Glenveagh cuts losses as new builds drive revenue

Listed homebuilder Glenveagh Properties cut its operating losses by almost two thirds during the first half of the year, its interim report shows.

The company also informed shareholders that chief executive Justin Bickle is to resign with immediate effect as he is returning to live in the UK.

He will be succeeded as chief executive from Friday by Stephen Garvey, who is currently chief operating officer and co-founder of the business.

The report for the period ended June 30th, 2019, said the group is currently selling from 13 sites with 800 units sold, signed or reserved, including Herbert Hill on Sandyford Road in Dublin where discussions are ongoing.

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Of these, 490 units were sold or have a signed binding contract in place, excluding Herbert Hill.

Glenveagh said it has been actively building on 17 sites in the period. In excess of 455 units which are due for delivery in 2019 are now through practical completion, “substantially underpinning” the group’s delivery target for 2019 of 725.

Furthermore, it said, existing open sites are capable of delivering in excess of 4,000 units.

The group said it has 16 applications at various stages of the planning process totalling in excess of 6,500 units.

Total revenue for the period was €45.5 million, which was up from €1.3 million on the same period last year. Some €45.3 million of that related to the completion of 158 units as compared with six the year before.

The company said more than three quarters of these units came from developments aimed at first-time buyers, and added that demand in this segment of the market “remains very strong”.

The average selling price for the period was €287,000, which was up significantly on the €199,000 last year.

The group’s gross profit for the period amounted to €7.5 million, which was up from €300,000 in 2018.

Glenveagh’s operating loss for the period was €2.8 million, which was down from €7.8 million last year.

Glenveagh executive chairman John Mulcahy said "positive momentum" had been maintained during the first six months of the current financial year.

“Customer demand has been solid and costs were also well managed,” he said. “Notably, the starter home market remained strong during the period and we saw no evidence of change to first-time buyer behaviour.

“We have made good progress in the current period and we are pleased with the levels of output and the investments we are making which will further enhance our position in the market.

“The Glenveagh management team remains focussed on delivering profitable growth and cash conversion in the medium term while building scale and continuing to develop out the platform.

“A functioning and sustainable housing market requires the orderly supply of the right product attractive to owner-occupiers as well as institutional investors and the rental market.

“Accordingly, our core product of starter homes, building quality rental product and placemaking with local authorities through mixed-tenure schemes, holds the best potential proposition for the Irish residential market.”

In terms of outlook, Glenveagh said it was “well-positioned” to deliver a successful outcome for the year, and that the board “remains confident” that results will be in line with its expectations.

Management intends to present an updated business plan to shareholders as part of a capital markets day during the first quarter of next year.

The timing is designed to ensure the plan has the benefit of increased visibility on both the impact of Brexit and the forthcoming budget with the “potential implications” for the Help to Buy scheme.