Cairn Homes Plc · LSE:CRN
Cairn Homes — FY2021 Earnings Presentation
42 slides from Cairn Homes's earnings presentation, Mar 3, 2022
Slide 1: Cairn Homes plc 2021 Preliminary Results Presentation
Cairn Homes plc 2021 Preliminary Results Presentation
Slide 2: Table of Contents
2021 Preliminary Results Presentation Table of Contents Page Michael Stanley FY 2021 Highlights & 1 Medium-Term Strategy 2 Chief Executive Officer Shane Doherty FY 2021 Financial Results 2 & Guidance 12 Chief Financial Officer Tara Grimley 3 Leading Sustainably 20 Company Secretary & Head of Sustain
Slide 3: FY 2021 Highlights & Medium-Term Strategy
01 FY 2021 Highlights & Medium-Term Strategy
Slide 4: 2021 Highlights – KPIs
2021 Highlights – KPIs Strong 2021 Sales Revenue and Margins Momentum Operating Profit Baselined 1,120 €424m (+62%) 19.8% Closed sales (+ 51% YoY) Revenue Gross margin (20.3% in H2) 1,218 €58m (+139%) 13.8% 2022 year to date closed and forward Operating Profit Operating margin sales with a net sales
Slide 5: Positive Momentum Driving 2022 Market
Positive Momentum Driving 2022 Market Economy continuing to Expand Strengthening Mortgage Market +23.8% +19.6% +25% +15% 2 year Irish GDP growth to Q3 Increase in Exchequer Increase in FTB mortgage Increase in FTB mortgage 2021 (EU 27 average: 0.0%) returns to €68bn in 2021 approvals in 2021 (28,954
Slide 6: Our Journey
Our Journey Annual Completions 5,500 c. 17,700 New homes sold to Unit landbank 1500 date, including 3,200 across 1120 starter homes 37 sites 1080 804 743 418 30 €1.15bn Housing and apartment Procured in labour 2017 2018 2019 2020 2021 2022 (F)* developments and materials completed or under to date G
Slide 7: Strong 2021 Sales Market – Further Growth in 2022
Strong 2021 Sales Market – Further Growth in 2022 Our Market in 2021 Further Growth in 2022 • Current forward sales pipeline expected to deliver 168% 35% 1,500 sales completions and in excess of Increase in Increase in website €600m revenue enquiry levels traffic (following new website launch) • Ove
Slide 8: Historic Low Cost Landbank – Foundation for Next Phase of Our Growth
Historic Low Cost Landbank – Foundation for Next Phase of Our Growth c. 17,700 Unit Landbank – Balance Sheet Value €672m 5,500 Sales Since 2016 €’m # Units # Units 70% of total capital 500 deployed in 2015 18,000 3,500 and 2016 3,000 450 2,500 2,000 400 16,000 1,500 350 1,000 65% 500 of existing 300
Slide 9: Landbank and Operating Platform Leading to Improved Gross Margins
Landbank and Operating Platform Leading to Improved Gross Margins c. 17,700 New Homes in Our Pipeline 37 Sites in Established Areas of Proven Demand Units 8,000 3,700 units (21%) within the M50 in Dublin 7,000 6,000 7,500 units (42%) 5,000 outside the M50 in Dublin 4,000 5,000 units (28%) 3,000 in t
Slide 10: Our Next Phase to 2024: Regional Expansion and Increased State Partnerships
Business Expansion and Strategy Our Next Phase to 2024: Regional Expansion and Increased State Partnerships in Social and Affordable New Home Delivery • Bringing Cairn’s evolved and efficient homebuilding model to more regions in Ireland • Having sold 5,500 new homes in the GDA, we will be successfu
Slide 11: Innovation in Cairn
Innovation in Cairn Current Innovation in Cairn 2022+ Innovation Initiatives • Timber frame kits for housing • Productivity trackers and • Net biodiversity gain and duplexes dashboards • Lean project planning and execution • Soil stabilisation • Light gauge steel systems for duplexes and apartments
Slide 12: The Challenging Build Cost Environment
The Challenging Build Cost Environment Our Strategy Our 2021 Experiences • Central procurement function is leveraging c. €1.3bn procurement spend across the three years to 2024 • c. €15,000 average cost increase for each new home built (c. 6%), including material and labour cost increases • 74% proc
Slide 13: FY 2021 Financial Results & Guidance
02 FY 2021 Financial Results & Guidance
Slide 14: FY 2021 Financial Performance
FY 2021 Financial Performance FY 2021 Unaudited FY 2020 Audited Movement €m €m Revenue 424.0 261.9 +62% Gross profit 83.9 42.7 +97% Gross margin % 19.8% 16.3% +350bps Opex (25.5) (18.3) +39% EBIT 58.4 24.4 +139% EBIT margin % 13.8% 9.3% +450bps PBT 50.2 14.8 +239% PAT 43.2 12.7 +240% EPS 5.8 cent 1.
Slide 15: Revenue and Sales Performance KPIs
Revenue and Sales Performance KPIs Average Selling Prices ASPs €’k (Gross) Sales Units Revenue (Net) Starter Homes Trade Up/Down Apartments Overall 2021 1,120 350 493 454 428 €422m 2020 743 348 489 339 377 €247m Movement +50.7% +0.6% +0.7% +33.8% +13.6% +€175m Closed & Forward Sales Pipeline (as at
Slide 16: Balance Sheet as at December 2021
Balance Sheet as at 31 December 2021 December 2021 Unaudited December 2020 Audited €m €m Non-current assets 3.1 2.7 Land held for development 671.7 690.3 Construction work in progress 268.3 277.8 Other receivables 29.9 13.4 Cash 40.0 34.5 Total assets 1,013.0 1,018.8 Other liabilities / payables (84
Slide 17: Key Cash Flow Considerations
Key Cash Flow Considerations FY 2021 Commentary Dec-21 Dec-20 Movement €m €m €m • Net debt reduced by €58.8m in the period to Net Debt 109.5 168.3 58.8 €109.5m, resulting in available liquidity of €234.0m Key Movements • WIP investment is 1.7 times covered by our forward sales pipeline FY 2021 EBITD
Slide 18: 2022 Guidance
2022 Guidance 2022 Revenue & Sales Volumes In excess of €600m & 1,500 sales completions (on active sites with full planning permission) Gross Margin 21.5% Operating Profit & €100m (top of previously guided range of c. €95 - €100m) Margin & c. 16.5% Shareholder Returns €115m & ROE 11% Operating Cashf
Slide 19: Driving Balance Sheet Efficiency and ROE Growth
Our Key Focus Area – Driving Balance Sheet Efficiency and ROE Growth Disciplined Existing 2024 target approach to Platform 15% ROE capital allocation Volume, revenue and profitability growth delivering €500m operating cashflow* in 2022 to 2024 to be used as follows: Shareholder Returns: Accretive St
Slide 20: Our Next Phase to 2024 – What Will This Deliver for Shareholders?
Our Next Phase to 2024 – What Will This Deliver for Shareholders? Three Years to 2024 Units 5,000 to 5,500 ROE 11% in 2022 growing to 15% in 2024 €500m after investment in WIP for future growth Operating Cashflow * 2022: €175m 2023 & 2024: €325m * Before any capital allocation considerations, includ
Slide 21: Leading Sustainably
03 Leading Sustainably
Slide 22: Our Sustainability Priorities
Our Sustainability Priorities OUR VISION OUR PURPOSE Our sustainability strategy is comprised of three pillars, People Places Homes which is aligned to the core elements of our purpose 21
Slide 23: Our Sustainable Evolution
Our Sustainable Evolution 2020 2021 2022 • 100% Homes BER A-rated • Upgraded SafeT certificate score • SBTi committed in January 2022 from B to A • 100% FSC timber procured • Scope 1 & 2 measured with • First TCFD disclosure target setting in progress • First air source heat pumps installed (nZeb co
Slide 24: Governance
Governance April 2022: Sustainability Report with increased ESG Disclosure Top Down and Bottom-Up approach Our Board Oversight & Ultimate Responsibility • From Board to day–to-day site operations • ESG Reporting and Research team facilitating collaboration across the business while Audit & Risk Remu
Slide 25: Environmental
Environmental Climate Change Biodiversity Circular Economy and Innovation Soil Stabilisation Waste and carbon savings through soil stabilisation and retaining soil on site Targeting no soil import or export from all future development sites • January 2022, SBTi committed • All of our developments ar
Slide 26: Social
Social People Placemaking “ Our focus on placemaking and communities is to ensure that we create places that people love to live and that will last long after our work is done. Michael Stanley, CEO New health and wellbeing Health and safety SafeT framework encompassing Cert Grade A achieved mental,
Slide 27: Outlook
Certified DEC 21- DEC 22
Slide 28: 2022 and Medium-Term Outlook
2022 and Medium-Term Outlook Economy Market stronger than pre-pandemic remains significantly undersupplied 1,500 €100m 15% ROE In 2024 completions 21.5% operating profit €115m €600m gross margin c. 16.5% shareholder returns revenue operating margin €500m operating cashflow in the three years to 2024
Slide 29: Appendices
05 Appendices
Slide 30: Our Purpose & Strategic Pillars
Our Purpose & Strategic Pillars Our purpose Our approach is considered and responsible: building high-quality, sustainable homes; creating communities; and striving to improve the built environment in Ireland. We want to take a prominent role in promoting sustainable and attainable building in Irela
Slide 31: Housing Sites in Areas of Proven Demand
Housing Sites in Areas of Proven Demand 13,000 new homes on sites with multi-modal transport links in established residential locations Active 1 Parkside, Malahide Road 2 Shackleton Park, Lucan 3 Glenheron, Greystones, Co. Wicklow 4 Mariavilla, Maynooth, Co. Kildare 15 5 Albany, Killiney 6 Oak Park,
Slide 32: Prime Apartment Sites
Prime Apartment Sites 4,700 homes in prime city and established suburban and commuter belt locations 3 SCALE Multifamily 1 km Active Opportunity 1 Marianella, Rathgar, Dublin 6W 2 Donnybrook Gardens, Dublin 4 3 Griffith Wood, Griffith Avenue, Dublin 9 4 Aldborough, Greystones, Co. Wicklow 5 Citywest
Slide 33: Transactional Activity in Ireland Remains Depressed
Transactional Activity in Ireland Remains Depressed Annual transactions as a percentage of total housing stock 6.0% 5.1% 5.0% 4.5% 4.0% 10 year average 2.7% 3.0% 2.3% 2.0% 10 year average 1.0% 0.0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 England Ireland Lack of liquidity in the Irish
Slide 34: Owning versus Renting
Owning versus Renting Cairn 3 Bed Starter Home FTB - Monthly Mortgage Cost Monthly Rental Cost €378,000 Purchase price €378,000 Daft.ie Market Rents Three bed house monthly rent: Average selling price (including VAT) in 2021 across Cairn developments in Dublin: Shackleton Park Mortgage - 90% LTV €34
Slide 35: Multifamily Market – Now An Established Asset Class
Multifamily Market – Now An Established Asset Class €2.1bn Transactional Activity in 2021 The 2021 Rental Market • Exodus of small landlords continues – c. 40k left the €’m market between 2016 and 2021 2,500 • 1,397 available properties to rent – only 7 homes in every 10,000 available to rent • Mult
Slide 36: Demand Drivers
Demand Drivers Q3 2021 Irish two-year GDP growth at 23.8% Record Monthly Household Savings +€23bn €bn between April 2020 30.0% 3.5 and December 2021 25.0% 3 20.0% 2.5 2 15.0% 1.5 10.0% 1 0.5 5.0% 0 0.0% -0.5 -1 -5.0% -1.5 -10.0% -2 Employment recovery Record 2021 €68.4bn Exchequer receipts 2,600 30.
Slide 37: New Homes Supply Indicators
New Homes Supply Indicators Completions still below pre-pandemic levels Commencements increasing Rolling 12m Total Rolling 12m Total 25,000 35,000 30,724 20,433 30,000 20,000 25,000 15,000 20,000 18,630 10,000 15,000 10,936 10,000 5,000 5,000 0 0 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018
Slide 38: New Homes Supply Indicators
New Homes Supply Indicators Greater Dublin Area planning grants – 12m rolling Significant decline in Dublin multi-unit scheme completions Rolling 12m Commencements 40,000 6,000 5,000 30,000 4,000 20,000 3,000 2,000 -59% 10,000 since 2018 1,000 0 0 2018Q4 H2'17 H1'18 H2'18 H1'19 H2'19 H1'20 H2'20 H1'
Slide 39: Mortgage Market
Mortgage Market Mortgage drawdowns above pre-pandemic levels (12m rolling) Mortgage approvals continue to grow post-pandemic €’000 16,000 12,000 12,000 10,000 8,000 8,000 6,000 4,000 4,000 - June Dec Mar June Dec Mar June Dec Mar June September Dec Sept Sept Sept 2,000 0 2018 2019 2020 2021 FTB ALL
Slide 40: Demographics Support Demand
Demographics Support Demand Strong population growth Average 1.1% annual population growth since 2015 • Population 5.0m as at April 2021 - the highest since 1851. 5.1 5.01 1.5% 5.0 4.98 1.3% • Population forecast to grow to 5.6m by 2040 4.92 5.0 1.1% • 30k Irish nationals returned to Ireland in the
Slide 41: 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 42: Contact details
7 Grand Canal, Grand Canal Street Lower, Dublin 2, D02 KW81 01 696 4600 www.cairnhomes.com