Building Better A N N U A L R E P O R T A N D A C C O U N T S 2 0 2 2 INTRODUC TION Welcome We made excellent progress in 2022 in driving strong growth in our key suburban business, strengthening our partnerships business and de-risking our urban land portfolio. STRATEGIC REPORT 1 2 Our integrated approach Company highlights 4 8 10 14 18 20 24 26 30 38 40 42 48 51 57 67 Our vision, mission and culture Our investment case Chair’s letter Chief Executive Officer’s review Market overview Our business model Our material issues Our stakeholders Our strategy Our impact Our land bank Environment, social and governance performance Sustainability accounting standards board disclosures Action and disclosure on climate change Risk management report Financial review 2 Our integrated approach 6 Our culture 30 Glenveagh Properties plc Annual Report and Accounts 2022 OUR STR ATEGY Guided by our OUR NEW BUILDING vision, our Building BET TER STR ATEGY Better strategy BUILDS ON WHAT will create WE HAVE ACHIEVED long-term, AND IS GUIDED BY sustainable OUR VISION. value. 2022 marked five years since IPO, an opportune milestone to undertake an extensive review of our strategy. Shaped by our vision – that everyone should have the opportunity to access great-value, high-quality homes in flourishing communities across Ireland – our mission, our values and our commitment to sustainability, we aimed to build on the successes of our existing strategic and sustainability priorities, while positioning ourselves optimally to create long-term value for stakeholders. The development of our evolved strategy was informed by rigorous research, peer analysis and our materiality assessment (see pages 24 and 25) as well as internal working groups and engagement with colleagues across the business. Each of our five strategic priorities is supported by action-oriented pillars, which in turn are underpinned by projects, many of which are already underway. We have identified KPIs to measure our performance. 14 Focused on consistently delivering Strategic Report Governance Financial Statements Placing the customer first We will be recognised as the leading provider of affordable, high-quality homes for all tenures, offering a best-in-class customer experience. See page 31 to read more Valuing and developing our colleagues We will be an employer of choice and the best place to work in our sector for diverse and high-calibre talent, with a safe and inclusive working environment and a culture built on teamwork and trust. See page 32 to read more OUR CULTURE Our Building Better strategy Driving operational excellence We will plan, design and assemble high-quality products using best-in-class processes across the build lifecycle. Clear accountability will enable us to make operational choices rapidly and decisively, and to allocate resources as efficiently as possible. OUR VALUES 30 Building Better Creating sustainable and thriving places We will be known for developing great places for people to live, where communities and nature can flourish for the long term. Embracing innovation We will be at the cutting edge of innovation in the homebuilding sector, allowing us to transition to a low-carbon economy with the best- value, circular construction. strategy See page 34 to read more See page 36 to read more See page 35 to read more GOVERNANCE Corporate governance report 70 82 86 90 104 106 109 Nomination Committee report Audit and Risk Committee report Remuneration Committee report Environmental and Social Responsibility Committee report Directors’ report Statement of Directors’ responsibilities FINANCIAL STATEMENTS Independent Auditor’s report 110 115 116 117 119 120 147 148 150 152 154 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 Supplementary information Company information 67 Continued growth 70 Strong Governance annualreports.glenveagh.ie/2022 1 Strategic Report Governance Financial Statements Contents COMPANY HIGHLIGHTS FINANCIAL HIGHLIGHTS €644.7m Revenue €70.1m Adjusted operating profit* 2022 2021 2020 €644.7m €476.8m €232.3m 2022 2021 2020 €7.6m €70.1m €46.4m 7.6 cent EPS 2022 2021 2020 €458.5m Carrying value of land 7.6 cent 4.5 cent 2022 2021 2020 (1.6 cent) €458.5m €562.7m €619.2m NON-FINANCIAL HIGHLIGHTS 15,100 No. of sites in land bank 1,358 No. of units sold 803 Units contracted/reserved** 2022 2021 2020 15,100 16,800 14,100 2022 2021 2020 1,358 1,150 2022 2021 2020 700 803 950 1,921 OPERATIONAL AND SUSTAINABILITY Customer satisfaction 2022 2021 2020 H&S audits 2022 2021 2020 B CDP AA MSCI 78% Employment engagement Low Risk Sustainalytics 91% 89% 83% 88% 89% 88% * Operating profit has been presented before exceptional items and impairment reversals/charges. ** As at the Annual Report approval date. Glenveagh Properties plc Annual Report and Accounts 2022 2 Strategic Report Governance Financial Statements Contents Our values OUR INTEGR ATE D APPROACH Creating value for our customers, our shareholders, employees and our communities. At Glenveagh, we take pride in our commitment to providing high-quality, affordable and sustainable homes. We believe that our vision, mission and culture are the foundation of our success. Our vision Our vision is that everyone should have the opportunity to access great-value, high-quality homes in flourishing communities across Ireland. See page 4 to find out more Our mission Our mission is to innovate how new homes are planned, designed, built and marketed in Ireland, and to make the journey for customers transparent, easy and joyful. See page 5 to find out more Our culture At Glenveagh, we foster a culture of fresh thinking, teamwork and trust to challenge the status quo in our industry. We believe that building homes and communities is a worthy cause and will positively impact Irish society. We want to forge a new path, relentlessly innovating every stage of the homebuilding process. See page 6 to find out more Our focus on sustainability We are committed to building sustainable homes and believe that sustainable building practices not only benefit the environment but also improve the quality of life for our homeowners. From the selection of materials to the design of our homes, we prioritise sustainability at every stage of the construction process. Our focus on sustainability extends beyond the construction phase, and we work closely with our homeowners to ensure they have the tools and resources needed to reduce their environmental impact and lead a sustainable lifestyle. See page 42 to find out more SAFETY FIRST Before everything else, safety comes first. The health and wellbeing of everyone who we engage and work with is the most important thing to us. This is why we are committed to maintaining the health and safety of all those who work with us and who are impacted by what we do. We do this by integrating health and safety into all our decision-making. COLLABORATIVE We believe in the power of teamwork to create new possibilities. Building homes at scale requires the close collaboration of many different people with specialist skills and distinct perspectives. We respect and trust each other while acting responsibly and with integrity, believing that how we get things done is just as important as our achievements. INNOVATIVE Each day we work to bring new ideas home. We constantly seek to innovate to satisfy customer needs, drive sustainability and deliver value for money. We find new ways of solving current and future challenges to create flourishing communities across Ireland. CUSTOMER-CENTRED Customers are at the heart of every decision we make. We build for the people who call our developments ‘home’. To do this well, we take the time to understand them, their lives and their ever changing needs. By putting our customers at the centre of everything we do, we create homes and communities that have lasting value. CAN-DO With the right attitude we can achieve anything. We positively impact each other, our partners and our customers through our dedication, grit, and can-do attitude. We are continuously learning and growing our skills to ensure we realise our vision. Glenveagh Properties plc Annual Report and Accounts 2022 3 Strategic Report Governance Financial Statements Contents OUR INTEGR ATE D APPROACH CONTINUED Our drivers of success Our strategic priorities Talented and dedicated individuals A strategic land bank Strong relationships A strong financial position A trusted brand See pages 21 to 23 to find out more OUR CULTURE Placing the customer first Valuing and developing our colleagues Our vision That everyone should have the opportunity to access great-value, high-quality homes in flourishing communities across Ireland. Our stakeholders See pages 26 to 29 to find out more OUR VALUES Driving operational excellence Customers Employees Communities Shareholders Suppliers and subcontractors Government and regulators Embracing innovation Creating sustainable and thriving places Glenveagh Properties plc Annual Report and Accounts 2022 4 Strategic Report Governance Financial Statements Contents OUR VISION, MISSION AND CULTURE Our CEO Stephen Garvey explains how Glenveagh’s vision guides decision-making throughout the organisation. Our vision Q&A with Stephen Garvey Chief Executive Officer Can you explain how Glenveagh works to achieve its vision that everyone should have the opportunity to access great-value, high- quality homes in flourishing communities across Ireland? We deliver housing particularly for the affordable end of the market – people starting out, people buying through the affordable purchase scheme, people who may be social tenants. We’re proud to be one of the leading developers providing A1-rated homes. We’re not required by regulation to do this but it was the right thing to do. Particularly given what’s happened with inflation and the cost of energy, this is making a real difference to families. When looking at affordability, people tend to focus on mortgage repayments as a percentage of their net disposable income. We think more broadly, taking into account the wider costs of maintaining a home such as utility costs, insurance, life insurance, and consider how we can make things better for customers in the long-term. Thinking that way has led us to invest in technology and a better standard of product. In addition to addressing macro-climate and energy issues, over the lifecycle of a property families will make substantial savings on energy costs. We have also innovated in the way we deliver in order to help affordability. We have adopted manufacturing, which gives us the capability to significantly increase output. It is important to us to be a key participant for the long-term in the communities we help create. We don’t simply seek to buy land and build the products, we want to be here for decades and be a reliable, trusted pillar of the community, providing employment, supporting sports clubs and the like. How does the vision guide decision-making and inspire people within Glenveagh? Our vision is based on where we see the future of housing, how it will be produced, how our workforce will work, and how we make the sector more attractive for people. We’ve been early adopters, not only around product and manufacturing innovation, but also in how we supply our customers, how we can make housing more affordable and accessible for home ownership, and how we can operate on a larger scale. We’re willing to try new things. We’ve been working with government as we have sought to reduce the income-level at which home ownership becomes an option and also to address demand from a growing population. Collaboration is a key part of our culture and is exemplified in our Partnerships business. We have been working with the local authority on the Oscar Traynor Road development, and we hope the scheme will demonstrate the ability of the public and private sectors to work together and make a real impact. Looking ahead, how do you see the outlook for fulfilling Glenveagh’s vision? There is a huge societal need for housing. We will be at the heart of working with government and other stakeholders on the solution. This gives us the opportunity to run a business with a long-term, stable future, allowing us to innovate and grow. Glenveagh Properties plc Annual Report and Accounts 2022 5 Strategic Report Governance Financial Statements Contents OUR VISION, MISSION AND CULTURE CONTINUED Our Managing Director of Planning, Design, Manufacturing and Operations, Tony McLoughlin, and Head of Sustainability, Lorraine Fitzgerald, talk about Glenveagh’s approach to innovation. Our mission Q&A with Tony McLoughlin Managing Director of Planning, Design, Manufacturing and Operations Lorraine Fitzgerald Head of Sustainability What is Glenveagh’s approach to innovation? TML: We are always trying to push the boundaries of what’s possible, whether that’s streamlining processes or thinking about our environmental impact, while also balancing regulations, what customers want, and any resource-availability issues to provide the best outcomes for our stakeholders. We encourage a culture of innovation and improvement throughout the business. Whether you work in an office or in manufacturing, as a site labourer or on the gate, it’s never a problem to ask why, or what if we did this? It’s also about being agile in evaluating and incorporating ideas and sharing them with contractors and business partners. What are the areas that Glenveagh is focused on innovating within? TML: Innovation runs through every strand of our business. We’ve done a lot of work to optimise our processes, all the way from a greenfield to a finished product, to make them as efficient as possible. We have brought in a lot of lean behaviours and are now ISO 14001 accredited. As well as innovation in our product-offering, to achieve the densities needed to facilitate the planning process, we have looked at what we can do to streamline the way we deliver and our use of materials, to add value off-site and limit our impact on the environment. LF: Sustainability from an innovation perspective is beginning to influence everything from land selection, the materials we use and the suppliers we work with – we pride ourselves on working with local suppliers and subcontractors. With our acquisition of timber frame supplier Harmony Timber Solutions and light gauge steel capabilities, we’re looking to do more in the factory. This helps with quality control, reduces waste, and helps manage our exposure to the market in terms of material costs or skilled labour shortages. Looking ahead, where do you see the greatest opportunities for innovation? TML: There are skills shortages worldwide, but there is an opportunity with technology, robotics and AI to change the way we do things. We have a longer-term vision and the financial strength to develop solutions for the future. There are challenges but also a world of opportunity. LF: Sustainability is a priority for the business – as important as safety and financial performance – and impacts everything we do. We have to think in different ways about how to reduce emissions and embodied carbon. Over 90% of our emissions aren’t within our direct control, so we need to bring our materials, suppliers and subcontractors on the journey so that we can decarbonise together. Glenveagh Properties plc Annual Report and Accounts 2022 6 Strategic Report Governance Financial Statements Contents OUR VISION, MISSION AND CULTURE CONTINUED Head of HR, Sinead Tolan and Sales Administrator, Craig Doolan discuss our culture and how this contributes to Glenveagh’s long-term success. Our culture Q&A with Sinead Tolan Head of HR Craig Doolan Sales Administrator How would you describe Glenveagh’s culture? ST: When I ask colleagues to describe our culture, the recurring themes are people- centric, innovative, energetic, agile and resilient. As these last few years have demonstrated, there are always things that need to be worked around, and our people have an innovative, forward-moving mindset – no one says, I can’t or won’t do that. Teamwork is core to the business – we all have the same agenda, no matter where we are in the business. CD: My role wouldn’t be possible without trust, collaboration, and teamwork, both internally and with external stakeholders. Our strong culture is reflected to our customers in how we work with and support them. Glenveagh Properties plc Annual Report and Accounts 2022 7 Strategic Report Governance Financial Statements Contents OUR VISION, MISSION AND CULTURE CONTINUED Sinead Tolan Head of HR OUR CULTURE AND VALUES RUN THROUGH EVERY THING WE DO, FROM THE MOMENT A COLLEAGUE IS WELCOMED WITH THEIR INDUC TION AND ONBOARDING, AND THROUGHOUT OUR TR AINING, DEVELOPMENT AND COM MUNICATION. How are culture and values embedded in the organisation? ST: Our culture and values run through everything we do, from the moment a colleague is welcomed with their induction and onboarding, and throughout our training, development and communication. Last year we introduced a quarterly employee recognition scheme based on our values, which is proving very popular. CD: Our values – safety first, collaborative, innovative, customer-centred and can-do – are not just words on posters around the office, they come from the top in how Senior Leadership behaves and are visible in everyone’s behaviours and ways of working. How does the organisation’s culture contribute to achieving Glenveagh’s vision, and influence behaviours and decision-making? ST: A strong culture helps bring everyone on the journey to achieving our vision. It takes the whole company to come together to realise the vision, and we wouldn’t be able to do this without our culture. CD: A lot of us work across functions, so trust in the information you’re receiving and giving to other teams is vital. For example, the sales team is involved at the very start when land is purchased, when considering the spread of units on the land, how many houses fit, the costings, and likely buyer types, and we’re constantly in touch with the construction team to be able to give status reports to buyers. We’ve sometimes had to be flexible to manage supply-chain constraints, and it is much easier to liaise with different departments when there’s trust. A key aspect of trust relates to operating sustainably. How does this influence how things are done? CD: Our top priority is to promote sustainability in all aspects of our work, including our initiatives on equity, diversity, and inclusion, safety, energy efficiency, solar panel usage, and heat-recovery systems. We also strive to make our developments as accessible as possible, as seen in our Kilcock development which is conveniently located within walking distance of the train station and features a dedicated path for walking and cycling to the town, as well as plenty of green spaces. Glenveagh Properties plc Annual Report and Accounts 2022 8 Strategic Report Governance Financial Statements Contents OUR INVESTME NT C A SE A unique proposition with exciting growth potential. Supported by innovation and supply-chain integration, Glenveagh is committed to opening access to sustainable, high-quality homes to as many people as possible in flourishing communities across Ireland. We are focused on three core markets – suburban housing, urban apartments and partnerships with local authorities and state agencies. Compelling market opportunity > Highly resilient domestic economy with population and wage growth. > Significant private customer demand in a market already undersupplied for many years. > Supportive government policy via demand and supply-side initiatives. 12.2% GDP growth in Ireland, FY 2022 535,000 Growth in Irish population since Census 2011 Scale operator with attractive product > One of the largest developers in an undersupplied housing market, underpinned by a balanced land bank in exceptional locations. > Targeting product offering at segments with deepest demand, focused on affordable suburban starter homes in GDA (Greater Dublin Area). > Building momentum in the Partnerships business with first completions planned for FY24. See page 40 to find out more Sustainable operational excellence > Building a strong track record of effective delivery, build quality and customer service. > Embedding sustainability into our land use, our energy efficient homes, people development and helping communities thrive. > Enhancing our efficiencies and supply- chain security through standardisation and vertical integration, supported by innovation in off-site manufacturing and our net zero transition pathway. 1,354 Suburban units completed in FY 2022 15,100 Available land bank units 100% A1/A2 energy rated units, FY 2022 71% Units using off-site manufacturing, FY 2022 See page 18 to find out more See pages 31 to 37 to find out more Glenveagh Properties plc Annual Report and Accounts 2022 9 Strategic Report Governance Financial Statements Contents THE GROUP CONTINUES TO SEE A VERY POSITIVE LONG-TER M OUTLOOK IN THE IRISH RESIDENTIAL HOUSING M ARKET AND WE BELIEVE WE ARE VERY WELL-POSITIONED TO TAKE ADVANTAGE OF THAT OPPORTUNIT Y. Michael Rice Chief Financial Officer OUR INVESTME NT C A SE CONTINUED Highly developed portfolio skills > Highly experienced Board and Executive team with relevant and diversified sector expertise. > Agile senior management structure that allows business to respond rapidly and effectively to market developments. > Expert in-house planning team to navigate the challenges and opportunities of the Irish market. See page 72 to find out more Effective capital allocation > Driving efficiency in land investment through minimising upfront cost and effective control of WIP investment. > Strong balance sheet, managed prudently with low leverage and high efficiency. > Clearly defined capital allocation framework focused on investment in supply chain, land, and WIP – and to return excess cash identified to shareholders. See pages 67 to 69 to find out more €600m Revenue generated to date from urban asset monetisation 3,600 Units lodged for planning, FY 2022 €200m+ Reduction in land bank value since FY 2019 €250m+ Value returned to shareholders since FY 2021 Glenveagh Properties plc Annual Report and Accounts 2022 Strategic Report Governance Financial Statements Contents 10 CHAIR ’S LET TE R Focused on strong growth and strategic progress. John Mulcahy Chairman Glenveagh Properties plc Annual Report and Accounts 2022 11 Strategic Report Governance Financial Statements Contents CHAIR ’S LET TE R CONTINUED 1,354 Suburban units delivered in FY 2022 €645m FY 2022 Revenue I am pleased to share with you Glenveagh’s Annual Report for the year ended 31 December 2022. It has been a busy year for the business, one of strong growth and important strategic progress, supported by the hard work and dedication of the whole team. As always there were plenty of challenges to contend with – no sooner had the disruption of COVID-19 began to ease than it was replaced by the war in Ukraine, inflation, consequent interest rate increases and the threat of impending recession across Europe and the world. I am glad to report that our strategy and platform enabled us to face and overcome these conditions and challenges. Growing a diversified and sustainable business Our three business segments – Suburban, Urban and Partnerships – provide an ideal platform to address the largest and most resilient parts of the Irish housing market. Our strategic priorities which evolved during the year, build on the successes of our strategy to date and position us optimally to address the needs of stakeholders and to manage for the future: accomplishing our clear priorities, achieving our vision and driving the financial performance of our business – thus increasing revenue, driving productivity and improving our disciplined capital allocation. I am pleased to report that Glenveagh delivered another impressive performance in 2022. Total revenue for the year grew by 35% to €644.7 million (2021: €476.8 million) in what remained a challenging operational environment. This primarily comprised 1,354 suburban unit sales completed (2021: 902) and urban revenue from ongoing completions and several transactions. For FY 2023 we have framed our approach to match supply and commercial activity with the emerging demand that will come from government initiatives and the impact of the change in the macroprudential rules. Read more about these in the Market Overview on page 18. productive years ahead in this area as we deepen our relationships in these forms of partnerships. Looking ahead, we expect the market environment to remain favourable, notwithstanding the broader economic and inflationary challenges that face us. This will be supported by a resilient domestic economy supported by population and wage growth, significant private customer demand in a market that has been undersupplied for many years, and supportive government policy via demand and supply-side initiatives. Advancing our business segments Our Suburban segment made considerable progress in FY 2022, with an attractive product offering and increased brand awareness following an extensive marketing campaign ‘Love Where You Live’. The introduction of the First Home scheme in July 2022 also supported customer demand. We completed 1,354 suburban units during the year, up 50% on FY 2021 levels. In our Urban segment we monetised a significant portion of our land assets, enabling us to improve the Group’s Return on Equity and return excess capital to shareholders. It has also allowed us to de-risk our portfolio in what is a more challenging environment for urban apartment construction. We will continue to assess our investment strategy in this segment and will be ready to become more active in the event that trading conditions become more favourable. Our Partnerships business progressed well in FY 2022. We submitted planning applications for both our 1,200 home development (with our partners Fingal County Council) at Ballymastone in Donabate and the 853 home development (with our partners Dublin City Council) at our Oscar Traynor Road site in Coolock in H2, and received an initial planning decision in favour of both applications, subject to any ongoing appeals. We are looking forward to busy and Our colleagues The Board continues to recognise and appreciate the significant role all our Glenveagh colleagues have played in delivering our success to date. None of our progress would have been possible without their energy and dedication. In line with our strategic priority ‘Valuing And Developing Our Colleagues’, our ambition is to be recognised as an employer of choice and as the best place to work in our sector, driven by an engaging and trusting culture and a safe working environment. All our colleagues are empowered to make decisions and know how they are contributing to our overall success, and an employee recognition scheme was introduced in 2022 to further strengthen engagement in this regard. The health and safety of our colleagues is paramount and we work relentlessly to embed this in everything we do. In FY 2022 we were delighted to be recognised with the President’s Award for Construction and the Healthy Workplace Award at the Annual Occupational Health and Safety Awards 2022. Sustainability 2022 was an important year for sustainability globally, domestically and for Glenveagh. Set against a difficult geopolitical backdrop, COP27 resulted in a package of decisions that reaffirmed the commitment to limit global temperature rise to 1.5 °C above pre-industrial levels. In Ireland, as noted last year, the Climate Action and Low Carbon Development (Amendment) Act 2021 was signed into law in 2021. In July 2022, a range of sectoral emission ceilings were announced that are designed to enable an overall target of 51% reduction of GHG emissions by 2030 (relative to 2018 levels). Glenveagh Properties plc Annual Report and Accounts 2022 12 Strategic Report Governance Financial Statements Contents CHAIR ’S LET TE R CONTINUED OUR THREE BUSINESS SEGMENTS – SUBURBAN, URBAN AND PARTNERSHIPS – PROVIDE AN IDEAL PL ATFOR M TO ADDRESS THE L ARGEST AND MOST RESILIENT PARTS OF THE IRISH HOUSING M ARKET. At Glenveagh, our evolved Building Better strategy incorporates sustainability explicitly into each of the pillars and individual projects that bring to life our strategic priorities. Central to this is our own Net Zero Transition Plan. The Group has developed both near-term and long-term GHG emissions reduction targets for Scopes 1, 2 and 3 in line with guidance from the Science Based Targets initiative (SBTi). These targets call for a 46% absolute reduction in Scopes 1 & 2 by 2031 and a 55% reduction in Scope 3 emissions intensity (tCO2e/100sqm) by 2031. Longer term net zero targets have been set for Scopes 1,2 & 3 by 2050. All targets have been submitted to the SBTi for validation. We acknowledge that partnering will be crucial to how effectively we all reach our sustainability goals. We are working with industry and cross- sectoral working groups and membership bodies including the Irish Green Building Council, Business in the Community Ireland and the Build Digital Project. We launched our Equity, Diversity & Inclusion (ED&I) strategy, Building a Better Workplace, with three overarching objectives in relation to ‘Better Representation’, ‘An Inclusive Environment’ and ‘Using our Influence’, along with a number of targets and goals which we aim to achieve over the coming years. We published our inaugural Gender Pay Gap (GPG) report in December 2022 and, while the results are not where we wish them to be, we are transparent and committed to being at the forefront of organisations reducing this gap in the Irish homebuilding industry. Capital allocation The Group continues to implement a disciplined capital allocation strategy, focused on three priorities: investment in supply-chain, land, and work-in-progress. Once these priorities are satisfied, the Group’s policy is to return any excess cash to shareholders. Capital efficiency improved further in FY 2022 through an ongoing reduction in our net investment in land, a more efficient use of our debt facilities and the continuation of share buyback programmes as the preferred method of returning value to shareholders. We returned approximately €146 million of capital to shareholders via share buyback programmes conducted during the year and have already returned approximately €30 million so far in FY 2023. We took the opportunity to acquire timber frame manufacturer Harmony Timber Solution Ltd. during the year, which is a key strategic acquisition for us, and I would like to welcome our Harmony colleagues to the Glenveagh team. Our capital allocation framework remains effective and appropriate for our business and for our stakeholders as we position ourselves for long- term growth. The Board will continue to review this policy as the business, finance and market environment evolves. Conclusion and outlook In what was a rewarding but also challenging year in many respects, I would like to offer my sincere thanks to my fellow Board members, our colleagues, customers, suppliers and investors for their ongoing commitment and support. I am more convinced than ever about the long- term growth opportunity for Glenveagh and our capability to provide great-value, high-quality sustainable homes in flourishing communities across Ireland. We are very well-positioned as a scale operator with attractive product and highly developed portfolio skills, underpinned by sustainable operational excellence. We will continue to invest sensibly to avail of the compelling market opportunity open to us. The Board remains very confident about the future and we look forward to further progress in 2023 and beyond. John Mulcahy 28 February 2023 Governance 2022 was a year of transition for the Board, its committees and for the senior executive team. As announced at the 2021 AGM, I transitioned to the role of Non-executive Chairman with effect from 1 January 2022 and, as part of the succession planning for the smooth transition of my executive functions, the composition of the Group’s executive committee was expanded. There were no new appointments to the Board during 2022, but during the year the committee commenced the process of identifying a new Independent Non-executive Director following Richard Cherry’s decision to step down from the Board at the conclusion of the 2022 AGM. Full details of the activities of the Board and its committee during 2022, and our priorities for the year ahead, can be found in the Corporate Governance Report on pages 74 to 81. Glenveagh Properties plc Annual Report and Accounts 2022 13 Strategic Report Governance Financial Statements Contents Justin Bickle In July 2022, we learnt of the untimely death of our friend and former colleague, Justin Bickle. In 2017, Justin, John Mulcahy and Stephen Garvey listed Glenveagh Properties plc on the stock market. Justin led the business as CEO through the initial IPO and on to 2019. In those early months and years, Justin travelled the world’s capital markets generating support for our vision of creating a best-in-class construction firm for the Irish residential market. Justin’s vision, hard work and expertise contributed greatly to getting Glenveagh to where it is today, and we know that he took great satisfaction from the progress that Glenveagh made on the journey which was mapped all those years ago. We remember him fondly in our thoughts and prayers. Glenveagh Properties plc Annual Report and Accounts 2022 14 Strategic Report Governance Financial Statements Contents CHIE F EXECUTIVE OFFICE R ’S REVIEW Focused on consistently delivering for our colleagues and customers. Stephen Garvey Chief Executive Officer Glenveagh Properties plc Annual Report and Accounts 2022 15 Strategic Report Governance Financial Statements Contents CHIE F EXECUTIVE OFFICE R ’S REVIEW CONTINUED 69% EPS growth in FY 2022 €146m Capital returned to shareholders during the year I am pleased to report that 2022 was another year of strong growth at Glenveagh as we rebounded from the challenges of COVID-19 disruption and regained strong momentum towards achieving our operational and financial goals. Five years of exciting progress October 2022 marked our fifth anniversary on public markets and is an appropriate milestone to reflect on our progress over that period. To scale a business to profitable and cash-generative growth is a huge task, particularly against the backdrop of the COVID-19 pandemic, war in Europe and the return of inflation. Our performance is thanks in no small part to the commitment of our colleagues, and the culture we have cultivated at Glenveagh. We have continued to evolve our business model to reflect our own progress and to adapt to the external environment. Firstly, we have successfully managed rapid growth in our Suburban business segment which now delivers a wide range of homes across multiple tenures from private buyers, cost rental tenants, social housing tenants, and homes for Approved Housing Bodies. Our developments have delivered thousands of homes to families across Ireland, with over 1,350 units completed in 2022 alone. Secondly, we have been agile in our Urban business segment, building a team and capability to deliver large-scale projects. We have been de-risking the portfolio in the last 18 months by monetising assets, while retaining the option to reinvest in this segment in future. Thirdly, we have established and made great progress in our Partnerships business segment and anticipate first revenue and profit generation from 2024. We have also evolved our business model to develop off-site manufacturing capabilities, and to this end in FY 2022 we completed our first business acquisition of timber frame manufacturer, Harmony Timber Solutions, as we invest in our supply chain to drive more efficiencies. Enhancing our balance sheet efficiency has been an ongoing priority. We continued to reshape our investment in inventory, with approximately 65% related to land in FY 2022, down from 80% at the end of FY 2019. Our net investment in land has reduced by over €200 million over the last three years. At the same time we have broadly maintained our available units through a combination of owned suburban, owned and forward-funded urban, and modest capital in the Partnerships-business. There is more to come in our drive to make our balance sheet more efficient. During FY 2022 we evolved our strategy to provide renewed impetus to ensure that everyone is working towards the same objectives. Our new Building Better strategy builds on what we have achieved and is guided by our vision – that everyone should have the opportunity to access great-value, high-quality homes in flourishing communities across Ireland. Our strategy is guided by the values that we live by every day, and by our commitment to sustainable development. We discuss this in more detail on pages 30 to 37. We should be rightfully proud of what we have achieved over the last five years. It gives us the platform as well as the confidence to advance and develop further in the coming years. During the year we opened five sites, capable of delivering approximately 600 homes. It was a very busy year for planning, with planning applications submitted for 3,600 new units across our business segments. We made significant additions to our manufacturing and supply-chain capabilities in 2022, which will benefit the long-term ambitions of the business. Our manufacturing capabilities allow us to align further with our sustainability pillars while also guaranteeing high-quality supply in a more volatile environment. A highlight was the acquisition of Harmony, a timber frame manufacturer based in Wicklow, in August 2022. We have worked successfully with Harmony for the last five years and were delighted to retain key management who will both grow the business itself and also assist in accelerating timber frame production at our Suburban South (Carlow) facility. When combined with our existing Suburban North facility (Dundalk) and the Carlow facility that will be operational this year, this will provide the capability to produce in excess of 2,000 timber frames per annum from FY 2024 onwards. Furthermore, our supply agreement with a Light Gauge Steel (‘LGS’) manufacturer will allow us to develop enhanced steel frame panelised systems at the Carlow site. Business update Health and safety is central to what we do every day, and putting safety first is a core value of the business, for all those working with us as well as those impacted by what we do. The leadership demonstrated across the business was exemplary and indicates how seriously we take the health and wellbeing of our people. These developments will help meet our ambition to incorporate high-density and standardised house types into our manufacturing and delivery process, allowing the business to deliver on its long term growth ambitions, improving the efficiency of our land use in a sustainable fashion, while also better controlling costs, thereby ensuring long-term value creation. Operationally we advanced strongly, with 1,354 suburban units delivered over the course of FY 2022, a 50% increase on FY 2021 levels and a 90% increase on pre-pandemic levels in FY 2019. In FY 2022 the Glenveagh family grew significantly, with colleague numbers increasing by 36%. This pace of recruitment requires careful management, investment in training and development, and a clear commitment to employee safety and wellbeing. Glenveagh Properties plc Annual Report and Accounts 2022 16 Strategic Report Governance Financial Statements Contents CHIE F EXECUTIVE OFFICE R ’S REVIEW CONTINUED CASE STUDY Science-based emissions targets We understand the importance of setting targets that are aligned with the latest climate science and that will ultimately put us on a pathway aligned with the goals of the Paris Climate Agreement. We have developed both near-term and long-term GHG emissions reduction targets for Scopes 1, 2 and 3. These targets have been developed in line with guidance from the Science Based Targets initiative (SBTi) and have been submitted to the SBTi for validation. They form a core element of our Net Zero Transition Plan. absolute reduction in Scopes 1 and 2 by 2031. 46% Net Zero in Scopes 1 and 2 emissions by 2050. 55% reduction in Scope 3 emissions intensity (tCO2e/100sqm) by 2031. Net Zero in Scope 3 emissions by 2050. More information on Glenveagh’s baseline emissions including the methodology used, verification and standards can be found at https://glenveagh.ie/corporate/sustainability Glenveagh Properties plc Annual Report and Accounts 2022 17 Strategic Report Governance Financial Statements Contents CHIE F EXECUTIVE OFFICE R ’S REVIEW CONTINUED We are committed to attracting and supporting and enabling a diverse workforce and to cultivating a culture of equity and inclusion, in which everyone feels empowered to be themselves and think differently to drive positive change and innovation. Sustainability Sustainability is at the heart of our Building Better strategy. Each individual project and pillar that underpins our five strategic priorities has been designed with clear links to our broader ESG initiatives, ensuring that sustainability is a driver of, not an attachment to, strategy. Each project and pillar must also be relevant to and address our material issues. A comprehensive exercise was undertaken in 2022 to identify the Environmental, Social and Governance issues most important to Glenveagh, and to inform the further development of our corporate and sustainability strategy, as well as supporting sustainability reporting aims. Our materiality assessment and matrix are detailed on pages 24 and 25. We are delighted to have published our Net Zero Transition Plan that addresses our longer- term approach to climate change and that includes demanding targets that we must hold our business to achieving. Energy efficient homes are leading our pathway to net zero. Our high energy standards go beyond regulatory compliance and our Building Energy Ratings (BER) are sector leading – in FY 2022 55% of our homes achieved the highest rating, A1. We have now started to explore how we reduce the embodied carbon of our homes. As part of our commitment to enhancing our ESG reporting, we have added to our Task Force on Climate-related Financial Disclosures (TCFD), including additional assessment of key climate risks and how we are responding to these. Further work on this will be a key focus for 2023, including scenario analysis. We are careful to respect and address the social aspects of sustainability. We place a strong emphasis on the wellbeing of our colleagues, developing our senior leaders and improving our employee engagement. In recognition of this, we are delighted to have been certified as a Great Place to Work for 2023. But the true solution to the longer-term structural supply issues the sector faces is planning policy reform. Clearer alignment of the Housing for All strategy and the National Planning Framework is essential to resolve a disconnect on unit output, compounded by inconsistent approaches to population projections in the policies. Addressing the planning system The strong underlying demand in the Irish market continues to be driven by a combination of a robust economic environment, a fast-growing population and increasing levels of inward migration. These factors are putting further pressure on an already undersupplied housing market. Efforts to address this significant undersupply continue to be obstructed by dysfunctional planning policy. Our decision to seek Judicial Reviews of both the Wicklow and Kildare County Development plans reflects our frustration in this regard. Excessively limiting the development of much-needed homes in these counties and elsewhere – regions that have seen unprecedented population growth, significant foreign direct investment, with associated job creation, as well as substantial investments in critical infrastructure by the government – makes no sense. We welcomed the government’s timely and proactive demand-side initiatives that have supported customer affordability, most notably for first-time buyers. On the supply-side, we are doing our part by delivering a wide range of homes across multiple tenures that can be accessed in conjunction with the government’s demand-led supports and initiatives. We engage regularly with state bodies and local authorities to accelerate delivery on planning- consented residential land that is currently in their control. We will also deliver a substantial number of affordable homes through our Partnerships business, initially via our proposed developments in Oscar Traynor Road and Ballymastone. Despite these developments, much more needs to be done to address supply in the short and longer term. Planning system reform requires an effective national planning appeals board in the first instance, with sufficient resources allocated to it as a matter of urgency so that the current backlog of applications can be addressed. The draft Planning and Development Bill is a necessary first step to address how the approvals process itself can be streamlined for the future. Capital allocation Glenveagh ended the year with modest net debt, in line with our prudent leverage policy and also reflective of the significant investment in work in progress and our commitment to utilise excess cash in a more capital efficient manner. The Group continues to implement a prudent capital allocation strategy focused on three priorities: land, work-in-progress, and investment in supply chain. Once these priorities are satisfied, we intend to return any excess cash identified to shareholders. We invested over €80 million across a range of investments during FY 2022, including land opportunities for over 1,150 units, the acquisition of Harmony, additional capabilities and facilities, and incremental work-in-progress through the opening of new sites. In FY 2022 we returned approximately €146 million of capital to shareholders. This brings to over €250 million the total capital returned to shareholders since the beginning of FY 2021, with another €30 million returned to date as part of our latest buyback initiated in January 2023. Outlook We begin FY 2023 with confidence in our business and in the fundamentals of our sector. We are very well-positioned to grow longer-term revenue and profitability, with a busy development schedule across our sites. We are building a strong track record of effective delivery, build quality and customer service, and embedding sustainability into everything we do. We operate in a highly resilient domestic economy underpinned by population and wage growth, and significant housing demand in a market that has been undersupplied for many years. Although the near-term outlook has been shaped by lags in planning momentum, we expect this to resolve as FY 2023 progresses. Coupled with our healthy land portfolio, we are confident in our capacity to achieve our target of 2,000 suburban units, as well as the continued delivery of urban projects and to generate the first revenue from our developing Partnerships business in FY 2024. We will continue our focus on generating greater balance sheet efficiency, which will underpin our target of achieving a Return on Equity of 15% by 2024. In conclusion, I would as always like to acknowledge the work and support of our senior team, our wider organisation and stakeholders and I look forward with ambition and confidence in Glenveagh for the years ahead. Stephen Garvey 28 February 2023 Glenveagh Properties plc Annual Report and Accounts 2022 18 Strategic Report Governance Financial Statements Contents M ARKET OVE RVIEW The Irish economy is resilient in a challenging environment. The Irish economy again delivered a stellar performance in 2022, achieving double digit GDP growth notwithstanding the emergence of higher energy prices and recessionary conditions across Europe in the second half of the year. Strong GDP growth in 2020, 2021 and 2022 marks Ireland out as one of very few economies delivering growth throughout that period. As in the pandemic, Ireland’s buoyant and defensive export sector is expected to prove resilient to likely recessions across Europe and the UK, helping GDP growth to stay in positive territory entering 2023. Ireland is also expected to remain one of the best performing economies in the eurozone for domestic demand. This will support continued growth in consumer spending and employment. Ireland’s public finances continued to beat expectations in 2022 and this provided the government with flexibility to support households prudently in its Budget 2023 plans. These factors underpin the buying power in the population and consequent demand in the economy. A strong level of consumer confidence is returning to the Irish economy, notwithstanding the more challenging economic environment more generally. Affordability supported by legislation and policy changes A combination of new legislation and updated policy measures from the Government and other bodies such as the Central Bank of Ireland (CBI) should help support affordability in this more challenging economic environment of rising interest rates and high inflation. The benefits of Housing For All, introduced in 2021 as the government’s housing delivery plan to 2030, are slowly beginning to materialise. A range of schemes, discussed below, have been introduced to secure delivery of large scale sustainable mixed-tenure communities, representing an overall investment of €20 billion over the five years to 2026. The plan is designed to cater for prospective buyers and renters for which market dynamics and market rules have made either owning or renting a property a difficult prospect. The Help to Buy (‘HTB’) scheme helps first- time buyers of newly-built homes to buy a new house or apartment. This incentive of €30,000 per qualifying property is in place until at least December 2024. In FY 2022, 87% of our first home purchasers availed of this scheme. The cost rental scheme is designed to relieve the burden on renters, where the state will take ownership of new build properties at market cost and rent them to the tenant at a rate that is at least a 25% discount to the private market. The First Home scheme was launched in July 2022 and is designed to support first-time buyers in purchasing new-build homes in private developments. Prospective buyers can use this scheme in conjunction with the HTB scheme. The government will take up to a 30% stake in the property to reduce the burden on the buyer from a financing perspective. The regional limits Glenveagh Properties plc Annual Report and Accounts 2022 19 Strategic Report Governance Financial Statements Contents M ARKET OVE RVIEW CONTINUED on purchase prices that apply in this scheme were increased in January 2023, further supporting buyers here. The CBI also introduced a significant policy amendment in October 2022, that became effective in January 2023. In its annual review of macroprudential rules, the CBI eased the loan-to- income (‘LTI’) multiple from 3.5x to 4x for first-time buyers while also adjusting exceptions and easing loan-to-value (‘LTV’) requirements for second and subsequent borrowers. This is an important support to affordability for first-time buyers in particular. Macroprudential rules continue to remain very conservative by European standards. Demand remains strong Demand for housing continues to be very strong in Ireland. Alongside private demand, the state is also contributing to demand with homes also being purchased by the Land Development Agency, Approved Housing Bodies and local authorities. Underlying demand is being driven by a combination of population growth, economic growth, and insufficient underlying supply. Latent demand, built up over the course of a decade of under-supply in the aftermath of the financial crisis, is also contributing to the existing imbalance. The preliminary results from Census 2022 indicates that the Irish population totalled over 5.1 million people, the first time the population has exceeded 5 million in a census since 1851A. Domestic population growth as well as increasing net inward migration has resulted in an increase in population of approximately 535,000 people since 2011. Additional housing stock is an essential requirement in this context. Economic growth is also a main driver of demand for housing in Ireland. Ireland has high GDP versus the OECD average, a high employment rate, with above-average salaries and solid wage growth. Average employment growth was estimated at over 6% in FY 2022 and is forecast to grow further in 2023 and 2024B. Employment has risen by more than 650,000 since 2012C. This has created the capacity and the desire among the population to own their own homes. In addition, during 2022 the employment rate was at levels last reached in 2007. This high employment rate, combined with wage inflation which is forecast to average 3-4% per annum in coming years, will create further capacity and increased affordability for people to purchase new homes in Ireland. The growth in mortgage approvals has reflected this underlying demand trend. There has been almost continual growth in approvals since 2011 and in 2022 the volume of approvals grew by 9%D, albeit driven in the second half of the year by re- mortgaging and switching to minimise the impact of rising interest rates. Supply shortages persist The long term under-supply of housing in Ireland has created a latent housing demand that, when combined with the continued demand drivers of economic growth and demographics, can only be solved with accelerated supply and an effective planning system and policy. Data from the 2022 Census indicated that the total housing stock increased by just over 6% since 2011, only half of the 12% increase in the number of households over the same period. There has been some improvement in liquidity in 2022 as measured by the stock of homes listed for saleE. At the end of 2022, there was a total of 15,200 homes listed for sale, an increase from the trough of 11,200 earlier in 2022 but still well down from the 20,000 average through 2017-2019. These low levels reflect years of under-supply and also the disruption caused by the COVID-19 pandemic. However, the pace of new development is being impacted negatively by supply-chain issues, input price inflation and ECB rate increases. There is now evidence of a marked slowdown in the level of housing commencements. In 2022, commencements fell by 12% year-on-year and were up just 3% compared to 2019, prior to any COVID-19 related volatility. The annual total for 2022 was 27,000, compared to a peak rolling 12-month total of approximately 35,000 earlier in the year. The annual total lagged that of housing completions at 30,000. These challenges can disproportionately impact what is a fragmented homebuilding industry. There is a risk that smaller scale developers will be unable to provide supply while these challenges persist. The planning system has also been a major factor in the lack of supply of housing in Ireland. Planning system reform requires an effective national planning appeals board in the first instance, with sufficient resources to address the current backlog of applications and to ensure efficient streamlining of new applications. The longer-term structural supply issues need to be addressed with reform of planning policy, including a clearer alignment of the Housing for All strategy and the National Planning Framework. POPULATION GROWTH 5.12m GDP GROWTH 2022 MORTGAGE APPROVALS HOUSING COMPLETIONS 4.76m 4.59m 14.7% 60 50 40 30 20 10 0 -2.7% -2.5% -1.0% -0.5% 0.4% 0.41% 0.5% 0.9% 2.5% 2.9% 2011 2016 2022 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 a i r t s u A n e d e w S l y a t I k r a m n e D 9 1 a e r A o r u E K U e c n a r F i n a p S S U d n a e r I l s d n a l r e h t e N Total Mortgages Approved (k) A: Source: CSO B: Source: Goodbody C: Source: Labour Force Survey Q3-2022 30,724 19,829 26,957 16,442 10,895 10,515 2021 2022 22,467 18,102 4,365 2018 26,237 18,969 7,268 2019 21,686 14,671 7,015 2020 Housing Units* Apartments Units* D: Source: BPFI E: Source: MyHome.ie report Q4-2022 Glenveagh Properties plc Annual Report and Accounts 2022 20 Strategic Report Governance Financial Statements Contents OUR BUSINESS MODE L As one of Ireland’s leading homebuilders, Glenveagh is focused on delivering high-quality homes in flourishing communities. We achieve quality and great accessibility to new homes by relentlessly innovating the way we plan, design and build. We bring new ideas home. ABOUT US Supported by innovation and supply-chain integration, Glenveagh is committed to opening access to sustainable high-quality homes to as many people as possible in flourishing communities across Ireland. We provide homes for our private, institutional and state customers via three business segments – Suburban, Urban and Partnerships. Each business segment benefits from our proven delivery platform and industry-leading central resources. These central resources span the entire process outside of construction delivery. OUR BUSINESS SEGMENTS Suburban Urban Partnerships Description Our suburban business is focused on delivering affordable, high-quality homes in locations of choice at €450,000 or below. Our focus is in particular on affordable starter homes in the Greater Dublin Area (GDA), the deepest demand segment of the Irish market, however the portfolio also has other potential sites nationally. Product Houses and low-rise apartments. End market Private/Institutions. Locations Ireland. Exit Traditional/forward sale (‘FS’). Revenue (FY 2022) €455m See page 40 to find out more OUR DRIVERS OF SUCCESS Description Urban product consists of apartments to be delivered to institutional investors primarily in Dublin and Cork but also on sites adjacent to significant rail transportation hubs. Description 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. Product Apartments. End market Institutions. Locations Dublin City/Cork City. Exit FS/forward fund (‘FF’). Revenue (FY 2022) €190m Product Houses and apartments. End market Private/State/Institutions. Locations Ireland. Exit State/traditional/FF/FS. Revenue (FY 2022) Anticipated to begin FY 2024 See page 40 to find out more See page 40 to find out more Talented and dedicated individuals A strategic land bank Strong relationships A strong financial position A trusted brand Glenveagh Properties plc Annual Report and Accounts 2022 21 Strategic Report Governance Financial Statements Contents OUR BUSINESS MODE L CONTINUED ALONGSIDE ONGOING EVALUATION OF OPPORTUNITIES TO EXPAND CAPACIT Y IN OUR OWN HOUSING M ARKET, WE CONTINUE TO EXPLORE WAYS TO DIVERSIF Y INTO COMPLEMENTARY BUSINESS AREA S. OUR DRIVERS OF SUCCESS Talented and dedicated individuals Our integrated business model Our clear vision and strong culture and values underpin everything that we do and shape the positive contributions we make to society. Our operational excellence and financial strength enable us to generate social and economic value for our stakeholders. Our model operates by acquiring land, obtaining planning permission, and then constructing houses on that land to sell to customers, with a key focus on sustainable practices and materials. Being one of the largest homebuilders in Ireland, we have access to a larger pool of financial and human capital to undertake large-scale development projects. Our established relationships with key stakeholders in the industry such as local authorities, suppliers, and contractors, can also help to streamline the development process. Our stakeholder engagement enables us to align our activities to our stakeholders’ expectations on environmental, social and governance- related matters. The integration of sustainability throughout our business allows us to create value for all stakeholders, mitigating risk whilst actively seeking opportunities to differentiate and unlock improvement in margins and returns. Enabling our model to succeed Alongside our ongoing evaluation of opportunities to expand capacity in our own housing market, we continue to explore ways to diversify into complementary business areas. These would leverage our existing capabilities and resources to generate new revenue and profit streams for the business in excess of our cost of capital. Our drivers for success are the critical inputs that enable our integrated business model to succeed. These support our ability to execute effectively against our strategic priorities. By achieving this we can create value for all our stakeholders. 423 Average number of Glenveagh colleagues employed during FY 2022 Our talented and motivated employees have the expertise and dedication to deliver our commitment to expand access to home ownership and create flourishing communities. Experienced professionals in fields such as architecture, engineering, and project management help ensure that projects are completed on time and within budget. Additionally, their knowledge of industry trends and regulations can help the business stay competitive and make well-informed decisions. Furthermore, talented individuals can drive innovation and growth within our business, bringing fresh ideas, new technologies, and new ways of thinking to the Company. Their creativity and vision can help the business stay ahead of the curve and respond quickly to changes in the market. Additionally, their leadership and management skills can help the business attract and retain other talented professionals, creating a positive feedback loop of growth and success. Glenveagh Properties plc Annual Report and Accounts 2022 22 Strategic Report Governance Financial Statements Contents OUR BUSINESS MODE L CONTINUED OUR DRIVERS OF SUCCESS OUR DRIVERS OF SUCCESS A strategic land bank Strong relationships Our strategic land bank allows the company to manage the supply of land available for future development, ensuring a steady supply in key locations. This stability in land supply can help the business plan for the long-term, as well as negotiate better deals with local authorities and other stakeholders. Our land bank is focused on starter-homes and the private rental sector with affordability and value for money at its core. Our land bank was acquired at attractive rates in the context of both cost per site and site cost as a percentage of net development value. €458m Land bank value We are a recognised and trusted partner, with a track record of building deep relationships with our partners, communities, suppliers and customers. Having strong supplier relationships is a key driver of success as it allows us to access the resources and materials needed for development at a competitive price. Reliable suppliers can also help to ensure that projects are completed on time, which is critical for maintaining a good reputation and attracting new customers. Without a strong set of relationships in our communities, our business cannot thrive. Constructive state and government relationships are increasingly crucial as we build out our Partnerships business segment, and are also important to facilitate the planning permission and approval process. 91% Customer satisfaction rating Glenveagh Properties plc Annual Report and Accounts 2022 23 Strategic Report Governance Financial Statements Contents OUR BUSINESS MODE L CONTINUED OUR DRIVERS OF SUCCESS OUR DRIVERS OF SUCCESS A strong financial position Financial capital fuels the achievement of our strategic priorities. We remain disciplined in our approach to the allocation of capital with the overriding objective of enhancing shareholder value. Our capital allocation strategy is focused on three priorities: land, work-in-progress, and investment in supply- chain. Once these priorities are satisfied, we intend to return any excess cash identified to shareholders. This is all underpinned by the maintenance of a strong balance sheet, good visibility on forward sales, and a rigorous investment appraisal process. €645m Revenue FY 2022 €693m Equity FY 2022 A trusted brand We have an established and trusted brand that is built on a customer-focused and high-quality approach. This helps us to differentiate the business, making it more likely that customers will choose us in future purchase decisions. Furthermore, a trusted brand can help to drive innovation and growth as customers who trust the brand are more likely to be willing to try new products and services offered. We are exploring how to effectively expand our branding and product offerings to increase sales and grow the customer base. Our strong brand also helps us to attract top talent to the company, as people are more likely to want to work for a reputable and successful business like ours. +16% Improvement in overall brand awareness score Glenveagh Properties plc Annual Report and Accounts 2022 24 Strategic Report Governance Financial Statements Contents OUR M ATE RIAL ISSUES Understanding what matters most to our stakeholders. We carried out a review of our material sustainability issues to inform the evolution of our business strategy and to ensure we are focusing and reporting on the most important issues for our stakeholders. The external challenges that face our business are constantly changing and we acknowledge the importance of staying updated on these. Actively engaging with our stakeholders enables us to understand their views more clearly and to ensure our business is responding appropriately and rapidly. We do this through customer and staff surveys, market research, peer review, participation in industry forums and networks as well as one-to-one engagement. More information on our stakeholder engagement approach can be found on page 26. In 2022, we undertook a specific engagement process to review and evolve our understanding of our most material issues. Our materiality assessment The first step in our assessment was to produce a long list of issues based on a wide range of inputs. These included Glenveagh’s own information, a peer review, sustainability and industry trends, current and forthcoming legislation and policy, ESG rating requirements, international standards and frameworks. A total of 80 issues were identified from across this literature. A shortlist was created by identifying issues most frequently mentioned in the literature and grouping together similar issues. A shortlist of 31 issues was agreed spanning environmental, social and governance factors. A broad range of stakeholders were identified including investors, lenders, Board members, subcontractors and suppliers, institutional customers, NGOs, Executive Committee members and employees. 15 semi-structured interviews took place, while 31 external stakeholders participated in a survey. Stakeholders were asked to rate the issues considering its relevance, risk, opportunity and urgency. Employees were also given the opportunity to input into the process through a dedicated survey. The information and ratings from the stakeholder engagement process were prioritised in two ways – a simple ranking based on the average score for each issue across all stakeholders as well plotting internal and external stakeholders scores on a materiality matrix. The results were then analysed to understand the insights that had emerged at a macro level and the relative priorities of each stakeholder group. Finally, the findings were validated with our Executive Committee. Briefings were also delivered for various business units, where relevant, to explore the insights from specific stakeholder groups. OUR MATERIALITY ASSESSMENT METHODOLOGY 01 02 03 04 05 06 Identify Identify a long list of relevant sustainability issues: 80 issues. Refine Refine into a shortlist and clearly define each issue: 31 issues. Engage Engage stakeholders in scoring and discussing the issues. Prioritise Prioritise the issues in a list and on a materiality matrix. Analyse Analyse the results of the stakeholder feedback. Validate Validate the findings/insights with our Executive Committee. Glenveagh Properties plc Annual Report and Accounts 2022 25 Strategic Report Governance Financial Statements Contents OUR M ATE RIAL ISSUES CONTINUED The outputs of our materiality assessment are illustrated in our materiality matrix which plots the views of external stakeholders against those of internal stakeholders. Environmental Social 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Water management Indoor air quality Biodiversity Climate risk – physical Pollution prevention Circular construction Land use and green infrastructure Renewable energy Sustainable mobility Digitalisation Innovation Carbon emissions Climate risk – transition Energy efficiency 15 16 17 18 19 20 21 22 23 24 25 Diversity, equity and inclusion Responsible sourcing Working conditions Build quality Customer Placemaking and community engagement Affordability Skilled workforce Supply-chain Health, safety and wellbeing Employee engagement Governance 26 27 28 29 30 31 Numbers do not indicate ranking. Many of the material topics have remained the same as in our previous assessment. However, some areas have seen more specificity – for example, climate is now divided into a number of discrete topics. We have also seen the emergence of innovation and digitalisation as particularly important issues internally. The insights from this process were used to inform the evolution of our strategy, which fully integrates our sustainability approach with our business strategy. Our section on strategy (pages 30 to 37) demonstrates which material issues are addressed by each of our strategic priorities and the progress we are making in these areas. In line with the requirements of the Corporate Sustainability Reporting Directive, in 2023 we will build on the work we have already completed and will carry out a double materiality assessment. This will involve assessing ‘impact materiality’ i.e. actual or potential significant impacts on people or the environment as well as ‘financial materiality’ i.e. where a sustainability topic triggers financial effects on the Group. We have already mapped the topics identified in our materiality assessment to the ESG topics defined under the European Sustainability Reporting Standards (‘ESRS’) and will evolve our reporting to align with these requirements over the next two years. l a n r e t x E More important for external stakeholders 31 30 22 14 13 28 17 27 16 7 25 8 20 9 29 12 19 21 23 6 3 2 26 5 4 15 High priority for all 18 24 11 10 Cyber security and data protection Sustainable building certifications/labels 1 Transparency Governance Human rights Business ethics Less important for all More important for Glenveagh Internal Glenveagh Properties plc Annual Report and Accounts 2022 26 Strategic Report Governance Financial Statements Contents OUR STAKE HOLDE RS How the Board considered stakeholders during the year. The Board believes that to secure Glenveagh’s long-term success, it must take account of the perspectives, insights and opinions of stakeholders when key strategic, financial and operational decisions are being made. Glenveagh has identified six key stakeholder groups, with each requiring tailored engagement. By fostering business relationships and maintaining effective engagement with these stakeholder groups, it should help to ensure that Glenveagh is a Company in which people want to invest, from which people want to buy, with which people want to partner and for which people want to work. The Board engages with each stakeholder group on a regular basis. Further information on how the Board directly engaged with shareholders and employees is outlined in the Corporate Governance Report on pages 79 to 81. Details of how Glenveagh engaged with employees, suppliers, shareholders, customers, communities, government and regulators and outcomes from these engagements are outlined on pages 27 to 29. The Board is continuously kept up-to-date on the feedback received from each stakeholder group through the various reports and presentations received from executive management. This feedback is carefully considered when making decisions that may impact stakeholders either collectively or individually. STAKEHOLDER CONSIDERATIONS OF THE BOARD Manufacturing Strategy Materiality Assessment Description Controlling and innovating with our supply-chain is a key priority of Glenveagh. To that end, our Manufacturing Strategy, inclusive of expanding our manufacturing operations, was approved by the Board in March 2022. Relevant stakeholders > Suppliers and subcontractors. Board considerations > Received and considered an update on the manufacturing strategy reiterating support. > Approved completion of supply agreement with a Light Gauge Steel (‘LGS’) manufacturer. > Approved acquisition of Harmony Timber Solutions Limited. Links to values Description Glenveagh completed a materiality assessment to identify, assess and prioritise the potential Environmental, Social and Governance issues that could affect the business and stakeholders to inform strategy and long- term value creation. Relevant stakeholders > Customers and communities. > Employees. > Suppliers and subcontractors. > Shareholders. > Government and regulations. Board considerations > Considered hot topics from the peer review such as whole life carbon, innovation and biodiversity. > Considered the top 10 issues identified across the stakeholder groups. > Received an update on the changing reporting requirements, specifically Corporate Sustainability Reporting Directive, EU Taxonomy and the Corporate Sustainability Due Diligence Directive. See pages 5, 34 and 35 to find out more Links to values Equity, Diversity and Inclusion Strategy Description This strategy document sets out the roadmap for how Glenveagh will ensure that equity, diversity and inclusion are embedded within the company. Relevant stakeholders > Employees. > Customers. > Suppliers and subcontractors. Board considerations > Received and considered the strategic themes of better representation, inclusive environment and using our influence. > Approved the strategic objectives and the specific targets and goals related to each. > Approved the addition of governance structure and progress reporting to future Board meeting agendas. Links to values See pages 32 and 33 to find out more See pages 24 and 25 to find out more Glenveagh Properties plc Annual Report and Accounts 2022 27 Strategic Report Governance Financial Statements Contents OUR STAKE HOLDE RS CONTINUED Customer Care Department is also available to provide support throughout the customer journey and has developed a homeowner’s guide as a reference point for customers. We conduct monthly customer satisfaction surveys and bi-annual brand surveys to obtain customer feedback. How is effectiveness measured? > Customer satisfaction and brand awareness surveys. > Reservations and enquiries from our customer website. > Performance versus budget, forecast and market data. > Resident surveys. > Customer care reporting and metrics. Interests and concerns > Regular and consistent communication in the home buying process. > The ability to conduct a virtual home buying journey. > Clarity on moving dates. > Location and community information. > The quality and affordability of the house. Outcome from engagement > Establishment of a dedicated customer care team and development of the homeowner’s guide. > Leads are up 68% year-on-year. > Increased brand awareness by 16%. > Improvements to our customer website and investment in state of the art CGI walkthrough tours. > Customer satisfaction rating of 91%. FY 2023 Priorities > Our priorities for FY 2023 are outlined as part of the Placing the Customer First strategic priority on page 31 of this report. Monthly updates are provided to the Board by the CEO on various HR KPIs, key employee priorities and the plans to address these priorities. HR initiatives are also presented to the executive committee by the Chief Strategy Officer, several times a year. How is effectiveness measured? > Feedback and scoring received through the Great Places to Work culture and engagement survey. > Feedback from employee committees. > Monthly reporting including health and safety audits, turnover rates, training and development levels. > Feedback from the Workforce Engagement Director. > Participation in our materiality assessment. > Engagement with staff email communications and surveys. Interests and concerns > Employee engagement. > Culture and Employer Value Proposition (‘EVP’). > Opportunities for training, development and career progression. > Health, safety and wellbeing of employees in work environment and processes. > Equity, diversity and inclusion (‘ED&I’). Outcome from engagement > Publication of the Group’s ED&I strategy and Gender Pay Gap report. > The Board approved the movement of head office to modernise and improve the work environment. > The Board received and considered feedback from the Workforce Engagement Director. > Investment in Internal Communications function, increasing output thereof. > Creation of Glenveagh’s EVP pillars. > Senior Leadership sponsorship of employee committees. FY 2023 Priorities > Our priorities for FY 2023 are outlined as part of the valuing and developing our colleagues strategic priority on page 32 of this report. Employees Why we engage We understand that our employees are at the heart of our success and are our most valuable asset. We are committed to creating a positive and inclusive workplace culture that promotes teamwork, collaboration, and innovation. By actively engaging with our employees, we can ensure that their needs are met, and they feel valued and motivated to contribute to the company’s success. How we engage We engage with our employees using a variety of methods including one-to-one meetings, team meetings, online training platforms, performance reviews, employee recognition awards, town halls, leadership correspondence, surveys and site visits. During November 2022, 77% of employees participated in the Great Place to Work culture and engagement survey. Our Corporate Affairs team provided regular internal communication through our dedicated employee app. Our Workforce Engagement Director, Cara Ryan, engaged directly with employees every six months and presented her findings to the Board. Details of these activities are outlined in the Corporate Governance Report on pages 76 and 81. Customers Why we engage Our customers are at the centre of everything we do, and we understand that their satisfaction is essential to building a reputable and successful business. We believe that by engaging with our customers, we can better understand their evolving needs and preferences, and ensure that we are providing sustainable, high-quality homes that exceed their expectations. How we engage We are committed to engaging with our customers throughout their customer journey. We believe that by actively listening to their feedback, responding to their needs and concerns, and delivering high-quality homes that exceed their expectations, we can build trust, loyalty, and a positive reputation in the market. To achieve this, we engage with customers through our website which provides advice and tips on each step of the home buying journey together with a best-in-class digital home viewing platform. We also update our buyers from the time of purchase through automated site updates and the latest news within their communities. Our Glenveagh Properties plc Annual Report and Accounts 2022 28 Strategic Report Governance Financial Statements Contents OUR STAKE HOLDE RS CONTINUED How is effectiveness measured? > Our Annual Community Report. > Progress against our Community Engagement Strategy objectives. > Independent stakeholder research. Interests and concerns > Being responsive to the views of the local community. > The efficient use of land and sustainable place making. > The protection of biodiversity, investment in local infrastructure, restoration of listed and protected features. > Support for local sports clubs, schools and community groups. Outcome from engagement > Increased ‘Building Communities not just Homes’ brand score. > 126 community activities in 23 communities nationally. > Launch of Nature Hero Awards and Community Report in 2022. > First community stakeholder survey completed. > Development of community hubs to update on new community activity. > Excellence in the Community award win in Kildare. FY 2023 Priorities > Increase in the number of schools engaging in biodiversity workshops, construction site safety talks and careers in construction days. > Community days with increased resident and local business participation. > Increase employee volunteering hours and charity fundraising. > Community engagement launch in new communities. > Improved community communication through community newsletter reports and digital hubs. > Development of new social value tools. > Publication of our Biodiversity Transition Plan. Communities Why we engage We understand that our business operations have an impact on the communities in which we operate, and we are committed to contributing positively to the social, economic, and environmental well- being of our communities. By engaging with our communities in a collaborative and transparent manner, we can build trust, enhance our reputation, and create sustainable, thriving communities and a responsible business model that benefits all stakeholders. How we engage We engage with our communities through various initiatives such as community events, sponsorships, and charitable donations. We also work closely with local authorities and community groups to ensure that our projects are designed and built in a way that benefits the wider community. By adopting a multi-disciplinary approach, involving our acquisitions, sales, planning and design teams, we identify the needs of local community groups and, in partnership with community groups and local authorities, decide on the best way to meet these needs. Shareholders Why we engage We understand that our shareholders are key stakeholders who invest in our business. We are committed to maximising value for them by achieving sustainable growth through our strategic priorities. We engage with our shareholders through regular communication and transparent reporting, providing updates on our business performance, financial results, and strategic initiatives. How we engage We maintain an active dialogue with our shareholders through various channels, such as regular meetings, shareholder presentations, investor conferences and online updates. We also engage with shareholders on specific topics, and where relevant, provide feedback to the Board, which we then consider as part of our decision- making processes. Our commitment to engaging with our shareholders is a fundamental part of our business strategy, and we strive to build long-term relationships based on transparency, trust, and mutual benefit. We will continue to work closely and consistently with our shareholders to ensure that we deliver value to them. How is effectiveness measured? > Feedback received from investor meetings. > Brokerage reports. > Participation at AGM and EGMs. > Weekly and monthly investor relations internal reporting. > Updates on institutional shareholding. Interests and concerns > The impact of supply-chain and planning challenges on Glenveagh’s performance and outlook. > The impact of global inflation on operating costs. > The need for progress updates on the long-term targets of the business. > Build quality. > Capital allocation policy. > An increased focus on ESG matters. > The Board’s composition and diversity. Outcome from engagement > 111 investor meetings in 2022. > Attendance at four conferences. > Shareholder consent for our capital returns programme. > Share register activity and trading volumes. > New investor interest. FY 2023 Priorities > Continue our programme of investor meetings. > Attendance at investor conferences, participation in site visits. > Availability of the Chair and Senior Independent Director to meet with investors. > Regular engagement with shareholders on specific topics. Glenveagh Properties plc Annual Report and Accounts 2022 29 Strategic Report Governance Financial Statements Contents OUR STAKE HOLDE RS CONTINUED priorities. Our aim is to create a supply-chain that is resilient, efficient, and effective, delivering quality projects that meet or exceed our customers’ expectations which benefits all parties involved. How is effectiveness measured? > ISO 9001:2015 Quality Management System has been implemented which informs the subcontractor evaluation process. > Participation in our materiality assessment. > Customer satisfaction survey. Interests and concerns > Visibility of future projects and workloads. > Delivery of an energy-efficient and low carbon supply-chain. > Ethical business practices. > Prompt payment of invoices. > Safety practices and business conduct. > Impact of global supply-chain challenges on the availability and cost of materials. Outcome from engagement > Supply arrangements were put in place to limit any potential disruption arising from global supply-chain challenges. > The Board approved our manufacturing strategy and the purchase of Harmony Timber Solutions Limited. > Monitoring of subcontractor performance through inspection plans. > Engagement with subcontractors on corrective action plans. > Informs our customer journey experience and handover guide. FY 2023 Priorities > Continue to implement efficiencies across our sites in line with our ISO 14001 accredited Environmental Management System. > Publication of our circular economy plan. > Supplier engagement programme to support the implementation of our Net Zero Transition Plan. > Community engagement initiatives to generate local employment for vendors and subcontractors. Government and Regulators Why we engage We believe that engaging with government and regulators is essential to ensure that we can continue to deliver high-quality homes that meet our customers’ needs. By engaging with government and regulators, we can also provide input into policy and regulatory developments that affect our industry and promote the adoption of sustainable and responsible practices that benefit the wider community. How we engage We engage with government departments, state agencies and local authorities on an ongoing basis directly or through membership of trade associations. We also attend and contribute to webinars and policy consultation events. Our environmental health and safety teams work closely with state agencies via health and safety and environmental audits, and our planning teams engage with local authorities through the statutory plan making processes and through the planning application process in accordance with statutory provisions. We engage with local authorities on housing partnerships via the e-tendering process. How is effectiveness measured? > Progress of planning applications and planning grants. > Social and affordable housing deliveries. > Outcomes of statutory policy consultation processes. > Implementation and application of legislative amendments. Interests and concerns > Planning policies. > Building and environmental regulations. > Health and safety matters. > Social and community issues. > Home affordability. > Economic policy to underpin a sustainable housebuilding industry in Ireland. Outcome from engagement > Social and affordable housing deliveries pipeline. > Review of the National Planning Framework, which recognises rapid population growth and the need to provide homes in sustainable locations where demand is greatest. FY 2023 Priorities > Continue to engage with relevant authorities on planning and development legislation being enacted this year. > Ensure the key developments in our Partnerships business efficiently progressed through the planning system. > Work with Authorised Housing Bodies and Local Authorities to deliver social and affordable housing. Suppliers and Subcontractors Why we engage We recognise that the success of our business is dependent on our relationships with suppliers and subcontractors. We believe in creating strong and mutually beneficial partnerships that enable us to deliver high-quality projects that exceed our customers’ expectations. By fostering open communication, promoting fair and ethical practices, and working together towards shared goals, we can create a sustainable and responsible supply-chain that delivers value for all parties. How we engage We have implemented various initiatives to promote communication, collaboration, and trust between our company and our suppliers and subcontractors. These include regular site meetings and workshops to share best practices, address challenges, and identify opportunities for improvement on topics such as health and safety, project performance and upcoming work. We also promote fair and ethical practices and encourage our partners to adopt sustainable and responsible practices that align with our values and strategic Glenveagh Properties plc Annual Report and Accounts 2022 30 OUR STR ATEGY Strategic Report Governance Financial Statements Contents Guided by our vision, our Building Better strategy will create long-term, sustainable value. Placing the customer first We will be recognised as the leading provider of affordable, high-quality homes for all tenures, offering a best-in-class customer experience. See page 31 to read more Valuing and developing our colleagues We will be an employer of choice and the best place to work in our sector for diverse and high-calibre talent, with a safe and inclusive working environment and a culture built on teamwork and trust. See page 32 to read more Our Building Better strategy OUR CULTURE OUR VALUES Driving operational excellence We will plan, design and assemble high-quality products using best-in-class processes across the build lifecycle. Clear accountability will enable us to make operational choices rapidly and decisively, and to allocate resources as efficiently as possible. See page 34 to read more 2022 marked five years since IPO, an opportune milestone to undertake an extensive review of our strategy. Shaped by our vision – that everyone should have the opportunity to access great-value, high-quality homes in flourishing communities across Ireland – our mission, our values and our commitment to sustainability, we aimed to build on the successes of our existing strategic and sustainability priorities, while positioning ourselves optimally to create long-term value for stakeholders. The development of our evolved strategy was informed by rigorous research, peer analysis and our materiality assessment (see pages 24 and 25) as well as internal working groups and engagement with colleagues across the business. Each of our five strategic priorities is supported by action-oriented pillars, which in turn are underpinned by projects, many of which are already underway. We have identified KPIs to measure our performance. Creating sustainable and thriving places We will be known for developing great places for people to live, where communities and nature can flourish for the long term. See page 36 to read more Embracing innovation We will be at the cutting edge of innovation in the homebuilding sector, allowing us to transition to a low-carbon economy with the best- value, circular construction. See page 35 to read more Glenveagh Properties plc Annual Report and Accounts 2022 31 31 Glenveagh Properties plc Annual Report and Accounts 2022 Strategic Report Governance Financial Statements Contents OUR STR ATEGY CONTINUED Placing the customer first STR ATEGIC PRIORIT Y We will be recognised as the leading provider of affordable, high-quality homes for all tenures, offering a best-in-class customer experience. Pillars Customer journey Transform our customer journey to a best-in-class experience. Affordability Ensure that we focus on affordability in everything that we do. Position ourselves as the partner of choice for affordable and high-quality housing, appealing to private, institutional and state-supported customers. Build quality Deliver high-quality homes across all our developments. Embed a quality-first approach in the workmanship, materials and products that we use. Extend our quality culture across the value chain, in particular with subcontractors and professional teams. IMPROVEMENTS TO OUR CUSTOMER WEBSITE AND COM MUNICATION WITH HOME BUYERS CONTRIBUTED TO A 91% CUSTOMER SATISFAC TION R ATING. Highlights from 2022 > 73% of all units delivered in 2022 were priced below the median price of new homes sold in the GDA and Cork (2021: 69%), and approximately 35% of our suburban units were part of social and affordable government- supported initiatives. > 100% of our sites now operate under our construction quality-management system (2021: 81%). This formed part of our broader commitment to ISO 9001: 2015 certification, which we achieved in 2022. > Our Partnerships business advanced, with two planning applications submitted for our first developments with local authorities. > We invested in state of the art CGI walk- > Enhance the digital customer journey by integrating this with the end-to-end planning, design and construction processes. Relevant principal risks and uncertainties > Broaden our after-sales service by offering adjacent products and services from an approved pool of suppliers at competitive rates. > Roll out revised inspection checklists and new quality bulletins to target key focus areas to enhance build quality. > Utilise new reporting software in the build quality team to provide live quality performance data from all active projects. > Complete development of existing projects for institutional customers and continue to assess market opportunities in this area. > Begin construction immediately once planning 04 05 07 11 See page 59 to find out more Relevant material issues 02 14 18 19 21 28 31 See page 25 to find out more Contribution to UN SDGs through tours for customers, ensuring sales and forecasting can be managed long before our homes are built. approval is granted for our Partnerships developments at Ballymastone and Oscar Traynor Road. > Improvements to our customer website and > Develop a visual model for customers to track See pages 43 to 46 to find out more communication with home-buyers contributed to a 91% customer satisfaction rating (2021: 89%). More than 70% of enquiries now come to Glenveagh.ie, reducing our reliance on third-party property portals. We saw a 68% increase in enquiries in 2022. progress of their homes. > Build integrated marketing campaigns including social media, customer journey and all sales collateral. Relevant values > Our strategic communications increased our brand awareness by 16% points, making us the most recognised Irish home-building company. How we measure progress > Customer satisfaction rating. > ASP FY 2023. See page 2 to find out more Focus for FY 2023 and beyond > Launch a web series to highlight the affordability of our own product alongside government’s demand-side initiatives, while also outlining new solutions for own-door affordable housing. > % homes priced below median in relevant regions. > % sites operating under our construction QMS. See page 45 to find out more Accreditations, certifications, external commitments and partnerships Quality ISO (ISO 9001) Glenveagh Properties plc Annual Report and Accounts 2022 32 32 Glenveagh Properties plc Annual Report and Accounts 2022 Strategic Report Governance Financial Statements Contents OUR STR ATEGY CONTINUED Valuing and developing our colleagues STR ATEGIC PRIORIT Y We will be an employer of choice and the best place to work in our sector for diverse and high-calibre talent, with a safe and inclusive working environment and a culture built on teamwork and trust. Pillars Talent Attract and retain high-calibre talent, ensuring we have an organisation that is fit for the future. Culture Create a strong culture centred on our values, with an ethos of equity, diversity and inclusion. Safety Foster a culture of safety for all those employed and affected by what we do. Highlights from 2022 > We worked with the Irish Management Institute (‘IMI’) to enhance our leadership and graduate training, and developed a new programme focused on softer skills for site managers. > We co-created Glenveagh’s Employer Value Proposition (‘EVP’) pillars with colleagues and informed by executive committee interviews, external market research and analysis of our Great Place to Work and Investor in Diversity survey results. > We launched our first equity, diversity and inclusion (‘EDI’) strategy in December 2022, setting out three objectives, underpinned by eight workstreams. The associated targets include to increase the number of women on our Board and at senior management-level. > We focused on raising awareness of our values and started to embed them throughout our communications and processes, supported by the launch of quarterly employee recognition awards for individuals who have embraced our values. > We initiated a programme to nurture a sense of ownership and accountability with respect to safety culture. Focus for FY 2023 and beyond > Complete the move to a new head office to accommodate our growing business and offer improved facilities. > Roll out a streamlined performance management process, supported by a learning management system. > Following the launch of our ED&I strategy in late 2022, set up the workstreams necessary to achieve our objectives and establish employee network groups, each with an Executive Committee sponsor. > Address the areas identified for improvement in our approach to safety, and establish a safety commitment. > Establish a Learning Academy that attracts and retains highly-skilled team members. CASE STUDY Environmental Health and Safety (‘EHS’) Advisor Luke O’Dea describes his journey at Glenveagh. I joined Glenveagh in 2018 as a general operative responsible for duties such as setting up walkways, snagging and boundary inspections. After a couple of years I got involved with helping with paperwork at the Kilcock site in Co. Kildare. I showed an interest and aptitude, so I was asked if wanted to join the safety team. I’d always wanted a career rather than a job so I jumped at the chance. I was offered the opportunity to do a 13-week training course with the National Irish Safety Organisation (‘NISO’) for which I was delighted to get a distinction. This was followed a few months later with a course at University College Dublin. Glenveagh has given me so much mentoring and support – they really encourage and reward initiative. I’m now a qualified EHS advisor. I’ve worked on a few sites and will shortly start a site myself, with full support from management every step of the way. Glenveagh Properties plc Annual Report and Accounts 2022 33 Glenveagh Properties plc Annual Report and Accounts 2022 Strategic Report Governance Financial Statements Contents OUR STR ATEGY CONTINUED WE L AUNCHED OUR FIRST EQUIT Y, DIVERSIT Y AND INCLUSION (‘EDI’) STR ATEGY IN DECEMBER 2022, SET TING OUT THREE OBJEC TIVES, UNDERPINNED BY EIGHT WORKSTREA M S. How we measure progress > Turnover rate. > Training hours per monthly salaried employee. > Great Place To Work Survey Score. > Total Recordable Incident Rate (‘TRIR’). See page 45 to find out more Relevant principal risks and uncertainties 08 09 10 Contribution to UN SDGs See page 59 to find out more See pages 43 to 46 to find out more Relevant material issues Relevant values 15 17 22 24 25 26 30 See page 25 to find out more See page 2 to find out more Accreditations, certifications, external commitments and partnerships ISO 45001 Elevate Pledge (BITCI) Great Place to Work Certification Investors in Diversity Mark (Silver) Health and Safety Award HEALTH & SAFETY ISO 45001:2018 NSAI Certified Glenveagh Properties plc Annual Report and Accounts 2022 34 34 Glenveagh Properties plc Annual Report and Accounts 2022 Strategic Report Governance Financial Statements Contents OUR STR ATEGY CONTINUED Driving operational excellence STR ATEGIC PRIORIT Y We will plan, design and assemble high-quality products using best-in-class processes across the end-to-end build lifecycle. Clear accountability will enable us to make operational choices rapidly and decisively, and to allocate resources as efficiently as possible. Pillars Efficiency Establish an end-to-end, time-bound process for the build cycle, with clear accountability at each element, supported by appropriate oversight. Enhance efficiency and use fewer resources (time, money, materials, energy, natural resources) to create a high-quality product. Highlights from 2022 > We completed a record number of new Suburban units and improved Suburban gross margins. We also continued to deliver for institutional customers with five active operational sites in the Urban business segment. > In a highly inflationary environment, we worked in close collaboration with our supply-chain partners to secure sustainable, competitive pricing while maintaining security of supply. > Developing our off-site manufacturing capabilities allowed us to mitigate the impact of rising input costs and also provides a platform from which to develop our model of standardised and own-door, high-density housing solutions. This will add resilience to delivery schedules, while aligning with our sustainability targets. > We are also delivering operational efficiency in a sustainable way: 55% of suburban homes delivered in FY 2022 had the top A1 rating, with the remainder having a BER rating of at least A2. > We were delighted to achieve ISO 9001:2015 certification for implementing and maintaining a Quality Management System (‘QMS’). > We strengthened our quality culture among subcontractors and professional teams, supported by the integration of major subcontractors into our QMS. Focus for FY 2023 and beyond > Increase the standardised proportion of our units. > Develop and integrate the timber frame and LGS capabilities we have in our own facilities. > Design a data framework to support the end-to-end process and to enable timely and informed decision-making. > Promote a lean capability and culture within the business to ensure efficiency is embedded throughout Glenveagh. Appoint an expert to identify and execute continuous improvement projects across the business. > Improve the accurate measurement and reporting of variances so that corrective actions can be implemented in a timely manner. > Ensure a holistic assessment of the operating model to allow rapid sharing of best practice. This will involve a focus on value engineering to minimise use of resources. > Continue to enhance the efficiency of our land investment, supported by our National Land campaign launched in October 2022. > Publish a circular economy plan, including targets, to ensure more efficient use of materials. > Assess sites to understand where efficiencies can be made with respect to fuel use. Contribution to UN SDGs See pages 43 to 46 to find out more Relevant values See page 2 to find out more How we measure progress > Operating margin. > Greenhouse gas emissions. > Operational energy intensity (mWh/100sqm). See pages 43 and 44 to find out more Relevant principal risks and uncertainties 02 03 06 07 10 11 See page 59 to find out more Relevant material issues 01 05 06 08 12 14 18 23 27 See page 25 to find out more Accreditations, certifications, external commitments and partnerships Quality ISO (ISO 9001) Environment ISO (ISO 14001) ENVIRONMENT ISO 14001:2015 NSAI Certified Glenveagh Properties plc Annual Report and Accounts 2022 35 Glenveagh Properties plc Annual Report and Accounts 2022 Strategic Report Governance Financial Statements Contents OUR STR ATEGY CONTINUED Embracing innovation STR ATEGIC PRIORIT Y We will be at the cutting edge of innovation in the homebuilding sector allowing us to transition to a low carbon economy with the best-value, circular construction. Pillars Efficient, low-carbon, circular construction Develop innovative solutions throughout the project lifecycle to reduce costs and whole-life carbon from our buildings, and incorporate circularity to support our net zero ambition. Research and Development hub Foster a culture of research, innovation and entrepreneurship within the organisation and be recognised for this in the industry. Highlights from 2022 > We established an innovation department to develop solutions that are viable, require less embodied carbon and fewer people. The department has already begun researching how best to incorporate high- density and standardised house types into our manufacturing and delivery process. We have begun a research project to assess the embodied carbon implications for a variety of options for all aspects of our homes. > We made significant additions to our manufacturing and supply-chain capabilities, which will benefit the long-term ambitions of the business, including our pathway towards net zero. A highlight was the acquisition of timber frame manufacturer, Harmony Timber Solutions, in September 2022. Combined with our existing Suburban North facility (Dundalk) and the Carlow facility (operational in FY 2023), this will provide the capability to produce in excess of 2,000 timber frames per annum from FY 2024. > We signed a supply agreement with a Light Gauge Steel (‘LGS’) manufacturer to help build Glenveagh’s own LGS capability at our Carlow site. This will facilitate the organic growth of this aspect of the business. > We committed to set science-based targets and signed up to Business in the Community, Ireland’s low carbon pledge. This commits us to setting science-based carbon emissions reduction targets by 2024, which must include Scopes 1, 2 and 3 and be in line with the Paris Agreement and the latest IPCC findings. Focus for FY 2023 and beyond > Set science-based targets and publish our Net Zero Transition Plan setting out our actions to align with a 1.5°C trajectory. > Publish a circular economy plan, including targets, which sets out how circularity can be incorporated into various stages of the value chain. > Create an Research and Development (‘R&D’) hub to assess ideas to improve methods, products, and approaches. Accreditations, certifications, external commitments and partnerships Low Carbon Pledge How we measure progress > Greenhouse gas emissions. > Pre-manufactured value. > € invested in R&D. See pages 43 and 44 to find out more Relevant principal risks and uncertainties 01 02 03 11 See page 59 to find out more Relevant material issues 04 06 09 10 11 12 13 14 18 22 23 See page 25 to find out more Contribution to UN SDGs See pages 43 to 46 to find out more Build Digital Industry Advocate Construct Innovate Member IGBC Gold Member > Develop alternatives for each stage of the Relevant values project lifecycle that maximise efficiencies and streamlines effort, input and resources required to produce our business’s product. See page 2 to find out more 36 36 Glenveagh Properties plc Annual Report and Accounts 2022 Strategic Report Governance Financial Statements Contents Focus for FY 2023 and beyond > Publish our Biodiversity Transition Plan setting out our targets and actions to get there. > Further stakeholder research to inform the development of a best practice tool to measure the social value of the projects we deliver. > Continue to engage with the communities where we build to understand their needs and build relationships with key stakeholders, and deliver programmes aligned with our ‘Building Lasting Communities’ strategy. > Support our national charity partnerships through fundraising, in-kind donations where appropriate and staff volunteering. CASE STUDY Nature Hero Awards We worked with Biodiversity in Schools, who delivered free Nature Hero workshops for schools in areas where we build – a total of 89 workshops for 2,210 primary and secondary school children. Together we launched the Nature Hero Award to support schools with their biodiversity goals and provide a mark of excellence to schools that create an educational space that nurtures a love of nature, develops a knowledge of biodiversity, and encourages action to support this. The Nature Hero Award currently has 200 primary schools registered. Schools are encouraged to undertake practical tasks such as hanging bird-nest boxes and pollinator planting, and ensuring outdoor teaching time each week. The winning school will receive a school garden makeover to a value of €10,000, courtesy of the Glenveagh Greencare team. OUR STR ATEGY CONTINUED Creating sustainable and thriving places STR ATEGIC PRIORIT Y We will be known for developing great places for people to live, where communities and nature can flourish for the longterm. Pillars Social impact Create places where people love to live, ensuring connectivity to the things that matter to them. Land use and biodiversity Use land in the most efficient way while protecting and ultimately contributing positively to biodiversity. Highlights from 2022 > Activities for our ‘Building Lasting Communities’ engagement programme spanned 23 communities and included establishing hubs to update on activities, engaging with Tidy Towns and community groups, sponsorship for local sports clubs, community events and supporting schools and local businesses. We published our first community report in May 2022, and our ‘Build Communities not just Homes’ brand- score increased from 9% to 19% (B&A research December 22). > In partnership with the education organisation Biodiversity in Schools, we launched the Nature Hero Awards, a national campaign to support schools with biodiversity initiatives (see case study). > Our EHS team delivered talks on construction- site safety to 11 primary schools in close proximity to our developments, framed around a children’s storybook that we developed. > We participated in two maintenance days with charity partner ALONE and provided mentoring and career guidance to an Early Learning Initiative programme, contributing to an overall total of 322 volunteering hours. We fundraised for charities including the Jack & Jill Foundation, ALONE, St. Vincent de Paul, the Dublin Simon Community as well as the Irish Red Cross to support victims of the war in Ukraine. > We commenced the development of our Biodiversity Transition Plan in line with the Post-2020 Global Biodiversity Framework targets of no net loss by 2030, net gain from 2030 and full recovery by 2050. The publication of this was postponed to 2023 to allow incorporation of the requirements of the European Sustainability Reporting Standards. > We continued to incorporate biodiversity into developments including detailed ecological studies, retaining wildlife corridors, incorporating Sustainable Drainage Systems (‘SuDS’) and encouraging pollinators. 37 Strategic Report Governance Governance Financial Statements Contents OUR STR ATEGY CONTINUED How we measure progress > ‘Build Communities not just Homes’ brand score. > Donations to charities/local communities. > Social value metric (to be developed). > Biodiversity metric (to be developed). See page 45 to find out more Contribution to UN SDGs See pages 43 to 46 to find out more Relevant values Relevant principal risks and uncertainties 02 See page 59 to find out more Relevant material issues 01 03 07 09 20 See page 25 to find out more See page 2 to find out more Accreditations, certifications, external commitments and partnerships All Ireland pollinator plan Nature heroes partnership Glenveagh Properties plc Annual Report and Accounts 2022 38 OUR IMPAC T Our positive stakeholder impact Glenveagh is focused on delivering high-quality homes in flourishing communities whilst also prioritising the impact on our stakeholders. Our stakeholders are a crucial part of our success, and our strategic priorities and drivers for success reflect our commitment to these stakeholders. We aim to demonstrate this commitment by delivering value to our stakeholders. Through considering their needs, we believe that we can continue to grow and succeed while also making a positive impact. Strategic Report Governance Financial Statements Contents Our drivers of success Our strategic priorities A strate gic lan d b a n k S t r o n g r e l a t i o n s h p s i Talented and dedicated individuals Placing the customer first Valuing and developing our colleagues OUR CULTURE Our Building Better strategy Ensuring operational excellence A OUR VALUES fi n s t r o a n n g cial p osition A trusted brand Driving innovation Growing sustainable and thriving places Glenveagh Properties plc Annual Report and Accounts 2022 39 Strategic Report Governance Financial Statements Contents OUR IMPAC T CONTINUED Our stakeholders in 2022 Our impact Customers Employees Communities > Provided affordability to our customers with an average sale price (‘ASP’) of €330k, well below the national average of €359k, with 85% of customers availing themselves of the Help to Buy scheme. > Achieved a customer satisfaction survey score of 91%. > Delivered sustainable homes with 100% of units A1/A2 rated. > Provided emergency accommodation for 40 Ukrainian families. > Worked to embed equity, diversity and inclusion, (‘ED&I’) throughout Glenveagh through publication of our ED&I Strategy. > Published our inaugural Gender Pay Gap report. > Created Glenveagh’s Employer Value Proposition (‘EVP’) pillars. > Achieved Great Places to Work certification with a score of 78%. > Completed 126 activities in 23 communities nationally across six community pillars – education, sports and fitness, health and wellbeing, local economy, sustainability and charity. > Launched Nature Hero Awards, a national accolade sponsored by Glenveagh to encourage biodiversity awareness amongst school children. > Delivered community days in five locations with average attendance of 120 residents. > Issued first Community Report in May 2022 and launched our Community Brand. > Attended four capital market conferences and conducted 111 institutional one-on-one or group meetings. > Returned €146 million to shareholders in two separate share buy-back programmes. Shareholders > Generated EPS growth of 69% in the year to 7.6 cents. > Increased ROE by 540bps to 7.1% in 2022. €330k Average selling price 91% Customer satisfaction rating 83% of employees felt ‘I can be myself in Glenveagh’ 28% of women in senior management by 2025 126 Community involvement events 322 Total staff volunteering hours €146m Returned to shareholders in 2022 69% EPS growth in 2022 Suppliers and subcontractors > Established supplier engagement programme as part of net zero plan. > Achieved ISO 9001:2015 Quality Management Systems. > Achieved Site Safety Audit score average of 88% in the year. > Supported a network of approximately 400 subcontractors and 600 materials suppliers. 135 Site safety audits completed Over 100 Weekly site-level meetings with subcontractors > Participated in Residential Zoned Land Tax and National Development Plan statutory provisions processes. > Active members of the Irish Home Builders Association, Construction Industry Federation and Irish Institutional Property industry groups. > Joined the Irish Green Building Council. 46% Absolute reduction in Scopes 1 & 2 by 2031 55% Reduction in Scope 3 emission intensity by 2031 Government and regulators > Signed the Low Carbon Pledge to set science based targets. Glenveagh Properties plc Annual Report and Accounts 2022 40 Strategic Report Governance Financial Statements Contents OUR L AND BANK Our active portfolio The Group continues to create XX a more active land portfolio to support continued growth and remains focused on managing a four to five-year land portfolio at scale. LAND BANK HIGHLIGHTS 15,100 Total units 70% Dublin and GDA focused by units XX 72% Suburban by units 98% Starter-homes by units XX XX 18 26 10 XX 17 16 05 08 01 22 09 21 38 19 24 25 06 20 11 14 23 35 04 15 30 37 29 02 07 36 31 34 32 12 03 13 28 33 27 SITE SCHEDULE Active Suburban 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Baker Hall Barn Oaks – Private Residential Belin Woods Bellingsmore Blackrock Villas Castleland Park Citywest Village Cluain Adain Cois Glaisin Drumaconn Donabate South Cluain Glasan Grey Abbey View Hearse Road, Donabate 15 16 17 18 19 Hollystown Maple Woods Mount Woods Greville Wood Oldbridge Manor 20 Raven’s Mill Riversend XX Ruxton Oaks Semple Woods Silver Banks Taylor Hill The Hawthorns Ushers Glen 21 22 23 24 25 26 27 28 Walkers Gate XX Active Urban 29 30 31 32 33 34 Barn Oaks – Apartments Carpenterstown Castleforbes Cluain Mhuire Marina Village The Collection Future Partnerships 35 36 Ballymastone Oscar Traynor Road Completed Sites in 2022 37 38 Barnhall Meadows Ledwill Park XX XX XX XX XX XX Glenveagh Properties plc Annual Report and Accounts 2022 41 Strategic Report Governance Financial Statements Contents OUR L AND BANK CONTINUED CASE STUDY National Land campaign In 2022, we launched our National Land campaign, driving awareness of our unique partnership with landowners across Ireland. According to the Department of Housing, approximately 10,000 hectares of land will fall within the scope of a new 3% zoned land tax. Some 90% of this land is understood to be currently in agricultural use. Glenveagh launched a new portal and national media campaign to help landowners navigate development partnership opportunities. We mapped out a simple five step process for people interested in a development partnership, from initial review through to due diligence, planning, zoning, and implementation, and provide support, expertise and experience throughout the process. Our cross-functional team brings expertise in sustainability, planning and design, manufacturing, procurement, and construction management. The campaign launched in October 2022 on radio, press and digital platforms, delivering more than one million online views and a national awareness of more than 10%, helping to build our land pipeline in key communities. Our partnerships are built on trust. If you’re a landowner with zoned land ready for development, talk to us about a Development Partnership. Find out more at Glenveagh.ie/Land Glenveagh Properties plc Annual Report and Accounts 2022 42 Strategic Report Governance Financial Statements Contents E NVIRONME NT, SOCIAL AND GOVE RNANCE PE RFOR M ANCE Sustainability Governance To ensure that sustainability is embedded throughout the organisation, and receives the appropriate oversight and direction, we have put in place a robust governance structure at Board and management-level which we will review and evolve as required. Glenveagh’s Board is responsible for setting the strategic direction for the organisation. This includes addressing relevant sustainability matters. It therefore has ultimate responsibility and oversight of sustainability. It receives regular reports throughout the year on this agenda including progress against targets. The Board also participated in a number of education sessions during the year to increase their understanding of this evolving area. The Board is supported by two Board committees on this agenda. and opportunities as part of its wider responsibility for the risk management of the business, ensuring that our controls and mitigants are adequate and effective. day management of sustainability, providing a framework within which all parts of the business can work. The team reports to the Chief Strategy Officer. The Environmental and Social Responsibility Committee (‘ESR’) was established in 2021 and is responsible for developing and monitoring the business’ approach to sustainability. The committee meets four times per year and provides reports to the main Board after every meeting (see page 104 for a full report of the ESR Committee). The Executive Committee, led by the CEO, has overall executive responsibility for sustainability. This is a regular agenda item with the committee discussing sustainability issues, reviewing performance and progress against targets. The Chief Strategy Officer has specific executive responsibility for sustainability. The Audit and Risk Committee (‘ARC’) has responsibility with respect to sustainability risks The sustainability team is led by the Head of Sustainability. The team is responsible for day-to- Department leads are accountable for the implementation of sustainability through operations, activities and projects. In 2023, a new Environmental Sustainability Working Group will be set up. This will provide a forum for the coordinated implementation of environmental sustainability actions across the company, in particular those to support our net zero, biodiversity and circular economy ambitions. Board Executive Management Team Sustainability Team Has ultimate responsibility for sustainability. Overall executive responsibility for sustainability. Responsible for the day-to-day management of sustainability. ESR Committee Audit & Risk Committee Department Leads Environmental Sustainability Working Group Develops and monitors Glenveagh’s approach to sustainability. Reviews sustainability risks and opportunities. Responsible for the implementation of sustainability commitments through operations, activities and projects. A forum to coordinate the implementation of environmental sustainability actions across the Group. Glenveagh Properties plc Annual Report and Accounts 2022 43 Strategic Report Governance Financial Statements Contents E NVIRONME NT, SOCIAL AND GOVE RNANCE PE RFOR M ANCE CONTINUED Environmental Indicator Climate – carbon emissions1 Link to strategy Link to material issues UN SDGs Measure 04 06 08 11 12 13 14 18 23 100sqm of units completed Scope 1 – combustion of fuel Scope 2 – location based Scope 2 – market-based Total Scopes 1 and 2 – location based Total Scopes 1 and 2 – market-based Scopes 1 and 2 per 100sqm of completed units – location based Scopes 1 and 2 per 100sqm of completed units – market-based Total Scope 3 GHG emissions Total Scopes 1, 2 and 3 – location based Total Scopes 1, 2 and 3 – market-based Emissions per 100sqm completed homes – Scopes 1, 2 and 3 – location based Emissions per 100sqm completed homes – Scopes 1, 2 and 3 – market-based Scope 3 emissions categories Waste Business travel Other fuel and energy Upstream transportation and distribution Employee commute Capital goods – construction materials Capital goods – assets Purchased goods and services Occupant energy use (over 50 years) – regulated Occupant energy use (over 50 years) – unregulated Occupant emissions – refrigerants End-of-life treatment of product We monitor a range of ESG indicators across our business activities, and many of these align to our strategic priorities. Unit 100sqm tCO2e tCO2e tCO2e tCO2e tCO2e tCO2e/100sqm tCO2e/100sqm tCO2e tCO2e tCO2e tCO2e/100sqm tCO2e/100sqm tCO2e tCO2e tCO2e tCO2e tCO2e tCO2e tCO2e tCO2e tCO2e tCO2e tCO2e tCO2e 2022 1,563 3,567 813 227 4,380 3,794 2.8 2.4 20212 1,255 3,048 518 189 3,566 3,237 2.8 2.6 20202 875 2,700 519 247 3,219 2,947 3.7 3.4 223,332 188,618 128,645 227,712 192,184 131,864 227,126 191,854 131,592 145.7 145.3 195 44 1,119 7,143 1,093 153.1 152.8 120 18 894 6,442 908 150.7 150.4 78 17 1,077 4,715 879 102,083 80,526 52,309 678 55,642 17,637 30,888 1,388 5,423 769 42,372 24,855 26,770 1,085 3,857 176 25,880 22,539 17,639 508 2,828 Glenveagh Properties plc Annual Report and Accounts 2022 44 Strategic Report Governance Financial Statements Contents E NVIRONME NT, SOCIAL AND GOVE RNANCE PE RFOR M ANCE CONTINUED Environmental continued Indicator Climate – energy efficiency Climate – low carbon homes Resource use and circular economy Link to strategy Link to material issues UN SDGs Measure 04 06 08 11 12 13 14 18 23 04 06 08 11 12 13 14 18 23 04 06 08 11 12 13 14 18 23 04 06 08 11 12 13 14 18 23 Fuel and electricity consumption from sites and offices Operation energy intensity Proportion of total homes with Building Energy Rating (BER) of A1 Proportion of total homes with Building Energy Rating (BER) of A2 Proportion of total homes with Building Energy Rating (BER) of A3 Homes incorporating renewable energy Proportion of off-site manufactured houses as a share of all houses sold Off-site manufactured timberframe houses Other house types Construction waste Construction waste per 100sqm build Construction waste recycled Construction waste recovered Biodiversity 03 07 09 20 Biodiversity risks assessed at % of sites Unit mWh 2022 16,707 20212 20202 13,779 13,580 mWh/100sqm 11 % % % % % % % 55% 44% 0.2% 30 99.7% 71% 70% 30% Tonnes 10,381 Tonnes/100sqm % % % 6.6 8.9% 91.1% 100% 11 – 82% 18% 45 94% 77% 76% 24% 6,191 4.9 10.2% 89.8% 100% 16 – 72% 28% 46 71% 85% 85% 15% 3,661 4.2 6.1% 93.9% 100% Average kilowatt hours per sqm per year across all homes delivered kwh/m2/yr Glenveagh Properties plc Annual Report and Accounts 2022 45 Strategic Report Governance Financial Statements Contents E NVIRONME NT, SOCIAL AND GOVE RNANCE PE RFOR M ANCE CONTINUED Social Indicator Consumers and end-users Own workforce Link to strategy Link to material issues UN SDGs Measure 13 15 22 25 29 15 17 22 24 25 Core ASP Proportion of core homes priced below the new market median First-time buyers (% of private sales) Proportion of customers who would recommend us to a friend Average number of employees3 Average number of salaried employees Great Place to Work Survey Score Annual employee turnover Glenveagh’s graduate programme participants Total training hours (ex. Health and Safety training) Training hours per monthly salaried employee (ex. Health and Safety training) Women in workforce – all employees Women amongst new graduates Total Recordable Incident Rate Health and Safety total training hours Unit €’k % % % Headcount Headcount % % Headcount Hours Hours % % TRIR Hours Affected communities 20 Donations to charities/local communities Employee fundraising Average monthly Health and Safety audit compliance score across all sites Proportion of independent audits % % €’k €’k Health and Safety training hours per all employees Hours/Employee 2022 330 73% 88% 91% 411 316 78% 14% 33 2021 308 69% 87% 89% 329 247 72% 10% 24 2020 311 72% 82% 83% 318 206 – 11% 12 6,522 3,919 2,266 19 30% 33% 3.54 16 27% 30% 2.38 5,205 3,644 11 88% 20% 394 18 11 89% 30% 129 19 11 24% 18% 2.43 1,932 6 88% 20% n/a n/a Glenveagh Properties plc Annual Report and Accounts 2022 46 Strategic Report Governance Financial Statements Contents E NVIRONME NT, SOCIAL AND GOVE RNANCE PE RFOR M ANCE CONTINUED Governance Indicator Ratings Link to strategy Link to material issues UN SDGs Measure 04 06 08 10 12 13 14 18 23 CDP Climate Change MSCI Sustainalytics Unit 2022 B AA 2021 A- AA 19.3 Low Risk 19.3 Low Risk 2020 B BBB 23.9 Medium Risk 1. The assessment of Glenveagh’s GHG emissions footprint has been carried out in line with the principles and guidelines provided by the two relevant GHG protocol standards: GHG Protocol Corporate Accounting and Reporting Standard (2004), and its supplement GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard. The assessment methodology also considers the following sector specific guidance: RICS professional standards and guidance, UK – Whole life carbon assessment for the built environment 1st edition, November 2017. The organisational boundary for Glenveagh’s GHG assessment has been determined on an operational-control basis. The assessment considers the six greenhouse gases covered by the Kyoto and Montreal Protocols: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulphur hexafluoride (SF6), perfluorocarbons (PFCs) and hydrofluorocarbons (HFCs). The total footprint is expressed as carbon dioxide equivalent (CO2e) applying the Global Warming Potential values provided by IPCC (2007). A third-party verification (ISO 14064-3) was completed for reported emissions. This was carried out by Clearstream Solutions Ltd. A copy of their GHG verification statement and more details on our methodology is available at https://glenveagh.ie/corporate/sustainability. 2. 2021 and 2020 emissions data has been restated to improve the accuracy of reporting and to reflect both improved methodology and data availability in calculation of all categories of emissions reported. This data was not subject to verification. 3. Average number of employees displayed in this table excludes Non-executive Directors. The headcount on the last day of each month is used to calculate the average. Glenveagh Properties plc Annual Report and Accounts 2022 47 Strategic Report Governance Financial Statements Contents E NVIRONME NT, SOCIAL AND GOVE RNANCE PE RFOR M ANCE CONTINUED Non-financial information statement Our annual report contains a range of non-financial information. A summary of this can be found in the table below. Reporting requirement Environmental matters Social and employee matters Relevant policies > Sustainability policy. > Waste and resources policy. > Climate change policy. > Environmental policy. > Sustainable procurement policy. > Community engagement policy. > Health and safety policy. > Diversity and inclusion policy. > Charitable giving policy. > Customer service policy. More information on our impact and risks > Embracing innovation (page 35). > Driving operational excellence (page 34). > Environmental performance (pages 43 and 44). > Action and disclosure on climate change (pages 51 to 56). > Risk management report (pages 57 to 66). > Placing the customer first (page 31). > Valuing and developing our colleagues (pages 32 and 33). > Creating sustainable and thriving places (pages 36 and 37). > Social performance (page 45). > Risk management report (pages 57 to 66). Respect for human rights > Human rights, anti-slavery, and human trafficking policy. > Valuing and developing our colleagues (pages 32 and 33). Anti-corruption and bribery matters > Whistleblowing policy. > Diversity and inclusion policy. > Vendor code of conduct. > Whistleblowing policy. > Anti-bribery policy. > Corporate governance (pages 70 to 108). > Our stakeholders (pages 26 to 29). > Risk management report (pages 57 to 66). > Audit and risk committee report (pages 86 to 89). Business model Non-financial KPIs Information on our business model can be found on pages 20 to 23. Our non-financial KPIs can be found on page 106. Glenveagh also monitors and reports performance through additional data which can be found on pages 43 to 46. Principal risks Our principal risks and uncertainties can be found on pages 59 to 66. Glenveagh Properties plc Annual Report and Accounts 2022 48 Strategic Report Governance Financial Statements Contents SUSTAINABILIT Y ACCOUNTING STANDARDS BOARD DISCLOSURES We have chosen to disclose sustainability topics and accounting methods in line with the Home Builders Sustainability Accounting Standard issued by the Sustainability Accounting Standards Board (‘SASB’). According to the SASB industry level materiality map, the following categories are ‘the most likely material issues for companies in the home builders’ industry. The below table references accounting metrics within this report and other sources. Activity metric Code Number of controlled lots Number of homes delivered Number of active selling communities1 IF-HB-000.A IF-HB-000.B IF-HB-000.C Category Quantitative Quantitative Quantitative Topic Code Accounting metric Land use and ecological impacts IF-HB-160a.1 IF-HB-160a.2 IF-HB-160a.3 IF-HB-160a.4 Number of (1) lots and (2) homes delivered on redevelopment sites. Number of (1) lots and (2) homes delivered in regions with High or Extremely High Baseline Water Stress. Total amount of monetary losses as a result of legal proceedings associated with environmental regulations. 2022 (1) 2,103 (2) 186 (1) 0 (2) 0 €nil 2021 (1) 3,611 (2) 248 (1) 0 (2) 0 €nil 2020 14,147 700 16 2022 15,198 1,358 12 2021 17,014 1,150 15 2020 (1) 4,005 (2) 25 (1) 0 (2) 0 €nil Discussion of process to integrate environmental considerations into site selection, site design, and site development and construction. As part of the land acquisition process all our sites are screened for their ecological attributes, proximity to sensitive habitats, and areas of significant biodiversity value. The sites are assessed by competent environmental experts using the appropriate recognised Irish and European Union (‘EU’) regulations. All potential sites are assessed and designed within the context of the national planning framework, local development standards, local authority development plans, zoning requirements, and development standards. In order to manage our environmental performance and minimise ecological impacts during construction we maintain and continually improve our ISO 14001:2015 Environmental Management System. We manage our systems and work activities to facilitate continual improvement and enhance environmental performance. We also measure our environmental performance and level of compliance by conducting self-monitoring, regular inspections, audits and reviews. 1. The scope of active selling communities includes those communities or developments open for sales with at least five homes or lots remaining to sell as of the last day of the reporting period. Glenveagh Properties plc Annual Report and Accounts 2022 49 Strategic Report Governance Financial Statements Contents SUSTAINABILIT Y ACCOUNTING STANDARDS BOARD DISCLOSURES CONTINUED Topic Code Accounting metric Workforce health and safety IF-HB-320a.1 (1) Total recordable incident rate (‘TRIR’) and (2) fatality rate for (a) direct employees and (b) contract employees.2,3 2022 (1) 3.54 (2) 0 Accident data includes Glenveagh employees, contractors, suppliers, and public. Our data collection process does not segregate employees from contractors. Design for resource efficiency IF-HB-410a.1 (1) Number of homes that obtained a certified HERS® Index Score and (2) average score. (1) 1,358 (2) 2021 (1) 2.38 (2) 0 (1) 1,150 (2) 2020 (1) 2.43 (2) 0 (1) 700 (2) Note that the HERS certification standard is not applicable within the Republic of Ireland. Information on mandatory Energy Performance Certificates is provided as an alternative. Note that ratings range from BER A1 to BER G. IF-HB-410a.2 Percentage of installed water fixtures certified to WaterSense® specifications. Design for resource efficiency IF-HB-410a.4 Description of risks and opportunities related to incorporating resource efficiency into home design, and how benefits are communicated to customers. 55% of homes were A1 rated 44% of homes were A2 rated 82% of homes were A2 rated 72% of homes were A2 rated 0.2% of homes were A3 rated 18% of homes were A3 rated 28% of homes were A3 rated Note that WaterSense® specifications are not applicable within the Republic of Ireland. All units in our developments include fixtures that have flow restrictors and aerators or are sized to reduce the water usage of our homes. Building Control Acts 1990 to 2014, local government requirements through planning, and the European Union Regulations 2014 (SI 426 of 2014) are all integrated into the energy efficiency of the homes Glenveagh builds. Non-compliance with these standards implies a substantial number of Group-wide risks. There are climate-related risks associated with unexpected market outcomes that are included into the Sustainability Risk and Opportunity Register, as they could have an impact on Glenveagh’s financial and operational performance. One such risk is the shift in consumer preferences towards more energy efficient homes. New homeowners are becoming more environmentally aware and there is a risk that Glenveagh may lose market share if the energy efficiency of our homes does not meet customer expectations. Glenveagh homes are more energy efficient than the average house, and since November 2020 nearly all our homes have been A2 rated or better. The key to us building to this standard is attention to detail during the design and construction process, which includes improved insulation measures, airtightness detailing, higher quality materials used, and the use of renewable technologies in our homes, such as heat pumps. Our marketing team communicates these sustainability features to customers at all stages of the purchasing process, from initial marketing brochures to detailed information upon completion of the home. 2. Reportable Incidents in Ireland are where a person is absent for more than 3 days not including the day of injury. In our 2020 sustainability report, we incorrectly disclosed ‘0’ for (a) and (b) for 2019. This should have been ‘1’. 3. Glenveagh Properties plc Annual Report and Accounts 2022 50 Strategic Report Governance Financial Statements Contents SUSTAINABILIT Y ACCOUNTING STANDARDS BOARD DISCLOSURES CONTINUED Topic Code Accounting metric 2022 2021 2020 Community impacts of new developments IF-HB-410b.1 Description of how proximity and access to infrastructure, services, and economic centres affect site selection and development decisions. At Glenveagh, we consider where the house is located as well as where people live. It is important to us that our developments reflect the local built environment. Therefore, we take a holistic approach to public infrastructure, understanding the needs and requirements specific to each development, with respect to the surrounding environment, public infrastructure, and amenities. Access to sustainable transport infrastructure – including public transport, cycle lanes and walking routes – is central to the development process for every scheme. As part of this process, we engage with public bodies, local communities and local authorities to ensure we consider all aspects of infrastructure provision, current and future. Climate change adaptation IF-HB-410b.2 IF-HB-410b.3 Number of (1) lots and (2) homes delivered on infill sites4. (1) Number of homes delivered in compact developments and (2) average density5. (1) 1,668 (2) 83 (1) 1,186 (2) 14 IF-HB-420a.1 Number of lots located in 100-year flood zones. 0 (1) 4,196 (2) 248 (1) 672 (2) 15.8 0 (1) 3,662 (2) 25 (1) 313 (2) 16.1 0 IF-HB-420a.2 Description of climate-change risk exposure analysis, degree of systematic portfolio exposure, and strategies for mitigating risks. For each risk and opportunity the register identifies: the description of the risk/opportunity; its potential impact; the time-horizon; the likely impact it will have and the magnitude of this; as well as control description and its effectiveness. Risks and opportunities are ranked on a scale ranging from insignificant risks (1) to catastrophic risks (5). Any given risk with a score above 3 – ‘Moderate’ – is considered to have a substantive financial or strategic impact on the business, which would require greater allocation of management effort. This is aligned with our approach adopted through the CDP reporting benchmarks. See pages 51 to 56 for more detail on climate risks Infill sites defined as those sites that are surrounded by other developments from both sides. 4. 5. Compact developments are defined as those sites with 13 or more units per acre. Glenveagh Properties plc Annual Report and Accounts 2022 51 Strategic Report Governance Financial Statements Contents AC TION AND DISCLOSURE ON CLIM ATE CHANGE Action and disclosure on climate change. At Glenveagh, we understand the immediate need for action on climate. The Intergovernmental Panel on Climate Change (‘IPCC’) has delivered its strongest warnings yet, and legislation and action plans at European and national levels are clear about what needs to happen. With construction and the built environment sectors accounting for 37% of Ireland’s carbon emissions, we acknowledge the role we need to play as a leading Irish homebuilder. Our stakeholders also told us how important action on climate change is to them, and we are committed to providing clear and transparent disclosures to them. Glenveagh is required to report against the Task Force on Climate-related Financial Disclosures (‘TCFD’) recommendations and recommended disclosures in its Annual Report covering financial year ended 31 December 2022 according to the Financial Conduct Authority (FCA) listing rule LR 9.8.6 R(8). Glenveagh is compliant with the TCFD recommendations and recommended disclosures, with the exception of Strategy 2.b (impact on business strategy and financial planning) and c (resilience to scenarios). We will complete work throughout the year with a view to full compliance in 2023. We will also explore how we can further improve all of the TCFD disclosures as we become increasingly mature in our approach. Our climate action journey 2023 > Net Zero Transition Plan published. > Successfully completed our first sustainability-linked financing facility. 2022 > Joined Irish Green Building Council (‘IGBC’). > Signed Low Carbon Pledge committing to setting science-based targets (‘SBTs’). > Commenced Hydrotreated Vegetable Oil (‘HVO’) trials. > CDP rating B. 2021 > Sustainability governance structures set up. > First climate target set. > CDP rating A-. > Electric vehicles (‘EVs’) introduced to fleet. > Published full Scope 3 emissions. 2020 > First sustainability report published. > Reported Scope 1 and 2 emissions with external assurance. > First CDP disclosure – B rating achieved. 2019 > Sustainability approach agreed by Board. 2017 > Company founded. Glenveagh Properties plc Annual Report and Accounts 2022 52 Strategic Report Governance Financial Statements Contents AC TION AND DISCLOSURE ON CLIM ATE CHANGE CONTINUED GOVERNANCE Board oversight of climate-related risks and opportunities The Board sets the strategic direction for Glenveagh taking consideration of a wide array of relevant issues including climate change. In approving the evolved business strategy ‘Building Better’ during 2022, the Board took account of the materiality of climate change risks and opportunities as defined through the materiality assessment. Action on climate-change has therefore been integrated throughout the business strategy. The Board’s approach to climate is informed by dedicated training sessions with external specialists, presentations from internal experts and the outputs from the Group’s materiality assessment and stakeholder engagement. The Board receives regular updates on sustainability, and in particular climate change, throughout the year. The Board’s appraisal of climate risk is indicated through its strategic decision making. In 2022, it made two significant decisions with respect to climate change: 1. It identified climate change as a principal risk for the Group. 2. It approved the Group’s commitment to setting science-based targets. The Board is supported on climate change by two Board committees. > The Environmental and Social Responsibility (‘ESR’) Committee is responsible for developing and monitoring our approach to sustainability (including climate change). Throughout 2022, the committee discussed in detail with management the development of the Group’s net zero approach and the commitment to setting science-based targets. This committee also reviewed and considered the climate- related risks and opportunities in advance of their consideration by the Audit and Risk Committee (‘ARC’). The ESR Committee’s report can be found on page 104. > The ARC is responsible for reviewing our climate risks and opportunities and ensuring that our controls and mitigants are adequate and effective. Climate risks are included in our risk register which is a standing item at committee meetings. In addition, climate risks and opportunities were reviewed specifically during 2022 and the ARC recommended that climate change be identified as a principal risk for the Group. The ARC’s report can be found on page 86. Management’s role in assessing and managing climate-related risks and opportunities The Executive Committee has overall responsibility for implementing the business strategy as agreed by the Board, which includes our approach to climate change. Climate change, as part of sustainability, is a regular agenda item for this committee. As the most senior executive, the CEO has responsibility for the management of climate-related initiatives under our agreed business strategy. The CEO also agrees the annual objectives for the Chief Strategy Officer who has specific executive responsibility for climate. Management is supported by the sustainability team, led by the Head of Sustainability. The team is responsible for day-to-day management of sustainability, providing a framework within which all parts of the business can work. Additional information with regard to governance of sustainability in Glenveagh can be found on page 42. STRATEGY In reviewing our business strategy during 2022, action on climate played a significant part in formulating our strategic priorities ensuring we adequately manage the risks and take advantage of the opportunities where possible. Action on climate is embedded throughout our strategic priorities. The following pages set out the climate-related risks and opportunities that we have identified over the short, medium, and long term as well as their potential impacts and what we are currently doing in response. In 2023, we will test the resilience of our business strategy through climate-related scenario analysis. How climate action is embedded in our strategic priorities IN APPROVING THE EVOLVED BUSINESS STR ATEGY ‘BUILDING BET TER’ DURING 2022, THE BOARD TOOK ACCOUNT OF THE M ATERIALIT Y OF CLIM ATE CHANGE RISKS AND OPPORTUNITIES A S DEFINED THROUGH THE M ATERIALIT Y A SSESSMENT. PLACING THE CUSTOMER FIRST > High-quality, energy-efficient homes. > Educating customers on reducing their carbon footprint. VALUING AND DEVELOPING OUR COLLEAGUES > Developing sustainability skills across the business. ENSURING OPERATIONAL EXCELLENCE > Driving efficiency in resource use to reduce GHG emissions. > Using renewable fuels where possible. DRIVING INNOVATION > Driving innovation in design, materials used, offsite manufacturing etc. to reduce embodied carbon in our homes. GROWING SUSTAINABLE AND THRIVING PLACES > Building communities that support sustainability. > Nature-based solutions to climate impacts/potential impacts. Glenveagh Properties plc Annual Report and Accounts 2022 53 Strategic Report Governance Financial Statements Contents AC TION AND DISCLOSURE ON CLIM ATE CHANGE CONTINUED OUR RISKS AND OPPORTUNITIES Risk/Opportunity Risk description Potential impact Our response HIGHEST R ATE D TR ANSITION RISKS SUPPLIERS’ PACE OF CHANGE AND NET ZERO ALIGNMENT There is a risk that key suppliers of high carbon impact materials and works on-site don’t address climate change challenges fast enough for us to align with our planned net zero journey, with little or no alternative available. Increased costs resulting from preferred suppliers’ inability to scale or transition to meet our sustainability needs cost effectively. Time frame: Medium-long-term Materiality: High Risk type: Reputational, Technology, Market CARBON PRICING Time frame: Medium-term Materiality: High Risk type: Policy and Legal, Technology, Market, Reputation Failure to move away from carbon intensive products/ services at a fast enough pace while carbon taxes continue to rise. Increased costs due to carbon taxes. Impairment in carrying value of carbon-intensive assets (e.g. plant and machinery). OFF-SITE MANUFACTURING AND MODERN METHODS OF CONSTRUCTION (‘MMC’) Failure to fully/quickly take advantage of off-site manufacturing and MMC to address net zero challenges. Increased construction costs resulting from the continued reliance on skilled labour, time spent on-site and the absence of efficiency benefits from standardisation in build methodology. Time frame: Medium-term Materiality: High Risk type: Technology DEVELOPMENT OF LOW CARBON TECHNOLOGY Time frame: Medium-long-term Materiality: High Risk type: Technology, Market, Reputation Lack of pace in the market developing adequate/ appropriate low carbon technology combined with a faster shift to low carbon technology or products, leads to lack of supply, price rises and ultimately an inability for the Group to meet certain commitments and obligations. Increased construction costs due to the lack of appropriate low carbon materials. Through the development of our Net Zero Transition Plan, we have begun identifying and assessing future trends and options to implement in the Group’s operations. This has necessitated supplier engagement and collaboration to ensure suppliers are aware of such movements and understand what is expected of them. We have also begun vertical integration of our supply-chain with the acquisition of Harmony Timber Solutions and the development of key manufacturing capabilities. The development of our Net Zero Transition Plan and commitment to science- based targets puts us on a trajectory towards decarbonisation across our value chain. This will see a reduction in carbon emissions and a decrease in exposure to carbon-pricing risks. Increased supplier engagement keeps us informed on the cutting-edge trends in the low carbon economy and solidifies good business relationships. This assists us to quickly transition away from carbon intensive products/services. The Group set up its Innovation Department which works closely with the sustainability team to ensure the benefits from MMC are maximised and that net zero targets are achieved. Furthermore, off-site manufacturing and MMC have been addressed in the development of the business strategy and sustainability has been interwoven throughout this. Additionally, the Group has begun the vertical integration of the supply-chain with the acquisition of Harmony Timber Solutions and the development of key manufacturing capabilities. Through the development of the Group’s Net Zero Transition Plan we have acknowledged the need to act quickly and engage with supply-chains to solidify strong relationships, ensuring we remain at the forefront of developments. Concurrently, the sustainability team and external consultants are also monitoring any developments in the area to assist in achieving this goal. Additionally, our commitment to low carbon technology will create increased demand in the market encouraging development to be undertaken at a faster pace within our value chain. Glenveagh Properties plc Annual Report and Accounts 2022 54 Strategic Report Governance Financial Statements Contents AC TION AND DISCLOSURE ON CLIM ATE CHANGE CONTINUED Risk/Opportunity Risk description Potential impact Our response HIGHEST-R ATE D PHYSIC AL RISKS IMPACTS ON SUPPLY-CHAINS Time frame: Medium-term Materiality: High Risk type: Acute physical, market SEVERE WEATHER EVENTS Time frame: Short-term Materiality: Low Risk type: Acute physical Supply-chain is impacted by disruption due to frequent severe weather events causing delays to deliveries and subsequent delays to our schedules. Suppliers themselves are restricted or impacted by transition risks affecting availability and the cost of goods and services to us. More frequent storms, extreme rainfall, flooding and other severe weather events result in sites being closed for longer periods of time at greater frequency, as well as potentially unsafe conditions to people on construction sites during extreme weather events e.g. storms and heatwave conditions. HIGHEST R ATES OPPORTUNITIES Increased construction costs resulting from disrupted construction programmes and availability of goods and services. The Group has begun supply-chain integration as demonstrated through our investment in our manufacturing facilities. Increased supplier engagement will also raise awareness of the various climate risks that our suppliers may face. Increased construction costs due to prolonged construction programmes resulting from severe weather related delays. Greater reliance on off-site construction will reduce the exposure to this risk. Health and Safety systems and procedures are in place with weather warnings being issued and safety procedures activated according to severity of weather. A STANDARD SETTER IN THE INDUSTRY Become a standard setter in the industry driving suppliers and partners to come on the journey with us as their partner of choice. Decreased construction costs resulting from better bargaining positions. Align our product with consumer green finance opportunities making Glenveagh houses the product of choice in the market. Increased revenue due to alignment with customer financing options. Decrease in the cost or increase in the availability of capital. Avail of green financing options due to performance against targets. Decrease in the cost or increase in the availability of capital. Successfully completed our first sustainability-linked financing facility in 2023. Our Net Zero Transition Plan sets out our ambition to our stakeholders, including our suppliers and partners, with respect to climate change. Increased supplier engagement, which is a key action under the plan will facilitate increased opportunities to partner and collaborate with suppliers to take advantage of opportunities. Vertical integration of supply-chain and development of key manufacturing capabilities has already begun. Our homes are already highly energy efficient with 55% of Glenveagh homes having an A1 rating making all of our homes aligned with green financing opportunities. We will also educate our customers regarding the support available including green finance opportunities. Time frame: Medium-term Materiality: Medium Opportunity type: Product ALIGNMENT WITH GREEN MORTGAGES Time frame: Short-term Materiality: Medium Opportunity type: Product SUSTAINABILITY FINANCING Time frame: Short-term Materiality: Medium Opportunity type: Markets Glenveagh Properties plc Annual Report and Accounts 2022 55 Strategic Report Governance Financial Statements Contents AC TION AND DISCLOSURE ON CLIM ATE CHANGE CONTINUED RISK MANAGEMENT Identifying and assessing climate-related risks and opportunities Glenveagh’s risk management framework is supplemented by a specific process to identify and assess climate-related risks and opportunities. This includes viewing risk over a longer timeframe than normal. Desk-based research including reviews of relevant climate-change literature on impacts and risks, peer reviews and review of the forthcoming regulatory requirements was carried out. From this a long list of potential climate risks and opportunities were developed, reviewed and consolidated further. Timeframes were defined as follows: > Short-term > Medium-term > Long-term 0–3 years 3–5 years + 5 years An external consultant reviewed the list and it was also tested with stakeholders as part of our materiality assessment. The risks were then individually scored using our standard risk scoring approach i.e. assessing impact and likelihood and the effectiveness of controls in place, to come up with a residual score. The risks and opportunities presented on the previous pages are the output of this exercise and represent the highest-ranked for transition and physical risks as well as opportunities. Managing climate-related risks and opportunities Glenveagh has developed a number of actions which support the realisation of the opportunities identified and the mitigation of the risks. These actions are outlined on the previous pages alongside each of the risks and opportunities. Additional information can be found in our Net Zero Transition Plan, the strategic section of this report and in our CDP response. Integrating climate-related risks into the organisation’s overall risk management Our risk management framework provides a common risk management process to identify, assess, mitigate, monitor and report risks which impact the business, including climate. Climate risks are included in our risk register along with all other relevant risks for the business and are managed in accordance with the framework. For the first time, climate change has been identified as a principal risk for the Group indicating its priority within our overall strategy. In addition, other principal risks are reviewed to ensure that climate-related elements are integrated where appropriate, e.g. availability and increased cost of materials and labour. METRICS Glenveagh monitors a number of metrics in the area of climate. Our detailed Scope 1, 2 and 3 emissions information can be found on page 43. Our assurance certificate and methodology document can be found at https://glenveagh. ie/corporate/sustainability. We also monitor the following metrics to assess our climate related risks and opportunities: > Proportion of total homes with Building Energy Rating (BER) of A1 and A2. > Average kilowatt hours per sqm per year (kwh/m2/yr) across all homes delivered. > CDP score. In 2021, we set a target to achieve a 25% reduction in our direct emissions (Scopes 1 and 2) intensity by 2025 against a 2020 baseline (tonnes of CO2e per 100 sqm of completed homes). Our 2022 emissions represent an 24% reduction compared to the 2020 baseline. As part of the development of our Net Zero Transition Plan, we have developed both near- term GHG emissions reduction targets and long- term net zero GHG emissions targets for Scopes 1, 2 and 3. These targets have been developed in line with guidance from the Science Based Targets initiative (‘SBTi’) and have been submitted to the SBTi for validation. FOR THE FIRST TIME, CLIM ATE CHANGE HA S BEEN IDENTIFIED A S A PRINCIPAL RISK FOR THE GROUP INDICATING ITS PRIORIT Y WITHIN OUR OVER ALL STR ATEGY. NEAR-TERM TARGET LONG-TERM TARGET 46% Net Zero absolute reduction in Scopes 1 and 2 by 2031* in Scopes 1 and 2 by 2050* 55% reduction in Scope 3 emissions intensity (tCO2e/100sqm) by 2031* Net Zero in Scope 3 by 2050* * Subject to validation. Glenveagh Properties plc Annual Report and Accounts 2022 56 Strategic Report Governance Financial Statements Contents AC TION AND DISCLOSURE ON CLIM ATE CHANGE CONTINUED OUR NET ZERO TRANSITION PLAN Throughout 2022, we focused on developing our Net Zero Transition Plan, which sets out the actions that we will take to put us on a 1.5°C pathway and achieve the ambitious targets that we set. Our Net Zero Transition Plan can be found here: https://glenveagh.ie/corporate/sustainability Now Targets Actions Scopes 1 and 2 2050 Supported by: 46% absolute reduction in Scopes 1 and 2 by 2031* Net Zero for Scopes 1 and 2 by 2050* 55% reduction in Scope 3 emissions intensity (tCO2e/100sqm) by 2031* Net Zero for Scope 3 by 2050* * Subject to validation. Transition sites to renewable fuel Scope 3 Supplier engagement Subcontractor engagement Aligned to a 1.5°C trajectory Robust governance Transparent reporting Stakeholder engagement Risk management Transition fleet to EV Renewable electricity Increased efficiency Electrification Innovation Raising awareness Data quality Glenveagh Properties plc Annual Report and Accounts 2022 57 Strategic Report Governance Financial Statements Contents RISK M ANAGEME NT RE PORT Risk management report 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 Glenveagh maintains the appropriate level of risk to achieve its strategic objectives, while also ensuring good corporate governance and prudent risk management is implemented. The Board has approved our risk management framework which provides a common risk management process to identify, assess, mitigate, monitor and report risks which impact the business. Our risk management process is an integrated approach with input across all levels of the Group that aims to ensure that all risks to which Glenveagh is exposed are identified, and understood, and appropriate mitigating controls are implemented to manage the risks effectively and protect the business. As part of its oversight responsibilities, the audit and risk committee (‘ARC’) is responsible for reviewing the adequacy and effectiveness of Glenveagh’s internal controls and risk management process (page 55). Our risk register and principal risks are a standing agenda item for each ARC meeting. The risk register is used to support the risk management process and document risks, controls and their approved ratings based on likelihood and impact from both an inherent and residual risk 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. Our risk management framework TOP-DOWN RISK LEVEL 1 Board of Directors LEVEL 2 Audit & Risk Committee LEVEL 3 Environmental & Social Responsibility Committee Executive Committee Internal Audit Function Department Heads Senior Leadership Team Site Leadership LEVEL 4 Site Non-Corporate Departments Corporate Departments BOTTOM-UP RISK Underpinned by Our Vision Our Culture Our Mission Drivers of Success Strategic Priorities Our Stakeholders KEY TO RISK MANAGEMENT Identify Assess Mitigate Monitor Report Glenveagh Properties plc Annual Report and Accounts 2022 58 Strategic Report Governance Financial Statements Contents RISK M ANAGEME NT RE PORT CONTINUED Glenveagh has implemented a line of defence model Line of defence Function Responsibilities Level 1 Board of Directors Level 2 Executive, Audit & Risk Committee, Environmental & Social Responsibility Committee and internal audit Level 3 Department Heads & senior leadership team Level 4 Department teams Overall responsibility for determining the nature and extent of the significant risks it is willing to take in achieving the Group’s strategic objectives and for setting the Group’s risk appetite. Committees have responsibility for risk monitoring and, ensuring policies are implemented throughout the business. Internal audit provides risk 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. Risk 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. Identify risks within the business with responsibility for implementing mitigation plans. Take a proactive approach to identifying, assessing and mitigating risk. Climate Risk and Opportunities In line with the recommendations of the Task Force on Climate Related Financial Disclosures (‘TCFD’) reporting requirements, the Group has considered climate-related impacts within the organisation under the pillars of Governance, Strategy, Risk Management and Metrics and Targets, as outlined on pages 51 to 56. The Group undertook a specific process to identify and assess climate- related risks and opportunities informed by relevant climate-change literature, peer reviews and forthcoming regulatory requirements. A long list of potential climate risks and opportunities was developed, reviewed and consolidated. These risks were then individually scored in line with our risk management framework. Risks include both transition risks, i.e. those associated with the transition to a decarbonised economy, and physical risks i.e. impacts from changes in weather and climate. In 2022, climate change moved from an emerging risk to a principal risk for the first time. Risk management in action Risk 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 objectives. Certain risk management and compliance activities across Glenveagh 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. At Board level, the Environmental and Social Responsibility Committee maintains responsibility for compliance with the evolving regulatory disclosure landscape and our key targets in respect of sustainability. The environmental health and safety (‘EHS’) department is a dedicated resource whose activities are mainly focused on risk management throughout the business. The certification to ISO 14001 environmental management and ISO 45001 occupational health and safety, led by the EHS department, demonstrates our commitment to managing our environmental impact and continued improvement of health and safety standards in the workplace. The services and utilities department is a dedicated resource whose activities are mainly focused on the risk management of product quality and building regulations throughout the business. The certification to ISO 9001 quality management, demonstrates our commitment to monitoring the quality of our products and drive for continuous improvement. There are a number of corporate office departments whose activities support EHS 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 strategy planning, and quarterly reforecast processes which are used to monitor progress against plan and assess risk across all existing and emerging risk categories. Glenveagh has also invested significantly in technology, site infrastructure and people to improve our control processes and systems to respond to the everyday operational risks that are faced by all companies in our industry. We purchased our third manufacturing facility in Co. Wicklow. This, coupled with the standardisation of house typologies and construction methodologies, further derisks our medium, and long-term housing delivery targets. 88% H&S score in 2022 Glenveagh Properties plc Annual Report and Accounts 2022 59 Strategic Report Governance Financial Statements Contents RISK M ANAGEME NT RE PORT CONTINUED 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 business in achieving our strategic objectives. The Board and ARC have reviewed the principal risks and have considered the new risks introduced for 2022. 5 t c a p m I 3 1 10 8 5 4 2 1 7 3 11 9 6 Principal risks 01 02 03 04 05 06 07 08 09 10 11 Adverse changes to government policy & regulations (operational risk) Climate change (external risk) Availability and increased cost of materials and labour (operational risk) Adverse macroeconomic conditions (external risk) Mortgage availability and affordability (external risk) Failure to obtain expected planning permission (operational risk) Inadequate project management (operational risk) Attracting, retaining and developing people (operational risk) Data protection and cyber security (operational risk) Insufficient health and safety procedures (operational risk) Decline in product quality (reputational risk) Key: Very high risk High risk 1 3 5 Likelihood RISK M ANAGEMENT IS EMBEDDED IN THE DAY-TO-DAY AC TIVITIES OF THE BUSINESS THROUGH ALIGNING KEY STR ATEGIC KPIS AND REMUNER ATION METRICS OF EXECUTIVE AND SENIOR M ANAGEMENT WITH RISK M ANAGEMENT OBJEC TIVES. Glenveagh Properties plc Annual Report and Accounts 2022 60 Strategic Report Governance Financial Statements Contents RISK M ANAGEME NT RE PORT CONTINUED Table legend: No change to risk rating Increased risk rating Decreased risk rating New risk Management’s view Key mitigating considerations Risk rating change Risk category Operational risk Risk or uncertainty and potential impact 1. Adverse changes to government policy and regulations A change in the domestic political environment and/or government policy (including tax legislation, support of the housebuilding sector, Part V allowance and first-time buyer assistance) could adversely affect Glenveagh’s financial performance. The provision of social and affordable housing will remain a significant political issue into the future until a sustained response to the supply/demand gap occurs. The current government has implemented or committed to policies which provide significant tailwinds to the construction industry such as: > Help to Buy (due to expire at the end of 2024). > New rental tenure scheme (cost-rental) and First Home scheme (shared equity scheme) in the Affordable Housing Act 2021. > Introduction of a €450 million subvention fund to assist in the delivery of urban apartments and five-year increase in social housing stock of at least 50,000. > Introduction of the Land Development Agency Act 2021 and Large-scale Residential Developments (LRDs). However, uncertainty exists regarding the formation of any future government and the potential policy headwinds that this might bring for the construction industry. Political influence has and can result in the government quickly enacting changes to legislation and policy. Further potential changes to legislation such as the zoned land tax or concrete levy could adversely impact Glenveagh. Changes to zoning rules as a result of the National Planning Framework (‘NPF’) could result in sites being dezoned, rezoned or phased which would adversely impact the carrying value of land, units available within our land portfolio and ultimately diminish Glenveagh’s ability to achieve financial targets. Our view is that the NPF’s population growth assumption is inadequate, and the allocation of zoned units is disproportionately weighted in favour of cities in Ireland. The resulting impact is that local authorities will have reduced unit allocations for zoning and therefore will have to decrease the quantum of zoned land in their jurisdiction. Glenveagh is therefore at risk of having sites within such jurisdictions: > Dezoned: the site is no longer zoned residential, > Rezoned: the site’s zoning is changed to a category other than residential, or > Phased: the site retains its zoned residential status however the land would not be available for release in the short-term. External risk 2. Climate change Changes in climate could impact Glenveagh either through the physical impacts of climate change or the risks and opportunities associated with the transition to a net zero economy. Failure to meet evolving stakeholder and legislative requirements could adversely affect our ability to raise capital, financial performance, reputation and lead to litigation and fines. Action on climate change has become a major focus for countries, corporates and citizens alike in particular in the last few years. The adoption of the Paris Climate Agreement at international level, the European Green Deal and the Climate Action and Low Carbon Development (Amendment) Act 2021 in Ireland all signal the direction of travel. The reporting framework is further set for us through the widespread adoption of TCFD and the forthcoming disclosure requirements under both the Corporate Sustainability Reporting Directive (‘CSRD’) and International Sustainability Standards Board (‘ISSB’). Against the background of these developments, our stakeholders, including investors and customers, have set out their expectations regarding this agenda and expect action in line with a 1.5⁰C world. It is management’s view that in order to future-proof the business and ensure continued access to capital, now is the right time to take positive action for the changes that need to be made. Additionally, the business needs to respond to consumer preferences and provide the energy efficient and sustainable product customers want. It is also our view that there are opportunities in this space to innovate to address not only this challenge but to continue to be a leader in the area of sustainable housebuilding. Glenveagh’s management and Board monitor government policy and political developments on an ongoing basis. Our site forecasts are conservative by nature and allow for expected negative changes in government policy and regulation. We have the capability to redesign developments as appropriate should this be required. Glenveagh will consider alternative strategies where required to align to any changes in the domestic political environment. Our land bank assembly is focused on affordability, first-time buyers, attractive locations and within the parameters of government support schemes. We will continue to develop partnerships with local authorities. We will continue to engage constructively with trade associations and the government. Glenveagh’s management is prioritising planning lodgements for sites within our land bank that are in jurisdictions at risk of zoning reductions. Glenveagh’s planning department engages in the statutory plan- making process to seek to protect the assets of the business. As part of the site-purchase due diligence, the land acquisition team is in communication with the planning department to assess the planning and zoning risk under the NPF for potential new site acquisitions. Glenveagh’s planning department is adopting innovative approaches to achieving minimum density requirements and is seeking to influence forthcoming policy around density. The Government has made a commitment to review the NPF. We have robust governance in place with an Environmental & Social Responsibility Committee at Board-level, executive responsibility and we have established a Sustainability department. Our innovation department has been established in line with our mission and specifically to provide sustainable high-quality homes. Climate change is a key focus area for the overarching Group strategy and action is integrated throughout each of the strategic priorities. We are launching our Net Zero Transition Plan in March 2023 to align our strategy with a 1.5⁰C world and we will submit our science-based targets to the Science Based Targets Initiative (‘SBTi’) for verification. We provide sector-leading A1-rated homes. Glenveagh Properties plc Annual Report and Accounts 2022 61 Strategic Report Governance Financial Statements Contents RISK M ANAGEME NT RE PORT CONTINUED Table legend: Risk category Operational risk Risk or uncertainty and potential impact 3. Availability and increased cost of materials and labour Shortages, increased costs of materials and labour and the low availability/higher cost of more sustainable materials could lead to an increase in construction costs and delays in the completion of units. If the Group is unable to control its costs or pass on any increase in costs to the purchasers of the Group’s product, appropriately 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. In addition, if ethical or responsible procurement procedures are not being implemented and followed this could lead to reputational damage and/or litigation. External risk 4. Adverse macroeconomic conditions Glenveagh operates in a property market that is cyclical by nature, which can lead to volatility of property values and market conditions. Geopolitical uncertainty can lead to a potential adverse impact on Glenveagh’s asset valuations and financial performance factors such as a slowdown in economic growth, increased interest rates and a decline in consumer confidence. No change to risk rating Increased risk rating Decreased risk rating New risk Management’s view Key mitigating considerations Risk rating change The construction sector has seen significant increased material costs over the past 12 months due to a range of issues including continuing supply-chain constraints, commodity-price increases, the impacts of escalating energy costs and fuel-cost inflation in relation to transportation. The business continues to leverage its purchasing power and scale to negotiate strong terms with both domestic and international suppliers allowing us to purchase more competitively than the wider market. In addition, the supply-chain investment in our timber-frame factory and soil recovery facility allow the business to shield itself from the full effect of the increases that the wider market experienced. As we progress our net zero strategy, we will need to engage with our suppliers to ensure that they come on the journey with us and can provide the materials necessary at an affordable cost to drive down our embodied carbon emissions. From a labour perspective, the end of all COVID-19 unemployment schemes and the slowdown in the one-off housing and renovation markets due to the significant cost inflation has resulted in encouraging labour availability as we open new construction sites. The Group has also seen the benefits of several recruitment and training initiatives which ensure we continue to attract and retain a high-performing workforce. In the short term, our continued investment in supply-chain initiatives and standardisation will be a significant contributor to managing both materials and labour-cost increases. Over the medium to long term, modular build and off-site construction are further mitigants that the business is exploring. A significant benefit from a modular build/ off-site construction approach is a reduction in the reliance on skilled trade labour on site, therefore shielding the business from any skilled labour shortages or cost increases over the medium to long term. Additionally, a reduction in housing typologies through increased standardisation of the Glenveagh product and construction methodology will further de-risk the business from shortages or increased costs of materials and labour. This reduced variation in packages procured and construction programmes, enhances our purchasing power and increases Glenveagh’s attractiveness as the partner of choice for subcontractors and suppliers. Market sentiment and transaction levels can change quickly, requiring us to adopt a flexible approach to our investment decisions. Glenveagh’s capital allocation policy allows the flexibility to reconfigure capital allocations that best fits a particular economic cycle. Notwithstanding the more challenging economic environment, the Irish economy has remained resilient in FY2022 with continued growth expected in FY2023. Consumer confidence remains strong and is underpinned by government support intitaives (e.g. Help to Buy, First Home scheme), low unemployment levels, population growth and strong corporate and household balance sheets. From a supply perspective, the Irish housing market remains materially undersupplied. The fragmented nature of the market, the inability of smaller builders to access capital and a defunct planning system are all contributory factors to supply remaining below the levels required, in the short to medium term. We have fixed cost contracts in place with subcontractors and suppliers where possible. We have the potential to expand our purchasing network should it be required and are not over-reliant on any one supplier. Glenveagh engages in financial planning and continuously monitors and reviews budgeted versus actual costings. We continuously evaluate partnerships at a site-level with outsourced labour providers to ensure agreements are in line with the market rates. We engage in continuous communications with our subcontractor network and supply-chain, to ensure they are aware of our plans and to reduce the impact of current trading conditions. We have strong relationships across the construction industry in Ireland and with our existing and wider subcontractor network. Our size and reputation in the market remain highly attractive to subcontractors and suppliers. Through acquisition and investment we continue to develop in-house manufacturing capabilities in timber-frame and light gauge steel. We aim to maintain a reasonable but limited stock of land (c. four to five years). We avoid any long-term exposure through strict land acquisition policies which are reviewed and updated on a regular basis to meet market sentiment and demand. We have a robust acquisition policy and approval process in place to ensure the best value is achieved on assets and that they are aligned to our strategic objectives. 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 geopolitical risks and seek expert industry advice where required. Glenveagh Properties plc Annual Report and Accounts 2022 62 Strategic Report Governance Financial Statements Contents RISK M ANAGEME NT RE PORT CONTINUED Table legend: Risk category External risk Risk or uncertainty and potential impact 5. Mortgage availability and affordability Glenveagh understands that affordable mortgage finance is a crucial funding source for buyers in the residential market in Ireland. Constraints on the availability and costs of mortgage financing and any adverse impact on this may have a negative impact on sales of Glenveagh’s products and ultimately our profitability, due to a potential decline in customer demand. Two mortgage providers have withdrawn from the Irish market creating the potential for reduced competition and delays in the application process. Operational risk 6. Failure to obtain expected planning permission Failure to obtain planning permission on sites in our one to three year sales pipeline or renew existing planning permission without significant changes could result in failure to meet unit delivery and return on investment targets. 1. Source: Banking and Payments Federation Ireland (‘BFPI’). No change to risk rating Increased risk rating Decreased risk rating New risk Management’s view Key mitigating considerations Risk rating change Mortgage demand remains strong; in 2022 the level of mortgage approvals in the Republic of Ireland increased by 9.3% in comparison to 2021 to 58,276 approvals. 2022 mortgage volumes increased by 21% to 52,634 drawdowns(1). We are seeing a slight shift in the market where the growth was previously being driven primarily by first-time buyers (54.4% volume in 2021 to 46.8% in 2022) to remortgages and top-ups which have increased by a combined 70% in 2022 when compared to 2021(1). Mortgage affordability remains a significant issue, with house prices continuing to rise nationwide. The average first-time buyer’s mortgage drawdown rose by 9.15% year-on- year to €270,508(1). In addition, the potential for further interest-rate increases creates additional challenges for first-time buyers. The affordability hurdle remains the biggest challenge for prospective buyers, despite the government offering First Home scheme where the state and participating banks pay up to 30% of the cost of a new home in return for a percentage share. Management and the Board continuously monitor government policy around mortgage availability. We regularly engage with mortgage advisors to gain valuable insights into the market and the impact of regulatory changes impacting mortgage lending. We have increased the frequency of cashflow and sales reporting to facilitate accurate business continuity planning. Our strategy can speed up delivery if required. New home buyers can continue to avail of Green Mortgage which offer lower interest rates for purchasing an energy efficient home. The Central Bank have adjusted their macro-prudential framework to allow first-time buyers to borrow up to four times their gross income, increasing affordability for prospective buyers. Obtaining the necessary planning permission on sites, to materially de-risk our unit delivery targets and build flexibility into our land bank, is a key strategic objective. Management’s progress in obtaining planning permission has been affected by the legal challenges and lengthy delays that can arise through the planning process. The planning process is currently in a transitionary phase with the Strategic Housing Development (‘SHD’) planning process now replaced by the LRDs operates similar to the SHD process in dealing with larger applications. The government is intending to publish a new planning bill in the coming months, which the Group has contributed to through various industry forums and submissions. The delays experienced in the planning process have limited the rate at which units have progressed through planning, with a significant number of units awaiting decision from An Bord Pleanala (‘ABP’). Management do not have any immediate concerns as the Group has planning permission for over 80% of the Group’s expected deliveries in 2023. Overall, the Group has over 5,000 units with full planning permission in place. To de-risk 2024 and 2025 delivery targets, management have focused the Company’s land acquisition strategy to ensure, at a minimum, 50% of the sites purchased are acquired with or subject to planning permission. Currently, over 30% of our land portfolio is planned and more than 3,500 planning lodgments were completed in 2022 which will further increase the planned units in our land bank. It is worth noting, from an Urban perspective, the business has limited exposure as most Urban sites are through the planning process. Furthermore, management have been prudent and realistic with unit delivery dates within the Group delivery matrix which forms the starting point of forecasting, financial and strategy planning. Finally, the Company has put in place the appropriate organisational structure within the Planning department to achieve our strategic goals. The Planning department is focused on the short-term needs of the business (i.e. progressing a large volume of units through planning within the existing processes), but also focuses on mapping out the long-term strategy for sites and the planning route these will take, based on the planning processes available. We ensure there is strong alignment between the planning and acquisitions departments to ensure planning-related issues are avoided, or identified and rectified on a timely basis. We have ongoing monitoring, liaising, engaging and networking processes with both local and national government agencies. We have a set strategy for Suburban planning applications, which is reported monthly and reviewed periodically, for any required changes. We have a strategy in place for planning applications currently lodged through the SHD planning process. We have put in place the appropriate organisational structure within the planning department to achieve our strategic goals. We envisage that the new LRD planning process will provide more timely decisions on planning applications. We envisage the new Planning Act will be enacted in 2023. The act will bring greater clarity, consistency and certainty to how planning decisions are made. The draft bill is currently at the pre-legislative scrutiny stage. Glenveagh Properties plc Annual Report and Accounts 2022 63 Strategic Report Governance Financial Statements Contents RISK M ANAGEME NT RE PORT CONTINUED Table legend: No change to risk rating Increased risk rating Decreased risk rating New risk Risk category Operational risk Risk or uncertainty and potential impact Management’s view 7. Inadequate project management Inadequate oversight of the cost and delivery of development projects adversely affects expected return on investment. As the business continues to scale, project management will play a key role in managing timelines to meet unit delivery targets and control costs to deliver gross margin and return on equity targets. Timely and accurate reporting against financial metrics and the construction programme facilitates decision-making on a site-by-site or overall portfolio basis. The Group has in place a commercial department that has oversight of all project costs and timelines. The Commercial Director works with an experienced quantity surveying and estimating teams that are responsible for: > pre-acquisition, planning and pre-construction stage budget preparation; > preparing build of quantities (‘BoQ’) to secure sub-contractors based on a detailed scope; > robust financial planning and forecasting for each site; and > continuously monitoring and reviewing budget versus actual costings. The Group also has in place a dedicated services and utilities department with responsibility for working with Irish Water and ESB to ensure timely connection to the water and electric grids, to deliver units in line with site openings and practical completion dates. The procurement department forecasts material packages 12 months in advance to lock in prices and guarantee supply, in advance of commencing construction on site. In addition, the procurement department works with suppliers to de-risk the supply of scarce or at-risk materials through consignment stock agreements. Management has implemented a new project management office to centralise processes, reporting and communication across departments. This has been facilitated by an external Company that has been engaged to review and improve our end-to- end processes and advise on how best to automate these. Through this process a construction committee has now been established, which is responsible for reviewing reporting, decision-making at site-by-site or overall portfolio-level and communicating actions across departments. Our suite of IT systems provides real time reporting/information for more accurate decision-making relevant to projects at a financial, programme and management level. Risk rating change Key mitigating considerations The Group has fixed-cost contracts in place with sub-contractors and suppliers where possible. The Group has an appointed Commercial Director who is responsible for: > reviewing pre-acquisitions budgets prior to engaging in the site acquisition process; > engaging in continuous monitoring and reforecasting of costs at the pre-construction stage as sites move through planning; and > completing a cost plan/bill of quantities at the pre-construction start/post-planning stage, which acts as the budget for the site build. The commercial department organisational structure ensures oversight of all costs as the business matures in line with the business plan. Glenveagh’s integrated ERP system provides commercial reporting, automated payment and subcontractor accrual functions which facilitates real-time reporting for more accurate decision-making relevant to projects at a cost-object, element and subproject level. Frequent Executive Committee and Board meetings. Glenveagh continuously reviews the site delivery matrix and updates this as necessary. We engage in continuous communications with our subcontractor network and supply chain to ensure they are aware of our plans. We employ highly experienced and qualified project managers and quantity surveyors 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. We have a formal budget sign-off procedure in place for each site. The commercial department has a dedicated estimating team to assist with reviews at pre-acquisition-stage budget preparation, planning- stage budget preparation, and pre-construction-stage budget preparation, with a focus on site development and value engineering. The estimating team is also responsible for the preparation of site development, curtilage & sub-structure BoQs to secure subcontractors based on a detailed scope, which facilitates thorough cost management and forecasting. The commercial team uses our reporting software which is linked directly with the Glenveagh ERP system. This ensures that budgets and cost data are managed and verified automatically, with forecasting and variances being tracked and reviewed. Glenveagh Properties plc Annual Report and Accounts 2022 64 Strategic Report Governance Financial Statements Contents RISK M ANAGEME NT RE PORT CONTINUED Table legend: Risk category Operational risk Risk or uncertainty and potential impact 8. Attracting, retaining and developing people The success of the Group is dependent on recruiting, retaining and developing highly skilled, diverse and competent people. The Group is aware that we need to have an inclusive and equitable working environment and ensure that we engage and challenge our employees so that they can positively impact the business. The loss of key personnel and/ or the inability to attract/retain adequately skilled and qualified people could adversely impact business performance. No change to risk rating Increased risk rating Decreased risk rating New risk Management’s view Key mitigating considerations Risk rating change As the business continues to grow in line with our targets, management is aware there will be a greater need to recruit high quality skilled staff to ensure site employee and head office headcount keeps pace with growth. The growth of the business also brings with it opportunities for increased responsibility and advancement for current staff and there needs to be a continued focus by management on the development of existing staff and succession planning. We are also conscious of the need to continue to develop our employer-value proposition and build our employer brand. Areas such as Equity, Diversity and Inclusion, employee engagement and flexible working conditions will be of greater importance as we compete in a market with full employment. Glenveagh offers competitive and attractive remuneration packages and where appropriate long-term interest alignment. We offer the opportunity for advancement through creating a positive working environment. We have a graduate programme across all departments to develop and ensure progression within the business. We have in place a performance management and appraisal process, which includes open channels of communication and feedback, and development plans for employees. We are developing a succession plan to ensure continuity of high quality service and knowledge retention. We have a dedicated learning and development team with a focus on developing and deploying continuous professional development and upskilling of staff. We have implemented flexible working arrangements for staff as well as offering support to ensure employees have suitable working-from- home arrangements. We ensure that all staff have access to relevant internal and external training. We are committed to the Great Place to Work credentials to further improve our internal and external culture and reputation. We have a corporate affairs team that is responsible for enhancing internal and external communications. We have put in place various initiatives at senior and middle management levels to address the greater need to recruit and maintain existing skilled staff, to ensure the site and head office employee headcount keeps pace with the continued growth of the business. We have invested in new HR software to support the organisation as it grows, providing more timely management information and freeing up resources to focus on core employee-related activities. Glenveagh Properties plc Annual Report and Accounts 2022 65 Strategic Report Governance Financial Statements Contents RISK M ANAGEME NT RE PORT CONTINUED Table legend: Risk category Operational and reputational risk Risk or uncertainty and potential impact 9. Data protection and cyber security Glenveagh 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 our systems and operations, which in turn could lead to damage to our reputation and potential loss of customers and revenue. Any security or privacy breach of the information technology systems may also expose Glenveagh to liability and regulatory scrutiny. No change to risk rating Increased risk rating Decreased risk rating New risk Management’s view Key mitigating considerations Risk rating change As businesses move to a hybrid working model, the threat from cyber attacks remains high. Enhanced controls, penetration-testing and security awareness training have been implemented which allow for better detection and prevention from cyber attacks. However methods of attack continue to evolve and are becoming more sophisticated, requiring additional technical controls and awareness training. Email-based attacks remain a significant risk. An email security platform is in place and is constantly reviewed and improved to address new threats. Glenveagh’s IT director leads our initiatives in mitigating the risk of cyber and data security breaches further. We have a personal data retention policy in place to manage the information held appropriately. We use 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. We have in place sensitive data and password protection and all such information is stored in secure locations and fully encrypted systems. Glenveagh is proactively managing the cyber threat, is continuously monitoring and evolving systems internally and has engaged a third party to assist and ensure that best practices are implemented to identify and remediate any potential weaknesses or control gaps. We have put in place a schedule of specific cyber security training- related training programmes. We have enabled multi-factor authentication for all users. A new VPN connection has been established increasing the resilience and security of the connection to facilitate remote working. Glenveagh’s IT Director completes security assessments and implements suggested changes on a periodic basis. We have a cyber incident response service in place. We have a Chief Information Security Officer service in place to continuously review and improve all security related policies and procedures. Glenveagh Properties plc Annual Report and Accounts 2022 66 Strategic Report Governance Financial Statements Contents RISK M ANAGEME NT RE PORT CONTINUED Table legend: No change to risk rating Increased risk rating Decreased risk rating New risk Risk or uncertainty and potential impact Management’s view The wellbeing of our people remains of paramount importance to management and the Board. We strive to ensure the highest standards of health and safety across our workforce and sites, with health and safety KPIs forming part of remuneration metrics. We continue to implement all the necessary steps to maintain the health and welfare of our employees, subcontractors and customers. Management has increased the proportion of sites having independent audits to 20% and we have continued to maintain our health and safety audit scoring at 88% (2021: 89%). Glenveagh has achieved ISO 45001 health and safety management systems certification, maintained our grade A Safe-T certificate, and increased training hours per employee. Risk rating change Key mitigating considerations Glenveagh has an experienced health and safety team in place with a specific health and safety plan for each site. We have a wealth of experience, adopt best practice and regulations and have developed and implemented formal best-practice policies and procedures to support and promote a robust health and safety environment. Glenveagh has developed an accredited health and safety management system and is certified to ISO 45001 by the National Standards Authority of Ireland. Glenveagh ensures all staff are appropriately and adequately trained. We hold a Grade A Safe-T certificate which is the industry health and safety auditing standard. We undertake monthly health and safety audits through both internal and external parties. We circulate a weekly incident monitoring report to construction management. There is adequate insurance cover in place to deal with any claims that may arise due to injury. Risk category Operational risk Reputational risk 10. Insufficient health and safety procedures Glenveagh is focused on the wellbeing of its employees, contractors, subcontractors and the general public. We understand that failure to implement and adhere to the highest standard of health and safety practices could 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 and safety regulations may result in financial and/or other penalties. 11. Decline in product quality Glenveagh’s brand and customer satisfaction are crucial to our performance and any negative incidents including construction defects, material environmental liabilities (including hazardous or toxic substances), quality deficiencies or perceptions thereof could adversely impact sales, and possibly result in litigation cases against the business. Our continued focus on improving the quality of design and product is an essential component of our homes. We continue to evolve the design of our end-product to meet the demands of changing lifestyles, as well as the rapidly changing levels of expectations from our customers. Glenveagh has in place robust quality-control procedures and strictly adheres to Building Control (Amendment) Regulations requiring (among other stipulations) the appointment of suitably qualified engineers and architects. Continued investment and expansion in our manufacturing facilities, the development of modular build and offsite manufacturing and the standardisation and reduction in our house typologies are some of the measures we have undertaken to ensure we deliver high quality homes. We have a dedicated quality manager to manage and report on site quality. We have a dedicated environmental officer to advise on the business challenges, from an environmental perspective, on a daily basis. Glenveagh has an experienced and professional support team in place. We have a dedicated customer care team in place. We have an ISO 9001 certified quality management system to monitor product quality and drive continuous improvement. Glenveagh Properties plc Annual Report and Accounts 2022 67 Strategic Report Governance Financial Statements Contents FINANCIAL REVIEW Glenveagh continued its strong growth momentum in 2022 across all segments of the business. Michael Rice Chief Financial Officer Glenveagh Properties plc Annual Report and Accounts 2022 68 Strategic Report Governance Financial Statements Contents €645m Total Group revenue €108.1m Gross profit for 2022 FINANCIAL REVIEW CONTINUED Glenveagh continued its strong growth momentum in 2022 across all segments of the business, with our highest Suburban unit deliveries, significant progress in the monetisation of our Urban portfolio, and planning lodged for both of our Partnership projects. This significant growth has not come at the expense of further progress on our capital efficiency strategy, with the business returning approximately €150 million to shareholders in the year, bringing the overall returns over a two-year period to over €250 million. The business has also reduced its total equity to below €700 million for the first time since 2017, Glenveagh’s first year in operation. Group performance Total Group revenue was €645 million (2021: €477 million) from two main income streams: > €455 million in our Suburban business, which predominantly relates to our 1,354 Suburban units closed in the year; > €190 million from our Urban business, which includes our land disposal in East Road and the revenue generated from a number of forward-funds, which are the Premier Inn hotel in Castleforbes and our apartment developments in Citywest and Castleknock. Glenveagh’s Suburban revenue of €455 million represents significant growth for the primary segment of the business and equates to a 64% increase in revenue versus 2021. The Group delivered 1,354 core units in the year at an average selling price of approximately €330k (FY 2021: €308k) reflecting the Group’s strong operational performance in a challenging environment. ASP increased by 7% as a result of a change in portfolio mix and house-price inflation in the period. Glenveagh finished the year with 408 Suburban units contracted or reserved for FY 2023 (FY 2021: 605). Though forward sales rates were lower than prior year levels, this is being actively managed to benefit from strong underlying market demand, that is further supported by updated Housing for All initiatives and the change to the Central Bank of Ireland’s macroprudential rules, both of which became effective in January 2023. We continued to actively manage suburban unit reservations in the first two months of the year and these now stand at 803 units. This progress demonstrates the strong underlying demand for suburban housing, supported by the updated government and Central Bank initiatives. The Group’s gross profit for the year amounted to €108.1 million (2021: €83.1 million) with an overall gross margin of 16.8% (2021: 17.4%). Suburban gross margins improved as the business benefitted from a full year not impacted by COVID-19 related restrictions. FY 2022 margin was 18.4% and with suburban margin in the second half of the year higher still, we anticipate further improvement in the FY 2023 margin to approximately 19%. Urban gross margin was 12.9% in FY 2022, modestly below guidance, reflecting the transaction mix in the period, in particular the impact of the forward sale of our development in Cluain Mhuire, Blackrock, where revenue and profits will now be fully recognised at completion. Our operating profit was €70.1 million (2021: €50.6 million). The Group’s central costs for the year were €36.1 million (2021: €30.1 million), which along with €1.9 million (2021: €2.4 million) of depreciation and amortisation, gives total administrative expenses of €38.0 million (2021: €32.5 million). Net finance costs for the year increased significantly to €7.1 million (2021: €4.8 million), predominantly impacted by increased interest rates which have impacted the overall market. Overall, the Group delivered an earnings per share of 7.6 cents (2021: 4.5 cents), an increase of 69%. Balance sheet In line with our continuing commitment to drive capital efficiency, we have reduced the Group’s net assets to €693.1 million at 31 December 2022 (2021: €784.1 million). This has been achieved through a considered and strategic reduction in the land portfolio to €458.5 million (2021: €562.7 million). We believe that further reductions can be made in our land portfolio, while still supporting the significant growth the business has projected in the coming years. The Group has continued to invest in work-in progress in line with the growth strategy of the business, with a year-end balance of €227.2 million (2021: €204.5 million). The increase year-on- year predominantly relates to the Urban business, where we have ongoing construction for the office development in Castleforbes and the apartment development at Cluain Mhuire, Dublin, both of which are due for completion in 2024. The business has increased its non-current assets during the year, with increases in both goodwill and property, plant and equipment, resulting from our continued investment in innovation and our supply-chain initiatives. The acquisition of Harmony Timber Solutions Limited, along with our investment in additional timber frame and soil recovery facilities, will enhance our off-site manufacturing capabilities considerably. The focus for the business is to now integrate these capabilities effectively and maximise the value of these investments. Glenveagh Properties plc Annual Report and Accounts 2022 69 Strategic Report Governance Financial Statements Contents FINANCIAL REVIEW CONTINUED THE GROUP ’S UNWAVERING FOCUS ON CAPITAL EFFICIENCY AND CA SH-GENER ATION PL ACES THE BUSINESS IN AN EXCELLENT POSITION FOR CONTINUED LONG-TER M OPER ATIONAL GROW TH. At 31 December 2022, the reduced equity figure reflected the three share buyback programmes completed by the Group to date, which total over €250 million. In 2022, a total of 135.7 million shares had been repurchased and subsequently cancelled. Albeit from a relatively low base, the Group made considerable progress in increasing Return on Equity (ROE) to 7.1% from 4.6% in 2021, an increase of 250bps. Cash flow In line with our continued focus on capital efficiency and reducing inventory, the business generated significant cash, with €140.9 million generated from operating activities (2021: €104.3 million). The main drivers of this cash-generation are €72.4 million from the Group’s profitability, and €83.4 million from the reduction in inventory. This cash-generation allowed the business to invest in line with our capital allocation priorities, predominantly focused on acquisitions and capital expenditure of €27.2 million and the two separate share buyback programmes totalling €146.3 million in the year. Outlook The Group continues to see a very positive long-term outlook in the Irish residential housing market, and we believe we are very well- positioned to take advantage of that opportunity. Notwithstanding the Group’s forecasted 2023 performance, which has been shaped specifically by planning momentum, the business has a busy development schedule across our sites, including opening new sites for first deliveries in 2024. The Group has forward-sales of 803 Suburban units which reflects significant progress from our announcement on 5 January 2023 and also demonstrates the strength of the underlying demand for Suburban homes. We currently anticipate earnings per share for FY 2023 to be 7.5 – 8.0 cents. The Group’s unwavering focus on capital efficiency and cash-generation, along with our new €350 million debt facility, places the business in an excellent position for continued long-term operational growth and maximising returns for shareholders, with our Return on Equity target of 15% in 2024 continuing to be our key capital metric. Michael Rice Chief Financial Officer The business vigorously managed its cash flow requirements and ended the year in a net debt position of only €13.8 million, demonstrating the strength and resilience of our balance sheet. This provides a very strong platform for further capital- allocation initiatives in 2023. Group financing In February 2023, the Group finalised a new five- year sustainability linked finance facility of €350 million, consisting of €100 million term component, and a revolving credit facility of €250 million, which is a direct replacement of our previous €250 million debt facility. This new facility is with our existing banking syndicate, at interest rates consistent with those of the previous facility and includes financial and sustainability covenants that better reflect the current strategy and growth ambitions of the business. This facility will ensure that the business has the appropriate financial structure to support the operational growth of the business over the next five years, while also ensuring the business can maximise its return on equity for shareholders. Investor relations and share price Glenveagh 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. During the year, the executive management and investor relations team presented at four capital market conferences and conducted 111 institutional one- on-one and group meetings. The Group has had a strong share-price performance throughout FY 2022 relative to its peer group, aided by the strong profitability and the initiatives introduced to improve the capital efficiency of the business. The Group’s shares traded between €0.84 and €1.27 during the year (2021: €0.82 to €1.24). The share price at 31 December 2022 was €0.85 (31 December 2021: €1.23) giving a market capitalisation of €539.9 million (2021: €950.8 million). Glenveagh Properties plc Annual Report and Accounts 2022 70 Strategic Report Governance Financial Statements Contents INTRODUC TION FROM THE CHAIR M AN Dear shareholders, On behalf of the Board, I am pleased to present the Corporate Governance Report for the year ended 31 December 2022. Corporate Governance Code The Board is committed to the highest standards of corporate governance and for the year ended 31 December 2022, the Corporate Governance Report, in conjunction with the Audit and Risk Committee report, the Remuneration Committee report, the Nomination Committee report and the Environmental and Social Responsibility Committee report, describes how the Company has applied the principles and followed the provisions of the 2018 UK Corporate Governance Code (the ‘Code’) and the Irish Corporate Governance Annex (the ‘Annex’) and details any departures from the specific provisions. During 2022, we complied with the Code and the Annex with the following exceptions: > Provision 9, in relation to the appointment of an Executive Chairman at IPO; and > Provision 41, workforce engagement on executive pay. Further details in relation to these matters are provided on pages 81 and 92, respectively, and the Board will keep them under review during 2023. > The Code can be found at www.frc.org.uk > The Annex can be found at www.euronext.com Glenveagh Properties plc Annual Report and Accounts 2022 71 Strategic Report Governance Financial Statements Contents INTRODUC TION FROM THE CHAIR M AN CONTINUED A S A BOARD, WE ARE COM MIT TED TO ACHIEVING THE TARGETS SET BY BAL ANCE FOR BET TER BUSINESS FOR ISEQ 20 COMPANIES. Sustainability, including climate change Glenveagh acknowledges the role that it needs to play as one of Ireland’s leading homebuilders and has integrated sustainability throughout its business strategy. Performance against our environmental, social, and governance (‘ESG’) indicators can be found on page 43. The Board are particularly conscious of the Group’s impact on climate change, and have set ambitious targets in this area. Details of these and the work to comply with the requirements of the Task Force on Climate- related Financial Disclosures (‘TCFD’) are set out on page 51. Building sustainable homes has been part of Glenveagh’s strategy for many years, and as a Board, we continue to give a considerable amount of time and focus to the oversight of sustainability matters. During 2022, the Nomination Committee conducted a request for proposal (‘RFP’) to select an executive search provider to advise it as it began the process of identifying a new Non-executive Director for proposal to the Board. Further details in relation to the nomination process are provided in the report of the Nomination Committee on page 83. As a Board, we are committed to achieving the targets set by Balance for Better Business for ISEQ 20 companies. The Nomination Committee remains cognisant of the diversity targets directed by forthcoming EU legislation, as well as by investor and stakeholder expectations, as it progresses through the nomination process in early 2023. Board composition and succession The Nomination Committee continues to lead the process for Board appointments and ensuring that plans are in place for systematic Board and senior management succession. Richard Cherry chose not to seek re-election at the Annual General Meeting (‘AGM’) in April 2022 and, on behalf of the Board, I would like to thank Richard for his contribution to Glenveagh since joining the Board in 2017. Board evaluation The Board and each of its committees evaluate their performance on an annual basis in order to assess if any improvements can be made. In 2022, we conducted an internal Board performance evaluation, overseen by our Company Secretary, and I am happy to report that the evaluation found that the Board and its committees continue to operate effectively, while providing some insight into opportunities for further development. Glenveagh corporate website The Glenveagh website www.glenveagh.ie contains additional information about our corporate governance: > Composition of principal Board and Board committees; > Terms of reference for the Board committees; and > Details of AGM, proxy voting by shareholders, including votes withheld CORPORATE GOVERNANCE REPORTING 72 and 73 Board leadership Board leadership and company purpose Division of responsibilities Composition, succession and evaluation 4 to 77 78 to 81 82 to 85 Audit, risk and internal control 86 to 89 Remuneration Environmental and social responsibility Directors’ report 90 to 103 104 and 105 106 to 108 You can read more about our evaluation process on page 85. Priorities for the year ahead As a Board we have a demanding year ahead with a number of environmental and social priorities; these include overseeing the implementation of our net zero transition plan, approving strategies in the important areas of biodiversity and circular economy, along with continued progress on our overall strategy, including the development of our senior leaders, and maintaining a robust internal control environment and risk management framework. Conclusion I believe that the Board is well-positioned to provide the strategic oversight and leadership required for Glenveagh to continue to deliver long-term sustainable success and continued returns for shareholders. The 2023 AGM will be held on 8 June 2023 and the Board looks forward to the opportunity to engage with our shareholders in person. Further details will be published in the Notice of Annual General Meeting, which will be sent or made available to shareholders, and is also available on the Company’s website, www.glenveagh.ie John Mulcahy Chairman Glenveagh Properties plc Annual Report and Accounts 2022 72 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: BOARD LEADE RSHIP Board of Directors Name Job title Nationality Date of appointment Skills and experience John Mulcahy (74) Stephen Garvey (43) Michael Rice (40) Robert Dix (70) Cara Ryan (50) Pat McCann (71) Camilla Hughes (53) Chloe McCarthy (38) Chairman Irish Chief Executive Officer Chief Financial Officer Senior Independent Director Independent Non-executive Director Independent Non-executive Director Independent Non-executive Director Company Secretary Irish Irish Irish Irish Irish British Irish Appointed to the Board on 11 August 2017 and as Chair of the Nomination Committee on 28 April 2022. Appointed to the Board on 9 August 2017. Appointed to the Board on 1 November 2019. Appointed to the Board on 26 September 2017. Appointed to the Board on 1 September Appointed to the Board on 1 September Appointed to the Board and as Chair 2019 and as Chair of the Remuneration of the Environmental and Social Committee on 28 April 2022. Responsibility Committee on 1 July 2021. 2019 and as Chair of the Audit and Risk Committee on 3 September 2020. Cara is also the Glenveagh Workforce Engagement Director. John is a chartered surveyor with over 40 years’ experience in the Irish real estate sector. Previously, he was a member of the board (from 2012 to 2014), and head of asset management (from 2011 to 2014), at National Asset Management Agency and, prior to that, was chairman and CEO of JLL’s operations in Ireland from 2002 to 2010. John was also a founding member of the RICS Asset Valuations Standards Committee and the Property Advisory Committee of the National Pension Reserve Fund. Stephen Garvey was appointed Chief Executive Officer in August 2019. Stephen is responsible for delivering on Glenveagh’s vision that everyone should have the opportunity to access great-value, high-quality homes in flourishing communities across Ireland. Stephen has over 20 years’ experience in the construction and property industry in Ireland. Prior to founding his own successful residential development business, Bridgedale Homes, Stephen worked with a number of Ireland’s largest property developers. From 2014 to 2017, Stephen advised and managed the acquisition of Irish residential development opportunities on behalf of TIO RLF. A co-founder of Glenveagh, Stephen has led the growth and development of Glenveagh since IPO. Michael Rice is Glenveagh’s Chief Financial Officer. Michael joined Glenveagh in September 2017 having previously worked as the group financial controller of Kingspan Group plc. Michael oversees a wide range of functions including finance, treasury, corporate governance, IT, corporate affairs and investor relations. He is a qualified chartered accountant with significant experience of finance management in both domestic and international environments. KEY Audit and Risk Committee Environmental and Social Responsibility Committee Remuneration Committee Nomination Committee Chair of Committee Other appointments John is the chairman of IPUT plc and a board member of TIO ICAV, and Quinta do Lago S.A., a Portuguese resort developer. Committee memberships 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, Robert Dix was formerly a partner and Cara is a Non-executive Director, with Pat has 50 years’ experience in the Camilla is a highly experienced ESG and Chloe is an ICSA qualified Company over 20 years’ experience at board level in hotel industry, having begun his career capital markets adviser, having spent over Secretary and a barrister-at-law in Ireland. publicly listed and private companies, in in 1969 with Ryan Hotels plc. He joined twenty-five years in financial services, and Chloe was called to the Bar of Ireland both regulated and non-regulated entities. Jurys Hotel Group plc in 1989 and became investment banking. She currently provides in 2008 and was a member of the Law which advises organisations on capital Park Homebuilders, an Irish housebuilding plc in 2000. Pat founded Dalata Hotel corporates and banking teams in M&A, Cara was the director of finance of Manor chief executive of Jurys Doyle Hotel Group independent ESG advisory services to Library for a number of years before gaining experience at international Group plc in 2007 and acted as CEO capital raisings, shareholder engagement law firms including Taylor Wessing in markets, corporate governance and strategic planning issues. Robert is a company and she was formerly a non- executive director of IFG Group plc, a graduate of Trinity College Dublin and a listed financial services group in Dublin & Fellow of Chartered Accountants Ireland. London and was the managing director of IFG Investment Managers until 2006. Cara holds a BA in Economics from University College Dublin and a MSc in Investment & Treasury from Dublin City University. until 31 October 2021. He is a non-executive director of a number of private companies and was appointed to the board of Ibec in 2017. Pat completed his term as president of Ibec in September 2020. 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. and ESG reporting at Rothschild & Co in the Global Advisory business, based in London. Her work focuses London, Allens Linklaters in Sydney and A&L Goodbody in Dublin. Prior to joining Glenveagh at IPO in 2017, Chloe was the on helping publicly listed and privately assistant company secretary at Aegon Ireland plc. owned companies around climate and sustainability strategies, including governance issues, and connecting them to ESG capital at all stages of corporate life cycle. Previous to expanding her executive career, Camilla has worked at Credit Suisse, UBS and Market Pipe, an early-stage Fintech SaaS business included in the Techtrak 100. She holds a Bachelor of Arts degree and MA (Hons) in Philosophy, Politics and Economics from Oxford University and is an alumna of the Cambridge University Institute for Sustainability Leadership and Sustainable Finance. Robert is the CEO of Sopal Limited and Cara is the chair of Mercer Ireland Limited Pat is the deputy chairman at The a non-executive director and chairman and a member of its board risk committee National Maternity Hospital and a of Quinn Property Group. and remuneration committee, a non- non-executive director of Ibec and executive director of Stonebond Properties Quinn Property Group. and a non-executive director and chair of the audit committee of BNP Fund Administration Services in Ireland. Glenveagh Properties plc Annual Report and Accounts 2022 73 Strategic Report Governance Financial Statements Contents Name Job title Nationality Date of appointment Skills and experience Appointed to the Board on 11 August 2017 and as Chair of the Nomination Committee on 28 April 2022. Appointed to the Board on 9 August 2017. Appointed to the Board on 1 November 2019. John is a chartered surveyor with over 40 Stephen Garvey was appointed Chief years’ experience in the Irish real estate Executive Officer in August 2019. Michael Rice is Glenveagh’s Chief Financial Officer. Michael joined sector. Previously, he was a member of Stephen is responsible for delivering Glenveagh in September 2017 having the board (from 2012 to 2014), and head on Glenveagh’s vision that everyone previously worked as the group financial of asset management (from 2011 to 2014), should have the opportunity to access at National Asset Management Agency great-value, high-quality homes in controller of Kingspan Group plc. Michael oversees a wide range of and, prior to that, was chairman and CEO flourishing communities across Ireland. functions including finance, treasury, of JLL’s operations in Ireland from 2002 to Stephen has over 20 years’ experience in corporate governance, IT, corporate 2010. John was also a founding member the construction and property industry affairs and investor relations. He is of the RICS Asset Valuations Standards in Ireland. Prior to founding his own a qualified chartered accountant Committee and the Property Advisory successful residential development with significant experience of finance Committee of the National Pension business, Bridgedale Homes, Stephen management in both domestic and Reserve Fund. worked with a number of Ireland’s international environments. largest property developers. From 2014 to 2017, Stephen advised and managed the acquisition of Irish residential development opportunities on behalf of TIO RLF. A co-founder of Glenveagh, Stephen has led the growth and development of Glenveagh since IPO. Other appointments John is the chairman of IPUT plc and a board member of TIO ICAV, and Quinta do Lago S.A., a Portuguese resort developer. Committee memberships John Mulcahy (74) Stephen Garvey (43) Michael Rice (40) Robert Dix (70) Cara Ryan (50) Pat McCann (71) Camilla Hughes (53) Chloe McCarthy (38) Chairman Irish Chief Executive Officer Chief Financial Officer Senior Independent Director Independent Non-executive Director Independent Non-executive Director Independent Non-executive Director Company Secretary Irish Irish Irish Irish Irish British Irish Appointed to the Board on 26 September 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. Appointed to the Board on 1 September 2019 and as Chair of the Audit and Risk Committee on 3 September 2020. Cara is also the Glenveagh Workforce Engagement Director. Cara is a Non-executive Director, with over 20 years’ experience at board level in publicly listed and private companies, in both regulated and non-regulated entities. Cara was the director of finance of Manor Park Homebuilders, an Irish housebuilding company and she was formerly a non- executive director of IFG Group plc, a listed financial services group in Dublin & London and was the managing director of IFG Investment Managers until 2006. Cara holds a BA in Economics from University College Dublin and a MSc in Investment & Treasury from Dublin City University. Appointed to the Board on 1 September 2019 and as Chair of the Remuneration Committee on 28 April 2022. Appointed to the Board and as Chair of the Environmental and Social Responsibility Committee on 1 July 2021. Pat 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. Pat founded Dalata Hotel Group plc in 2007 and acted as CEO until 31 October 2021. He is a non-executive director of a number of private companies and was appointed to the board of Ibec in 2017. Pat completed his term as president of Ibec in September 2020. 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. Camilla is a highly experienced ESG and capital markets adviser, having spent over twenty-five years in financial services, and investment banking. She currently provides independent ESG advisory services to corporates and banking teams in M&A, capital raisings, shareholder engagement and ESG reporting at Rothschild & Co in the Global Advisory business, based in London. Her work focuses on helping publicly listed and privately owned companies around climate and sustainability strategies, including governance issues, and connecting them to ESG capital at all stages of corporate life cycle. Previous to expanding her executive career, Camilla has worked at Credit Suisse, UBS and Market Pipe, an early-stage Fintech SaaS business included in the Techtrak 100. She holds a Bachelor of Arts degree and MA (Hons) in Philosophy, Politics and Economics from Oxford University and is an alumna of the Cambridge University Institute for Sustainability Leadership and Sustainable Finance. Chloe is an ICSA qualified Company Secretary and a barrister-at-law in Ireland. Chloe was called to the Bar of Ireland 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. Robert is the CEO of Sopal Limited and a non-executive director and chairman of Quinn Property Group. Cara is the chair of Mercer Ireland Limited and a member of its board risk committee and remuneration committee, a non- executive director of Stonebond Properties and a non-executive director and chair of the audit committee of BNP Fund Administration Services in Ireland. Pat is the deputy chairman at The National Maternity Hospital and a non-executive director of Ibec and Quinn Property Group. Glenveagh Properties plc Annual Report and Accounts 2022 74 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: BOARD LEADE RSHIP AND COMPANY PURPOSE Role of the Board The Board is responsible for setting the Company’s purpose, strategy and values, promoting the long-term sustainable success of the Group while generating shareholder-value and contributing to the society in which it operates. The Board provides effective leadership by developing and guiding the strategic direction of the Group, understanding the key risks faced by the Group and determining the risk appetite of the Group and ensuring that a robust internal control environment and risk management framework are in place. Details of the activities of the Board during the year can be found on the next page. Board meetings The Board convenes with sufficient frequency to ensure the effective discharge of its duties during the year and holds additional meetings when required. In line with the easing of COVID-19 restrictions, the Board met in person for all nine meetings held during the year. In addition to formal Board meetings, the Board also convened for a number of strategy and training sessions in 2022. 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, 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. The Board has overall responsibility for the management of the Group’s activities and has put in place a framework of controls and delegated authorities, which enables the Group to appraise and manage risk effectively. To assist in discharging its responsibilities, the Board has established an Audit and Risk Committee, a Remuneration Committee, a Nomination Committee and an Environmental and Social Responsibility (‘ESR’) Committee. A high-level overview of the delegated authority flow from the Board is shown in the diagram on page 77. The composition of each of the Board committees is fully aligned with the provisions of the Code and is detailed in the reports of the relevant committees on pages 82 to 105. 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, www.glenveagh.ie. Attendance at Board and committee meetings Current Directors John Mulcahy Stephen Garvey Michael Rice Robert Dix Cara Ryan Pat McCann Camilla Hughes Past Directors Richard Cherry Board Nomination Committee Remuneration Committee Audit and Risk Committee ESR Committee 9/9 9/9 9/9 9/9 9/9 9/9 9/9 3/3 3/3 n/a n/a 3/3 n/a 3/3 3/3 0/1 n/a n/a n/a n/a 6/6 6/6 6/6 2/2 n/a n/a n/a 5/5 5/5 5/5 n/a 0/1 n/a 4/4 n/a 4/4 n/a 4/4 4/4 n/a MEETINGS DURING THE YEAR AGM Board meeting Committee meeting Training days January Board training March Board meetings May Board meeting September Board meeting Remuneration Committee meeting Audit & Risk, and Nomination Committee meetings Audit & Risk, Nomination and ESR Committee meetings Audit & Risk, Remuneration and ESR Committee meetings November Audit & Risk and ESR Committee meetings February ESR Committee Meeting April Board meeting Annual General Meeting October Board training day (including strategy session) Board meeting December Board meeting July Board meeting Audit & Risk and Remuneration Committee meetings Nomination and Remuneration Committee meetings Glenveagh Properties plc Annual Report and Accounts 2022 75 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: BOARD LEADE RSHIP AND COMPANY PURPOSE CONTINUED The Board’s key activities during the year were: What did the Board do this year? Activity Description Strategy & Management > Engaged with senior management in detailed strategic planning sessions and received reporting on strategy implementation throughout the year, as part of the annual strategic planning cycle. > Reviewed and challenged operational and financial reporting from the Chief Executive Officer and the Chief Financial Officer. Monthly management reporting includes an analysis of the Group’s performance against KPIs and updates in relation to health and safety, planning, construction, sales, customer satisfaction, investment, operations, finance, HR and investor relations. > Reviewed and approved the Group’s updated manufacturing strategy. > Continued to assess the capital allocation priorities of the Group and identified excess capital for return to shareholders through the initiation of a third buyback programme. Environmental & Social > Reviewed quarterly management reporting in relation to the Group’s environmental and social responsibilities. > Received training in the form of presentations from external advisors on recent developments including; EU Sustainable Finance Action Plan and Taxonomy, Corporate Sustainability Reporting Directive and ESG trends. > Supported management in partnering with Clúid Housing to provide emergency accommodation for up to 40 Ukrainian families, in addition to matching voluntary donations by staff to a minimum commitment of €250,000. Strategy & Management Financial Reporting Investments/Acquisitions Financial Reporting > Reviewed and approved Budget 2023. Environmental & Social Governance Governance > Reviewed and approved the 2022 Annual Report and Audited Financial Statements, on the recommendation of the Audit & Risk Committee. > Reviewed and approved the 2022 Interim Financial Statements, on the recommendation of the Audit & Risk Committee. > Reviewed and approved the Group’s full-year and half-year financial results announcements. > Reviewed the findings from the internally facilitated Board performance evaluation in 2022 and agreed areas of focus for the Board in 2023. > Considered Board members’ potential conflicts of interests. > Received updates from the Chairs of the Board committees at each scheduled Board meeting. > Reviewed and approved the 2022 Notice of Annual General Meeting for circulation to shareholders. > Reviewed and approved the schedule of matters reserved for the Board and the terms of reference for each of the Board committees. > Reviewed and approved the terms of reference for the expanded executive committee (‘ExCo’), following the Chairman’s transition to a non-executive role. Investments/ Acquisitions > Reviewed all site acquisitions approved by the ExCo under its delegated authority from the Board. > Considered and approved the disposal of the East Road site. > Considered and approved the acquisition of Harmony Timber Solutions Limited. > Reviewed management updates in relation to pipeline sites and the progression of existing land bank assets. > Reviewed and challenged post-acquisition investment performance against management models. > Reviewed and approved capital expenditure associated with the Group’s updated manufacturing strategy. Glenveagh Properties plc Annual Report and Accounts 2022 76 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: BOARD LEADE RSHIP AND COMPANY PURPOSE CONTINUED Culture and Values Glenveagh’s vision is that everyone should have the opportunity to access great-value, high-quality homes in flourishing communities across Ireland. The Board believes that building homes and communities is a worthy cause and will positively impact Irish society. The Board continues to support management in forging a new path, innovating at every stage of the homebuilding process. To do this, the Board fosters a culture of fresh thinking, teamwork and trust to challenge the status quo. The Board is committed to ensuring the continued alignment of Glenveagh’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 assesses and monitors Glenveagh’s culture through a number of employee engagement measures including the workforce engagement forum, which is attended by Cara Ryan as the Board’s Workforce Engagement Director, regular employee engagement surveys and the Group’s whistleblowing reporting mechanisms. Further details in relation to the role of the Workforce Engagement Director can be found on page 81. The Board recognises the significant role the people of Glenveagh have played in delivering our success to date and strives to continue to be a great place to work for every single employee. OUR VALUES Our values encompass the culture and conduct we expect from all our employees in the day-to-day operations of our business. Safety-first Collaborative Innovative Customer-centred Can-do Examples of ways that the Board and its committees monitor and assess culture Who The Board What > The operational and financial reporting presented at every scheduled Board meeting contains detailed people updates covering health and safety, recruitment and retention, and learning and development. > The Board reviews customer satisfaction survey scores on a monthly basis. Board Members > The Workforce Engagement Director meets with employee representatives every six months in order to facilitate direct feedback to the Board on culture and the working environment. > Board training days and site visits provide opportunities for the Non-executive Directors to engage with employees of all levels across the Group’s operations. ESR Committee > The committee receives regular updates on diversity and inclusion, health and safety and culture within the Group, with progress in these areas measured and assessed through employee survey results. > The committee considered and approved the introduction of a Group Equity, Diversity and Inclusion (‘EDI’) Strategy, including the adoption of targets and goals for each level of the organisation. > The committee reviewed and approved the Group’s first report under the Gender Pay Gap Information Act 2021. Audit and Risk Committee > The committee receives and considers regular internal audit reports, covering a wide range of the Group’s operations and providing insight into the operational culture of the business. > The committee reviews and approves the Group Whistleblowing Policy and reporting mechanisms. Remuneration Committee > The committee evaluates the Group’s non-financial performance against defined safety and customer satisfaction measures, assessed through externally managed customer surveys and site audits. These non-financial KPIs account for 30% of the annual bonus. > In addition to setting the pay for the Executive Directors and members of the ExCo (including the Company Secretary), the committee also considers matters relating to pay across the Group as a whole, including workforce remuneration policies and incentives for the wider employee population. Nomination Committee > The committee recognises that succession planning is key to maintaining the Group’s culture and it focuses on developing people internally and having a promising pipeline of talent to fill key senior management positions. > The Board is committed to achieving diversity and inclusion across the Group and, through the committee, continues to progress towards meeting the targets and goals set both internally and externally. Glenveagh Properties plc Annual Report and Accounts 2022 77 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: BOARD LEADE RSHIP AND COMPANY PURPOSE CONTINUED GOVE RNANCE FR A MEWORK DELEGATED AUTHORITY FLOW Board Executive Management Team Operating Business See Board of Directors on page 72 and 73 Nomination Committee ExCo See report on page 82 Audit & Risk Committee See report on page 86 Remuneration Committee See report on page 90 ESR Committee See report on page 104 On 1 January 2022, the Executive Directors Stephen Garvey and Michael Rice were joined on the ExCo by Wesley Rothwell (Chief Commercial Officer), Conor Murtagh (Chief Strategy Officer), Barney O’Reilly (Head of Construction) and Tony McLoughlin (Managing Director – Planning, Design, Manufacturing and Operations). The Company Secretary Chloe McCarthy also attends ExCo meetings. The ExCo has responsibility for day-to-day running of the Group’s operations, as delegated by the Board in the ExCo’s terms of reference. Senior Leadership Team (‘SLT’) The SLT is comprised of over 30 senior members of management and is aimed at keeping the senior leaders in the business informed of the day-to-day business and performance of the Company. Members of the SLT present at the meetings, providing insight into various parts of the business. The SLT is also used to update senior leaders on strategy, people, performance and culture. General Data Protection Regulation (‘GDPR’) Committee Construction Committee The GDPR Committee was established in July 2022 and is responsible for providing oversight and high-level support for data privacy and implementation of GDPR within the Group. The committee is comprised of the CFO, the Chief Commercial Officer, the Chief Strategy Officer and the Company Secretary. The Construction Committee is comprised of senior members of the business with specific responsibility for areas of construction operations. The Construction Committee meetings are held monthly to review all construction projects. Glenveagh Properties plc Annual Report and Accounts 2022 78 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: DIVISION OF RESPONSIBILITIES 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 ExCo, with the Board reserving to itself a formal schedule of matters over which it retains control. 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 table below summarises how there is a clear division of responsibilities between the leadership of the Board and the executive leadership of the business. Position Chair Description 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. Chief Executive Officer (‘CEO’) The CEO, 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 CEO 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. The CEO also chairs the ExCo. Chief Financial Officer (‘CFO’) The CFO, Michael Rice, is responsible for managing the financial affairs of the Group. His areas of responsibilty include finance, treasury, corporate governance, IT, corporate affairs and investor relations and he works closely with the CEO to manage the Group’s operations. The CFO is a member of the ExCo and GDPR committee. Senior Independent Director The Senior Independent Director, Robert Dix, is available to shareholders who have concerns that cannot be addressed through the Chairman or CEO and will attend meetings with major shareholders as necessary. The Senior Independent Director acts as a sounding board for the Chairman and serves as an intermediary for the other Directors as necessary. He is also responsible for leading the annual performance review of the Chairman. Non-executive Directors Of the seven Board members, four are Independent Non-executive Directors. The Company’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 Executive Directors 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 obligations. Glenveagh Properties plc Annual Report and Accounts 2022 79 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: DIVISION OF RESPONSIBILITIES CONTINUED Shareholder and stakeholder engagement The Code provides that the Board should ensure effective engagement with, and encourage participation from shareholders and stakeholders. Further details regarding the Board’s engagement with key stakeholders can be found on page 80. Shareholders The Board recognises the importance of engaging with shareholders and values regular dialogue. The Group prioritises effective dialogue with shareholders to ensure that we capture and embrace feedback relating to areas of interest and areas of concern. This commitment is formalised through the Group’s comprehensive investor relations programme. 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, all of which assists the Board in understanding and taking account of the view of shareholders. In addition, the Chairman and Senior Independent Director remain available to meet with shareholders on request, should they have any issues or concerns that cannot be resolved through the usual IR channels, and up-to-date contact details are available on the Group’s website, www.glenveagh.ie. Investors and analysts In addition to the detailed presentations and roadshows conducted after the announcement of interim and full-year results, the Group runs an active investor relations programme that includes all financial announcements, presentations and regular ongoing dialogue with the investment community, apart from when the Group is in a close period. The CEO, CFO and Head of Investor Relations regularly meet with institutional investors and analysts throughout the year and participate in a number of industry conferences. This year, executive management attended in-person conferences, roadshows and investor meetings as outlined on the next page. Further details in relation to the Group’s investor engagement during 2022 is provided in the stakeholder engagement section on page 28. Annual General Meeting The AGM gives shareholders an opportunity to receive a presentation on the Group’s activities and performance during the year, to ask questions of the Chairman and, through him, the Board committee chairs 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 the Board encourages all shareholders to attend the meeting each year and to put forward any questions they may have to the Directors at the conclusion of the formal business of the meeting. In line with the easing of COVID-19 restrictions, the Board was delighted to once again meet with shareholders in person at the 2022 AGM. Shareholders who were unable to attend the AGM in person were invited to remotely access the AGM via a virtual meeting platform which included a mechanism for lodging questions in advance of and during the meeting. The 2023 AGM will be held on 8 June 2023 at The Westbury Hotel, Balfe Street, Dublin 2. Private shareholders The Company Secretary, Chloe McCarthy, oversees communication with private shareholders, and ensures direct responses as appropriate in respect of any matters raised by shareholders. Website Glenveagh’s website is an important channel for interacting with all stakeholders, including shareholders, and it provides a library of all relevant shareholder communications, financial results and updates, and a history of our share price performance. All material information reported to the Regulatory News Service is published at www.glenveagh.ie/corporate/investor-centre. TIMELINE OF STAKEHOLDER ENGAGEMENT January 5 January 2022 March 8-14 March 2022 29 March 2022 May 26 May 2022 September 14-15 September 2022 21 September 2022 November 25 November 2022 Roadshow Conference AGM April 7 April 2022 28 April 2022 (Dublin) June 28 June 2022 Glenveagh Properties plc Annual Report and Accounts 2022 80 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: DIVISION OF RESPONSIBILITIES CONTINUED OTHER STAKEHOLDERS It is critical for the success of the Group that it engages with all of its key stakeholders, seeks their views and takes into consideration their interests as part of its decision-making process. Board engagement with other key stakeholders during 2022 is summarised in the table below. Further detail in relation to the wider Group’s engagement with key stakeholders is provided on pages 26 to 29. Stakeholder How the Board engages Activity during 2022 Employees > Monthly in-house and externally facilitated > Monthly reporting of health and safety audit results. health and safety audits of all Group sites. > Continued recognition of the importance of health and safety, maintaining it as one of the Group’s two non-financial > Board visits to sites, manufacturing facilities annual bonus metrics. and head office. > Employee engagement surveys. > Designated Non-executive Director with responsibility for workforce engagement. > Approved the Group’s EDI strategy and set clear targets across all levels of the business. > Approved the movement of head office to modernise and improve the work environment for staff. > Received and considered feedback from the 2022 Great Place to Work employee engagement survey. > Visits by Cara Ryan, in her capacity as Workforce Engagement Director, to meet with employee representatives on-site every six months. > Ongoing review of leading employee satisfaction indicators, including turnover rates, training and development levels, and benefits available to staff. Customers > Externally facilitated customer satisfaction surveys. > Monthly reporting of customer satisfaction survey results. > Customer Care department reporting and metrics. > Regular review of customer care data and issue tracking. > Continued recognition of the importance of customer satisfaction, maintaining it as one of the Group’s two non-financial annual bonus metrics. Communities > Consultation with communities throughout the site > Regular review of housing need in the communities in which the Group operates. planning process. > Supported the development and publication of the Group’s Compact Growth Strategy, demonstrating Glenveagh’s role > Support of local community initiatives and Group as a thought leader in this area. charity partners. > Supported management in responding to the humanitarian crisis in Ukraine through an initiative with Clúid Housing to provide emergency accommodation in Ireland for up to 40 displaced Ukrainian families. Government & regulators > Regular communication with industry bodies, planning > Direct engagement through the Executive Directors with housebuilding bodies and local and national planning authorities authorities and Government representatives. and government representatives. > Communication with regulators including the LSE, > Engagement with regulatory authorities through the Company Secretary. Euronext Dublin, the FCA and the Central Bank of Ireland. Suppliers & partners > Board visits to manufacturing facilities and > Monthly reporting from construction operations and procurement departments. development sites. > Approved the expansion of the Group’s manufacturing operations and increased supply-chain integration and partnerships > Surveys of contractors and supply-chain partners. across different building methodologies. Glenveagh Properties plc Annual Report and Accounts 2022 81 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: DIVISION OF RESPONSIBILITIES CONTINUED Given John’s prior executive role within the Company, the Senior Independent Director remains willing and available to assume any additional responsibilities, as required. There is also 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 particular consideration to the continued independence of Robert Dix and Pat McCann, noting that both currently act as non-executive directors at Quinn Property Group. The Board was aware of this relationship on appointing Pat to the Board in 2019, and remains satisfied that Robert and Pat continue to demonstrate objectivity and autonomy in both character and judgement, irrespective of their relationship outside the Company, and will continue to act objectively and in the best interests of the Company. 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 Company 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. 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. Cara Ryan is designated as the Non-executive Director with responsibility for employee engagement on behalf of the Board. In her position as the Workforce Engagement Director, Cara continued to work with the Company Secretary and the Head of Human Resources to develop meaningful two-way dialogue between employees across the Groups’ operations and the wider Board. During the year, Cara held two meetings with representatives from each department in the business and provided an opportunity for them to ask questions directly of the Board. Feedback from these meetings has continued to be very positive, with employees welcoming the opportunity to meet with a Non- executive member of the Board. Equally the Board recognises the importance of ongoing communication and ‘reporting back’ to the workforce, to demonstrate that it has listened to and acted upon feedback, and the Board remains committed to continuing to enhance its engagement activities and strengthen its relationship with the workforce. Board information Each month, the Directors receive financial and operational information to help them discharge their duties. In order to allow sufficient time to review, Board papers are circulated digitally at least one week before each Board meeting. Directors have access to independent professional advice at the Company’s expense, if they consider it appropriate. Independence As required by the Code, Provision 9 prescribes that the Chairman should be independent on appointment. The Board is of the collective belief that John Mulcahy’s role as a Non-independent Chairman during the period from IPO to 31 December 2022 enabled him to bring his extensive knowledge and experience of the Irish residential housing market to his leadership of the Board. As announced at the Company’s 2021 AGM, John transitioned to a Non- executive Chairman role on 1 January 2022. While John has stepped down from his executive duties, the Board unanimously considers that his commitment and contribution as Chairman is essential to the continued effective leadership of the Board and the Group. Glenveagh Properties plc Annual Report and Accounts 2022 82 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: COMPOSITION, SUCCESSION AND EVALUATION NOMINATION COM MIT TE E RE PORT Nomination Committee Report Chair, Nomination Committee John Mulcahy Committee members and attendance Name John Mulcahy Pat McCann Robert Dix Camilla Hughes Richard Cherry Position Chair Member Member Member Member Attendance Quick facts > John Mulcahy has chaired the Nomination Committee since April 2022. > A majority of committee members are Independent Non-executive Directors, in line with the Code. > The committee met three times during the year ended 31 December 2022. Link to terms of reference nomination-committee-terms-of-reference (glenveagh.ie) On behalf of the committee, I am pleased to present the Nomination Committee report for the financial year ended 31 December 2022. 2022 was a year of transition for the Board, its committees and for the senior executive team. As announced at the 2021 AGM, I transitioned to the role of Non-executive Chairman with effect from 1 January 2022 and, as part of the succession planning for the smooth transition of my executive functions, the composition of the Group’s executive committee was expanded with Tony McLoughlin (Managing Director – Planning, Design, Manufacturing and Operations), Wesley Rothwell (Chief Commercial Officer), Conor Murtagh (Chief Strategy Officer) and Barney O’Reilly (Head of Construction) joining the Executive Directors. Throughout 2022, the committee continued its engagement with management in relation to succession planning for these key Executives within the business. Following Richard Cherry’s decision not to seek re-election at the 2022 AGM, the committee reviewed all Board committee structures and Directors’ responsibilities, and the following changes were recommended to the Board and approved with effect from the conclusion of the AGM: > Pat McCann assumed the chair of the Remuneration Committee; > I succeeded Pat as the chair of this committee, though he remains a member of the committee; and > Pat also joined the Audit & Risk Committee. Arising from the review of Board and committee composition during the year, the committee conducted an RFP in Q4 2022 to select an executive search provider to advise us, as we begin the process of identifying and appointing a new Independent Non-executive Director. Further details in relation to the appointment process are provided on page 83 of this report. The Board is committed to achieving the targets set by Balance for Better Business for ISEQ 20 companies and by the FCA for UK-listed companies, though we acknowledge that the Board composition as at 31 December 2022 did not meet these targets. A detailed breakdown of Board diversity is provided on page 84 of this report. This committee will remain cognisant of these diversity and inclusion targets, as well as investor and stakeholder expectations in this regard, as we proceed through the nominations process in early 2023. Glenveagh Properties plc Annual Report and Accounts 2022 83 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: COMPOSITION, SUCCESSION AND EVALUATION CONTINUED NOMINATION COM MIT TE E RE PORT CONTINUED Committee’s key roles and responsibilities As a committee our responsibilities include: Committee activities in 2022 > Regularly reviewing the structure, size and composition (including skills, experience and knowledge) of the Board and other senior management positions and making recommendations to the Board with regard to any proposed changes; > Leading the process for appointments and ensuring that a formal, rigorous and transparent procedure is undertaken for effective and orderly succession to both Board and senior management positions; > Promoting the development of greater diversity at Board-level and reviewing the Board diversity policy on an annual basis; and > Reviewing the results of the annual Board performance evaluation process that relate to the composition of the Board and the time commitment required from Non-executive Directors. March 2022 May 2022 December 2022 > Discussed and considered the results of the 2021 Board evaluation in relation to Board and committee composition and Directors’ responsibilities and time commitments. > Reviewed Board and committee structure, size and composition. > Reviewed and discussed the Board skills matrix as a basis for preparing a draft candidate specification for a potential new Independent Non-executive Director. > Considered RFP responses received from three potential third-party executive search advisors. > Continued discussions in relation to Board succession and the potential initiation of an RFP to appoint a third-party executive search adviser. > Considered and approved an initial draft candidate specification for the proposed new Non-executive Director appointment. PROCESS FOR BOARD APPOINTMENTS The process for Board appointments involves the committee first appointing a search agent for the assignment, following which it reviews and approves an outline of the role specification for the new appointee. The committee meets the search agent to discuss the specification and the search, following which the agent prepares an initial longlist of candidates. The committee defines a shortlist and holds interviews and ultimately, the committee makes a recommendation to the Board for its consideration. Following Board approval, and in line with the requirements of the FCA and Euronext Dublin listing rules, the appointment is announced to the market. Following a detailed RFP process in Q4 2022, Odgers Berndtson (an executive search firm with no other connections to the Company or its Directors) was selected by the committee to advise on the appointment of a new Independent Non-executive Director in early 2023. Step 01 Step 02 Step 03 Step 04 Step 05 The committee appoints a search agent and reviews and approves an outline brief and role specification. The agent prepares an initial longlist of candidates. The committee then selects a shortlist and hold interviews. The committee makes a recommendation to the Board for its consideration. Following Board approval, the appointment is announced in line with the requirements of the FCA and Euronext Dublin listing rules. Glenveagh Properties plc Annual Report and Accounts 2022 84 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: COMPOSITION, SUCCESSION AND EVALUATION CONTINUED NOMINATION COM MIT TE E RE PORT CONTINUED Board composition The Board is currently comprised of seven Directors: the Non-executive Chairman, two Executive Directors and four Independent Non-executive Directors. As part of 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 its 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 Company 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. Appointments to the Board The 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 BOARD COMPOSITION candidates to the Board. There were no new appointments to the Board during 2022, but during the year the committee commenced the process of identifying a new Independent Non-executive Director following Richard Cherry’s decision to step down from the Board. The Nomination Committee reviews 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. Re-election All Directors submit themselves for re-election at the Company’s AGM. Board diversity The Board has adopted a Board diversity policy, intended to assist it, through the Nomination Committee, in achieving optimum Board and committee composition. The Board recognises the clear benefits of a diverse Board including diversity of experience, skills, background and gender and agrees that these differences should be considered in determining the optimum board composition. 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 Company’s policy to develop over time the diversity of its Board without compromising the calibre of new Directors. Through the ESR committee, the Board has approved targets for diversity and aims to reach 40% female representation and at least one Director from a minority ethnic group. Currently, female Directors account for 29% of the Board; there are no Directors who self-disclose as being from minority ethnic groups. Below Board level, female employees accounted for 14% of the senior management as at 31 December 2022, as defined by the Code, and 27% of senior management direct reports. Directors’ induction, training and development The Board 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. 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 Balance of Executive and Non-executive Directors Balance of male and female Directors Length of tenure of Directors 14% 29% 29% 57% 71% 43% 14% 43% Independent non-Executive Executive Chair Male Female 1 to <2 2 to <4 4 to <6 Glenveagh Properties plc Annual Report and Accounts 2022 85 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: COMPOSITION, SUCCESSION AND EVALUATION CONTINUED NOMINATION COM MIT TE E RE PORT CONTINUED 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 Board is committed to continued training and development 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 matters. Annual Board evaluation The Code specifies that the Board should undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual Directors, and that the Board should also have an externally facilitated evaluation at least once, every three years. 2020 was the first year of the Board’s three-year review cycle. An external evaluation was conducted by the Institute of Directors in Ireland, to provide the Board with greater insights into its performance and to identify opportunities to improve its effectiveness. In 2021, the Board undertook an internally facilitated review by way of a comprehensive questionnaire to assess its performance and effectiveness. Some areas highlighted by the 2021 evaluation for potential improvement, and the agreed action items for implementation during 2022, are summarised in the adjacent table. The 2022 evaluation, being the third year of our cycle, was comprised of a questionnaire-based internal evaluation. As part of the annual evaluation process, the Chairman also conducted one-on-one meetings with each individual Director, and the Senior Independent Director met with the Non-executive Directors to evaluate the performance of the Chairman during the year. Having carefully considered the results of the 2022 Board evaluation in their totality, the Directors are satisfied with the effectiveness of the Board and its committees, and with the performance of the Chairman and the individual Directors. John Mulcahy Chair, Nomination Committee BOARD EVALUATION Year 1 – 2020 Year 2 – 2021 Year 3– 2022 Evaluation by external facilitator. Internal review against detailed Year 1 evaluation. Questionnaire-based internal evaluation. Focus areas highlighted in the 2021 review Progress during 2022 Focus areas arising from 2022 review The Board will continue to enhance its engagement with key stakeholders in the business, building on the work of the newly established ESR Committee. During 2022, the Board engaged with key stakeholders across the Group. Details in relation to the Board’s engagement with stakeholders are provided on page 80. The Board will work to expand its meaningful engagement with all principal stakeholders and enhance its understanding of their interests and concerns. The Board will prioritise in-person engagement between the Directors, both formally and informally, as COVID-19 restrictions are lifted. The Board will review and assess the structure and composition of the Board committees during the year, while also encouraging cross-committee interaction where appropriate. In line with the easing of COVID-19 restrictions, the Board met in-person for all nine meetings held during 2022. In addition to formal Board meetings, the Board also convened for strategy and training sessions. The Nomination Committee reviewed all Board committee structures and Directors’ responsibilities following Richard Cherry’s decision not to seek re-election at the 2022 AGM and changes were recommended to the Board and approved with effect from the conclusion of the AGM. The Board will continue the development of Non-executive Directors through training on areas of operational focus for the business. Following Richard Cherry’s departure in 2022, the Nomination Committee will focus on identifying a suitable new Independent Non-executive Director for recommendation to the Board in early 2023. The Board will continue its work in relation to medium, and long-term succession planning for the Board and ExCo. As part of the succession planning for the smooth transition of John Mulcahy’s executive functions in 2022, the composition of the Group’s ExCo was expanded. Following the expansion of the ExCo in 2022, the Board will focus on succession planning for the Executive Directors. Glenveagh Properties plc Annual Report and Accounts 2022 86 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: AUDIT, RISK AND INTE RNAL CONTROL AUDIT AND RISK COM MIT TE E RE PORT Audit and Risk Committee Report Chair, Audit and Risk Committee Cara Ryan Committee members and attendance Name Cara Ryan Robert Dix Pat McCann Richard Cherry Position Chair Member Member Member Quick facts > Cara Ryan has chaired the Audit and Risk Committee since September 2020. > All committee members are Independent Non-executive Directors in line with the Code, and the Board considers them to have an appropriate level of experience. > The committee met five times during the year ended 31 December 2022. > Regular attendees at committee meetings include the Chair, the Executive Directors, the Group Financial Controller and representatives from KPMG LLP (the ‘External Auditor’) and Deloitte (the ‘Internal Auditor’). > The committee meets with the Internal and External Auditors without management being present, on an annual basis in order to discuss any issues which may have arisen during the financial year. Link to terms of reference audit-and-risk-committee-terms-of-reference (glenveagh.ie) On behalf of the committee, I am pleased to present the Audit and Risk Committee (‘ARC’) report for the financial year ended 31 December 2022. The composition of the committee is outlined in the table to the left; all committee members are Independent Non-executive Directors in line with the Code. Attendance The committee continues to focus its efforts on assisting the Board by proactively managing its core areas of responsibility: the integrity of the Group’s financial reporting, risk management and internal control and assurance processes. The principal duties and responsibilities of the committee together with an overview of its activities for the year have been outlined in detail on pages 88 and 89 and summarised in the table on page 87. Committee’s key roles and responsibilities The Board believes the ARC to be a central pillar for effective corporate governance by providing independent and impartial oversight of the Company’s relevant functions. As a committee, our responsibilities include: > Monitoring the integrity of the Group’s financial statements including reviewing significant financial reporting issues, judgements and other supplementary financial information contained in formal announcements and communications; > Providing advice on whether the Annual Report and financial statements, taken as a whole, is fair, balanced and understandable and provides the necessary information for shareholders to assess the Group’s position and performance, business model and strategy; > Reviewing internal financial controls and the Group’s internal control and risk management systems; > Reviewing the effectiveness of the audit process and the independence and objectivity of the external auditor; > Monitoring and reviewing the effectiveness of the Group’s Internal and External Auditors; > Developing and implementing policy on engaging the External Auditor to supply non-audit services, taking into account relevant guidance; > Approving the External Auditor’s remuneration and terms of engagement, and making recommendations about its re- appointment; > Receiving updates on the work undertaken to improve the Group IT and cyber security capabilities; and > Reporting to the Board on how the committee has discharged its responsibilities. Glenveagh Properties plc Annual Report and Accounts 2022 87 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: AUDIT, RISK AND INTE RNAL CONTROL CONTINUED AUDIT AND RISK COM MIT TE E RE PORT CONTINUED Committee activities in 2022 March 2022 May 2022 September 2022 October 2022 November 2022 > Reviewed the Annual Report to ensure it > Received and considered the internal > Reviewed and considered the internal > Received and considered a review of > Reviewed and considered the internal was fair, balanced and understandable and provided information enabling an assessment of Glenveagh’s position and performance, business model and strategy. audit update. audit update. the risk management process. audit update. > Reviewed the External Auditor’s year- end report, including independence considerations. > Received updates on the Company’s deep- dive on climate risk presentation and on climate risk and opportunities. > Reviewed structure, organisation and resources. > Received and considered the principal risks to the business which included external and operational risks. > Received and considered KPMG’s audit plan and strategy 2022. > Considered the net realisable value of inventories. > Reviewed the full-year financial report announcement, the Annual Report; and papers in relation to: > year-end accounting matters. > the preparation of the financial statements on the going-concern basis (see also Note 7 to the Group financial statements). > the making of a going concern and viability statement recommendation to the Board. > the making of the Director’s compliance statement recommendation to the Board. > the making of management representations. Each scheduled meeting considered Directors’ interests and reviewed risk register updates. > Considered next steps on 2022 sustainability workplan update. > Discussed in detail the 2022 interim financial results. > Received and considered the KPMG interim review findings report. > Considered and approved the 2022 interim financial statements and letter of representation. > Reviewed and considered the PLC obligations register. > Undertook the annual review of Company policies. > Undertook the annual review of the committee’s terms of reference. Glenveagh Properties plc Annual Report and Accounts 2022 88 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: AUDIT, RISK AND INTE RNAL CONTROL CONTINUED AUDIT AND RISK COM MIT TE E RE PORT CONTINUED Financial reporting and compliance The committee reviewed, prior to their publication, the Group’s Annual Report and financial statements and half-year and year- end results announcements issued during the year. 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. The committee also considered the view expressed by the External Auditor, KPMG, in making these assessments. The primary issue considered by the committee in relation to the financial statements for the financial year ended 31 December 2022 was the Group’s assessment of the carrying value of inventory at the reporting date, and profit recognised on completed units during the year. The committee assessed the Group’s ability to continue as a going concern and its viability statement prior to recommending both for approval by the Board. The committee considered the actual and potential implications on the Group’s financial performance and position against the macro-economic environment and because of environmental or sustainability risks. These considerations included but were not limited to the impact on selling prices and strategies, development costs and construction programmes and put a focus on the adequacy of liquidity when reaching its conclusion. During the financial year, the committee reviewed and recommended the Group’s 2021 Annual Report and the condensed financial statements for the half-year ended 30 June 2022 to the Board for approval. The committee’s review of the Annual Report and financial statements considered whether, taken as a whole, it was fair, balanced and understandable and provided the information necessary for shareholders to assess the Group’s position and performance, business model and strategy. Having considered this, the committee confirmed to the Board its approval of the Annual Report and financial statements. 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. Risk management and internal controls The committee acknowledges its role to oversee the Group’s risk management framework and internal-controls processes. This framework has been in place from the start of the financial year to the approval date of the 2022 Annual Report and financial statements and is set out on pages 57 to 66 of the strategic report. process. Throughout the year, the committee continued to engage with Group management to ensure that robust internal controls and risk management systems continue to apply. The committee undertook an annual review of the Group’s risk management and internal controls framework in October. The review focused on the strategic risks and internal controls to address these risks. This included: > Assessment of the principal and emerging strategic risks faced by the Group; > The key internal controls in place and their effectiveness to mitigate and manage these risks; and > Determining scoring thresholds and risk ratings. The risk register and the principal risks and uncertainties faced by the Group are outlined on pages 59 to 66 of this report. We have also discussed with Group management the additional work completed in respect of the viability and going concern statements to seek to assess the impact, in the short-to medium-term, of environmental and sustainability risks on the prospects of the Group. The Group’s internal controls manage risk and provide reasonable assurance against events or conditions that may result in material misstatement or loss to the Group. Internal control processes are regularly reviewed by the committee including an annual review by the Board of Directors through the Directors’ Compliance Statement The committee’s key priorities for the year ahead will include a continued focus on assisting the Group with cyber security, emerging environmental and sustainability considerations and ensuring recommendations from Group internal audit reviews are implemented on time, and giving effect to the actions from the reviews of the Group internal audit function. Significant issue considered Committee activity Carrying value of inventory The carrying value of the Group’s inventory was €685.8 million at 31 December 2022 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. 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. At 30 June and 31 December 2022, 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 estimation 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. As part of the assessment, the Group has re-evaluated its most likely exit strategies on all developments in the context of the current market environment and reflected these in revenue assumptions within the forecast models. The results of the exercises determined that no net adjustment to the carrying value was required at 30 June 2022 and 31 December 2022. The committee robustly challenged management on the additional work completed in respect of the carrying value of inventory both at 30 June 2022 and 31 December 2022, to seek to assess the impact of the macro-economic environment and sustainability and environmental issues on the profitability of the Group’s development sites and to understand the different scenario analysis completed. The committee considered the six-month interim approach and financial year-end approach to the net realisable carrying value of the inventory balance. It also considered the External Auditor’s conclusion regarding management’s assessment that no net impairment charge or reversal was required at 30 June 2022 and 31 December 2022. 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 2022. Glenveagh Properties plc Annual Report and Accounts 2022 89 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: AUDIT, RISK AND INTE RNAL CONTROL CONTINUED AUDIT AND RISK COM MIT TE E RE PORT CONTINUED objectivity is monitored and reviewed sufficiently. The committee considered senior management’s satisfaction with KPMG. the services by the External Auditor considering any relevant ethical guidance on the matter. Assurance oversight 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 which is informed by the strategic risk areas for the business and considers any identified ineffective controls and findings. The committee places a particular focus on control weaknesses identified by internal audit and the remediation plans put in place by management. A bi-annual update is provided to the committee by internal audit on the remediation plan progress made by management. Auditor independence and non-audit services KPMG has formally confirmed its independence to the committee. To further ensure independence, the committee has a policy on the provision of non-audit services by the External Auditor that seeks to ensure 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 in respect of services provided by KPMG in the financial year are analysed in the table below: The committee met representatives from the Internal Auditor on four occasions during the financial year and considered the findings from their reviews of planning, procurement, internal financial controls, project management, cyber security and human resources. During the year, the committee considered the frequency of internal audit reviews in the context of the current and future scale of the business. To ensure the scope, extent and effectiveness of the internal audit function is appropriate the committee approved six internal audit reviews in the 2023 financial year. Audit fees Non-audit fees Interim review fees Tax services fees Other non-audit services Total €’000 255 20 73 20 368 External auditor Audit effectiveness KPMG were appointed as the Group’s External Auditors in 2017. During 2021, the committee reviewed KPMG’s reports on its 2021 audit and interim review for the six months ended 30 June 2022. It also reviewed and approved KPMG’s audit plan in respect of the audit for the year ended 31 December 2022. The effectiveness of the external audit process is assessed by the committee, which meets regularly throughout the financial year with the audit partner, with and without management. In conducting this review, the 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. The 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 four committee meetings in 2022. In assessing the independence and objectivity of the External Auditor, the committee considered the internal processes which the External Auditor has in place to ensure their independence and At the end of the financial year, non-audit fees paid to KPMG represented 44% of total audit fees. It is the Group’s practice to engage KPMG on assignments in addition to its statutory audit duties where its expertise and experience with the Group is 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 requiring fees for non-audit services to be capped at 70% of the average statutory audit fee over the previous three 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 Whistleblowing, fraud and anti-bribery The Group has whistleblowing, fraud and anti-bribery policies and reporting procedures in place that have been reviewed and approved by the Board. The policies are detailed in the employee handbook and published on the Group’s intranet. All employees are required to acknowledge and confirm that they have read and understand these policies. Any reported cases of whistleblowing, fraud and bribery or alleged breach of these policies are appropriately investigated, with the results reported to the committee. I am pleased to conclude that the ARC has met its obligations for 2022 and is looking forward to further adapting the Group’s risk management framework to respond to the opportunities and challenges that 2023 will bring as the Group continues to deliver on its strategic objectives. Cara Ryan Chair, Audit and Risk Committee Glenveagh Properties plc Annual Report and Accounts 2022 90 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: REMUNE R ATION REMUNE R ATION COM MIT TE E RE PORT Remuneration Committee Report Chair, Remuneration Committee Pat McCann Committee members and attendance Name Pat McCann Cara Ryan Camilla Hughes Richard Cherry Position Chair Member Member Member Quick facts > Pat McCann has chaired the Remuneration Committee since April 2022. > All committee members are Independent Non-executive Directors, in line with the Code. > The committee met six times during the year ended 31 December 2022. Link to terms of reference remuneration-committee-terms-of-reference (glenveagh.ie) On behalf of the committee, I am pleased to present our Remuneration Committee report for the financial year ended 31 December 2022, which contains: Attendance > The current Directors’ remuneration policy, which was approved at the AGM on 28 April 2022; and > The annual remuneration report, describing how the policy has been put into practice in 2022 and how it will be implemented in 2023. Committee’s key roles and responsibilities The principal responsibilities and duties of the Remuneration Committee include: > Setting the remuneration policy for the 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. Performance during 2022 As explained throughout this Annual Report, Glenveagh performed strongly in 2022 across all segments of the business, with our highest suburban unit deliveries to date and significant progress achieved in the monetisation of our urban land portfolio. This performance did not happen by accident as it relies on good leadership and strong operational teams to deliver a highly consistent quality product. The Remuneration Committee pays close attention to the retention and rewards for the entire workforce. While the committee’s remit is to focus on senior management, we feel it is important to look at the rewards for the wider workforce in making our decisions on senior management total remuneration. We recognise that there needs to be alignment across the entire workforce and we set out to be fair and reasonable in all our deliberations. I am delighted to report that there is a wide range Glenveagh Properties plc Annual Report and Accounts 2022 91 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: REMUNE R ATION CONTINUED REMUNE R ATION COM MIT TE E RE PORT CONTINUED Committee activities in 2022 January 2022 March 2022 April 2022 September 2022 October 2022 December 2022 > Concluded shareholder consultation on the proposed new remuneration policy for 2022. > Authorised the issue and allotment of shares to satisfy the exercise of vested LTIP option awards. > Approved and adopted the amended LTIP Rules, following shareholder approval at the AGM. > Initiated a formal RFP process for the committee’s external remuneration adviser. > Considered the external remuneration adviser RFP presentations. > Finalised 2021 bonus pay-out level. > Authorised the application to > Approved the 2022 LTIP award > Approved 2022 Bonus Metrics. > Approved targets for the 2022 LTIP award. > Reviewed remuneration for the new ExCo members and the Company Secretary. Euronext Dublin and the London Stock Exchange for a block listing of shares to satisfy LTIP options at exercise. > Approved the establishment of a restricted share trust for the purpose of holding shares that are subject to restrictions on disposal. grants. > Received an update on the work of employee share plan providers in Ireland to try and find an alternative savings carrier for the Revenue- approved SAYE Scheme following Ulster Bank’s decision to leave the Irish market. > Approved the appointment of Ellason as external remuneration adviser to the committee. > Authorised the issue and allotment of shares to satisfy the exercise of SAYE options. > Authorised the application to Euronext Dublin and the London Stock Exchange for a block listing of shares to satisfy SAYE options at exercise. > Considered the projected vesting outcome of the 2020 LTIP based on the performance period ending 31 December 2022. Received advice from Ellason in relation to the potential adjustment of the 2020 LTIP vesting outcome. > Reviewed current progress of 2022 bonus metrics versus target. > Annual review of committee terms of reference. of benefits available to all the workforce. Glenveagh pays competitive basic salaries with bonus structures for performance, in addition to providing pension schemes, private health insurance, employee assistance programs, access to the Laya wellbeing studio and a host of other benefits including further education to help our people grow. The committee has been unable to roll out a Save As You Earn (‘SAYE’) share scheme to employees for a number of years due to the absence of a savings carrier in the Irish market, however we are committed to reviving the SAYE as soon as a new savings carrier is in place. The SAYE scheme has proven to be extremely popular in previous years and the committee looks forward to rolling it out to employees again in the future. The committee’s deliberations in 2022 focused on the retention of the truly fantastic team in place within Glenveagh. The market for talent is very competitive and the committee is very aware of what is happening in the sector. Glenveagh is not just competing for talent with Irish companies, as many international companies are also recruiting in Ireland. The committee is firmly of the belief that the Group has a great team of people in place to deliver the future growth strategies for Glenveagh, and that it is therefore essential that the Group continues to grow and nurture all its people. Remuneration outcomes for 2022 2022 annual bonus outcome Given the level of business performance during the year, the Executive Directors were successful in achieving the maximum annual bonus for 2022. The committee was very pleased with management’s execution and delivery during the year to ensure that Glenveagh finished 2022 with a strong set of results. Conclusion of the founder share scheme The final testing period for the legacy founder share scheme, in which the Chairman and the CEO participated, ended in June 2022. The final performance condition related to the Company’s share price was not satisfied and therefore no founder shares were converted to ordinary shares during 2022. Further details in relation to the winding up of the expired founder share scheme can be found on page 103. Bonuses for 2022 were payable to the Executive Directors at 100% of maximum as a result, which the committee believes was wholly appropriate in light of the performance throughout the year. Full details of the specific bonus targets, the outcomes achieved and the resulting level of bonus payments are provided on page 99 of this report. In line with the new remuneration policy, the 2022 annual bonus payments to the Executive Directors were subject to one-third deferral into shares, which must be held for a minimum of two years. 2019 LTIP outcome The performance period for the 2019 long-term incentive plan (‘LTIP’), in which Michael Rice, the CFO, was a participant, ended in April 2022. Following assessment of performance against the 2019 LTIP targets, the vesting outcome for the awards was 100% of maximum for all participants, including the CFO. 2020 LTIP outcome The performance period for the 2020 LTIP, in which the CFO was a participant, ended on 31 December 2022. The 2020 LTIP award was granted in February 2020 and had a three-year vesting period. The award was subject to two equally weighted performance conditions: 50% absolute total shareholder return (‘TSR’) and 50% earnings per share (‘EPS’). As allowed under the Code, the committee reviewed the vesting outcome in early 2023, to ensure that it was fair and appropriate in the context of the overall performance of the business and the experience of our stakeholders. The committee did not consider the formulaic vesting out-turn to be a fair reflection of the strong performance of the business and management team over the performance period. For this reason, the committee exercised discretion in respect of one of the performance metrics for senior management LTIP participants. Glenveagh Properties plc Annual Report and Accounts 2022 92 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: REMUNE R ATION CONTINUED REMUNE R ATION COM MIT TE E RE PORT CONTINUED The committee engaged with major shareholders in early 2023 in relation to this decision, and sought shareholder support to exercise the same level of discretion in respect of the CFO, as the committee felt strongly that it was important to treat all participants consistently. The CEO was not a participant in the 2020 LTIP. We are committed to open and transparent engagement with shareholders in relation to remuneration, and we were greatly encouraged by the level of responsiveness and support received from our major shareholders for our proposed exercise of discretion in respect of the 2020 LTIP. As a committee, we are aware that the use of discretion in relation to the CFO’s 2020 LTIP award will be scrutinised carefully by investors and other interested parties. We strongly believe that the use of discretion was fair and appropriate to ensure that the vesting outcome for the CFO was aligned with the performance of the company and the experience of stakeholders, and is necessary for his continued retention and incentivisation. Full details in relation to the performance outcome, formulaic level of vesting, and the subsequent level of discretion exercised by the committee are set out on page 101. Remuneration in 2023 Base salaries The base salary of the CEO increased to €600,000 in 2022 under the new remuneration policy, and, for the CFO to €400,000. In light of the recent step-up in base salary for the Executive Directors, which was disclosed in last year’s report and approved by shareholders at the end of April 2022, the salary levels for the Executive Directors remain unchanged for 2023. Annual bonus The CEO and CFO will continue to participate in the annual bonus scheme. For 2023 the financial measures remain unchanged from 2022, consisting of profit before tax (‘PBT’) (50%) and operating margin (20%). Non-financial performance will continue to be assessed based on health and safety (15%) and customer satisfaction (15%) measures and assessed in a similar way as in previous years by input from externally managed surveys and audits. remain unchanged from 2022, at 150% and 125% of base salary for the CEO and the CFO respectively, in line with the new policy. Two-thirds of the annual bonus will continue to be paid in cash, the remainder will be deferred into shares for a minimum of two years. LTIP The CEO and CFO will continue to participate in the LTIP, with awards levels for 2023 unchanged from 2022 at 200% and 175% of salary for the CEO and CFO respectively. Further detail in relation to target-setting for the 2023 LTIP awards is set out on page 100. Pension contributions Over the last number of years, the committee has worked towards achieving pension alignment between the Executive Directors and the average workforce. In line with our new remuneration policy, pension contributions for the Executive Directors reduced from 15% to 5% of salary with effect from 1 January 2023. As a result, pension contributions for the Executive Directors are now aligned to the wider workforce. Wider workforce The Board remains cognisant of the importance of retaining key staff across all levels of the wider organisation as we progress our ambitious growth plans for the business. The Board recognises the importance of rewarding our workforce fairly and competitively to ensure the incentivisation of the people we need to attract and to retain across our business segments. In 2022 the committee considered matters relating to workforce remuneration, particularly the cost of living pressures experienced in Ireland. As a result, average workforce salaries were increased by 3% with effect from 1 January 2023. Further detail in relation to the committee’s wider employee remuneration considerations are provided on page 96. During 2022, the Board, through the ESR Committee, received and considered the Group’s first reporting under the Gender Pay Gap Information Act 2021. In conjunction with the work of the ESR Committee, this committee will maintain an ongoing focus on the Group’s gender pay gap in 2023. As recommended by the Code, Glenveagh’s remuneration policy and its implementation are designed to support the strategy of the business and promote long-term sustainable success. This Remuneration Committee report explains the policy in a transparent and straightforward manner, with sufficient detail provided to give shareholders a clear understanding of how the policy operates and the potential reward opportunities available to the Executive Directors. There is a clear link between the performance of the Group and the rewards available to individual Directors. The policy has a relatively conventional structure and unnecessary complexity has been avoided. There is consistency with Glenveagh’s broader culture of rewarding excellent performance across the organisation, and strong alignment with the interests of shareholders and wider stakeholders. External advisers During 2022, the committee undertook a formal tender process for the appointment of its remuneration adviser. Following the conclusion of this process, the committee selected Ellason as its independent remuneration consultants and they succeeded Korn Ferry with effect from October 2022. Ellason are members of the Remuneration Consultants Group and signatories to its code of conduct, and all advice is provided in accordance with this code. The committee has satisfied itself that the advice provided by Ellason is robust and independent. Annual General Meeting As noted above, the committee consulted with major shareholders at the outset of 2023 on its proposal to exercise discretion in relation the CFO’s 2020 LTIP. We remain grateful for the time taken by shareholders to consider our proposal and to provide their feedback, which was supportive of our intentions as a committee. Shareholder approval will be sought at the AGM for the usual advisory vote on this Remuneration Committee report. I hope you will support this resolution and, ahead of the AGM, I welcome any comments or feedback you may have on the committee’s activities in 2022, our plans for 2023, or any other relevant matters. All the measures selected are critical indicators of Glenveagh’s ability to meet its strategic objectives over the short-term. The specific targets have been set in the context of the business environment for the year and will be disclosed in the 2023 remuneration report. For 2023 the annual bonus opportunity will UK Corporate Governance Code Glenveagh continues to support the principles and provisions of the Code, though the committee and the Board acknowledge Glenveagh’s departure from provision 41 of the Code concerning engagement with the workforce in relation to executive remuneration. Pat McCann Chair Remuneration Committee Glenveagh Properties plc Annual Report and Accounts 2022 93 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: REMUNE R ATION CONTINUED REMUNE R ATION COM MIT TE E RE PORT CONTINUED DIRECTORS’ REMUNERATION POLICY The following table outlines the key elements of Glenveagh’s remuneration policy, as approved by shareholders at the 2022 AGM. Fixed remuneration Base salary Element/purpose To attract and retain high calibre individuals. Benefits To be competitive with the market. Retirement benefits Operation Maximum opportunity Base salaries are normally 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. There are no prescribed maximum salaries or maximum increases. Increases 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. 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. No maximum levels are prescribed as benefits relate to each individual’s circumstances. 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. Maximum contribution rate is set in line with the rate attributable to a majority of the wider workforce (currently 5%). Glenveagh Properties plc Annual Report and Accounts 2022 94 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: REMUNE R ATION CONTINUED REMUNE R ATION COM MIT TE E RE PORT CONTINUED Variable remuneration Annual bonus Element/purpose Operation Maximum opportunity To reward the achievement of annual performance targets. Individuals receive annual bonus awards based on the achievement of financial and/or non-financial targets. The maximum award for Executive Directors as a percentage of base salary is 150%. Long-term Incentive Plan (LTIP) To incentivise long-term sustainable performance by granting shares which vest subject to the achievement of targets which are linked to Glenveagh’s business strategy and central to its long-term success. The LTIP also contributes to Glenveagh’s long- term interests by ensuring alignment between participants and the interests of shareholders. 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 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 for the year ahead, based on the budget and strategic plan process carried out in Q3/Q4 of the preceding year. Appropriate details of the specific targets will be included on a retrospective basis in the Remuneration Committee report each year. The committee retains discretion to adjust any award to reflect the underlying financial position of the Group. For 2023, the committee intends to apply the following maximum opportunities as a percentage of base salary: CEO CFO 150% 125% The amount payable for target performance is limited to 50% of the relevant maximum award opportunity. Two-thirds of the annual bonus will be paid in cash, while one-third will be delivered in shares deferred for at least two years. No further performance targets apply to the deferred shares but malus and clawback will apply to the shares during the deferral period. Senior executives are eligible to participate in the LTIP. The LTIP rules permit awards to be granted up to 200% of base salary. The LTIP involves the grant of nil-cost options over ordinary shares to participants based on a percentage of their gross base salary. The committee intends to make grants at the following levels in 2023 (as a percentage of base salary): LTIP awards vest subject to the satisfaction of performance conditions over a three-year period. The committee selects the performance conditions ahead of each grant, taking into account Glenveagh’s strategic priorities and business circumstances. A majority of the metrics chosen will be financial metrics. CEO CFO Full details of the chosen metrics and specific targets for recent awards and for awards to be granted in 2023 are set out on page 100. 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. LTIP awards 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. 200% 175% Glenveagh Properties plc Annual Report and Accounts 2022 95 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: REMUNE R ATION CONTINUED REMUNE R ATION COM MIT TE E RE PORT CONTINUED Relative proportion of fixed and variable remuneration As indicated in the table above, the remuneration of the Executive Directors includes both fixed and variable remuneration. The charts below indicate the relative proportion of the fixed and variable remuneration for each Executive Director. CEO Max variable pay Target variable pay No variable pay 0 10 20 30 40 50 Salary Pension Bonus 60 LTIP 70 80 90 100 CFO Max variable pay Target variable pay No variable pay 0 10 20 30 40 50 Salary Pension Bonus 60 LTIP 70 80 90 100 NOTES: (1) Max variable pay assumes a full annual bonus pay-out and the vesting of LTIP awards at the maximum level. No account has been taken of share price appreciation since the date of grant. (2) Target variable pay assumes a bonus pay-out at a target level of 50% of the maximum and LTIP vesting at a target level of 50% of the maximum. (3) No variable pay assumes no annual bonus pay-out and no LTIP vesting. (4) The value of benefits will fluctuate and therefore for simplicity have not been included in the charts. 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 of the business at the time the targets are set. 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 are designed to be relevant to achieving Glenveagh’s vision that everyone should have the opportunity to access great-value, high-quality homes in flourishing communities across Ireland. The performance conditions which apply to the annual bonus scheme to operate in 2023 are based on a mix of financial and non-financial criteria as set out below: > Profit before tax: This is considered to be the best profit measure to use for the bonus scheme as it takes into account depreciation, amortisation and interest on debt, and overall financing; > Operating margin: This ensures that management is focused 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; on operating profit in the context of revenue growth; > If the participant has engaged in any wilful misconduct, > Health and safety: Glenveagh’s health and safety audit score is an indicator of the ability of the business to provide a safe working environment for our people. Among other things, this ensures we operate as a responsible employer and can attract and retain the best people in the industry. Safety audits are completed on a monthly basis by an external consultant and by internal safety specialists; and > Customer satisfaction: Customers are central to the success of the business. An independent external firm is used to survey customers on topics linked to their experience with Glenveagh. Annual bonuses are based on the survey results. Ultimately, Glenveagh’s long-term success will depend upon its ability to meet and exceed customer expectations. recklessness, fraud and/or criminal activity which reflects negatively on Glenveagh or otherwise impairs or impedes its operations and/or which has caused serious injury to the financial condition and/or business reputation of Glenveagh; > If a participant behaves in a manner which fails to reflect Glenveagh’s governance and business values and/or which has the effect of causing, or is likely to result in, serious reputational damage to Glenveagh; > If there is an incidence of corporate failure (including but not limited to Glenveagh being placed into administration); and > If the participant commits an act which constitutes a material breach of his/her contract, restrictive covenants and/or any confidentiality obligations. The performance conditions for the LTIP awards to be granted in 2023 will be announced at the time of granting awards. Further details in relation to the LTIP awards to be granted in 2023 are provided on page 100. The committee is responsible for assessing the extent of the achievement of the performance conditions for both the bonus scheme and the LTIP. In the case of the financial metrics this involves reviewing Glenveagh’s financial performance as determined by its audited results and comparing the specific targets against the performance achieved. Health and safety is measured by considering the result of internal and external site safety audits. Customer satisfaction is determined through the results of the surveys conducted on Glenveagh’s behalf by an independent external firm. Shareholding guidelines The CEO is required to build a shareholding equivalent in value to 300% of his base salary, while all other Executive Directors must build a shareholding equivalent in value to 200% of base 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). In line with the new remuneration policy, there is a requirement for shares to be held by Executive Directors for a period of time following termination of employment. For a minimum period of two years after the cessation of their employment, the Executive Directors are required to hold shares at a level of the lower of (i) the in-employment shareholding requirement in place at the time and (ii) their actual shareholding at the time of departure. These requirements apply to any shares which vest from incentive awards granted from 2022 onwards. Shares which have been purchased by an Executive Director from their own resources will not be covered by this arrangement. Glenveagh Properties plc Annual Report and Accounts 2022 96 Strategic Report Governance Financial Statements Contents The committee reserves the right to appoint a new Executive Director on a service agreement with a twelve-month notice period, in line with standard market practice. of pay arrangements across the Group and has sought to ensure consistency where appropriate. CODE PRINCIPLE: REMUNE R ATION CONTINUED REMUNE R ATION COM MIT TE E RE PORT CONTINUED 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. > Base 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. This is currently 5% of base salary. > 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 150% of base salary. > LTIP: A new Executive Director will normally be eligible Service agreements The current Executive Directors have service agreements with Glenveagh of no fixed term. The agreements are terminable on nine 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. 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. 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 a maximum of 200% of base salary. 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. > 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. Wider executive/employee remuneration considerations In addition to setting the pay for the Executive Directors, the committee has responsibility for setting the pay of members of senior management immediately below Board level (including the Company Secretary). The committee 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. In designing the Directors’ remuneration policy the committee has been cognisant For example, senior managers participate in a bonus scheme which has a similar structure to that of 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. 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. Full details in relation to the Board’s engagement with, and consideration of, its employees is set out on page 80 of the Corporate Governance Report. 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. The committee has engaged extensively with major shareholders on remuneration matters in recent years, most recently in late 2021 and early 2022 to discuss the new remuneration policy and its implementation for 2022, and, as detailed earlier in this report, in early 2023 in relation to its proposed exercise of discretion in respect of the 2020 LTIP. 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 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. Glenveagh Properties plc Annual Report and Accounts 2022 97 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: REMUNE R ATION CONTINUED REMUNE R ATION COM MIT TE E RE PORT CONTINUED 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. NEDs are not eligible to participate in any Group pension plan. The Non-executive Directors do not have service contracts and do not participate in any bonus or share option schemes. NEDs may receive benefits if considered appropriate. All remuneration received by the NEDs is fixed remuneration. 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 their 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 Board on advice from the independent professional advisers. The NEDs are paid a fee of €65,000 per annum with additional fees payable to the Senior Independent Non-executive Director of €30,000 per annum and to the Workforce Engagement Director of €15,000 per annum. NEDs receive an additional €15,000 for chairing the Audit and Risk, Remuneration, Nomination and ESR Committees. The Non-executive Chairman receives a fee of €200,000. Accordingly, the NED letters of appointment detail the following annual fees: Role John Mulcahy Company Chairman, and Chair of the Nomination Committee Robert Dix Cara Ryan Senior Independent Non-executive Director Workforce Engagement Director and Chair of the Audit and Risk Committee € 200,000 95,000 95,000 Pat McCann Chair of the Remuneration Committee 80,000 Camilla Hughes Chair of the ESR Committee 80,000 Glenveagh Properties plc Annual Report and Accounts 2022 98 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: REMUNE R ATION CONTINUED REMUNE R ATION COM MIT TE E RE PORT CONTINUED ANNUAL REMUNERATION REPORT FOR 2022 The following table illustrates remuneration awarded to Directors for the financial year ended 31 December 2022: Name Salary/fees (€)(1) Benefits (€)(2) Employer pension contribution (€)(3) Total fixed (€) Annual bonuses (€) LTIP Total variable (€) Total (€) 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022(7) 2021 2022 2021 2022 2021 Executive Directors Stephen Garvey 600,000 450,000 24,801 Michael Rice 400,000 315,000 16,121 25,213 16,270 90,000 60,000 67,500 47,250 714,801 542,713 900,000 445,500 – 476,121 378,520 500,00 311,850 545,643 Non-executive Directors John Mulcahy(4) 200,000 300,000 Robert Dix 95,000 90,000 Richard Cherry(6) Pat McCann Cara Ryan Camilla Hughes(5) 26,667 75,000 80,000 95,000 80,000 75,000 78,750 37,500 – – – – – – 18,500 – – – – – – – – – – 200,000 318,500 95,000 90,000 26,667 80,000 95,000 80,000 75,000 75,000 78,750 37,500 – – – – – – 222,750 – – – – – – – – – – – – – – Total 1,576,667 1,421,250 40,922 59,983 150,000 114,750 1,767,589 1,595,983 1,400,000 980,100 545,643 (1) Amounts reflect salaries in respect of Executive Directors and Directors’ fees in respect of Chairman and other Non-executive Directors. (2) Benefits largely relate to car allowances and healthcare provided to Executive Directors in accordance with their employment contracts. (3) Only Executive Directors are eligible to receive pension contributions. Non-executive Directors do not receive pension contributions. (4) John Mulcahy was an Executive director in 2021. (5) Camilla Hughes was appointed to the Board on 1 July 2021. (6) Richard Cherry resigned from the Board in 2022. (7) Amount reflects the combined total of 2019 and 2020 LTIP awards. The performance periods for the 2019 and 2020 LTIP awards ended on 16 April 2022 and 31 December 2022, respectively. – – – – – – – – 900,000 445,500 1,614,801 988,213 1,045,643 311,850 1,521,764 690,370 – – – – – 222,750 200,000 541,250 – – – – – 95,000 90,000 26,667 75,000 80,000 95,000 80,000 75,000 78,750 37,500 1,945,643 980,100 3,713,232 2,576,083 Glenveagh Properties plc Annual Report and Accounts 2022 99 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: REMUNE R ATION CONTINUED REMUNE R ATION COM MIT TE E RE PORT CONTINUED Total remuneration received for 2022 All elements of the remuneration received by the Directors for 2022 were consistent with the Directors’ remuneration policy as approved by shareholders at the AGM in 2022. The salaries received by the Executive Directors and the fees received by the Non-executive Directors were as disclosed in the 2021 Remuneration Committee report. The bonus payments received by the Executive Directors in respect of 2022 reflected the achievement of the performance targets, as explained further below. The Remuneration Committee report for 2021 and the Directors’ remuneration policy were the subject of advisory shareholder votes at the AGM in 2022. The resolutions were passed with the support of 89% and 95% of those voting, respectively. The committee took this overwhelming level of shareholder support into account when reflecting on the appropriate approach to executive remuneration to take in respect of 2022. The committee concluded that the vote results indicated shareholder satisfaction with the current approach and that no changes were required to be made in response. Annual bonus 2022 bonus outcome The Executive Directors participated in an annual bonus scheme for 2022 with performance measured against a mix of financial (70%) and non-financial (30%) performance conditions. The specific targets that were set for the bonus scheme in 2022 are set out in the table below: During the financial year ended 31 December 2022: > There were no deviations from the procedure for implementing the remuneration policy; > There were no derogations from the remuneration policy; and > No use was made of the possibility to reclaim variable remuneration using the malus and clawback mechanisms described in the remuneration policy. Base salary and fees The actual salaries paid to the Executive Directors for the financial year ended 31 December 2022 are set out in the table on page 98. The base salaries for the CEO and CFO will remain unchanged for the 2023 financial year. Metric Profit before tax Operating margin Health and safety Customer satisfaction Weight 50% 20% 15% 15% % Payable Threshold 25% Target 50% Max 100% Threshold 25% Target 50% Max 100% Threshold 25% Target 50% Max 100% Threshold 25% Target 50% Max 100% Target Performance achieved €46,260,000 51,400,000 €62,828,000 9.00% 9.60% 10.50% 70% audit score 75% audit score 85%+ audit score 75% survey score 80% survey score 90%+ survey score €63.0m 10.9% 88% 91% The Remuneration Committee reviewed the outcome of the formulaic bonus calculations and was satisfied that they were a fair reflection of the overall performance of the business. As a result, the Executive Directors received €1,400,000, being 150% of base salary for the CEO and 125% of base salary for the CFO. Glenveagh Properties plc Annual Report and Accounts 2022 100 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: REMUNE R ATION CONTINUED REMUNE R ATION COM MIT TE E RE PORT CONTINUED 2023 bonus arrangements For 2023, the annual bonus scheme will continue to operate in the same manner as in 2022, with a 70%/30% split between financial and non-financial metrics. The performance metrics and associated weightings will remain as follows: Long-term incentive plan (LTIP) Awards granted in 2022 The table below provides details of the LTIP awards made during the year to the Executive Directors. Director Award date % of salary award Grant date share price Face value of award Number of shares Performance period Date of vesting Weighting Stephen Garvey 29 Apr 2022 200% €1.16 €1,200,000 1,034,483 Michael Rice 29 Apr 2022 175% €1.16 €700,000 603,448 Financial metrics Profit before tax Operating margin Non-Financial metrics Health and safety Customer satisfaction 50% 20% Weighting 15% 15% 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 2023 will be 150% of base salary for the CEO and 125% for the CFO. The amount payable for target performance will continue to be 50% of the maximum opportunity. The performance conditions for this award are set out below: EPS performance (applies to 50% of the award) – adjusted EPS to be achieved in FY2024 20.0c 12.0c Less than 12.0c Level of vesting 100% 25% Nil Awards vest on a straight-line basis for performance between 12.0c and 20.0c In line with the Directors’ remuneration policy, two-thirds of the annual bonus will be paid in cash while one-third will be delivered in shares deferred for at least two years. Return on equity performance (applies to 50% of the award) – ROE to be achieved in FY2024 16.2% 11% Less than 11% Level of vesting 100% 25% Nil Awards vest on a straight-line basis for performance between 11% and 16.2% In addition, the vesting of the 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. 1 Jan 2022 to 31 Dec 2024 1 Jan 2022 to 31 Dec 2024 28 Apr 2025 28 Apr 2025 Awards to be granted in 2023 The CEO and CFO will continue to participate in the LTIP, with awards levels for 2023 unchanged from 2022 at 200% and 175% of salary for the CEO and CFO respectively. At the time of finalising this report, the committee had not made a final decision on the metrics and targets to apply to the 2023 LTIP award. Details in relation to the metrics and targets will be included in the necessary regulatory announcement of the award at the time it is granted. The committee confirms that the chosen metrics and targets will be challenging in the context of relevant internal and external forecasts. In addition, the vesting of the awards will be 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. The committee will have the flexibility to make adjustments to the targets and/or the determination of performance against the targets and vesting outcome to reflect the impact of material events during the performance period. Any such adjustment will be explained in the relevant Directors’ remuneration report. Glenveagh Properties plc Annual Report and Accounts 2022 101 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: REMUNE R ATION CONTINUED REMUNE R ATION COM MIT TE E RE PORT CONTINUED LTIP awards held by Directors Details of all LTIP awards held by Directors are set out in the table below: Director Stephen Garvey Michael Rice Award date* 29 Apr 2022 17 Apr 2019 28 Feb 2020 1 Apr 2021 29 Apr 2022 Share price used Share awards held at 1 Jan 2022 Awarded during the year Vested during the year Lapsed during the year €1.16 €0.84 €0.75 €0.91 €1.16 – 1,034,483 200,893 420,000 399,493 – – – – 603,448 – 200,893 – – – – – – – – Share awards held at 31 Dec 2022 Vesting date 1,034,483 28 Apr 2025 – 16 Apr 2022 420,000 399,493 603,448 27 Feb 2023 31 Mar 2024 28 Apr 2025 * The awards are granted as options with an exercise price of nil. The vesting of the award granted in April 2019 was subject to the TSR performance condition set out in the table below: LTIP award April 2019 Performance condition Performance Period TSR 17 Apr 2019 – 16 Apr 2022 Threshold (25% vesting) 6.25% Maximum (100% vesting) 12.5% Actual 12.5% % Vesting 100% The vesting of the award granted in February 2020 was subject to performance conditions based on absolute TSR and EPS performance (equally weighted on a 50/50 basis) detailed in the table below: LTIP award February 2020 Performance condition Performance Period Threshold (25% vesting) Maximum (100% vesting) TSR EPS 1 Jan 2020 – 31 Dec 2022 1 Jan 2020 – 31 Dec 2022 6.25% 9.5c 12.5% 12.5c Actual 10.4% 7.6c % Vesting 74% 0%* * Details in relation to the discretion exercised by the committee, and the resulting effective vesting percentage, are provided below. The 2020 LTIP award was granted in February 2020 and has a three-year vesting period. The award was subject to two equally weighted performance conditions: 50% of the award was based on absolute total shareholder return (TSR) and the other 50% of the award was based on earnings per share. The absolute TSR condition required growth of 6.25% to 12.5% per annum. Our TSR performance over the period was 10.4% per annum, resulting in 74% of this element of the award becoming due to vest. No adjustment is being made to the absolute TSR vesting outcome. The EPS performance condition required EPS of 9.5 to 12.5 cents for FY 2022. Whilst EPS has grown strongly over the performance period, delivering a total growth over the period of 192%, performance against this target was significantly impacted by the COVID-19 pandemic and, as a result, the EPS target for the 2020 LTIP was not met. The committee does not consider this formulaic vesting out-turn to be a fair reflection of the strong underlying performance of the business and management team over the period. For this reason, the committee exercised its discretion in respect of the senior management LTIP participants, determining that an equivalent percentage vesting as that achieved in the TSR metric be applied to the EPS element of the award, thereby giving an overall vesting percentage of 74% across both metrics. Following engagement with shareholders, and on receipt of their support for the proposal, the committee also exercised discretion in the same manner in respect of Michael Rice, CFO, as the committee believes it is important to treat all participants consistently. Stephen Garvey, CEO, was not a participant in the 2020 LTIP award, therefore the exercise of discretion for Executive Directors is limited to Michael Rice. The vesting of the award granted in April 2021 is subject to performance conditions based on absolute TSR and EPS performance (equally weighted on a 50/50 basis) over the three years to the end of December 2023. The specific targets were disclosed in the 2021 Remuneration Committee report. The performance outcome and subsequent level of vesting will be disclosed in next year’s Remuneration Committee report. In addition to performance conditions set out above, the vesting of any LTIP award 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 Directors’ remuneration policy (as set out in the table on page 93), LTIP awards granted to Executive Directors from 2020 onwards 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. Glenveagh Properties plc Annual Report and Accounts 2022 102 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: REMUNE R ATION CONTINUED REMUNE R ATION COM MIT TE E RE PORT CONTINUED Change in remuneration of all directors and all employees As required by the European Union (Shareholders’ Rights) Regulations 2020, the table below sets out the annual change of remuneration for each director compared with the performance of Glenveagh. Executive Directors Stephen Garvey Michael Rice Non-executive Directors John Mulcahy(1) Robert Dix Richard Cherry(3) Pat McCann Cara Ryan Camilla Hughes(2) Company performance Adjusted EBITDA Health and safety Customer satisfaction 2022 2021 2020 2019 2018 €1,614,801 €1,521,764 €200,000 €95,000 €26,667 €80,000 €95,000 €80,000 €988,213 €690,370 €541,250 €90,000 €75,000 €75,000 €78,750 €37,500 €72.2m €48.8m 88% 91% 89% 89% €541,821 €378,176 €750,439 €99,918 €318,500 €480,596 €79,875 €75,000 €63,427 €64,875 – €9.6m 88.0% 83.0% €75,000 €75,000 €20,000 €20,000 – €31.9m 75.0% 82.0% €564,401 – €419,000 €75,000 €75,000 – – – €(2.0)m N/A N/A John Mulcahy was an Executive Director in 2021. (1) (2) Camilla Hughes was appointed to the Board on 1 July 2021. (3) Richard Cherry resigned from the Board in 2022. The table below sets out the change in average remuneration (on a full-time equivalent basis) of Glenveagh employees (other than the Directors). Average full time employee remuneration Average remuneration for employees of the Group 2022 €92,745 2021 €98,350 2020 €73,610 2019 €84,286 2018 €90,110 % Change 2022 v 2021 63.4% 120.4% -63.0% 5.6% -64.4% 6.67% 20.6% 113.3% 48.0.% -1.1% 2.2% % Change 2022 vs 2021 -5.7% Glenveagh Properties plc Annual Report and Accounts 2022 103 Strategic Report Governance Financial Statements Contents CODE PRINCIPLE: REMUNE R ATION CONTINUED REMUNE R ATION COM MIT TE E RE PORT CONTINUED 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 72 and 73 of the Corporate Governance Report. The table below sets out the interests of the Directors and Company Secretary in ordinary shares of the Company as at 31 December 2022. Under the remuneration policy, the CEO is required to build a shareholding equivalent in value to 300% of his base salary. Other Executive Directors are required to build a holding of 200% of base 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). Ordinary shares Founder shares Deferred shares Ordinary shares under option** Name Stephen Garvey Michael Rice Richard Cherry John Mulcahy Robert Dix Cara Ryan Pat McCann Camilla Hughes Chloe McCarthy 2022 9,411,319 169,333 9,411,329 23,333 1,370,905 1,371,069 2,882,766 2,682,766 350,000 350,000 28,000 70,000 – – 28,000 70.000 – – 2021 2022 2021 2022 2021 2022 – – – – – – – – – 81,453,077 – – 18,100,684 – – – – – – – – – – – – – – – – – – – – – – – 2021 – 1,034,483* 1,452,941* 1,050,386* – – – – – – – – – – – – 420,606* 368,677* * The exercise price of the ordinary shares under options detailed above is €nil. The expiry date for the options granted during 2021 and 2022 are 7 years from 31 March 2024 and 28 April 2025 respectively. ** Shares under option include options from both LTIP and SAYE schemes. were converted to ordinary shares during the financial year. Under the Company’s constitution, any Founder Shares which remained in existence, and which had not been previously converted were, following the final test period, to be converted on a 1:1 basis into deferred shares (the ‘Termination Conversion’). On 26 October 2022, the Board approved the Termination Conversion. In respect of the deferred shares held by the Founders, John Mulcahy and Stephen Garvey surrendered their respective deferred shares in November 2022. 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 entitled 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 fifth and final test period (which ran from 1 March 2022 until 30 June 2022), 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 Glenveagh Properties plc Annual Report and Accounts 2022 104 Strategic Report Governance Financial Statements Contents E NVIRONME NTAL AND SOCIAL RESPONSIBILIT Y COM MIT TE E RE PORT Environmental and Social Responsibility Committee Report Chair, Environmental and Social Responsibility Committee Camilla Hughes Committee members and attendance On behalf of the committee I am pleased to present the ESR Committee report for the financial year ended 31 December 2022. Name Camilla Hughes Stephen Garvey Robert Dix Pat McCann Position Chair Member Member Member Attendance The committee focuses its efforts on assisting the Board by proactively managing its core areas of responsibility: developing and monitoring the Group’s approach to sustainability. The principal duties and responsibilities of the committee together with an overview of its activities for the year have been outlined below and on the following page. Committee’s key roles and responsibilities The Board strongly believes that sustainability is an inherent part of our business. As a Group, we are committed to playing a leading role in achieving a sustainable future. As a committee, our responsibilities include: > Reviewing the environmental and social responsibility targets and areas of focus as set out in the Group’s strategy; > Ensuring compliance with the evolving regulatory disclosure Quick facts > The Environmental and Social Responsibility (‘ESR’) Committee was established in July 2021. > Camilla Hughes has chaired the Committee since it was established. > All committee members but one are Independent Non-executive landscape in respect of sustainability; Directors. > The committee met four times during the year ended 31 December 2022. > The Chief Strategy Officer and Head of Sustainability were invited to all meetings. Link to terms of reference environmental-and-social-responsibility-committee-terms-of- reference (glenveagh.ie) > Investigating any statutory prosecutions or notices in relation to environmental and community issues and make recommendations to the Board regarding any action to be taken; and > Considering budgetary and financial implications of the environmental and social responsibilities strategy. Areas of focus for the committee in 2022. The committee reviewed the Group’s approach to sustainability, its environmental and social responsibility targets and the progress being made against these. The main areas of focus in 2022 are outlined below. > Development of the Group’s Net Zero Transition Plan. > Materiality assessment. > Preparation for the Corporate Sustainability Reporting Directive (‘CSRD’). > Equity, Diversity and Inclusion (‘ED&I’). > Ongoing sustainability workplan. Glenveagh Properties plc Annual Report and Accounts 2022 105 Strategic Report Governance Financial Statements Contents E NVIRONME NTAL AND SOCIAL RESPONSIBILIT Y COM MIT TE E RE PORT CONTINUED Committee activities in 2022 February 2022 May 2022 September 2022 November 2022 > Discussed in detail the results of the Great Place To Work > Received an update on external developments such as > Received an update on external developments such as > Received an update on external developments such as (‘GPTW’) Survey. sustainability-related policy, legislation and important reports in Ireland and worldwide. sustainability-related policy, legislation and important reports in Ireland and worldwide. sustainability-related policy, legislation and important reports in Ireland and worldwide. > Received an update on the Group’s progress on its > Received an update on the evolution of CDP. > Received and considered the outputs of the Group’s > Received an update on the Net Zero Transition Plan and ED&I strategy. materiality assessment carried out by an external provider. proposed next steps to the Board for approval. > Discussed the proposed Health and Safety Culture > Received an overview of the Group’s approach to > Received an update on the Net Zero Transition Plan. > Received and considered the ED&I strategy and Gender approach. materiality and stakeholder engagement. Pay Gap report. > Received an update on the 2022 sustainability workplan. > Received an update on the Net Zero Transition Plan. > Received an overview of the proposed approach > Received an update on CSRD preparation. to biodiversity. > Received and considered climate and ESG risks. > Received an update on CSRD preparation. > Discussed the 2023 sustainability workplan and budget. > Reviewed structure, organisation and resources with > Discussed the 2022/23 sustainability workplan. > Reviewed and approved the Terms of Reference for respect to sustainability. the Committee. > Considered next steps on 2022 sustainability workplan. The main focus throughout the year was the development of the Group’s Net Zero Transition Plan. The committee received ongoing updates from management as work on this progressed in order to understand the options emerging and the commitments to be made. As key stakeholders, the committee participated in the Group’s materiality assessment which was carried out, by an external provider, to determine the most important sustainability issues. We also received and discussed the outputs of this assessment which allowed us to better understand the key priorities for a range of stakeholders, both internal and external. Social aspects of sustainability also formed a key part of our agenda in 2022. This included understanding staff priorities through our GPTW survey results, our evolving approach to Health and Safety culture as well as an ongoing focus on ED&I including our first Gender Pay Gap report. As a standing item, the committee reviewed future obligations and recent external developments with respect to standards and legislation and assessed the Group’s preparedness for these. These included the CSRD, the Gender Pay Gap Information Act 2021, the Climate Action Plan, the net zero standard from SBTi and the establishment of the International Sustainability Standards board. I am pleased to conclude that the ESR Committee has made continued progress in its second year. With sustainability now fully embedded into our business strategy and at the core of future strategic decision making, I am looking forward to further evolving the Group’s sustainability approach to respond to the needs of our stakeholders. The committee also reviewed and approved the sustainability workplan presented by management. Camilla Hughes Chair, Environmental and Social Responsibility Committee Glenveagh Properties plc Annual Report and Accounts 2022 106 Strategic Report Governance Financial Statements Contents DIREC TORS’ RE PORT The 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 2022. Principal activities and business review Glenveagh is a leading Irish homebuilder listed on Euronext Dublin and the London Stock Exchange. Supported by innovation and supply chain integration, Glenveagh is committed to opening up access to sustainable high-quality homes to as many people as possible in flourishing communities across Ireland. 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 (the ‘Act’), the Company 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 to mitigate them, are detailed on pages 59 to 66 of the risk management report and deemed to be incorporated into the Directors’ Report. Glenveagh is focused on three core markets – suburban housing, urban apartments and partnerships with local authorities and state agencies. The land bank that Glenveagh has assembled can deliver housing that is both in demand and affordable. Shareholders are referred to the Chair’s letter, the CEO’s review and the CFO’s review on pages 10, 14 and 67, respectively, which set out management’s review of the Group’s operations and financial performance in 2022 and the outlook for 2023. These are deemed to be incorporated into the Directors’ Report. Results and dividends Group revenue for the year ended 31 December 2022 was €644.7 million (2021: €476.8 million), gross profit was €108.1 million (2021: €83.1 million), profit after tax was €52.6 million (2021: €37.7 million) and basic earnings per share was 7.6 cents (2021: 4.5 cents). The Company did not pay a dividend during the financial year ended 31 December 2022 (2021: €nil). Key performance indicators Group performance against 2022 key performance indicators is outlined in the table below. The key performance indicators upon which particular emphasis is placed are as follows: KPIs financial Profit before tax Operating margin KPIs non-financial Customer satisfaction Health and safety 2022 2021 % change €63,001 10.9% €45,722 9.7% +37.8% +12.4% 91% 88% 89% 89% +2% -1%% Directors and company secretary The names of the Directors and Company Secretary and a biographical note on each appear on pages 72 to 73. In accordance with the provisions contained in the Code, all Directors will voluntarily retire and be subject to election by shareholders at the 2023 AGM. 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 Committee Report on page 103. Shareholder Teleios Capital Partners FIL Investment International GIC Pelham Capital Mgt Man GLG Notz, Stucki Europe Lansdowne Partners Paradice Investment Mgt PM Capital Schooner Investment Group Helikon Investment SAS Rue la Boétie 1 2 3 4 5 6 7 8 9 10 11 12 Share capital The issued share capital of the Company as at 28 February 2023 consists of 607,638,221 ordinary shares and 81,453,077 deferred 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 Company, while no voting rights are conferred on holders of deferred shares. The Company’s deferred shares have nominal and no economic value and are, simply, a means of winding up the historic founder share scheme. Further information on the Company’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 has a Long-term incentive plan in place, the details of which are set out at page 94 of the Remuneration Committee Report and in Note 14 to the consolidated financial statements. Significant shareholdings As at 31 December 2022 and 28 February 2023, the Company has been notified of the following interests of 3% or more in its ordinary share capital: 31 December 2022 28 February 2023 Ordinary shares held 107,151,843 81,430,276 61,649,008 35,169,985 30,333,123 27,025,000 30,812,648 21,389,642 20,433,755 19,088,095 18,879,353 19,247,848 % 16.79 12.76 9.66 5.51 4.75 4.24 4.83 3.35 3.20 2.99 2.96 3.02 Ordinary shares held 114,384,243 80,740,545 35,949,008 32,087,423 29,919,533 27,615,000 23,994,934 21,369,706 20,433,755 19,382,095 18,879,353 17,729,528 % 18.67 13.18 5.87 5.24 4.88 4.51 3.92 3.49 3.34 3.16 3.08 2.89 Glenveagh Properties plc Annual Report and Accounts 2022 107 Strategic Report Governance Financial Statements Contents DIREC TORS’ RE PORT CONTINUED Accounting records The Directors believe that they have complied with the requirements of Sections 281 to 285 of the Act with regard to maintaining adequate accounting records 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 Company 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 Committee report on pages 101 to 103 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 long-term incentive plan is set out below. Long-term incentive plan The Remuneration Committee will determine the extent to which any outstanding awards will vest with regard to the extent that the applicable performance condition has been satisfied up to the date of the change of control event. 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 risks and uncertainties faced, the Chair’s letter on pages 10 to 12, the CEO’s review on pages 14 to 17, the CFO’s review on pages 67 to 69 and the principal risks and uncertainties detailed on pages 59 to 66 are deemed to be incorporated in this part of the Directors’ Report. Corporate governance The Directors are committed to achieving the highest standards of corporate governance. The Directors have prepared a Corporate Governance Report, which is set out on pages 70 to 81 and, for the purposes of s1373 of the Act, is deemed to be incorporated into the Directors’ Report. The Corporate Governance Report includes a detailed description of the way in which the Company has applied the principles of good governance set out in the Code and the Annex. The Directors assessed the prospects of the Group over the three- year period to February 2026. The Directors concluded that three years was an appropriate period for the assessment, having regard to the following: Directors’ compliance statement The Directors acknowledge their responsibility for securing the Company’s compliance with its relevant obligations under Section 225(2)(a) of 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 Company’s policies (that are, in the opinion of the Directors, appropriate to the Company) in respect of compliance with the 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 Company’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. A number of considerations have been assessed as outlined in Note 7 of the consolidated financial statements. The Directors believe that the Group is well placed to manage and mitigate these risks. Thus, they have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for twelve 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. Viability statement In accordance with the provisions of the Code, the Directors are required to assess the prospects of the Company, explain the period over which they have done so and state whether they have a reasonable expectation that the Company will be able to continue in operation and meet liabilities as they fall due over this period of assessment. > The Group’s strategic plan is predominantly based on a three- 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 February 2023 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 57 to 66 were also considered in the strategic plan process. Based on the above assessment the Directors have a reasonable expectation that the Company and the Group will be able to continue in operation and meet liabilities as they fall due over the three-year period. Political donations No political donations were made 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 24 to the financial statements. The Group does not have any branches outside of Ireland. Subsequent events Information in respect of events since the year end is contained in Note 31 to the consolidated financial statements. Glenveagh Properties plc Annual Report and Accounts 2022 108 Strategic Report Governance Financial Statements Contents DIREC TORS’ RE PORT CONTINUED Audit and Risk Committee The Company 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 86 and 87. 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 AGM. Relevant audit information The Directors confirm that so far as they are each aware, there is no relevant audit information of which the Company’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 Company’s auditors are aware of that information. Approval of financial statements The financial statements were approved by the Board on 28 February 2023. On behalf of the Board Michael Rice Director Stephen Garvey Director Glenveagh Properties plc Annual Report and Accounts 2022 109 Strategic Report Governance Financial Statements Contents STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS The Directors are responsible for preparing the annual report and the Group and Company financial statements, in accordance with applicable law and regulations. 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 72 to 73 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 2022 and of the profit or loss of the Group for the 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 risks and uncertainties that they face; and – The annual report and financial statements, taken as a whole, provides the information necessary to assess the Group’s performance, business model and strategy and is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy. On behalf of the Board Michael Rice Director Stephen Garvey Director 28 February 2023 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 Group financial statements in accordance with IFRS as adopted by the European Union and applicable law including the Commission Delegated Regulation 2018/815 regarding the single electronic reporting format (ESEF) and Article 4 of the IAS Regulation. The Directors have elected to prepare the Company financial statements in accordance with FRS 101 Reduced Disclosure Framework as applied in accordance with the provisions of Companies Act 2014. Under company law the Directors must not approve the Group and Company financial statements unless they are satisfied that they give a true and fair view of the assets, liabilities and financial position of the Group and Company and of the Group’s profit or loss for that year. 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 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 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. Glenveagh Properties plc Annual Report and Accounts 2022 110 Strategic Report Governance Financial Statements Contents INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF GLENVEAGH PROPERTIES PLC Report on the audit of the financial statements Opinion We have audited the financial statements of Glenveagh Properties plc (‘the Company’) and its consolidated undertakings (‘the Group’) for the year ended December 31, 2022, contained within the reporting package 635400QUQ2YYGMOAK834-2021-12-31-en.zip, 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 Statement of Cash Flows and related notes, including the summary of significant accounting policies set out in Note 1. The risk that we considered most likely to adversely affect the Group’s and Company’s available financial resources over this period was the impact of construction cost inflation and/or a reduction in the volume of units sold. As this was the risk that could potentially cast significant doubt on the Group’s and the Company’s ability to continue as a going concern, we considered sensitivities over the level of available financial resources indicated by the Group’s financial forecasts taking account of reasonably possible (but not unrealistic) adverse effects that could arise from these risks individually and collectively and evaluated the achievability of the actions the Directors consider they would take to improve the position should the risks materialise. The financial reporting framework that has been applied in their preparation is Irish Law, including the Commission Delegated Regulation 2019/815 regarding the single electronic reporting format (ESEF) and International Financial Reporting Standards (IFRS) as adopted by the European Union and, as regards the Company financial statements, as applied in accordance with the provisions of the Companies Act 2014. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group or the Company’s ability to continue as a going concern for a period of at least twelve months from the date when the financial statements are authorised for issue. 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 December 31, 2022 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 IFRS as adopted by the European Union, as applied in accordance with the provisions of the Companies Act 2014; 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 Committee. We were appointed as auditor by the Directors on August 21, 2017. The period of total uninterrupted engagement is the 6 years ended December 31, 2022. 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. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. In relation to the Group and the Company’s reporting on how they have applied the UK Corporate Governance Code and the Irish Corporate Governance Annex, we have nothing material to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting. Detecting irregularities including fraud We identified the areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements and risks of material misstatement due to fraud, using our understanding of the entity’s industry, regulatory environment and other external factors and inquiry with the Directors. In addition, our risk assessment procedures included: – Inquiring with the Directors as to the Group’s policies and procedures regarding compliance with laws and regulations, identifying, evaluating and accounting for litigation and claims, as well as whether they have knowledge of non-compliance or instances of litigation or claims. – Inquiring of Directors, the Audit Committee and internal audit as to the Group’s policies and procedures to prevent and detect fraud, as well as whether they have knowledge of any actual, suspected or alleged fraud. – Inquiring of Directors, the Audit Committee and internal audit regarding their assessment of the risk that the financial statements may be materially misstated due to irregularities, including fraud. – Inspecting the Group’s regulatory and legal correspondence. – Reading Board minutes. – Considering remuneration incentive schemes and performance targets including the EPS target for Conclusions relating to going concern management remuneration. In auditing the financial statements, we have concluded that the director’s use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the director’s assessment of the Group’s and Company’s ability to continue to adopt the going concern basis of accounting included: – Performing planning analytical procedures to identify any usual or unexpected relationships. We discussed identified laws and regulations, fraud risk factors and the need to remain alert among the audit team. Glenveagh Properties plc Annual Report and Accounts 2022 111 Strategic Report Governance Financial Statements Contents INDEPENDENT AUDITOR’S REPORT (CONTINUED) TO THE MEMBERS OF GLENVEAGH PROPERTIES PLC Firstly, the Group is subject to laws and regulations that directly affect the financial statements including companies and financial reporting legislation. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items, including assessing the financial statement disclosures and agreeing them to supporting documentation when necessary. As the Group is regulated, our assessment of risks involved obtaining an understanding of the legal and regulatory framework that the Group operates and gaining an understanding of the control environment including the entity’s procedures for complying with regulatory requirements. Secondly, the Group is subject to many other laws and regulations where the consequences of non- compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following areas as those most likely to have such an effect: health and safety, anti-bribery, employment law, environmental law, regulatory capital and liquidity and certain aspects of company legislation recognising the financial and regulated nature of the Group’s activities and its legal form. Auditing standards limit the required audit procedures to identify non-compliance with these non-direct laws and regulations to inquiry of the Directors and inspection of regulatory and legal correspondence, if any. These limited procedures did not identify actual or suspected non-compliance. We assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. As required by auditing standards, we performed procedures to address the risk of management override of controls and the risk of fraudulent revenue recognition. We identified a fraud risk in relation to the Group revenue. We did not identify any additional fraud risks. In response to the fraud risks, we also performed procedures including: – Identifying journal entries and other adjustments to test based on risk criteria and comparing the identified entries to supporting documentation. – Assessing significant accounting estimates for bias – Assessing the disclosures in the financial statements Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non- compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remains a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations. 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 identified, was as follows (unchanged from 2021): Carrying value of inventory €685.8 million (2021: €767.2 million) and profit recognition Refer to, page 124 (accounting policy for inventories) page 123 (accounting policy for expenditure) and page 136 (financial disclosures – inventories). Glenveagh Properties plc Annual Report and Accounts 2022 112 Strategic Report Governance Financial Statements Contents INDEPENDENT AUDITOR’S REPORT (CONTINUED) TO THE MEMBERS OF GLENVEAGH PROPERTIES PLC 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 and direct labour costs 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 key 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 and direct labour costs 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 compared the forecast sales prices against recent prices achieved for similar properties and properties that were reserved/contracted 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 certain forecast 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 assess that NRV estimates 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 accurately reflected the attributable costs of the units sold. We found that the key assumptions used in the calculations of NRV were within a reasonable range and supported the carrying value of inventory as at 31 December 2022, and the related disclosures in respect of work-in-progress to be appropriate. Our application of materiality and an overview of the scope of our audit Materiality for the Group financial statements as a whole was set at €3.3 million determined with reference to total revenue for the Group of which it represents 0.5%, which we consider to be one of the principal considerations for members of the Group in assessing its financial performance for the year. We have used the revenue benchmark in the current year because the group is entering into a mature stage and the importance placed on this metric by the users of the financial statements. In 2021, materiality for the Group financial statements was set at €4.8 million with reference to total assets of which it represented 0.5%. Performance materiality for the Group financial statements as a whole was set at €2.5 million (2021: €3.6 million). We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. In applying our judgement in determining performance materiality, we considered a number of factors including; the low number and value of misstatements detected and the low number and severity of deficiencies in control activities identified in the prior year financial statement audit. We reported to the Audit and Risk Committee any corrected or uncorrected identified misstatements exceeding €0.2 million (2021: €0.2 million) in addition to other identified misstatements that warranted reporting on qualitative grounds. Materiality for the Company financial statements as a whole was set at €3.0 million (2021: €3.7 million). This was determined with reference to a 0.5% benchmark of total assets (2021: 0.5% of total assets). Performance materiality for the Company financial statements as a whole was set at €2.3 (2021: €2.8 million). We reported to the Audit and Risk Committee any corrected or uncorrected identified misstatements exceeding €0.1 million (2021 €0.1 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 used materiality to assist us to determine what risks were significant risks and to determine the audit procedures to be performed including those discussed above. Glenveagh Properties plc Annual Report and Accounts 2022 113 Strategic Report Governance Financial Statements Contents INDEPENDENT AUDITOR’S REPORT (CONTINUED) TO THE MEMBERS OF GLENVEAGH PROPERTIES PLC 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 Report, Risk Management Report, Sustainability Accounting Standards Board disclosures, Corporate Governance Statement, Audit and Risk Committee Report, Remuneration Committee Report, Nomination Committee Report and Environmental and Social Responsibility 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 undertaken during the course of the audit, we report that, in those parts of the Director’s 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. Corporate governance statement We have reviewed the Directors’ statement in relation to going concern, longer-term viability, that part of the Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code and the Irish Corporate Governance Annex. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the financial statements and our knowledge obtained during the audit: – Directors’ statement with regards the appropriateness of adopting the going concern basis of The Listing Rules of Euronext Dublin also requires us to review certain elements of disclosures in the report to shareholders by the Board of Directors’ Renumeration Committee. We have nothing to report in this regard. In addition as required by the Companies Act 2014, we report, in relation to information given in the Corporate Governance Statement on pages 70 to 81, 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 and Diversity Information by certain large undertakings and groups) Regulations 2017. We also report that, based on work undertaken for our audit, the 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 purposes of our audit. In our opinion the accounting records of the Company were sufficient to permit the financial statements to be readily and properly audited and the 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: accounting and any material uncertainties identified; – the disclosures of Directors’ remuneration and transactions required by Sections 305 to 312 of the Act – Directors’ explanation as to their assessment of the Group’s prospects, the period this assessment are not made; covers and why the period is appropriate; – the Company has not provided the information required by Section 1110N in relation to its remuneration – Director’s statement on whether it has a reasonable expectation that the Group will be able to report for the financial year December 31, 2021. continue in operation and meets its liabilities; – Directors’ statement on fair, balanced and understandable and the information necessary for shareholders to assess the Group’s position and performance, business model and strategy; – Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks and the disclosures in the annual report that describe the principal risks and the procedures in place to identify emerging risks and explain how they are being managed or mitigated; – 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 2021 as required by the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) (amendment) Regulations 2018. – Section of the annual report that describes the review of effectiveness of risk management and internal We have nothing to report in this regard. control systems; and; – Section describing the work of the Audit Committee. Glenveagh Properties plc Annual Report and Accounts 2022 114 Strategic Report Governance Financial Statements Contents INDEPENDENT AUDITOR’S REPORT (CONTINUED) TO THE MEMBERS OF GLENVEAGH PROPERTIES PLC Respective responsibilities and restrictions on use Responsibilities of Directors for the financial statements As explained more fully in the Directors’ responsibilities statement set out on page 109, 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 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 Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements 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 an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A fuller description of our responsibilities is provided on IAASA’s website at https://iaasa.ie/publications/ description-of-the-auditors-responsibilities-for-the-audit-of-the-financial-statements/. 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 this report, or for the opinions we have formed. 28 February 2023 Michael Gibbons for and on behalf of KPMG Chartered Accountants, Statutory Audit Firm 1 Stokes Place St. Stephen’s Green Dublin 2 D02 DE03 Glenveagh Properties plc Annual Report and Accounts 2022 115 Strategic Report Governance Financial Statements Contents CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 Revenue Cost of sales Impairment reversal Gross profit Administrative expenses Operating profit Finance expense Profit before tax Income tax Profit after tax attributable to the owners of the Company Other comprehensive income Total comprehensive profit for the year attributable of the owners of the Company Basic earnings per share (cents) Diluted earnings per share (cents) Note 10 19 2022 €’000 644,706 (536,655) – 2021 €’000 476,807 (397,969) 4,219 108,051 83,057 (37,956) (32,490) 70,095 50,567 (7,094) (4,845) 63,001 45,722 (10,434) (8,020) 52,567 37,702 – – 52,567 37,702 7.6 7.6 4.5 4.5 11 12 16 15 15 Glenveagh Properties plc Annual Report and Accounts 2022 116 Strategic Report Governance Financial Statements Contents CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2022 Assets Non-current assets Goodwill Property, plant and equipment Intangible assets Deferred tax asset Current assets Inventory Trade and other receivables Restricted cash Cash and cash equivalents Total assets Equity Share capital Share premium Undenominated capital Retained earnings Share–based payment reserve Total equity Liabilities Non-current liabilities Loans and borrowings Lease liabilities Trade and other payables Current liabilities Trade and other payables Income tax payable Loans and borrowings Lease liabilities Total liabilities Total liabilities and equity Michael Rice Director 1. See Note 6(i)(a) for more information on the restatement. Note 2022 €’000 As restated1 2021 €’000 18 17 18 16 19 20 23 27 26 26 26 22 28 21 21 22 28 5,697 51,750 1,770 619 59,836 685,751 58,671 458 71,085 815,965 875,801 719 179,416 335 465,680 46,968 693,118 71,221 4,216 3,500 78,937 93,234 565 9,419 528 103,746 182,683 875,801 – 27,230 1,214 403 28,847 767,194 32,380 458 141,176 941,208 970,055 952 179,310 100 558,468 45,251 784,081 80,622 81 – 80,703 57,488 7,692 39,625 466 105,271 185,974 970,055 Stephen Garvey Director 28 February 2023 Glenveagh Properties plc Annual Report and Accounts 2022 117 Strategic Report Governance Financial Statements Contents CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 Share Capital Note Ordinary shares €’000 771 Founder shares €’000 181 Balance as at 1 January 2022 Total comprehensive profit for the year Income for the year Other comprehensive income Transactions with owners of the Company Equity-settled share-based payments Lapsed share options Conversion of founder shares to deferred shares Cancellation of deferred shares Exercise of options Purchase of own shares 14 26 26 26 Balance as at 31 December 2022 – – 771 – – – – 2 (135) (133) 638 – – 181 – – (181) – – – (181) – – – – – – – 181 (100) – – 81 81 Deferred shares €’000 Undenominated capital €’000 Share premium €’000 179,310 Share-based payment reserve €’000 Retained earnings €’000 Total equity €’000 45,251 558,468 784,081 – – – – 52,567 – 52,567 – 100 – – 100 179,310 45,251 611,035 836,648 – – – 100 – 135 235 335 – – – – 106 – 106 179,416 1,717 – – – – – – – – – – (145,355) 1,717 – – – 108 (145,355) 1,717 46,968 (145,355) (143,530) 465,680 693,118 Glenveagh Properties plc Annual Report and Accounts 2022 118 Strategic Report Governance Financial Statements Contents CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021 Balance as at 1 January 2021 Total comprehensive profit for the year Income for the year Other comprehensive income Transactions with owners of the Company Equity-settled share-based payments Lapsed share options Exercise of options Purchase of own shares Balance as at 31 December 2021 Note 14 26 Share Capital Ordinary shares €’000 871 – – 871 – – – (100) (100) 771 Founder shares €’000 Undenominated capital €’000 181 – – 181 – – – – – 181 – – – – – – – 100 100 100 Share premium €’000 179,281 – – Share-based payment reserve €’000 44,129 Retained Earnings €’000 629,044 Total Equity €’000 853,506 – – 37,702 – 37,702 – 179,281 44,129 666,746 891,208 – – 29 – 29 179,310 1,219 (97) – – 1,122 45,251 – 97 – (108,375) (108,278) 558,468 1,219 – 29 (108,375) (107,127) 784,081 Glenveagh Properties plc Annual Report and Accounts 2022 119 Strategic Report Governance Financial Statements Contents CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 Cash flows from operating activities Profit for the financial year Adjustments for: Depreciation and amortisation Impairment of inventories reversal Finance costs Equity-settled share-based payment expense Tax expense (Profit)/loss on disposal of property, plant and equipment Changes in: Inventories Trade and other receivables Trade and other payables Cash from operating activities Interest paid Tax (paid)/refund Net cash from operating activities Cash flows from investing activities Acquisition of property, plant and equipment Acquisition of intangible assets Acquisition of subsidiary undertakings Cash acquired on acquisition Transfer from restricted cash Proceeds from the sale of property, plant and equipment Net cash used in investing activities Cash flows from financing activities Proceeds from loans and borrowings Repayment of loans and borrowings Transaction costs related to loans and borrowings Purchase of own shares Proceeds from exercise of share options Payment of lease liabilities Net cash used in financing activities Net (decrease)/increase 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 1. See Note 6(i)(a) for more information on the restatement. Note 2022 €’000 As restated1 2021 €’000 52,567 37,702 19 11 14 16 12 17 18 25 25 23 22 22 22 26 26 28 2,081 – 7,094 1,717 10,434 (1,501) 72,392 83,360 (26,290) 35,662 165,124 (6,490) (17,778) 2,406 (4,219) 4,845 1,219 8,020 1,707 51,680 59,418 (17,796) 14,306 107,608 (4,009) 705 140,856 104,304 (19,278) (1,055) (6,875) 847 – 2,036 (24,325) 110,000 (150,000) – (146,260) 108 (470) (186,622) (70,091) 141,176 71,085 (15,701) (1,012) – – 250 5,099 (11,364) 130,000 (107,500) (2,993) (107,466) 29 (1,110) (89,040) 3,900 137,276 141,176 Glenveagh Properties plc Annual Report and Accounts 2022 120 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 1 Reporting entity Glenveagh Properties PLC (‘the Company’) is domiciled in the Republic of Ireland. The Company’s registered office is Block B, Maynooth Business Campus, Maynooth Co. Kildare. These consolidated financial statements comprise the Company and its subsidiaries (together referred to as ‘the Group’) and cover the financial year ended 31 December 2022. 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. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) 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, including the Commission Delegated Regulation 2018/815 regarding the single electronic reporting format (ESEF), applicable to companies reporting under IFRS and Article 4 of the IAS regulation. 2 Statement of compliance The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union which comprise standards and interpretations approved by the International Accounting Standards Board (IASB), and those parts of the Companies Act 2014 applicable to companies reporting under IFRS and Article 4 of the IAS regulation. 3 Functional and presentation currency These consolidated financial statements are presented in Euro which is the Company’s functional currency. All amounts have been rounded to the nearest thousand unless otherwise indicated. 4 Use of judgements and estimates The preparation of the Group’s financial statements under International Financial Reporting Standards (‘IFRS’), as adopted by the European Union, requires the Directors to make judgments and estimates that affect the application of policies and the reported amounts of assets, liabilities, income, expenses and related disclosures. Actual results may differ from these estimates. Critical accounting judgements 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. Key sources of estimation uncertainty The key source of significant estimation uncertainty impacting these financial statements involves 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. The impact of sustainability and other macroeconomic factors have been considered in the Group’s assessment of the carrying value of its inventories at 31 December 2022, particularly with regard to the potential implications for future selling prices, development expenditure and construction programming. Management has considered a number of scenarios on each of its active developments and the consequential impact on future profitability based on current facts and circumstances together with any implications for future projects in undertaking its net realisable value calculations. As part of the assessment, the Group has re-evaluated its most likely exit strategies on all developments in the context of the current market environment and reflected these in revenue assumptions within the forecast models. The results of this exercise determined that the net impairment charge or reversal required for the period was €Nil (2021: reversal of €4.2 million). Further detail is included in Note 19. Management have performed a sensitivity analysis to assess the impact of a change in estimated costs for developments on which sales were recognised in the year. A 1%-4% increase in estimated costs recognised in the year, which is considered to be reasonably possible, would reduce the Group’s gross margin by approximately 58-174bps (2021: 65bps). 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. The Group has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values and reports directly to the Chief Financial Officer. Glenveagh Properties plc Annual Report and Accounts 2022 121 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 5 Measurement of fair values (continued) The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assess the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of the Standards, including the level in the fair value hierarchy in which the valuations should be classified. Significant valuation issues are reported to the Group’s Audit and Risk Committee. Fair value is defined in IFRS 13, Fair Value Measurement, as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When measuring the fair value of an asset or liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). Further information about the assumptions made in measuring fair values is included in the following notes: – Note 14 Share-based payments arrangements; and – Note 27 Financial instruments and financial risk management. 6 Changes in significant accounting policies Amendments to standard IAS 37 Onerous Contracts – Cost of Fulfilling a Contract are effective from 1 January 2022 but they do not have a material effect on the Group’s financial statements. (i) New significant accounting policies (a) Cash and cash equivalents In April 2022, the IFRS Interpretations Committee issued an agenda decision clarifying the definition of cash and cash equivalents in the statement of cash flows stating that cash amounts that are only restricted by an obligation to a third party meet the definition of cash under IAS 7 Statement of Cash Flows. The title of the agenda decision is Demand Deposits with Restrictions on Use arising from a Contract with a Third Party (IAS 7 Statement of Cash Flow). Prior to this clarification, the Group had not treated cash in demand deposit accounts that were contractually restricted as cash and cash equivalents in the statement of cash flows and had instead classified these balances as non-current assets – restricted cash. The Group considered these cash balances to not be available to the Group and disaggregated these cash balances from the cash balances that are available to the Group. In accordance with this clarification, the Group has made an accounting policy change as a result of the IFRIC decision and has presented cash and cash equivalents for the purpose of its cash flow including these restricted balances and has restated the prior period accordingly. The change in accounting policy has resulted in a change to prior year numbers in 2021 in the statement of financial position and the statement of cash flows. The change in classification for the purpose of statement of cash flows did not impact the overall statement of financial position other than the transfer of €25.0 million restricted cash from non-current assets to cash and cash equivalents in current assets. (b) Contingent consideration 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. (c) Classification of liabilities as current or non-current (amendments to IAS 1) The amendments, as issued in 2020, aim to clarify the requirements on determining whether a liability is current or non-current and apply for annual reporting periods beginning on or after 1 January 2023. However, the IASB has subsequently proposed further amendments to IAS 1 and the deferral of the effective date of the 2020 amendments to no earlier than 1 January 2024. Due to these ongoing developments, the Group is unable to determine the impact of these amendments on the consolidated financial statements in the period of initial application. The Group is closely monitoring the developments. There have been no other changes to significant accounting policies during the financial year ended to 31 December 2022. (ii) Other standards The Group has not adopted the following new and amended standards early, and instead intends to apply them from their effective date as determined by the date of EU endorsement. The potential impact of these amendments to standards on the Group is under review: – IAS 8 Accounting policies, changes in accounting estimates and errors: Definition of accounting estimates and errors (amendment) (not yet effective) – IAS 1 Presentation of financial statements: Amendments to IAS 1 presentation of financial statements and IFRS practice statement 2 making materiality judgements (amendment) (not yet effective) – IFRS 16 Leases – COVID-19 related rent concessions beyond 30 June 2021 (amendment) – Annual improvements to IFRS standards 2018-2020 – IAS 16 Property plant and equipment: Proceeds before intended use (amendment) – IFRS 3 Business combinations: Reference to the Conceptual Framework (amendment) – IFRS 17 Insurance contracts – amendments to IFRS 17 insurance contracts (amendment) (not yet effective) – IAS 12 Income taxes – Deferred tax related to assets and liabilities arising from a single transaction (amendment) (not yet effective) Glenveagh Properties plc Annual Report and Accounts 2022 122 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 7 Going concern The Group has recorded a profit before tax of €63.0 million (2021: €45.7 million which included a non- cash impairment reversal of €4.2 million relating to the Group’s inventory balance). The Group has an unrestricted cash balance of €46.1 million (31 December 2021: €116.2 million) exclusive of the minimum cash balance of €25.0 million which the Group is required to maintain under the terms of its debt facilities. The Group has committed undrawn funds available of €150.0 million (31 December 2021: €120.0 million). Management has prepared a detailed cash flow forecast to assess the Group’s ability to continue as a going concern for at least a period of twelve months from the signing of these financial statements. The preparation of this forecast considered the principal risks facing the Group, including those risks that could threaten the Group’s business model, future performance, solvency or liquidity over the forecast period. These principal risks and uncertainties and the steps taken by the Group to mitigate them are detailed on page 60 to 66 of the Risk Management Report. The Group’s business activities, together with the factors likely to affect its future development are outlined in our Strategic Report. Further disclosures regarding the Group’s loans and borrowings are provided in Note 22. The Group is forecasting compliance with all covenant requirements throughout the period of assessment under the current facilities including the interest cover covenant which is based on earnings before interest, tax, depreciation and amortisation (EBITDA) excluding any non-cash impairment charge or reversal. Other assumptions within the forecast include the Group’s expected selling prices and sales strategies as well as its investment in work in progress which reflect updated development programmes. Based on the forecasts modelled, the Directors have assessed the Group’s going concern status for the foreseeable future. Having considered the Group’s cash flow forecasts, the Directors are satisfied that the Group has the appropriate working capital management strategy, operational flexibility, and resources in place to continue in operational existence for the foreseeable future. Accordingly, these consolidated financial statements have been prepared on a going concern basis. 8 Significant accounting policies The Group has consistently applied the following accounting policies to all periods presented in these consolidated financial statements, except if mentioned otherwise. 8.1 Basis of consolidation (i) Business combinations The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss. Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured, and settlement is accounted for within equity. Otherwise, other contingent consideration is remeasured at fair value each reporting date and subsequent changes in the fair value of the contingent consideration are recognised in profit or loss. (ii) Subsidiaries Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. (iii) Joint operations Joint operations arise where the Group has joint control of an operation with other parties, in which the parties have direct rights to the assets and obligations of the operation. The Group accounts for its share of the jointly controlled assets and liabilities and income and expenditure on a line by line basis in the consolidated financial statements. (iv) Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated. 8.2 Revenue The Group develops and sells residential properties and non-core land in addition to developing land under development agreements with third parties. (i) Housing and land sales Revenue is recognised at the point in time when control over the property has been transferred to the customer, which occurs at legal completion. (ii) Development revenue Revenue arising on contracts under a development agreement which give the customer control over properties as they are constructed, and for which the Group has a right to payments for work performed, is recognised over time. Revenue and costs are recognised over time with reference to the stage of completion of the contract activity at the balance sheet date where the outcome of a contract can be estimated reliably. This is measured by surveys of work performed to date. Variations in contract work, claims and incentive payments are included to the extent that it is probable that they will result in revenue, and they are capable of being reliably measured. When land is transferred at the start of a contract, revenue is not recognised until control has been transferred to the customer which includes legal title being passed to them. Where the outcome of a contract cannot be estimated reliably, contract revenue where recoverability is probable is recognised to the extent of contract costs incurred. The costs associated with fulfilling a contract are recognised as expenses in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately. Glenveagh Properties plc Annual Report and Accounts 2022 123 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 8 Significant accounting policies (continued) 8.3 Expenditure Expenditure recorded in inventory is expensed through cost of sales at the time of the related property sale. The amount of cost related to each property includes its share of the overall site costs. Expenditure related to revenue recognised over time is expensed through cost of sales on an inputs basis. 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. (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: 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. 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. – 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; 8.6 Exceptional items – 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. Temporary differences in relation to a right of use asset and a lease liability for a specific lease are regarded as a net package (the lease) for the purposes of recognising deferred tax. 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. During the financial year, there were no costs considered exceptional items. Glenveagh Properties plc Annual Report and Accounts 2022 124 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 8 Significant accounting policies (continued) 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. 8.8 Intangible assets Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses. 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. Licence costs are capitalised as intangible assets as acquired and amortised on a straight-line basis over their estimated useful life in line with the period over which economic benefit from the software is expected to be derived. The assets’ useful 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. 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 Trade receivables Other receivables Amounts recoverable on construction contracts Restricted cash Deposits for sites Construction bonds Financial liabilities Lease liabilities Trade payables Inventory accruals Other accruals Loans and borrowings Contingent consideration IFRS 9 Classification Amortised cost Amortised cost Amortised cost Amortised cost Amortised cost Amortised cost Amortised cost Amortised cost Amortised cost Amortised cost Amortised cost Amortised cost Fair value through profit or loss Glenveagh Properties plc Annual Report and Accounts 2022 125 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 8 Significant accounting policies (continued) 8.10 Financial instruments (continued) Classification of financial instruments (continued) Cash and cash equivalents Contingent consideration Contingent consideration includes amounts payable if conditions pertaining to the business combination are satisfied. 8.11 Provisions Cash and cash equivalents include cash, short-term investments with an original maturity of three months or less and minimum cash balances required under the terms of the debt facilities. Interest earned or accrued on these financial assets is included in finance income. 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. Trade and 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 statement of financial position 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 are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss. Amounts recoverable on construction contracts Amounts recoverable on construction contracts includes recoverable revenue recognised over time with reference to the stage of completion arising on contracts under a development agreement which are receivable within 12 months of the reporting date. Deposits for sites Deposits for sites includes a percentage amount paid of the total purchase price for the acquisition of land intended for development. Restricted cash Restricted cash includes cash amounts which are classified as 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. Financial liabilities Such financial liabilities are recorded at amortised cost and include all liabilities. Loans and borrowings Loans and borrowings include debt facilities, interest accrued and borrowing costs classified as current and non-current liabilities. 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 At the inception of a contract, the Group assess 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. (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. Glenveagh Properties plc Annual Report and Accounts 2022 126 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 8 Significant accounting policies (continued) (ii) As a lessor 8.13 Leases (continued) (i) As a lessee (continued) 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. 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. 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). 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. (ii) Founder Shares Lease payments included in the measurement of the lease liability comprise the following: 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. – 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 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. 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. 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. Glenveagh Properties plc Annual Report and Accounts 2022 127 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 9 Segmental information Segmental financial results The Group has considered the requirements of IFRS 8 Operating Segments in the context of how the business is managed and resources are allocated. The Group is organised into three key reportable segments, being Suburban, Urban and Partnerships. Internal reporting to the Chief Operating Decision Maker (‘CODM’) is provided on this basis. The CODM has been identified as the Executive Committee. The Group currently operates solely in the Republic of Ireland and therefore no geographically segmented financial information is provided. Suburban The Suburban segment is focussed primarily on high quality housing (with some low rise apartments) with demand coming from private buyers and institutions. Our core Suburban product is affordable and located in well serviced communities predominantly in the Greater Dublin Area and Cork. Urban Revenue Suburban Urban Partnerships Revenue for reportable segments Operating profit/(loss) Suburban Urban Partnerships Operating profit for reportable segments Urban’s strategic focus is developing apartments to deliver to institutional investors. The apartments are located primarily in Dublin and Cork, but also on sites adjacent to significant rail transportation hubs. Urban’s strategy is to deliver the product to institutional investors through a forward sale, or forward fund transaction providing longer term earnings visibility. Partnerships A Partnership will typically involve the Government, local authorities, or state agencies contributing their land on a reduced cost, or phased basis into a development agreement with Glenveagh. Approximately 50% of the product is delivered back to the government or local authority via social and affordable homes. This provides longer term access to both land and deliveries for the business and provides financial incentive by reducing risk from a sales perspective. Reconciliation to results for the financial year Segment results – operating profit Finance expense Directors’ remuneration Corporate function payroll costs Depreciation and amortisation Professional fees Share-based payment expense Profit/(loss) on sale of property, plant and equipment Other corporate costs Profit before tax 2022 €’000 454,540 190,166 – 644,706 70,353 21,532 (1,565) 90,320 90,320 (7,094) (3,402) (6,081) (2,081) (4,992) (1,717) 1,501 (3,453) 63,001 2021 €’000 276,848 199,959 – 476,807 36,153 33,426 (1,050) 68,529 68,529 (4,845) (2,576) (4,350) (2,406) (3,451) (1,219) (1,707) (2,253) 45,722 There are no individual costs included within other corporate costs that is greater than the amounts listed in the above table. Glenveagh Properties plc Annual Report and Accounts 2022 128 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 9 Segmental information (continued) Segment assets and liabilities Segment assets Reconciliation to Consolidated Balance Sheet Deferred tax asset Trade and other receivables Cash and cash equivalents Property, plant and equipment Intangible assets Suburban €’000 590,321 31 December 2022 Urban €’000 153,018 Partnerships €’000 6,452 Total €’000 749,791 620 785 71,085 51,750 1,770 875,801 31 December 20211 Suburban €’000 613,168 Urban €’000 183,848 Partnerships €’000 Total €’000 2,519 799,535 403 497 141,176 27,230 1,214 970,055 Segment liabilities 69,138 9,876 159 79,173 – – – – Reconciliation to Consolidated Balance Sheet Trade and other payables Loans and Borrowings Lease liabilities Income tax payable 17,561 80,640 4,744 565 182,683 57,488 120,247 547 7,692 185,974 1. See Note 6(i)(a) for more information on the restatement. As a result of a change in reporting to the CODM in FY2022, liabilities are now split between reportable segments. Glenveagh Properties plc Annual Report and Accounts 2022 129 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 10 Revenue Suburban Core Non-core Urban Core Non-core 2022 €’000 451,930 2,610 454,540 176,570 13,596 190,166 2021 €’000 276,848 – 276,848 126,217 73,742 199,959 Total Revenue 644,706 476,807 The Group has presented revenue as a split between core and non-core by business segment. This split is consistent with internal reporting to the Chief Operating Decision Maker (‘CODM’). Core suburban product relates to affordable starter homes for first time buyers. Core urban product relates primarily to apartments suitable for institutional investors. Non-core suburban and urban product relates to high-end, private developments and sites. Non-core suburban and urban cost of sales is mostly attributable to land and development expenditure costs for high end, private developments and sites. 11 Finance Expense Interest on secured bank loans Finance cost on lease liabilities 12 Statutory and other information Amortisation of intangible assets (Note 18) Depreciation of property, plant and equipment (Note 17)* Employment costs (Note 13) (Profit)/Loss on disposal of property, plant and equipment Audit of Group, Company and subsidiary financial statements** Other assurance services Tax advisory services Tax compliance services Other non-audit services Urban core revenue includes income from the sale of land and development revenue from construction contracts that are recognised over time by reference to the stage of completion of the contract with the customer. Development revenue recognised in the financial year related to the development of the sites at Barn Oaks Apartments, Castleforbes and Carpenterstown and amounted to €82.1 million (2021: €8.2 million) with €32.1 million (2021: €3.8 million) outstanding in contract receivables (Note 20) at the year end. The payment terms for these contracts are between 30 and 90 days. Directors’ remuneration Salaries, fees and other emoluments Pension contributions 2022 €’000 7,049 45 7,094 2022 €’000 487 3,509 40,337 (1,501) 255 20 30 43 20 368 3,252 150 3,402 2021 €’000 4,820 25 4,845 2021 €’000 487 3,144 33,481 1,707 235 15 23 33 6 312 2,461 115 2,576 All revenue is earned in the Republic of Ireland. * ** Includes €2.1 million (2021: €1.2 million) capitalised in inventory during the year ended 31 December 2022. Included in the auditor’s remuneration for the Group is an amount of €0.020 million (2021: €0.015 million) that relates to the Company’s financial statements. Glenveagh Properties plc Annual Report and Accounts 2022 130 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 13 Employment costs (b) LTIP The average number of persons employed by the Group (including Executive Directors) during the financial year was 423 (Executive Committee: 6; Non-executive Directors: 5; Construction: 227; and Other: 185). (2021:336 (Executive Committee: 3; Non-executive Directors: 5; Construction: 176; and Other: 152)). 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 14) 2022 Total €’000 33,734 3,540 1,346 1,717 40,337 2021 Total €’000 28,262 2,744 1,256 1,219 33,481 €15.4 million (2021: €12.3 million) of employment costs were capitalised in inventory during the financial year. 14 Share-based payment arrangements The Group operates three equity-settled share-based payment arrangements being the Founder Share scheme, the Long-Term Incentive Plan (‘LTIP’) and the Savings Related Share Option Scheme (known as the Save As You Earn or ‘SAYE’ scheme). 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 fifth test period (which ran from 1 March 2022 until 30 June 2022), 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. Accordingly, no Founder Shares were converted to ordinary shares during the financial year. Following completion of the fifth test period, the scheme is now completed. On 1 April 2022, the Remuneration Committee approved the grant of 4,568,698 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 Return on Equity (ROE) and Earnings per Share (EPS) across the vesting period. 50% of the awards will vest based on the Group’s ROE for the financial year ended 31 December 2024. The EPS based options will vest based on the Group’s EPS* for the financial year ended 31 December 2024. 25% of ROE based options vest should the Group achieve ROE of 11.0% with the remaining options vesting on a pro rata basis up to 100% if ROE of 16.2% is achieved. 25% of EPS based options will vest should the Group achieve EPS* of 12.0 cents per share with the remaining options vesting on a pro rata basis up to 100% if EPS* of 20.0 cents per share is achieved. In line with the Group’s remuneration policy, LTIP awards granted to Executive Directors from 2020 onwards include a holding period of at least two years post exercise. LTIP options in issue at 1 January Granted during the financial year Forfeited during the financial year Lapsed during the financial year Exercised during the financial year Number of Options 2022 10,583,497 4,568,698 (264,729) – (1,864,636) Number of Options 2021 7,675,456 3,998,475 (590,329) (381,595) (118,510) LTIP options in issue at 31 December 13,022,830 10,583,497 Exercisable at 31 December 461,395 58,057 LTIP options were exercised during the financial year with the average share price being €1.00 (2021: €0.99). The options outstanding at 31 December 2022 had an exercise price €0.001 (2021: €0.001) and a weighted-average contractual life of 7 years (2021: 7 years). * Group EPS is defined as Basic Earnings Per Share as calculated in accordance with IAS 33 Earnings Per Share subject to adjustment by the Remuneration Committee at its discretion, for items deemed not reflective of the Group’s underlying performance for the financial year. Glenveagh Properties plc Annual Report and Accounts 2022 131 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 14 Share-based payment arrangements (continued) (c) SAYE Scheme (b) LTIP (continued) The EPS and ROE related performance conditions are non-market conditions and do not impact the fair value of the EPS or ROE based awards at grant date which is equivalent to the share price at grant date. The fair value of LTIP options granted in the prior periods was measured using a Monte Carlo simulation. There is no Total Shareholder Return (TSR) linked performance condition for options granted in the period and therefore no fair value exercise was performed related to this performance condition. Service and non- market conditions attached to the arrangements were not taken into account when measuring fair value. The inputs used in measuring fair value at grant date were as follows: Fair value at grant date Share price at grant date Valuation methodology Exercise price Expected volatility Expected life Expected dividend yield Risk free rate 2022 €1.16 €1.16 N/A €0.001 N/A N/A N/A N/A 2021 €0.49 €0.91 Monte Carlo €0.001 36.1% 3 years 0% -0.7% 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. No options were granted in the current year or prior period and therefore no fair value exercise was performed. Details of options outstanding and grant date fair value assumptions SAYE options in issue at 1 January Granted during the financial year Cancelled during the financial year Exercised during the financial year SAYE options in issue at 31 December 2022 2021 Number of Options 3 Year 799,740 – (32,520) (177,000) 590,220 Number of Options 5 Year 165,000 – – – 165,000 Number of Options 3 Year 959,040 – (130,500) (28,800) 799,740 Number of Options 5 Year 255,000 – (90,000) – 165,000 The weighted average exercise price of all options granted under the SAYE to date is €0.97 (2021: €0.71). The exercise price of all options granted under the LTIP to date is €0.001 and all options have a 7-year contractual life. The expected share price and TSR volatility was based on the historical volatility of the Group over the expected life of the equity instruments granted. The expected share price and TSR volatility was based on the historical 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 €1.7 million (2021: €1.2 million) in the consolidated statement of profit or loss in respect of options granted under the LTIP. The Group recognised an expense of €0.06 million (2021: €0.06 million) in the consolidated statement of profit or loss in respect of options granted under the SAYE scheme. Glenveagh Properties plc Annual Report and Accounts 2022 132 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 15 Earnings per share (a) Basic earnings per share 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 638,131,722 ordinary shares in issue at 31 December 2022 (2021: 771,770,694). Reconciliation of weighted average number of shares (diluted) Weighted average number of ordinary shares (basic) Effect of potentially dilutive shares 2022* No. of shares 2021 No. of shares 693,872,004 2,098,936 840,694,786 5,114,647 695,970,940 845,809,433 * The number of potentially issuable shares in the Group held under option or Founder Share arrangements at 31 December 2022 is 13,022,830 (2021: 191,590,335). ** Under IAS 33, Founders Shares and LTIP arrangements have an assumed test period ending on 31 December 2022. Based on this assumed test period no ordinary shares would be issued through the conversion of Founder Shares. Based on the assumed test period only the TSR performance condition was met related to LTIP options and therefore only ordinary shares related to this condition would be issued through the conversion of LTIP options. At 31 December 2022 Nil options (2021: Nil options) were excluded from the diluted weighted average number of ordinary shares because their effect would have been anti-dilutive. Profit for the financial year attributable to ordinary shareholders (€’000) Weighted average number of shares for the financial year 52,567 693,872,004 37,702 840,694,786 Basic earnings per share (cents) 7.6 4.5 2022 2021 Reconciliation of weighted average number of shares Number of ordinary shares at beginning of financial year Effect of share buyback Effect of SAYE maturity Effect of LTIP maturity (b) Dilutive earnings/(loss) per share Diluted earnings per share 2022* No. of shares 2021 No. of shares 771,770,694 (78,865,173) 29,487 936,996 871,333,550 (30,664,903) 4,359 21,780 693,872,004 840,694,786 Profit for the financial year attributable to ordinary shareholders (€’000) Weighted average number of shares for the financial year 52,567 695,970,940 37,702 845,809,433 Diluted earnings per share (cents) 7.6 4.5 2022 2021 Glenveagh Properties plc Annual Report and Accounts 2022 133 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 16 Income tax Movement in deferred tax balances Current tax charge for the financial year Deferred tax (credit)/charge for the financial year Total income tax charge 2022 €’000 10,650 (216) 10,434 2021 €’000 7,008 1,012 8,020 Expenses deductible in future periods Balance at 1 January 2022 €’000 403 403 Recognised in profit or loss €’000 216 216 Balance at 31 December 2022 €’000 619 619 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. Profit before tax for the financial year 2022 €’000 63,001 2021 €’000 45,722 Tax charge at standard Irish income tax rate of 12.5% 7,875 5,715 Tax effect of: Income taxed at the higher rate of corporation tax Non-deductible expenses – other Adjustment in respect of prior year (over)/under accrual Losses forward previously not recognised as deferred tax Total income tax charge 2,424 97 38 – 10,434 2,141 298 44 (178) 8,020 The expenses deductible in future periods arise in Ireland and have no expiry date. Based on profitability achieved in the period, the continued forecast profitability in the Group’s strategic plan and the sensitivities that have been applied therein, 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. Global minimum tax To address concerns about uneven profit distribution and tax contributions of large multinational corporations, various agreements have been reached at the global level, including an agreement by over 135 jurisdictions to introduce a global minimum tax rate of 15%. In December 2021, the Organisation for Economic Co-operation and Development (‘OCED’) released a draft legislative framework, followed by detailed guidance released in March 2022, that is expected to be used by individual jurisdictions that signed the agreement to amend their local tax laws. Once changes to the tax laws in any jurisdiction in which the Group operates are enacted or substantively enacted, the Group may be subject to the top- up tax. At the date when the financial statements were authorised for issue, the jurisdiction in which the Group operates had not enacted or substantively enacted the tax legislation related to the top-up tax. The Group may be potentially subject to the top up tax. Management is closely monitoring the progress of the legislative process in the Republic of Ireland. At 31 December 2022, the Group did not have sufficient information to determine the potential quantitative impact. Glenveagh Properties plc Annual Report and Accounts 2022 134 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 17 Property, plant and equipment Cost At 1 January Acquisitions through business combinations (Note 25) Additions Disposals At 31 December Accumulated depreciation At 1 January Charge for the financial year Disposals At 31 December Net book value At 31 December 2022 2021 Land & buildings €’000 Fixtures & fittings €’000 Plant & machinery €’000 Computer equipment €’000 Total €’000 Land & buildings €’000 Fixtures & fittings €’000 Plant & machinery €’000 Computer equipment €’000 18,239 3,313 15,315 (545) 945 56 1,095 – 14,699 714 7,874 (792) 36,322 2,096 22,495 (2,216) (748) – (2,964) (438) (216) – (654) (4,121) (2,447) 700 (5,868) 717 – 308 (75) 950 (595) (98) 66 (627) 34,600 4,083 24,592 (1,412) 61,863 (7,370) (3,509) 766 (10,113) 15,263 – 10,000 (7,024) 18,239 (1,693) (922) 399 (2,216) 1,162 – 62 (279) 945 (389) (197) 148 (438) 9,045 – 5,958 (304) 14,699 (2,551) (1,866) 296 (4,121) 694 – 32 (9) 717 (444) (159) 8 (595) Total €’000 26,164 – 16,052 (7,616) 34,600 (5,077) (3,144) 851 (7,370) 33,358 1,442 16,627 323 51,750 16,023 507 10,578 122 27,230 The depreciation charge for the year includes €2.1 million (2021: €1.2 million) which was capitalised in inventory at 31 December 2022. Property plant and equipment includes right of use assets of €4.7 million (2021: €0.5 million) related to leased properties and motor vehicles. During the year, the Group entered into new lease agreements for the use of land and buildings as its head office facility in Maynooth, Co. Kildare. The land and buildings lease commenced in September 2022 for a duration of seven years. On lease commencement, the Group recognised €4.7 million of right-of-use assets and lease liabilities. In the prior year, The Group entered new lease arrangements for the use of motor vehicles (€0.3 million). Glenveagh Properties plc Annual Report and Accounts 2022 135 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 18 Intangible assets Cost At 1 January Additions Disposals At 31 December Accumulated amortisation At 1 January Charge for the year Disposals At 31 December Net book value At 31 December 2022 Goodwill €’000 Licence €’000 Computer Software €’000 – 5,697 – 5,697 – – – – – 300 – 300 – – – – 2,390 743 – 3,133 (1,176) (487) – (1,663) Total €’000 2,390 6,740 – 9,130 (1,176) (487) – (1,663) 5,697 300 1,470 7,467 2021 Computer Software €’000 1,359 1,038 (7) 2,390 (696) (487) 7 (1,176) Total €’000 1,508 1,038 (156) 2,390 (796) (487) 107 (1,176) 1,214 1,214 Licence €’000 149 – (149) – (100) – 100 – – Glenveagh Properties plc Annual Report and Accounts 2022 136 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 19 Inventory Land Development expenditure work in progress Development rights 2022 €’000 455,280 227,240 3,231 685,751 2021 €’000 548,728 204,458 14,008 767,194 €530.4 million (2021: €387.5 million) of inventory was recognised in ‘cost of sales’ during the year ended 31 December 2022. Sustainable materials such as heat pumps, PV panels, timber frames and building expenditure necessary to deliver A1/A2 Building Energy Rating (‘BER’) homes are included within development expenditure work in progress. (i) Impairment of inventories (iii) Development right 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 the site at Gateway Retail Park, Knocknacarra, Co. Galway for consideration of approximately €13.2 million (including stamp duty and acquisition costs). The development rights will (subject to planning) entitle the Group to develop at least 250 residential units under a joint business plan 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 the site. The Directors have determined that joint control of the site exists and the arrangement has been accounted for as a joint operation in accordance with IFRS 11 Joint Arrangements. For further information regarding the APSA, see Note 29 of these financial statements. In July 2022, the Group agreed a repayment of consideration (€10.0 million) and release of obligations under the Acquisition and Profit Share Agreement in relation to the site at The Square Shopping Centre, Tallaght, Dublin 24. During the financial year the Group carried out a net realisable value assessment of its inventories at the reporting date. This assessment determined that the net impairment charge or reversal required for the period was €Nil. 20 Trade and other receivables In the prior financial year, the Group’s net realisable value assessment resulted in an impairment reversal of €4.2 million for the year at our previously impaired non-core active sites. The impairment reversal was reflective of management’s reassessment of sales prices on remaining units at higher ASP sites due to better pricing being achieved on unit closings in the year. This was recognised in cost of sales with €1.4 million allocated to land and the remainder (€2.8 million) allocated to work in progress. (ii) Employment cost capitalised €15.4 million of employment costs incurred in the financial year have been capitalised in inventory (2021: €12.3 million). Trade receivables Contract receivables Other receivables Prepayments Construction bonds Deposits for sites 2022 €’000 9,224 32,113 2,283 862 12,140 2,049 58,671 2021 €’000 6,549 3,825 2,172 698 10,012 9,124 32,380 The carrying value of all financial assets and trade and other receivables is approximate to their fair value and are short term in nature with the exception of construction bonds. Glenveagh Properties plc Annual Report and Accounts 2022 137 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 21 Trade and other payables Current Trade payables Payroll and other taxes Inventory accruals Contingent consideration Other accruals VAT payable 2022 €’000 7,132 4,897 33,600 1,500 16,372 29,733 93,234 2021 €’000 6,202 3,524 20,069 – 13,238 14,455 57,488 The carrying value of all financial liabilities and trade and other payables is approximate to their fair value and are repayable under the normal credit cycle. Non-current Contingent consideration (Note 25) Non-current Current 22 Loans and borrowings (a) Loans and borrowings 2022 €’000 3,500 3,500 93,234 96,734 2021 €’000 – – 57,488 57,488 The Group is party to a long-term debt facility for a total of €250.0 million with a syndicate of domestic and international banks for a term of 5 years at an interest rate of one-month EURIBOR (subject to a floor of 0 per cent) plus a margin of 2.6%. €82.5 million had been drawn on the new debt facilities (31 December 2021: €122.5 million). Pursuant to the debt facility agreement, there is a fixed and floating charge in place over the net assets of the subsidiary entities of the Group as continuing security for the discharge of any amounts drawn down. The carrying value of these net assets at 31 December 2022 is €685.2 million (31 December 2021: €783.2 million). Debt facilities Unamortised borrowing costs Interest accrued Total loans and borrowings Loans and borrowings are payable as follows: Less than one year Between one and two years More than two years Total loans and borrowings 2022 €’000 82,500 (1,877) 17 80,640 2022 €’000 9,419 9,401 61,820 80,640 2021 €’000 122,500 (2,476) 223 120,247 2021 €’000 39,625 9,401 71,221 120,247 The Group’s debt facilities were entered into with AIB, Bank of Ireland, Barclays and Ulster Bank and are subject to primary financial covenants calculated on a quarterly basis: – A maximum net debt to net assets ratio of 25%; – Loans to eligible assets value does not exceed 65%; – The Group is required to maintain a minimum cash balance of €25.0 million throughout the term of the debt facility, from 31 March 2024 this will increase to €50.0 million; and – EBITDA must exceed net interest costs by a minimum of 3 times and is calculated on a trailing twelve- month basis. All covenants have been complied with in 2022 and 2021. Debt facilities are secured by a debenture incorporating fixed and floating charges and assignments over all the assets of the Group. The carrying value of inventories as at 31 December 2022 pledged as security is €685.2 million. Glenveagh Properties plc Annual Report and Accounts 2022 138 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 22 Loans and borrowings (continued) (b) Reconciliation of movements of liabilities to cash flows arising from financing activities 2022 Liabilities: Loans and borrowings Unamortised transaction costs Lease liability Interest accrual Equity: Share Buyback Share option exercise 2021 Liabilities: Loans and borrowings Unamortised transaction costs Lease liability Interest accrual Equity: Share Buyback Share option exercise Credit facility drawdown €’000 Credit facility repayment €’000 Transaction costs related to loans and borrowings €’000 Proceeds from share option exercise €’000 Payment of lease liability €’000 110,000 – – – (150,000) – – – (107,466) 29 – – – – 13,357 110,000 (150,000) Opening 2022 €’000 122,500 (2,476) 547 223 Opening 2021 €’000 100,000 (104) 1,316 38 Cash flows Share buyback payments €’000 – – – – (146,260) – (146,260) Cash flows Share buyback payments €’000 – – – – – – – (470) (6,490) 599 6,284 Amortisation of transaction costs €’000 Non-cash changes Interest on debt facilities €’000 Interest on lease liability €’000 – 599 – – – – – – – 6,284 – – – – 45 – – – 45 Amortisation of transaction costs €’000 Non-cash changes Interest on debt facilities €’000 Interest on lease liability €’000 – 621 – – – – 621 – – – 4,194 – – 4,194 – – 22 – – – 22 Interest Paid €’000 – – – (6,490) – – Interest Paid €’000 – – – (4,009) – – – – (470) – – – – – (1,110) – – – New leases €’000 – – 4,622 – Closing 2022 €’000 82,500 (1,877) 4,744 17 – – (253,726) 137 4,622 (168,205) New leases €’000 Closing 2021 €’000 – – 319 – – – 319 122,500 (2,476) 547 223 (107,466) 29 13,357 – – – – – 108 108 – – – – – 29 29 Credit facility drawdown €’000 Credit facility repayment €’000 Transaction costs related to loans and borrowings €’000 Proceeds from share option exercise €’000 Payment of lease liability €’000 130,000 – – – (107,500) – – – – (2,993) – – – – – – – – – – – – – – (107,466) – 101,250 130,000 (107,500) (2,993) (107,466) (1,110) (4,009) Glenveagh Properties plc Annual Report and Accounts 2022 139 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 22 Loans and borrowings (continued) (c) Net (debt)/funds reconciliation Restricted Cash Cash and cash equivalents Loans and borrowings Lease liabilities Total net (debt)/funds (d) Lease Liabilities Lease liabilities are payable as follows: Less than one year Between one and two years More than two years 23 Restricted cash Current 2022 €’000 458 71,085 (80,640) (4,744) (13,841) As restated 2021 €’000 458 141,176 (120,247) (547) 20,840 Present value of minimum lease payments €’000 84 16 4,644 4,744 31 December 2022 Future value of minimum lease payments €’000 84 16 4,957 5,057 As restated 2021 €’000 458 458 Interest €’000 – – 313 313 2022 €’000 458 458 The restricted cash balance relates to €0.5 million held in escrow until the completion of certain infrastructural works relating to the Group’s residential development at Balbriggan, Co. Dublin. 24 Subsidiaries The principal subsidiary companies and the percentage shareholdings held by Glenveagh Properties plc, either directly or indirectly, pursuant to Section 314 of the Companies Act 2014 at 31 December 2022 are as follows: Company Principal activity Glenveagh Properties (Holdings) Limited Holding company Glenveagh Treasury DAC Glenveagh Contracting Limited Glenveagh Homes Limited Greystones Devco Limited Marina Quarter Limited GLV Bay Lane Limited Glenveagh Living Limited Financing activities Property development Property development Property development Property development Property development Property development GL Partnership Opportunities DAC Property development Castleforbes Development Company DAC Property development Hollystown Golf & Leisure Limited Golf Club operations Harmony Timber Solutions Limited Manufacturing operations GMP Developments Limited Holding company 1 Block B, Maynooth Business Campus, Maynooth, Co. Kildare, W23W5X7. % 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Reg. office 1 1 1 1 1 1 1 1 1 1 1 1 1 Pursuant to section 316 of the Companies Act 2014, a full list of subsidiaries will be annexed to the Company’s Annual Return to be filed in the Companies Registration Office in Ireland. 25 Acquisition of subsidiary On 31 August 2022, the Group acquired 100% of the share capital of Harmony Timber Solutions Limited (‘Harmony’) and GMP Developments Limited (‘GMP’) for a total consideration of €11.9 million. Taking control of Harmony and GMP enables the Group to enhance its timber frame manufacturing capabilities and de-risks our supply chain with access to high quality timber frames. The business is highly complementary to the Group’s housing development platform and existing manufacturing capabilities. The investment increases the Group’s market share in the timber frame sector and is expected to have a positive impact from a construction costs perspective. In the post-acquisition period to 31 December 2022, the business acquired during the current year contributed revenue of €1.1 million and profit of €0.3 million respectively to the Group’s results. The full year revenue and trading profit had the acquisition taken place at the start of the year, would have been €6.9 million and €1.3 million respectively. Glenveagh Properties plc Annual Report and Accounts 2022 140 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 25 Acquisition of subsidiary (continued) (i) Goodwill Goodwill arising from the acquisition has been recognised as follows. Cash paid Contingent consideration Total consideration Less: fair value of net (assets)/liabilities acquired Goodwill Impairment Test Harmony €’000 6,875 5,000 11,875 (6,181) 5,694 GMP €’000 – – 3 3 Total €’000 6,875 5,000 11,875 (6,178) 5,697 (ii) Contingent consideration The Group has agreed to pay the selling shareholders additional consideration over a three year between €nil and €5.0 million dependent on the selling shareholders successfully achieving certain agreed metrics. These metrics are fully aligned with the business strategy. At the reporting date, there is a reasonable expectation that these metrics will be met with €5.0 million being recognised as the fair value of contingent consideration at the date of acquisition. The fair value of contingent consideration will be reassessed at each reporting date. The valuation technique used to measure contingent consideration was the enterprise value of the entity acquired with the enterprise value being determined with reference to EBITDA and Net Asset multiples. Contingent consideration is categorised as a Level 3 fair value instrument. (iii) Acquisition related costs The Group incurred acquisition related costs of €0.5 million on legal fees and due diligence costs. These costs have been included in administrative expenses in the Consolidated statement of profit or loss and other comprehensive income. The goodwill carrying amount is allocated to the suburban segment with the recoverable amount of this cash generating unit (CGU) being based on value in use. The value in use was determined by the cash flows to be generated from the continuing use of the CGU over a three year period. (iv) The fair value of assets and liabilities arising from the acquisition The following table summarises the recognised amounts of assets and liabilities assumed at the date of acquisition. The Group has established internal controls designed to effectively assess and centrally review future cash flows generated from CGUs. The key assumptions on which management has based its cash flows are revenue and construction costs. Revenue assumptions relate to unit sales prices for sites delivering over the period based on prices achieved to date, current market prices, historic prices, and sales agent reports. Construction cost assumptions are based on contracted/procured package pricing or where packages are not procured, historic pricing achieved, or pricing achieved on similar packages in reference to other sites. The impact of sustainability and other macroeconomic factors have been considered in the Group’s assessment of these cash flows, particularly with regard to the potential implications for future selling prices, development expenditure and construction programming. Management has considered scenarios on each of its active developments and the consequential impact on future profitability based on current facts and circumstances together with any implications for future projects in undertaking its impairment analysis. As part of the assessment, the Group has re-evaluated its most likely exit strategies on all developments in the context of the current market environment and reflected these in revenue assumptions within the forecast models. The results of this exercise determined that the no impairment was required at the reporting date. Non-current assets Land and buildings Plant and machinery Fixtures and Fittings Current assets Trade and other receivables Inventories Cash and cash equivalents Current Liabilities Trade and other payables Harmony €’000 GMP €’000 2,932 714 56 2,555 1,009 847 381 – – – – – Total €’000 3,313 714 56 2,555 1,009 847 (1,932) (384) (2,316) Fair value of net assets/(liabilities) acquired 6,181 (3) 6,178 Glenveagh Properties plc Annual Report and Accounts 2022 141 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 25 Acquisition of subsidiary (continued) (v) Measurement of fair values (b) Issued and fully paid share capital and share premium The valuation techniques used for measuring the fair value of material assets acquired were as follows: (a) Land and buildings and plant and machinery The valuation model considers market prices for similar items when they are available and depreciated cost when appropriate. Depreciated replacement cost reflects adjustments for physical deterioration as well as functional and economic obsolescence. At 31 December 2022 Ordinary Shares of €0.001 each Founder shares of €0.001 each Deferred Shares of €0.001 each (b) Inventories The fair value of raw materials is determined based on the cost based on market rates in the ordinary course of business. The fair value for finished goods is determined based on the estimated cost of inputs to complete units. (c) Trade receivables and other receivables At 31 December 2021 Ordinary Shares of €0.001 each Founder Shares of €0.001 each The gross contractual value of trade and other receivables as at the date of acquisition amounts to €2.8 million. The fair value of these receivables is €2.5 million, all of which is expected to be collectable at the date of acquisition. (c) Reconciliation of shares in issue If new information obtained within one year of the date of acquisition about facts and circumstances that existed as the date of acquisition identifies adjustments to the above amounts, then the accounting for the acquisition will be revised. 26 Capital and reserves (a) Authorised share capital Ordinary Shares of €0.001 each Founder Shares of €0.001 each Deferred Shares of €0.001 each 2022 2021 Number of shares 1,000,000,000 – 200,000,000 1,200,000,000 €’000 1,000 – 200 1,200 Number of shares 1,000,000,000 200,000,000 200,000,000 1,400,000,000 €’000 1,000 200 200 1,400 In respect of current year In issue at 1 January 2022 Purchase of own shares Conversion of founder shares to deferred shares Cancellation of deferred shares Exercise of options In respect of prior year In issue at 1 January 2021 Purchase of own shares Exercise of options Number of shares 638,131,722 – 81,453,077 719,584,799 Number of shares 771,770,694 181,006,838 952,777,532 Deferred shares ‘000 Un- denominated capital €’000 – – 100 135 – 100 – 335 Share capital €‘000 638 – 81 719 Share capital €‘000 771 181 952 Share capital €‘000 952 (135) – (100) 2 Share premium €’000 179,416 – – 179,416 Share premium €’000 179,310 – 179,310 Share premium €’000 179,310 – – – 106 719 179,416 Share capital €‘000 1,052 (100) – 952 Share premium €’000 179,281 – 29 179,310 Ordinary shares ‘000 771,771 (135,680) Founder shares ‘000 181,007 – – – 2,041 (181,007) – – 181,007 (99,554) – 638,132 – 81,453 Ordinary shares ‘000 871,333 (99,710) 148 771,771 Founder shares ‘000 181,007 – – 181,007 Undenominated capital €’000 – 100 – 100 Glenveagh Properties plc Annual Report and Accounts 2022 142 Strategic Report Governance Financial Statements Contents (f) Share buyback programme Further to the authority granted at the Annual General Meeting on 27 May 2021. The Group commenced a €75.0 million share buyback programme on 28 May 2021, the programme completed on 13 October 2021. The total number of shares purchased was 71,689,205 at a total cost of €75.0 million. All repurchased shares were cancelled in accordance with the share buyback programme. On 16 November 2021, the Group announced a second share buyback programme, which completed on 28 April 2022. The total number of shares purchased was 92,950,510 at a total cost of €111.0 million. The total number of shares purchased in the period 1 January to 28 April 2022 was 64,929,549 at a total cost of €77.9 million. All repurchased shares were cancelled in accordance with the share buyback programme in the year ended 31 December 2022. On 1 June 2022, a third share buyback programme commenced up to a further €75.0 million, which completed on 1 November 2022. As at 31 December 2022 the total number of shares purchased under the third buyback programme was 70,750,810 at a total cost of €67.5 million. All repurchased shares were cancelled in the year ended 31 December 2022. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 26 Capital and reserves (continued) (d) Rights of shares in issue Ordinary Shares The holders of Ordinary Shares are entitled to one vote per Ordinary Share at general meetings of the Company and are entitled to receive dividends as declared by the Company. Founder Shares Founder Shares do not confer on any holder thereof the right to receive notice of, attend, speak or vote at general meetings of the Company except in relation to resolutions regarding the voluntary winding up of the Company or the granting of further Founder Shares. Founder Shares do not entitle their holder to receive dividends. Founder Shares entitle the Founders of the Company namely, Justin Bickle (through Durrow Ventures), Stephen Garvey and John Mulcahy to share 20% of the Company’s TSR (calculated by reference to the change of control price plus dividends and distributions made) between admission and the change of control (less the value of any ordinary shares (at their original conversion or redemption price)) which have previously been converted or redeemed in the five years following the IPO of the Company. This entitlement is subject to the achievement of a performance condition related to the Company’s share price, specifically that a compound rate of return of 12.5% (adjusted for any dividends or other distributions and returns of capital made but excluding the value of any Founder Shares which have been redeemed) is achieved across five testing periods. Following completion of the fifth test period (which ran from 1 March 2022 until 30 June 2022), 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. Under the Company’s constitution any Founder Shares which remained in existence, and which had not been previously converted were, following the final test period, to be converted on a one-to-one basis into deferred shares, (the ‘Termination Conversion’). On 26 October 2022, the Board approved the Termination Conversion. In respect of deferred shares held by the Founders, John Mulcahy and Stephen Garvey surrendered their respective deferred shares in November 2022. Following completion of the fifth test period, the scheme is now completed. (e) Nature and purpose of reserves Share based payment reserve The share-based payment reserve comprises amounts equivalent to the cumulative cost of awards by the Group under equity settled share-based payment arrangements being the Group’s Long Term Incentive Plan and the SAYE scheme. On vesting, the cost of awards previously recognised in the share-based payments reserve is transferred to retained earnings. Details of the share awards, in addition to awards which lapsed in the year, are disclosed in Note 14. Glenveagh Properties plc Annual Report and Accounts 2022 143 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 27 Financial instruments and financial risk management Financial risk management objectives and policies 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 Amounts recoverable on construction contracts Other receivables Construction bonds Deposits for sites Cash and cash equivalents Restricted cash (current) Total financial assets 1. See Note 6(i)(a) for more information on the restatement. Cash and cash equivalents are short-term deposits held at variable rates. Financial instruments: financial liabilities Trade payables Lease liabilities Inventory accruals Other accruals Contingent consideration Loans & borrowings Total financial liabilities Trade payables and other current liabilities are non-interest bearing. 2022 €’000 9,224 32,113 2,282 12,140 2,049 71,085 458 129,351 2022 €’000 7,132 4,744 33,600 16,372 5,000 80,640 147,488 As restated1 2021 €’000 6,549 3,825 2,172 10,012 9,124 141,176 458 173,316 2021 €’000 6,202 547 20,069 13,238 – 120,247 160,303 As all of the operations carried out by the Group are in Euro there is no direct currency risk, and therefore the Group’s main financial risks are primarily: – liquidity risk – the risk that suitable funding for the Group’s activities may not be available; – credit risk – the risk that a counter-party will default on their contractual obligations resulting in a financial loss to the Group; and – market risk – the risk that changes in market prices, such as interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. This note presents information and quantitative disclosures about the Group’s exposure to each of the above risks, its objectives, policies and processes for measuring and managing risk, and the Group’s management of capital. Liquidity risk Liquidity risk is the risk that the Group may not be able to generate sufficient cash reserves to settle its obligations in full as they fall due or can only do so on terms that are materially disadvantageous. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring, unacceptable losses or risking damage to the Group’s reputation. The Group’s liquidity forecasts consider all planned development expenditure. Management monitors the adequacy of the Group’s liquidity reserves against rolling cash flow forecasts. In addition, the Group’s liquidity risk management policy involves monitoring short-term and long-term cash flow forecasts. Set out below are details of the Group’s contractual cash flows arising from its financial liabilities and funds available to meet these liabilities. Lease liabilities Trade payables Inventory accruals Other accruals Contingent consideration Loans and borrowings 31 December 2022 Carrying amount €’000 4,744 7,132 33,600 16,372 5,000 80,640 Contractual cash flows €’000 5,057 7,132 33,600 16,372 5,000 89,488 147,488 156,649 Less than 1 year €’000 84 7,132 33,600 16,372 1,500 11,563 70,251 1 year to 2 years €’000 More than 2 years €’000 16 – – – 1,750 11,546 13,312 4,957 – – – 1,750 66,379 73,086 Glenveagh Properties plc Annual Report and Accounts 2022 144 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 27 Financial instruments and financial risk management (continued) Credit risk Liquidity risk (continued) Lease liabilities Trade payables Inventory accruals Other accruals Loans and borrowings Funds available Debt facilities* (undrawn committed) Cash and cash equivalents Carrying amount €’000 547 6,202 20,069 13,238 120,247 160,303 31 December 2021 Contractual cash flows €’000 Less than 1 year €’000 1 year to 2 years €’000 More than 2 years €’000 568 6,202 20,069 13,238 130,596 170,673 487 6,202 20,069 13,238 43,954 83,950 80 – – – 11,253 11,333 2022 €’000 150,000 71,543 221,543 1 – – – 75,389 75,390 2021 €’000 120,000 141,634 261,634 * The Group’s debt facilities contains a mechanism through which the committed amount can be increased by a further €50.0 million. The Group’s RCF is subject to primary financial covenants calculated on a quarterly basis: 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. The Group is party to a debt facility agreement for a total of €250.0 million, the agreement has a term component of €100.0 million and a committed Revolving Credit Facility of €150.0 million. The facility is with a syndicate of domestic and international banks for a term of 5 years at an interest rate of EURIBOR (subject to a floor of 0 per cent) plus 2.6%. €82.5 million (2021: €122.5 million) had been drawn on the facility at 31 December 2022. The Group has an exposure to cash flow interest rate risk where there are changes in the EURIBOR rates. Interest rate risk reflects the Group’s exposure to fluctuations in interest rates in the market. This risk arises from bank loans that are drawn under the Group’s debt facilities with variable interest rates based upon EURIBOR. At the year ended 31 December 2022 it is estimated that an increase of 100 basis points to EURIBOR would have decreased the Group’s profit before tax by €2.5 million assuming all other variables remain constant and the rate change is only applied to the loans that are exposed to movements in EURIBOR. – A maximum net debt to net assets ratio of 25%; – Loans to eligible assets value does not exceed 65%; – The Group is required to maintain a minimum cash balance of €25.0 million throughout the term of the The Group is also exposed to interest rate risk on its cash and cash equivalents. These balances attract low interest rates and therefore a relative increase or decrease in their interest rates would not have a material effect on the Group’s profit. debt facility, from 31 March 2024 this will increase to €50.0 million; and – EBITDA must exceed net interest costs by a minimum of 3 times and is calculated on a trailing twelve- month basis. A fundamental review and reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank offered rates (IBORs) with alternative nearly risk-free rates (referred to as ‘IBOR reform’). The Group has no exposure to these changes as it only has exposure to EURIBOR interest rates which is outside the scope of the current reform. Capital management The Group finances its operations through 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. The Group’s capital allocation policy is to invest in supply chain, land, and work-in-progress. Once the business has invested sufficiently in each of these priorities, excess capital is returned to shareholders. Glenveagh Properties plc Annual Report and Accounts 2022 145 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 28 Leases (a) Leases as lessee (IFRS 16) (ii) Amounts recognised in profit or loss The Group leases a property and motor vehicles. Motor vehicle 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 property lease is for 15 years with a break clause after 7 years. 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. 2022 – Leases under IFRS 16 Interest on lease liabilities Expenses relating to short-term leases (iii) Amounts recognised in statement of cash flows 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 17). Total cash outflow on leases (b) Leases as lessor 2022 €’000 45 97 2022 €’000 470 2021 €’000 25 46 2021 €’000 1,110 2022 Balance at 1 January Additions to right-of-use assets Depreciation charge for the year Balance at 31 December 2021 Balance at 1 January Additions to right-of-use assets Depreciation charge for the year Balance at 31 December Property €’000 286 4,605 (506) 4,385 Property €’000 1,024 – (738) 286 Motor Vehicles €’000 261 – (175) 86 Motor Vehicles €’000 292 319 (350) 261 Total €’000 547 4,605 (681) 4,471 Total €’000 1,316 319 (1,088) 547 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 2022 €’000 4,864 294 670 5,828 2021 €’000 2,461 115 116 2,692 Compensation of the Group’s key management personnel includes salaries, non-cash benefits and contributions to a post-employment defined contribution plan. Glenveagh Properties plc Annual Report and Accounts 2022 146 Strategic Report Governance Financial Statements Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 29 Related party transactions (continued) (ii) Other related party transactions Acquisition of development rights The Group entered into the 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. (OCM) (and an entity in which John Mulcahy is a Director) 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. In July 2022, the Group agreed a repayment of consideration (€10.0 million) and release of obligations under the APSA in relation to the site at The Square Shopping Centre, Tallaght, Dublin 24. The Directors have determined that joint control over the remaining site 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 Directors concluded that it remains appropriate. 30 Commitments and contingent liabilities (a) Commitments arising from development land acquisitions The Group had no contingent liabilities at 31 December 2022. The Group had the following commitments at 31 December 2022 relating to Development Land Acquisitions. 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. Contracted acquisitions At 31 December 2022, the Group had contracted to acquire a site; in County Kildare for approximately €14.0 million (excluding stamp duty and legal fees). Deposits totalling €1.4 million were paid pre-year end and are included within trade and other receivables at 31 December 2022. 31 Subsequent events 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 Gateway Retail Park, Knocknacarra, Co. Galway and Bray Retail Park, Bray, Co. Wicklow. In February 2023, the Group finalised a new five-year sustainability linked finance facility of €350.0 million, consisting of €100.0 million term component and a revolving credit facility of €250.0 million, which is a direct replacement of our previous €250.0 million debt facility. This new facility is with our existing banking syndicate, at interest rates consistent with those of the previous facility and includes financial and sustainability covenants that better reflect the current strategy and growth ambitions of the business. 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. On 6 January 2023, the Group announced a fourth share buyback programme to repurchase up to 10% of the Group’s issued share capital such that the maximum number of shares which can be repurchased under the buyback is 63,813,172. On 20 February 2023, the number of shares repurchased in respect of this buyback programme had reached 29,678,501 shares for a cost of €28.1 million. All repurchased shares were cancelled. 32 Profit of the Parent Company The parent company 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 profit after tax for the financial year was €7.7 million (for the year ended 31 December 2021: profit of €0.031 million). 33 Approved financial statements The Board of Directors approved the financial statements on 28 February 2023. Glenveagh Properties plc Annual Report and Accounts 2022 147 Strategic Report Governance Financial Statements Contents COMPANY BALANCE SHEET AS AT 31 DECEMBER 2022 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 Undenominated capital Liabilities Current liabilities Trade and other payables Total liabilities Total liabilities and equity Note 3 4 5 7 2022 €’000 8,860 8,860 171 599,854 191 600,216 2021 €’000 7,143 7,143 190 736,398 1,983 738,571 609,076 745,714 719 179,416 379,855 46,968 335 607,293 952 179,310 517,528 45,251 100 743,141 6 1,783 2,573 1,783 609,076 2,573 745,714 Glenveagh Properties plc Annual Report and Accounts 2022 148 Strategic Report Governance Financial Statements Contents COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 Balance as at 1 January 2022 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 Lapsed share options (Note 14*) Conversion of founder shares to deferred shares (Note 26) Cancellation of deferred shares (Note 26) Exercise of options Purchase of own shares (Note 26*) Balance as at 31 December 2022 Share Capital Ordinary shares €’000 771 Founder Shares €’000 181 – – 771 – – – – 2 (135) (133) 638 – – 181 – – (181) – – – (181) – Deferred Shares €’000 Undenominated capital €’000 – – – – – – 181 (100) – – 81 81 100 – – 100 – – – 100 – 135 235 335 Share premium €’000 179,310 Share-based payment reserve €’000 45,251 Retained earnings €’000 517,528 Total equity €’000 743,141 – – – – 7,682 – 7,682 – 179,310 45,251 525,210 750,823 – – – – 106 – 106 1,717 – – – – – 1,717 – – – – – (145,355) (145,355) 1,717 – – – 108 (145,355) (143,530) 179,416 46,968 379,855 607,293 * The note reference is to the Consolidated financial statements as the information is not disclosed in the notes to the Company financial statements. Glenveagh Properties plc Annual Report and Accounts 2022 149 Strategic Report Governance Financial Statements Contents COMPANY STATEMENT OF CHANGES IN EQUITY (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021 Balance as at 1 January 2021 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 Lapsed share options (Note 14*) Exercise of options Purchase of own shares (Note 26*) Balance as at 31 December 2021 Share Capital Founder shares €’000 181 Ordinary shares €’000 871 – – 871 – – – (100) (100) 771 – – 181 – – – – – 181 Undenominated capital €’000 – – – – – – – 100 100 100 Share premium €’000 179,281 – – Share-based payment reserve €’000 44,129 Retained earnings €’000 625,775 Total equity €’000 850,237 – – 31 – 31 – 179,281 44,129 625,806 850,268 – – 29 – 29 1,219 (97) – – 1,122 – 97 – (108,375) (108,278) 1,219 – 29 (108,375) (107,127) 179,310 45,251 517,528 743,141 * The note reference is to the Consolidated financial statements as the information is not disclosed in the notes to the Company financial statements. Glenveagh Properties plc Annual Report and Accounts 2022 150 Strategic Report Governance Financial Statements Contents NOTES TO THE COMPANY FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 1 Basis of preparation 3 Investment in subsidiaries The financial statements have been prepared on a going concern basis under the historical cost convention in accordance with the Companies Act 2014 and Generally Accepted Accounting Practice in the Republic of Ireland (Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101)). Note 2 describes the principal accounting policies under FRS 101, which have been applied. The Company has applied the exemptions available under FRS 101 in respect of the following disclosures: Investment in subsidiaries Accumulated cost of share-based payments in respect of subsidiaries – 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 – Disclosures required by IFRS 2 Share-based Payments – Disclosures required by IAS 24 Related Party Disclosures – The effects of new but not yet effective IFRSs; and – Disclosures in respect capital management Details of subsidiary undertakings are given in Note 24 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 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 profit for the financial year was €7.7 million. (2021: Profit of €0.03 million). VAT receivable Prepayments and other receivables 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. 5 Amounts due from subsidiaries (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. Amounts due from subsidiaries 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. 2022 €’000 4,025 4,835 8,860 2021 €’000 4,025 3,118 7,143 2022 €’000 48 123 171 2021 €’000 56 134 190 2022 €’000 599,854 599,854 2021 €’000 736,398 736,398 Glenveagh Properties plc Annual Report and Accounts 2022 151 Strategic Report Governance Financial Statements Contents NOTES TO THE COMPANY FINANCIAL STATEMENTS (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 6 Trade and other payables Trade payables Accruals Payroll and other taxes 2022 €’000 75 1,649 59 1,783 2021 €’000 128 2,385 60 2,573 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 14 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. Glenveagh Properties plc Annual Report and Accounts 2022 152 Strategic Report Governance Financial Statements Contents SUPPLEMENTARY INFORMATION FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 Alternative Performance Measures (APMs) 2 Core gross margin percentage (continued) 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 2022 €’000 108,051 644,706 16.8% 2021 €’000 83,057 476,807 17.4% Prior year gross margin percentage is calculated after an impairment reversal of €4.2 million. 2 Core gross margin percentage Suburban Core revenue Non-core revenue Total revenue 2022 €’000 451,930 2,610 454,540 2021 €’000 276,848 – 276,848 Note 10 Urban Core revenue Non-core revenue Total revenue Core cost of sales Non-core cost of sales Total cost of sales Core gross profit Core revenue Core gross margin percentage Note 10 2022 €’000 176,570 13,596 190,166 2022 €’000 (521,292) (15,363) Statement of profit or loss (536,655) 2022 €’000 107,208 628,500 17.1% 2021 €’000 126,217 73,742 199,959 2021 €’000 (324,254) (73,715) (397,969) 2021 €’000 78,811 403,065 19.6% Core gross margin represents gross margin before impairment and non-core revenue and cost of sales is applied. Core gross margin is calculated from Suburban and Urban core revenue unit sales and rental income less the equivalent cost of sales. Non-core revenue is mostly attributable to the Urban segment. Non-core cost of sales is mostly attributable to land and development expenditure costs for high end, private developments and sites. 3 Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) pre-exceptional items, pre-impairment and related margin An APM representing earnings before interest, tax, depreciation, amortisation, impairment 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 and impairment. Adjusted EBITDA margin pre-exceptional items, pre- impairment and related margin represents this metric as a percentage of the Group’s revenue. Glenveagh Properties plc Annual Report and Accounts 2022 153 Strategic Report Governance Financial Statements Contents SUPPLEMENTARY INFORMATION (CONTINUED) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 Alternative Performance Measures (APMs) (continued) 6 Net Development Value (NDV) 3 Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) pre-exceptional items, pre-impairment and related margin (continued) 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. Depreciation – capitalised Depreciation – expensed Total depreciation Financial statements reference Note 17 Adjusted operating profit Impairment Depreciation – expensed Amortisation Statement of profit or loss Note 19 As above Note 18 Adjusted EBITDA pre-exceptional items Adjusted EBITDA margin pre-exceptional items 4 Return on capital employed (ROCE) 2022 €’000 1,978 1,616 3,594 2022 €’000 70,095 – 1,616 487 72,198 11.2% 2021 €’000 1,224 1,920 3,144 2021 €’000 50,567 (4,219) 1,920 487 48,755 10.2% 7 Adjusted EPS 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 Committee at its discretion, for items deemed not reflective of the Group’s underlying performance for the period. 8 Adjusted operating profit An APM representing a metric the Group uses to measure financial performance in a given financial period. It is defined as operating profit before exceptional items and impairment reversals/charges. Operating profit Impairment reversal Adjusted operating profit Revenue Adjusted operating margin Financial statements reference Statement of profit or loss Statement of profit or loss Statement of profit or loss 2022 €’000 70,095 – 70,095 644,706 10.9% 2021 €’000 50,567 (4,219) 46,348 476,807 9.7% 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. 5 Return on equity (ROE) An APM representing return on equity that Group management apply to measure of the Group’s efficiency of returns generated from shareholder equity after taxation and is calculated as profit after tax attributable to shareholders divided by the average of opening and closing shareholders’ funds. Profit after tax Total equity Average total equity ROE Financial statements reference Statement of profit or loss Balance sheet 2022 €’000 52,567 693,118 738,600 7.1% 2021 €’000 37,702 784,081 818,793 4.6% Glenveagh Properties plc Annual Report and Accounts 2022 154 Strategic Report Governance Financial Statements Contents COMPANY INFORMATION Directors Executive Directors Stephen Garvey Michael Rice Non-executive Directors John Mulcahy Robert Dix Pat McCann Cara Ryan Camilla Hughes Company Secretary Chloe McCarthy Registered Office Glenveagh Properties plc Block B, Maynooth Business Campus Maynooth Co. Kildare W23 W5X7 Ireland Bankers Allied Irish Banks, p.l.c 10 Molesworth Street Dublin 2 Bank of Ireland Group plc 40 Mespil Road Dublin 4 D04 C2N4 Barclays Bank Ireland plc One Molesworth Street Dublin 2 D02 RF29 Website www.glenveagh.ie Stockbrokers Davy Group Davy House 49 Dawson Street Dublin 2 D02 PY05 Registrars Computershare Investor Services (Ireland) Limited 3100 Lake Drive Citywest Business Campus Dublin 24 D24 AK82 Auditor KPMG Chartered Accountants 1 Stokes Place St. Stephen’s Green Dublin 2 D02 DE03 Solicitors A&L Goodbody 3 Dublin Landings North Wall Quay Dublin 1 D01 C4E0 DLA Piper Ireland LLP 40 Molesworth Street Dublin 2 D02 YV57 Kane Tuohy Hambleden House 19-26 Pembroke Street Lower Dublin 2 D02 WV96 Mason Hayes and Curran South Bank House Barrow St Dublin 4 D04 TR29 Glenveagh Properties plc Annual Report and Accounts 2022 Contents Contents Glenveagh Properties plc Block B, Maynooth Business Campus Maynooth Co. Kildare W23 W5X7 Ireland T: +353 (0)1 903 7100 glenveagh.ie