1 March 2023

Glenveagh Properties plc

Final Results 2022

Glenveagh Properties plc ("Glenveagh" or the "Group") a leading Irish homebuilder announces its Final Results for the period ended 31 December 2022.

Financial Highlights

FY 2022 Highlights

·     Strong revenue growth in FY 2022 of 35% to €645m, driven by the Suburban business segment

·     1,354 suburban units closed, up 50% on the 902 units closed in FY 2021 and 90% ahead of the 712 suburban units closed in FY 2019

·     Urban transactions completed during the year are expected to generate overall revenue of over €310 million. Urban assets now comprise approximately 13% of the Group's total landbank

·   Advanced the Partnerships segment with planning submitted for both Oscar Traynor Road and Ballymastone in H2 2022. An initial planning decision in favour of both applications has been made and these are currently subject to any ongoing appeals  

·     Overall gross margin of 16.8% (FY 2021: 17.4%)

o  Suburban gross margin improved to 18.4% (FY 2021: 17.3%)

o  Urban gross margin was 12.9% in FY 2022 (FY 2021: 17.6%)

·     Mitigated the impact of build cost inflation to a 8%-9% level through effective use of the Group's scale and long-term supply chain commitments

·     EPS consistent with Group guidance at 7.6 cents, representing growth of 69% year on year

·   Advanced the Group's off-site manufacturing strategy through the acquisition of Harmony Timber Solution Ltd. ("Harmony") and the establishment of our light gauge steel ("LGS") manufacturing partnership

·    Continued to improve the capital efficiency of the Group's land investment, with landbank value at year end of €458.5 million (FY21: €562.7 million)

·     Continued financial discipline evident with modest net debt at year end of €13.8 million

·    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

·     Strong progress made to further integrate sustainability throughout the business, including the launch of its Equity, Diversity & Inclusion ("EDI") strategy in December 2022

Outlook

·     The Group continues to see a very positive long-term outlook for the Irish residential housing market and we believe we are well positioned to take advantage of that opportunity. We are now active on 21 suburban and urban construction sites, with an additional five new sites to open during this year for first deliveries in FY 2024

·    We continue to anticipate that suburban unit deliveries for FY 2023 will be broadly in line with FY 2022 levels. Further improvement in the suburban margin is expected in FY 2023 to approximately 19%, and given strong underlying demand we anticipate an EPS outturn for FY 2023 of 7.5-8.0 cents

·     We are actively managing suburban unit reservations for FY 2023 and closed units and reservations for this year now stand at 803 units, supported by strong underlying market demand and by the updated Housing for All initiatives and the change to the Central Bank of Ireland's macroprudential rules that both became effective in January 2023

·   The Group has seen some progress in planning momentum since the start of the year and it is anticipated that additional resources will be provided to the planning board in the coming months to improve its processing capability. Given positive recent momentum in the Large-Scale Residential Development ("LRD") planning process, we anticipate final planning decisions on Ballymastone by Q2 2023 and on Oscar Traynor Road by Q3 2023, both in our Partnerships business segment. The segment remains on track for revenue and profits generation in FY 2024

·     In FY 2023 we anticipate making further efficiencies in our land investment, while WIP is expected to increase to reflect ongoing urban developments. As such net debt is expected to reach 10-15% of net assets by the end of FY 2023, that will then unwind during FY 2024 as these urban developments are completed

·   The Group agreed a new €350m five-year sustainability linked finance facility in February 2023, extending the tenure of facilities by two years and expanding available facilities by €100 million

·     The Group also today launched its Net Zero transition plan that sets both near-term GHG emissions reduction targets and long-term net zero GHG emissions targets for Scopes 1, 2 and 3, in line with guidance from the Science Based Targets initiative (SBTi)

·  Our current share buyback programme, initiated on 6 January 2023, progresses to plan and approximately €30m has been returned to shareholders to date, in line with our capital allocation framework

·   With a very healthy land portfolio and the resources and capability in place to drive operational expansion, the Group continues to have strong confidence in its capacity to achieve its 2,000 suburban unit target, as well as the continued delivery of urban projects and generating its first revenue from its Partnerships business, for FY 2024

·    Our unwavering focus on capital efficiency and cash generation places the business in an excellent position to deliver long-term operational growth and to maximise returns for shareholders, with our Return on Equity target of 15% in 2024 continuing to be our key capital metric

CEO Stephen Garvey commented:

"We are in a very strong position to continue scaling our business, enhancing our profitability and delivering even more of the high-quality, sustainable, affordable homes that Ireland urgently needs.

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.

We have also demonstrated rigorous control of our costs, significant innovation in acquisitions to enhance our supply chain, and an optimised capital management programme that has returned over €250 million to shareholders in two years.

But the fact remains that we are capable of building many more new homes if the Government matches its ambitions on much-needed planning reform with the decisive and meaningful action that Ireland's accommodation crisis warrants. It deserves credit for the effectiveness of its measures supporting first-time buyers, but this crisis cannot be ended without a significant ramp-up in supply across the industry.

We are ready to play a leading role in delivering more supply; our own experience already this year is proving that even in a more economically challenged environment there is still significant demand for the right product. But the industry needs correct policy decisions and a planning framework that is designed for the types of homes that people want - and one which does not undermine the commercial viability of delivering more of these types of homes."

Results Presentation

A webcast presentation of the results for analysts and institutional investors will take place at 8.30am on 1 March 2023. The presentation slides will be available on the Investor Relations section on www.glenveagh.ie from 7.00am on 1 March 2023.

This presentation can also be accessed live from the Investor Relations section on www.glenveagh.ie or alternatively via conference call.

Click here to register for the conference call

Registration and access details are also available at www. glenveagh.ie/corporate/investor-centre/investors-events

For further information please contact:

Note to Editors

Glenveagh Properties plc, listed on Euronext Dublin and the London Stock Exchange, is a leading Irish homebuilder.

Supported by innovation and supply chain integration, Glenveagh are 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.

www.glenveagh.ie

Forward-looking statements

This announcement does not constitute or form any part of an invitation to underwrite, subscribe for or otherwise acquire or dispose of any shares of Glenveagh Properties plc ("Glenveagh" or "the Group").

This announcement contains statements that are, or may be deemed to be, forward-looking statements. Forward-looking statements include, but are not limited to, information concerning the Group's possible or assumed future results of operations, plans and expectations regarding demand outlook, business strategies, financing plans, competitive position, potential growth opportunities, potential operating performance improvements, expectations regarding inflation, macroeconomic uncertainty, geopolitical tensions, weather patterns, the effects of competition and the effects of future legislation or regulations. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as "may", "will", "should", "expect", "anticipate", "project", "estimate", "intend", "continue", "target", "ensure", "arrive", "achieve", "develop" or "believe" (or the negatives thereof) or other variations thereon or comparable terminology. Forward-looking statements are prospective in nature and are based on current expectations of the Group about future events, and involve risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. Although Glenveagh believes that current expectations and assumptions with respect to these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to be correct. Due to various risks and uncertainties, actual events or results or actual performance of the Group may differ materially from those reflected or contemplated in such forward-looking statements. You are cautioned not to place undue reliance on any forward-looking statements.

These forward-looking statements are made as of the date of this document. Glenveagh expressly disclaims any obligation to update these forward-looking statements other than as required by law.

The forward-looking statements in this announcement do not constitute reports or statements published in compliance with any of Regulations 6 to 8 of the Transparency (Directive 2004/109/EC) Regulations 2007 (as amended).

GLENVEAGH PROPERTIES PLC: BUSINESS AND FINANCIAL REVIEW

1.   BUSINESS REVIEW

i.    Group Sales

a.   Overview

The Group had total revenue of €644.7 million (2021: €476.8 million), relating to the completion of 1,354 suburban units (2021: 902) in the year and the significant monetisation of Urban assets.

b.   Suburban

The Group reported suburban revenue of €455 million, driven by increased unit sales and a higher suburban Average Selling Price ("ASP") reflecting the Group's strong operational performance in a challenging environment.

In FY 2022, 1,354 suburban units were closed. This represented a 50% increase on the 902 units closed in FY 2021 and was 90% higher than the 712 suburban units closed in FY 2019 before the pandemic.

ASP in FY 2022 was approximately €330k (FY 2021: €308k). The increase in ASP of 7% was driven by a combination of portfolio mix and underlying House Price Inflation ("HPI") in the period. Our commitment to delivering homes that are affordable for our customers is demonstrated by the fact that approximately 73% of our suburban home sales in FY 2022 were at prices below the median price of a new home in our key locations of the Greater Dublin Area and Cork. Delivering much-needed housing at this price point is important to Glenveagh's sustainability pillar of putting customers at the heart of what we do and linking our homes to local affordability.

Nationally, residential property prices grew by approximately 8% in FY 2022, representative of HPI in the Group's starter-home focused suburban segment. Some moderation in levels of HPI for the overall market is expected in FY 2023, while HPI in the first-time buyer segment of the market is expected to remain broadly in line with FY 2022 levels. 

As the Group meets the rising demand from the multiple customer types in the market, several sites are now delivering over 100 units per annum which allows the business to generate enhanced operational efficiencies, underpinning faster profit generation and improving the Group's Return on Equity. 

In FY 2022, the Group delivered approximately 480 units (35% of our suburban units) as part of these Government support initiatives to provide social and affordable housing.

The First Home Scheme has been operational since July 2022. The scheme is designed to bridge the gap between a first-time buyer's deposit and mortgage and the price of the new home, providing up to 30% of the price of the home in Government funding. This initiative is an important element of the Government's Housing for All plan and supports affordability for first-time buyers, a key customer for Glenveagh. On 1 January 2023 the scope of the scheme was significantly extended to an additional cohort of buyers by increasing the price ceilings that apply in 30 of Ireland's 31 local authority areas. These changes will provide more first-time buyers with enhanced access to new housing developments.

The potential customer demand is further strengthened by the recent change in the Central Bank of Ireland's macroprudential rules, announced in October 2022 and effective from 1 January 2023, which is also expected to increase borrowing capacity materially among the first-time buyer cohort. These buyers can now borrow up to 4x income compared to a 3.5x limit previously.

c.   Urban

In FY 2022 the Group made significant progress in the monetisation of the urban land portfolio. This has served to improve the Group's Return on Equity, generated excess capital to return to shareholders and significantly de-risked its urban assets in a more challenging environment for apartment construction.

The four projects signed in FY 2022 - East Road, Barn Oaks, Castleknock and Cluain Mhuire - are expected to generate over €310 million of total revenue.

·    In April 2022 the Group announced the sale of its high-rise apartment site at East Road in Dublin's Docklands for a cash consideration of approximately €63 million. The East Road site was purchased by Glenveagh in 2017 and following extensive master planning, design and place making, the site consisted of 554 residential units with ancillary commercial space.

Revenue generated from the Dublin Docklands site to date has totalled over €210 million. Included within this is the forward fund of the Premier Inn hotel with Union Investments, completed in 2021 for €70 million, which continues to deliver revenue and profits in line with the construction progress on site. This project delivered approximately €26 million in FY 2022.

The remaining asset in the Docklands portfolio is the office development which is being constructed in conjunction with the Premier Inn hotel and will be sold in FY 2024 at completion.

·   In May 2022 the Group closed the forward fund transaction for 320 apartments in Barn Oaks, Citywest, Dublin for approximately €100 million. This site is under construction and delivered a land sale and development revenue in FY 2022 of approximately €56 million.

·  The Group signed a forward fund transaction for 192 apartments in Castleknock, Dublin for approximately €80 million in September 2022. The associated land sale and development revenue in FY 2022 was approximately €30 million.

·    In September 2022 the Group also signed a transaction to forward sell the development in Cluain Mhuire, Blackrock, Dublin of 140 residential units (incl. Part V) for approximately €70 million. As this transaction is a forward sale, all revenue and profits will be recognised at completion, which is currently forecasted for FY 2024.

Construction also commenced in the year on the 33 units at Marina Village, Greystones which were forward sold for approximately €17 million. These units will complete in FY 2024 with revenue and profits recognised at that point.

In total approximately €600 million of urban revenue will be generated from the Group's urban asset monetisation to date. Approximately €203 million is expected to be recognised in coming years, of which approximately €120 million will be recognised in FY 2023.

The Group's urban assets now comprise a modest 13% of its overall land investment. The focus in the near term for the Urban business segment is delivering the five executed transactions for institutional customers, but the Group will continue to monitor the dynamics in the urban market and may reinvest further capital when a favourable market opportunity arises.

d.   Partnerships

The Group progressed well in its Partnerships business segment in FY 2022 and, as expected, lodged planning applications for both Ballymastone and Oscar Traynor Road in the second half of the year. An initial planning decision in favour of both applications has been made and are currently subject to any ongoing appeals.

The Group expects to receive a final planning decision on Ballymastone by Q2 2023 and Oscar Traynor Road by Q3 2023. As previously indicated, we will start construction immediately once planning approval is granted. This timeline continues to support our target that the Partnership business will generate revenue and profits from FY 2024.

ii.   Forward Sales/Orderbook

The suburban forward order book is currently 803 units, comprising units for delivery in FY 2023. In addition, revenue contracted for delivery in the five executed transactions within the Urban business segment is €203 million. In total these provide a forward order book value of approximately €462 million.

We have continued to actively manage suburban unit reservations for FY 2023 and closed units and reservations for this year now stand at 803 units. This improved reservation rate is evidence of the strong underlying market demand that is supported by the resilience of the domestic economy and by the updated Housing for All initiatives and the change to the Central Bank of Ireland's macroprudential rules that both became effective in January 2023. Customer demand is further strengthened by the continued undersupply of high-quality, affordable housing in Ireland.

All of the sites required to achieve the Group's FY 2023 suburban target are now also active, selling to private buyers and via Government supported initiatives. The Group expects to commence construction on another five sites during this year that will position the business effectively for delivery of its 2,000 suburban unit guidance for FY 2024.

iii.  Planning Progress and Policy

Notwithstanding strong underlying market demand, the current planning system and the delays experienced in getting timely decisions is directly impacting the business. As we noted in our Full Year Trading Statement on 5 January 2023, planning delays will have a near term impact on suburban unit completions for FY 2023 and in this context we anticipate suburban unit deliveries in line with FY 2022 performance.

Recent appointments have been made to the Board of An Bord Pleanala ("ABP") and it is anticipated that additional resources will be provided to the planning board in the coming months to improve its processing capability and to enable it to process new applications more effectively.

The Group did make progress despite this turbulent planning environment during FY 2022 with 653 units granted permission across 9 sites. In addition, the Group also received initial planning decisions from Local Authorities on 1,939 units, including 432 units in the Partnerships business segment.

In FY 2022 the Strategic Housing Development ("SHD") planning process was replaced by the LRD process. This process operates in a similar manner to the SHD process but leaves decision making with the Local Authority, allowing ABP to operate as an appeals board in dealing with larger applications. The LRD system is functioning well and the Group has already lodged five applications under this process, with several successful grants already received within or ahead of guided timelines. The Group is also exploring the option to re-lodge its four outstanding SHD applications, totalling 1,100 suburban units, into the LRD system.

Overall, the Group is well positioned for longer term growth. It lodged planning applications for approximately 3,600 units in FY 2022. The Group currently has over 5,000 available planned units, including approximately 3,500 suburban units.

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iv.  Input Cost Inflation

Inflation across materials and labour remained elevated through the year and the Group's scale advantages, long-term commitment to local supply chain partners and its manufacturing capabilities, gave it the ability to manage overall cost price inflation to approximately 8%-9% for FY 2022. As levels of house price inflation in the new homes market were at similar levels, the overall impact on margin was broadly neutral.

Significant increases in material input costs were experienced during FY 2022 as the construction sector faced a combination of ongoing supply chain constraints, volatile and rising commodity prices, materially higher energy costs and fuel cost inflation in relation to transportation.

The materials element of the Group's cost base experienced a low-teen percentage level of cost price inflation in FY 2022, though as the year ended there were early indications that the pace of inflation was beginning to moderate.

The Group has a number of strategies to mitigate the impact of rising input costs. It continues to work in close collaboration with supply chain partners to secure sustainable, competitive pricing, while maintaining the security of supply. A key strength of the Group, its scale and purchasing power, has become much more significant in the current environment and this enhances its ability to negotiate competitive terms and pricing with both domestic and international suppliers.

In addition, the Group has further developed its own manufacturing capabilities to give greater control over input costs and mitigate the effects of the inflationary environment.

Inflation in the labour element of the Group's cost base was at mid-single-digit percentage levels in FY 2022. Labour availability in the sector increased during the year as all COVD-19 related unemployment schemes came to an end as well as activity levels slowed in the one-off housing and renovation markets as a result of the inflationary environment. The Group also continued to benefit from the significant investment made in recruitment and training which ensures that it continues to attract and retain a high performing workforce with the necessary skills and expertise. Investment in our off-site manufacturing capabilities will also help protect the business from any longer-term structural labour shortages in the construction industry.

v.   Supply Chain Integration

The Group made significant additions to its supply chain in 2022, which will benefit the long-term ambitions of the business. As the Group's manufacturing capabilities continue to develop, this allows the Group to align further with its sustainability objectives while also guaranteeing high quality supply in a more volatile environment.

In August 2022 the Group acquired Harmony Timber Solutions Ltd., a timber frame manufacturer based in Wicklow. The Group has worked successfully with Harmony for the last five years and key management will both grow the business itself and assist in accelerating timber frame production at our nearby Suburban South facility in Carlow.

Our planned facility in Carlow is anticipated to become operational in FY 2023. Together with our existing Dundalk facility and the newly acquired capacity from Harmony, this will provide the capability to produce more than 2,000 timber frames per annum from FY 2024.

Furthermore, in FY 2022 the Group signed a supply agreement with a Light Gauge Steel ("LGS") manufacturer that will allow the Group to develop enhanced steel frame panelised systems at the same Carlow site. This has the potential to increase control of the construction process in all unit types up to five storeys, and is a stepping stone towards volumetric off-site construction. This will be complementary to, and integrate with, our timber frame operations.

Together these initiatives will help the Group to meet its ambition to incorporate high-density and standardised house types into the manufacturing and delivery process. They also will improve the efficiency and sustainability of the Group's land use, while improving operational effectiveness and costs control, thereby ensuring long-term value creation. It is a key component of the Group's long term growth ambition.

The focus for Glenveagh in FY 2023 is to integrate these capabilities effectively into Group operations and maximise the value of these investments. Progress to date on this is encouraging.

vi.  Development Land Portfolio Management

Given the Group's strong land portfolio, the business continues to take a disciplined and strategic approach to land acquisitions and remains focussed on managing to a 4-5 year land portfolio at scale.

A key strategic priority for the business has been to reduce the net investment in land and improve capital efficiency and, in line with this priority, the Group's land portfolio was €458.5 million at 31 December 2022, a reduction of over €100 million since 31 December 2021. This was primarily driven by the monetisation of further assets, particularly in the urban portfolio. It is anticipated that the size of the landbank will reduce further in FY 2023.

The Group controlled a land portfolio of approximately 15,100 units at 31 December 2022 with an average plot cost of approximately €30k. Suburban units accounted for 72% of the portfolio, with the remainder comprising Urban segment (14)% and Partnerships segment (14%). 70% of the overall portfolio is located in the Greater Dublin Area and 96% of the suburban portfolio are starter homes.

The Group continues to create a more active land portfolio to support the continued growth and the opening of new sites. The Group acquired nine new sites in the year for a total consideration of €34 million (excluding taxes and fees) and these sites are expected to deliver over 1,150 units over the coming years. Three of the new sites are adjacent to active construction sites, which should allow the Group to maximise construction and operational efficiencies in these locations.

The Group also remains focused on prioritising structured land transactions which will enable more efficient standardisation of the suburban portfolio as well as maintaining an efficient balance sheet. We completed our first such transaction in FY 2022 in Donabate.

In October 2022 the Group launched its National Land campaign, including a new portal and national media campaign to support landowners in Ireland as they navigate development partnership opportunities.  

Working in partnership with the landowners, Glenveagh will provide support, expertise, and experience throughout the development process, from initial review through due diligence, planning, zoning, and implementation. This launch has been very well received to date and this approach has significant potential in building the land pipeline in key communities for Glenveagh.

A Residential Zoned Land Tax is being introduced in FY 2024, replacing the current Vacant Site Levy, aimed at incentivising landowners to use inactive zoned land for housing. This will be a positive development in that it will bring additional land investment opportunities for the Group.

vii. Building Better

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 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, some of which are already underway. We have identified KPIs to measure our performance. Guided by our vision, our Building Better strategy will create long-term, sustainable value.

Our five strategic priorities are:

·     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.

·     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.

·     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.

·     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.

·     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.

viii.            Sustainability Agenda Progress

The Group made considerable progress during FY 2022 to further integrate sustainability throughout the business. Strong governance structures are in place to help drive and assess performance with the Environmental and Social Responsibility Committee in place at Board level.  

The Group placed environmental and social issues at the heart of its Building Better strategy and has integrated sustainability and business priorities into one overarching strategy. The launch of the Group's net zero transition plan is a key development in this regard. The Group has developed both near-term GHG emissions reduction targets and long-term GHG emissions 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.

In addition, the Group successfully achieved ISO 9001 (Quality) certification during FY 2022 which demonstrates the ability of the Group to operate a Quality Management System that consistently provides products and services that meet customer and regulatory requirements. It also completed the annual surveillance audits on the two certifications received in FY 2021 - ISO 14001 Environmental Management and ISO 45001 Occupational Health and Safety. The ISO 14001 certification helps to ensure the business is focused on reducing its environmental impact, supported by effective management processes. ISO 45001 demonstrates that the Group is committed to improving employee safety, reducing workplace risks, and creating better, safer working conditions.

In December 2022 the Group launched its Equity, Diversity & Inclusion (ED&I) strategy, Building a Better Workplace. There are three overarching objectives relating 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 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 awarded Great Place to Work certification for 2023.

In February 2023 the Group agreed a new sustainability linked finance facility that incorporates four specific sustainability Key Performance Indicators ("KPIs") in line with those already set out above.

Our current ESG ratings are: MSCI (AA), Sustainalytics ('Low-risk') and CDP (B). These support our commitment and progress on our sustainability agenda.

2.   FINANCIAL REVIEW

i.    Group Performance

Glenveagh continued its strong growth momentum in 2022 across all segments of the business, with our highest number of suburban unit deliveries, significant progress in the monetisation of our urban portfolio and positive initial planning decisions received for both of our Partnership projects.

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 East Road site disposal 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 ("ASP") 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 portfolio mix and house price inflation in the year.

We have actively managed suburban unit reservations for FY 2023 and these now stand at 803 units. The progress made to date in 2023 demonstrates the strong underlying demand for suburban housing, supported by the updated initiatives from the Government and the Central Bank of Ireland.

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 of no 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 suburban margin in FY 2023 to approximately 19%.

Urban gross margin was 12.9% in FY 2022, compared to the FY 2021 outturn of 17.6% which was enhanced by the significant urban site sales in that year. The FY 2022 outturn was modestly below our guidance of approximately 15%, reflecting the transaction mix in the year, 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 in 2024.

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), primarily impacted by increased interest rates which have impacted the overall market.

Overall, the Group delivered an earnings per share of 7.6 cent (2021: 4.5 cent), an increase of 69%. 

ii.   Robust Balance Sheet

In line with our continuing commitment to improve capital efficiency, we have undertaken 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 this regard, 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. As these urban developments complete in FY 2024, it is envisaged that further balance sheet efficiencies will be realised through a lower WIP profile.

The business has increased its non-current assets during the year, with increases in both goodwill and Property, Plant & 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.

At 31 December 2022 the reduced equity figure reflected the three share buyback programmes completed by the Group to date which totalled over €250 million. In FY 2022, a total of 135.7 million shares were repurchased and subsequently cancelled.

Though from a relatively low base, the Group made considerable progress in increasing Return on Equity to 7.1% from 4.6% in FY 2021.

iii.  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 focussed on acquisitions and capital expenditure of €26.4 million and the two separate share buyback programmes totalling €146.3 million in the year.

The business vigorously managed its cash flow requirements and ended the year in a net debt position of a modest €13.8 million demonstrating the strength and resilience of our balance sheet and provides a very strong platform for further capital allocation initiatives in 2023.

iv.  Group Financing

In February 2023, the Group finalised a new five-year sustainability linked finance facility of €350 million, consisting of a €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.

Ends