Glenveagh Properties PLC (GVR) Earnings Call Transcript & Summary

Hello and welcome to the Glenveagh Properties plc 2024 Full Year Results Call. Please note this conference is being recorded. [Operator Instructions] I will now hand you over to your host, Stephen Garvey, CEO, to begin today's conference. Thank you.

Thank you and good morning to everyone on the call. My name is Stephen Garvey and I'm CEO of Glenveagh. And I'm joined today by my colleague and Glenveagh CFO, Conor Murtagh. I'd like to thank you all for taking the time to join our conference call, which relates to our full year 2024 results statement released today. This morning I'm going to focus on the front end of the deck up to Slide 16 and Conor will talk to the financials. We want to give you a clear picture of the most important moving parts in the business and how delivering against our Building Better Strategy has resulted in strong performance. We will also provide context on the environment that we operate in and of course allow plenty of time to answer any questions you may have at the end. I would like to draw your attention to the forward-looking statements included at the end of today's presentation. Let's begin on Slide 4 highlighting the strong performance in 2024, which delivered record financial operational milestones for the company. We're extremely pleased to have delivered 2,415 new homes last year, a record revenue of EUR 869 million and an improved gross margin of 21.2%. Our market enjoys excellent fundamentals, but our achievements are a result of our agility, our continued operational excellence and our successful execution of our Building Better Strategy launched in 2023. The gains and efficiencies we see today, our opportunistic approach to our land bank and our scaled Partnership segments are core aspects of this strategy. We are pleased to secure such strong results in such a short time frame. As you recall, in September we said we anticipated strong increases in several areas and delivered a record upturn in both revenue and home completions. We also achieved a strong EPS for our shareholders, an increase of 112% in addition to the commencement of a EUR 65 million share buyback program. Importantly, our 2024 performance also sets us up well to operate at scale in 2025 and beyond. This was a significant year for our Partnerships business now operating at scale and making a material contribution to the group's revenue of EUR 120 million. At the same time, our commitment to innovation is driving tangible efficiencies across the business evident in our increased delivery of units and our improved gross margin profile. As a scale business, we continue to move proactively and with agility to emerging opportunities. The strategic expansion of our land bank this year supports our long-term ambitions. We will discuss these elements in greater detail as we progress this morning. For now, I want to emphasize that we hold an increasingly strong market position and have every confidence in our ability to sustain the excellent... [Technical Difficulty] Sorry about that. We had a technical problem here. So I want to go back to Slide 5 and continue from there if possible. So as we drive forward with momentum, we move to Slide 5. It's useful to provide an overview of some of the key elements of our differential investment case. The need for housing in Ireland is acute and government policy is particularly focused on increasing supply. This is against the backdrop of continued economic strength. Therefore, the market opportunity is apparent. From our perspective at Glenveagh, there are a number of key elements that we've embedded in our business to capitalize on that opportunity. We are confident in our sector leading platform, building high quality homes at scale in the right locations through our uniquely integrated operating platform. Coupled with that: our focused approach to profitable growth, balance sheet strength and capital investments are enabling us to create long-term value in our business thereby driving shareholder returns. Providing some more context to the economic environment, Slide 6 emphasizes the long-term demand outlook is very positive with the resilient domestic economy, high employment levels, a growing population and healthy public finances that can provide some protection from external shocks if needed. There are still some challenges of course; but with our enhanced land bank and full planning commission secured for this year ahead, we are confident in our ability to sustain the excellent momentum that we have built and get more homes on the ground. Turning to Slide 7. We illustrate in more detail how the program for government and the substantial market initiatives are creating a supportive environment for the housing market. The program for government aims to build 300,000 new homes by the end of 2030, a significant acceleration compared to our recent years. In addition to Help to Buy and the First Home Scheme, which underpin the affordability for homebuyers; the Taoiseach Micheal Martin has stressed its intention to bring private sector capital and investment into the housing market to ramp up completions. Such moves are welcome as in our view, a minimum of up to EUR 20 billion a year will be required in all forms of private sector investment and capital to achieve the government's housing target and meet future housing needs. As I said in January, there remains a serious challenge to housing delivery without substantial additional capital, adequately zoned land, public sector resources and critical infrastructure to support new homes. The success of our Partnerships platform, which we will go into further detail a little later, demonstrates how public and private resources can be pooled effectively to deliver this much needed housing. Moreover, we believe that we are excellently positioned to make strong contribution in addressing Ireland's housing needs. Now let's take a deeper look at our business segments starting with Suburban on Slide 8. We completed 1,650 homes, which was a 24% increase on 2023, generating record revenue of EUR 631 million. Our gross margin expanded by over 200 bps to 22.2% reflecting the benefits of our strategic and sustained focus on innovation, standardization and on our large-scale sites. Looking towards 2025, we anticipate completing at least 1,500 homes, which are already under construction and at an average selling price of approximately EUR 345,000. Our forward order book is now 59% complete and provides a strong foundation for future growth. All of this is underpinned by sustainable operational excellence, increasing innovation and standardization of our product and capitalizing on modern methods of construction which we will touch on again shortly. Looking now at our Partnerships segment on Slide 9. As mentioned earlier, 2024 was a breakout year for Partnerships. We actively collaborated with multiple state agencies to stimulate and accelerate housing supply and earning a partner of choice status. In 2024, we demonstrated the strong sustainable potential of this segment as the portfolio expanded on 4 partnership agreements. The new Mooretown and New Road sites and joint Ballymastone and Oscar Traynor Road developments. Overall, we achieved EUR 120 million in revenue in this business segment, up from EUR 17 million in 2023 with a gross margin of 16.9%. As evidenced by the strength of our Suburban results; the group's strategic investment in innovation, standardization and supply chain integration also provides a strong competitive advantage for partnerships enhancing our capabilities in planning, design, manufacturing, quality and speed. We are well positioned for future collaboration with public sector bodies having forged strong relationships with multiple state agencies, approved housing bodies and local authorities. The Partnerships segment has the potential to deliver sustained growth and will account for a significantly higher proportion of revenues from 2025 onwards with an anticipated reoccurring annual revenue of over EUR 400 million. Turning to Slide 10. The Urban segment made good progress in 2024 completing 655 units and generating EUR 118 million in revenue by closing key projects including our Cluain Mhuire development, Citywest and Castleknock. In Q4, the segment also completed a forward fund transaction of EUR 52 million for 139 units at our Barn Oaks site with an Approved Housing Body and a forward fund transaction of 337 units at our Cork Docklands site with the Land Development Agency. These partnerships further cement our position as a partner of choice in public-private collaboration and our ability to execute large-scale projects efficiently. Finally, as announced in January, the group intends to simplify its segment reporting under Housebuilding and Partnerships. You will see our Urban segment consolidated under Partnerships from H1 2025 reflecting our strategic focus on large-scale mixed tenure developments. With Slide 11, let's take a step back for a moment. When we launched our Building Better Strategy in 2023, we highlighted our proactive land investment strategy, which could be the cornerstone for our growth. This approach was driven by market context for structural undersupply particularly in core locations and the time lag in delivering units on newly zoned land. Our strategy has been to acquire land both opportunistically and proactively to facilitate the delivery of own-door housing in the right locations. In 2024, we identified the opportunity and acted decisively to secure attractive assets across 14 well-located sites aligned with future planning the National Planning Framework policy. As you can see on the right here, our controlled land bank now approaches 20,000 units. Moving on to Slide 12. As you can see in more detail on the profile and qualities of those acquisitions: the size, the location, the profile of the site align with our strategy of the type of high quality units we can deliver efficiently with strong focus on own-door homes. The sites were purchased at an attractive cost of EUR 31,000 per unit with site cost as a percentage of net development value of less than 10% and strong embedded spot margin of approximately 21% offering an attractive return on capital employed profile. Our controlled land bank of up to 20,000 units will support the delivery of over 2,600 equivalent units across our business segments through to 2029. Moving to Slide 13. Innovation, standardization and manufacturing are an integration and inherent to the process that we will continue to future-proof the businesses. With our off-site manufacturing unit now operating at scale, the benefits of the investments in these processes are evident across our operational and financial performance. A key focus of Building Better Strategy has been to transform our manufacturing business. NUA, our innovation and manufacturing arm, reflects our success in doing that having operated at high volume and manufactured over 2,000 units in 2024. Innovation in off-site manufacturing enables us to plan, design and build homes and houses effectively and with greater efficiency, speed and cost control over our supply chain. The benefits are already evident in our margin expansion and will yield greater results in the coming years. Slide 14 illustrates how we are evolving construction methods to future-proof our business. Our innovation agenda is supporting the transition from heavy traditional materials to innovative lightweight alternatives that enhance the efficiency and the delivery of high quality units. As outlined on this slide, these innovative wall, roof and floor solutions will be rolled out on a phased basis right through to 2030. A notable achievement last year was the signing of an exclusive perpetuity license to extend the capabilities of our manufacturing business and increase the pre-manufactured value in future periods. Our innovation agenda has positioned Glenveagh as a leader in modern methods of construction and timber frame construction with the government targeting 25% of modern methods of construction in state-backed housing and promoting timber frame in new housing. We are well positioned for future delivery. As you can see on Slide 15, we have scaled our delivery while delivering the high quality standards and excellent finish that customers trust, which underpins our reputation. Our customer satisfaction rating increased to a high of 94.3% in 2024. We continue to adapt to meet customer needs exemplified by our digitalized customer service platform, which enhances support and overall experiences for our homeowners. At the same time, our industry-leading certified manufacturing capabilities ensure that all developments meet the highest quality standards. Turning to Slide 16. Sustainability has always been a key driver integrated in our Better Building Strategy. For us, sustainability is about identifying opportunities, managing risks and ensuring the long-term resilience. Cost and carbon are inherently linked in Homebuilding and by reducing emissions not only do you protect the environment, but you also drive operational efficiency and safeguard the future for the business. Furthermore, in a sector where the workforce participation rate is declining, we must remain an employer of choice both for our direct employees and those working across our sites with our subcontractors. In 2024, we made significant progress in our emissions reduction, biodiversity and inclusion. We achieved a reduction in absolute Scope 1 and Scope 2 emissions and conducted our first double materiality assessment. This year we became the first Irish homebuilder to report in CSRD, enhancing the rigor and the accountability of our business activities and further strengthening our position as a market leader. We are also proud to share our experience with the initiatives that have helped the business to improve the sustainability performance. We also earned a gold accreditation from the Irish Center of Diversity making Glenveagh the first construction company to do so. And finally, with the positive news that we have been recognized as one of Ireland's Best Workplaces for now half a decade. With that, I'll pass you over to Conor for a review of the financials. Thank you.

Thanks, Stephen, and good morning, everyone. I'll start with the income statement for 2024 on Slide 18. As Stephen has said, 2024 was a landmark year for Glenveagh characterized by robust revenue growth, improved margins and significant increases in both operating profit and EPS. Total group revenue reached EUR 869 million, an increase of 43% from 2023. This revenue growth was as a result of strong delivery on site particularly in the Suburban segment, which recorded revenues of EUR 631 million, up 34%. Our Partnerships segment is also now generating material revenues and we anticipate further sustained growth in this segment in 2025 and beyond. Prior period investment in innovation, standardization and size and scale were clearly evident in the group's gross profit and margin performance in 2024. Gross profit of EUR 184 million grew by 63% and resulted in a corresponding group gross margin of 21.2%, 270 basis points higher with the Suburban segment expanding gross margin by 200 basis points to 22.2%. Urban and Partnerships segments delivered margins of 19.7% and 16.9%, respectively, with both benefiting from strong mix effects in addition to a EUR 2 million net impairment reversal in Urban. The enlarged Partnerships segment is expected to deliver a gross margin of approximately 15% in future periods. People, innovation and systems are all critical to the continued success and growth of the business and the increase in operating expenses reflects the continued investment in those areas inclusive of an increase in the share-based payment expense. This is partly as a result of the significant increase in the share price during the period. Overall, the group delivered an improved EPS of EUR 0.17, in line with guidance and a return on equity of 14.2% was achieved. Moving to Slide 19. We take a closer look at the balance sheet, which reflects a robust financial position. While our capital allocation priorities remain unchanged, market dynamics and the opportunity to secure our long-term outlook necessitated a rebalancing towards land investment in 2024 with a closing land balance of EUR 556 million excluding development rights. Moving to other working capital. December '24 bulk sale transactions resulted in an artificially high debtor balance with one-off proceeds from the Foxwood Bam forward fund development received following year-end. Meanwhile, underlying trade and other receivables increased due to a rise in contract assets from our Partnerships business. Given the stage of construction on existing partnership sites and the profile of new partnership wins, significant growth in segment revenues is achievable without a material further investment in this contract asset. Moving to Slide 20. Reflective of our deliberate decision to add to the group's sector leading own-door focused land portfolio, operating cash outflow for the year was EUR 93.4 million compared to an inflow of EUR 50.9 million in 2023. Notwithstanding this, we delivered a strong underlying cash performance in H2 of approximately EUR 100 million. Our net debt position increased to EUR 179 million or 15% of gross assets, comfortably within our guided range of 15% to 25%. Finally, the expansion of net debt in H1 '25 is expected to be significantly less pronounced than in H1 '24 given the improved revenue and cash profile in H1 '25 with more Homebuilding unit completions anticipated and a more favorable cash flow profile in Partnerships. Moving to Slide 21. The year-end land balance was EUR 556 million, up from EUR 403 million in 2023 excluding development rights. This represents a peak year-end investment level and we anticipate reducing our land bank investment through unit delivery complemented by noncore site sales exceeding EUR 100 million over 2025 and 2026. Confidence in delivering this outcome has increased since the trading statement in January. On Slide 22, our capital allocation priorities are unchanged with a focus on value creation and shareholder returns through disciplined and balanced capital allocation across 4 areas: land investment, work in progress, supply chain and returning excess cash to shareholders. As I've outlined, our land investment represents a peak year-end level for us and will reduce in future periods. Partially offsetting this, investment is required in work in progress to support Homebuilding unit growth from 2025 to 2027. Croi Conaithe schemes in particular will require near-term WIP investment as we prove out this new market segment. Meanwhile, divesting the freight building will allow us to reallocate resources effectively in due course. In supply chain, our investment in off-site premises is largely complete. We have capacity in place to produce 2,500 timber frames and light gauge steel units per annum and plan to invest approximately EUR 25 million in aggregate across the next 3 years primarily to operationalize production of an external wall system thereby improving supply chain efficiency, meeting growing demand and supporting margin expansion. Finally, with regards to the return of excess cash. On completion of the current buyback program, we will have returned over EUR 380 million to shareholders since 2021 reducing the share count by approximately 37%. As part of our ongoing EUR 65 million share buyback program, we have deployed EUR 46 million to date with the remainder of the program expected to complete around the date of the group's AGM in May. So bringing that all together on Slide 23, the long-term demand outlook is very positive buoyed by underlying housing need as a result of population growth, resilient demand, clear policy visibility over the next 5 years and our ability to deliver high quality own-door housing in the best locations. We expect to exceed 1,500 Homebuilding unit deliveries in 2025 with 1,900 anticipated in 2027. As a partner of choice for the public sector, we also anticipate further projects and growth in our Partnerships segment and are targeting run rate revenues of approximately EUR 400 million from this segment from 2025. Meanwhile, we will reduce capital in land with site sales exceeding EUR 100 million over 2025 and 2026 with a weighting towards 2025. As a result, we are confident in our ability to sustain the excellent momentum we have built and deliver an EPS of approximately EUR 0.195 for 2025 well underpinned by our strong forward order book. Finally, we will maintain a disciplined and balanced approach to capital allocation, prioritizing long-term value creation and shareholder returns. Our return on equity target remains at 15% following the activation of newly acquired land assets in future periods. Thanks again for joining this morning. And I'll now pass you back to Stephen for his concluding remarks.

Thank you, Conor. As we conclude with Slide 25, we remind you of the key factors that Conor has already spoken about for the success and the differential investment case in our business. First, we operate in a market with structural undersupply, a really strong economic backdrop and supportive government policy; all driving robust customer demand. Second, our attractive land portfolio, proven private sector collaboration track record and our innovative manufacturing capabilities gives us a sustainable competitive edge. Finally, our performance record in delivering strong outcomes speaks for itself. Our 2024 achievements include a 77% increase in housing completions, a 43% growth, 9,000 units added to our land bank and a successful scaling of our Partnerships segment. Importantly, we are creating long-term value in our business and delivering returns for our shareholders. On completion of our share buyback program, we will have returned over EUR 380 million to shareholders since May 2021. Glenveagh is positioned to continue growth with a healthy land portfolio, a robust forward order book, a very positive environment and the necessary planning permission and the innovation and standardization that has been completed in the business. I want to thank you for your attention. We will now open the line for any questions. Thank you.

[Operator Instructions] We will take our first question from Colin Sheridan from Davy.

Congrats on the great '24 again. I have 3 questions, if that's okay, and the first one's in a few parts. The first one is on vertical integration. I mean you've talked through what seems to be a pretty impressive opportunity set in the presentation. I was just hoping to dig into a little bit more. Ultimately these changes you're talking about with the new deal that you have and the expansions that you're doing, what is it ultimately going to take away from the site in relation to labor or what processes are no longer going to be done on site and are going to be done in the manufacturing facilities as well? And then I guess what is the benefit to the group from either a returns perspective, i.e., saving time and maybe whether these can have a margin benefit through lower costs as you increase the amount of off-site as a percentage of the overall construction? And then maybe specifically on the EUR 25 million that you flagged for new spend, is there any new facilities in that or whether that's just kind of equipment and expansions of existing facilities? The second one then is on the new land purchase mostly in 2024. Just wondering if you could give us an update on how quickly can those be progressed in relation to either maybe in some case getting on site and for others how quickly they can be pulled through the planning system and whether there's been any moves on that to date? And then finally, just on Partnerships, you've highlighted the 2,000 units of adjacencies from the deals that are already closed. Just wonder what the rest of the pipeline looks like outside of those deals and whether there's really anything that could become revenue generative in the short term within that pipeline.

Colin, apologies for the gremlins in the system earlier on if you missed anything. For the first question, so at the moment obviously we operate in 3 manufacturing facilities. Predominantly 90% of what we produce is timber frame units and then we've got our light gauge steel system, which we use for maisonette duplexes. Give or take that's about 20% to 25% of the production. Where we see ourselves evolving, I suppose the system that we've now acquired and obviously we're the sole licensee in Ireland for this system. There's a drive by government to drive modern methods of construction. It's actually a drive by both government and opposition parties that this is the way of the future. Where we would like to get to is we're not going for a full volumetric. We're going for a 2D system where we can to a degree complete a very large element of the product under a factory floor condition. So we're getting to a stage where if you were to look at it, there's 4 main components on site. You've got your civils and your substructures, which are about 20%-odd; then you've got your superstructure; you've got your fit-out costs and then you've got your prelims. Where the real saving that we're driving is obviously at our prelims because if you can reduce the quantum of labor and requirement of management's time on site, that's a massive saving. It can also allow us to deal with our ground conditions much better because our view is it's in the ground is where the most money can be lost and if you can get above ground, you can control your costs better and then that reduces our time frame to deliver the units and complete them. We already were able to bring them in an element. Once we get from substructure to finish the house, we were able to do it in about 12 to 14 weeks. With this system, we can probably get closer now to about 8 weeks in the long term once you're out and above ground. That obviously is a big saving on our premium cost on site. So you would imagine there's 2 ways this will go for us. It can enhance obviously the management structure on site and it's integrated with our standardization process and that's key to that process and it can make us turn our WIP much faster. The other big I suppose benefit for what we see is the states are going to drive this their lands in particular. This is the way they're going to want partnership sites in the future delivered. Now we see that as a real advantage for us when we're tendering for future projects or a way to deliver housing into the future. We think we have those benefits.

And on the EUR 25 million, Colin, there's no additional facilities required. There is a rejigging in terms of what the facilities will do and get a bit more focused on the digital part of the processes, but no new premises. It's all lines and machinery and moving stuff around.

I might have answered this. The key trades we're probably looking to is not eliminate, but we know there's going to be resource issues going forward for the workforce that's out there and the declining participation in construction. It's an element of being able to remove the block layer and the brick layer, the roof tiler, the groundworker, the scaffolding. They are all big cost items that ultimately we're trying to control them in a better fashion and obviously allows us not only to control costs, but also scale the quantity of units we can deliver. So that's really where we're targeting. On the new land and just obviously 2024 was a big year. We flagged it earlier that we were going to make these big acquisitions. I suppose the biggest one that came in was the Swords site. So we purchased give or take about 1,500 units in the [indiscernible] portfolio. So 2 of those sites are now under construction already. But the other thing too, as we flagged, in our acquisitions was there was also an adjoining partnership site to one of these sites. That has also been activated, which is the Mooretown site. So we've activated the Mooretown partnership with Fingal County Council and we've also activated give or take about 1,000 units across those 2 sites and Swords as well. Expected delivery, I suppose that was the big thing that we flagged at the start of January was we had hoped that these developments would have come in September, which would have given us a starting chance to get them up and running earlier. They didn't complete until the very last week of December. So we were only able to activate construction in the third week of January. So that was a bit of delay in that. But they're now in full operation and obviously we're factoring them in for 2026. The other sites we've obviously taken in, they are substantial land holdings. Some of them have an element of planning, which we are going to win and amend to our product and get it more aligned to the product that we deliver. But we're looking at somewhere between give or take on the short end, 12 months and at the long end, about 24 to 30 months to get them through the planning system. We're pretty happy with what we've now acquired and locked in. We see quite limited what we might acquire over the next 12 to 24 months. But obviously our commitment is to recycle sites that are probably no longer accretive to the business. There might be sites of smaller scale that don't make sense for us for the product we're delivering out there and we'll recycle that over the next 12 to 24 months as Conor has flagged. Partnerships, I suppose this is why we are where we are. So a number of the sites we've acquired had partnerships adjacent to them. We have 1 taken down already. We hope to be progressing another one as the year evolves or maybe into 2026. You may have seen the news today from the LDA that they've acquired another large development besides themselves in Clongriffin and [ Ballymastone ]. I think if you were to look at 2024 from a land market perspective, the big buyers in the land market were ourselves and I would say the Land Development Agency took down a lot of sites. We think that that's where the big opportunity now is going to be coming forward is obviously the state lands. They have the land. They obviously have the capital. They just need to team up with the right people to get the best design and get the efficiency of delivering product on that. So we see those as opportunities. We're in tender on 1 project at the moment. We hope that that might come through later on in the year. But as I said probably 12 months ago, the plan would be to get the business somewhere to 6 to 8 partnership sites give or take over the next 24 months and then have a robust business from there on an ongoing basis. I suppose for us, the state are the single biggest landowner controlling the best part of 150,000 to 200,000 units and if we only got 10% of that, it's a very robust business for us going forward.

We will take our next question from Shane Carberry from Goodbody.

Just a couple for me, if I could. If I could expand a little bit more just in terms of Colin's question around the partnership and the pipeline. I think it was kind of this time last year, Stephen, you were kind of talking about potentially being able to juggle kind of 6 to 8 sites from a Partnerships perspective, obviously already great progress made and at that kind of 6 number. Is that still how we should be thinking about things going forward? I know when the Urban business and Partnerships business combine, it will be a little bit more difficult to see that maybe. But can you talk a little bit around if that's still the kind of number we should be thinking in our head? And then just in terms of the infrastructure piece of the jigsaw, could we get an update in terms of your feel for how things are going on the infrastructure side; ESB, Irish Water, et cetera?

Shane, apologies for the phone line earlier on. I think on the Partnerships side, I suppose I always classify it. I know we've amalgamated the businesses now with Urban and Suburban. I classify the 4 partnerships that we're doing with the local authorities, obviously the Cork Docklands is the fifth and Barn Oaks the sixth. It's probably give or take when you amalgamate the Urban business. Obviously we've probably reduced the quantity of Urban in this business. We're not acquiring Urban assets. But yes, I feel pretty confident that we're probably a minimum of 8 sites going forward with a reoccurring business. I see that as a big opportunity. What sticks out to me when you look around the land market and I suppose why we really went into the land market last year was it's quite limited the quantity of zone land that's there available to the private market. And then if you look at the land that is in the system or potentially can be opened up, it's predominantly big state assets that can be opened up that they need an element of infrastructure investment. And I think that's where probably the target is going to be from the government's perspective is target to open up some of these big land banks. You don't have to look very hard to identify sites of 2,000, 3,000, 4,000 units that are in state control that can open up vast quantities of housing. It's just a matter of getting on with it quickly and I think we've shown that we have the ability to do that. So look, I wouldn't like it to be 100% of the business, but I certainly think going forward, this can be a minimum of 50% of our business into the future years. It's reoccurring income. It's a very, very low land cost if any land cost at all. And I suppose the other big benefit is working with the state brings the state's capital or balance sheet to the table as well and it's just very accretive to returns for investors and we just think that's a huge opportunity going forward. So very much leaning towards that now at this moment in time. I'm trying to think the other one. The infrastructure and I kind of covered a bit of it. There's absolute constraints out there and we're hearing stories of Irish Water is challenging. You're now hearing challenges with the grid. We've got a reach-out from a few developers who are struggling at the moment. Now there is solutions to the grid and we're actually openly working with the suppliers on that to bring. Because we have such large sites, we have areas where we can actually facilitate utility companies to bring their infrastructure. So we're looking at them, but it's an absolute challenge. If I was to look at it, it's probably the government's #1 priority is to look at where the infrastructure is obviously challenged and how they can deliver on it quickly. it's not an issue for us. I suppose what we always do is really look at that where the challenges are. We've built up such a platform here at this stage with the experiences of acquiring so many sites. We can look through that and exactly identify where the issues are and we're in a pretty good place. But I am seeing that on the ground and I suppose the thing that sticks out to us is we're starting to be really approached by smaller developers who are really struggling for either they don't have land with services or they don't have land at all and they're coming to the likes of us and say look, would you proportion a piece of your land. So that's why we're pretty confident in being able to recycle our land bank in the foreseeable future on sites we don't require.

That's really helpful. If I could just ask 1 follow-up, Stephen, if that's okay, just on the first part regarding the state land bank. Those sites that you're calling out maybe 2,000 to 4,000 units, would they be broken up or would that be a possibility to actually agree a deal of that sort of size?

I think that's going to be interesting. Like some of them you could look at and say you might break them up and look at different quantities of tiles in a site. You take the likes of a Cherrywood, which Hines developed; you could look at a site like that and say break it up into tiles. But you probably need someone to probably lead the master planning and lead the infrastructure development and break it up from there. So there's probably something like that. I think sites of that size wouldn't bother us because if you look at a site of 3,000 or 4,000 units, the state can -- over the tenure profile, remember you're doing probably 4 tenures on this site from social affordable housing, maybe private housing, cost rental housing; you can probably deliver comfortably 500 to 600 units a site on these sites. And we've seen that in 1 or 2 of our developments. We're going to see that in Ballymastone this year, it's going to deliver about 450 units. It shows you when sites of these scales really get up and running, you can deliver large quantities of housing. The other big thing and probably sticks out as well is these sites are all kind of linked in key transport nodes. So they don't need a massive investment from a transportation point of view. They may need some critical infrastructure and upgrades on ESP supply or water supply. But from a transportation point of view, they're actually well located and you're using the existing infrastructure. I think that's where the focus will come from the state. How can they get the maximum return with the greatest speed on these sites going forward.

Our next question comes from Glynis Johnson from Jefferies.

I actually have 3, but they're all on your off-site manufacturing actually. The first one is just in terms of the facade systems. I'm just wondering by the sort of 2027 period, what is the scale or is the penetration do you think you'll have with that facade system? Can you put it on 100% of what you're building? Is it actually only going to be a placed for 50%? Then in terms of the MMC innovation fund, I'm just wondering in each of those 3 stages that you've given us in terms of the facade and the roof cassette or the roofing, what proportion of premanufactured will you be at in each of those end stages just so we can judge quite how much will be off-site? And then lastly, just going back to your point about could Partnerships become 50% of what you deliver, that would imply that you do need another facility in order to be as well covered from your premanufactured. So when do we need to or when do you need to start thinking about the decision to start investing in for that factory #4, factory #5?

Sure. As a percentage I suppose, Glynis, we always outlined at the very start of this way back in 2018 or 2019 that we were homebuilders. That manufacturing obviously we wanted to embed it in the business, but we wanted to take it slowly. I think if you look at the success of our timber frame operations, we're the biggest timber frame supplier in the country now and we didn't make a huge investment. We got there by incremental steps. Obviously we're in a very unique position by buying what we've just purchased and we're going to be the sole licensee in Ireland. That leaves us in a very unique position. I'd like to take it on a very much staged basis. We're going to be putting a new line in our first in the Carlow factory over the next 12 months and working on that line at the moment, get it into production, roll it out. The 2 key things for us is it's one thing producing it in a factory, it's also another thing taking the site teams through the process and bringing that through. We've tried an element of this already in one of our developments in a kind of trial and test period, very small operation. We've seen great success in that. But I think you're probably going to see us roll it out over the back end of '26 into '27 and then it will be stages of maybe moving from 10% to 25% and so on and so on. Take it on that stage basis because we want to see it in that success. As we outlined, there's each phase of this we're looking at from roof tiles are a very onerous high carbon product. The labor intensity of that, the health and safety requirements, we believe there's a better way of doing that. We're looking at innovating that product. That's probably down the road from '27 onwards and keep bringing that up. And then for us the ground, we're already in testing on that and you'll see it in the Carlow factory where we've done testing on this. It's about bringing the regulations with us and working that through. Again that will be a core system. Ideally you're kind of looking at give or take, 50% of the entire production would be a factory-based control system probably, but it's on a phased basis running up to 2030 and maybe beyond to roll that out.

And just obviously the penetration is higher, Glynis, in the Homebuilding business than it is in the Partnerships. So there's no plans for an additional factory at the moment.

On Partnerships, I think, Glynis?

No, that was it on Partnerships. It's just I would have actually thought there's a higher penetration potential within Partnerships than in Homebuilding, but it was about how you accommodate future growth with your MMC?

Yes, it's a typology. So if you think the Homebuilding business will have just a higher weighting of own-door housing and maintenance and duplexes, which lend itself more easily to the Panama system than, say, apartments.

There's probably infill systems we would use on the apartments, but there'll be a smaller quantity required.

[Operator Instructions] We are now taking our next question from Jonathan Coubrough from Deutsche Numis.

Interesting to note that the land acquired last year is at 21% gross margin, which is similar to the gross margin that the group is currently doing on land acquired historically. Just wondering what are the dynamics in the land market and does that imply there's not been much inflation in the land market or is something else going on there?

Yes. It's an interesting dynamic. I suppose the key thing that's probably different to other markets is the percentage of sale prices. Obviously our average selling price has moved up over the last number of years. But as a percentage of net development value, that percentage has gone down. The average would have been 15%, 16% a number of years ago, it's now sub-10%. I think there's 2 key factors. I think the availability of capital on the ground to buy those sites and those sites of scale is probably quite limited. There's obviously other -- to get finance and pay. Alternative finance last year probably cost some of the players 12% to 15%. So that would be quite challenging for them to get their hands on that. We've kind of seen those opportunities. We knew what was coming out in the system. We had focused on that plan for a number of years and we've just seen our opportunity to strike and I suppose that was the big investment last year. Our view out there at this moment in time is, as you know, we have a national development plan now that's obviously under review. The government are going to increase housing targets. That is going to make county development plans come in, reiterate their plans, review that. But by the time you take all that into account and it goes through the process, to put a shovel in a newly zoned site, you're probably looking at somewhere at the back end of 2028 or the first quarter of 2029. From the land that we have bought and what we have under our control excluding new partnerships, we're in a pretty safe place that we can get through all that. Obviously we'll target future opportunities. We have an element of strategic land that we own ourselves. We're going to bring that hopefully through the system and rezoning that. But for now, I kind of look at it, there's quite a limited amount of land. The other big challenge is there probably is land, but it probably is very limited in services and that's going to be quite challenged to open that up. It might take 3 or 4 years to get the services on to that site. So we're pretty happy where we're at. We're happy with the margins we bought them. I suppose the biggest thing for us is the volumes we can drive out of those sites by bringing not only private housing, but an element of tenure housing to it and turning that capital as quickly as possible for us and being efficient with our WIP on those sites as well as we move forward.

And last one for me would just be on the off-site manufacturing. There have been a few questions on it, but I was just wondering whether you'd be willing to tell us what the fixed cost base of the timber frame factories are and whether they're at breakeven relative to what you would pay if you're buying these things from third parties, if that was possible? And if not, when they would get to breakeven?

Yes. They're already making a positive contribution relative to what we procure out of the market. So 2024 we got there and you'll see that continue into 2025 at scale. So very pleased with where that's relative to market pricing.

Thank you. It appears there are no further questions. I'd like to turn the conference back to Stephen Garvey for any additional or closing remarks. Please go ahead, sir.

Thank you. Thank you for all your questions. I would thank you for joining the call this morning. We're confident in Glenveagh's continued success in 2025 and we look forward to providing you with further updates as we move through the year. Thank you very much.

Thank you for joining today's call. You may now disconnect.