Cairn Homes Plc · LSE:CRN
Cairn Homes — H1 2020 Earnings Presentation
44 slides from Cairn Homes's earnings presentation, September 2020
Slide 1: Cairn Homes plc 2020 Interim Results Presentation
Cairn Homes plc 2020 Interim Results Presentation
Slide 2: Table of Contents
2020 Interim Results Presentation Table of Contents Page Michael Stanley 1 H1 2020 Review 2 Co-Founder & CEO 2 Financial Results & Guidance 8 3 Our Sustainability Agenda 16 Shane Doherty Chief Financial Officer 4 Landbank & Market 20 5 Outlook 27 Declan Murray Head of Investor Relations 6 Appendices
Slide 3: H1 2020 Review
01 H1 2020 Review 2
Slide 4: Highlights
Highlights Health & Safety Construction Sites Construction Productivity Top Priority 15 active c. 85% Together with our subcontractors and suppliers, fully committed to 17 by year end Of pre-pandemic productivity levels and driving further efficiencies creating safe environments for the (from c. 60%
Slide 5: Operational Review
Operational Review Health Subcontractors Construction and Safety and Supply Chain Activities • Successful implementation of • Regular communication and assisted • Successfully reopened all 15 active “Return to Work Strategy” in remobilisation upon site reopenings sites on 18 May 2020 • All sites ope
Slide 6: Our Ambitious Growth Plan
Our Ambitious Growth Plan €56.8m net WIP investment in H1 Overall WIP targeted at core markets • Significant portion of total €261.3m construction work in progress (“WIP”), including €56.8m net WIP investment in H1, is in our core starter home and contracted PRS markets €261.3m 932 units • Overall W
Slide 7: Strengthening 2020 and 2021 Closed and Forward Order Book
Strengthening 2020 and 2021 Closed and Forward Order Book Forward order book serving 2020 and 2021 • Closed and forward order book of 1,030 units includes 350 new homes which will close in 2021 473 • Forward order book has a net sales value of €237m as at 9 September 2020 • Marketing strategy adapte
Slide 8: First Time Buyer Market Trends
First Time Buyer Market Trends Strong demand from recent starter home launches Starter home pricing at pre-Covid levels • Starter home pricing resilient against the economic backdrop, 2.50 2.38x in both existing and recently launched developments • Three starter home scheme launches between late Jun
Slide 9: Financial Results & Guidance
02 Financial Results & Guidance Gandon Park, Lucan 8
Slide 10: H1 2020 Financial Performance
H1 2020 Financial Performance June 2020 Unaudited June 2019 Unaudited Movement Total Total €m €m Revenue 80.9 192.4 (57.9%) Gross profit 13.0 35.7 (63.5%) % margin 16.1% 18.6% (2.5%) Administrative expenses (7.3) (8.4) +13.3% Operating profit 5.8 27.3 (78.9%) % margin 7.1% 14.2% (7.1%) Profit before
Slide 11: Revenue and Sales Performance KPIs
Revenue and Sales Performance KPIs Average Selling Prices ASPs €'k Trade Starter Homes Apartments Overall Sales Units Up/Down Revenue H1 2020 207 322 369 348 337 €69.7m H1 2019 390 321 406 608 449 €175.3m Movement (47%) 0% (9%) (43%) (25%) (€105.6m) Closed & Forward Sales Pipeline Closed and Forward
Slide 12: Key Gross Margin Considerations
Key Gross Margin Considerations Commentary Jun-20 Jun-19 • A full review of all of sites was undertaken to % % ascertain the following: - The additional preliminary costs associated with the full lockdown during April and May Gross profit 16.1% 18.6% 2020 Core housebuilding margin 16.6% 18.1% - Incr
Slide 13: Balance Sheet at 30 June 2020
Balance Sheet at 30 June 2020 June 2020 Unaudited December 2019 Audited €m €m Non-current assets 3.2 3.7 Land held for development 696.4 692.8 Construction work in progress 261.3 204.5 Other receivables 13.5 12.4 Cash 155.6 56.8 Total assets 1,130.0 970.2 Other liabilities / payables 47.1 58.4 Net a
Slide 14: Net Debt Bridge
Net Debt Bridge Commentary Jun-20 Dec-19 Movement • WIP investment on significant closed and €m €m forward sales pipeline. • Only c. 20% of this has closed and forward sales pipeline closed at half year Net Debt (186.8) (91.2) (95.6) • Main investment in starter home segment and PRS Key Movements Pu
Slide 15: Cash Flow Statement for the Six Month Period Ended 30 June 2020
Cash Flow Statement for the Six Month Period Ended 30 June 2020 (Unaudited) Commentary June 2020 Unaudited June 2019 Unaudited €m €m • EBITDA of €4.9m EBITDA 4.9 28.1 (H1 2019: €28.1m) • Net cash used in operating Increase in inventories (60.1) (3.4) activities €66.8m, including Other working capita
Slide 16: 2020 Guidance
2020 Guidance Unit Completions Modestly in excess of 700 unit completions Gross Margin c. 16.3% Operating Profit c. €20m Shareholder Returns Recognising the importance, revisit decision next year 15
Slide 17: Our Sustainability Agenda
03 Our Sustainability Agenda Wildflower meadow, Mariavilla, Maynooth 16
Slide 18: Our Sustainability Agenda – Across Our Entire Business
Our Sustainability Agenda – Across Our Entire Business We have now transitioned from CSR and developed an ESG framework for our business to define our Sustainability Agenda Our next step is to complete materiality assessments to form the basis for the future measurement of our Sustainability Agenda.
Slide 19: H1 2020 Highlights
H1 2020 Highlights Low Carbon Pledge London Stock Exchange Biodiversity Compiled and submitted our benchmark Green Economy Mark Continued commitment to biodiversity reporting including all Scope 1 and 2 across new developments with native We were honoured to receive the London direct emissions and d
Slide 20: Product Innovation and Supply Chain
Product Innovation and Supply Chain The home as a place to live and work Innovation agenda driven across business Our approach to customer-focused product innovation is now We continue to explore more innovate and efficient ways to more important than ever as many people will view the family deliver
Slide 21: Landbank & Market
04 Landbank & Market Elsmore, Naas 20
Slide 22: Future Profitable Growth Underpinned By Low Cost Landbank
Future Profitable Growth Underpinned By Low Cost Landbank Low historic cost c. 17,000 unit landbank Enhanced by planning track record • 8,134 new homes granted planning permission since IPO, €’m # Units including 2,449 new homes in the last 12 months 76% of total capital 500 deployed in 2015 and 201
Slide 23: Land Acquisitions – All Adjoining Existing Sites
Land Acquisitions – All Adjoining Existing Sites Clonburris SDZ, Dublin Parkside, Malahide Road • Acquired existing site 177 acres / 3,000 unit site in 2016. Bought • First joint venture partnership with NAMA concluded in 2018. adjoining 97 acres / 2,000 unit site from O’Callaghan Properties Second
Slide 24: Land Acquisition – Creating Shareholder Value
Land Acquisition – Creating Shareholder Value Esmonde Motors site - value creation opportunity • Continuing with our strategy of acquiring land adjoining existing sites, we intend to purchase the Esmonde Motors site which adjoins our existing Blakes site in Stillorgan, Co. Dublin for €14 million • S
Slide 25: 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 11,900 5,100 17,000 Average Site Cost per Unit €32k €60k €41k Average Selling Price €299k €489k €353k (estimated) (ex. VAT) (no HPI) Net Devel
Slide 26: Our Land Bank and Addressable Market
Our Land Bank and Addressable Market 31% 54% 69% 78% 84% 100% Cumulative % of our land bank* addressing these 4,700 price points Land Bank Units* 3,600 2,200 2,400 1,400 1,000 €250k - €300k €300k - €350k €350k - €400k €400k - €450k €450k - €500k €500k + ASP (incl. VAT) €65k to €90k €90k to €130k Sal
Slide 27: Market Backdrop: Cairn Uniquely Positioned To Respond
Market Backdrop: Cairn Uniquely Positioned To Respond Impact of Covid-19 on GDA housing supply Affordable Housing Largest cohort whose housing needs not met Unit Completions Commitment to a state-backed affordable home purchase 12,000 scheme Target for delivery of affordable homes Demand estimated a
Slide 28: Outlook
05 Outlook Mariavilla, Maynooth 27
Slide 29: Outlook
Outlook Investing in active and new site Robust demand from first time Broader industry supply commencements which will buyers for fewer competitively challenges in 2020 and 2021 deliver growth into 2021 priced new homes and beyond Strong liquidity position, agile Modestly in excess of c. 700 A futu
Slide 30: Appendices
06 Appendices Oak Park, Naas 29
Slide 31: 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 32: Macroeconomic Drivers for Cairn
Macroeconomic Drivers for Cairn Population Supply Annual Housing +1.1% (+ 56,000) 20.3k new homes in the year to H1 2020 – Demand in the year to April 14k expected in 2020 with CBI Estimate 2020 34,000 c. 6k available for owner- 3x EU Average occupiers GDA annual demand – c. 20k Exchequer Returns Un
Slide 33: Well Located Housing Sites
Well Located Housing Sites 12,000 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 792 5 Glenheron, Greystones, Co. Wicklow 242 6 Mariav
Slide 34: Prime Apartment Sites
Prime Apartment Sites 5,000 homes in established city centre, suburban, and commuter belt locations 3 SCALE PRS 1 km Active Units Opportunity 1 Marianella, Rathgar, Dublin 6W 209 2 Donnybrook Gardens, Dublin 4 85 3 Griffith Wood, Griffith Avenue, Dublin 9 385 Rostrevor Place, Marianella, Rathgar, 4
Slide 35: 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 €372,000 Purchase price €372,000 Three bed house monthly rent: Average selling price (including VAT) in 2020 on Mortgage - 90% LTV €334,800 36 three bed new home Lu
Slide 36: The Irish Multifamily PRS Market – Rebounding After Lockdown
The Irish Multifamily PRS Market – Rebounding After Lockdown Resilient PRS Market: Strong Demand for 2020 and Beyond • Following a record year for PRS investment in 2019, H1 €’m 2020 transactions were impacted by lockdown (€163m) 2,500 € 2,366m 6.0% • Activity has rebounded in H2 with three large 2,
Slide 37: Construction Site Remobilisation
Construction Site Remobilisation Capacity on Sites improved since June 2020 • Given the nature of our active sites, all trades from ground works to finishing trades have returned to work Personnel Productivity • Gradual reintroduction of trades in May on a phased basis, 2,500 100% with emphasis on h
Slide 38: Supply Response Remains Muted
Supply Response Remains Muted Supply to be restricted in 2020 Average annual completions (thousands) 70 63.6 • 2019 Supply: 21,133 completions. Rolling 12-month completions to H1 2020: 20,309 60 • Annual demand 35,000: Dublin 15,000 and Rest of Ireland 20,000 50 • Forecast 2020 completions: c. 14,00
Slide 39: Housing Undersupply to Continue
Housing Undersupply to Continue Few new homes available to owner occupiers GDA (incl Dublin) Planning Grants – 12m rolling 35,000 80% • Market dynamics are reducing the number of new homes available to the 70% 30,000 owner occupier market, and in particular first-time buyers 60% 25,000 • Supply will
Slide 40: Demographics Support Demand
Demographics Support Demand Strong population growth Average 1.1% annual population growth since 2015 5,000 1.5% • Highest birth rate in Europe (12.1 births for every 1,000 of population) with population growth at 3x EU average 4,900 1.0% • High household formation sizes (2.6 compared to 2.3 EU aver
Slide 41: Mortgage Market Conditions
Mortgage Market Conditions Key facts Approvals recovering from COVID shock €’m • 10,000+ mortgages approved for FTBs in 2020 to date • Mortgage drawdowns for FTBs for new homes: 2,469 in H1’20 879 compared to 2,811 in H1’20 811 • 1,883 FTB mortgages approved in July (78% increase on June and 97% of
Slide 42: Cairn Brands
Cairn Brands FTB, Trade Up Trade Up/Down Prime PRS Oak Park Churchfields Edenbrook Glenheron Marianella Griffith Wood Hanover Quay Shackleton Gandon Park Elsmore Graydon Mariavilla Rostrevor Place Mariavilla Albany Shackleton Parkside Whitethorn Archers Wood Donnybrook Gardens The Quarter 41
Slide 43: 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 44: 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 43