Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
Annual Report & Accounts 2019Home of the new. Ledwill Park
Kilcock, Co. Kildare
Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
Contents
Chairman’s Letter
CEO's Review
CFO’s Review
Our KPIs
Business Model & Strategy
Strategic Update
Business Units
Risk Management Report
ESG Report
Knightsgate
Rush, Co. Dublin
Governance
Corporate Governance Report
Audit and Risk Committee Report
Remuneration and Nomination Committee Report
Board of Directors
Directors’ Report
Financial Statements
Company Information
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“
Building high
quality homes for
where and how
our customers
want to live.”
Cluain Adain
Clonmagadden, Navan
Taylor Hill
Balbriggan, Co. Dublin
Barnhall Meadows
Leixlip, Co. Kildare
Contents
Glenveagh Homes
1
Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
2Glenveagh Properties PLCAnnual Report and Accounts 2019 * At Annual Report approval date** Suburban portfolio at year end Our vision is to create the leading sustainable homebuilding platform in Ireland. 3Glenveagh at a GlanceGlenveagh at a Glance 2019 2018 FinancialsRevenue €284.6m €84.2mGross margin % 18.1% 18.2%Net cash at 31 December €53m €131mOperating profit/(loss) €29.4m (€2.6m)Inventory at 31 December €840.5m €718.9mSales ActivitySelling sites 14 7 Unit completions 844 275Units sold, signed or reserved* 475 451ASP €332k €287kPricing <€350k** 84% 74%Construction Active construction sites 17 14 Site openings 6 7 Next year's deliveries from existing sites 100% 100%Units under construction in the period >1,600 >1,100AcquisitionsStrategic acquisitions 8 16 Acquisitions cost €109m €351mTotal units acquired 2,600 7,408Landbank size 14,500+ 12,600+ Proby PlaceBlackrock, Co. Dublin€ Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
4Glenveagh Properties PLCAnnual Report and Accounts 20195Chairman’s LetterWe have reviewed our key markets ahead of 2020 and realigned the segments of our business internally to ensure we are best equipped operationally to respond to current market dynamics. Our business segments are now Suburban, Urban and Partnerships and each are discussed in more detail in the strategy and business model section from page 18. Our peopleThe Board recognises the significant role the people within our Company have played in delivering our success to date. Our role is to continue to support and develop our people through refining our culture and communicating what we value as a Company. The implementation of our culture and values extend beyond employees and include our wider subcontractor and supplier base. Glenveagh now employs over 330 staff and has a subcontractor network of more than 1,600. Our people continue to be the key element in delivering our increased output targets and the Board reaffirms its commitment to invest in our people. On behalf of the Board, I want to thank our employees, subcontractors and suppliers for their efforts and dedication throughout 2019 and we look forward to supporting and working with you throughout 2020 and beyond. GovernanceThe New CodeStrong corporate governance is a pillar of the Group and the Board is firmly committed to maintaining the highest standards of corporate governance. Following the publication of the new 2018 UK Corporate Governance Code (the “Code”), the Board has invested significant time ensuring that we have met the changes introduced by the Code from 1 January 2019. Details of our approach and the governance structure changes introduced are set out in the Corporate Governance Report on pages 54 to 61. Board CompositionDuring 2019 there were a number of changes to the membership of the Board. Early in 2019, we announced that Caleb Kramer had informed the Board of his intention to retire as a Non-Executive Director and confirmed that he would not seek re-election at the AGM. Justin Bickle stepped down from his role as Chief Executive Officer of the Group and resigned from the Board in August 2019. I’d like to take this opportunity to thank Justin and Caleb for the significant and valuable contribution they have made to the success achieved to date at Glenveagh.John Mulcahy ChairmanGlenveagh Properties PLC was established just 28 months ago with the clear target of becoming the leading sustainable house builder in Ireland and we are well on our way to achieving that goal. The Company’s successful performance in 2019 demonstrates that we continue to implement the right strategy and provide attractive, affordable and high-quality product to owner occupiers, local authorities and the rental sector.Successful scaling of operationsIn 2019, the Group's second full year of trading, we delivered another strong performance both operationally and financially with a 207% increase on 2018 in the number of unit completions. The 844 (2018: 275) unit completions in 2019 were delivered from 14 (2018: 7) sales outlets while we have now opened 20 sites since IPO which clearly illustrates the successful escalation of our operations. Looking ahead, we expect the market environment to remain favourable with significant owner occupier and institutional demand for housing, particularly starter homes. The extent of the institutional demand for high quality residential product is such that the Group now expects to forward fund a series of Urban apartment developments in the future. Reflecting confidence in where the delivery capability has evolved since IPO, we have increased the Group's medium-term output targets by 2,650 units from 2022 to 2024. The increased output targets and our approach to funding our development expenditure reflects the Group's continued commitment to invest in operational scale and efficiencies which maximise return on capital. Chairman’s LetterDear Shareholder,I am pleased to present our Annual Report for the year ended 31 December 2019. InnovativeOur CultureCustomer- CentredSafety LedCollaborativeCan-DoGlenveagh have increased the Group's medium-term output targets by 2,650 units from 2022 to 20242,650 IPO Target Increase1,00020201,40020211,7506002,35020222,0001,0503,05020232,0001,0003,0002024Revised Group Output TargetsNote 1: Since IPOIncreasing output target to 3,000 units by 2023 (+50% vs IPO)12,000units delivered by 20241 Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
6Glenveagh Properties PLCAnnual Report and Accounts 20197Chairman’s LetterFollowing on from the Remuneration and Nomination Committee’s 2018 assessment of the composition of the Board and its Committees, a process was undertaken to identify and appoint suitable independent Non-Executive Directors with complimentary skills and experience to the existing Board members. On completion of this process I was pleased to welcome two new Non-Executive Board members in September 2019; Pat McCann and Cara Ryan. In addition, I was pleased to welcome our Chief Financial Officer, Michael Rice, to the Board as an Executive Director in November 2019. Each new Board member has a diverse background and unique skillset that will bring a fresh perspective to our existing Board composition. I look forward to the valued contribution each new Board member will make as we execute on our business plan and continue to work towards meeting our targets in 2020 and beyond. Further details of the above are set out in the Remuneration and Nomination Committee Report on page 68.Capital re-organisation At the Extraordinary General Meeting held on 17 December 2019, shareholders approved a capital reorganisation resolution to reduce the Group’s share premium account by an amount up to €700 million. Subject to High Court approval of the capital reorganisation, the undistributable reserves (namely the share premium account) will be transferred to distributable reserves. We expect this process to complete in 2020 which will provide the Company with flexibility to establish and implement a capital returns policy in due course. As communicated at our Investor Day on 29 January 2020 our priorities for maximising shareholder returns in the short term include a reduction in our net land investment, increased unit output, a targeted investment in suburban working capital and the forward funding of certain urban projects while maintaining prudent leverage levels in the interim. In the context of these near-term strategic priorities, we re-affirm our commitment to commencing a capital returns program once excess cash is available and will continue to keep our investor community informed as we execute our business plan.OutlookWe are on plan and have made good progress in 2019 and are confident that the investments we are making will further enhance our level of output and position in the market. The Glenveagh management team remains focussed on delivering profitable growth and cash conversion in the medium term while building scale and continuing to develop out the platform.In particular the Board believes that the Company is well positioned to deliver across three segments, but as a single business capitalising on scale advantages to address Ireland’s fundamental demand / supply imbalance. In the market there continues to be a long-term demand for 35,000 units per annum. We intend to be the volume operator supplying these units to the market. We are clear on where we are, where we are going and we have the right strategy for how we are going to get there. The Group’s increased output targets are ambitious but achievable in the context of the short to medium term fundamentals of the Irish housing market. The Board remains very confident about the future for your Company and the further progress 2020 and beyond will bring. John Mulcahy Executive ChairmanOur vision is to create the leading sustainable homebuilding platform in Ireland. In the market there continues to be a long-term demand for 35,000 units per annum. Glenveagh intend to be the volume operator supplying these units to the market35,000Taylor HillBalbriggan, Co. Dublin Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
8Glenveagh Properties PLCAnnual Report and Accounts 20199CEO's Reviewprofits have consistently exceeded expectations in each of the years since IPO. Our approach to operations and construction consistently delivers and exceeds expectations. Our key objective is to continue solidifying this platform and programme to deliver units and returns for shareholders.Market EnvironmentA key driver of this unit delivery is a market opportunity which remains highly compelling. Population growth is driving a housing need and well-capitalised scale homebuilders, such as Glenveagh, are best placed to address this. The landbank we’ve assembled can deliver housing which is both in demand and affordable and for which we have the operations and capital structure to execute on. Fourteen selling sites delivered the Group’s units for 2019 with both existing and new selling sites performing well with reservations and pricing remaining strong throughout the period. New selling sites in 2019 included Blackrock Villas, Ledwill Park, Mountwoods, Semple Woods, and Knightsgate. These sites will each be delivering sales again in 2020 with new developments at Barnhall Meadows, Oldbridge Manor, Bellingsmore, and Silver Banks also coming onstream. Our End MarketsWe will continue to pursue our three core markets – suburban housing, urban apartments and partnerships with local authorities and state agencies. To better reflect how we are delivering these segments to the market and to streamline communication to investors, Suburban, Urban and Partnerships will replace the old Home and Living banners. While the target markets remain the same our new approach will allow the attractive characteristics of each segment to be assessed and valued independently.Given our single delivery platform, one of the welcome challenges the Group will begin to face is where to deploy our construction resource to deliver the best return on capital for shareholders. In the near-term that’s across Suburban and Urban where we’re balancing the returns on offer against the requirement to both manage risk and build a sustainable business. Over the life of the plan, when Partnerships materialise, we will take the opportunity to reduce our overall land investment and deliver our output targets in as capital light a manner as possible. This will be upside to our base case plan which just deals with our current operational programme – Suburban and Urban.Scaling Our Construction Operations2019 was another strong year on the construction front where the Group opened seven construction sites assisted by the formation of dedicated site opening teams. Allowing for completed developments at Herbert Hill, Proby Place and Holsteiner, the Group is now actively constructing on 16 sites with a further two sites scheduled to open in Q1 2020. Since IPO a commitment of the business has been to clearly outline where we believe we can take the business from a unit delivery standpoint. We’re now two years into our journey and have proven we can move quickly to monetise the Group's attractive landbank. Reflecting our confidence in where the delivery capability has got to, and the extent of the team's ambitions, we have significantly increased the Group’s output targets for the medium-term to 3,000 units per annum from 2023. This is 50% greater than the IPO target of 2,000 units. This plan sees the Group delivering a further 10,800 units in the period to 2024 having already delivered on over 1,100 since IPO.The Group’s Urban projects, once successfully forward funded, will result in revenue, profits and cash for the Group in advance of the full delivery of the unit output targets outlined. The increased output targets and approach to funding our development expenditure reflects the Group’s continued commitment to invest in operational scale and efficiencies which maximises the return on the capital of the Group. Working Closely With Our Supply Chain The Group continues to invest in more efficient and cost-effective construction techniques. Early initiatives have included the optimisation of our processes and finished product, in addition to adopting modern building practices, including utilising off site timber-frame and modular manufacturing systems. In order to further enhance the Group's timber-frame construction solutions and guarantee long-term supply, Glenveagh has entered into an exclusive multi-year open book supply agreement with one of its existing timber-frame suppliers based in Ireland, Keenan Timber Frame Limited (“KTF”). In conjunction with the agreement the Group has purchased a production facility in a strategic location close to its active construction sites for approximately €5 million. This manufacturing facility will be leased to KTF and once operational will allow KTF to supply timber frame product exclusively for Glenveagh. Stephen GarveyChief Executive OfficerIn our second full year of trading it has been another strong performance for the Group both operationally and financially as we continue to exceed our targets, delivering three times the number of unit completions from one year ago. We have completed our net investment in land, grown our operations consistent with our business plan and remain focused on optimising capital returns as the business continues to scale.Our VisionThe vision for the business is simple; it’s that everyone should have access to high quality, energy efficient homes in flourishing communities across Ireland. Our key ingredient for delivering on this vision is people. We’re very proud of what the business has become in a short space of time since its inception. If you were to spend a day at our offices or indeed visit us on our sites I believe you’d see a business that is; safety led, customer centred, collaborative, innovative and importantly for the scale of the opportunity ahead of us, a talented group of people with a ‘can-do’ attitude. Phase I Of IPO Objectives DeliveredIt’s our ‘can-do’ attitude that has helped ensure that the Group has delivered on Phase I of our IPO objectives. We’ve not only succeeded in successfully deploying our capital; we’ve also assembled a landbank which is targeted at the most resilient segment of the market – starter homes – in very strong urban centres. The sustained and profitable manner in which we’ve deployed the capital is best demonstrated by the pace of our operational ramp-up. We’ve opened 20 sites to date, thus far delivered more than 1,100 units (844 in 2019) with in excess of this number under construction again in 2020. Our delivery of units, revenues and CEO’s ReviewI am pleased to update you, our shareholders, on our continued strong progress at Glenveagh.For more information on our Business Model see page 18 Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
10Glenveagh Properties PLCAnnual Report and Accounts 201911CEO's ReviewThe open book supply agreement and the factory investment by Glenveagh will facilitate the expansion of KTF’s own operations and help de-risk Glenveagh’s medium and long-term housing delivery targets while also allowing the Group to benefit from any savings delivered as a result of the partnership. The factory is due to be operational by Q2 2020 and will initially have the capability to deliver approximately 800 timber frame units per annum with the option to expand this capacity in the future with limited investment. Our Sustainability AgendaIn delivering on our objectives we recognised early the importance of creating a sustainable business. Our environmental and social agenda has been to the fore since our establishment as a PLC and we committed to strengthening and progressing this as part of our operational and construction programmes.Our work in planning and contributing to sustainable communities, meeting and exceeding our environmental obligations and sustainably integrating with our supply chain are features of our operations and are covered in more detail in this report. Customer Service We are very proud to lead the industry in Ireland in both build quality and customer service. Quality and customer service have been long-term commitments for us, and we strive to meet and exceed our customers’ expectations. We believe that high quality homes and excellent customer service are fundamental to our ongoing success. We are building homes the country needs, creating jobs and supporting economic growth whilst also delivering both operationally and financially for our shareholders. Conclusion The fundamentals of our sector remain strong. There is a continuing chronic under-supply of housing in Ireland (both private and public) and well-capitalised scale homebuilders are best placed to address this. With a strong landbank primed for operation and capital ready to deploy should we see an opportunity, together with a skilled team with a proven track record, Glenveagh has already earned a leading role within the Irish residential landscape. We will continue to deliver in 2020 where the Group has substantially de-risked its construction targets with costs largely fixed and strong forward sales in place. The market backdrop remains favourable with significant institutional and private demand for housing, particularly starter homes, evident across the Group’s selling sites. In closing, I wish to echo the words of our Executive Chairman and thank all the Glenveagh staff, their families and our industry partners for joining us on this exciting journey.Stephen GarveyChief Executive OfficerBarnhall MeadowsLeixlip, Co. Kildare Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
12Glenveagh Properties PLCAnnual Report and Accounts 201913CFO's Reviewour Revolving Credit Facility, commitment fees on the undrawn element of the facility and arrangement fees, which are being amortised over the life of the facility. Overall, the Group delivered a profit after tax of €22.8m, which shows significant progression from the loss of €3.9m incurred in 2018, and current year earnings per share of 2.6 cent (2018: Loss per share of 0.5 cent). Balance SheetThe Group’s net asset value has increased to €867m at 31 December 2019 (2018: €843m).The Group has increased its land portfolio to €668m (2018: €618m) at 31 December with the Group’s net investment in land now starting to decrease with focus on smaller incremental land acquisitions. The Group has made a significant investment in work in progress in line with the continued ramp-up of the business with a year-end balance of €173m (2018: €101m). The investment in the land portfolio and work in progress has been financed through the Group’s cash balances, which have decreased to €93m at 31 December 2019 (2018: €131m). Cash flowThe Group had a net cash outflow in the year of €37.5m, a significant reduction from €221m in the prior year. This reduction comes from a combination of improved cash generation from the business and a reduced spend on land. With the business now getting towards scale, the business generated operating cash inflows before changes in working capital of €31m versus a cash outflow of €2m in 2018. Given the strong landbank now in place, our net inventory spend for the year was €119m, with the vast majority of that related to work in progress, compared to a net inventory spend of €432m in 2018. The Group is in a net cash position of €53m (2018: €131m) at year-end, with €93m of cash and €40m of debt from our Revolving Credit Facility.As expected, we utilised this debt facility to a greater extent in 2019 to fund our investment in work in progress. We drew down €120m (2018: €26m) and repaid €80m (2018: €26m) from the facility at various points during the year. The increased utilisation of the facility will continue in 2020 as we open more construction sites in line with our strategy.Investor RelationsGlenveagh is committed to interacting with the international financial community to ensure a full understanding of the Group’s strategic plans and targets and its performance against these plans and targets. During the year, the executive management and investor team presented at 9 capital market conferences, and conducted 258 institutional one-on-one and group meetings.On 29 January 2020, the Group also hosted a Capital Markets Day in the London Stock Exchange with a strong attendance amongst shareholders, analysts and financial institutions. The Group’s updated 5-year plan was unveiled at this event, with increased delivery targets and new forward funding mechanisms outlined.Share Price and Market CapitalisationThe Group’s shares traded between €0.62 and €0.91 during the year (2018: €0.67 to €1.26). The share price at 31 December 2019 was €0.87 (31 December 2018: €0.71m) giving a market capitalisation of €758m (2018: €619m).Group performanceGlenveagh had another strong year in 2019 both from an operational and financial perspective. This was the first year of profitability for the Group and we have now established ourselves as a scale housebuilder within the Irish market after only two full years of operation. The total unit completions for the year was 844 units (2018: 275), a 207% increase on the prior year but also 16% higher than our market guidance of 725 units. Group revenue was €284.6m (2018: €84.2m) for the year with €280m (2018: €79m) related to the 844 units. The continued strong demand for our first-time buyer product is evident from our Average Selling Price (‘ASP’) for the year of €332k (2018: €287k). Revenue included consideration of €4.3m (2018: €5m) from a number of non-core site disposals.The Group’s gross profit for the year amounted to €51.5m (2018: €15.3m) with an overall gross margin of 18.1% (2018: 18.2%). The strong margin performance demonstrates continued margin progression in our underlying housing margin which was 17% in 2018. Our operating profit (pre-exceptional items) was €30.5m (2018: loss of €2.2m), which is a 10.7% operating margin and is in line with expectations. The Group’s central costs for the year were €19.6m (2018: €17.2m), which along with €1.4m (2018: €0.2m) of depreciation and amortisation gives total administrative expenses (pre-exceptional items) of €21.0m (2018: €17.4m). The exceptional costs of €1.1m (2018: €0.4m) incurred in the year relate to redundancy and restructuring costs and costs associated with the cessation of the Hollystown Golf and Leisure Limited business in December 2019.Net finance costs for the year were €2.7m (2018: €1.4m), primarily reflecting interest on the drawn portion of Glenveagh had another strong year in 2019 both from an operational and financial perspective. The total unit completions for the year was 844 units (2018: 275), a 207% increase on the prior year but also 16% higher than our market guidance of 725 units. 844Michael RiceChief Financial OfficerCFO's ReviewOverall, the Group delivered a profit after tax of €22.8m, which shows significant progression from the loss of €3.9m incurred in 2018.€22.8m€ Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
14Glenveagh Properties PLCAnnual Report and Accounts 201915CFO's ReviewFinancial Risk ManagementThe Group’s financial risk management is governed by policies and procedures which have been approved by the Board of Directors and are reviewed on an annual basis. These policies primarily cover credit risk, liquidity risk and interest rate risk. The principal objective of these policies is the minimisation of financial risk at reasonable cost. Credit riskThe Group transacts with a variety of high credit-rated financial institutions for both placing deposits and managing our day-to-day cash flow requirements. The Group actively monitors its credit exposure to each counterparty to ensure compliance with internal limits approved by the Board. Liquidity and interest rate riskThe Group has a strong balance sheet with its cash balance and debt facility allowing the business to finance its current growth strategy. The Group’s debt facility is drawn on a floating interest rate, with no related derivatives or financial instruments in place. The Group will continue to review this approach based on the level of drawn funds and the wider interest rate environment. OutlookThe Group had forward sales of 240 units (2018: 202 units) at 31 December 2019 which has risen to 475 at the date of this report giving a strong view on our 1,000 unit completion target for 2020.All sites required to deliver the 1,000 units in 2020 are now active and this gives us good visibility of the projected 2020 gross margin. The Group has maintained a strong Balance Sheet throughout the year with €53m (2018: €131m) of net cash at year end and an undrawn debt facility of €210m (2018: €250m). The next phase of the Group’s growth will require significant investment in working capital and I am confident that this growth will be prudently funded through a combination of cash generated from the business and our current debt facility.The Group looks forward to further underlying financial and operational growth in the year ahead.Michael RiceCFOAll sites required to deliver the 1,000 units in 2020 are now active.1,000The Group has a strong balance sheet with its cash balance and undrawn debt facility allowing the business to finance its current growth strategy. Herbert Hill Dundrum, Dublin Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
17KPIs16Glenveagh Properties PLCAnnual Report and Accounts 2019Our KPIsNon-financial KPIs Health & SafetyCustomer SatisfactionFor more information on how our KPIs impact Executive Director's remuneration See pages 82 and 83Financial KPIs Revenue predominantly includes housing revenue, which reflects the number of units sold by the Average Selling Price of those units, and non-core land disposals. As the business continues to grow, Revenue is seen as a key measure of top-line business improvement. €284.6m Revenue€284.6m2019 2018€84.2mGroup management consider EBITDApre-exceptional items and the related margin percentage of revenue, to be an important measure for assessing the profitability of the Group. It demonstrates profitable and sustainable growth during our initial ramp-up phase and shows improvements in the operating efficiencies of the business. €31.9m EBITDA€31.9m2019 2018(€1.9m) 11.2% EBITDA Margin11.2%2019 2018-2.3%The Group considers Health & Safety audit scoring an important indicator of performance for the Group. The metric is the average Site Safety Audit score percenage from both internally and externally completed audits. 2019 Performance achieved 75%Exceeding customer expectations is central to the Group's strategy and a key indicator of performance linked to variable remuneration. Glenveagh engages an independent external firm to survey our customers on topics linked to their experience with Glenveagh. 2019 Performance achieved 84%Semple Woods Donabate, Co. Dublin Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
Taylor Hill
Balbriggan, Co. Dublin
Business Model
& Strategy
For more on our
use of technology
see pages 23 and 24
“
We achieve quality and
greater accessibility
to new homes by
relentlessly innovating
the way we plan, design
and build. We bring
new ideas home.”
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Glenveagh Properties PLC
Annual Report and Accounts 2019
Glenveagh Homes
19
Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
21 20Glenveagh Properties PLCAnnual Report and Accounts 2019Strategic UpdateBusiness Model & StrategyStrategic UpdateBusiness Model and Organisational StructureGlenveagh is focussed on strategically located developments in the Greater Dublin Area, Cork, Limerick and Galway. The Group delivers across three distinct business segments – Suburban, Urban and Partnerships - as a single business, capitalising on scale advantages and investing to optimise return on capital. Each business segment benefit from the Group’s attractive landbank, proven delivery platform and industry leading central resources covering the entire process outside of construction delivery. Our single underwriting teams is complimented by centralised, planning & design, manufacturing, procurement, construction management and PLC functions. The four strategic priorities of the Group which are underpinned by our sustainability objectives are as follows:A. Disciplined investment across our target segments;B. Putting our private and institutional customers at the heart of what we do; C. Scaling our construction capability across Suburban and Urban; andD. Optimisation of capital employed to drive returns for shareholders.During 2019 the Group made significant progress towards the achievement of these strategic objectives.Disciplined investment across three business segmentsPost IPO the Group moved quickly to de-risk our long-term sales objectives by assembling a starter-home focussed landbank with affordability and value-for-money at its core. Our landbank was assembled at attractive rates in the context of both cost per site and site cost as a percentage of NDV.Glenveagh is now positioned to deliver housing to the deepest segments of the market with 84% of Suburban units on forthcoming developments priced at €350k or less. With an average site size of 280 units coupled with a focus on starter-homes, the portfolio is monetisable in Our implementation strategySuburbanUrbanPartnershipsThree business segments addressing Ireland’s fundamental demand / supply imbalanceKey AttractionsFundamentals remain highly favourable and sustainableGlenveagh focused on three attractive segments Opportunity to create the leading homebuilding platform in IrelandStructures now in place to triple construction output Scalable and sustainable business focused on driving ROCEStrategic priorities for maximising shareholder returnsSuburban Urban PartnershipsDisciplined Investment Across Target SegmentsCustomer service Retail offering Institutional offeringCustomer Centric FocusMinimise upfront land cost Control WIP investment Innovation to control the cost of deliveryTarget Enhanced ROCELow and high-rise Standardisation Offsite contruction Use of technologyScale Contruction CapabilityDelivering strong performance outcome for allOperating responsibly People Health & Community Customers Environment Supply Safety Chain Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
22Glenveagh Properties PLCAnnual Report and Accounts 201923Business Model & StrategyStrategic Updatethe current regulatory and market environment within a short time-frame. We also estimate that our primarily low-density Homes portfolio has the optionality to deliver over 2,000 units into the Suburban PRS sector. Our valuable Urban sites also allow the Group to capitalise on the large quantum of capital currently seeking to access the Urban PRS opportunity in Ireland. The Group’s Urban portfolio includes high density apartment sites focused on sustainable rental locations primarily in Dublin City and Cork City. Further opportunities continue to exist to make accretive land acquisitions which target the starter-home and PRS markets in the strongest locations. Once acquired these acquisitions will contribute to the achievement of delivery targets in the near-term and drive returns above Group targets in future periods.Despite our continued investment in land the Group are committing to reducing our net landbank investment by €100m by 2021.1 Customer centric focusRetail Customer FocusOur retail customer service offering is built around three core customer promises:• Access – building where our customers want to live at a price that is affordable; • Quality is a promise we do not compromise on. Energy efficient homes designed for how people want to live; and• To achieve access and quality for our customers we will continue to relentlessly innovate how we plan, design and build - bringing new ideas homeThis approach is driving our customer service reputation.Institutional Customer FocusIncreasingly our customers are institutions which is a feature of the market that we believe is here to stay. These institutions choose Glenveagh not only because we are one of the few companies delivering product which works in strong locations, but because:• We have a track record of delivering and a strong reputation;• Institutional investors know that when we say we’ll deliver, that’s what happens; and• There is peace of mind for individuals within organisations who are advocating for an investment in one of our developments alongside a blue chip supplier like Glenveagh. Increasingly these features are establishing Glenveagh as the partner of choice within the industry. Scaling our construction capabilitiesWe are now actively constructing from 16 sites which are expected to deliver our 2020 unit guidance of 1,000 units. This is consistent with our target absorption rate of 50-70 unit sales per site per annum. In order to achieve Glenveagh’s medium-term construction objectives, the key priorities for the Group have been to:• Further develop the Groups low-rise and high-rise construction capabilities;• Standardise our processes and end product;• Invest in offsite construction; and• Utilise technology across our business. Develop low-rise and high-rise capabilitiesOur central Group resources have allowed the construction operations to focus on opening sites and controlling the build programme. The delivery of our developments is aligned to our target markets and reflects the different skill sets involved in delivering Suburban and Urban product.For Suburban construction we have dedicated teams for site openings – the most challenging part of any development. These delivery teams are organised into clusters by region to maximise efficiencies but also to help train, retain and promote our construction talent in a structured and deliberate manner.We recognised early that Urban apartment delivery is a specialised skill-set. We’ve built on the track record of the existing team with specialised hires from the London market where high-rise apartment delivery has been the norm for a significant period of time. Our highly experienced Urban delivery team is well positioned to deliver the forthcoming Urban developments in a timely and cost-effective manner.Standardisation of Processes and ProductionOur construction methodologies are built around a standardised process to deliver high quality sustainable homes as efficiently as possible. This approach has allowed Glenveagh to build at volume across our active sites and deliver on our multi-site strategy.Supporting our standardised construction approach is our centralised procurement team that has established strong relationships with suppliers and subcontractors enabling the Group to enter into comparatively attractive contracts for key labour and materials thereby allowing the Group to manage our exposure to construction cost inflation.1. Vs June 2019Offsite ConstructionThe Group continues to invest in more efficient and cost-effective construction techniques. Early initiatives have included the optimisation of our processes and finished product, in addition to adopting modern building practices, including utilising off site timber-frame and modular manufacturing systems.In order to further enhance the Group's timber-frame construction solutions and guarantee long-term supply, Glenveagh has entered into an exclusive multi-year open book supply agreement with one of its existing timber-frame suppliers based in Ireland, Keenan Timber Frame Limited (“KTF”). In conjunction with the agreement, the Group has purchased a production facility in a strategic location close to its active construction sites for approximately €5 million. This manufacturing facility will be leased to KTF and once operational will allow KTF to supply timber frame product exclusively for Glenveagh. The open book supply agreement and the factory investment by Glenveagh will facilitate the expansion of KTF’s own operations and help de-risk Glenveagh’s medium and long-term housing delivery targets while also allowing the Group to benefit from any savings delivered as a result of the partnership. The factory which is due to be operational in Q2 2020 and will initially have the capability to deliver approximately 800 timber frame units per annum with the option to expand this capacity in the future with limited investment.Separately, the Group’s quarry for the offsite disposal of inert material is also due to be operational from Q2 2020 further de-risking the costs associated with groundworks on site. TechnologyAlong with a stable and sustainable supply chain another asset that the Group is utilising to facilitate our continued growth is technology. The aim is to utilise technology to connect construction across our sites and the rest of the business.Our ability and motivation to invest in technology early has ensured we have a stable platform for growth that helps deliver transparency and control throughout our projects. Examples of this include drone scans, document management and a mobile field app. This helps ensure that collaboration, cost management, quality control and health and safety are all managed effectively. Optimise capital employed to drive returns for shareholdersAs we make increasing progress towards achieving these objectives we will further optimise the capital employed within the business to drive shareholder value and returns over the long term. Practically this will mean a reduced landbank investment without a reduction in output in the outer years of our business plan. We’ve assembled a highly attractive landbank and are now at the peak of that investment trajectory with no net land spend envisaged (€100m reduction targeted by the end of 20211). Having already grown the delivery capability threefold, we’re committing to doing the same again and more. This will require continued investment in work-in-progress which is a necessity to work the balance sheet appropriately. Where possible we’ll mitigate any WIP investment via the forward funding of our Urban projects.Operating responsiblyOur environmental and social agenda has been to the fore since our establishment as a PLC. PeopleKey to scaling the business has been people. Growing the business from 75 employees at IPO to over 330 today required the creation of a culture which not only empowered talent but which also embraced equal opportunities, diversity and inclusion. We have a strong gender balance ratio compared to the industry average (Glenveagh 19% female, Industry average 5.5%). Glenveagh works closely with the Construction Industry Federation (“CIF”) on initiatives to encourage female participation in the industry and sponsored the CIF’s “International Women's Day Conference" in 2019 and will do so again in 2020.At Glenveagh we encourage an inclusive culture, where employees have a voice and feel valued. Glenveagh held Diversity Day 2019 which provided diversity and inclusion workshops for all managers. We will again be carrying out Diversity and Inclusion training in 2020. We The Group continues to invest in more efficient and cost-effective construction techniques Chairman’s Letter
CEO’s Review
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Financial Statements
24Glenveagh Properties PLCAnnual Report and Accounts 201925Strategic UpdateBusiness Model & StrategyTechnology in action Technology allows us to have a collaborative environment where the whole business is on the same page. One of the challenges within our business is how best we can connect sites to our head office. To facilitate coordination, we use an online platform that is accessible to everyone in the business. We use multiple modules across the platform such as document control, health & safety, tendering, supplier packages and workflows. Our field app allows us to inspect, observe, identify and report any positive or negative corrective actions. Drone scans and videos are used to record and communicate on this platform with all parts of the business. This offers the ability to predict constraints and reprogram the works which de-risks the entire process and greatly improves coordination. Utilising our drone technology, 3D scans are the used in our earthworks modelling software which allows us to value engineer and manage our civil engineering projects at an early stage before we even go into a site. “ Technology allows us to have a collaborative environment where the whole business is on the same page.” Case Studyhave also signed up to the CIF Diversity Charter with a view to gaining bronze accreditation in 2020. We are committed to having a great place to work for our people. We carry out annual employee surveys to ensure engagement with employees and encourage frequent engagement through line management. We work on the lowest scoring areas to improve in these areas and also focus on our highest scoring areas to ensure we maintain these results. Health and SafetyHealth and Safety is at the heart of our operations. In 2019 the Group achieved a Highly Commended Award from NISO and a Grade A Safe T Cert. We believe there is always more that can be done in this area and as a market leader, it is incumbent on us to continue to drive the health and safety agenda and the Group are currently implementing ISO 45001:2018 Occupational Health & Safety Management. Health and Safety drives an element of all senior management's variable remuneration with awards based on the results of site audits. CustomerExceeding customer expectations is central to the Group's strategy of creating the leading home building platform in Ireland. Built around the objectives of access, quality and innovation our customer service offering has brought a new professionalism to the industry. Customer satisfaction has been a KPI for the entire business since inception and drives an element of senior management's variable remuneration. Despite there being no published benchmarks in Ireland we engage an independent external firm to survey our customers. Full variable remuneration is not paid to employees unless the equivalent of 5 star status in the UK is achieved. Sustainable CommunitiesContributing to sustainable communities is a key feature of our approach to planning and design. In 2020 the Group will commence works on our first urban brownfield regeneration project in Dublin’s Docklands. This is the first project of its type to be delivered by the Group and forms part of a portfolio of over 2,000 urban brownfield units which will be delivered by the Group between now and 2024. Glenveagh is pleased to confirm that the Group has been shortlisted as a finalist in Residential Category for the upcoming Irish Construction Excellence Awards. Environmental and QualityThe environmental sustainability of our housing is at the forefront of business decisions. All houses and apartments delivered by the Group in 2019 had a BER rating of A3 or better and our efforts in providing sustainable energy efficient homes are replicated in reducing the environmental footprint of our operations. Initiatives to date have included the introduction of electric vehicles, the use of recycled materials on site and a minimisation of waste across the business. Glenveagh has also commenced the implementation of ISO 14001:2015 Environmental Management System.Quality control is integral to how we procure and run our sites. High risk materials such as stone, concrete, block, and mortar are certified at source with additional random sampling and testing carried out in the field. All materials are sent to design teams for approval prior to use and must carry a DOP or CE mark. As part of our ongoing training and development, we provide Building Control (Amendment) Regulations (BCAR) training for all of our employees involved in this process and quality assurance training in relevant departments.Our near-term strategic prioritiesIn achieving our corporate strategy, the near-term strategic priorities for the Group are to:• Actively manage our landbank by acquiring sites at attractive rates through disciplined capital deployment while reducing the Groups overall land investment by over €100m in the period to 2021; • Exceed our customers’ expectations with a continued commitment to access, quality and innovation;• Triple construction output to 3,000 units as the Group continues to build a balanced and sustainable business throughout the cycle by focussing on Suburban, Urban and Partnerships while maintaining the highest standards of health and safety on our sites; and• Deliver sector leading return on capital over the long term by optimising the capital employed within the business. Chairman’s Letter
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Financial Statements
Case Study
Glenveagh celebrates one
year of happy homeowners
June 2018, Glenveagh closed the first house in the
company’s history when Shay Kearney and his
wife Thelma received the keys to their home. After
selling their home in Dublin and browsing the
market, Shay and Thelma found exactly what they
were looking for at Cois Glaisin.
“We knew all about the community because
our kids live here,” he says. “The houses are well
structured and they’re well finished and even
now I’ve found that I can get help from Sean,
the finishing foreman on the site, if there’s
anything I need.”
“ We got the keys on
a Friday evening and
we slept there on
Sunday night. That's
how quickly the move
took place for us.”
Cois Glaisin
Navan, Co. Meath
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Shay and Thelma Kearney
Cois Glaisin
Navan, Co. Meath
Chairman’s Letter
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Site Schedule29Business Model & StrategyOur Lanbank - Balanced GDA Focused PortfolioSite Schedule28Glenveagh Properties PLCAnnual Report and Accounts 201922251323724231323018141564128511127362617343519Key Suburban Urban Suburban/Urban Motorway Network Rail networkActive SuburbanSelling from1Barnhall Meadows20202Bellingsmore 20203Blackrock Villas (Eden houses) 20194Cluain Adain20185Cnoc Dubh 20186Cois Glaisín20187Knightsgate 20198Ledwill Park20199Maple Woods 201910Mount Woods201911Oldbridge Manaor202012Ruxton Oaks 202013Semple Woods 201914Silver Banks 202015Taylor Hill 2018Future Suburan 16The Hawthorns202017Belin Woods18Blessington 19The Boatyard20Castleredmond21Citywest houses22Clonmagadden 23Donabate East 24Hollystown 25Killruddery26Keatingstown27MullingarActive Urban28Dargan Hall 202029Eden Apartments2019Future Urban 30East Road202031Carpenterstown32Castleforbes 33Citywest apartments 34Cork Docklands 35Galway 36Howth37Parson Street, Maynooth 38Tallaght 3738310162128920Landbank HighlightsSplit by Units69% Suburban369%31% Suburban UrbanNotes:1. by value2. Suburban portfolio3. by units91% GDA Focused197% Starter-Homes269% Suburban342% PRS Potential314,500 Total Units Chairman’s Letter
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CFO’s Review
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Governance
Financial Statements
Business Units
Glenveagh delivers across three distinct business segments – Suburban, Urban and Partnerships - as a single business,
capitalising on scale advantages and investing to optimise return on capital. These business segments have differing
characteristics in terms of product, end-market, location and exit mechanism.
Our business segments - key characteristics
Product
End-Market
Locations
Exit
Suburban
Houses and Low-
rise Apartments
Private/
Institutions
Ireland
Traditional/
Forward Sales
("FS")
Urban
Apartments
Institutions
Dublin/Cork
city
FS/Forward Fund
("FF")
Partnerships
Houses and
Apartments
Private/State/
Institutions
Ireland
State/
Traditional/FF
or FS
The comptitive environment, from land availbility through to supply and demand differs across each target
segment. Over the medium term the diversification across these distinct markerts will allow the Group to prioritise
its construction resource in a manner which generates the best return for shareholders while reducing risk and
increasing business resiliance.
Our business segments – competitive dynamics
Suburban
Urban
Land
Availability
Land
Competition
Demand
Supply
• Stable supply of
• Limited for sites
• Owner occupiers
zoned land
of scale
• Primarily off-market
• More prevalent on
transactions
small sites
• PRS rental product
• Social housing
• Primarily small
developers
• On-market transactions
• Strong competition
• PRS rental product
more prevalent
• Utilising PLC advantages
to compete for sites
for high-profile
on-market
transactions
• Social housing
Partnerships
• Driven by Local
Authorities and Land
Development Agency
(“LDA”)
• Local developers
and contractors
• Developer /
contractor
consortiums
• Strong urban
centres suit owner
occupier product
• Social and
affordable
component
de-risk each site
• Investment fund
/ end owners
utilising 3rd
party contractors
• Specialist
developers
• Local developers
and contractors
• Developer /
contractor
consortiums
Investing across three segments to optimise return on capital
Optimising mix across three segments to optimise return on capital
Targeting these verticals has allowed the Group to capitalise on the unique attractions of each market. Each business
segment benefits from the Group’s attractive landbank, proven delivery platform and industry leading central resources
covering the entire process outside of construction delivery. Our single underwriting team are complemented by
centralised planning & design, manufacturing, procurement and PLC functions.
Attractions of our complementary
business segments
Suburban
Deepest demand
Most fragmented supply
Alignment of buyer
income and aspirations
Easier optimisation of
construction
Urban
Structural occupier
shift to rental
Institutionalisation of
rental sector
Capital light
(forward funds)
Longer term earnings
visibility
Partnerships
Strong ROCE
Increased business
resilience/reduced risk
Fit with both suburban
and urban segments
Access to land/deliveries
All developments sourced and delivered via single delivery platform
The focus on three distinct verticals and exit optionality through increased sales velocity has allowed the Group
to increase its output targets significantly since IPO. Reflecting confidence in where the delivery capability has
evolved, the Group’s medium-term output targets were increased for 2022, 2023 and 2024 to 2,350, 3,050 and
3,000 units respectively.
Our urban and suburban
delivery schedule
1,400
303
1,097
1,000
3,050
550
529
1,971
3,000
250
495
2,255
2,350
350
402
1,598
Suburban
Urban
Urban Dublin Docklands
2020
2021
2022
2023
2024
Both suburban and urban deliveries are core to the group’s output targets
(Note: The Group communicated the change in its segments from Homes and Living to Suburban, Urban and
Partnerships to the shareholder community at its Investor Day on 29 January 2020 and has prepared this strategic
report on this basis to maintain consistency. It should be noted that this change in how we analyse our business is
effective from January 2020, while the previous segmentation of Homes and Living was used throughout 2019 and Note
9 of the consolidated financial statements has been prepared on this basis, in accordance with the requirements of
IFRS 8 Operating Segments)
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Chairman’s Letter
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Business Model & Strategy
Governance
Financial Statements
Suburban
Suburban product is primarily housing with some low-rise apartments with demand coming from private buyers and
institutions. This means affordable, high quality homes in locations of choice at €325,000 or below. The Group has an
overwhelming Greater Dublin Area focus in our portfolio however the product is required nationally. Suburban sees
private and institutional demand for our product via traditional and forward sale structures.
Suburban Landbank Split by ASP
97%
Starter-Homes
57%
<€300k
Urban
27%
€300k-€350k
16% €350k+/
(3% €425k+)
Urban product is all apartments to be delivered to institutions primarily in Dublin and Cork but also on sites
adjacent to significant rail transportation hubs. Demand in this segment is being driven by the shift to rental by
millennials and lifestyles and the exodus of private landlords due to fiscal policy and regulation who are being
replaced by institutional investors.
Urban offers significant attractions from a risk and return on capital perspective given the opportunities that exist to
forward fund these developments. This provides longer term earnings visibility due to early commitment from a forward
sale or forward fund transaction.
Why Institutions
choose Glenveagh
Access to quality
product in
Suburban and
Urban locations
Building
track-record and
reputation
Certainty
of delivery
Blue chip
backing
Herbert Hill
Dundrum, Dublin
Strong focus on
collaboration driving
repeat business
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Chairman’s Letter
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Business Model & Strategy
Governance
Financial Statements
Ledwill Park
Kilcock, Co. Kildare
Partnerships
Partnerships are accretive to the business over the long-term. A partnership typically involves the Government, local
authority or state agency contributing their land on a reduced cost or phased basis into a development agreement
with Glenveagh. It has a reduced risk from a sales perspective where approx. 50% of the product will be delivered
back to the government or local authority for social and affordable homes. Over time this will de-risk the Glenveagh
market exposure and provide:
•
•
•
access to both land and deliveries for our Suburban and Urban segments;
strong ROCE profile; and
increased business resilience with reduced risk
The Partnerships segment is going to take the most time to come to fruition but it’s one where we are investing
significant time and effort given our skillset and the attractions of the segment from a ROCE perspective.
Local Authority / State Agency Benefits
Placemaking
Social and Affordable
units delivered in an
appropriate setting
Utilise site value
Overage
Leverage value in state
lands to provide social
and affordable units
Sharing of
economics above
certain thresholds
Developer Economics
Delivery Margin
Developer Margin
Fees
On social and
affordable units
Returns
On social and
affordable units
On PRS and private
for sale units
For development
management
Units
On PRS and private
for sale units
Risk Management
Strong unit delivery
with high level of
pre-committed sales
even in downturn
Example Unit Mix
Indicative Tender Criteria
50%
20%
30%
60%
40%
PRS/Private
for sale
Affordable
Social
Financial
Quality
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Chairman’s Letter
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Business Model & Strategy
Governance
Financial Statements
36Glenveagh Properties PLCAnnual Report and Accounts 201937Risk Management ReportBusiness Model & StrategyThe Group has implemented a four line of defence model.Line of defenceFunctionResponsibilitiesFirst lineDepartment headsRisk owners within the business with responsibility for ensuring risk management is embedded in day to day activities and taking a proactive approach to risk identification and mitigation. Second lineExecutive committeeRisk monitoring within the business with responsibility for ensuring policies are implemented throughout the Group. Third lineInternal auditRisk assurance within the business with responsibility for providing additional assurance on the effectiveness of risk management and internal controls to the Executive Committee and the Audit and Risk Committee.Fourth lineAudit & Risk CommitteeRisk oversight with responsibility for setting Group strategy through determining risk policy and procedures.Our approach to risk management is embedded across all levels and departments of our business, with a focus on site level risk, to ensure that barriers to achieving strategic objectives are identified and mitigated. The Board and senior management set the tone for risk management in the business through regular interaction, review and ownership of key risks. The Board is responsible for ensuring good corporate governance and prudent risk management is implemented by the Group. The Board has approved the Group’s 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 is a bottom up integrated approach that aims to ensure that all risks to which the Group are exposed are identified, understood and appropriate mitigating controls are implemented to manage the risks effectively and protect the Group. As part of its oversight responsibilities, the Audit & Risk Committee is responsible for reviewing the adequacy and effectiveness of the Group’s internal controls and risk management process (page 62). The Group’s risk register and principal risks are a standing agenda item for each Audit and Risk Committee meeting. The risk register is used 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 risk register is not a static list, but a dynamic process to ensure risk is managed and mitigated effectively. The Board formally reviews and approves the risk register on at least a bi-annual basis.Risk Management ReportIdentifyAssessReportRiskMonitorRisk management in actionRisk management is embedded in the day to day activities of the business through aligning key strategic KPIs and remuneration metrics of Executive and senior management with risk management.Certain risk management and compliance activities across the Group are reported monthly to the Board and Executive committee, with input received from across the business to respond to risk in line with the risk management framework.The Health & Safety (H&S) department is a dedicated resource whose activities are mainly focused on risk management throughout the Group. There are a number of Corporate office departments whose activities support H&S and also assist in maintaining a focus on risk management including Information Technology, Human Resources and Internal Audit. In addition, third parties are engaged where necessary to assist and provide additional assurance in relation to risk management. A key component of financial risk management is the Executive and senior management led development of the annual budget and 5-year business plan, and quarterly reforecast processes which are used to monitor progress against plan and assess risk across all existing and emerging risk categories. The Group has also invested significantly in technology, site infrastructure and people to improve our control processes and systems in order to respond to the everyday operational risks that are faced by all companies in our industry.Our Risk Management FrameworkMitigate Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
Principal risks and uncertainties
The Board has carried out a robust assessment of the principal risks facing the business. 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. The Board and Audit and Risk Committee have reviewed the
Group’s principal risks and have considered the new risks introduced for 2019. The main risk categories that the Board
considered are the following:
The principal risks and uncertainties together with key mitigating considerations that fall into each of these risk
categories are set out below.
Our risk
category
Risk or uncertainty and
potential impact
Risk rating
change
External risk
1. Adverse Macroeconomic Conditions
Risk Categories
Financial Risk
Investment risk is defined as the probability or likelihood of occurrence of losses relative to the expected return on
any particular investment.
Market risk is the risk of loss to the Group arising from market volatility or adverse movements in the level or
volatility of market prices of equities, currencies or property. Market Risk includes Interest Rate Risk which is the risk
to earnings and capital associated with changes in the level or volatility of interest rates and Foreign Exchange (FX)
Risk is the risk to earnings and capital associated with changes in the level of foreign exchange rates.
Non-Financial Risk
Compliance risk is the risk of legal sanctions, material financial loss, or loss to reputation that the Group may suffer as
a result of its failure to comply with legislation, regulations, code of conduct, and standards of best/good practice.
Operational and IT risk is the risk of loss resulting from inadequate or failed internal processes, people and systems,
or from external events.
Reputational risk is a risk of loss resulting from damage to the Group's reputation.
Strategic risk is the loss or unplanned/unfair gains resulting from adverse strategic initiatives.
External Risk
External Risk is the risk to the Group of potentially failing to meet its strategic objectives following significant
changes to the external environment in which it operates.
Ledwill Park
Kilcock, Co. Kildare
2. Adverse changes to government policy and regulations
3. Mortgage Availability and Affordability
Operational risk
4. Availability and increased cost of materials and labour
5. Inadequate Project Management
6. Insufficient health and safety procedures
7. Employee development and retention
Reputational risk
8. Data protection and cyber security
9. Decline in Product Quality
Table legend: No change to risk rating Increased risk rating New risk
1
2
3
4
6
7
5
8
9
I
m
p
a
c
t
5
3
1
1
3
likelihood
5
Key:
High Risk
Medium Risk
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40Glenveagh Properties PLCAnnual Report and Accounts 201941Risk Management ReportBusiness Model & StrategyOur risk categoryRisk or uncertainty and potential impact Key Mitigating ConsiderationsRisk rating changeExternal riskAdverse Macroeconomic ConditionsGlenveagh 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 a decline in consumer confidance.The Group aims to maintain a reasonable but limited stock of land (c.5 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.The Urban and Partnerships segments will assist in reducing the cyclical nature of the business through the delivery of apartments and houses for the rental market as well as schemes with local authorities or other government bodies.Management and the Board actively monitor the geopolitical risks and seeks expert industry advice where required. External riskAdverse changes to government policy and regulationsA 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.The Group’s management and Board monitor government policy and the make-up of any new governments on an ongoing basis.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. External riskMortgage Availability and AffordabilityGlenveagh 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 and the Board continuously monitor Central Bank of Ireland 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. Our risk categoryRisk or uncertainty and potential impactKey Mitigating ConsiderationsRisk rating changeOperational riskAvailability and increased cost of materials and labourShortages 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.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. Operational riskInadequate Project ManagementInadequate oversight of the cost and delivery of development projects adversely affects expected return on investment.The Group has fixed cost contracts in place with sub-contractors and suppliers where possible. The Group employs highly experienced and qualified commercial and finance teams 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. The Group have implemented a new organisational structure within the Commercial department to correctly structure the department to ensure oversight of all costs as the business matures in line with the business plan.The Group have implemented an integrated ERP system which provides improved commercial reporting, automated payment and sub-contractor accrual functions. The system eliminates manual processes and provides for real time reporting for more accurate decision making at a project, sub project, element and cost object level. Table legend: No change to risk rating Increased risk rating New risk Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
42Glenveagh Properties PLCAnnual Report and Accounts 201943Risk Management ReportBusiness Model & StrategyOur risk categoryRisk or uncertainty and potential impactKey Mitigating ConsiderationsRisk rating changeOperational riskInsufficient health and safety proceduresGlenveagh 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 health, safety 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 delays in responding to changes in health & safety regulations may result in financial and/or other penalties.A dedicated Health & Safety Officer is appointed and in place for every site.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 Grad 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. Operational riskEmployee development and retentionThe 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;• Insufficient transfer of knowledge amongst staff to allow for succession planning; • Demotivated staff; and• 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 has introduced a Graduate Programme across all departments to develop and ensure progression within the business for all 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. Our risk categoryRisk or uncertainty and potential impactKey Mitigating ConsiderationsRisk rating changeOperational & reputational riskData 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's Head of IT leads the Group's initiatives in mitigating the risk of cyber and data security breaches.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. Reputational riskDecline in Product QualityDelivery 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.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 architectsThe Group has an experienced and professional support team in place.The Group has a dedicated customer service after-sales team. Table legend: No change to risk rating Increased risk rating New risk Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
44Glenveagh Properties PLCAnnual Report and Accounts 201945ESG ReportBusiness Model & StrategyIn a market of full employment and skill shortages in the construction industry Glenveagh are acutely focused on attracting and retaining talent. We have developed a competency framework to support the hiring and development of staff and have put in place formalised career paths to attract and retain key talent. Glenveagh has formalised training and CPD programmes to enable employees to achieve their highest potential and contribute to the Group's future success including:• the Glenveagh Graduate Programme with 18 graduate attendees from across the business in 2020;• the introduction of a Leadership Development Programme for senior and middle management; and• internally designed Technical Construction Training Programmes for our site teams.We reward people fairly and have very competitive benefit and reward packages ensuring the commitment and retention of employees. These include health insurance, life assurance, a defined contribution pension scheme and a Save As You Earn share purchase programme allowing employees to share in the success of the Group. We continuously strive towards enhancing our employee value proposition.Glenveagh have a strong gender balance ratio compared to the industry average (Glenveagh 19% female, Industry average 5.5% (CIF Women in Construction Industry Report 2018)). Glenveagh works closely with the Construction Industry Federation (CIF) on initiatives to encourage female participation in the industry. Glenveagh was a sponsor at the CIF’s “International Women's Day Conference" in 2019 and will be again in 2020.At Glenveagh we encourage an inclusive culture, where employees have a voice and feel valued. Glenveagh held Diversity Day in 2019 and provided Diversity and Inclusion Workshops for all managers. We will again be carrying out Diversity and Inclusion training in 2020 and have signed up to the CIF Diversity Charter in 2020. To ensure our employees’ health and wellness in the workplace, each year we put together a wellness calendar which includes a range of health initiatives and programmes that are rolled out throughout the year. This includes mental wellbeing initiatives, health checks and awareness programmes, training to support wellbeing and guest speakers on relevant issues. Glenveagh also provide a 24-hour Employee Assistance Programme service to all employees. ESG ReportIn Glenveagh creating homes safely is at the core of what we do. Our main objective every day is that our employees, sub-contractors, suppliers and all those visiting sites come into work and go home from work safely. Senior management involvement is the cornerstone of health and safety in Glenveagh. Here at Glenveagh we ‘Walk the talk’ and it is senior management being visible on site that sets the standard and lead on safety.At Glenveagh, health and safety training is a continuous process and investing in the competency levels of all staff, particularly site staff, is a key commitment Glenveagh makes to its people. In-house training for staff is provided in:• Manual handling• Abrasive wheels• Working at height• Fire training• Toolbox talks In addition, external training consultants are brought in to provide further training in manual handling and Safe Pass and Plant safety (CSCS). When we identify an area of competency that we need to increase or supplement, staff are provided with the appropriate level of training.Planning is the key to the success of health and safety in Glenveagh and this is best demonstrated through our daily site white board meetings at which a safe plan of action for the day’s activities is agreed.Glenveagh are also investing in technology to assist with our health and safety initiatives. TAG is a biometric time and attendance software that ensures only pre-qualified and competent people are allowed access to sites. The person gaining access to the site has to have their certification and induction up to date and reflected in TAG before the software will allow them access. Additionally, this software allows Glenveagh to de-risk health and safety onsite by controlling who is onsite at any point in time and provides data to be able to assess resources to ensure only people that need to be onsite are provided access. The progress Glenveagh has made and the efforts we have gone to from a health and safety perspective have been recognised in 2019. In our second full year of operations Glenveagh were awarded a “Highly Commended" certificate by the National Irish Safety Organisation at the 28th Annual Occupational Safety Awards 2019. In addition, we were also awarded Safe T-cert grade A in 2019 by the Construction Industry Federation. Being recognised for our health and safety policies and procedures indicates the strong progress we have made in the context of the number of sites we have open. However, Glenveagh recognises the need to constantly strive for the highest standards of health and safety and are focussed on embedding an attitude of ‘we can always do more’ from a health and safety perspective. “ Safety is just massive with Glenveagh. It’s just something that we all adhere to and we’re all tuned into. It’s good onsite but we’re always trying to find a better way of doing things all the time with Glenveagh’s help.” (John Keenan - Director, Keenan Timber Frame)Glenveagh Diversity InformationHeadcountbreakdownFemale65Male277 Headcount siteand office Female Office 54Male Office80Female Site11Male Site197 Average salary Female €48,666Male€63,433 Average Age Female 36Male40People Retaining talent Equal opportunities Diversity and inclusionHealth & Safety Led At the core of what we do NISO - High Commended Award IOSH - T Cert Grade A“ Health and safety is the first item on our Board’s agenda and drives an element of all senior management’s remuneration. We have already achieved various awards for health and safety initiatives. Health and safety will always be to the forefront of the business.” (Stephen Garvey, CEO) As the business has gown since IPO, we have continued to develop our environmental, social and governance (ESG) agenda. Our commitment to the highest standards of corporate governance is detailed in the Governance section of this report and set out below is an update on other areas of priority which demonstrates our focus on building the business in a sustainable and responsible way. Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
47Business Model & StrategyESG ReportCommunity Matters Public Infrastructure Community Initiatives Strong transport links/park and cycleAs part of our commitment to placemaking Glenveagh contributes to and provides public infrastructure as part of our development process. This may include playgrounds, access roads, public amenity areas, or financial contributions towards infrastructure etc. We believe it is both responsible and necessary that public infrastructure is a component of our construction methodology during our placemaking process. Public infrastructure can be very broad in definition allowing us to take a holistic approach to understanding the needs and requirements specific to each and every development with respect to the surrounding environment, public infrastructure, and amenity. As part of this process we engage with public bodies, local communities and local authority policy to ensure we consider all aspects of infrastructure provision, current and future. As part of the placemaking process when considering our development we initiate a significant process of understanding where existing public infrastructure is located (public parks, transport links, retail business, schools, play facilities, etc.). During this process we build in links and permeability to infrastructure nodes while also, if required, providing elements of the infrastructure ourselves if a deficit exists. As part of our sustainable approach and engaging with the community we consider sustainable infrastructure provision as part of our normal development process on every scheme, ie EV charging points, cycle lanes, connection to pubic cycle lanes, walking permeability, etc.The customer is core to our business, be that retail or institutional. At Glenveagh we are committed to constantly evolving to deliver best in class product. The customer is central to our integrated planning and design approach. As part of this approach we consider what our customers' ask is and what their needs are in terms of:• Public and private open space;• Fit and finish; • Layout;• Natural surroundings; and• Leveraging existing infrastructure We deliver best in class after sales service, maintenance plans and meaningful warranties for our clients providing further piece of mind with the sale of our productOur design principles are based on affordability. We are focused not only on designing a residential unit or scheme that complies with regulatory rules but we also consider affordability in the locality in the context of the macroprudential rules. At Glenveagh we are committed to placemaking for our customers. We consider the architecture and bio-diversity of the surrounding environment to ensure we are representing this appropriately in our schemes. Our aim is to ensure our schemes fit in with the natural surrounding environment whilst leveraging public open space and the existing infrastructure.Customer Focused Access to housing Innovative and sustainable design Customer serviceWhite Board Meeting White board meetings are completed on each site at the beginning of every day to agree a safe plan of action for the day's activities. Every supervisor on site must attend these meetings. The objective of the meetings is to identify the hazards and risks associated with each area of work on the site. Examples of the topics discussed include:• Interaction with sub-contractors• Alterations to scaffolding• Safeguarding of excavation and deliveries• Crane setupThe white board sessions are also an opportunity for any other challenges or concerns to be brought forward by supervisors and addressed.“ Every morning on site we would have white board meetings where all trades would come together and discuss what was happening during the day in terms of what each trade is doing. We would all be co-ordinated together to make sure safety is at the top of the list. Everybody would be made aware of what is going on around the site in terms of machinery moving around and what is the highest risk for that day. I think it is very important because once employees are safe and understand what they're doing I think everything works better.” (Alan Cribben - MD, Alan Cribben Electrical Ltd.)Case Study46Glenveagh Properties PLCAnnual Report and Accounts 2019Cluain Adain Navan, Co. Meath Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
Environmental Priorities
NZEB buildings
Energy demand supplied from
renewable energy
Construction waste recycled or reused
Glenveagh are constantly innovating our design,
operations and materials principles to push further beyond
current building regulation to ensure our environmental
agenda is central to all developments in the business.
For example, we are now focused on “beyond-NZEB
(Nearly Zero Energy Building)” standards in the product
we are delivering. The key to us building to this standard
is attention to detail during the design and construction
process and the use of renewable technologies in our
homes, for example heat pumps.
We use heat pumps as standard as a renewable
source of energy production in our homes. This is an
environmentally sustainable form of energy generation
while also offering a convenient system of heating
the home for our consumers. The holistic approach
we take to our overall development process to include
our insulation measures, air tightness detailing and
quality of materials results in our homes deriving their
considerably reduced energy demand solely from a
renewable generator, the heat pump.
Glenveagh understands that we are uniquely positioned
to be a leader in environmental sustainability for the
construction industry in Ireland. To achieve this we
embed in the business greater awareness and training,
accountability and responsibility in our actions and
measuring and reporting of our progress to ensure
sustainable environmental targets are achieved.
Environmental practices being implemented in 2020
including the implementation of ISO 14001 that
specifies requirements for an effective environmental
management system and ISO 45001 related to
Occupational Health and Safety. Carbon reduction
projects including a strategy to move towards electric
vehicle usage within the business, associated mileage
reduction and establishing a baseline for carbon
footprint. In addition, Glenveagh work with accredited
waste recycling services to ensure that our targets for
reduction in landfill and increase in recycling targets
are achieved.
Supply Chain
Sustainable offsite manufacturing
Material certification
Supply payment terms reflect
sub-contractor partnership mentality
Materials suppliers
Glenveagh takes a partnership approach with our
supply chain through emphasising the ability to provide
suppliers with a clear roadmap of annual targets and
multi-phase projects. This gives suppliers the confidence
and line of sight to allow them to scale their business in
a stable and secured way.
To mitigate the effect of restricted credit within the
system we have taken the decision to centrally procure
a large majority of the high value items required for
the construction process such as heat pumps, sanitary
ware, insulation and plasterboard so as minimise the
administration for sub-contractors.
There are many advantages of maintaining a substantial
approved supplier base from ensuring healthy
competition during our procurement process with a
view to minimising cost price inflation to facilitating our
scale and having the ability of opening multiple sites
simultaneously. In addition to ensuring that the best
price is achieved Glenveagh also focuses on ensuring
the suppliers we partner with are only suppliers that are
aligned with our values and our sustainability agenda.
Our substantial approved subcontractor base and
the utilisation of our MEAT (Most Economical
Advantageous Tender) analysis ensures that we
achieve this Utilising our MEAT analysis process we
ensure that we are assessing a range of competencies
of suppliers including:
•
•
•
•
health and safety;
resources and ability to meet program;
product and materials sourcing; and
quality standards
Our ability to bulk buy and enter into long term
agreements has multiple benefits:
•
•
•
•
higher quality material at a very competitive price
ultimately providing a better product for our clients;
ability to accurately control material costs for
the duration of projects by minimising material
inflation;
assist in streamlining operations for our suppliers
by reducing the number of spares they may have to
carry and coordinating deliveries ultimately driving
better value; and
ultimately we can maintain and manage a
sustainable supply chain as we grow.
By centralising our procurement, we get the benefit
of a portfolio focused procurement strategy and
avoid a silo approach from each site. We can ensure
consistency on-site by standardising the products
reducing coordination issues, and streamlining
training requirements. We can coordinate and manage
logistics ensuring just in time deliveries and minimise
our carbon footprint by mitigating against multiple
deliveries. With a view to growing our supplier network
and providing local employment where possible we
work with local suppliers.
“ They are very competent at
what they do. They adopt a very
professional attitude and we enjoy a
close working partnership with, their
procurement team and site personnel.
When we have that knowledge of
the 20 sites and more to come it
allows us to also achieve economies
of scale so that we can deliver cost
savings. When you’re dealing with
one procurement team you build
close working relationships, and an
understanding of each others work
practices, requirements and style.”
(Rory O’Hanlon – MD, Davies Ltd, Grafton Group)
Bellingsmore
Kilmartin, Co. Dublin
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Glenveagh Properties PLC
Annual Report and Accounts 2019
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ESG Report
49
Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
Taylor Hill
Balbriggan, Co. Dublin
Case Study
Our Subcontractor Partners
Our multi phase approach to projects gives
sub-contractors the confidence to scale their business
as they have line of sight of our annual targets and
deliveries. Our centralised procurement approach
reduces the credit risk and provides security to
subcontractors to plan and grow their own businesses.
Knowing that Glenveagh has the ability to pay, and
pay on time, gives our subcontractors the security to
plan and grow their own businesses. This mitigates
against subcontractors requiring expensive sources
of finance like invoice discounting and helps to ensure
that our partners not only meet but exceed our
requirements including Health, Safety, Environment,
Program, and Quality.
Our subcontractors now understand the Glenveagh
Way. These are our standardised processes and
procedures that we utilise across our sites including:
•
•
•
•
site set up;
health safety and environmental requirements;
procurement and valuations processes; and
logistics planning and coordination meetings.
By ensuring consistency across our sites our
expectations and requirements are clearly set out and
our required standards achieved.
By utilising our value proposition we have and
continue to attract a significant number of competent
sub contractors. In the period from October 2018 to
December 2019 alone we have been able to add 191
partners to our tendering process.
“ When I first started in 2014 it was myself and another engineer so working
with Glenveagh the last couple of years has allowed me to grow, has allowed
me to employee people. When I’m planning with Glenveagh, I’m planning not
just for this year, but next year and the following year and a lot of the projects
I would be working on would be three year programmes because there are
only so many houses you can deliver in a year on a particular site. So for me
there’s safety when I’m talking about employing somebody I say here’s the
project and this is a three year project so if you stay with me I know we’re ok
for the next couple of years from a financial point of view.”
(Paul McGrail – Director, Paul McGrail Consultant Engineers)
Our Subcontractors want to work for Glenveagh
New Subcontractor
Additions
Top Packages
on Site
191 newly approved
subcontractors
since October 2018
230
180
130
80
30
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Infrastructure
Sub-structure
Super-structure
Timber-frame
Mechanical
Electrical
Commentary
Increasing number
of subcontractors
available for each
package offered
Track record now
established by high
performing cohort
No single contractor
reliance
Flight of contractors to Glenveagh makes new site openings easier and reduces CPI
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ESG Report
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Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
Marina Village
Greystones, Co. Wicklow
Governance
y
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For more on
customer testimonial
See page 27
“
We looked around at
quite a number of places,
different developments
and different sized houses
and we just kept coming
back to this because of
the quality of build.”
Shay and Thelma Kearney
(Customers at Cois Glaisin)
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Annual Report and Accounts 2019
Glenveagh Homes
53
Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
54Glenveagh Properties PLCAnnual Report and Accounts 201955GovernanceCorporate Governance Report GovernanceEarly in 2019, we announced that Caleb Kramer had informed the Board of his intention to retire as a Non-Executive Director and confirmed that he would not seek re-election at the AGM. Mr Kramer had been appointed to the Board at IPO pursuant to the relationship agreement then in place between the Group and Oaktree Capital Management. The Remuneration and Nomination Committee commenced the process, assisted by the engagement of independent executive search firm Korn Ferry, to identify and select suitable candidates with the stated intention of appointing at least one new independent Non-Executive Director during the year. Following a considered appointment process, we were delighted to welcome Pat McCann and Cara Ryan to the Board in September 2019.We later announced the appointment of an additional Executive Director to the Board, our Chief Financial Officer Michael Rice. Michael has been engaged as the Group’s Chief Financial Officer since IPO in October 2017 and has responsibility for the Group’s finance, commercial, treasury and IT functions. He has proved to be a valuable addition to the Board since his appointment in November 2019. One of my responsibilities as your Chairman is to ensure that the Board is performing effectively. There are now eight members of the Board, including myself, and we are comprised of three executives and five independent non-executives. Each member contributes a combination of skills, experience and knowledge to the Board and provides constructive challenge, strategic guidance and specialist advice to management. The positive impact of the addition of new members to the Board in 2019 and the increased effectiveness of the updated structure and composition of the Board were reflected in the results of our second annual self-evaluation. Further detail in relation to the review process and outcomes can be found at page 60.The Board is grateful for the support of our shareholders and we will continue to engage regularly with you to ensure that we understand your views on governance and performance against strategy. We particularly appreciate the feedback received from a number of our large shareholders during the Remuneration and Nomination Committee’s consultation on remuneration policy and plans for 2020, which is set out in more detail in the Committee's report on pages 68 to 85, and the strong turnout from shareholders at our first Investor Day held in January 2020.Together with my colleagues on the Board, I am looking forward to the continued growth of our business in 2020 and I would like to thank all of our colleagues across the Group for their contribution to the significant progress made in 2019. John MulcahyChairman John Mulcahy ChairmanThe Board remains committed to ensuring that Glenveagh meets the highest standards of corporate governance. We have closely monitored the developments in corporate governance following the publication of the new 2018 UK Corporate Governance Code (the “Code”) and we have given detailed consideration to the adjustments that were required within our governance structures to meet the changes introduced by the Code from 1 January 2019. In this Corporate Governance Report we describe how we have applied the principles and provisions of the Code and the Irish Corporate Governance Annex (‘the Annex”) which underpin the corporate governance framework for listed companies and, in line with its ‘comply or explain’ model, we detail any departures from its provisions. The Board recognises that, in addition to its own activities, the work of the Board committees is central to ensuring the robustness of the Group’s corporate governance framework. Our Board committees have continued to work effectively during the year and reports from the Audit and Risk Committee and the Remuneration and Nomination Committee are set out at pages 62-67 and 68-85 respectively, providing details of each committee’s membership and activities during the year. As previously announced, there were a number of changes to the executive leadership of the Group and to the membership of the Board during the course of 2019. Justin Bickle stepped down from his role as Chief Executive Officer of the Group and resigned from the Board in August 2019. Justin was succeeded as Chief Executive Officer by Stephen Garvey, previously the Chief Operating Officer and a Co-Founder of the Group. Justin and Stephen worked closely with the Board and the Group’s senior management team in the following months to ensure a smooth transition. Introduction from the ChairmanDear Shareholders,I am pleased to present the Corporate Governance Report for 2019, our second full year of operations at Glenveagh.The Board remains committed to ensuring that Glenveagh meets the highest standards of corporate governance. Proby PlaceBlackrock, Dublin Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
Corporate
Governance
Report
The Corporate Governance Report, in conjunction with the Audit and Risk Committee Report and the Remuneration
and Nomination Committee Report, describes how the Group has applied the principles and followed the provisions of
the new 2018 UK Corporate Governance Code (the “Code”) and the Irish Corporate Governance Annex (“the Annex”)
and details any departures by the Group from the specific provisions of the Code and the Annex. The full text of the
Code and the Annex can be obtained from the following websites respectively:
www.frc.org.uk
www.euronext.com
Glenveagh
Properties plc
Board
Executive
Committee
Audit & Risk
Committee
Remuneration
& Nomination
Committee
Board Leadership
and Purpose
Purpose & Culture
The Group’s overarching purpose is the provision
of access to high quality, energy efficient homes in
flourishing communities across Ireland.
The Group has positioned itself as ‘Home of the New’
in Irish residential development, not only in how it builds
energy-efficient, high quality homes but in how it selects
land and partners, how it plans on land, how it fosters
and embeds relationships with communities and how it
utilises technology to innovate in delivery.
The Group has a clear vision to create the leading and
most sustainable homebuilding platform in Ireland and
it recognises and reinforces the pivotal role played by its
people in achieving its aims. To this end, the Group has
developed a culture that is safety-led, customer-centred,
collaborative and innovative.
The Board is committed to ensuring the continued
alignment of the Group’s strategic decisions with
its purpose and culture, through both the setting of
non-financial KPIs in Health and Safety and Customer
Satisfaction and through its regular assessment of policies
and practices across the business. The Board supports
and encourages two-way communication with the
workforce and has established formal channels for the
workforce to raise any matters of concern directly.
Role of the Board
The Board is responsible for setting and guiding the
strategic direction of the Group, understanding the key
risks faced by the Group, determining the risk appetite
of the Group and ensuring that a robust internal
control environment and risk management framework
is in place. The Board has overall responsibility
for the management of the Group’s activities and
is accountable to shareholders for creating and
sustaining shareholder value and for the long-term
success of the Group.
There is a clear division of responsibilities within the
Group between the Board and executive management.
Responsibility for day-to-day running of the Group’s
operations is delegated by the Board to the Executive
Committee, with the Board reserving to itself a formal
schedule of matters over which it retains control. To
assist in discharging its responsibilities, the Board
has established an Audit and Risk Committee and a
Remuneration and Nomination Committee. The terms
of reference for each of the Board Committees and
the schedule of matters reserved for the Board are
reviewed on an annual basis and made available on
the Group’s website.
Engagement with Shareholders
The Board recognises the importance of effective
engagement with, and active participation from,
its shareholders and is committed to building and
maintaining successful shareholder relationships through
regular and transparent communication.
This commitment is formalised through the Group’s
comprehensive investor relations program. In addition
to the detailed presentations and roadshows conducted
after the announcement of interim and full-year results,
the Chief Executive Officer, Chief Financial Officer
and the Director of IR & Strategy regularly meet with
institutional investors and analysts throughout the year
and participate in a number of industry conferences.
In addition, the Chairman and Senior Independent
Director are also available to meet with shareholders on
request, should they have any issues or concerns that
cannot be resolved through the usual IR channels.
The views of shareholders are communicated to the
Board through the Executive Directors and they receive
monthly updates on institutional shareholder meetings,
broker reporting and general market commentary from
the Director of IR & Strategy, all of which assists the
Board in understanding and taking account of the view
of shareholders.
Annual General Meeting
The Annual General Meeting gives shareholders an
opportunity to hear a presentation on the Group’s
activities and performance during the year, to ask
questions of the Chairman and, through him, the Board
Committee Chairmen and members, and to vote on
each resolution put to the meeting.
The AGM also provides the Board with a valuable
opportunity to communicate with private investors and
Glenveagh encourages all shareholders to attend the
meeting each year and to put forward any questions
that they may have to the Directors at the conclusion of
the formal business of the meeting.
The AGM will be held on 19 May 2020 at Herbert Park
Hotel, Ballsbridge, Dublin 4.
Workforce Engagement
The Board is committed to meeting its responsibilities
to all stakeholders in the business and places
significant value on the maintenance of successful
relationships with the Group’s workforce, suppliers,
customers and the communities in which it operates.
Following the introduction of the new Code, the Board
gave detailed consideration to its existing stakeholder
engagement structures and identified key actions to
further develop meaningful, two-way dialogue with the
Group’s workforce.
During 2019, the Board assessed and reviewed the
engagement activities already taking place within the
business through the externally facilitated Great Place
to Work Trust Index Employee Survey and Culture Audit.
Following careful consideration, the Board elected to
designate a Non-Executive Director as responsible for
gathering the views of the workforce, noting that the
existing workforce-led Great Place to Work employee
committee would provide a complementary mechanism
through which the new Workforce Engagement Director
would effectively engage with the workforce.
Following her appointment as Workforce Engagement
Director, Cara Ryan worked with the Company
Secretary and the Head of HR to develop a method
for connecting the pre-existing Great Place to Work
Committee’s engagement activity with decision-
making in the boardroom. The employee-led Great
Place to Work Committee is composed of workforce
representatives from across the Group’s office locations
and sites and it meets on a regular basis throughout
each calendar year to review the results of the annual
Great Place to Work survey and develop proposals to
management to address key themes arising from the
survey. As Workforce Engagement Director, Cara Ryan
meets with the Great Place to Work Committee at key
intervals in the Group’s workforce engagement calendar
and delivers succinct and accurate feedback both up-to
and back-from the Board.
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The Board recognises the importance of communication
and ‘reporting back’ to the workforce, to demonstrate
that it has listened to and acted upon feedback, and
the Board is committed to continuing to build upon its
engagement activities and strengthen its relationship
with the workforce over the course of 2020.
Conflicts of Interest
The Board considers potential conflicts of interest as a
standing agenda item at each meeting and a Conflicts of
Interest Register is maintained by the Company Secretary,
setting out any conflicts of interest which a Director has
disclosed to the Board in line with their statutory duty.
The Group has established a comprehensive Conflict of
Interest Policy and, in line with that policy, each Director
reviews the Conflict of Interest Register and provides an
updated declaration of interests form to the Company
Secretary on an annual basis.
Division of
Responsibilities
Chairman and Chief Executive Officer
The roles of the Chairman and the Chief Executive
Officer are clearly segregated and the division of
responsibilities between them is set out in writing and
reviewed by the Board on an annual basis.
The Chairman, John Mulcahy, 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 that the Board members receive accurate and
timely information, enabling them to play a full and
constructive role in the development and determination
of the Company’s strategy. He is responsible for creating
an environment which encourages open dialogue and
constructive challenge, and he ensures that there is
effective communication with the shareholders.
The Chief Executive Officer, Stephen Garvey, is
accountable to and reports to the Board and is
responsible for running the Group’s business. He is
charged with the execution of agreed strategy and
implementation of the decisions of the Board, with
a view to creating value for shareholders and the
wider stakeholder base. The Chief Executive Officer is
ultimately responsible for all day-to-day management
decisions, acting as a direct liaison between the Board
and management and communicating to the Board on
behalf of the Group’s external stakeholders.
Senior Independent Director
Lady Barbara Judge is the Senior Independent Director
of the Group. She is available to shareholders who
have concerns that cannot be addressed through the
Chairman or Chief Executive Officer and will attend
meetings with major shareholders as necessary. The
Senior Independent Director acts as a sounding board for
the Chairman and serves as an intermediary for the other
Directors as necessary. She is also responsible for leading
the annual performance review of the Chairman.
Non-Executive Directors
Of the eight Board members, five are independent Non-
Executive Directors. The Group’s Non-Executive Directors
have a key role in the appointment and removal
of Executive Directors, and the assessment of their
performance. The Non-Executive Directors constructively
challenge and debate management proposals and
hold to account the performance of management and
of individual Executive Directors against the agreed
performance objectives.
The Non-Executive Directors have direct access to the
senior management team within the Group and contact
with the business is encouraged by the Board and
assists the Non-Executive Directors in constructively
challenging management and offering advice and
guidance on strategic decisions.
Company Secretary
The Company Secretary, Chloe McCarthy, supports the
Chairman and the Chief Executive Officer in fulfilling
their duties and is available to all Directors for advice
and support. She is responsible for ensuring compliance
with Board procedures and for the Group’s commitment
to best practice in corporate governance. The Company
Secretary is also responsible for ensuring compliance
with the Group’s legal and regulatory requirements.
Independence
Provision 9 of the Code prescribes that the Chairman
should be independent on appointment. The Board is of
the collective belief that John Mulcahy’s ongoing role as
Executive Chairman enables him to bring his extensive
knowledge and experience of the Irish residential
housing market to his leadership of the Board. The
Board continues to believe that John’s commitment and
contribution as Executive Chairman is essential to the
effective leadership of the Board and the Group as
it implements its ambitious growth strategy following
admission to trading in October 2017.
Given the Board’s unanimous decision to appoint
an Executive Chairman, and its collective preference
for John Mulcahy to continue in his role, the Senior
Independent Director remains willing and available to
assume additional responsibilities, as required. There
also continues to be a clear division of responsibilities
between the Chairman and the CEO. As such, the
Board remains satisfied that no one individual or group
has dominated its decision making and that there has
been sufficient challenge of executive management in
meetings of the Board.
The independence of each of the Non-Executive
Directors is considered on appointment, and on an
annual basis by the Board. The Board has reviewed
the independence of all Non-Executive Directors and
determined that they continue to be independent within
the provisions of the Code.
The Board gave detailed consideration to the
independence of Robert Dix and Pat McCann, given
that Robert Dix is currently a Non-Executive Director
of Dalata Hotel Group plc where Pat McCann serves
as Chief Executive, and both currently act as Non-
Executive Directors at The Quinn Property Group. The
Board was aware of this relationship on appointing
Pat McCann to the Board in 2019 and concluded
that his experience, knowledge and skills in leading
and growing a company post-IPO would be of
immeasurable value to the Board and in the best
interests of the Group and its shareholders.
The Board is satisfied that Robert Dix and Pat McCann
have demonstrated objectivity and autonomy in both
character and judgement, irrespective of their pre-
existing relationship, and will continue to act objectively
and in the best interests of the Group.
Board Meeting Attendance
The Board convenes with sufficient frequency to ensure
the effective discharge of its duties during the year.
In 2019, the Board held seven formal Board meetings
with one additional full-day session covering strategy
and training.
The table below provides details of the attendance
record for all Board meetings held in 2019.
Meetings
Attended
Attendance
Record
Meetings
held
while a
Director
John Mulcahy
Stephen Garvey
Lady Barbara Judge
Richard Cherry
Robert Dix
Cara Ryan
Pat McCann
Michael Rice
7
7
7
7
7
2
2
1
7
7
7
7
7
2
2
1
100%
100%
100%
100%
100%
100%
100%
100%
Directors are expected to attend all meetings of the
Board and of the Committees on which they serve,
and the Annual General Meeting.
Time Commitment
The time commitment required of Directors is considered
on appointment, and on an annual basis by the Board.
All Directors are expected to allocate sufficient time to
discharge their duties effectively and confirm this as part
of the annual Board evaluation each year.
Each year, the schedule of regular meetings to be held
in the following calendar year is agreed with each of the
Directors. If a Director is unable to attend a scheduled
meeting, they are encouraged to communicate their
views on the relevant agenda items in advance to the
Chairman or the Company Secretary for noting at the
Board meeting.
Supplementary to its formal meetings, the Board
encourages its Non-Executive Directors to communicate
directly with both the Executive Directors and the senior
management team.
Composition, Succession
and Evaluation
Board Composition
There were a number of changes to the membership of
the Board in 2019, including the resignations of Justin
Bickle and Caleb Kramer and the appointments of Pat
McCann, Cara Ryan and Michael Rice.
The Board is now comprised of eight Directors: three
Executive Directors, including the Executive Chairman,
and five independent Non-Executive Directors. During the
annual Board evaluation process, the Board reviewed
the overall balance of skill, experience, knowledge and
independence of the Board and its Committees. The
Board is satisfied that it is of an appropriate size for
the requirements of the business and that the current
composition provides a suitable balance of skills and
experience across a number of industry sectors including
construction, property development, capital markets, legal
and financial services, which equip the Board members in
effectively discharging their duties to the Group and
its shareholders.
The Board is satisfied that the balance of Executive
and Non-Executive Directors is suitable to facilitate
constructive and effective challenge and debate.
Biographies of the Directors are set out on pages
86 to 88.
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Appointments to the Board
The Remuneration and Nomination Committee is
responsible for leading the process for new director
appointments and has established a formal, rigorous
and transparent procedure for the selection and
nomination of candidates to the Board.
All members of the Remuneration and Nomination
Committee are independent Non-Executive Directors
and the details of its nomination activities in 2019 are
set out in the Committee Chairman’s report at pages
68 to 85.
The Non-Executive Directors are appointed for a term
of three years, with no right to re-nomination by the
Board either annually or after the conclusion of the
three-year period. The terms of their engagement with
the Company as Directors are set out in formal letters
of appointment.
The Executive Directors have service agreements with
the Company, which provide for notice periods of six
months. Full details of the remuneration of the Directors
can be found at page 81.
All Directors will submit themselves for re-election at
the 2020 AGM.
Board Diversity
The Board has adopted a Board Diversity Policy,
intended to assist the Board, through the Remuneration
and Nomination Committee, in achieving optimum
Board and Committee composition.
The Board recognises the clear benefits of a diverse
Board including with regard to diversity of experience,
skills, background and gender and agrees that these
differences should be considered in determining the
optimum composition of the Board.
While all Board appointments are made on merit
and with regard to the skills and experience that the
Board requires to be effective, it is the Group's policy
to develop over time the diversity of its Board without
compromising the calibre of new directors.
The Remuneration and Nomination Committee review
the Board Diversity Policy annually, including assessing
its effectiveness and will discuss any revisions that may
be required, recommending any such revisions to the
Board for approval.
Following changes to Board composition in 2019,
female representation on the Board increased to 25%.
Female employees accounted for 25% of the senior
management, as defined by the Code, and 11% of senior
management direct reports. Further details on diversity
within the Group can be found on page 44 .
Directors’ Induction, Training
and Development
The Group has established a formal induction process
for new Non-Executive Directors, providing them with
a comprehensive understanding of their role and
responsibilities as Directors, the business of the Group and
the operations of the Board and allowing for the efficient
and effective integration of new Board members.
The induction of Non-Executive Directors is overseen
by the Chairman with the assistance of the Company
Secretary and includes meetings with respective
management teams in each of the Group’s business
lines and site tours of live construction projects. Newly
appointed Directors have access to the Company
Secretary’s assistance and guidance around the
workings of the Board, in addition to the experience
gained with attendance at regular meetings.
The Group is committed to the ongoing development of
the Board and all Directors receive regular updates on
the Group’s projects and activities and are encouraged
to attend site tours facilitated by the Executive Directors.
Directors also receive updates from the Company
Secretary on legal and regulatory changes.
In 2019 the Board held a full-day group strategy and
training session, designed to address topics of strategic
importance to the Group. Presenters on the day included
external advisors from the Group’s broker and corporate
law firm as well as the internal heads of department for
Construction, Sales and Land Acquisition.
Board Evaluation
The performance and effectiveness of the Board and
its Committees is reviewed on an ongoing basis and
is subject to a formal and rigorous evaluation on an
annual basis.
The annual review process for 2019 was conducted
internally and followed the approach and findings of
the previous year’s review. Led by the Chairman and the
Company Secretary, the annual review was conducted
by way of a comprehensive questionnaire developed
specifically for the Board and carefully structured and
designed to enable the Directors to identify any areas
for potential improvement in the processes of the Board
and its Committees.
The evaluation process began with the issue of
questionnaires to Directors for their consideration
and comment, with appropriate time provided for
completion. All Directors were also asked to complete a
self-evaluation questionnaire. Following the completion
of questionnaires, the Chairman met with Directors on a
one-on-one basis, inviting them to evaluate and comment
on the operation of the Board and its committees. The
Chairman and Company Secretary then met to discuss
the results of the evaluation process and a report was
submitted to the Board setting out the principal issues
raised and proposing appropriate actions for 2020.
As part of the annual Board evaluation process, the
independent Non-Executive Directors met with Lady
Barbara Judge as Senior Independent Director to review
the performance of the Chairman during the year. Lady
Judge later met with the Chairman to communicate
the feedback from that meeting and she formally
reported to the Board on the outcome of the Chairman’s
performance evaluation.
Having considered the results of the 2019 Board
evaluation in their totality, the Directors are satisfied
with the effectiveness of the Board and its Committees,
and with the performance and contribution of the
Chairman and the individual Directors.
The key elements of the Group’s system of internal
controls are as follows:
• A clearly defined organisation structure and lines
of authority;
• Group policies for financial reporting, treasury
management, tax, risk management, information
technology and security and site acquisition
and investment;
• Approval of annual budgets and strategic business
plans by the Board, with performance against
budgets and forecasts monitored and reported back
to the Board on a regular basis;
The Board will conduct its first externally facilitated
annual review process for the year ending
31 December 2020.
• An Audit & Risk Committee comprised of
independent Non-Executive Directors; and
Audit, Risk and
Internal Control
Audit and Risk Committee
The Board has established an Audit and Risk Committee
comprised entirely of independent Non-Executive
Directors.
The Audit and Risk Committee is responsible for
monitoring the integrity of the Group’s financial
reporting and the effective application of the Group’s
internal controls and risk management procedures.
The Board is satisfied that the combined qualification
and experience of the individual members provides the
Committee with the financial and risk management
expertise necessary to discharge its responsibilities.
A detailed overview of the key roles and responsibilities
of the Audit and Risk Committee and the work of the
Committee in discharging its responsibilities during
2019 is set out in the Committee Chairman’s report on
pages 62 to 67.
Internal Control and Risk Management
The Board recognises its ultimate responsibility for
establishing and maintaining Group procedures to
manage risk, oversee the internal control framework and
determine the nature and extent of the principal and
emerging risks that the Group is willing to take in order
to achieve its long-term objectives.
The Board confirms that a robust process for identifying,
evaluating and managing significant risks has been
in place for the financial year and up to the date of
approval of the Annual Report and financial statements.
Details of the annual assessment of the principal
risks facing the Group are set out in the Group's Risk
Management Report on pages 36 to 43.
• An independent internal audit function reporting
directly to the Audit and Risk Committee.
The preparation and issue of financial reports is
managed by the Group Finance Department in
accordance with Group accounting policies and
reporting systems, and under the direction of the Chief
Financial Officer. The interim and preliminary results
and the Annual Report and financial statements of the
Group are reviewed by the Audit and Risk Committee
and recommended for approval to the Board.
Remuneration
Remuneration and
Nomination Committee
The Board has established a Remuneration and
Nomination Committee comprised entirely of
independent Non-Executive Directors.
The Remuneration and Nomination Committee has
been delegated responsibility for determining Group
policy on executive remuneration and for setting
remuneration for the Chairman, Executive Directors and
senior management.
A detailed description of the work undertaken by
the Remuneration and Nomination Committee in
its assessment, development and application of the
Group’s executive remuneration policy is set out in the
Committee's Report on pages 68 to 85.
Non-Executive Director Remuneration
The remuneration of Non-Executive Directors is set on
appointment by the Board, on advice from independent
professional advisors, and is reflective of the time
commitment and responsibilities of their role.
The full details of fees paid to Non-Executive Directors is
set out on page 79.
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Robert Dix
Chairman
Audit and Risk Committee
Audit and
Risk Committee
Report
On behalf of the
Committee, I am pleased
to present the Audit and
Risk Committee Report
for the financial year
ended 31 December 2019.
The Company has had a significant year of growth and
the Committee has continued to focus its efforts on
assisting the Board by proactively managing its core
areas of responsibility. This activity has been outlined
in detail on page 64 and is summarised below.
In December, the Committee sought a presentation
from management on the successful ERP system
implementation during Q4 and a wider IT update to
satisfy the Committee that IT controls and security
remains effective within the Group.
With regard to the half year and year end financial
statements, the Committee is particularly focused on
the areas of the financial statements with which a high
degree of judgement and estimation uncertainty is
associated. The primary area of judgement reviewed
by the Committee is the carrying value of inventory and
profit recognition. The issue considered and activities
undertaken by the Committee are outlined on page
65. The underlying valuation models for inventory are
thoroughly scrutinised by the external auditors with
no disagreement in judgements used by the Company
being reported.
In March, the Committee reviewed the Director’s
statements on compliance, viability and going concern
from the 2018 Annual Report prior to recommending
approval of these to the Board. This review was revisited
as part of the approval of the condensed consolidated
interim financial statements in August.
The risk register and the principal risks and uncertainties
faced by the Group outlined in the Risk Management
Report are a standing agenda point on all Committee
meetings. Discussions are focused on emerging risk
areas and existing risks where the risk rating has
increased or decreased significantly.
In June, the Committee received a comprehensive
presentation from the Group insurance broker on the
Group insurance programme to satisfy the Committee
that the insurance policies in place remained appropriate
in the context of our current growth and future objectives.
As part of the June and December meetings the
Committee received presentations from and reviewed
the findings of internal audit in relation their reviews
of Project Management, IT security and change
management and Health and Safety.
I am pleased to conclude that the Audit and Risk
Committee has met its obligations for 2019 and is
looking forward to further developing the Group's
risk management framework to respond to the
opportunities and challenges that 2020 will bring
as the Group continues to deliver on its strategic
objectives and 5 year plan.
Robert Dix
Chairman
Audit and Risk Committee
Roles and
Responsibilities
The Audit and Risk Committee’s Terms of Reference, are
available on the Group’s website. The Terms of Reference
are 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 Group’s relationship with the
external auditor.
These responsibilities are intended to be performed
in conjunction with the management team, Executive
Committee and internal/external auditors.
The key function of the Committee is oversight of the
Group’s internal control and risk management systems.
This involves the following responsibilities:
• Monitor the integrity of the financial statements of
the Company, including its interim management
statements, annual and half-yearly reports, and
any other formal announcement relating to its
financial performance reviewing and reporting to
the Board on significant financial reporting issues
and judgements which they contain having regard
to matters communicated to it by the auditor
Review the content of the annual report and accounts
and advise the Board on whether, taken as a whole, it
is fair, balanced and understandable and provides the
information necessary for shareholders to assess the
company’s performance, business model and strategy
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
•
•
Advise the Board on the Group’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 Group’s risk management process
• Other responsibilities of the Audit and Risk
Committee are set out in detail its Terms of
Reference which are available on the Group’s
website and are noted below.
(i)
Integrity of the Financial Statements and
Announcements
(ii) Compliance, Bribery, Conflicts of interest,
Whistleblowing and Fraud
(iii) Internal Audit
(iv) External Audit
(v) Committee Effectiveness
Audit and Risk
Committee Composition
During 2019, the Audit and Risk Committee comprised
three independent non-executive Directors; Robert Dix
(Chairman), Richard Cherry and Lady Barbara Judge.
The biographies of these Directors can be found on
pages 86 to 88.
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.
Meetings
The Audit and Risk Committee have met on four
occasions during the financial year and there was full
attendance by all Committee members. The attendance
of Committee members is detailed in the table below.
On occasion, special attendees were invited to attend all
or part of Committee meetings as deemed appropriate
and necessary by the Committee Chairman.
Review the principal risks identified in the annual
report and the statements on the Group’s internal
controls and risk management framework
The Committee meet with the internal and external
auditor without other executive management being
present, on an annual basis in order to discuss any
issues which may have arisen during the financial year.
Review and approve the risk management policy, the
Group’s risk register and appetite statement, prior to
submission to the Board for its approval
•
•
•
•
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Committee
Member
Robert Dix
Richard Cherry
Lady Barbara Judge
In
Attendance
Committee
member as of
4/4
4/4
4/4
2017
2017
2017
Activities
2019 has been a year of significant growth and
development for the Group. The Group’s risk profile
continues to evolve as it works towards achieving its
strategic objectives and executing on its 5-year plan.
To respond and mitigate against risks as they emerge
or evolve, the Group implements a risk management
approach that is dynamic rather than static in nature.
Further detail in relation to the Group’s approach to
risk management is set out on pages 36 to 43. The
Group continues to embed risk management across
all levels and departments of the Group through a
top down approach with the tone being set by the
Committee, Board and senior management. Set out
below is a summary of the Committee’s activity during
the financial year.
Activity in 2019
Topic
Description of activity
Financial Reporting
The Committee assessed whether suitable accounting policies had been adopted in the
preparation of the results for the relevant 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 below). The Committee also considered the view expressed by the
external auditor, KPMG, in making these assessments.
During the financial year, the Committee reviewed and recommended the Group’s 2018
Annual Report and the financial statements for the half year ended 30 June 2019 to the
Board for approval.
The Committee considered the requirements of the Irish Companies Act 2014 in relation
to the Directors’ Compliance Statement and is satisfied that appropriate steps were
taken to ensure compliance by the Group with these requirements. The Committee also
considered the Group’s adoption of the going concern basis of preparation and its
viability statement prior to recommending both for approval by the Board.
Risk Management
In respect of the 2019 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 received a presentation from the Group's insurance broker on the
Group insurance programme to satisfy the Committee that the insurance policies in
place remained appropriate in the context of our current growth and future objectives.
The Committee also sought a presentation from management on the successful ERP
system implementation during Q4 and a wider IT update to satisfy itself that IT controls
and security remain strong within the Group.
Internal Audit
The Committee met representatives from the outsourced internal audit function
(Deloitte) throughout the financial year and reviewed reports, findings and
recommendations arising from the audits conducted.
The Committee also approved the planned programme of work for 2020.
External Audit
The Committee met representatives from the external auditor throughout the financial
year both with and without management present.
During 2019, the Committee reviewed KPMG’s reports on the 2018 audit and their
interim review for the six months ended 30 June 2019. It also reviewed and approved
KPMG’s audit plan in respect of the audit for the year ended 31 December 2019.
Fair, Balanced and Understandable
The Board is responsible for the approval of the Annual
Report and financial statements. The Board is required
to confirm that:
•
•
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 Group’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 financial year met these requirements. To satisfy this
responsibility the Committee considered the following:
•
•
•
the timetable, communications and co-ordinated
approach to the preparation of the Annual Report
and financial statements by senior management;
the systematic and timely approach to review
and sign off with a focus on transparency and
understandability by senior management;
the detailed presentation of the Annual Report
and financial statements to the Committee
by senior management outlining the process
undertaken to ensure the report is fair, balanced
and understandable;
•
•
timely submission of the draft Annual Report and
financial statements to the Committee to facilitate
adequate review and discussion prior to approval
by the Committee; and
the presentation by KPMG on their audit process
and conclusions reached on the Annual Report and
financial statements.
Having considered the above, the Committee confirmed
to the Board that the Annual Report and financial
statements taken as a whole, is fair, balanced and
understandable and provided the information necessary
for shareholders to assess the Group’s and the
Company’s financial position, performance, business
model and strategy.
Financial Reporting
The primary issue considered by the Audit and Risk
Committee in relation to the financial statements for the
financial year ended 31 December 2019 was the Group’s
assessment of the carrying value of inventory at the
reporting date and profit recognised on completed units
during the year.
Significant Issue Considered
Committee Activity
Carrying value of inventory and profit recognition
The carrying value of the Group’s inventory was
€840.5m at 31 December 2019 which comprises the cost
of development land and development rights acquired,
and the costs of the work completed thereon to date.
Inventory is required to be carried at the lower of cost
and net realisable value.
At financial year 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 which
are also the key determinants of profit recognition as
sales complete. The exercise indicated no evidence of
impairment and therefore no adjustment to the carrying
value was required at 31 December 2019.
Management presented a summary of its review to the
Committee which included information in relation to the
cross functional approach taken to the net realisable
value calculations, its policy for profit recognition
on completed units as well as the review process
undertaken by senior management. Management’s
presentation included a summary of the results of the
review for each development site with key assumptions
highlighted for discussion.
The Committee considered the financial year end
approach to the inventory carrying value review and
discussed same with management. It also considered
the external auditor’s findings in respect of the carrying
value review which supported management’s assertion
that no impairment was required.
Based on the results of the process undertaken by
management, the Committee was satisfied with the
carrying value of inventory at year end and the profit
recognised in the consolidated statement of profit or
loss on units closed in 2019.
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Internal Audit
The Committee is responsible for the scope and
operation of the internal audit function. The Committee
approves and monitors the planned work of internal
audit considering any identified ineffective controls and
findings. The Committee places a particular focus on
control weaknesses and the remediation plans put in
place by management.
The Committee met representatives from the
outsourced internal audit function (Deloitte) on four
occasions during the financial year and considered
the reports from the internal audit function on their
reviews of project management, IT security and change
management and Health and Safety. The Committee
has also approved the planned programme of work
for 2020.
External Auditor
KPMG is the 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 external auditor. KPMG attended each of the
Committee meetings in 2019.
During the year, the Committee was informed of lead
audit partner Ruaidhri Gibbons’s intention to step down
following the completion of the 2019 half year review,
to be replaced by Michael Gibbons. This transition took
place in Q3 ahead of the year end audit.
Audit effectiveness
The effectiveness of the external audit process is
assessed by the Audit and Risk Committee, which
meets regularly throughout the financial year with the
audit partners. 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 considered
senior management’s satisfaction with KPMG. The
Committee also meets regularly with KPMG without the
presence of management.
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
external auditor are not, or are not perceived to be, in
conflict with auditor independence. Analysis of fees paid
or payable at in respect of services provided by KPMG
in the financial year are analysed in the table below:
Audit fees
Non-audit fees
Interim review fees
Tax services fees
Total
€ ‘000
120
15
50
185
At the end of the financial year, non-audit fees paid to
KPMG represented 54% of total audit fees.
It is the Group’s practice to engage KPMG on
assignments in addition to their statutory audit duties
where their expertise and experience with the Group
are important. KPMG provided certain tax services in
the financial year which were 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 Group 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 Group
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 considering any
relevant ethical guidance on the matter.
Barnhall Meadows
Leixlip, Co. Kildare
The effectiveness of the external
audit process is assessed by
the Audit and Risk Committee,
which meets regularly throughout
the financial year with the
audit partners.
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Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
Richard Cherry
Chairman,
Remuneration and Nomination Committee
Remuneration
& Nomination
Committee
Report
Dear Shareholder,
I am pleased to present
the Remuneration
and Nomination
Committee report for
the financial year ended
31 December 2019 which
provides a summary
of the activities of the
Committee during the
financial year.
2019 was a year of significant change at Board level
for Glenveagh. The Committee’s work during the year
included agreeing the appropriate remuneration
package for Stephen Garvey in his new role as Chief
Executive Officer and the resignation arrangements
for his predecessor, Justin Bickle. The Committee also
recommended the appointment of Michael Rice (Chief
Financial Officer), to the Board, and identified and
recommended to the Board the appointment of two new
Non-Executive Directors, Pat McCann and Cara Ryan.
To ensure ongoing alignment with Glenveagh’s strategy,
regulatory developments and the views of leading
investors, during the year the Committee undertook
a detailed review of the Remuneration Policy for the
Executive Directors with the assistance of external
advisers. The outcome of this review is set out below.
The Committee is confident that the changes to
the Remuneration Policy and the way it will be
implemented in 2020 results in an approach to
executive remuneration which is appropriate from
an external perspective, taking into account practice
at other comparable companies and the views of
Glenveagh’s major shareholders. The Committee
also believes that pay for the Executive Directors is
appropriate in the context of remuneration practices
across the Company more broadly, both in terms of
pay levels and incentive structures.
•
2019 Performance
2019 has been another year where the Group has
outperformed our IPO targets and continued to focus
on increasing our operational scale. Glenveagh is
now benefiting from efficiencies and has the platform
in place to maximise returns for our shareholders by
focusing on achieving our increased output guidance
and monetising our landbank.
Incentive Outcomes for 2019
In light of the above performance, the Committee has
agreed annual bonus payments between 72% and 75%
of the maximum available opportunity for the Executive
Directors for 2019. This reflects the Directors’ achievements
against challenging performance targets across a range
of financial and non-financial metrics.
Details of the bonus targets in place for the year and
the level of achievement against them are set out on
page 82 with the Committee providing greater levels of
information this year to reflect governance best practice).
•
Review of the Remuneration Policy
The Committee’s intention in reviewing the
Remuneration Policy was to ensure that Glenveagh
has appropriate structures in place to incentivise and
reward management in the next phase of the Group’s
development, while also being cognisant of corporate
governance best practice and the views of investors.
After developing a series of proposals for the revised
Policy, the Committee conducted a consultation exercise
with major shareholders and leading proxy advisers and
was pleased with the broad support received from those
consulted on the direction of travel.
Full details of the new Remuneration Policy are included
in this Report on pages 75 to 79. The Policy continues
to include a mix of fixed and variable remuneration,
with incentives provided through short and long-term
schemes. The key changes to the previous approach are
explained below:
The Long-Term Incentive Plan (LTIP) is now explicitly
included within the Remuneration Policy, taking
into account the participation of the CFO in this
plan. The CFO received LTIP awards prior to his
appointment to the Board and he will continue to
receive regular annual awards going forward. The
performance metrics for the 2020 award (which differ
from the approach adopted in the past to ensure
continued alignment with Glenveagh’s strategy) are
set out below. Due to the ongoing participation of
the other Executive Directors in the Founder Share
Scheme (which was established prior to Glenveagh’s
IPO), they will not receive LTIP awards in 2020. As the
Founder Share Scheme moves towards the end of
its life, the Committee will give further consideration
to the best long-term incentive opportunities to
provide to the Executive Chairman and the CEO.
Any proposals will be the subject of consultation with
major shareholders at the relevant time.
From 2020, Executive Directors granted LTIP awards
will be required to retain any shares that vest for
a minimum period of at least two years following
vesting (other than shares which are sold to pay
tax). This is in line with the provisions of the 2018
UK Corporate Governance Code and the views of
many leading shareholders.
• Consistent with standard practice for companies
of Glenveagh’s size, the Committee has introduced
a requirement for Executive Directors to build a
shareholding equivalent in value to 200% of basic
salary. Taken together with the other changes
set out above, this significantly strengthens the
alignment between Executive Directors and
shareholders. As such, and recognising that the
new LTIP holding period continues to apply for
awards held by any leavers, the Committee has
decided not to go further at this stage and has
not introduced an additional requirement for
shares to be held for a set period of time following
termination of employment. However, this matter
will be kept under review as market practice and
investor expectations continue to develop.
•
•
The existing annual bonus scheme works well in
incentivising outperformance against various key
performance indicators, and so its basic structure
has been retained. However, the amount payable for
target performance has been reduced from 70% of
the maximum (67% for the Executive Chairman) to
50%, recognising general shareholders views on this
issue. We have also introduced appropriate recovery
provisions to give the Committee the ability to claw
back bonuses if required in specific circumstances.
Bonuses will continue to be paid in cash, although
the Committee will keep under review whether it
would be appropriate to require a portion of any
cash bonus to be invested in Glenveagh shares.
The Policy permits Executive Directors to receive an
annual Company pension contribution up to a level
of 15% of basic salary, with contributions above
5% depending on the extent of the individual’s
personal contributions. These arrangements are
consistent with those in place for senior executives
below Board level and are also in line with the
wider market. However, the Committee recognises
that investors are increasingly keen on pension
provision for Executive Directors to be aligned
with that of the wider workforce, and this issue will
therefore be kept under review as it relates to the
existing Directors. That said, for any new Executive
Director, the Policy specifies that their contribution
rate will be set in line with the rate attributable to
the majority of the wider workforce.
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Chairman’s Letter
CEO’s Review
CFO’s Review
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Financial Statements
Cluain Adain
Clonmagadden, Navan
•
The Founder Share Scheme is no longer
considered part of the formal Remuneration Policy.
The Scheme reflects the rights of the Founder
Shares as a specific class of shares in the share
capital of the Company, as set out in Glenveagh’s
Memorandum and Articles of Association. The
Remuneration and Nomination Committee does
not have the ability to amend these rights. As
such, the Committee believes that the Founder
Share Scheme is not a long-term incentive scheme
in the conventional sense and should not be
treated as part of the Remuneration Policy. The
Scheme will continue to run its course and details
of its operation – including any shares converted
in accordance with the terms and conditions of the
Scheme – will be included in future Remuneration
and Nomination Committee Reports. Full details
of the current status of the Scheme are set out on
page 85 of this year’s report.
Other Committee Activity in 2019
In addition to the review of the Directors’ Remuneration
Policy, during 2019 the Committee considered in detail
the remuneration policies and incentive schemes in
place for colleagues across Glenveagh more broadly.
Over the course of the year, the Committee placed
particular focus on Board development and
succession planning. As part of its nomination duties,
the Committee undertook a formal and rigorous
recruitment process to identify additional independent
Non-Executive Directors with the necessary skills and
experience to strengthen the Board’s composition as the
Group continues to scale its operations. The Committee
also supported the Board Chairman in ensuring that
succession requirements were carefully considered in
the appointment of a new Chief Executive Officer and a
new Executive Director during the year. Further details in
relation to the Committee’s nominations activity in 2019
are set out at page 72.
In carrying out its duties during the year, the Committee
met and consulted with specialist external advisers,
members of the Executive Committee and members of
the wider management team on a number of occasions.
Remuneration for 2020
Full details of the operation of the Remuneration Policy
for 2020 are set out later in this Report. In brief, there
are no changes to the basic salaries of the Executive
Directors or any other aspect of their fixed remuneration.
The annual bonus scheme will operate in a similar
fashion as in 2019, albeit with a reduction in the amount
payable for target performance (as noted above). The
performance metrics used in 2019 – which remain central
to the achievement of Glenveagh’s strategic goals in
the short-term – will continue to apply. The Committee
acknowledges that some shareholders have expressed a
preference for a return on capital employed metric to be
included in the bonus scheme, and this will be kept under
review for future years.
For the LTIP, the Committee will grant an award to the
CFO at a level of 100% of his basic salary. For half of
this award, performance conditions based on absolute
total shareholder return (TSR) will apply. TSR directly
aligns rewards for management with the returns to
Glenveagh shareholders and is a reflection of the
success or otherwise of Glenveagh's chosen strategic
path. For the other half, targets based on growth in
Glenveagh’s earnings per share (EPS) will be introduced.
This is an important measure of profitability which
acts as a gauge of how well Glenveagh has followed
through on its targeted growth strategy across the
different business segments. It also ensures that a
meaningful proportion of the LTIP relates to a parameter
over which the CFO (and other LTIP participants) has
direct line of sight. The specific targets for both the TSR
and the EPS metrics are set out on page 83 and 84. As
noted above, the Executive Chairman and the CEO will
not receive an LTIP grant in 2020.
Following the appointment of two new independent
Non-Executive Directors in late 2019, the Committee
will continue to oversee the induction of the newest
members of the Board during 2020. Throughout
the year, the Committee will ensure that effective
succession planning for the Board and senior
management is developed further, building on the
progress made during 2019. The Committee will also
have an active role in the first externally facilitated
annual Board evaluation in 2020.
of the Committee, I had extensive experience in my
previous executive role of dealing with a range of
remuneration matters across a large housebuilding
company. I have now chaired the Remuneration
and Nomination Committee at Glenveagh for over
two years.
AGM
The Committee is continuing to actively monitor the
transposition into Irish law of the EU Shareholder
Rights Directive, which will require Glenveagh to
provide shareholders with a specific vote on the
Remuneration Policy. In advance of the introduction
of this requirement, and in line with the approach
already taken by some other listed Irish companies, we
have decided to voluntarily present the new Policy to
shareholders by way of an advisory vote at the AGM
to be held on 19 May 2020. In addition, we will also ask
shareholders to approve a separate advisory vote on
the Remuneration and Nomination Committee Report
at the AGM, continuing our previous practice.
I hope you will support both the Policy and the Report
resolutions, and I welcome any comments or feedback
you may have on our activities in 2019, the changes to
the Remuneration Policy, or any other relevant matters.
Richard Cherry
Chairman,
Remuneration and Nomination Committee
2018 UK Corporate Governance Code
Glenveagh is committed to complying with the UK
Corporate Governance Code wherever appropriate
or explaining its reasons for non-compliance. The
Committee believes that the Remuneration Policy for
Executive Directors is consistent with the key principles
set out in the 2018 Code. The arrangements are
simple and transparent, with a clear link between the
performance of the Group and the rewards available
to individual Directors. The Policy for Directors is
aligned with Glenveagh’s culture of rewarding excellent
performance across the organisation and also provides
for a strong level of alignment with the interests of
shareholders in Glenveagh.
The Committee is satisfied that Glenveagh complies
in all material respects with the remuneration
provisions of the 2018 Code, with the following minor
exceptions. First, the Committee has not developed
a formal policy on post-employment shareholding
requirements. Second, the pension contribution rate
for existing Executive Directors is not aligned with
the rate for the wider workforce. The Committee’s
position in respect of these matters is set out above.
In addition, the Code provision requiring the chair
of the remuneration committee to have served on a
remuneration committee for at least 12 months prior to
appointment as chair was published subsequent to my
appointment as Chair of Glenveagh’s Remuneration
and Nomination Committee. Although I had not served
on a remuneration committee prior to becoming Chair
70
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Annual Report and Accounts 2019
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Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
Roles and
Responsibilities
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 Group 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;
• Having responsibility for setting the Remuneration
Policy for all Executive Directors including pension
rights and any other compensation payments;
•
•
•
Recommending and monitoring the level and
structure of remuneration for senior management;
Reviewing the ongoing appropriateness and
relevance of the Remuneration Policy, taking into
account all factors which it deems necessary,
including the risk appetite of the Group and
alignment to the Group’s long term strategic goals
and culture;
Reviewing the total individual remuneration
package of each Executive Director and other
designated senior executives including any
bonuses, incentive payments and share options or
other share awards; and
• Overseeing any major changes in employee
benefits structures throughout the Group.
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 page 87.
The Board believes that the Committee members offer
a balanced suite of expertise, meeting the specific
requirements of this Committee. The breadth of skills
and experience of the members enables the Committee
to carry out its duties and responsibilities as detailed in
the Committee Terms of Reference.
Meetings
The Committee met on nine occasions during the
financial year ended 31 December 2019. On occasion,
additional attendees including the Board Chairman, the
CEO, the CFO, the Head of HR, the Group Company
Secretary and specialist external advisers were invited
to attend all or part of Committee meetings as deemed
appropriate and necessary by the Committee Chairman.
Committee
Member
Richard Cherry
Robert Dix
Lady Barbara Judge
In
Attendance
Committee
member as of
9/9
9/9
9/9
2017
2017
2017
Board Nomination Activities
Board Composition
Arising from the results of the first annual Board
evaluation, conducted at the end of 2018, the
Committee gave detailed consideration to the size
and structure of the Board in the first half of 2019. The
Committee reviewed the existing make up of skills and
experience on the Board and identified key attributes
and skills for the appointment of additional independent
Non-Executive Directors in 2019.
Following Justin Bickle’s decision to step down from his
role as Chief Executive Officer of the Group and resign
from the Board in August 2019, the Committee placed
particular focus in the latter half of 2019 on ensuring
the appropriate balance of Executive Directors and
senior management representation on the Board,
culminating in the appointment of the Group CFO,
Michael Rice, to the Board.
The Board is now comprised of eight Directors: three
Executive Directors, including the Executive Chairman,
and five independent Non-Executive Directors.
The Committee is satisfied that the Board is of an
appropriate size for the requirements of the business
and that the current composition provides a suitable
balance of skills and experience, although this will
continue to be reviewed on an ongoing basis.
Taylor Hill
Balbriggan, Co. Dublin
Non-Executive Director Appointments
Having considered in detail the skills and capabilities
that would be required from new Non-Executive
Directors to strengthen the Board and assist the Group
in achieving its strategic objectives, the Committee
engaged independent executive search firm Korn Ferry
to support the process of identifying and shortlisting
suitable candidates. Reflecting on the skills and
expertise that each potential candidate would bring to
the Board, the Committee then selected candidates to
invite to interview.
The interview process comprised an initial interview with
the Committee, with two candidates then selected to
proceed to further interviews with the Board Chairman
and the Executive Directors. The interview process
culminated in the Committee formally recommending
the appointments of Pat McCann and Cara Ryan to the
Board. On the Board’s approval, Pat McCann and Cara
Ryan were appointed as Non-Executive Directors with
effect from 1 September 2019.
Robert Dix is a Non-Executive Director of Dalata
Hotel Group plc where Pat McCann serves as Chief
Executive, and both currently act as Non-Executive
Directors at The Quinn Property Group. Robert Dix
deferred the decision to recommend Pat McCann’s
appointment to his fellow Committee members, and
he abstained from voting on the appointment at the
Board. The Committee, and the Board, were aware
of this relationship on appointing Pat McCann and
concluded that his experience, knowledge and skills in
leading and growing a company post-IPO would be
of immeasurable value to the Board and in the best
interests of the Group and its shareholders. Further
details in relation to the Board’s consideration of Non-
Executive Director independence is set out at page 59
of the Corporate Governance Report.
Biographies for Pat McCann and Cara Ryan are set out
at page 88.
Succession Planning
The Committee is cognisant of the role of effective
succession planning in governance and in ensuring
that the Group mitigates ‘key people’ risk. During 2019
the Committee supported the Board Chairman in
reviewing and enacting succession plans for the role of
CEO and in recommending the promotion of the CFO
to Executive Director.
In addition to planning for the succession of Executive
Directors, the Committee engages with the Executive
Directors on succession planning for senior management
roles below Board level and encourages the alignment
of succession planning and remuneration arrangements
with Group strategy.
Re-Election of Directors
The contribution and commitment of all Directors is
reviewed on an annual basis as part of the wider
Board evaluation.
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CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
As part of the annual review process, all Directors
are asked to complete self-evaluation questionnaires,
assessing their own skills and expertise and this
analysis is reviewed in detail to determine whether
the collective skills and experience of the Directors
are appropriate to meet the needs of the Group.
The Committee will work closely with the Board
Chairman to consider the outcomes of the annual
Board evaluation for 2019 and ensure that any
necessary actions are taken during the course of 2020.
Full details of the annual Board evaluation process are
set out at page 60 of the Corporate Governance Report.
The Board will recommend the formal election to office
of those new Directors appointed in 2019 and the
re-election of all other Directors at the 2020 AGM.
Other Activities
Set out below is a summary of the Committee’s key activities during the financial year.
Activity in 2019
Topic
Description of activity
Annual Bonus
The Committee formally assessed performance against the targets set for the 2018
annual bonus scheme, agreeing bonus payments as disclosed in last year’s report.
Later in 2019, the Committee also undertook an initial review of performance against
the targets for the 2019 annual bonus and considered the targets to apply for the 2020
scheme, taking into account Glenveagh’s key financial and non-financial KPIs.
Long Term Incentive
Plan (LTIP)
The Committee approved the granting of LTIP awards to certain members of the
senior management team during 2019, having considered the appropriate employee
population and performance conditions for these awards.
Review of AGM voting
The Committee considered the outcome of the 2019 AGM vote on the Remuneration &
Nomination Committee Report and the issues raised by certain shareholders.
Appointment of
independent advisers
Following a formal tender process, Korn Ferry were appointed as the Committee’s
independent advisers on executive remuneration matters.
Review of
Remuneration Policy
and Shareholder
Consultation
The Committee undertook a detailed review of the Executive Directors’ Remuneration
Policy, with the assistance of the new independent external advisers. Among other
things, this considered developments in market practice, the views of investors and
the appropriate incentives required for the next stage of Glenveagh’s development.
The Committee consulted major shareholders and proxy advisers on the outcome of
the review.
Executive Committee
The Committee met representatives from the Executive Committee throughout the
financial year to receive updates on the business and specific areas of interest to
the Committee.
Committee Evaluation
The Committee reviewed its Terms of Reference to ensure they were fit for purpose. The
Terms of Reference are available on the Group’s website.
Diversity
During 2019, the Group adopted a Board Diversity
Policy designed to assist the Board, through the
Committee, in achieving optimum Board and
Committee composition. It is the Group's policy to
develop over time the diversity of its Board without
compromising the calibre of new Directors. All Board
appointments are made on merit and with regard to
the skills and experience that the Board requires to
be effective.
The Committee will review the Board Diversity Policy
annually, including assessing its effectiveness and
will discuss any revisions that may be required,
recommending any such revisions to the Board
for approval.
The Committee recognises the value of diversity
in its ongoing review of Board composition and in
succession planning. All candidates are considered
on merit and against objective criteria, having due
regard to the benefits of diversity of experience, skills,
background and gender.
The Board Diversity Policy is published on the
Group website.
Details of the gender balance of those in senior
management within the Group, and their direct
reports, are provided at page 60 of the Corporate
Governance Report.
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.
External Advisers
During the financial year, 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.
Following a formal tender process, the Committee
appointed Korn Ferry as its new advisers during the year
to provide support in developing and implementing a
new Remuneration Policy. Both Mercer and Korn Ferry
are members of the Remuneration Consultants Group
and signatories to its Code of Conduct, and all advice is
provided in accordance with this Code.
As noted above, a separate practice within Korn Ferry
provided support to the Committee during the year in
identifying potential candidates for appointment to the
Board as new Non-Executive Directors. The Committee
is entirely comfortable that the advice it received from
Korn Ferry on executive remuneration matters was
independent and robust.
Remuneration Policy
The following table outlines the key details of the
Executive Directors’ Remuneration Policy, applicable
from the 2020 financial year onwards. 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 Group
successfully, having regard to the views of shareholders
and other stakeholders, as well as pay and conditions
across the Group as a whole. The Committee is satisfied
that the remuneration framework is in alignment with
the Group’s risk appetite, purpose and culture, while
also being supportive of its long-term strategic goals.
A summary of the key changes to the Remuneration
Policy are set out in the statement from the Committee
Chairman on pages 68 to 71.
At the AGM to be held on 19 May 2020, shareholders
will be asked to approve the new Remuneration Policy
by way of a separate advisory resolution.
Element/Purpose Operation
Maximum Opportunity
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 developments in pay in the market
generally and across the Group.
Base salary for Executive Directors is inclusive of
fees receivable by the Executive as a Director of
the Group.
Benefits
To be competitive
with the market
In addition to their base salaries, Executive
Directors’ benefits currently include life and health
insurance and a car allowance in line with typical
market practice. Other benefits may be provided if
considered appropriate.
There are no prescribed maximum
salaries or maximum increases.
Increases will normally reflect
increases across the Group and in
the market generally.
However, increases may be
higher or lower to reflect certain
circumstances (whether temporary
or permanent) 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.
No maximum levels are prescribed
as benefits will be related to each
individual’s circumstances.
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Element/Purpose Operation
Maximum Opportunity
Element/Purpose Operation
Maximum Opportunity
Annual Bonus
To reward the
achievement
of annual
performance
targets
Individuals will receive annual bonus awards based
on the achievement of financial and/or non-financial
targets. Threshold, target and maximum performance
levels will be set, with pro-rata payments between
the points based on relative achievement levels
against the agreed targets.
The financial KPIs will ensure that employees
are aligned with shareholders’ interests and the
parameters that the Group 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. Appropriate details of the specific
targets will be included on a retrospective basis
in the Remuneration and Nomination Committee
Report each year.
The Committee retains discretion to adjust any
award to reflect the underlying financial position
of the Group.
The maximum award for Executive
Directors as a percentage of basic
salary is as follows:
Executive Chairman
CEO
CFO
75%
100%
100%
The amount payable for target
performance is limited to 50% of
the maximum award.
Bonuses are paid in cash although
the Committee will keep under
review whether it would be
appropriate to require a portion of
any cash bonus to be invested in
Glenveagh shares.
Long Term Incentive Plan (LTIP)
The LTIP rules permit awards to
be granted up to 150% of basic
salary, or 200% in exceptional
circumstances.
To incentivise
long-term
performance and
ensure alignment
with the interests
of Glenveagh
shareholders.
Senior executives are eligible to participate in the
LTIP. The CFO is the only Executive Director who
currently participates in the plan. The Executive
Chairman and the CEO do not currently participate
in the LTIP given their participation in the Founder
Share Scheme (see page 85).
The LTIP involves the grant of nil-cost options
over ordinary shares to participants based on a
percentage of their gross basic salary.
LTIP awards vest subject to the satisfaction
of performance conditions over a three-year
period. The Committee selects the performance
condition ahead of each grant taking into account
Glenveagh’s strategic priorities and business
circumstances. A majority of the metrics chosen will
be financial metrics.
Full details of the chosen metrics and specific targets
for recent awards and for awards to be granted in
2020 are set out on pages 83 and 84.
The vesting of any award is subject to Committee
discretion that it is satisfied the Group’s underlying
performance has shown a sustained improvement in
the period since date of grant.
With effect from 2020, LTIP awards granted to
Executive Directors are subject to a holding
period of at least two years following the date of
exercise of their options. Shares that are subject
to a holding period post-exercise may be placed
in a restricted share trust for the duration of the
restricted period.
Retirement Benefits
To attract and
retain high calibre
individuals as part
of competitive
package.
The Group operates a defined contribution pension
scheme for Executive Directors. Pension contributions
are calculated on base salary only.
For current Executive Directors, 15%
of basic salary.
Any new Executive Director
appointed after the 2020 AGM will
have their contribution rate set in
line with the rate attributable to the
majority of the wider workforce
Performance Conditions
For both the annual bonus scheme and the LTIP, the
Committee sets performance conditions based on
business circumstances and the key strategic priorities.
Specific targets are chosen based on the business plan
and budget, the Board’s expectations of performance
and external market estimates (where relevant). The
performance conditions to apply to the 2020 bonus
scheme and the LTIP award to be granted in 2020 are
set out on pages 83 to 84.
Malus and Clawback
For both the annual bonus scheme and the LTIP,
recovery provisions are in place which permit the
Committee to claw back awards if certain trigger events
occur within two years of the payment or vesting date:
•
•
•
If the award was determined on the basis of
materially incorrect information, including as a
result of any material misstatement of the financial
results; and/or
If the participant has engaged in any wilful
misconduct, recklessness, fraud and/or criminal
activity (including actions which have impacted the
reputation of the Company); and/or
If the participant commits an act which constitutes
a material breach of his/her contract, restrictive
covenants and/or any confidentiality obligations.
Shareholding Guidelines
All Executive Directors are required to build a
shareholding equivalent in value to 200% of their basic
salary. Until this guideline is met, individuals will be
required to retain at least 50% of any shares which
vest following the end of the performance and holding
periods for the LTIP (excluding any shares which are
required to be sold to pay tax due at vesting).
As explained on page 69, the Committee has at this
stage decided not to introduce a requirement for
shares to be held for a set period of time following
termination of employment. However, this matter will
be kept under review.
Approach to Recruitment Remuneration
The package for any new Executive Director would be
based on the elements set out in the Remuneration
Policy table above. For certain elements of the
package, the following approach would apply.
Basic salary: The salary offered to a new Executive
Director would take into account a number of relevant
factors including the individual’s background and
experience, the responsibilities of the role and wider
market practice. The Committee has the discretion to
appoint a new Executive Director on a salary below
the prevailing market rate, with a view to increasing
the salary over time depending on performance and
development in the role. Such increases may be at a
level higher than would otherwise apply.
Benefits: The benefits package will be consistent
with that provided to existing Executive Directors.
The Committee may provide other benefits (e.g. a
relocation package in the event of a new Executive
Director being required to relocate in order to
join Glenveagh).
Retirement benefits: As stated in the Remuneration
Policy table, any new Executive Director will have
their pension contribution rate set in line with the rate
attributable to the majority of the wider workforce.
Annual bonus: A new Executive Director will normally
be eligible to participate in the annual bonus scheme,
on the same basis as the other Executive Directors.
Participation will normally be pro-rated to reflect
the period of service during the financial year. The
maximum bonus opportunity for a new Executive
Director is 100% of basic salary.
LTIP: A new Executive Director will normally be
eligible to participate in the LTIP on the same basis
as the other Executive Directors. An LTIP award may
be granted as part of the arrangements agreed on
appointment. In line with the Remuneration Policy,
any LTIP award will be limited in size to 150% of basic
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salary, or 200% in the event the Committee considers
the circumstances to be sufficiently exceptional to
justify an award at this level.
Buyout awards: In certain circumstances – for example
to attract an external candidate of exceptional calibre
– the Committee may consider providing a buyout
award as compensation for incentives provided by
the candidate’s previous employer which will lapse
as a result of the individual joining Glenveagh. The
value of any buyout award will take into account the
performance conditions attached to the forfeited
incentives, the likelihood of them being satisfied, the
proportion of the performance period completed as at
the date of cessation of employment, the mechanism
of delivery (e.g. in cash or equity) and any other
relevant factors. The Committee may grant a buyout
award under Glenveagh’s existing incentive plans or, if
necessary, may use a bespoke arrangement.
The Committee reserves the right to appoint a
new Executive Director on a service agreement
with a 12-month notice period, in line with standard
market practice.
Wider Executive/Employee
Remuneration Considerations
The Remuneration and Nomination Committee has
oversight of the remuneration arrangements for other
senior executives in Glenveagh and also considers
matters relating to pay across the Group as a whole,
including workforce remuneration policies and incentives
for the wider employee population. The Committee
has not engaged directly with employees on executive
remuneration matters but has considered in detail
the issue of alignment between Executive Director
remuneration and the pay for the employee population
more broadly.
Senior managers participate in a bonus scheme
which is reflective of the structure in place for the
Executive Directors. A number of senior managers
below the Board participate in the LTIP, with the same
performance conditions applying to all awards granted
under the plan. For 2020, a separate bonus scheme
applies for the main employee group, under which
the majority of bonus payments are subject to the
achievement of targets linked to personal performance.
Service Agreements
The current Executive Directors all have service
agreements with Glenveagh of no fixed term. The
agreements are terminable on six months’ notice from
both the Group and the Executive. The agreements
do not provide for any additional compensation to be
paid in the event of a change of control of Glenveagh.
Engaging with Shareholders
The Committee is committed to an open line of
communication with shareholders and will seek the
views of major investors when considering significant
changes to remuneration practices or policies (as
evidenced by the consultation exercise undertaken as
part of the recent policy review process).
Policy for Leavers
Salary and Benefits
For leavers, any termination payments are made only
in respect of annual salary excluding benefits for the
relevant notice period.
Annual Bonus
In order for annual bonus payments to be made,
Executive Directors must normally be employed by the
Group on the bonus payment date.
Long-Term Incentive Plan
Under the rules of the LTIP, the vesting of awards for
good leavers depends on the satisfaction of the relevant
performance conditions. Awards are reduced on a pro
rata basis to reflect the proportion of the vesting period
which has not elapsed at the date of cessation.
For other leavers, unvested awards lapse on cessation.
In the event of a change of control, the Committee
has discretion under the LTIP rules to determine the
extent of vesting of outstanding awards, having regard
to the extent that performance conditions have been
met and the length of the performance period which
has elapsed.
Committee Discretions
The Committee retains discretion to make any
payments, notwithstanding that they are not in line
with the policy set out above, where the terms of the
payment were agreed (i) before the policy came into
effect, or (ii) at a time when the relevant individual was
not a director of the Company and, in the opinion of
the Committee, the payment was not in consideration
of the individual becoming a director of the Company.
For these purposes ‘payments’ includes the Committee
satisfying awards of variable remuneration and, in
relation to an award over shares, the terms of the
payment are determined at the time the award is
granted. Details of any such payments will be disclosed
in the Remuneration and Nomination Committee Report
for the relevant year.
The Committee also has the discretion to amend the
policy with regard to minor or administrative matters
where it would be, in the opinion of the Committee,
disproportionate to seek or await shareholder approval.
The Committee will operate the annual bonus and
long-term incentive arrangements according to their
respective rules. Consistent with market practice the
Committee retains certain discretions in respect of the
operation and administration of these arrangements.
External Appointments
The Board recognises the benefit which the Company
can obtain if Executive Directors serve as non-executive
directors of other companies. Subject to review in each
case, the Board’s general policy is that an Executive
Director can accept non-executive directorships of
other companies (provide this does not prejudice the
individual’s ability to undertake his duties at Glenveagh)
and can retain the fees in respect of such appointment.
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 advisers. 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
receive an additional €15,000 for chairing the Audit
and Risk Committee and the Remuneration and
Nomination Committee.
Accordingly, the NED letters of appointment detail the following annual fees:
Name
Role
Lady Barbara Judge
Senior Independent Non- Executive Director
Robert Dix
Richard Cherry
Pat McCann
Cara Ryan
Chairman, Audit & Risk Committee
Chairman, Remuneration & Nomination Committee
Non-Executive Director
Non-Executive Director
€
90,000
75,000
75,000
60,000
60,000
There has been no change in the fees payable to NEDs since appointment and no change is proposed for 2020.
NEDs are not eligible to participate in any Group pension plan. The NEDs do not have service contracts and do not
participate in any bonus or share option schemes. NEDs may receive benefits if considered appropriate.
Marina Village
Greystones, Co. Wicklow
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Blackrock Villas
Blackrock, Cork
Annual Remuneration Report for 2019
The following table illustrates remuneration awarded to Directors for the financial year ended 31 December 2019:
Name
Salary/Fees(1)
Annual Bonuses(2)
Benefits(3)
Employer
Pension
Contributions(4)
Total
2019
€
2018
€
2019
€
Executive
Directors
2018
2019
2018
2019
2018
€
€
€
€
2019
€
2018
€
John Mulcahy
300,000
300,000
162,096
100,500
18,500 18,500
-
480,596
419,000
€
-
Stephen Garvey
383,333
350,000
286,881
175,000
22,725
21,901
57,500
17,500
750,439
564,401
Michael Rice (5)
52,500
-
39,375
-
168
-
7,875
-
99,918
-
Justin Bickle (6)
675,000*
450,000
336,773
225,000
22,000 22,000
22,500
22,500
1,056,273
719,500
Non-Executive
Directors
Robert Dix
75,000
75,000
Richard Cherry
75,000
75,000
Lady Barbara
Judge
Pat McCann (7)
Cara Ryan (7)
90,000
90,000
20,000
20,000
-
-
Caleb Kramer (8)
26,209
60,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
75,000
75,000
75,000
75,000
90,000
90,000
20,000
20,000
-
-
26,209
60,000
Total
1,717,042
1,400,000
825,125
500,500
63,393
62,401
87,875
40,000
2,693,435
2,002,901
*
Includes €450,000 related to salary and €225,000 related to payment in lieu of notice
1. Amounts reflect salaries in respect of Executive Directors and Directors' fees in respect of Non-Executive Directors.
2. Annual Bonuses relate to bonuses paid to Executive Directors as explained on page 82.
3. Benefits largely relate to car allowances and health insurance provided to Executive Directors in accordance with
their employment contracts.
4. Only Executive Directors are eligible to receive pension contributions. Non-Executive Directors do not receive
pension contributions.
5. Michael Rice was appointed to the Board on 1 November 2019. Payments disclosed in the table above relate to period
served as a Director.
6. Justin Bickle resigned from the Board on 23 August 2019 but remained an employee of the Company until 16 January
2020. Payments disclosed include his salary as an employee for the entirety of 2019 in addition to a payment in lieu of his
contractual notice period. Further details in respect of the resignation arrangements for Justin Bickle are set out below.
7. Pat McCann and Cara Ryan were appointed to the Board on 1 September 2019.
8. Caleb Kramer resigned from the Board on 7 June 2019.
Resignation Arrangements for Justin Bickle
Justin Bickle stepped down from his role as Group CEO and resigned as a Director of the Board with effect from 23
August 2019. He was immediately succeeded as CEO by Stephen Garvey, though he continued to be employed by
the Group during a transition period on his existing terms and conditions.
In recognition of his continuation in service during the transition period, Justin Bickle remained eligible for his
full performance related bonus payment in respect of financial year 2019, in accordance with the terms of his
employment agreement.
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82Glenveagh Properties PLCAnnual Report and Accounts 201983GovernanceRemuneration & Nomination Committee Report Justin Bickle’s employment with the Group ceased on the expiry of the transition period, with effect from 16 January 2020. He was paid in lieu of his contractual entitlement to six months’ notice. No ex gratia termination payments were paid to Justin Bickle in connection with his ceasing employment with the Group. Justin Bickle is a holder of Founder Shares, awarded to him as a Co-Founder of the Group prior to admission to trading on the Irish and London Stock Exchanges on 13 October 2017. As a Founder Shareholder, Justin Bickle remains entitled to participate in the Founder Share Scheme. Where the performance conditions are met, a corresponding portion of his Founder Shares will automatically convert into Ordinary Shares. No new or additional Founder Shares have been or will be created and any future conversion of Founder Shares will not involve any new issuance of shares, rather an automatic re-designation of existing shares that he has held as a Founder Shareholder since 2017. Further details in relation to the Founder Share Scheme are provided at page 85 of this report.Base SalaryThe salaries paid to the Executive Directors for the financial year ended 31 December 2019 are set out in the table above. Stephen Garvey’s annual salary was increased from €350,000 to €450,000 on his appointment as CEO on 23 August 2019, to align his salary with that paid to his predecessor, Justin Bickle. The CFO, Michael Rice, was appointed to the Board on 1 November 2019 and his annual salary is €315,000.The base salaries of Executive Directors will remain unchanged for the 2020 financial year.Annual Bonus2019 Outcome The Executive Directors participated in an annual bonus scheme for 2019 with performance measured against a mix of financial (60%) and non-financial (40%) performance conditions. The specific financial target ranges and the extent to which they were met are set out in the table below:2020 Bonus Arrangements For 2020, the annual bonus scheme will continue to operate in the same manner as in 2019, with a 60%/40% split between financial and non-financial metrics. The performance metrics will remain the same:Financial metricsWeightingRevenue20%EBITDA20%EBITDA margin20%Non-financial metricsWeightingSafety20%Customer service20%The specific performance targets are currently considered commercially sensitive. Full details of the targets – including information on the extent of achievement against them – will be included in next year’s report.The maximum annual bonus opportunity for 2020 will be 100% of basic salary for the CEO and CFO and 75% of basic salary for the Executive Chairman. As set out in the Remuneration Policy table, the amount payable for target performance will be set at 50% of the maximum opportunity.Long-Term Incentive Plan (LTIP)Michael Rice is the only Executive Director who participates in the LTIP. He received awards under the plan in October 2017 and April 2019, prior to his appointment to the Board, as detailed in the table below.Award dateNumber of optionsGrant date share pricePerformance periodDate of vesting13 Oct 2017225,000€1.0013 Oct 2017 to 12 Oct 202012 Oct 202017 Apr 2019200,893€0.8417 Apr 2019 to 16 Apr 202216 Apr 2022Vesting of the awards set out in the table above is subject to a performance condition based on the satisfaction of absolute total shareholder return (TSR) targets over the three-year vesting period, as follows:TSR performance - compound growth per annumLevel of vesting12.5% 100%6.25% 25%Less than 6.25% NilAwards vest on a straight-line basis for performance between 6.25% and 12.5%. In addition, any vesting of awards is subject to Committee discretion that it is satisfied the Group’s underlying performance has shown a sustained improvement in the period since the date of grant.MetricWeight% PayableTargetsPerformance AchievedBonus AwardRevenue20%Threshold 40%€249.6m€284.6m78%Max 100%€305.0mEBITDA20%Threshold 40%€25.7m€31.9m85%Max 100%€33.6mEBITDA margin20%Threshold 40%9.3%11.2%77%Max 100%12.1%Health & Safety20%Threshold 40%70% Audit Score75%70%Max 100%80%+ Audit ScoreCustomer Satisfaction20%Threshold 40%80% Survey Score84%64%Max 100%90%+ Survey Score Taking this into account, the total bonus award was determined by the Committee to be 75% of the maximum opportunity for Justin Bickle, Stephen Garvey and Michael Rice and 72% for John Mulcahy. This resulted in the following bonus payments to the Executive Directors which were paid in cash.NameRoleBonus Payment€’000Bonus payment as % of maximum opportunityJohn MulcahyExecutive Chairman16272%Stephen GarveyCEO28775%Michael Rice*CFO3975%Justin BickleFormer CEO33775%* Relates to period served as an Executive Director Chairman’s Letter
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For 2020, the Committee intends to grant an LTIP award to the CFO at a level of 100% of basic salary.
The Committee has decided to apply two performance conditions to this award, as set out below.
TSR performance (applies to 50% of the award)
– compound growth per annum
12.5%
6.25%
Less than 6.25%
Awards vest on a straight-line basis for performance between 6.25% and 12.5%.
EPS performance (applies to 50% of the award)
– Adjusted EPS to be achieved in FY2022
12.5c
9.5c
Less than 9.5c
Level of vesting
100%
25%
Nil
Level of vesting
100%
25%
Nil
Awards vest on a straight-line basis for performance between 9.5c and 12.5c.
The performance period for this award will be aligned
with Glenveagh’s financial years and will run for three
years from 1 January 2020 to 31 December 2022.
The TSR performance conditions for the award are
the same as those applying to earlier LTIP awards
and are considered appropriately challenging. The
EPS performance targets have been set taking into
account the internal budget and strategic plan as well
as external expectations of Glenveagh’s performance
over the period up to the end of 2022. Achievement
of the maximum target would represent significant
outperformance of both internal and external forecasts.
In addition to the performance conditions as set out
above, any vesting of awards is subject to Committee
discretion that it is satisfied the Group’s underlying
performance has shown a sustained improvement in the
period since the date of grant.
In line with the new Remuneration Policy (as set out
in the table on pages 75 to 77), LTIP awards granted
to Executive Directors from 2020 onwards will include
a holding period of at least two years post-exercise.
Shares that are subject to a post-exercise holding period
may be placed in a restricted share trust.
Directors’ and Secretary’s
Interest in Shares
The biographical information for the Directors and the
Company Secretary at the time of this report can be
found on pages 86 to 88. The table below sets out the
interests of the Directors and Company Secretary in
Ordinary Shares of the Group at 31 December 2019.
Ordinary Shares
Founder Shares
Deferred Shares
Ordinary Shares
under option
Name
2019
2018
2019
2018
2019
2018
2019
2018
John Mulcahy
2,682,766
2,482,766
18,100,684
18,100,684
Stephen Garvey
13,261,329
13,061,329
81,453,077
81,453,077
Michael Rice
23,333
23,333
Lady Barbara Judge
109,880
109,880
Richard Cherry
1,371,069
1,166,666
Robert Dix
Cara Ryan
Pat McCann
Chloe McCarthy
350,000
350,000
-
70,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
425,893*
225,000*
-
-
-
-
-
-
-
-
-
-
142,381*
65,000*
Founder Share Scheme
This scheme was established in 2017 in advance of the
Company’s IPO to incentivise the three founders of
Glenveagh (John Mulcahy, Stephen Garvey and Justin
Bickle) to grow the business over the initial
five-year period following listing.
Each of the founders holds a number of Founder
Shares, which are a specific class of shares in the share
capital of the Company, with their terms set out in the
Memorandum and Articles of Association. The Founder
Shares are converted into ordinary shares (or a cash
equivalent) subject to the achievement of a performance
condition linked to Glenveagh’s share price.
The scheme runs over the five years from 2018 to 2022.
Performance is assessed separately over five separate
test periods, with Founder Shares converting into
ordinary shares based on performance in each test
period. The test period is from 1 March to 30 June
each year.
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.”
This is 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.
As previously disclosed, the performance condition was
satisfied during the first test period from 1 March 2018
to 30 June 2018, resulting in the conversion of Founder
Shares into 18,993,162 ordinary shares in 2018.
The performance condition was not satisfied during
the test period from 1 March 2019 to 30 June 2019. As a
result, there was no conversation of Founder Shares into
ordinary shares during 2019.
Under the performance condition, the closing
Glenveagh share price must, for a period of 15 or more
consecutive business days during the test period, exceed
the adjusted issue price1 by 12.5%.
All new ordinary shares issued in respect of the
conversion of Founder Shares are subject to a one-year
lock-up period, with 50% of the new ordinary shares
subject to a further one-year lock-up period thereafter.
This percentage increase is measured on a
compound basis.
The table below sets out the ownership split between
the holders of Founder Shares:
Name
Justin Bickle*
Stephen Garvey
John Mulcahy
Total
* Beneficially held by Durrow Ventures.
31 December 2018
31 December 2019
81,453,077
81,453,077
18,100,684
181,006,838
81,453,077
81,453,077
18,100,684
181,006,838
* The exercise price of the ordinary shares under options detailed above is nil. The expiry date for the options granted during
2019 and prior to 2019 are 7 years from 16 April 2022 and 12 October 2020 respectively.
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.
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Board of Directors
John Mulcahy (70)
Executive Chairman
Nationality: Irish
Date of Appointment:
11 August 2017
Stephen Garvey (40)
CEO
Nationality: Irish
Date of Appointment:
9 August 2017
Michael Rice (37)
CFO
Nationality: Irish
Date of Appointment:
1 November 2019
John Mulcahy is a chartered surveyor
with over 40 years’ experience in
the Irish real estate sector. He is
currently the chairman of IPUT plc
and a member of the board of TIO
ICAV. 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 IPUT plc
•
Board member of TIO ICAV,
and Quinta do Lago S.A., a
Portuguese resort developer.
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, Schelester
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 acquisitions of
development sites, secured external
finance, formulated and implemented
business plans for each project and
managed the overall delivery of
residential units. From 2014 to 2017,
Stephen advised and managed on
the acquisition of 2,101 units in the
Irish residential development market
on behalf of TIO RLF.
Michael joined the Group in
September 2017, having previously
worked as Group Financial
Controller in Kingspan Group plc.
Michael has responsibility for the
Group’s finance, commercial and IT
functions and has been instrumental
in developing and implementing
the Group’s internal and external
reporting framework. Michael has
a Bachelor of Commerce degree
and a Masters in Accounting
from University College Dublin
and is a Fellow of Chartered
Accountants Ireland.
Lady Barbara Judge CBE (73)
Senior Independent Director
Nationality: Irish
Date of Appointment:
26 September 2017
Lady Barbara Judge CBE has 40
years’ experience in the financial,
legal and property industries.
Lady Judge has previously served
as chairman of the UK Pension
Protection Fund, 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.
• Chairman of the Astana
Financial Services Authority
Committee Memberships:
• Member of the Audit and Risk
Committee (2 years).
Robert Dix (67)
Independent Non-Executive Director
& Chairman of the Audit and
Risk Committee
Richard Cherry (58)
Independent Non-Executive Director
& Chairman of the Remuneration
and Nomination Committee
Nationality: Irish
Date of Appointment:
26 September 2017
Nationality: British
Date of Appointment:
2 October 2017
Robert Dix was formerly a partner
and head of Transaction Services
at KPMG Ireland, where he worked
for 20 years before his retirement
in 2008. He now 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 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.
Robert also holds non-executive
directorships at a number of
private companies.
•
Committee Memberships:
• Chairman of the Remuneration
and Nomination Committee
(2 years).
• Member of the Audit and Risk
Richard Cherry 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:
•
Richard holds directorships
at a small number of private
companies
Committee Memberships:
• Chairman of the Remuneration
and Nomination Committee
(2 years).
• Member of the Audit and
Risk Committee (2 years).
• Member of the Remuneration
Committee (2 years).
and Nomination Committee
(2 years).
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88Glenveagh Properties PLCAnnual Report and Accounts 201989GovernanceDirectors' ReportPat McCann (68)Independent Non-Executive DirectorNationality: IrishDate of Appointment: 1 September 2019Pat McCann has 50 years' experience in the hotel industry, having begun his career in 1969 with Ryan Hotels plc. He joined Jurys Hotel Group plc in 1989 and became Chief Executive of Jurys Doyle Hotel Group plc in 2000. In 2007, Pat founded Dalata Hotel Group plc. He is a non-executive director of a number of private companies and was appointed to the board of lbec in 2017. Pat is currently President of lbec. He is a former non-executive director of EBS Building Society, Greencore Group plc and Whitfield Private Hospital. He has served as National President of the Irish Hotels Federation and as a member of the National Tourism Council.Other Appointments:• CEO and Executive Director of Dalata Hotel Group plc.• Non-executive Director of Ibec and Quinn Property Group. Cara Ryan (47)Independent Non-Executive DirectorNationality: IrishDate of Appointment: 1 September 2019Cara Ryan is an experienced non-executive director, with 20 years' experience at board level in publicly listed and private companies in both regulated and non-regulated entities. Until recently, she was a non executive director of IFG Group plc, a listed financial services Group, where she chaired the Nominations Committee and was a member of the Audit & Risk and Remuneration Committees. In March 2019 she was appointed as a non-executive director of Mercer Ireland, where she chairs the Risk Committee and sits on the Audit Committee. Cara was also a non-executive director of the Children's Medical Research Foundation, supporting Our Lady's Children's Hospital in Crumlin and the National Children's Research Centre. She has held Board positions at various investment funds, was the MD of IFG Investment Managers until 2006 and is the former Director of Finance of Manor Park Homebuilders , where she held responsibility for financial and legal matters of the Group until 2012.Other Appointments:• Non-executive Director and Chair of the Risk Committee and member of the Audit Committee of Mercer Ireland Limited.• Non-executive Director of Harmony Capital Partners LimitedCompany SecretaryChloe McCarthy (35)Chloe McCarthy is an ICSA qualified Company Secretary and a Barrister-at-Law in Ireland. Chloe was called to the Bar in 2008 and was a member of the Law Library for a number of years before gaining experience at international law firms including Taylor Wessing in London, Allens Linklaters in Sydney and A&L Goodbody in Dublin. Prior to joining Glenveagh at IPO in 2017, Chloe was the Assistant Company Secretary at Aegon Ireland PLC. Principal Activities and Business ReviewGlenveagh is a leading Irish homebuilder listed on Euronext Dublin and the London Stock Exchange. With a focus on strategically located developments in the Greater Dublin Area, Cork, Limerick and Galway, The Group delivers across there distinct business segments – Suburban, Urban and Partnerships – as a single business capitalising on scale advantages and investing to optimise return on capital.Shareholders are referred to the Chairman’s Letter, the CEO's Review and the CFO's Review on pages 4, 8 and 12 respectively, which set out management’s review of the Group’s operations and financial performance in 2019 and the outlook for 2020. These are deemed to be incorporated into the Directors' Report.Results and DividendsGroup revenue for the year ended 31 December 2019 was €284.6 million (2018: €84.2 million), gross profit was €51.5 million (2018: €15.3 million), profit after tax was €22.8 million (2018: loss of €3.9 million) and basic earnings per share of €0.03 (2018: loss per share of €0.01). Glenveagh did not pay a dividend during the financial year ended 31 December 2019 (2018: €Nil). As communicated at our Investor Day on 29 January 2020, the Group’s strategy for maximising shareholder returns will include a targeted investment in suburban working capital. Accordingly no current proposal exists to pay a dividend or otherwise deploy any distributable reserves to shareholders but, in order to provide the flexibility to establish and implement a capital returns policy in due course, the Company has initiated the process of generating the necessary distributable reserves through the reduction of the share premium account of the Company.Directors’ ReportThe Directors present their report and the consolidated financial statements of Glenveagh Properties plc (“Glenveagh” or the “Company”) and its subsidiaries (the “Group”) for the year ended 31 December 2019.Group revenue for the year ended 31 December 2019 was €284.6 million (2018: €84.2 million)€284.6m Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
Group Strategy
A review of the Group’s strategic priorities is set
out in the Strategic Report, which is deemed to be
incorporated into the Directors’ Report.
Principal Risks and Uncertainties
In accordance with Section 327(1)(b) of the Companies
Act 2014, Glenveagh is required to give a description
of the principal risks and uncertainties faced by the
Group. These principal risks and uncertainties, and the
steps taken by the Group to mitigate them, are detailed
in the Risk Management Report and deemed to be
incorporated into the Directors’ Report.
Directors and Company Secretary
The names of the Directors and Company Secretary and
a biographical note on each appear on pages 86 to 88.
In accordance with the provisions contained in the
UK Corporate Governance Code (2018), all Directors
will voluntarily retire and be subject to election by
shareholders at the 2020 Annual General Meeting.
Directors’ and Company
Secretary’s Interests in Shares
Details of the Directors’ and Company Secretary’s
share interests and interests in unvested share awards
of the Company are set out in the Remuneration and
Nomination Committee Report on page 84.
Share Capital
The issued share capital of the Group as at 27 February
2020 consists of 871,333,550 ordinary shares and
181,006,838 Founder Shares. Each share class has a
nominal value of €0.001. Holders of ordinary shares
are entitled to one vote per ordinary share at general
meetings of the Group, 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 Group’s share price.
Further information on the Group’s share capital and the
rights attaching to the different classes of shares is set
out in Note 26 to the consolidated financial statements.
The Group also has a Long-Term Incentive Plan in place,
the details of which are set out at pages 83 and 84 of
the Remuneration and Nomination Committee Report
and in Note 15 to the consolidated financial statements.
Significant Shareholdings
As at 31 December 2019 and 27 February 2020, the Group has been notified of the following interests of 3% or more
in its ordinary share capital:
As at 31 December 2019
As at 27 February 2020
Shareholder
FIL Investment International
Rye Bay Capital
GIC
Oaktree Capital Mgt
Paradice Investment Mgt
Pelham Capital Mgt
Man GLG
Lazard
SAS Rue la Boétie
Credit Suisse Group
Kinney Asset Mgt
Ranger Global Real Estate Advisors
1
2
3
4
5
6
7
8
9
10
11
12
Ordinary
Shares held
87,027,910
78,698,321
77,492,088
55,250,000
47,857,210
45,497,440
40,018,455
36,045,437
29,647,572
29,525,118
27,200,000
26,127,436
%
9.99
9.03
8.89
6.34
5.49
5.22
4.59
4.14
3.40
3.39
3.12
3.00
Ordinary
Shares held
86,834,926
73,698,321
77,492,088
55,250,000
47,267,338
45,497,440
43,432,327
37,472,424
29,552,390
27,083,342
25,600,000
24,914,985
%
9.97
9.03
8.89
6.34
5.42
5.22
4.98
4.30
3.39
3.11
2.94
2.86
Accounting Records
The Directors are responsible for ensuring that
adequate accounting records are maintained by the
Group, as required under Sections 281 to 285 of the
Companies Act, 2014. The Directors believe that they
have complied with this requirement through the
implementation and maintenance of appropriate
accounting systems and resources, including the
employment of suitably qualified accounting personnel
and the provision of adequate resources to the Group
Finance Department. The accounting records of the
Group are maintained at Block B, Maynooth Business
Campus, Maynooth, Co. Kildare.
Takeover Regulations 2006
For the purposes of Regulation 21 of Statutory
Instrument 255/2006 “European Communities
(Takeover Bids (Directive 2004/25/EC)) Regulations
2006”, the details provided on share capital and
substantial shareholdings above, and the disclosures in
relation to Directors’ remuneration and interests in the
Remuneration and Nomination Committee Report on
pages 68 to 85 are deemed to be incorporated in this
section of the Directors’ Report.
Further required information in relation to the change of
control provisions contained in the Group’s Founder Share
Scheme and Long-Term Incentive Plan is set out below.
Founder Shares
In the event of a change of control of the Group 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 with
regard to the extent that the applicable performance
condition has been satisfied up to the date of the
change of control event.
Transparency Regulations 2007
For the purposes of information required by Statutory
Instrument 277/2007 ‘Transparency (Directive 2004/109/
EC) Regulations 2007’ concerning the development and
performance of the Group, and the principal risk and
uncertainties faced, ,the Chairman’s Letter on pages
4 to 6, the CEO’s Review on pages 8 to 11, the CFO’s
Review on pages 12 to 14 and the Principal Risks and
Uncertainties detailed at pages 40 to 43, are deemed to
be incorporated in this part of the Directors' Report.
Corporate Governance
The directors of Glenveagh are committed to achieving
the highest standards of corporate governance. The
directors have prepared a Corporate Governance
Report, which is set out on pages 54 to 61 and, for the
purposes of s1373 of the Companies Act 2014, is deemed
to be incorporated into the Directors’ Report.
The Corporate Governance Report includes a detailed
description of the way in which Glenveagh has applied
the principles of good governance set out in the UK
Corporate Governance Code (2018) and the Irish
Corporate Governance Annex.
Directors’ Compliance Statement
The directors acknowledge their responsibility for
securing the Group’s compliance with its relevant
obligations under Section 225(2)(a) of the Companies
Act 2014 (the “Act”) (the “Relevant Obligations”).
In accordance with Section 225 (2) (b) of the Act, the
directors confirm that they have:
1. drawn up a Compliance Policy Statement setting
out the Group’s policies (that are, in the opinion of
the directors, appropriate to the Group) in respect
of the compliance by the Company with its Relevant
Obligations;
2. put in place appropriate arrangements or structures
that, in the opinion of the directors, provide a
reasonable assurance of compliance in all material
respects with the Group’s Relevant Obligations; and
3. 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 year to
which this report relates.
Going Concern
The Directors have assessed the financial position of
the Group in light of the principal business risks facing
the construction industry as a whole and the Group’s
strategic plan. They believe that the Group is well
placed to manage and mitigate these risks. Thus, they
have a reasonable expectation that the Group has
adequate resources to continue in operational existence
for 12 months from the date of approval of the financial
statements. For this reason, the directors consider
it appropriate to adopt the going concern basis in
preparing the financial statements.
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Semple Woods
Donabate, Co. Dublin
Viability Statement
In accordance with the provisions of the UK Corporate
Governance Code (2018), the directors are required to
assess the prospects of the Group, explain the period
over which they have done so and state whether they
have a reasonable expectation that the Group will be
able to continue in operation and meet liabilities as they
fall due over this period of assessment.
The directors assessed the prospects of the Group over
the three-year period to February 2023. The directors
concluded that three years was an appropriate period
for the assessment, having regard to the following:
•
•
The Group’s strategic plan is predominantly based
on a 3-year horizon with longer term strategic
forecasting and any statement with foresight
greater than three years having to be made with a
considerable level of estimation; and
In general, 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 December 2019 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
underlying assumptions of the Group’s strategic plan are
subject to sensitivity analysis for scenarios that could
reasonably materialise. The risk factors outlined in the
Risk Management Report on pages 36 to 43 were also
considered in the strategic plan process.
Subsequent Events
Information in respect of events since the year end
is contained in note 31 to the consolidated financial
statements.
Audit and Risk Committee
The Group has an established Audit and Risk
Committee comprising of three independent Non-
Executive Directors. Details of the Committee and its
activities are set out on pages 62 to 66.
Auditor
KPMG, Chartered Accountants, were appointed
statutory auditor on 21 August 2017 and have been
re-appointed annually since that date. Pursuant
to section 383(2) KPMG will continue in office and
a resolution authorising the directors to fix the
auditor’s remuneration will be proposed at the Annual
General Meeting.
Relevant Audit Information
The Directors confirm that in so far as they are each
aware, there is no relevant audit information of which
the Group’s auditors are unaware and that each
Director has taken all the steps that they ought to have
taken as a Director to make themselves aware of any
relevant audit information and to establish that the
Group’s auditors are aware of that information.
Approval of Financial Statements
The financial statements were approved by the
Board on 27 February 2020.
On behalf of the Board
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 3-year period.
Micheal Rice
Director
Political Donations
No political donations were made by the Group
during the year that require disclosure under the
Electoral Act 1997.
Subsidiary Companies
Information in relation to the Group’s subsidiaries is set
out in note 25 to the financial statements. The Group
does not have any branches outside of Ireland.
Stephen Garvey
Director
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Financial Statements
“
We are giving more
people the opportunity
of owning a new
home - building where
they want to live and
at a price that is more
affordable.”
Financial
Statements
s
s
e
c
c
A
Statement of directors’ responsibilities in respect of the annual report and the financial statements
Independent Auditor’s Report to the Members of Glenveagh Properties plc
Consolidated statement of profit or loss and other comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Company balance sheet
Company statement of changes in equity
Notes to the Company financial statements
Alternative Performance Measures (APMs)
96
98
104
105
106
108
109
148
149
151
154
Cluain Adain
Navan, Co. Meath
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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 year.
Under that law, the directors are required to prepare the consolidated 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 the financial year ended 31 December 2019. 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 applicable Accounting Standards have been followed, subject to any material departures disclosed
and explained in the financial statements;
» assess the Group and Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern; and
» use the going concern basis of accounting unless they either intend to liquidate the Group or Company or to
cease operations, or have no realistic alternative but to do so.
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 responsible for such internal controls as they determine
is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error, and have general 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.
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 86 to 88 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, give a true
and fair view of the assets, liabilities, and financial position of the Group and Company at 31 December 2019
and of the profit or loss of the Group for the financial year then ended;
» 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 risk 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.
On behalf of the Board
Michael Rice
Director
Stephen Garvey
Director
27 February 2020
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Independent Auditor’s Report to the Members of Glenveagh Properties PLC
Independent Auditor’s Report to the Members of Glenveagh Properties PLC
(continued)
Report on the audit of the financial statements
Opinion
We have audited the Group and Company financial statements of Glenveagh Properties PLC (‘the Group’) for the
year ended 31 December 2019 set out on pages 104 to 153, which comprise the Consolidated statement of profit
or loss and other comprehensive income, the Consolidated and Company Balance Sheets, the Consolidated and
Company Statements of Changes in Equity, the Consolidated and Company Cash Flow Statements and related
notes, including the summary of significant accounting policies set out in note 8. The financial reporting framework
that has been applied in the preparation of the Group financial statements is Irish Law and International Financial
Reporting Standards (IFRS) as adopted by the European Union and, as regards the Company financial statements,
Irish Law and FRS 101 Reduced Disclosure Framework.
In our opinion:
» the financial statements give a true and fair view of the assets, liabilities and financial position of the Group and
Company as at 31 December 2019 and of the Group’s profit for the year then ended;
» the Group financial statements have been properly prepared in accordance with IFRS as adopted by the
European Union;
» the Company financial statements have been properly prepared in accordance with FRS 101 Reduced Disclosure
Framework issued by the UK’s Financial Reporting Council; and
» the Group 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 and Risk Committee.
We were appointed as auditor by the directors on 21 August 2017. The period of total uninterrupted engagement is
the period 3 years ended 31 December 2019. 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 public interest
entities. No non-audit services prohibited by that standard were provided.
Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, 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 matter was as follows:
Carrying value of Inventory €840.5 million (2018 - €719 million) and profit recognition.
Refer to page 62 (Audit and Risk Committee Report), page 115 (accounting policy for inventories) page 113
(accounting policy for expenditure) and pages 133 to 134 (financial disclosures - inventories)
The key audit matter
How the matter was addressed in our audit
Inventories, relating to work-in-
progress on sites under development
and land yet to be developed,
represent a significant asset of
the Group.
Work-in-progress comprises of
the costs of the land being built
on, direct materials, direct labour
costs and those overheads that
have been incurred in bringing the
inventories to their present location
and condition.
Work-in-progress per site is stated
at the lower of cost and net
realisable value (“NRV”), NRV being
the estimated net selling price less
costs to sell and management’s
estimated total costs of completion.
The forecasting of selling prices
and costs to complete is inherently
judgemental and may be subject to
estimation error.
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.
The Group recognises profit on each
unit sale by reference to the overall
expected margin to be achieved on
the site.
There is a risk that the assumptions
of such forecasts and estimations
may be inaccurate with a resulting
impact on the carrying value
of inventory or the amount of
profit recognised.
Our audit procedures included, amongst others:
» We obtained and documented our understanding of the process to
determine the NRV of the Group’s work-in-progress and tested the
design and implementation of the relevant controls therein.
» For all new land acquisitions, we inspected purchase contracts and
agreed the costs of acquisition including related purchase costs.
» We agreed a sample of costs incurred and included in inventory in
the year such as direct materials, direct labour costs and overheads
to supporting documentary evidence, which included checking that
they were allocated to the appropriate site.
» We inspected the Group’s NRV reports on a sample basis and
challenged the key inputs and assumptions in the following ways:
– We agreed a sample of forecast costs to purchase
contracts, supplier agreements or tenders and other
relevant documentation.
– We evaluated the assumption in relation to forecast unit numbers to
be constructed based on appropriate documentary support.
– We compared the forecast sales prices against recent prices
achieved for similar properties to support the validity of the
estimated sales price in the forecast.
– We enquired as to whether there were any site-specific factors
which may indicate that an individual site could be impaired.
– We evaluated the sensitivity of the development margin to a
change in sales prices and costs and considered whether this
indicated a risk of impairment of the inventory balance.
– For sites in development, we compared actual unit sales and
costs incurred to NRV estimates to ensure that NRV values
were updated and that the overall expected site margin was
adjusted accordingly.
» For completed sales, we tested the accuracy of the release from
inventory to cost of sales recorded in the general ledger for
consistency with the NRV reports for the relevant sites.
» We considered the adequacy of the Group’s disclosures regarding
the carrying value of inventory.
We found that the profit margins recognised on completed sales during
the year appropriately reflected the attributable costs of the units sold.
We found that the key assumptions used in the calculations of NRV
were reasonable and supported the carrying value of inventory as at
31 December 2019, and the related disclosures in respect of work-in-
progress to be appropriate.
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CFO’s Review
Business Model & Strategy
Governance
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)
Due to the nature of the Company’s activities, there are no key audit matters that we are required to communicate
in accordance with ISAs (Ireland).
Our application of materiality and an overview of the scope of our audit
The materiality for the Group financial statements as a whole was set at €4.8 million (2018: €4.4 million). 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 €0.2 million (2018: €0.2 million). In addition, we applied
a lower specific materiality level of €1.1 million for testing profit and loss items, representing approximately 0.4%
of total revenues for the year. In our judgement, the application of this specific materiality is appropriate due to key
performance indicators of the Group.
Materiality for the parent company financial statements as a whole was set at €4.3 million (2018: €4.3 million). This
was determined with reference to a 0.5% benchmark of total assets. We reported to the Audit and Risk Committee
any corrected or uncorrected identified misstatements exceeding €0.2 million (2018: €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.
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 Euronext Dublin and UK Listing Authority Listing Rules set out on page 92 is
materially inconsistent with our audit knowledge.
We have nothing to report in these respects.
Other information
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, Chairman’s Letter,
CEO’s Review, CFO’s review, Strategic Update, Business Units, Risk Management Report, ESG Report, Corporate
Governance Report, Audit and Risk Committee Report and Remuneration and Nomination Committee Report. The
financial statements and our auditor’s report thereon do not comprise part of the other information. 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.
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 report that, in those parts of the Directors’ report specified for
our consideration:
» 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 Viability Statement on page 92 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
» the directors’ explanation in the Viability Statement 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 and Risk Committee: if the section of the Annual Report describing the work of the Audit and
Risk Committee does not appropriately address matters communicated by us to the Audit and Risk 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 of
Euronext Dublin and the UK Listing Authority 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 54 to 61, 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 2006 and specified for our consideration, is consistent with the financial statements and has been
prepared in accordance with the Act;
» 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; and
» the Corporate Governance Statement contains the information required by the European Union (Disclosure of
Non-Financial Diversity Information by certain large undertakings and groups) Regulations 2017.
We also report that, based on work undertaken for our audit, other information required by the Act is contained in
the Corporate Governance Statement.
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.
100
Glenveagh Properties PLC
Annual Report and Accounts 2019
Financial Statements
101
Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
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 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.
Michael Gibbons
for and on behalf of KPMG
Chartered Accountants, Statutory Audit Firm
1 Stokes Place
St. Stephen’s Green
Dublin 2
Ireland
27 February 2020
In our opinion, the accounting records of the Company were sufficient to permit the financial statements to be
readily and properly audited and the financial statements are in agreement with the accounting records.
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 Companies Act 2014 also requires us to report to you if, in our opinion, the Company has not provided
the information required by section 5(2) to (7) of the European Union (Disclosure of Non-Financial and Diversity
Information by certain large undertakings and groups) Regulations 2017 for the year ended 31 December 2019 as
required by the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings
and groups) (amendment) Regulations 2018.
The Listing Rules of the Euronext Dublin and the UK Listing Authority require us to review:
» the Directors’ Statement, set out on pages 91 and 92, in relation to going concern and longer-term viability;
» the part of the Corporate Governance Statement on pages 54 to 61 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.
Respective responsibilities and restrictions on use
Directors’ responsibilities
As explained more fully in their statement set out on pages 96 and 97, 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 and 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
102
Glenveagh Properties PLC
Annual Report and Accounts 2019
Financial Statements
103
Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
Consolidated statement of profit or loss and other comprehensive income
For the financial year ended 31 December 2019
Consolidated balance sheet
as at 31 December 2019
Before
exceptional
items
€’000
Note
2019
Exceptional
items
€’000
2018
Before
exceptional
items
€’000
Exceptional
items
€’000
Total
€’000
Revenue
10
284,637
Cost of sales
Gross profit
(233,150)
51,487
-
-
-
284,637
84,179
(233,150)
(68,887)
51,487
15,292
-
-
-
Total
€’000
84,179
(68,887)
15,292
Administrative expenses
11
(21,005)
(1,125)
(22,130)
(17,438)
(409)
(17,847)
Operating profit/(loss)
30,482
(1,125)
29,357
(2,146)
(409)
(2,555)
Finance expense
Profit/(loss) before tax
12
13
(2,666)
-
(2,666)
(1,414)
-
(1,414)
27,816
(1,125)
26,691
(3,560)
(409)
(3,969)
Income tax (charge)/credit
17
(3,944)
93
(3,851)
39
39
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax asset
Restricted cash
Current assets
Inventory
Trade and other receivables
Income tax receivable
Cash and cash equivalents
Total assets
Equity
Share capital
Share premium
Retained earnings
Share-based payment reserve
Profit/(loss) after tax
attributable to the
owners of the Company
Other comprehensive
income
Total comprehensive
income/(loss) for the
year attributable to the
owners of the Company
Basic earnings/(loss)
per share (cents)
Diluted earnings/(loss)
per share (cents)
16
16
23,872
(1,032)
22,840
(3,521)
(409)
(3,930)
Total equity
-
-
-
-
-
-
22,840
2.62
2.62
(3,930)
(0.53)
(0.53)
Liabilities
Non-current liabilities
Trade and other payables
Lease liabilities
Current liabilities
Trade and other payables
Income tax payable
Loans and borrowings
Lease liabilities
Total liabilities
Total liabilities and equity
Note
2019
€’000
2018
€’000
18
19
17
24
20
21
27
26
22
28
22
23
28
18,142
944
128
1,500
20,714
11,497
727
208
1,500
13,932
840,487
12,241
-
93,224
945,952
718,862
14,507
340
130,701
864,410
966,666
878,342
1,052
879,281
(57,821)
44,035
1,052
879,281
(80,661)
43,443
866,547
843,115
-
319
319
1,803
5
1,808
56,218
3,737
39,569
276
99,800
100,119
33,386
-
-
33
33,419
35,227
966,666
878,342
104
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Annual Report and Accounts 2019
Financial Statements
105
Michael Rice
Director
Stephen Garvey
Director
27 February 2020
Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
Consolidated statement of changes in equity
for the financial year ended 31 December 2019
Consolidated statement of changes in equity
for the financial year ended 31 December 2018
Share Capital
Ordinary
shares
€’000
Founder
shares
€’000
Share
premium
€’000
Share-
based
payment
reserve
€’000
Retained
earnings
€’000
Total
equity
€’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 1 January 2019
871
181
879,281
43,443
(80,661) 843,115
Balance as at 1 January 2018
667
200
666,381
47,548
(74,112)
640,684
-
-
-
-
-
-
-
-
22,840
-
22,840
-
Total comprehensive loss for the
financial year
Loss for the financial year
Other comprehensive income
-
-
-
-
-
-
-
-
(3,930)
-
(3,930)
-
871
181
879,281
43,443
(57,821) 865,955
667
200
666,381
47,548
(78,042)
636,754
Total comprehensive income for
the financial year
Profit for the financial year
Other comprehensive income
Transactions with owners of
the Company
Equity-settled share-based payments
Balance as at 31 December 2019
871
181
879,281
44,035
(57,821) 866,547
-
-
-
-
-
-
592
592
-
-
592
592
Transactions with owners of the
Company
Issue of ordinary shares for cash
Share issue costs
Conversion of Founder Shares
to ordinary shares
Equity-settled share-based payments
Balance as at 31 December 2018
185
-
19
-
204
871
-
-
212,900
-
-
-
-
(7,131)
213,085
(7,131)
(19)
-
-
-
(4,512)
407
4,512
-
-
407
(19)
212,900
(4,105)
(2,619)
206,361
181
879,281
43,443
(80,661)
843,115
106
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Annual Report and Accounts 2019
Financial Statements
107
Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
Consolidated statement of cash flows
For the financial year ended 31 December 2019
Notes to the consolidated financial statements
For the financial year ended 31 December 2019
Cash flows from operating activities
Profit/(loss) for the financial year
Adjustments for:
Depreciation and amortisation
Finance costs
Equity-settled share-based payment expense
Tax charge/(credit)
(Profit)/loss on disposal of property, plant and equipment
Changes in:
Inventories
Trade and other receivables
Trade and other payables
Cash used in operating activities
Interest paid
Tax refund/(paid)
Net cash used in operating activities
Cash flows from investing activities
Acquisition of property, plant and equipment
Acquisition of intangible assets
Cash acquired on acquisition
Proceeds from the sale of property, plant and equipment
Acquisition of subsidiary (net of cash acquired)
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Issue costs paid
Proceeds from loans and borrowings
Repayment of loans and borrowings
Transaction costs related to loans and borrowings
Payment of lease liabilities
Net cash from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Note
2019
€’000
2018
€’000
12
15
17
18
18
19
22,840
(3,930)
1,391
2,666
592
3,851
(456)
30,884
235
1,414
407
(39)
18
(1,895)
(118,605)
(1,036)
21,346
(432,031)
11,076
23,126
(67,411)
(399,724)
(2,472)
276
(1,218)
(32)
(69,607)
(400,974)
(7,747)
(491)
-
1,160
-
(10,622)
(564)
15
-
(13,663)
(7,078)
(24,834)
-
-
120,000
(80,000)
-
(792)
213,085
(7,131)
26,000
(26,000)
(1,025)
(216)
39,208
204,713
(37,477)
(221,095)
130,701
93,224
351,796
130,701
1 Reporting entity
Glenveagh Properties PLC (“the Company) is domiciled in the Republic of Ireland. The Company’s registered office
is 15 Merrion Square North, Dublin 2. These consolidated financial statements comprise the Company and its
subsidiaries (together referred to as “the Group”) and cover the financial year ended 31 December 2019. The
Group’s principal activities are the construction and sale of houses and apartments for the private buyer, local
authorities and the private rental sector.
2 Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS’s) as adopted by the European Union which comprise standards and interpretations approved by
the International Accounting Standards Board (IASB), and those parts of the Companies Act 2014 applicable to
companies reporting under IFRS and Article 4 of the IAS regulation.
This is the Group’s first set of annual financial statements in which IFRS 16 Leases has been applied. The related
changes to significant accounting policies are described in Note 6. Other than the adoption of IFRS 16, there have
been no other significant changes to the Group’s accounting policies during the year.
3 Functional and presentation currency
These consolidated financial statements are presented in Euro which is the Company’s functional currency. All
amounts have been rounded to the nearest thousand unless otherwise indicated.
4 Use of judgements and estimates
Management applies the Group’s accounting policies as described in Note 8 when making critical accounting
judgements, of which no individual judgement is deemed to have a significant impact upon the financial
statements, apart from the estimation involved in assessing the carrying value of inventories as detailed below.
(a)
Carrying value of work-in-progress, estimation of costs to complete and impact on
profit recognition
The Group holds inventories stated at the lower of cost and net realisable value. Such inventories include land and
development rights, work-in-progress and completed units. As residential development is largely speculative by
nature, not all inventories are covered by forward sales contracts. Furthermore, due to the nature of the Group’s
activity and, in particular the scale of its developments and the length of the development cycle, the Group has
to allocate site-wide development costs between units being built and/or completed in the current year and
those for future years. It also has to forecast the costs to complete on such developments. These estimates impact
management’s assessment of the net realisable value of the Group’s inventory balance and also determine the
extent of profit or loss that should be recognised in respect of each development in each reporting period.
In making such assessments and allocations, there is a degree of inherent estimation uncertainty. The Group
has established internal controls designed to effectively assess and centrally review inventory carrying values and
ensure the appropriateness of the estimates made. These assessments and allocations evolve over the life of the
development in line with the risk profile, and accordingly the margin recognised reflects these evolving assessments,
particularly in relation to the Group’s long-term developments.
108
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Annual Report and Accounts 2019
Financial Statements
109
Chairman’s Letter
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Governance
Financial Statements
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
5 Measurement of fair values
A number of the Group’s accounting policies and disclosures require the measurement of fair values, both for
financial and non-financial assets and liabilities. Fair value is defined in IFRS 13, Fair Value Measurement, as the
price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. When measuring the fair value of an asset or liability, the Group uses market
observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on
the inputs used in the valuation techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Further information about the assumptions made in measuring fair values is included in the following notes:
» Note 15 Share-based payments; and
» Note 27 Financial instruments and financial risk management.
6 Changes in significant accounting policies
The Group has initially adopted IFRS 16 Leases from 1 January 2019. A number of other new standards (IFRIC 23
Uncertainty on Tax Treatments and Annual Improvements to IFRS 2015-2017) are effective from 1 January 2019
but they do not have a material effect on the Group’s financial statements.
The Group has applied IFRS 16 using the modified retrospective approach, under which the right-of-use asset has
been measured at an amount equal to the lease liability. Accordingly, the comparative information presented for
2018 has not been restated – i.e. it is presented, as previously reported, under IAS 17 and related interpretations.
The details of the changes in accounting policy are disclosed below. The Group’s new accounting policy is
included in Note 8.13. Additionally, the disclosure requirements in IFRS 16 have not generally been applied to
comparative information.
a) Definition of a lease
Previously, the Group determined at contract inception whether an arrangement was or contained a lease under
IFRIC 4 Determining Whether an Arrangement contains a Lease. The Group now assesses whether a contract is
or contains a lease based on the new definition of a lease. Under IFRS 16, a contract is, or contains, a lease if the
contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration.
On transition to IFRS 16, the Group elected to apply the practical expedient to grandfather the assessment of which
transactions are leases. It applied IFRS 16 only to contracts that were previously identified as leases. Contracts that
were not identified as leases under IAS 17 and IFRIC 4 were not reassessed for whether there is a lease under IFRS
16. Therefore, the definition of a lease under IFRS 16 was applied only to contracts entered into or changed on or
after 1 January 2019.
b) As a lessee
As a lessee, the Group leases assets including a property and motor vehicles. The Group previously classified leases
as operating or finance leases based on its assessment of whether the lease transferred significantly all the risks
and rewards incidental to ownership of the underlying asset to the Group. Under IFRS 16, the Group recognises
right-of-use assets and leases liabilities for most of these leases – i.e. these leases are on-balance sheet.
6 Changes in significant accounting policies (continued)
b) As a lessee (continued)
For leases of properties in which it is a lessee, the Group has elected not to separate non-lease components and
will instead account for the lease and non-lease components as a single lease component.
i.
Leases classified as operating leases under IAS 17
Previously, the Group classified property and certain motor vehicles as operating leases under IAS 17. On transition,
for these leases, lease liabilities were measured at the present value of the remaining lease payments, discounted at
the Group’s incremental borrowing rate as at 1 January 2019 (see Note 6(d)(i)). Right-of-use assets are measured at
an amount equal to the lease liability. The Group applied this approach to all leases.
The Group tested its right-of-use assets for impairment on the date of transition and has concluded that there is no
indication that the right-of-use assets are impaired.
The Group used a number of practical expedients when applying IFRS 16 to leases previously classified as
operating leases under IAS 17. In particular, the Group:
» did not recognise right-of-use assets and liabilities for lease for which the lease term ends within 12 months of
the date of initial application;
» did not recognise right-of-use assets and liabilities for leases of low value assets;
» excluded initial direct costs from the measurement of the right-of-use asset at the date of initial application; and,
» used hindsight when determining the lease term.
ii.
Leases classified as finance leases under IAS 17
Previously, the Group leased certain motor vehicles and these leases were classified as finance leases under IAS
17. For these finance leases, the carrying amount of the right-of-use asset and the lease liability at 1 January 2019
were determined at the carrying amount of the lease asset and the lease liability under IAS 17 immediately before
that date.
c) As a lessor
In certain instances the Group acts as a lessor in relation to certain property assets. These arrangements are not
material to the Group’s consolidated financial statements.
d)
Impact on financial statements
(i)
Impact on transition*
On transition to IFRS 16, the Group recognised additional right-of-use assets and additional lease liabilities. The
impact on transition is summarised below and further detail is provided in Note 28.
Right-of-use assets presented in Property, Plant and Equipment
Lease liabilities
1 January
2019
€’000
1,227
1,227
111
110
Glenveagh Properties PLC
Annual Report and Accounts 2019
Financial Statements
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CEO’s Review
CFO’s Review
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Financial Statements
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
6 Changes in significant accounting policies (continued)
8 Significant accounting policies (continued)
d)
(i)
Impact on financial statements (continued)
Impact on transition* (continued)
When measuring lease liabilities for leases that were classified as operating leases, the Group discounted lease payments
using its incremental borrowing rate at 1 January 2019. The discount rate applied for all leases ranged between 2.5%-4%.
Operating lease commitment at 31 December 2018 disclosed in the Group’s
consolidated financial statements
Discounted using the incremental borrowing rate at 1 January 2019
Finance lease liabilities recognised as at 31 December 2018
Recognition exemption for leases with less than 12 month of lease term at transition
Lease liabilities recognised at 1 January 2019
1 January
2019
€’000
1,305
1,248
38
(59)
1,227
8.1 Basis of consolidation (continued)
(ii) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights
to, variable returns from its involvement with the entity and has the ability to affect those returns through its power
over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from
the date on which control commences until the date on which control ceases.
(iii) Joint operations
Joint operations arise where the Group has joint control of an operation with other parties, in which the parties have
direct rights to the assets and obligations of the operation. The Group accounts for its share of the jointly controlled
assets and liabilities and income and expenditure on a line by line basis in the consolidated financial statements.
(iv) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated.
*For the impact of IFRS 16 on profit or loss for the year and consolidated statement of cash flows, see Note 28. For
the impact of IFRS 16 on segment information see Note 9.
8.2 Revenue
7 Going concern
The Group has recorded a profit after tax of €22.8 million (2018: loss of €3.9 million). The Group has a cash
balance of €93.2 million (2018: €130.7 million) and has committed undrawn funds available of €85 million
(2018: €125 million). Having considered the Group’s cash flow forecasts, the Directors believe that the Group has
adequate resources to continue in operational existence for the foreseeable future and that it is appropriate to
prepare the financial statements on a going concern basis.
8 Significant accounting policies
The Group has consistently applied the following accounting policies to all periods presented in these consolidated
financial statements, except if mentioned otherwise.
8.1 Basis of consolidation
(i) Business combinations
The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The
consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired.
Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss
immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships.
Such amounts are generally recognised in profit or loss. Any contingent consideration is measured at fair value at
the date of acquisition. If an obligation to pay contingent consideration that meets the definition of a financial
instrument is classified as equity, then it is not remeasured, and settlement is accounted for within equity. Otherwise,
other contingent consideration is remeasured at fair value each reporting date and subsequent changes in the fair
value of the contingent consideration are recognised in profit or loss.
The Group develops and sells residential properties. Revenue is recognised at the point in time when control over
the property has been transferred to the customer, which occurs at legal completion. Revenue is measured at the
transaction price agreed under the contract.
8.3 Expenditure
Expenditure recorded in inventory is expensed through cost of sales at the time of the related property sale. The
amount of cost related to each property includes its share of the overall site costs. Administration expense is
recognised in respect of goods and services received when supplied in accordance with contractual terms.
8.4 Taxation
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it
relates to a business combination, or items recognised directly in equity or in OCI.
(i) Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any
adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or
receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to
income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current
tax also includes any tax arising from dividends.
Current tax assets and liabilities are offset only if certain criteria are met.
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Financial Statements
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
8 Significant accounting policies (continued)
8.4 Taxation (continued)
(ii) Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for:
» temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit or loss;
» temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that
the Group is able to control the timing of the reversal of the temporary differences and it is probable that they
will not reverse in the foreseeable future; and
» taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences
to the extent that it is probable that future taxable profits will be available against which they can be used. Future
taxable profits are determined based on the reversal of relevant taxable temporary differences. If the amount of
taxable temporary differences is insufficient to recognise a deferred tax asset in full, then future taxable profits,
adjusted for reversals of existing temporary differences, are considered, based on the business plans for individual
subsidiaries in the Group. Deferred tax assets are reviewed at each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the
probability of future taxable profits improves.
Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has
become probable that future taxable profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to temporary difference when they
reverse, using tax rates enacted or substantively enacted at the reporting date, and reflects uncertainty related to
income taxes, if any.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the
Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. For this
purpose, the carrying amount of investment property measured at fair value is presumed to be recovered through
sale, and the Group has not rebutted this presumption.
8 Significant accounting policies (continued)
8.6 Exceptional items
Exceptional items are those that are separately disclosed by virtue of their nature or amount in order to highlight
such items within the consolidated statement of profit or loss for the financial year. Group management exercises
judgement in assessing each particular item which, by virtue of its scale or nature, should be highlighted as an
exceptional item. Exceptional items are included within the profit or loss caption to which they relate.
In the current financial year, redundancy and restructuring costs and costs associated with the cessation of the
Hollystown Golf and Leisure Limited business are considered exceptional items (Note 11). The directors believe that
separate presentation of these exceptional expenses is useful to the reader as it allows clear presentation of the results
of the underlying business and is relevant for an understanding of the Group’s performance in the financial year.
8.7 Property, plant and equipment
Property, plant and equipment is carried at historic purchase cost less accumulated depreciation. Cost includes the
original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its
intended use. Depreciation is provided to write off the cost of the assets on a straight-line basis to their residual
value over their estimated useful lives at the following annual rates:
» Buildings
» Plant and machinery
» Fixtures and fittings
» Computer Equipment
2.5%
14-20%
20%
33%
The assets’ residual values, carrying values and useful lives are reviewed on an annual basis and adjusted if
appropriate at each reporting date.
Where an impairment is identified, the recoverable amount of the asset is identified and an impairment loss, where
appropriate, is recognised in the statement of profit or loss and other comprehensive income.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are
recognised within administration expenses in the statement of profit or loss and other comprehensive income.
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the
expenditure will flow to the Group.
Deferred tax assets and liabilities are offset only if certain criteria are met.
8.8 Intangible assets – computer software
8.5 Share-based payment arrangements
The grant date fair value of equity-settled share-based payment arrangements granted to employees is generally
recognised as an expense, with a corresponding increase in equity, over the vesting period of the awards. The
amount recognised as an expense is adjusted to reflect the number of awards for which the related service and
non-market performance conditions are expected to be met, such that the amount ultimately recognised is based
on the number of awards that meet the related service and non-market performance conditions at the vesting
date. For share-based payment awards with non-vesting conditions or market conditions, the grant date fair value
of the share-based payment is measured to reflect such conditions and there is no true-up for differences between
expected and actual outcomes.
Computer software is capitalised as intangible assets as acquired and amortised on a straight-line basis over its estimated
useful life of 3 years, in line with the period over which economic benefit from the software is expected to be derived.
The assets’ useful economic lives and residual values are reviewed and adjusted, if appropriate, at each
reporting date.
8.9 Inventory
Inventory comprises property in the course of development, completed units, land and land development rights.
Inventories are valued at the lower of cost and net realisable value. Direct cost comprises the cost of land, raw
materials and development costs but excludes indirect overheads. Land purchased for development, including land
in the course of development, is initially recorded at cost.
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Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
8 Significant accounting policies (continued)
8.9 Inventory (continued)
Where such land is purchased on deferred settlement terms, and the cost differs from the amount that will
subsequently be paid in settling the liability, this difference is charged as a finance cost in the statement of profit or
loss and other comprehensive income over the period to settlement.
A provision is made, where appropriate, to reduce the value of inventories and work-in-progress to their net
realisable value.
8.10 Financial instruments
Financial assets and financial liabilities
Under IFRS 9, financial assets and financial liabilities are initially recognised at fair value and are subsequently
measured based on their classification as described below. Their classification depends on the purpose for
which the financial instruments were acquired or issued, their characteristics and the Group’s designation of such
instruments. The standards require that all financial assets and financial liabilities be classified as fair value through
profit or loss (“FVTPL”), amortised cost, or fair value through other comprehensive income (“FVOCI”).
Classification of financial instruments
The following summarises the classification and measurement the Group has elected to apply to each of its
significant categories of financial instruments:
Type
Financial assets
Cash and cash equivalents
Other receivables
Restricted cash
Construction bonds
Financial liabilities
Bank indebtedness
Accounts payable and accrued liabilities
Cash and cash equivalents
IFRS 9
Classification
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Cash and cash equivalents include cash and short-term investments with an original maturity of three months or
less. Interest earned or accrued on these financial assets is included in other income.
8 Significant accounting policies (continued)
8.10 Financial instruments (continued)
Classification of financial instruments (continued)
Other receivables
Such receivables are included in current assets, except for those with maturities more than 12 months after the
reporting date, which are classified as non-current assets. Loans and other receivables are included in trade
and other receivables on the consolidated balance sheets and are accounted for at amortised cost. These assets
are subsequently measured at amortised cost. The amortised cost is reduced by impairment losses. The Group
recognises impairment losses on an ‘expected credit loss’ model (ECL model) basis in line with the requirements of
IFRS 9. Interest income and impairment losses are recognised in profit or loss. Any gain or loss on derecognition is
recognised in profit or loss.
Restricted cash
Restricted cash includes cash amounts which are classified as non-current assets and held in escrow until the
completion of certain criteria.
Construction bonds
Construction bonds includes amounts receivable in relation to the completion of construction activities on sites.
These assets are included in trade and other receivables on the consolidated balance sheets and are accounted for
at amortised cost.
Other liabilities
Such financial liabilities are recorded at amortised cost and include all liabilities.
8.11 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events
and it is probable that an outflow of resources will be required to settle that obligation, and the amount has been
reliably estimated.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and the risks specific to the liability, where the effect of discounting
is considered significant. The unwinding of the discount is recognised as a finance cost.
8.12 Pensions
The Group operates a defined contribution scheme. The assets of the scheme are held separately from those of the
Group in a separate fund. Obligations for contributions to defined contribution plans are expensed as the related
service is provided.
8.13 Leases
The Group has applied IFRS 16 using the modified retrospective approach and therefore the comparative
information has not been restated and continues to be reported under IAS 17 and IFRIC 4. The details of
accounting policies under IAS 17 and IFRIC 4 are disclosed separately.
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Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
8 Significant accounting policies (continued)
8.13 Leases (continued)
Policy applicable from 1 January 2019
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains,
a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group
uses the definition of a lease in IFRS 16.
This policy is applied to contracts entered into, on or after 1 January 2019.
i. As a lessee
At commencement or on modification of a contract that contains a lease component, the Group allocates the
consideration in the contract to each lease component and non-lease component on the basis of its relative stand-
alone prices. However, for the leases of property the Group has elected not to separate non-lease components and
account for the lease and non-lease components as a single lease component.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use
asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs
to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located,
less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to
the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of
the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that
case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on
the same basis as those of property and motor vehicles. In addition, the right-of-use asset is periodically reduced by
impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted using the interest rate implicit in the lease, or, if that rate cannot be readily determined, the Group’s
incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.
The Group determines its incremental borrowing rate with reference to its current financing sources and makes
certain adjustments to reflect the terms of the lease and type of the asset leased.
Lease payments included in the measurement of the lease liability comprise the following:
» fixed payments, including in-substance fixed payments;
» variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the
commencement date;
» amounts expected to be payable under a residual value guarantee; and
» the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an
optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early
termination of a lease unless the Group is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a
change in the future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate
of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it
will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment.
8 Significant accounting policies (continued)
8.13 Leases (continued)
Policy applicable from 1 January 2019 (continued)
i. As a lessee (continued)
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount
of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been
reduced to zero.
The Group presents right-of-use assets that do not meet the definition of investment property in ‘property, plant and
equipment’ and lease liabilities in ‘lease liability’ in the statement of financial position.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and
short-term lease. The Group recognises the lease payments associated with these leases as an expense on a
straight-line basis over the lease term.
ii) As a lessor
In certain instances the Group acts as a lessor in relation to certain property assets. These arrangements are not
material to the Group’s consolidated financial statements.
Policy applicable before 1 January 2019
For contracts entered into before 1 January 2019, the Group determined whether the arrangement was or
contained a lease based on the assessment of whether:
» fulfilment of the arrangement was dependent on the use of a specific asset or assets; and
» the arrangement had conveyed a right to use the asset. An arrangement conveyed the right to use the asset if
one of the following was met:
– the purchaser had the ability or right to operate the asset while obtaining or controlling more than an
insignificant amount of the output;
– the purchaser had the ability or right to control physical access to the asset while obtaining or controlling more
than an insignificant amount of the output; or
– facts and circumstances indicated that it was remote that other parties would take more than an insignificant
amount of the output, and the price per unit was neither fixed per unit of output nor equal to the current
market price per unit of output.
i. As a lessee
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.
Assets held under other leases were classified as operating leases and were not recognised in the Group’s statement
of financial position. Payments made under operating leases were recognised in profit or loss on a straight-line basis
over the term of the lease. Lease incentives received were recognised as an integral part of the total lease expense,
over the term of the lease.
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Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
8 Significant accounting policies (continued)
8.13 Leases (continued)
Policy applicable before 1 January 2019 (continued)
ii. As a lessor
In certain instances, the Group acts as a lessor in relation to certain property assets. These arrangements are not
material to the Group’s consolidated financial statements.
8.14 Share capital
(i) Ordinary shares
Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity
(retained earnings).
(ii) Founder Shares
Founder Shares were initially issued as ordinary shares and subsequently re-designated as Founder Shares.
Following re-designation, the instruments are accounted for as equity-settled share-based payments as set out at
Note 8.5 above.
8.15 Finance income and costs
The Group’s finance income and finance costs include:
» Interest income
» Interest expense
Interest income and expense is recognised using the effective interest method.
9 Segmental information
The Group has considered the requirements of IFRS 8 Operating Segments in the context of how the business is
managed and resources are allocated.
In 2019, the Group was organised into two key reportable operating segments being Glenveagh Homes and
Glenveagh Living. Internal reporting to the Chief Operating Decision Maker (“CODM”) is provided on this basis. The
CODM has been identified as the Executive Committee (as detailed in the Corporate Governance Report).
The Group currently operates solely in the Republic of Ireland and therefore no geographically segmented financial
information is provided.
Glenveagh Homes
Glenveagh Homes develops and builds starter, mid-size, executive and high-end homes (both houses and
apartments) for the residential market in Ireland, with a focus principally on the Greater Dublin Area, as well as the
Cork, Limerick and Galway regions.
9 Segmental information (continued)
Glenveagh Living
Glenveagh Living’s strategic focus is on designing, developing and delivering residential solutions for institutional
investors, social and affordable landlords, government entities and strategic landowners. Glenveagh Living intends
to augment its operations with partnership arrangements to design, develop and deliver residential schemes for
purchase by institutional investors, approved housing authorities and governmental and local authorities in Ireland.
Glenveagh Living is also the Group’s delivery platform for Private Rental Sector (“PRS”) projects, which are residential
projects that governmental authorities promote by offering a range of financial incentives, such as by granting
guarantees and other financial risk sharing incentives, in order to increase the supply of properties in the build-to-
rent market. Glenveagh Living develops residential schemes for private sector investors in PRS projects.
As outlined in the Strategy Update on pages 20 to 27, the Group’s activities have been restructured from 2020
onwards into new operating segments being Suburban, Urban and Partnerships with internal reporting to the
CODM being modified to reflect this new structure. As such, segmental information will be presented in line with this
new structure and the requirements of IFRS 8 Operating Segments in future reporting periods.
Segmental financial results
Revenue
Glenveagh Homes
Glenveagh Living
Revenue for reportable segments
Operating profit/(loss)
Glenveagh Homes
Glenveagh Living
Operating profit for reportable segments
Reconciliation to results for the year
Segment results – operating profit
Finance expense
Directors’ remuneration
Corporate function payroll
Listing costs
Depreciation and amortisation
Professional fees
Share-based payment expense
Gain on sale of property, plant and equipment
Other corporate costs
Profit/(loss) before tax
2019
€’000
2018
€’000
284,596
41
284,637
84,115
64
84,179
41,812
(1,983)
39,829
39,829
(2,666)
(2,712)
(3,631)
-
(980)
(1,256)
(592)
456
(1,757)
26,691
6,311
(1,306)
5,005
5,005
(1,414)
(2,003)
(3,137)
(409)
(34)
(845)
(407)
-
(725)
(3,969)
121
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Financial Statements
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
9 Segmental information (continued)
Segment assets and liabilities
Glenveagh
Homes
€’000
2019
Glenveagh
Living
€’000
Total Glenveagh
Homes
€’000
€’000
2018
Glenveagh
Living
€’000
Total
€’000
Segment assets
759,958
163,364
923,322
632,503
130,324
762,827
Reconciliation to
Consolidated Balance Sheet
Deferred tax asset
Trade and other receivables
Cash and cash equivalents
Property, plant and equipment
Intangible assets
31
338
25,251
16,855
869
966,666
71
1,117
106,650
7,677
-
878,342
Segment liabilities
54,872
1,292
56,164
30,708
2,660
33,368
Reconciliation to
Consolidated Balance Sheet
Trade and other payables
Interest accrual
Loans and Borrowings
4,386
-
39,569
100,119
1,663
196
-
35,227
10 Revenue
Residential property sales
Land sales
Income from property rental and other income
All revenue is earned in the Republic of Ireland.
11 Exceptional items
2019
€’000
2018
€’000
280,035
4,300
302
284,637
78,971
4,950
258
84,179
In the current financial year, redundancy and restructuring costs and costs associated with the cessation of the
Hollystown Golf and Leisure Limited (“HGL”) business of €1.1 million have been classified as exceptional items in
accordance with the Group’s accounting policy set out at Note 8.6.
In the prior financial year, listing costs of €0.4 million relating to the Group’s Firm Placing and Open Offer were
classified as exceptional items in the prior financial year.
Corporate and HGL redundancy costs
HGL closure costs
Listing costs
12 Finance Expense
Interest on secured bank loans
Finance cost on lease liabilities
2019
€’000
817
308
-
1,125
2019
€’000
2,634
32
2,666
2018
€’000
-
-
409
409
2018
€’000
1,414
-
1,414
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Financial Statements
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
13 Statutory and other information
Amortisation of intangible assets (Note 19)
Depreciation of property, plant and equipment (Note 18)*
Employment costs (Note 14)
(Profit)/loss on disposal of property, plant and equipment
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
2019
€’000
299
1,937
28,567
(456)
120
15
18
32
185
2,605
88
2,693
2018
€’000
61
645
19,885
18
120
315
48
29
512
1,963
40
2,003
* Includes €0.8 million (2018: €0.5 million) capitalised in inventory during the year ended 31 December 2019
** Included in the auditor’s remuneration for the Group is an amount of €0.015 million (2018: €0.015 million) that
relates to the Company’s financial statements.
14 Employment costs
The average number of persons employed by the Group (including Executive Directors) during the financial year was
313 (Executive Committee: 4; Non-Executive Directors:4, Construction: 198; and Other: 107). (2018: Executive
Committee: 4; Non-Executive Directors: 4, Construction: 126; and Other: 66)
14 Employment costs (continued)
The aggregate payroll costs of these employees for the financial year were:
Wages and salaries
Social welfare costs
Pension costs - defined contribution
Share-based payment expense (Note 15)
Before
Exceptional
items
€’000
2019
Exceptional
items
€’000
23,723
2,316
1,119
592
27,750
745
72
-
-
817
Total
€’000
24,468
2,388
1,119
592
28,567
2018
Total
€’000
16,998
1,685
795
407
19,885
€12.9 million (2018: €7.3 million) of employment costs were capitalised in inventory during the financial year.
15 Share-based payment arrangements
The Group operates three equity-settled share-based payment arrangements being the Founder Share scheme, the
Long-Term Incentive Plan (“LTIP”) and the Savings Related Share Option Scheme (known as the Save As You Earn or
“SAYE” scheme). As described below, options were granted under the terms of the LTIP and SAYE schemes during
the financial year.
(a) Founder Share Scheme
The Founders of the Company (John Mulcahy, Justin Bickle (beneficially held by Durrow Ventures), and Stephen
Garvey) subscribed for a total of 200,000,000 ordinary shares of €0.001 each for cash at par value during 2017,
which were subsequently converted to Founder Shares in advance of the Company’s initial public offering. These
shares entitle the Founders to share 20% of the Company’s Total Shareholder Return (“TSR”) (being the increase
in market capitalisation of the Company, plus dividends or distributions in the relevant period) in each of five
individual testing periods up to 30 June 2022, subject to achievement of a performance condition related to the
Company’s share price. Further details in respect of the Founder Shares are outlined in Note 26.
Following the completion of the second test period (which ran from 1 March 2019 until 30 June 2019), it was
confirmed that, the performance condition related to the Company’s share price was not satisfied and therefore the
Founder Share Value in respect of the test period was €nil and accordingly no Founder Shares were converted to
ordinary shares during the year.
(b) LTIP
On 17 April 2019, the Remuneration and Nomination Committee approved the grant of 2,750,293 options to
certain members of the management team 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
3-year annualised TSR reaches 6.25% per annum with the remaining options vesting on a pro rata basis up to
100% if TSR of 12.5% is achieved. The entire grant of options remain outstanding at 31 December 2019.
124
Glenveagh Properties PLC
Annual Report and Accounts 2019
Financial Statements
125
Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
15 Share-based payment arrangements (continued)
15 Share-based payment arrangements (continued)
(b) LTIP (continued)
(c) SAYE Scheme
LTIP options in issue at 1 January
Granted during the year
Forfeited during the year
LTIP options in issue at 31 December
Number
of Options
2019
Number
of Options
2018
2,351,743
2,750,293
(416,236)
1,588,500
839,065
(75,822)
4,685,800
2,351,743
On 1 October 2019, the Remuneration and Nomination Committee approved the grant of 966,420 options to
employees of the Group. Under the terms of the scheme, employees may save up to €500 per month from their
net salaries for a fixed term of three or five years and at the end of the savings period they have the option to buy
shares in the Company at a fixed exercise price.
Details of options outstanding and grant date fair value assumptions
2019
2018
Number of
Options
3 Year
Number of
Options
5 Year
341,640
771,420
(306,720)
150,000
195,000
(35,000)
Number of
Options
3 Year
-
-
356,040
(14,400)
Number of
Options
5 Year
-
150,000
-
Exercisable at 31 December
-
-
The fair value of LTIP options granted in the period was measured using a Monte Carlo simulation. Service and
non-market conditions attached to the arrangements were not taken into account when measuring fair value. The
inputs used in measuring fair value at grant date were as follows:
SAYE options in issue at 1 January
Granted during the financial year
Cancelled during the financial year
Fair value at grant date
Share price at grant date
Valuation methodology
Exercise price
Expected volatility
Expected life
Expected dividend yield
Risk free rate
2019
Tranche 1
2018
Tranche 1
2018
Tranche 2
€0.32
€0.84
€0.48
€1.16
€0.31
€0.87
Monte Carlo Monte Carlo Monte Carlo
€0.001
28.1%
3 years
0%
-0.42%
€0.001
34.3%
3 years
0%
-0.45%
€0.001
27.0%
3 years
0%
-0.55%
The exercise price of all options granted under the LTIP to date is €0.001 and all options have a 7- year
contractual life.
Given the Group did not have an extensive trading history at grant date, expected share price and TSR volatility
was based on the volatility of a comparator group of peer companies over the expected life of the equity
instruments granted together with consideration of the Group’s actual trading volatility to date.
The Group recognised an expense of €0.6 million (2017: €0.04 million) in the consolidated statement of profit or
loss in respect of options granted under the LTIP.
SAYE options in issue at 31 December
806,340
310,000
341,640
150,000
2019
2018
3 Year
5 Year
3 Year
5 Year
Fair value at grant date
Share price at grant date
Valuation Methodology
Exercise price
Expected volatility
Expected life
Expected dividend yield
Risk free rate
€0.20
€1.03
€0.21
€0.75
€0.21
€0.75
€0.23
€1.03
Monte Carlo Monte Carlo Monte Carlo Monte Carlo
€1.00
29.6%
5 years
1.4%
-0.42%
€0.60
29.6%
5 years
1.4%
-0.78%
€1.00
26.8%
3 years
0%
-0.14%
€0.60
27.5%
3 years
0%
-0.82%
The weighted average exercise price of all options granted under the SAYE to date is €0.77.
Given the Group did not have an extensive trading history at grant date, expected share price and TSR volatility
was based on the volatility of a comparator group of peer companies over the expected life of the equity
instruments granted together with consideration of the Group’s actual trading volatility to date.
The Group recognised an expense of €0.01 million consolidated statement of profit or loss in respect of options
granted under the SAYE scheme.
126
Glenveagh Properties PLC
Annual Report and Accounts 2019
Financial Statements
127
Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
16 Earnings per share
a) Basic Earnings per share
16 Earnings per share (continued)
b) Diluted Earnings per share (continued)
The calculation of basic earnings per share has been based on the profit attributable to ordinary shareholders
and the weighted average numbers of shares outstanding for the financial year. There were 871,333,550 ordinary
shares in issue at 31 December 2019 (2018: 871,333,550).
** Under IAS 33, Founders Shares and LTIP arrangements have an assumed test period ending on 31 December
2019. Based on this assumed test period no ordinary shares would be issued through the conversion of Founder
Shares and LTIP as the performance conditions were not met.
Profit/(loss) for the financial year attributable to ordinary shareholders (€’000)
Weighted average number of shares for the financial year
22,840
(3,930)
871,333,550 745,664,898
Basic earnings/(loss) per share (cents)
2.62
(0.53)
2019
2018
At 31 December 2019, 1,116,340 options (2018: 2,843,383) were excluded from the diluted weighted average
number of ordinary shares because their effect would have been anti-dilutive. As a result, there was no difference
between basic and diluted earnings per share.
17 Income tax
Reconciliation of weighted average number of shares (basic)
Issued ordinary shares at beginning of financial year
Effect of Founder Shares Converted
Effect of shares issued for cash
b) Diluted Earnings per share
2019
2018
No. of shares No. of shares
871,333,550 667,049,000
7,545,229
71,070,669
-
-
871,333,550 745,664,898
2019
2018
Profit/(loss) for the financial year attributable to ordinary shareholders (€’000)
Weighted average number of shares for the financial year
22,840
(3,930)
871,333,550 745,664,898
Diluted earnings/(loss) per share (cents)
2.62
(0.53)
Reconciliation of weighted average number of shares (diluted)
Weighted average number of ordinary shares (basic)
Effect of share options on issue**
2019
2018*
No. of shares No. of shares
871,333,550 745,664,898
-
-
871,333,550 745,664,898
*The number of potentially issuable shares in the Group held under option or Founder Share arrangements at 31
December 2019 is 185,692,638 (2018: 183,850,221).
Before
Exceptional
items
€’000
2019
Exceptional
items
€’000
Current tax charge for the financial year
Deferred tax charge/(credit) for the financial year
Total income tax charge/(credit)
3,864
80
3,944
(93)
-
(93)
2018
Total
€’000
18
(57)
(39)
Total
€’000
3,771
80
3,851
The tax assessed for the financial year differs from the standard rate of tax in Ireland for the financial year. The
differences are explained below.
2019
€’000
2018
€’000
Profit/(loss) before tax for the financial year
26,691
(3,969)
Tax charge/(credit) at standard Irish income tax rate of 12.5%
3,336
(496)
Tax effect of:
Income taxed at the higher rate of corporation tax
Non-deductible expenses – other
Other adjustments
Total income tax charge/(credit)
222
230
63
3,851
324
109
24
(39)
128
Glenveagh Properties PLC
Annual Report and Accounts 2019
Financial Statements
129
Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
17 Income tax (continued)
Movement in deferred tax balances
Tax losses carried forward
Balance at
1 January
2019
€’000
Recognised
in profit
or loss
€’000
Balance at
31 December
2019
€’000
208
208
(80)
(80)
128
128
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.
18 Property, plant and equipment
Cost
At 1 January 2019
Recognition of right-of-use asset on
initial application of IFRS 16
Adjusted at 1 January 2019
Additions
Disposals
At 31 December 2019
Accumulated depreciation
At 1 January 2019
Charge for the financial year
Disposals
At 31 December 2019
Net book value
At 31 December 2019
Land &
buildings
€’000
Fixtures &
fittings
€’000
Plant &
machinery
€’000
Computer
equipment
€’000
Total
€’000
7,713
748
3,341
407
12,209
876
-
351
-
1,227
8,589
5,281
(704)
13,166
(36)
(743)
-
(779)
748
21
(7)
762
(89)
(141)
2
3,692
2,616
-
6,308
407
146
-
553
13,436
8,064
(711)
20,789
(500)
(896)
-
(87)
(157)
-
(712)
(1,937)
2
(228)
(1,396)
(244)
(2,647)
12,387
534
4,912
309
18,142
18 Property, plant and equipment (continued)
Cost
At 1 January 2018
Acquisitions through business
combinations
Additions
Disposals
At 31 December 2018
Accumulated depreciation
At 1 January 2018
Charge for the financial year
Disposals
At 31 December 2018
Net book value
At 31 December 2018
Land &
buildings
€’000
Fixtures &
fittings
€’000
Plant &
machinery
€’000
Computer
equipment
€’000
Total
€’000
-
331
1,161
57
1,549
-
7,713
-
7,713
-
(36)
-
(36)
-
417
-
748
(15)
(74)
-
(89)
62
2,136
(18)
3,341
(50)
(452)
2
(500)
-
356
(6)
407
(8)
(83)
4
(87)
62
10,622
(24)
12,209
(73)
(645)
6
(712)
7,677
659
2,841
320
11,497
The depreciation charge for the year includes €0.8 million (2018: €0.5 million) which was capitalised in inventory at
31 December 2019.
130
Glenveagh Properties PLC
Annual Report and Accounts 2019
Financial Statements
131
Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
19 Intangible assets
20 Inventory
Licence
€’000
Computer
Software
€’000
Total
€’000
858
516
Land held for development (i)
Development expenditure (ii)
Development rights (iii)
2019
€’000
647,513
172,683
20,291
2018
€’000
597,028
100,964
20,870
840,487
718,862
Cost
At 1 January 2019
Additions
At 31 December 2019
Accumulated amortisation
At 1 January 2019
Charge for the year
At 31 December 2019
Net book value
At 31 December 2019
Cost
At 1 January 2018
Acquisitions through business
combinations
Additions
At 31 December 2018
Accumulated amortisation
At 1 January 2018
Charge for the year
At 31 December 2018
Net book value
At 31 December 2018
49
895
944
Licence
€’000
Computer
Software
€’000
Total
€’000
709
516
1,225
1,374
(131)
(199)
(330)
(131)
(299)
(430)
145
-
564
709
(70)
(61)
145
149
564
858
(70)
(61)
149
-
149
-
(100)
(100)
-
149
-
149
-
-
-
€227.3 million (2018: €66.6 million) of inventory was recognised in ‘cost of sales’ during the year ended
31 December 2019.
(i) Significant development land acquisitions completed during the year
Maryborough Ridge, Cork
As at 31 December 2018, the Group had entered into an unconditional contract to acquire 24.34 acres of
zoned land for residential development at Maryborough Ridge a development site at Douglas, Co. Cork for total
consideration of €12.5 million (excluding fees and stamp duty). A deposit of €1.3 million was paid in 2018 and was
recognised within trade and other receivables as at 31 December 2018. The transaction subsequently completed in
February 2019 resulting in the transfer of the full amount to inventory.
Castleknock
As at 31 December 2018, the Group had contracted to acquire a development site at Carpenterstown Road,
Castleknock, Co. Dublin for total consideration of €9.3 million (excluding fees and stamp duty). A deposit of €0.9
million was paid in 2018 and was recognised within trade and other receivables at 31 December 2018. The
transaction subsequently completed in January 2019 resulting in the transfer of the full amount to inventory.
Project Arrow
In March 2019 the Group acquired two development sites located in Leixlip and Newbridge, Co. Kildare for total
consideration of approximately €50 million (excluding fees and stamp duty).
Kilruddery, Co. Wicklow / Howth, Co. Dublin
In June 2019 the Group acquired two development sites for an aggregate consideration of approximately €24m
(excluding fees and stamp duty) at Kilruddery, Bray Co. Wicklow and at Howth Co. Dublin.
Rathmullan Road, Drogheda, Co. Meath
(131)
(131)
In July 2019 the Group acquired a 30 acre site at Rathmullan Road, Drogheda, Co. Meath for total consideration of
€7.4m (excluding fees and stamp duty).
149
578
727
€12.9 million of employment costs incurred during the year have been capitalised in inventory (2018: €7.3 million).
(ii) Employment cost capitalised
132
Glenveagh Properties PLC
Annual Report and Accounts 2019
Financial Statements
133
Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
20 Inventory (continued)
(iii) Development rights
Tallaght, Dublin 24 / Gateway Retail Park, Co. Galway
In March 2018, the Group entered into an Acquisition and Profit Share Agreement (“APSA”) with Targeted
Investment Opportunities ICAV (“TIO”), a wholly owned subsidiary of OCM Luxembourg EPF III S.a.r.l. Under the
terms of the APSA, the Group acquired certain development rights in respect of sites at The Square Shopping
Centre, Tallaght, Dublin 24 and Gateway Retail Park, Knocknacarra, Co. Galway for aggregate consideration of
approximately €13.9 million (including stamp duty and acquisition costs). The development rights will (subject
to planning) entitle the Group to develop at least 750 residential units under two joint business plans to be
undertaken with Sigma Retail Partners (on behalf of TIO) which will also entitle TIO to control and benefit from any
retail development at both sites. The Directors have determined that joint control over both sites exists and the
arrangements have been accounted for as joint operations in accordance with IFRS 11 Joint Arrangements. For
further information regarding the APSA, see Note 29 of these financial statements.
Maryborough Ridge, Cork
In December 2018, the Group entered into a licence agreement to develop 18.65 acres at Maryborough Ridge,
Cork. At 31 December 2019 an amount of €6.4 million (2018: €6.9 million) is included within inventory in line with
the conditions of the licence agreement as outlined in Note 30.
21 Trade and other receivables
Trade receivables
Other receivables
Prepayments
Unamortised transaction costs on debt facility
VAT recoverable
Construction bonds
Deposits for sites
2019
€’000
3,412
2,482
393
-
-
4,401
1,553
2018
€’000
249
70
1,065
788
6,461
3,377
2,497
12,241
14,507
22 Trade and other payables
Trade payables
Payroll and other taxes
Inventory accruals
Other accruals
VAT payable
Interest accrual
Non-current
Current
2019
€’000
7,455
2,755
22,017
5,709
18,282
-
56,218
-
56,218
56,218
2018
€’000
7,821
2,787
21,289
3,096
-
196
35,189
1,803
33,386
35,189
The carrying value of all financial liabilities and trade and other payables is approximate to their fair value and are
repayable on demand.
23 Loans and Borrowings
(a) Loans and borrowings
The Group is party to a Revolving Credit Facility for a total of €250 million (of which €125 million is committed) with
a syndicate of domestic and international banks for a term of 3 years at an interest rate of one-month EURIBOR
(subject to a floor of 0 per cent.) plus a margin of 2.5%. At 31 December 2019, €40.0 million (31 December 2018:
€nil) had been drawn on the facility. Pursuant to the RCF agreement, there is a fixed and floating charge in place
over certain assets of the Group as continuing security for the discharge of any amounts drawn down.
31 December
2019
€’000
31 December
2018
€’000
40,000
(446)
15
39,569
-
-
-
-
The carrying value of all financial assets and trade and other receivables is approximate to their fair value and are
repayable on demand.
Revolving Credit Facility
Unamortised borrowing costs*
Interest accrued*
Total loans and borrowings
134
Glenveagh Properties PLC
Annual Report and Accounts 2019
Financial Statements
135
The Group’s RCF was entered into with AIB, Barclays and HSBC and is subject to primary financial covenants
calculated on a quarterly basis:
» A maximum net debt to net assets ratio;
» The Group is required to maintain a minimum cash balance of €25.0 million throughout the term of the facility; and
» A minimum EBITDA to net interest coverage ratio.
*The Group had €Nil loans and borrowings at 31 December 2018 and accordingly the unamortised transaction
costs asset was classified within trade and other receivables at that date. Interest accrued was classified within trade
and other payables at 31 December 2018.
Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
9
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136
23 Loans and Borrowings (continued)
(c) Net (debt) / funds reconciliation
Cash and cash equivalents
Loans and borrowings
Lease liabilities
Total net funds
(d) Lease Liabilities
Lease liabilities are payable as follows:
Less than one year
Between one and two years
More than two years
24 Restricted cash
31 December
2019
€’000
31 December
2018
€’000
93,224
(39,569)
(595)
130,701
-
(38)
53,060
130,663
31 December 2019
Present value of
minimum lease
payments
€’000
Future value of
minimum lease
payments
€’000
Interest
€’000
423
102
18
543
49
2
1
52
472
104
19
595
The restricted cash balance relates to €1.5 million held in escrow until the completion of certain infrastructural works
relating to the Group’s residential development at Balbriggan, Co. Dublin. The estimated fair value of restricted cash
as at 31 December 2019 is its carrying value.
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L
Glenveagh Properties PLC
Annual Report and Accounts 2019
Financial Statements
137
Chairman’s Letter
CEO’s Review
CFO’s Review
Business Model & Strategy
Governance
Financial Statements
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
25 Subsidiaries
The subsidiary companies (all of which are resident in Ireland) and the percentage shareholdings held by Glenveagh
Properties PLC, either directly or indirectly, at 31 December 2019 are as follows:
Company
Principal activity
%
Reg.office
Glenveagh Properties (Holdings) Limited
Holding company
Glenveagh Treasury DAC
Financing activities
Glenveagh Contracting Limited
Property development
Glenveagh Homes Limited
Greystones Devco Limited
Marina Quarter Limited
GLV Bay Lane Limited
Glenveagh Living Limited
Property development
Property development
Property development
Property development
Property development
GL Partnership Opportunities DAC
Property development
GL Partnership Opportunities II DAC
Property development
Hollystown Golf & Leisure Limited
Golf Club operations
GLL PRS HoldCo Limited
GLL Partnership HoldCo Limited
GLL HoldCo Limited
Into the Future (South) Limited
Feathermist Limited
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Braddington Developments Limited
Dormant company
Bulwark Limited
Dormant company
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
1
2
2
2
2
2
2
1
1
1
2
1
1
1
2
2
2
1
1
2
15 Merrion Square North, Dublin 2, D02 YN15
Block B, Maynooth Business Campus, Maynooth, Co. Kildare, W23W5X7
26 Share capital and share premium
(a) Authorised share capital
2019
Number
of shares
Ordinary Shares of €0.001 each
Founder Shares of €0.001 each
Deferred Shares of €0.001 each
1,000,000,000
200,000,000
200,000,000
€’000
1,000
200
200
2018
Number
of shares
1,000,000,000
200,000,000
200,000,000
1,400,000,000
1,400
1,400,000,000
(b)
Issued share capital and share premium
At 31 December 2019
Ordinary Shares of €0.001 each
Founder Shares of €0.001 each
At 31 December 2018
Ordinary Shares of €0.001 each
Founder Shares of €0.001 each
(c) Reconciliation of shares in issue
In respect of current year
In issue at 1 January 2019
Issued for cash
Conversion of Founder Shares
Number
of shares
871,333,550
181,006,838
1,052,340,388
Number
of shares
871,333,550
181,006,838
1,052,340,388
Ordinary
shares
‘000
Founder
shares
‘000
871,333
-
-
871,333
181,007
-
-
181,007
Share
capital
€‘000
871
181
1,052
Share
Capital
€‘000
871
181
1,052
Share
capital
€‘000
1,052
-
-
1,052
€’000
1,000
200
200
1,400
Share
premium
€’000
879,281
-
879,281
Share
premium
€’000
879,281
-
879,281
Share
premium
€’000
879,281
-
-
879,281
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Financial Statements
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CEO’s Review
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Financial Statements
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
26 Share capital and share premium (continued)
(c) Reconciliation of shares in issue (continued)
Ordinary
shares
‘000
Founder
shares
‘000
Share
capital
€‘000
Share
premium
€’000
667,049
185,291
18,993
200,000
-
(18,993)
867
185
-
666,381
212,900
-
871,333
181,007
1,052
879,281
In respect of prior year
In issue at 1 January 2018
Issued for cash
Conversion of Founder Shares
(d) Rights of shares in issue
Ordinary Shares
The holders of Ordinary Shares are entitled to one vote per Ordinary Share at general meetings of the Company
and are entitled to receive dividends as declared by the Company.
Founder Shares
Founder Shares entitle the Founders of the Company namely, Justin Bickle (through Durrow Ventures), Stephen
Garvey and John Mulcahy to share 20% of the Company’s TSR (calculated by reference to the change of control
price plus dividends and distributions made) between admission and the change of control (less the value of
any ordinary shares (at their original conversion or redemption price)) which have previously been converted or
redeemed in the five years following the IPO of the Company.
This entitlement is subject to the achievement of a performance condition related to the Company’s share price,
specifically that a compound rate of return of 12.5% (adjusted for any dividends or other distributions and returns
of capital made but excluding the value of any Founder Shares which have been redeemed) is achieved across five
testing periods.
Following completion of the second test period (which ran from 1 March 2019 until 30 June 2019), it was confirmed
that, the performance hurdle condition was not satisfied and therefore the Founder Shares Value for the test period
was zero, and accordingly no Founder Shares were converted to ordinary shares in respect of this test period.
Capital re-organisation
At an Extraordinary General Meeting of the Company held on 17 December 2019, the shareholders approved
(subject to the approval of the High Court) an increase of the distributable reserves of the Company by the transfer
of an amount of up to €700 million from the Company’s share premium account to distributable reserves (namely
retained earnings). This transfer will be reflected in the Group and Company financial statements once approved by
the High Court.
27 Financial instruments and financial risk management
The consolidated financial assets and financial liabilities are set out below. While all financial assets and liabilities
are measured at amortised cost, the carrying amounts of the consolidated financial assets and financial liabilities
approximate to fair value. Trade and other receivables and trade and other payables approximate to their fair value
as the transactions which give rise to these balances arise in the normal course of trade and, where relevant, with
industry standard payment terms and have a short period to maturity (less than one year).
Financial instruments: financial assets
The consolidated financial assets can be summarised as follows:
Trade receivables
Other receivables
Construction bonds
Deposits for sites
Cash and cash equivalents
Restricted cash (non-current)
Total financial assets
2019
€’000
2018
€’000
3,412
2,482
4,401
1,553
93,224
1,500
249
70
3,377
2,497
130,701
1,500
106,572
138,394
2019
€’000
7,455
595
22,017
5,709
35,776
2018
€’000
7,821
38
21,289
3,096
32,244
Trade payables
Lease liabilities (2018: finance lease obligations)
Inventory accruals
Other accruals
Total financial liabilities
Trade payables and other current liabilities are non-interest bearing.
Financial risk management objectives and policies
As all of the operations carried out by the Group are in Euro there is no direct currency risk, and therefore the
Group’s main financial risks are primarily:
» liquidity risk – the risk that suitable funding for the Group’s activities may not be available;
» credit risk – the risk that a counter-party will default on their contractual obligations resulting in a financial loss
to the Group; and
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.
Cash and cash equivalents are short-term deposits held at variable rates.
Financial instruments: financial liabilities
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Financial Statements
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
27 Financial instruments and financial risk management (continued)
27 Financial instruments and financial risk management (continued)
Financial risk management objectives and policies (continued)
Financial risk management objectives and policies (continued)
» market risk – the risk that changes in market prices, such as interest rates and equity prices will affect the
Liquidity risk (continued)
Group’s income or the value of its holdings of financial instruments.
This note presents information and quantitative disclosures about the Group’s exposure to each of the above risks,
its objectives, policies and processes for measuring and managing risk, and the Group’s management of capital.
Liquidity risk
Liquidity risk is the risk that the Group may not be able to generate sufficient cash reserves to settle its obligations
in full as they fall due or can only do so on terms that are materially disadvantageous. The Group’s approach to
managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities
when due, under both normal and stressed conditions, without incurring, unacceptable losses or risking damage to
the Group’s reputation. The Group’s liquidity forecasts consider all planned development expenditure.
Management monitors the adequacy of the Group’s liquidity reserves against rolling cash flow forecasts. In addition,
the Group’s liquidity risk management policy involves monitoring short-term and long-term cash flow forecasts. Set
out below are details of the Group’s contractual cash flows arising from its financial liabilities and funds available to
meet these liabilities.
Lease liabilities
Trade payables
Inventory accruals
Other accruals
Loans and borrowings*
Finance lease obligations
Trade payables
Inventory accruals
Other accruals
Loans and borrowings*
31 December 2019
Carrying
amount
€’000
Contractual
cash flows
€’000
Less than
1 year
€’000
1 year
to 2 years
€’000
More than
2 years
€’000
595
7,455
22,017
5,709
39,569
75,345
595
7,455
22,017
5,709
41,244
276
7,455
22,017
5,709
40,862
77,020
76,319
319
-
-
-
382
701
-
-
-
-
-
-
31 December 2018
Carrying
amount
€’000
Contractual
cash flows
€’000
Less than
1 year
€’000
1 year
to 2 years
€’000
More than
2 years
€’000
38
7,821
21,289
3,096
-
32,244
42
7,821
23,713
672
2,920
36
7,821
23,713
672
1,252
35,168
33,494
6
-
-
-
1,252
1,258
-
-
-
-
416
416
*Contracted cash flows on loans and borrowings in the prior year related to commitment fee payable on the RCF.
Funds available
Revolving credit facility* (undrawn committed)
Cash and cash equivalents
2019
€’000
2018
€’000
85,000
93,224
125,000
130,701
178,224
255,701
*The Group’s RCF contains a mechanism through which the committed amount can be increased up to €250.0
million. Under the terms of the Group’s RCF, the Group is required to maintain a minimum cash balance of €25.0
million in cash and cash equivalents throughout the term of the facility.
The Group’s RCF is subject to primary financial covenants calculated on a quarterly basis:
» A maximum net debt to net assets ratio;
» A minimum cash reserves limit; and
» A minimum EBITDA to net interest coverage ratio.
Credit risk
The Group’s exposure to credit risk encompasses the financial assets being: trade and receivables and cash and
cash equivalents. Credit risk is managed by regularly monitoring the Group’s credit exposure to each counter-party
to ensure credit quality of customers and financial institutions in line with internal limits approved by the Board.
There has been no impairment of trade receivables in the year presented. The impairment loss allowance allocated
against trade receivables, cash and cash equivalents and restricted cash is not material. The credit risk on cash and
cash equivalents is limited because counter-parties are leading international banks with minimum long-term BBB-
credit-ratings assigned by international credit agencies. The maximum amount of credit exposure is the financial
assets in this note.
Market risk
The Group’s exposure to market risk relates to changes to interest rates and stems predominately from its debt
obligations. In the prior year, the Group entered in to a RCF for a total of €250.0 million (of which €125.0 million is
committed) with a syndicate of domestic and international banks for a term of 3 years at an interest rate of EURIBOR
(subject to a floor of 0 per cent.) plus 2.5%. €40 million (2018: €nil) had been drawn on the facility at 31 December
2019. The Group has an exposure to cash flow interest rate risk where there are changes in the EURIBOR rates.
A fundamental review and reform of major interest rate benchmarks is being undertaken globally. There is
uncertainty as to the timing and the methods of transition for replacing existing benchmark interbank offered rates
(IBORs) with alternative rates.
IBOR continues to be used as a reference rate in financial markets and is used in the valuation of instruments with
maturities that exceed the expected end date for IBOR. Therefore, the Group believes the current market structure
supports the valuation of our debt obligations as at 31 December 2019.
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Financial Statements
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Financial Statements
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
27 Financial instruments and financial risk management (continued)
28 Leases (continued)
Financial risk management objectives and policies (continued)
Capital management
The Group finances its operations by a combination of shareholders’ funds and working capital. The Group’s
objective when managing capital is to maintain an appropriate capital structure in the business to allow
management to focus on creating sustainable long-term value for its shareholders, with flexibility to take advantage
of opportunities as they arise in the short and medium term. This allows the Group to take advantage of prevailing
market conditions by investing in land and work-in-progress at the right point in the cycle.
28 Leases
A. Leases as lessee (IFRS 16)
The Group leases a property and motor vehicles. The leases typically run for a period of 1-3 years, with an option
to renew the lease after that date. Lease payments are renegotiated every 1-3 years to reflect market rentals.
The Group leases certain motor vehicles with contract terms of one year. These leases are short term and leases of
low-value items. The Group has elected not to recognise right-of-use assets and lease liabilities for these leases.
Information about leases for which the Group is a lessee is presented below.
i.
Right-of-use assets
Right-of-use assets related to leased properties (that do not meet the definition of investment property) and motor
vehicles are presented as property, plant and equipment (see Note 18).
2019
Balance at 1 January
Depreciation charge for the year
Additions to right-of-use assets
Balance at 31 December
ii. Amounts recognised in profit or loss
2019 – Leases under IFRS 16
Interest on lease liabilities
Expenses relating to short-term leases
2018 – Operating leases under IAS 17
Lease expense
Property
€’000
Motor
Vehicles
€’000
876
(596)
-
280
351
(148)
90
293
Total
€’000
1,227
(744)
90
573
2019
€’000
32
80
771
A. Leases as lessee (IFRS 16) (continued)
iii. Amounts recognised in statement of cash flows
Total cash outflow on leases
B.
Leases as lessor
2019
€’000
792
In certain instances, the Group acts as a lessor in relation to certain property assets. These arrangements are not
material to the Group’s consolidated financial statements.
29 Related party transactions
(i) Key Management Personnel remuneration
Key management personnel comprise the Non-Executive Directors and the Executive Committee. The aggregate
compensation paid or payable to key management personnel in respect of the financial year was the following:
Short-term employee benefits
Post-employment benefits
LTIP and SAYE share-based payment expense
(ii)
Other related party transaction
Prior year transaction
2019
€’000
2,912
116
66
3,094
2018
€’000
2,357
74
50
2,481
The Group entered into the APSA with TIO, a wholly owned subsidiary of OCM Luxembourg EPF III S.a.r.l. (OCM)
(and an entity in which John Mulcahy and Justin Bickle are directors) on 12 March 2018.
Under the terms of the APSA, the Group acquired certain development rights in respect of sites at The Square
Shopping Centre, Tallaght, Dublin 24 and Gateway Retail Park, Knocknacarra, Co. Galway for aggregate
consideration of approximately €13.9 million (including stamp duty and transaction costs). The development rights
will (subject to planning) entitle the Group to develop at least 750 residential units under two joint business plans
to be undertaken with Sigma Retail Partners (on behalf of TIO) which will also entitle TIO to control and benefit from
any retail development at both sites.
The Directors have determined that joint control over both sites exists and the arrangements have been accounted
for as joint operations in accordance with IFRS 11 Joint Arrangements. This accounting treatment was re-assessed at
the end of the reporting period and the Director’s concluded that it remains appropriate.
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Financial Statements
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the consolidated financial statements
For the financial year ended 31 December 2019 (continued)
31 Subsequent events
No events have occurred subsequent to the reporting date that require disclosure in these financial statements.
32 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 financial year was €1.1 million (for the period ended 31 December 2018: loss
of €0.7 million).
33 Approved financial statements
The Board of directors approved the financial statements on 27 February 2020.
29 Related party transactions (continued)
(ii)
Other related party transaction (continued)
Prior year transaction (continued)
The APSA also stipulates that TIO would be entitled to share, on a 50/50 basis, any residual profit remaining after
the Group’s purchase consideration plus interest and residential development cost plus 20% has been deducted
from sales revenue in relation to the residential development opportunity at The Square Shopping Centre, Tallaght,
Dublin 24, Gateway Retail Park, Knocknacarra, Co. Galway and a third site, Bray Retail Park, Bray, Co. Wicklow.
The agreement defines certain default events including TIO not possessing good and marketable title over
the development sites and TIO not transferring good and marketable title over the development sites. On the
occurrence of a default event, the Group shall be entitled to recover the aggregate purchase consideration in
respect of the development rights. OCM has agreed to guarantee this obligation of TIO.
30 Commitments and contingent liabilities
(a) Commitments arising from development land acquisitions
In addition to the contingent liabilities outlined in Note 29 above, the Group had the following commitments at 31
December 2019 relating to development land acquisitions:
Land acquisition subject to re-zoning
In the prior year, the Group contracted to acquire 66 acres of currently unzoned land in the Greater Dublin Area
subject to appropriate residential zoning being awarded in the next local authority development plan on at least 30
acres of the site. Once this minimum threshold is achieved, the Group has committed to acquiring the entire site at a
fixed price per acre on land zoned for residential development with the remaining land to be acquired at market value.
Hollystown Golf and Leisure Limited (“HGL”)
During 2018, the Group acquired 100 per cent of the share capital of HGL. Under the terms of an overage
covenant signed in connection with the acquisition, the Group has committed to paying the vendor an amount
equal to an agreed percentage of the uplift in market value of the property should any lands owned by HGL,
that are not currently zoned for residential development be awarded a residential zoning. This commitment has
been treated as contingent consideration and the fair value of the contingent consideration at the acquisition
date was initially recognised at €nil. At the reporting date, the fair value of this contingent consideration was
considered insignificant.
Maryborough Ridge, Cork
The Group entered into a licence agreement to develop a further 18.65 acres at the Maryborough Ridge site in
2018. At 31 December 2018 an amount of €6.9 million was recognised in inventory reflecting the initial licence
fee paid and related stamp duty and acquisition costs. The remaining €6.1 million of the licence fee is payable in
equal instalments in line with milestones outlined in the licence agreement which will bring the total consideration to
approximately €13.0 million. During the year ended 31 December 2019, the first milestones were achieved resulting
in the payment of €2.1m of the residual licence fee.
Under the terms of the licence agreement, the Group has committed to paying the vendor further variable amounts
dependent on the number of units developed and unit sale prices achieved in excess of those contemplated in the
licence agreement. As these commitments are based on uncertain future events, the Group has treated them as
contingent consideration. The Group will reassess these commitments at each reporting date.
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Financial Statements
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Financial Statements
Company balance sheet
as at 31 December 2019
Company statement of changes in equity
for the financial year ended 31 December 2019
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
3
4
5
7
2019
€’000
5,063
5,063
2018
€’000
4,471
4,471
170
845,700
1
845,871
264
845,931
447
846,642
850,934
851,113
1,052
879,281
(75,026)
44,035
849,342
1,052
879,281
(73,893)
43,443
849,883
6
1,592
1,230
1,592
1,230
850,934
851,113
Share Capital
Ordinary
shares
€’000
Founder
shares
€’000
Share
premium
€’000
Share-
based
payment
reserve
€’000
Retained
earnings
€’000
Total
equity
€’000
871
181
879,281
43,443
(73,893)
849,883
-
-
871
-
-
181
-
-
879,281
-
-
43,443
(1,133)
-
(75,026)
(1,133)
-
848,750
-
-
-
-
-
-
592
592
-
-
-
592
Balance as at 1 January 2019
Total comprehensive loss for
the financial year
Loss for the financial year
Other comprehensive income
Transactions with owners
of the Company
Equity-settled share-based payments
Balance as at 31 December 2019
871
181
879,281
44,035
(75,026)
849,342
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Financial Statements
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Financial Statements
Company statement of changes in equity
for the financial year ended 31 December 2018
Notes to the Company financial statements
For the financial year ended 31 December 2019
Share Capital
Ordinary
shares
€’000
Founder
shares
€’000
Share
premium
€’000
Share-
based
payment
reserve
€’000
Retained
earnings
€’000
Total
equity
€’000
667
200
666,381
47,548
(70,559)
644,237
-
-
667
185
-
19
-
204
871
-
-
200
-
-
666,381
-
-
47,548
(715)
-
(71,274)
(715)
-
643,522
-
-
212,900
-
-
-
-
(7,131)
213,085
(7,131)
(19)
-
(19)
-
-
212,900
(4,512)
407
(4,105)
4,512
-
(2,619)
-
407
206,361
181
879,281
43,443
(73,893)
849,883
Balance as at 1 January 2018
Total comprehensive loss for
the financial year
Loss for the financial year
Other comprehensive income
Transactions with owners of the
Company
Issue of ordinary shares for cash
Share issue costs
Conversion of Founder Shares to
ordinary shares
Equity-settled share-based payments
Balance as at 31 December 2018
1 Basis of preparation
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 capital management
As noted in Note 32 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
financial year was €1.1 million. (2018: €0.7 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.
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Financial Statements
Notes to the Company financial statements
For the financial year ended 31 December 2019 (continued)
Notes to the Company financial statements
For the financial year ended 31 December 2019 (continued)
7 Share capital and share premium
For further information on share capital and share premium, refer to Note 26 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 consolidated financial instruments and risk management are given in Note 27 of the
consolidated financial statements.
9 Share-based payments
For information in relation to share-based payment arrangements impacting the Company, refer to Note 15 of the
consolidated financial statements.
10 Related party disclosures
See Note 29 of the consolidated financial statements for information in relation to related party transactions.
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 Note 29 of the consolidated financial statements.
3
Investment in subsidiaries
Investment in subsidiaries
Accumulated cost of share-based payments in respect of subsidiaries
2019
€’000
4,025
1,038
5,063
2018
€’000
4,025
446
4,471
Details of subsidiary undertakings 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.
4 Trade and other receivables
VAT receivable
Prepayments and other receivables
5 Amounts due from subsidiaries
Amounts due from subsidiaries
2019
€’000
35
135
170
2018
€’000
110
154
264
2019
€’000
2018
€’000
845,700
845,931
845,700
845,931
Amounts owed by subsidiaries are non-interest bearing and are repayable on demand. The expected credit loss
associated with the above balances is considered to be insignificant.
6 Trade and other payables
Trade payables
Accruals
Payroll and other taxes
2019
€’000
44
1,476
72
1,592
2018
€’000
146
1,022
62
1,230
152
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3 Return on capital employed (ROCE)
An APM representing return on capital employed that Group management believes is the best measure of the
Group’s ability to generate profits from its asset base in a capital efficient manner and to create sustainable
shareholder value. ROCE is calculated as operating profit divided by average capital employed, where operating
profit is earnings before interest and tax and where capital employed is calculated as (i) net assets plus (ii) financial
indebtedness, less (iii) cash and intangible assets.
4 Net Development Value (NDV)
An APM representing a metric the Group uses to estimate the development value of land held in inventory. NDV is
calculated by multiplying the number of units the Group expects to sell on a given site by the estimated sales price
of each unit.
5 Adjusted EPS (AEPS)
This metric will be used as a performance condition for grants under the Group’s LTIP from 2020 onwards. It
is defined as Basic Earnings Per Share as calculated in accordance with IAS 33 Earnings Per Share subject to
adjustment by the Remuneration and Nomination Committee at its discretion, for items deemed not reflective of the
Group’s underlying performance for the period.
Alternative Performance Measures (APMs)
The Group reports certain alternative performance measures (“APMs”) that are not required under IFRS, which is
the framework under which the consolidated financial statements are prepared. The Group believes that these
metrics assist investors in evaluating the performance of the underlying business and provides a more meaningful
understanding of how senior management review and monitor the business on an ongoing basis.
These performance measures are referred to throughout our strategy and business update and the discussion of
our reported financial position. These performance measures may not be uniformly defined by all companies and
accordingly they may not be directly comparable with similarly titled measures and disclosures by other companies.
The principal APMs used by the Group are defined as follows:
1 Gross margin percentage
Gross profit
Revenue
Gross margin percentage
Financial statements reference
Statement of profit or loss
Note 10
2019
€’000
51,487
284,637
18.1%
2018
€’000
15,292
84,179
18.2%
2
Earnings before interest, tax, depreciation and amortisation
(EBITDA) pre-exceptional items and related margin
An APM representing earnings before interest, tax, depreciation, amortisation and exceptional items that Group
management considers to be the most appropriate measure for assessing the profitability of the Group in a given
financial period. It is calculated by adding back non-cash depreciation and amortisation charges to the Group’s
operating profit or loss for a period, and also adding back exceptional items. EBITDA margin pre-exceptional items
represents this metric as a percentage of the Group’s revenue.
Financial statements reference
Depreciation - capitalised
Depreciation - expensed
Total depreciation
Note 18
Operating profit/(loss)
Exceptional items
Depreciation – expensed
Amortisation
Statement of profit or loss
Note 11
As above
Note 19
EBITDA: pre-exceptional items
EBITDA margin pre-exceptional items
2019
€’000
845
1,092
1,937
2019
€’000
29,357
1,125
1,092
299
31,873
11.2%
2018
€’000
524
121
645
2018
€’000
(2,555)
409
121
61
(1,964)
(2.3%)
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Company
Information
Directors
Executive Directors
John Mulcahy
Stephen Garvey
Michael Rice
Non-Executive Directors
Lady Barbara Judge, CBE
Robert Dix
Richard Cherry
Pat McCann
Cara Ryan
Company Secretary
Chloe McCarthy
Registered Office
Glenveagh Properties PLC
15 Merrion Square North
Dublin 2
Ireland
Registrars
Computershare Investor Services
(Ireland) Limited
3100 Lake Drive
Citywest Business Campus
Dublin 24
Auditor
KPMG
Chartered Accountants
1 Stokes Place
St. Stephen’s Green
Dublin 2
Solicitor
A&L Goodbody
North Wall Quay
Dublin 1
Kane Tuohy
The Malt House North
Grand Canal Quay
Dublin 2
Bankers
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
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Glenveagh Properties PLC
15 Merrion Square North
Dublin 2
D02YN15
Ireland
T: +353 (0)1 556 5600
E: enquiries@glenveagh.ie
Block B, Maynooth Business Campus
Maynooth,
Co. Kildare
W23 W5X7
Ireland
T: +353 (0)1 610 6546
glenveagh.ie