Hello and welcome to the Glenveagh Properties 2024 full-year results call. Please note this conference is being recorded, and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on the telephone keypad to register your question. If you require assistance at any point, please press star zero, and you will be connected to an operator. 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 2020 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 four, 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 scale 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 partnership 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. At 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.
Please stand by momentarily while we establish the speaker line again. Please stand by while we establish the audio again. Mr. Stephen, please go ahead. Ladies and gentlemen, please stand by while we establish the speaker lines once again. We apologize for the inconvenience. By the introductions, Mr. Stephen, please go ahead.
Hello, how are you doing? Sorry about that. We had a technical problem here. I am going to go back to slide five and continue from there if possible. As we drive forward with the momentum, we move to slide five. It is 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 have 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 location through our uniquely integrated operating platform.
Coupled with that, our focused approach to profitable growth, balance sheet strength, and capital investment are enabling us to create long-term value in our business, thereby driving shareholder return. Providing some more context to the economic environment, slide six emphasizes the long-term demand outlook is very positive, with a 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 seven, we illustrate in more detail Programme for Government and the substantial market initiatives are creating a supportive environment for the housing market.
Programme 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 home buyers, the Taoiseach Micheál 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 contributions in addressing Ireland's housing needs. Now, let's take a deeper look at our business segment, starting with suburban on slide eight. 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 basis points to 22.2%, reflecting the benefits of a 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'll touch on again shortly. Looking now at our partnership segment on slide nine, 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 four partnership agreements. The new Mooretown and New Road sites joined 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 partnership 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 Brownsbarn 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 house building 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 value 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 aligns 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 costs as a percentage of net development value of less than 10%, and strong embedded spot margins of approximately 21%, offering an attractive capital 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 into the process that we will continue to future-proof the business with. With our off-site manufacturing unit now operating at scale, the benefits of our business, of the investment 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 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 Building Better Strategy. For us, sustainability is about identifying opportunities, managing risks, and ensuring the long-term resilience. Cost and carbon are inherently linked in home building, 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 One and Scope Two emissions and conducted our first double materiality assessment.
This year, we became the first Irish home builder to report against 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 Centre for Diversity, making Glenveagh the first construction company to do so. 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 and increased to 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 partnership 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 of 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 partnership 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 earnings. The enlarged partnership 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 a continued investment in those areas, inclusive of an increase in the share-based payment expense. This is partly as a result of a 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 a 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 2024 bulk sale transactions resulted in an artificially high debtor balance, with one-off proceeds from the Foxwood Barn 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%-25%.
Finally, the expansion of net debt in H1 2025 is expected to be significantly less pronounced than in H1 2024, given the improved revenue and cash profile in H1 2025, with more home building 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 non-core 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 four 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 home building unit growth from 2025 to 2027. Croí Cónaithe 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 lightweight steel units per annum and plan to invest approximately EUR 25 million in aggregate across the next three 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.
Bringing that all together on slide 23, the long-term demand outlook is very positive, followed by underlying housing need as a result of population growth, resilient demand, clear policy visibility over the next five years, and our ability to deliver high-quality own-door housing in the best locations. We expect to exceed 1,500 home building 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 partnership segment, and are targeting run rate revenues of approximately EUR 400 million from this segment from 2025. Meanwhile, we will reduce capital and 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 EPS of approximately EUR 19.50 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 a robust customer demand. Second, our attractive land portfolio, proven private sector collaboration track record, and our innovative manufacturing capabilities give 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 partnership segments. 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's position 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 have been completed in the business. I want to thank you for your attention. We will now open the line for any questions. Thank you.
Thank you. If you would like to ask a question or make a contribution on today's call, please press star one on your telephone keypad. To withdraw your question, please press star two. We will take our first questions from Colin Sheridan from Davy. Your line is open. Please go ahead.
Thank you. Morning, guys. Congrats on the great twenty-four again. I have three questions, if that's okay. The first one's in a few parts, but the first one's on vertical integration. I mean, you've talked through what seems to be a pretty impressive opportunity set in the presentation. We're 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?
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? 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 extensions of existing facilities? The second one 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 cases 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.
Finally, just on partnerships, you've highlighted the 2,000 unit of adjacencies from the deals that are already closed. Just wondering 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. Thanks.
Thanks, Colin. Good morning. Apologies for the gremlins in the system here. I honestly missed anything. For the first question, at the moment, obviously, we operate in three manufacturing facilities. Predominantly, 90% of what we produce is timber frame units, and then we've got our lightweight steel system, which we use for maisonettes and duplexes. Give or take, that's about 20%-25% of the production. Where we see ourselves evolving, and I suppose the system that we've now acquired, 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 governments and opposition parties that this is a 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. We are getting to a stage where if you were to look at it, there are four main components on site. You have your civils and your substructures, which are about 20-odd percent. Then you have your superstructure, you have your fit-out costs, and then you have 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, we can control the cost better. That reduces our time frame to deliver the units and complete them. We already were able to bring them in an element of from once we get to superstructure from substructure to finish the house, we were able to do it in about 12-14 weeks. With this system, we can probably get closer now to about eight weeks in the long term once you're right to finish. That obviously is a big saving on our prelim costs on site. You would imagine there's two ways this will go for us. It can enhance, obviously, the management structure on site.
is integrated with our standardization process, and that is key to that process. It can make us turn our work much faster. The other big, I suppose, benefit for what we see is the state are going to drive this across their lands in particular. This is the way they are going to want partnership sites in the future delivered. We see that as a real advantage for us when we are tendering for future projects or a way to deliver housing into the future. We think we have those benefits.
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 they'll obviously get a bit more focused on individual parts of the processes, but no new premises. It's all lines and machinery and moving stuff around.
I suppose just I might have asked this. The key trades we're probably looking to, it's not eliminate, but we know there's going to be resource issues going forward for the workforce that's out there. The declining participation in construction is. It's an element of being able to remove the block layer and the brick layer, the roof tiler, the groundworker, the scaffolding. They're all big kind of items that ultimately we're trying to control in a better fashion. It obviously allows us not only to control costs, but also scale the quantity of units we can deliver. That's really where we're targeting. On the new land and just obviously, 2024 was a big year. We flagged it early that we were going to make these big acquisitions. I suppose the biggest one that came in was the Swords site.
We purchased, give or take, about 1,500 units in the Gannon portfolio. Two of those sites are now under construction already. The other thing too is, as we flagged in our acquisitions, there was also an adjoining partnership site to one of these sites that has also been activated, which is the Mooretown site. We have activated the Mooretown partnership with Fingal County Council, and we have also activated, give or take, about 1,000 units across those two sites in 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 did not complete until the very last week of December.
We were only able to activate construction in the third week of January. That was a bit of a delay in that. They're now in full operation, and obviously, we're factoring them in for 2026. The other sites we've obviously taken in, they're substantial land holdings. Some of them have an element of planning, which we're going to go in and amend to our product and get it more aligned to the product that we deliver. We're looking at somewhere between, give or take, on the short end, 12 months, and at the long end, about 24-30 months to get them through the planning system. We're pretty happy with what we've now acquired and locked in. We see it quite limited what we might acquire over the next 12-24 months.
Obviously, our commitment is to recycle sites that are probably no longer appreciative to the business. They might be sites of smaller scale. They do not make sense for us for the product we are delivering out there. We will recycle that over the next 12-24 months, as Conor has flagged. Partnerships, and I suppose this is why we are where we are in things. A number of the sites we have acquired had partnerships adjacent to them. We have one taken down already. We would 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 have acquired another large development beside themselves in Clongriffin and Balgriffin.
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. We see those as opportunities. We're in tender on one project at the moment. We hope that that might come true later on in the year.
As I said, probably 12 months ago, the plan would be to get the business somewhere to six to eight 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 land owner controlling the best part of 150,000-200,000 units. If we only got 10% of that, it is a very robust business for us going forward.
That's great. Thank you.
Thank you. We will take our next questions from Shane Carberry from Goodbody. Your line is open. Please go ahead.
Thank you. Thank you, Stephen and Conor, for the presentation. 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 six to eight sites from a partnership's perspective. Obviously, already great progress made and at that kind of six 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 is still the kind of number we should be thinking in our head?
Just in terms of the infrastructure piece at a jigsaw, could we get an update in terms of your feel for how things are going on the infrastructure side, ESB, Irish Water, etc.?
Sure. Good morning, Shane. Apologies for the phone line earlier on. I think on the partnership side, I suppose I always classified and always amalgamated the businesses now with urban and suburban. I classified the four partnerships that we're doing with the local authorities. Obviously, the Cork Docklands is a fifth and Barnoaks a 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. Yeah, I feel pretty confident that we're probably a minimum of eight sites going forward with a recurring business. I see that as the big opportunity.
What sticks out to me when you look around the land market is, and I suppose why we really went into the land market last year was it's quite limited, the quantity of zoned land that's there available to the private market. 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 need an element of infrastructure investment. 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 landmarks. 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.
I think we've shown that we have the ability to do that. 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. I suppose the other big benefit is working with the state brings the state's capital or balance sheet to the table as well. It's just very appreciative to returns for investors. We just think that's a huge opportunity going forward. Very much leaning towards that now at this moment in time. I'm trying to think the other one. Oh, sorry, the infrastructure. Sorry, I kind of covered a bit of this. There's absolute constraints out there.
We're hearing stories of Irish Water is challenging. You're now hearing challenges with the grid. We've got to reach out from a few developers who are struggling at the moment. There are 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. We're looking at them, but it's an absolute challenge. If I was to look at it, it's probably the government's number one 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.
We have 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. 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 ourselves and say, "Look, would you proportion a piece of your land?" That is 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 one follow-up, Stephen, if that's okay, just on the first part regarding the state land bank. Those sites which are that you're calling out, maybe 2,000-4,000 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. Some of them you could look at and say you might break them up and look at different quantities or 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." You probably need someone to probably lead the master planning and lead the infrastructure development and break it up from there. 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 10-year profile, remember, you're doing probably four, 10 years on this site from social affordable housing, maybe private housing, cost rental housing. You can probably deliver comfortably 500 to 600 units of size on these sites.
We have seen that in one or two of our developments. We are going to see that in Ballymastone this year. It is 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 is, and probably sticks out as well, is these sites are all kind of linked in key transport nodes. They do not need a massive investment from a transportation point of view. They may need some critical infrastructure and upgrades on ESB supply or water supply. From a transportation point of view, they are actually well located, and you are using the existing infrastructure. I think that is where the focus will come from the state. How can they get the maximum return with the greatest speed on these sites going forward?
That's really helpful. Thank you, Stephen.
Thank you. Our next question comes from Glynis Johnson from Jefferies. Your line is open. Please go ahead.
Good morning. I actually have three, 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 what 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 applicable to 50%? In terms of the MMC Innovation Fund, I'm just wondering, in each of those three stages that you've given us in terms of the facade and the roof cassette or the roofing, what proportion of pre-manufactured will you be at in each of those end stages, just so we can judge quite how much will be off-site?
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 pre-manufactured. When do we need to or when do you need to start thinking about the decision to start investing in factory number four, factory number five?
Sure. Thank you, Glynis, and good morning. I'll just present you that. I suppose, Glynis, we always outlined at the very start of this, way back in 2018 or 2019, that we were home builders, 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. 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. 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 the Carlow factory over the next 12 months.
They're working on that line at the moment. Get it into production, roll it out. The two 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. I think you're probably going to see us roll it out over at the back end of 2026 into 2027. It'll be stages of maybe moving from 10% to 25% and so on and so on, take it in 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 is a better way of doing that. We are looking at innovating that product. That is probably down the road from 2027 onwards and keep bringing that step. For us, the ground, we are already in testing on that. You will see it below in the Carlow factory where we have done testing on this. It is about bringing the regulations with us and working that through. That will be a store system. Ideally, you are kind of looking at, would you be, give or take, 50% of the entire production would be a factory-based control system, probably, but it is on a phased basis running up to 2030, and maybe beyond to roll that out. Obviously, the penetration is higher, Glynis, in the home building business than it is in the partnership.
There are no plans for an additional factory at the moment. Had you 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 there is in home building, but it was about, yeah, how you accommodate future growth with your MMC.
Yeah, it's typology. If you think the home building business will have just a higher weighting of own-door housing and maisonettes and duplexes, which lend itself more easily to the panelized system than, say, apartments. There's probably infill systems we would use on the apartments, but there'll be a smaller quantity required.
Thanks.
Thank you. As a reminder, if you would like to ask a question, please signal by pressing star one on your telephone keypad. We are now taking our next questions from Jonathan Coubrough from Deutsche Numis. Your line is open. Please go ahead.
Thanks. Good morning, Stephen and Conor. Interesting to note that the land acquired last year is at a 21% gross margin, which is similar to the gross margin that the group's 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? Thanks.
Yeah, it's an interesting dynamic. Of course, the key thing that's probably different from 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 are two key factors. I think the availability of capital on the ground to buy those sites and those sites to scale is probably quite limited. There's obviously others to get financed and pay. Alternative finance last year probably cost some of the players 12%-15%. That would be quite challenging for them to get their hands on that. We kind of saw those opportunities. We knew what was coming out in the system.
We had focused on that land for a number of years, and we just seen our opportunities just striking. 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. 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. For now, I kind of look at it as 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 three or four years to get the services onto that site. We are pretty happy where we're at. We're happy with the margins we bought on.
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.
Thanks, Stephen. Last one for me would just be on the off-site manufacturing. There've 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 break-even 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 break-even.
Oh, yeah. They're already making a positive contribution relative to what we procure out of the market, Johnny. In 2024, we got there, and you'll see that continuing to 2025 and under that scale. Very pleased with where it's at relative to market pricing.
Great. Thanks very much.
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. 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.
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