Cairn Homes Plc · LSE:CRN
Cairn Homes — FY2019 Earnings Presentation
49 slides from Cairn Homes's earnings presentation, March 2020
Slide 1: Cairn Homes plc 2019 Preliminary Results Presentation
Cairn Homes plc 2019 Preliminary Results Presentation Oak Park, Naas
Slide 2: Table of Contents
2019 Preliminary Results Presentation Table of Contents Page Michael Stanley 1 Highlights 2 Co-Founder & CEO 2 Sustainability & Innovation 11 3 Financial 15 Ian Cahill Head of Finance 4 Market & Landbank 20 5 Guidance, Capital Returns & Outlook 26 Declan Murray Head of Investor Relations 6 Appendice
Slide 3: Highlights
01 Highlights Our 2,000th Customers 2
Slide 4: 2019 Highlights
Highlights Exceptional Sales Strong Revenue and Robust Underlying Gross Performance in 2019 Operating Profit and Operating Margin 1,080 €435m (+29%) 19.6% Closed sales in 2019 Revenue Gross margin 853* €68m (+28%) 15.6% Year to date closed and forward sales Operating profit Operating margin (701 exp
Slide 5: Building the Best in Class Irish Homebuilder
Building the Best in Class Irish Homebuilder 01 02 03 We acquire We have a strong We win awards our land well track record in for design and enhancing land placemaking value 04 05 We drive We deliver a operational diverse range of efficiencies through new homes to a our established deep buyer pool s
Slide 6: We Acquire Our Land Well
1. We Acquire Our Land Well c. €900 million deployed on a 79% 76% c. 17,000 unit landbank Of landbank Capital units acquired deployed €’m # Units within 1 year of IPO 500 20,000 450 18,000 400 16,000 95% 350 14,000 Of capital allocated in the Greater Dublin Area 300 12,000 250 10,000 €32,000 €63,000
Slide 7: We have a Strong Track Record in Enhancing Land Value
2. We have a Strong Track Record in Enhancing Land Value Level of SHD Planning Grants Underpin our Forecasts 100% 83% Of forecast 2020 sales Of forecast 2021 sales # Units Units Granted through SHD Process since 2018 completions have FPP* completions have FPP* 4,000 7 Cairn +140% 3,000 more units th
Slide 8: We Win Awards for Design and Placemaking
3. We Win Awards for Design and Placemaking 12,000 55km New trees planted across our Of new roads built developments to date 13 50% New playgrounds and Carbon pledge outdoor gyms opened reduction by 2030 €125m 34 acres Spent and committed on public Of parks and green realm and infrastructure project
Slide 9: We Drive Operational Efficiencies Through Our Established Scale
4. We Drive Operational Efficiencies Through Our Established Scale Industry’s Largest Procurer 2.5% €325m of Labour and Materials Build cost inflation in 2019 Current Committed from €288m procurement Order Book €’m 300 +€46m* €700m Procured since IPO 250 Top 20 subcontractors - 66% of total, average
Slide 10: We Deliver a Diverse Range of New Homes to a Deep Buyer Pool
5. We Deliver a Diverse Range of New Homes to a Deep Buyer Pool 2019 Sales by New Home Type 3,250 1,850 Customers who have New Homes Sold to First chosen a Cairn home, Time Buyers in our starter €’m # Units with over 2,500 of these homes schemes 500 1,200 customers already living in their new home 5
Slide 11: We Generate Strong Profits and Shareholder Returns
6. We Generate Strong Profits and Shareholder Returns Profitability Growing Significantly And Committed to Shareholder Returns €’m €’m €’m 90 35 120 80 30 +23% 100 70 60 25 +28% 80 50 20 60 40 +63% 15 30 40 10 20 5 20 10 0 0 0 Gross Profit Operating Profit Net Profit after Tax Interim €25m Share €35
Slide 12: Sustainability & Innovation
02 Sustainability & Innovation Gandon Park, Lucan 11
Slide 13: Our CSR Pillars
Our CSR Pillars Community Environment People Industry Working with all Reducing our Carbon People come first. Leading from the stakeholders, footprint. Making a Valuing our teams, front. Developing especially our positive contribution customers and strong industry customers, to create to the environ
Slide 14: CSR Strategy & Activities
CSR Strategy & Activities Community Environment People Industry Community events at Low carbon pledge – Health and wellbeing Increased our new reduce our carbon initiatives subcontractor developments emissions across all engagement and developments by Workplace diversity support Arts programme 50% b
Slide 15: Innovation in Our Business
Innovation in Our Business Off Site Manufacturing SFS Inner Leaf Precast superstructural elements yielding programme Makes the building watertight at the earliest possible date gains and consistent quality allowing internal finishes to be progressed faster Timber Frame Construction Building Informat
Slide 16: Financial
03 Financial Shackleton Park, Lucan 15
Slide 17: 2019 Financial Highlights
2019 Financial Highlights ASPs Sales Units Revenue €435.3m (+29%) Houses Apartments Overall 2019 1,080 €321k €648k €372k €401.8m 2018 804 €323k €505k €366k €294.2m Revenue (2018: €337.0m) 2020 – closed and forward sales* 701 €331k €298k €317k €222.5m 2021 – forward sales** 152 €234k €293k €287k €43.
Slide 18: Income Statement for the Year Ended 31 December 2019
Income Statement for the Year Ended 31 December 2019 Commentary December 2019 Unaudited December 2018 Audited • Revenue of €435.3m (+29%) Total Total including the sale of 1,080 units €m €m (€401.8m) and site sales (€32.2m) • Gross profit of €85.3m (+23%). Revenue 435.3 337.0 Gross margin of 19.6% C
Slide 19: Balance Sheet at 31 December 2019
Balance Sheet at 31 December 2019 Commentary December 2019 Unaudited December 2018 Audited €m €m • Total assets of €970.2m PP&E and intangibles 2.6 2.2 (2018: €1,005.8m) Right of use asset 1.1 - Non-current assets 3.7 2.2 • Total equity of €763.7m (2018: €756.6m) Inventories 897.3 933.4 Other receiv
Slide 20: Cash Flow Statement for the Year Ended 31 December 2019
Cash Flow Statement for the Year Ended 31 December 2019 December 2019 Commentary December 2018 Audited Unaudited • EBITDA of €69.0m €m €m (2018: €54.7m) EBITDA 69.0 54.7 • Net cash from operating activities Decrease / (Increase) in inventories 36.6 (21.4) €99.2m (2018: €40.1m) Other working capital
Slide 21: Market & Land Bank
04 Market & Land Bank Mariavilla, Maynooth 20
Slide 22: Characteristics of Housing and Apartments
Characteristics of Housing and Apartments Key Metrics and Characteristics * Housing Apartments ** Total Land Bank Capital Allocation 55% 45% 100% Total Units 12,000 5,000 17,000 Average Site Cost per Unit €32k €63k €45k Average Selling Price €299k €509k €361k (estimated) (ex. VAT) (no HPI) Net Devel
Slide 23: Our Land Bank and Addressable Market
Our Land Bank and Addressable Market Land Bank Units* 4,700 3,900 2,400 2,100 1,400 800 €250k - €300k €300k - €350k €350k - €400k €400k - €450k €450k - €500k €500k + ASP (incl. VAT) Cumulative % of our land bank* addressing these price points 31% 56% 70% 79% 84% 100% Single or Joint Income Required
Slide 24: Owning versus Renting
Owning versus Renting Cairn 3 Bed Starter Home FTB Monthly Private Sales in 2019 Monthly Mortgage Cost Rental Cost €360,000 Purchase price €360,000 Daft.ie Q4 2019 Rental Report Average selling price Average three bed house (including VAT) in 2019 on monthly rent: 216 three bed new home Mortgage - 9
Slide 25: Sales Absorption Rates
Sales Absorption Rates Housing Site Sales Spring selling season • Average 2019 weekly sales rate of 3.33 units per • Positive start to season. Eight site reopenings with active housing sales outlet* (2018: 2.78 units; continuing strong demand for our competitively priced 2017: 2.38 units) starter ho
Slide 26: The Irish Multifamily PRS Market – 2019
The Irish Multifamily PRS Market – 2019 Exceptional Growth in Multifamily PRS Investment in 2019 • 44% of all real estate investment 2500 € 2,366m 6.0% (2018: 31%; 2017: 17%) 5.0% 2000 3.75% • PRS Investment increased by €1.436bn (+154%) 1500 4.0% 3.0% • 18 new build PRS transactions completed 1000
Slide 27: Guidance, Capital Returns & Outlook
05 Guidance, Capital Returns & Outlook Donnybrook Gardens, Dublin 4 26
Slide 28: 2020 – 2022 Guidance
2020 – 2022 Guidance Continued Volume Growth into the Medium-Term • For the full year, we expect 1,250 to 1,300 sales completions and are targeting a gross margin of c. 20.0%. As in previous years and reflecting our continuing growth, both revenues and gross margin will be heavily weighted towards t
Slide 29: Capital Returns 2020 - 2022
Capital Returns 2020 - 2022 Free cash flow Converting to Capital Returns c. €400m c. €150m c. €250m Expected free cash Progressive biannual Available for share buybacks generation 2020 to 2022 ordinary dividend or special dividends The Board continue to review the capital structure and requirements
Slide 30: Outlook
Outlook Bring new homes to the market at price points where first Talented team, balance sheet Up to 7 new site buyers can get access to capacity and unique optionality commencements in 2020 and mortgage finance and continue of scaled platform to leverage strong forward to meet the demand from curre
Slide 31: Appendices
06 Appendices 30
Slide 32: Our Vision, Mission and Values
Our Vision, Mission and Values Our vision Our values Be the most trusted and safest homebuilder in Ireland Agile & Honest & Innovative Straight Talking Collaborative Our mission Building in great locations to create places and homes where people love to live Commercially Committed minded & Engaged S
Slide 33: People
People Expanding the Depth and Talent of our Senior Management Team in 2019 and 2020 Maura drives our people and organisation Mike joins us with extensive industry experience effectiveness agenda. She is focused on across the breadth of our operating model, using implementing our new operating model
Slide 34: Macroeconomic Drivers for Cairn
Macroeconomic Drivers for Cairn Supply Population Annual Housing 21.2k new homes +1.3% (+ 64,500) in 2019 – only Demand in the year to April 2019 16.2k in multi unit CBI Estimate (3x EU average) developments of which 34,000 10.7k are in the GDA GDA annual demand – c. 20k Employment Multifamily PRS &
Slide 35: Well Located Housing Sites
Well Located Housing Sites c. 12,000 units with excellent public transport Active Units links and no planning risk 1 Parkside, Malahide Road 395 2 Churchfields, Ashbourne, Co. Meath 397 3 Elsmore, Naas, Co. Kildare 506 4 Shackleton Park, Lucan 756 5 Glenheron, Greystones, Co. Wicklow 426 6 Mariavill
Slide 36: Prime Apartment Sites
Prime Apartment Sites c. 5,000 units in and near Dublin City PRS Active Units Opportunity 3 SCALE 1 Marianella, Rathgar, Dublin 6W 209 1 km 2 Donnybrook Gardens, Donnybrook, Dublin 4 85 3 Griffith Wood, Griffith Avenue, Dublin 9 385 4 Rostrevor Place, Marianella, Rathgar, Dublin 6W 107 5 The Quarter
Slide 37: 2019 National Supply – Just 9,000 New Homes for Owner Occupiers
2019 National Supply – Just 9,000 New Homes for Owner Occupiers 2019 Dublin – 2019 6,991 new home completions (+1% YoY): Units % • 301 one off houses; • 4,036 new homes in multi-unit developments (-17% YoY); New Home Completions 21,241 100% • 2,654 apartments (+52% YoY). Less: One-Off New Homes (5,0
Slide 38: Planning Grants & Commencements to Lead to Static Supply?
Planning Grants & Commencements to Lead to Static Supply? Total GDA Planning Grants Dublin – Multi Unit Developments 20,000 16,000 1,321 new homes granted planning permission in multi-unit developments in the year to September 12,000 2019 (-65% YoY) 8,000 4,000 -36% YoY 0 GDA (excl. Dublin) – Multi
Slide 39: Supply Response Still Muted
Supply Response Still Muted 1972 2019 Change While national output increased New Home Completions 21,572 21,241 -2% 18% in 2019 to 21,241 Population 3,024,400 4,921,500 +63% new home completions remain Employment ('000) 1,084,000 2,361,200 +118% significantly below medium term demand in Dublin and t
Slide 40: Depth of FTB Market
Depth of FTB Market What would a couple have to earn to afford a new home: Irish Revenue Maximum Mortgage Can Afford a House Joint Income (€) Number of Couples statistics indicate (3.5x Income) (€) at this Price (€) that there are: 75,000 221,000 262,500 292,000 97,000 119,000 133,000 83,000 339,500
Slide 41: Depth of FTB Market (continued)
Depth of FTB Market (continued) If we assume that 25% of these couples and individuals own their own homes (less than 15% of all people aged under 49 own their own home), our addressable market (those who can afford to buy a new Cairn home, subject to having a deposit and mortgage approval) is: Hous
Slide 42: 2019 Multifamily PRS Transactions – New Builds
2019 Multifamily PRS Transactions – New Builds # Property No. of Units Buyer Status Reported Price (€'m) 1 Spencer Place, North Docklands, Dublin 1 471 International institutional investor Sale Agreed €250.0 2 Dublin Landings, Dublin 1 268 International institutional investor Completed €175.5 3 East
Slide 43: 2019 Land Market Transactions
2019 Land Market Transactions Acres Units Reported Seller Seller Buyer PRS (estimate) (estimate) Price DIT Kevin Street, Dublin 2 TUD Private Homebuilder 3.6 Unknown Mixed Use €140m Cherrywood SDZ, South Co. Dublin Private Equity Private Homebuilder 118 2,600 Yes €120m John Player Site, Dublin 8 NAM
Slide 44: Positive Affordability Indicators
Positive Affordability Indicators Best performing economy in Europe With a booming labour market 10.0% 2,400 16% 8.0% 2,200 498k new jobs created in Ireland 12% since 2012 - 80k 6.0% 2,000 in 2019 4.0% 8% 1,800 2.0% 1,600 4% 2007Q1 2007Q3 2008Q1 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3 2011Q1 2011Q3 2012Q
Slide 45: Demographics Support Demand
Demographics Support Demand Strong population growth is being driven by the Our population will reach 5m in 2020 (4.92m in April highest birth rate in Europe (13.5 births for every 2019) and is forecast to grow to c. 5.6m by 2040. 1,000 of population), one of the highest household The population of
Slide 46: Mortgage Market Conditions
Mortgage Market Conditions Two entrants to a more competitive market Drawdowns by value growing €’m Total Loans 1,500 +9.2% 14,000 12,000 1,200 10,000 900 8,000 600 6,000 4,000 300 2,000 ? 0 - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2014 2015 2016 2017 2018 2019 ? No. of
Slide 47: Cairn Brands
Cairn Brands FTB, Trade Up Trade Up/Down Prime PRS Oak Park Churchfields Edenbrook Glenheron Marianella Hanover Quay Shackleton Gandon Park Elsmore Graydon Mariavilla Donnybrook Gardens The Quarter Mariavilla Shackleton Parkside Archers Wood Albany Griffith Wood Rostrevor Place 46
Slide 48: Disclaimer
Disclaimer This presentation document (hereinafter “this document”) has been Certain information contained herein constitutes “forward-looking prepared by Cairn Homes plc (“Cairn” or the “Company”). statements”, which can be identified by the use of terms such as “may”, “will”, “should”, “expect”, “
Slide 49: www.cairnhomes.com
www.cairnhomes.com 7 Grand Canal Grand Canal Street Lower Dublin 2 Ireland D02 KW81 +353 1 696 4600 investors@cairnhomes.com Glenheron, Greystones 48