Cairn Homes Plc · LSE:CRN
Cairn Homes — FY2020 Earnings Presentation
48 slides from Cairn Homes's earnings presentation, Mar 4, 2021
Slide 1: Cairn Homes plc 2020 Preliminary Results Presentation
Cairn Homes plc 2020 Preliminary Results Presentation
Slide 2: Table of Contents
2020 Preliminary Results Presentation Table of Contents Page Michael Stanley 1 2020 Review 2 Co-Founder & CEO 2 Financial Results & Guidance 10 3 Landbank & Market 19 Shane Doherty Chief Financial Officer 4 Our Sustainability Agenda 25 5 Outlook 32 Declan Murray Head of Investor Relations 6 Appendic
Slide 3: 2020 Review
01 2020 Review
Slide 4: 2020 Operational Review
2020 Operational Review Health Subcontractors Construction Sites and Safety and Supply Chain and Productivity Top Priority 56 19 active Effectiveness of new Covid Strong subcontractor NPS Construction sites at year end work practices resulted in minimal positive cases across our sites Scalable and s
Slide 5: 2020 Financial Review
2020 Financial Review Robust Sales Resilient Financial BCI and Performance Performance HPI in 2020 743 €262m +3% Closed sales in FY 2020 Revenue Build cost inflation 536 €24m +1.4% Closed sales in H2 2020 Operating profit and an House price inflation (H2 2019: 690 closed sales) operating margin of 9
Slide 6: Positive Momentum Driving 2021 Market
Positive Momentum Driving 2021 Market Demand will continue to outstrip supply PRS market fundamentals remain compelling +€14.2bn +34% +1.1% +0.9% Record increase in household FTB mortgage approvals Population growth in 2020 Increase in rents savings in 2020 increase YoY in Q4 2020 with 64% of net mi
Slide 7: Significant WIP Investment Supports our 2,500 Closed Sales Target
Significant WIP Investment Supports our 2,500 Closed Sales Target for 2021 and 2022 Increased WIP investment in 2020 Ambitious Near Term Growth Plans Units €277.8m €73.3m 1,200 Closing WIP balance Net WIP investment in 2020 1,000 1,017 €302m 7 Closed and forward order New sites starting 800 book ful
Slide 8: Order book underpins 2,500 closed sales target
New starter home 2021 launch enquiry lists have doubled on 2020 levels Order book underpins 2,500 closed sales target Units Key Sales Stats 800 Virtual H2 20 and current sales activities largely 700 74% - 82% of 2021 virtual or one to one appointments volume guidance 775 range of c. 950 – 600 1,050
Slide 9: Multifamily PRS Market Strengthening
Multifamily PRS Market Strengthening Surge in transactions in H2 2020 post lockdown Features of the 2020 PRS Market €’m # Transactions • Mid-market rents stable and occupancy c. 99% 1,200 9 • Prime yields hardened to c. 3.75% (UK prime yields – 3.25%, EU prime yields 3.1%) 8 8 1,000 • 48% of the Iri
Slide 10: Planning Success Providing Future Optionality
Planning Success Providing Future Optionality Strong track record continued in 2020 Units in Period Cumulative Units Supporting Further Growth 5,000 9,000 11.5% 4,500 8,000 Land (at historic cost) as a percentage of current total landbank net development value (excl. HPI) 4,000 7,000 1,616 8,200 3,5
Slide 11: Financial Results & Guidance
02 Financial Results & Guidance
Slide 12: 2,500 Closed Sales in 2021 and 2022 - KPIs
2,500 Closed Sales in 2021 and 2022 - KPIs Estimated Sales 2021 - 2022 2021 - 2022 2021 2022 Total Gross Margin 2021 2022 Volumes Average Average %* Range 1 950 1,550 Range 1 18.0% 19.0% 18.6% 2,500 1,250 Range 2 1,050 1,450 Range 2 18.0% 19.0% Estimated 2021 - 2022 Estimated 2021 - 2022 2021 2022 T
Slide 13: 2020 Financial Performance
2020 Financial Performance December 2020 Unaudited December 2019 Audited Movement Total Total €m €m Revenue 261.9 435.3 (39.8%) Gross profit 42.7 85.3 (49.9%) % margin 16.3% 19.6% (3.3%) Administrative expenses (18.3) (17.3) 5.8% Operating profit 24.4 68.0 (64.1%) % margin 9.3% 15.6% (6.3%) Profit b
Slide 14: Revenue and Sales Performance KPIs
Revenue and Sales Performance KPIs Average Selling Prices ASPs €'k Sales Units Revenue Starter Homes Trade Up/Down Apartments Overall 2020 743 314 391 330 332 €246.9m 2019 1080 314 391 733 372 €401.8m Movement (31%) - - (55%) (11%) (€154.9m) Closed & Forward Sales Pipeline Units Revenue 2021– closed
Slide 15: Positive Underlying Gross Margin Momentum
Positive Underlying Gross Margin Momentum Commentary 2020 (A) 2021 (F) 2022 (F) • Increased preliminary costs associated with extended construction programmes on % % % sites arising due to Covid-19 • Second lockdown (sites in Ireland anticipated to reopen Gross margin 16.3% c. 18.0% c. 19.0% on 6 Ap
Slide 16: Balance Sheet at December 2020
Balance Sheet at 31 December 2020 December 2020 Unaudited December 2019 Audited €m €m Non-current assets 2.7 3.7 Land held for development 690.3 692.8 Construction work in progress 277.8 204.5 Other receivables 13.4 12.4 Cash 34.5 56.8 Total assets 1,018.8 970.2 Other liabilities / payables 65.5 58.
Slide 17: Net Debt Bridge & Three Year Free Cash Generation
Net Debt Bridge & c. €350 - €400m Three Year Free Cash Generation Dec-20 Dec-19 Movement Current Year Commentary • WIP investment fully covered by closed and forward sales pipeline, €m €m €m and included funding five new site commencements in 2020 Net Debt (168.3) (91.2) (77.1) • Main investment in
Slide 18: Cash Flow Statement for the Year Ended December 2020
Cash Flow Statement for the Year Period Ended 31 December 2020 December 2020 Unaudited December 2019 Audited Commentary €m €m • EBITDA of €24.9m EBITDA 24.9 69.0 (2019: €69.0m) (Increase)/decrease in inventories (70.2) 36.6 • Net cash used in operating activities €40.6m, including Other working capi
Slide 19: Guidance Recap
Guidance Recap Two Year Closed Sales Target 2,500 closed sales by the end of 2022 Gross Margin c. 18.0% in 2021 progressing to c. 19% in 2022 Operating Profit c. €120m cumulative in 2021 and 2022 Cash Generation * c. €150m by 2022, increasing to c. €350 - €400m by 2023 The Board will consider the re
Slide 20: Landbank & Market
03 Landbank & Market
Slide 21: Low Cost Landbank Driving Future Growth, Profitability and Cash Generation
Low Cost Landbank Driving Future Growth, Profitability and Cash Generation €911m investment in c. 16,800 unit landbank Focused on core FTB market €’m # Units 75% of total capital deployed in 2015 and 2016 500 20,000 10% 450 400 14% 350 16,000 Buyer 50% 300 Profile 77% of landbank units acquired 250
Slide 22: Characteristics of Housing and Apartments
Characteristics of Housing and Apartments Key Metrics and Characteristics * Housing Apartments ** Total Land Bank Capital Allocation 53% 47% 100% Total Units 11,700 5,100 16,800 Average Site Cost per Unit €32k €63k €41k Average Selling Price €301k €489k €358k (estimated) (ex. VAT) (no HPI) Net Devel
Slide 23: Land Bank Price Points
Land Bank Price Points Cumulative % of our landbank* 31% 55% 68% 78% 83% 100% addressing these price points 4,700 Land Bank Units* 3,600 2,500 2,000 1,400 900 ASP (incl. VAT) €250k - €300k €300k - €350k €350k - €400k €400k - €450k €450k - €500k €500k + Salary Required for Over 415,000 people in this
Slide 24: Owning versus Renting
Owning versus Renting Cairn 3 Bed Starter Home FTB Monthly Private Sales in 2020 Monthly Mortgage Cost Rental Cost Daft.ie Market Rents €373,000 Purchase price €373,000 Three bed house monthly rent: Average selling price (including VAT) Mortgage - 90% LTV €335,700 in 2020 across Cairn Lucan €2,250 d
Slide 25: New Shared Equity Loan Scheme – A Positive Housing Initiative
New Shared Equity Loan Scheme – A Positive Housing Initiative New €150m shared equity loan Current purchasing power scheme expected to start later in 2021 targeting the “squeezed middle”, those who earn too Salary € 50,000 € 60,000 € 70,000 much to avail of social housing Maximum permitted mortgage
Slide 26: Our Sustainability Agenda
04 Our Sustainability Agenda
Slide 27: Progress on our Sustainability Strategy Journey
Progress on our Sustainability Strategy Journey 2019 2020 2021 Transition from Definition, Scoping Implementation and CSR to ESG Agenda and Design of our Disclosure of Strategy Sustainability Strategy CSR to ESG Governance Sustainability Steering Group Align to a Framework for disclosures, establish
Slide 28: Materiality Assessment
Materiality Assessment Our key ESG priorities have been informed by our Materiality Assessment, letting us know what really matters to us and where we can make the most difference with our Sustainability Strategy. Stakeholder Consultations Materiality Assessment Employees Investors Surveys Suppliers
Slide 29: 2020 Sustainability Successes
2020 Sustainability Successes London Stock Exchange 100% A-Rated New Homes Biodiversity – Tree Planting Green Economy Mark 743 completed sales of BER A-rated new We planted 6,823 trees across all of our We received the London Stock Exchange homes, with 1,013 A-rated closing completed developments (6
Slide 30: Prioritising People Through a Focused People Agenda
Prioritising People Through a Focused People Agenda Our priority is understanding and improving the wellbeing of all of our employees, ensuring their health and safety at all times, both on site and whilst working from home Connection Consideration Commitment Employee Health, Continued employment, E
Slide 31: Accelerating Innovation through Partnerships in 2020
Accelerating Innovation through Partnerships in 2020 Operational Excellence Prioritising People Product Delivery Use of leading edge Development of customised Improving the efficiency of product technologies to control, monitor technologies and initiatives to delivery through the use of and manage o
Slide 32: Bringing Partnerships To Life
Bringing Partnerships To Life Rapid Impact Compaction Light Gauge Steel (LGS) Neighbourhood Network In 2020, we became the first homebuilder A form of modular construction utilising light Network neighbourhood is an in Ireland to utilise a new engineering gauge steel to replace on-site construction
Slide 33: Outlook
05 Outlook 32
Slide 34: Outlook
Outlook All of this means Industry Sustained Peer leading outputs supply demand across across….. challenges broad buyer pool • c. €120m cumulative operating profit in 2021 and 2022 • c. €350-€400m free Regional expansion 2,500 closed sales cash generation by the by 2022 end of 2023 Active on an aver
Slide 35: Appendices
06 Appendices
Slide 36: Our Purpose & Strategic Pillars
Our Purpose & Strategic Pillars Our purpose Our purpose is what drives us - it’s why we do what we do. It’s why we strive to build the best homes possible. It’s why we go the extra mile to ensure that the places we create are beautiful and enhance the quality of life of all that live there. And it’s
Slide 37: People
People New Roles and Joiners Gavin Whelan Gavin joined Cairn in January 2021. Ger Hoare Ger joined Cairn in June 2017. Head of Construction Previously Managing Director and founder of Head of Corporate Previously Group Pre-Construction Manager & Operations Bailey Brothers Construction Management Ser
Slide 38: Well Located Housing Sites
Well Located Housing Sites 11,700 new homes all on multi-modal transport Active Units links in areas of proven demand 1 Parkside, Malahide Road 491 2 Churchfields, Ashbourne, Co. Meath 397 3 Elsmore, Naas, Co. Kildare 189 4 Shackleton Park, Lucan 778 5 Glenheron, Greystones, Co. Wicklow 242 6 Mariav
Slide 39: Prime Apartment Sites
Prime Apartment Sites 5,100 homes in prime city centre and established suburban and commuter belt locations 3 SCALE PRS 1 km Active Units Opportunity 1 Marianella, Rathgar, Dublin 6W 208 2 Donnybrook Gardens, Dublin 4 85 3 Griffith Wood, Griffith Avenue, Dublin 9 385 4 Rostrevor Place, Marianella, R
Slide 40: The Irish Multifamily PRS Market – 2020
The Irish Multifamily PRS Market – 2020 2020 PRS Market Resilience • €1.1bn new build PRS market in 2020. Strong rebound in H2 2020 at €992m following the pandemic-affected H1’20 < €100m traded. • Average investment size for the top 5 Dublin new build PRS investments increased from €119m in 2019 to
Slide 41: 2020 Multifamily PRS Transactions – New Builds
2020 Multifamily PRS Transactions – New Builds 2020 New Build Transactions over €50m # Property No. of Units Buyer Status Reported Price (€m) 1 Cedarview, Santry Demesne, Dublin 9 138 Private Complete €58.9 2 Prestige Portfolio 317 International institutional investor Complete €145.0 3 Cheevers Cour
Slide 42: Demand Drivers
Demand Drivers Government Supporting Home Ownership Record Breaking Household Savings Help to Buy 2,000 €m Household Deposits (6 month rolling avg) Aug Tax rebate to First Time Buyers of new homes priced up to €500,000. 2020: 1,500 €1.4bn Enhanced in 2020 to increase the amounts available; lower of
Slide 43: Dublin New Homes Supply Down 12.2% in 2020
Dublin New Homes Supply Down 12.2% in 2020 Supply 2020 Significant decline in Dublin Multi-unit scheme completions • 2020 supply: 20,676 completions – a 1.9% decrease on 2020. Dublin 6,081 6000 (-12.2%) and Rest of Ireland 14,595 (+3%). • 7,861 (38%) of multi-unit development new home completions fo
Slide 44: Housing Undersupply to Continue
Housing Undersupply to Continue Commencements the lead indicator for future supply GDA (incl Dublin) Planning Grants – 12m rolling • Apartment and multi-unit development new home commencements down 18.3% nationally in 2020 at 17,271. Dublin down 4.7% and the GDA (incl. 40,000 Dublin) down 14.1%. 35,
Slide 45: Mortgage Market Conditions
Mortgage Market Conditions Q4 2020 – rebound in Approvals Strength of Q4 2020Aapprovals continues in early 2021 The surge in mortgage • FTB mortgage approval volumes +34% YoY, including a record 3,041 approvals in Q4 - significant approvals in October which was the highest since BPFI records started
Slide 46: Demographics Support Demand
Demographics Support Demand Strong population growth Average 1.1% annual population growth since 2015 • Highest birth rate in Europe (12.1 births for every 1,000 of population) with 5,000 1.5% population growth at 3x EU average. 4,900 • High household formation sizes (2.6 compared to 2.3 EU average)
Slide 47: 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 48: Contact details
7 Grand Canal, Grand Canal Street Lower, Dublin 2, D02 KW81 01 696 4600 www.cairnhomes.com 47