Cairn Homes Plc · LSE:CRN
Cairn Homes — H1 2021 Earnings Presentation
49 slides from Cairn Homes's earnings presentation, Sep 9, 2021
Slide 1: Cairn Homes plc 2021 Interim Results Presentation
Cairn Homes plc 2021 Interim Results Presentation
Slide 2: Table of Contents
2021 Interim Results Presentation Table of Contents Page Michael Stanley 1 Key Highlights 2 CEO 2 H1 2021 Financial Results & Guidance 12 3 Our Sustainability Agenda 19 Shane Doherty 4 Capital Returns 22 Chief Financial Officer 5 Landbank & Market 25 6 Outlook 29 Declan Murray Head of Investor Relat
Slide 3: Key Highlights
01 Key Highlights
Slide 4: Key Highlights
Key Highlights • Protecting the health and safety of our people and communities remains our top priority • Delivered on what we said we would do and today upgrading our original two-year targets • Continued commitment and leadership in build quality and customer service • Significant investment in o
Slide 5: Key Highlights - KPIs
Key Highlights - KPIs Very Strong H1 Sales Market Leading Current Closed Performance Sales Rates and Forward Sales 403 3.7 1,750 Closed sales (+ 95% YoY) Sales per week per active sales outlet €655m 832* 8 New homes and net sales value New homes sales (+ 370% YoY) Sold-out virtual sales launches (92
Slide 6: Government Supporting Homeownership and Irish Housebuilding Industry
Government Supporting Homeownership and Irish Housebuilding Industry “Housing for All” – Government’s Signature Policy Ambitious Government Housing Strategy Increased Targets and Funding • New strategy launched on 2 September 2021 Target of 300,000 new homes by 2030 with significant involvement of t
Slide 7: Low Cost Landbank and Planning Gains Driving Margins
Low Cost Landbank and Planning Gains Driving Margins Low Land Cost €’m 75% (€679m) of total capital # Units €30,000 €59,000 deployed in 2015 and 2016 Average housing Average apartment 500 plot cost plot cost 20,000 450 400 Average housing and €38,000 apartment plot cost 350 300 16,000 77% of landban
Slide 8: Managing Our Supply Chain
Managing Our Supply Chain Cairn has built up a deep pool of trusted subcontractors over the last 6 years Top 20 = 64% Of total €1bn procurement since Tactical Initiatives IPO • A number of key initiatives in maintaining their financial and operational integrity during second lockdown: - COVID-19 fin
Slide 9: Managing Our Build Costs
Managing Our Build Costs Key Challenges and Responses Challenges - Unprecedented global demand for 97% Procured on active sites for 2021 materials - Increased shipping costs - Commodity prices remain at abnormal levels - However timber price rate of inflation 69% Procured on active sites for 2022 st
Slide 10: Decision to Significantly Invest in WIP Rewarded with 1,750 Closed and Forward Sales
Decision to Significantly Invest in WIP Rewarded with 1,750 Closed and Forward Sales WIP Investment Increasing In Line With Demand WIP – The Key Underpin For Growth Units €’m €285m €81m 1,200 300 Closing Net investment in WIP WIP balance in last 18 months 3 10 1,000 250 New sites New sites at pre- 8
Slide 11: 370% Increase in Sales and a 61% Increase in Average Weekly Sales Rate
370% Increase in Sales and a 61% Increase in Average Weekly Sales Rate Strong Momentum in Closed and Forward Order Book New Homes €’m Sales KPIs 2,000 €656m 700 +370% Increase in H1 21 sales (832 new homes) compared to 600 H1 20 (177 new homes) 1,750 1,750 1,500 500 96% 56% Increase in H1 21 enquiry
Slide 12: Multifamily Market – Strong Recovery in Transactions
Multifamily Market – Strong Recovery in Transactions H2 2020 market momentum maintained in H1 2021 The 2021 Rental Market €’m • Exodus of small landlords – c. 35k left the market between 2016 and 2020 1,500 €1.4bn • 2,455 available properties to rent – 74% below 15 year average (only 0.15% of total
Slide 13: H1 2021 Financial Results & Guidance
02 H1 2021 Financial Results & Guidance
Slide 14: Strong GDP Growth Supported by Positive Macro Trends
Strong GDP Growth Supported by Positive Macro Trends +23.3% +€21.5bn +65% Two year Irish GDP growth to Record increase in household Increase in FTB mortgage approval June 2021 (EU 27 average: - savings (Jan 20 – Jun 21) volumes in H1 21 (average value 2%) €249k) + 18% 1.53x + 25% Increase in income
Slide 15: Upgraded Guidance
Upgraded Guidance Sales Estimated 2021 2022 Total 2021 2022 Volumes Gross Margin %* Upgraded Guidance 1,100 1,450 2,550 Upgraded Guidance 19.0% 20.0% +50 units compared to March 2021 guidance +1.0% in each year compared to March 2021 guidance Estimated Free Cash Generation** 2021- 2021 2022 Total 20
Slide 16: H1 2021 Financial Performance
H1 2021 Financial Performance June 2021 Unaudited June 2020 Unaudited Movement €m €m Revenue 130.6 80.9 +61% Gross profit 24.2 13.0 +86% Gross margin % 18.5% 16.1% +240bps Opex (12.5) (7.3) +71% EBIT 11.7 5.8 +102% EBIT margin % 8.9% 7.1% +180bps PBT 7.6 1.2 +512% PAT 6.4 1.2 +434% EPS 0.85 cent 0.1
Slide 17: 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 H1 2021 403 327 458 305 324 €130.4m H1 2020 207 323 419 348 337 €69.7m Movement +95% +1% +9% (12%) (4%) +€60.7m Closed & Forward Sales Pipeline (as at 8 September 202
Slide 18: Balance Sheet at 30 June 2021
Balance Sheet at 30 June 2021 June 2021 Unaudited December 2020 Audited €m €m Non-current assets 2.6 2.7 Land held for development 676.2 690.3 Construction work in progress 285.0 277.8 Other receivables 15.0 13.4 Cash 33.7 34.5 Total assets 1,012.6 1,018.8 Other liabilities / payables (70.2) (65.5)
Slide 19: Key Cash Flow Considerations
Key Cash Flow Considerations Jun-21 Dec-20 Movement H1 2021 Commentary • Net debt reduced by €18.9m in the period to €149.4m, resulting in €m €m €m available liquidity of €193.7m Net Debt 149.4 168.3 18.9 • No near-term debt maturities Key Movements • WIP investment is 1.7 times covered by our forwa
Slide 20: Our Sustainability Agenda
03 Our Sustainability Agenda
Slide 21: Progress in Implementing our Sustainability Strategy
Progress in Implementing our Sustainability Strategy Our 2021 Commitment The Full Implementation and Disclosure of our Sustainability Strategy • Align our KPIs to relevant reporting frameworks • Measure our full Scope 3 emissions • Embed additional sustainability metrics within our remuneration stra
Slide 22: H1 2021 Sustainability Highlights
H1 2021 Sustainability Highlights People Homes Places SafeT Certification Measuring our Emissions Biodiversity Net Gain Policy Achieved Grade A for 2021 We obtained ISO 14064-3 certification for From 2022, every new development will our 2020 Scope 1 and 2 GHG emissions have a Biodiversity Action Pla
Slide 23: Capital Returns
O04 Capital Returns
Slide 24: €350m – €400m Cash Generation In The Three Years to 2023
€350m – €400m Cash Generation In The Three Years to 2023 A business back generating significant operating cashflow Forecast Operating Cashflow After Funding €’m 250 • Operating expenses • Finance costs c. €185m - €235m • Taxes 200 • Continued investment in WIP to support 1,750 closed and forward ord
Slide 25: Capital Discipline and Allocation
Capital Discipline and Allocation 2021 – 2023 Capital Allocation c. €120m c. €230m - €280m Progressive annual interim Returns to shareholders through a combination of and final ordinary dividend capital returns and accretive strategic investments Reimplementation of Annual 15% Dividend Programme Any
Slide 26: Landbank & Market
O5 Landbank& Market. —s* ==
Slide 27: Industry Leading Sales
Industry Leading Sales Over 4,900 sales since 2015 Units Apartment Construction Experience 3,500 • Self-build developer counterparty of choice for institutional 3,000 investors 2,500 • Eight apartment developments delivered to date (social, 2,000 private & multifamily) 1,500 • One development nearin
Slide 28: Owning versus Renting
Owning versus Renting Cairn 3 Bed Starter Home FTB Monthly Private Sales in 2020 Monthly Mortgage Cost Rental Cost €372,000 Purchase price €372,000 Current Market Rents Equivalent three bed Average selling price house monthly rent: (including VAT) Mortgage - 90% LTV €335,700 in 2021 across Cairn Luc
Slide 29: New Home Affordability – Impact of Shared Equity at Affordable Repayment Levels
New Home Affordability – Impact of Shared Equity at Affordable Repayment Levels Help to Buy provides a 2021 – Help to Buy 2022 – Shared Equity & Help to Buy 10% deposit up to a maximum of €30,000 New home price € 350,000 New home price € 350,000 on new homes priced up to €500,000 Help to Buy (lower
Slide 30: Outlook
06 Outlook
Slide 31: Outlook
Outlook Which delivers Strong Demand stronger • c. 19% gross margin in economic recovery than ever 2021 and just over 20% in 2022 • c. €137m cumulative operating profit in 2021 2,550 closed sales and 2022 Significant cash in 2021 and 2022 • c. 15% EBIT margin in generation delivering Significant vol
Slide 32: Appendices
07 Appendices
Slide 33: 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 34: Housing Sites in Areas of Proven Demand
Housing Sites in Areas of Proven Demand 11,700 new homes on sites with multi-modal transport links in established residential locations Active Units 1 Parkside, Malahide Road 120 2 Shackleton Park, Lucan 778 3 Glenheron, Greystones, Co. Wicklow 242 4 Mariavilla, Maynooth, Co. Kildare 730 5 Albany, K
Slide 35: Prime Apartment Sites
Prime Apartment Sites 4,800 homes in prime city and established suburban and commuter belt locations 3 SCALE Multifamily 1 km Active Units Opportunity 1 Marianella, Rathgar, Dublin 6W 208 2 Donnybrook Gardens, Dublin 4 85 3 Griffith Wood, Griffith Avenue, Dublin 9 377 4 Rostrevor Place, Marianella,
Slide 36: Characteristics Of Historic Low Cost 16,500 Unit Landbank
Characteristics Of Historic Low Cost 16,500 Unit Landbank Broad buyer pool for Housing and Apartments 35 sites in established areas of proven demand 12,000 9,000 4,100 units (25%) 11,700 6,000 within the M50 in Dublin 71% 3,000 4,800 29% 7,100 units (43%) 0 outside the M50 in Dublin Houses Apartment
Slide 37: Landbank Price Points
Landbank Price Points Cumulative % 30% 54% 68% 77% 83% 100% of our landbank addressing these price points 4,500 Landbank Units* 3,500 2,500 2,100 1,350 900 €250k - €300k €300k - €350k €350k - €400k €400k - €450k €450k - €500k €500k + ASP (incl. VAT) • 83%: qualifies for Help to Buy (up to €500k) Key
Slide 38: Some of Cairn’s Recently Completed Apartment Developments
Some of Cairn’s Recently Completed Apartment Developments Marianella, Rathgar Six Hanover Quay, Dublin 2 Donnybrook Gardens, Dublin 4 208 apartments 120 apartments 85 apartments Commenced: April 2016 Commenced: August 2017 Commenced: March 2018 Completed: July 2019 Completed: June 2019 Completed: De
Slide 39: What Building Long-Term Communities Really Means
A Case Study: What Building Long-Term Communities Really Means Home Together Initiative launched across three Cairn developments in H1 2021 Initiatives launched Initiatives launched Initiatives launched • Biodiversity planting day • A craft group has started • Picnic on the green • Neighbourhood cle
Slide 40: Full Reopening of Ireland by October 2021
Full Reopening of Ireland by 22 October 2021 88% of adults fully vaccinated Re-opening roadmap 88% 75% 72% 71% Sept Public transport returns 70% 70% 67% 64% 58% 1st to full capacity Sept “Night Economy” re-opens 6th Sports & events at 60%-75% capacity Second highest rate of adult vaccination in the
Slide 41: Demand Drivers
Demand Drivers Q2 2021 GDP growth highest in EU 27 Household savings at record levels €1,800 7% 6.3% €m Household Deposits 6% (6m rolling average) 5% €1,300 QoQ Change 4% 3% €800 2% 1% €300 0% Denmark OECD Belgium Norway France Ireland Portugal EU27 USA Japan UK Poland Netherlands Spain Italy Slovak
Slide 42: New Homes Supply Indicators
New Homes Supply Indicators Completions returning to pre-pandemic levels Commencements starting to get back on track 25,000 Q1’20 Peak 21,773 30,000 21,329 27,264 20,000 25,000 Rolling 12m Total Rolling 12m Total 15,000 20,000 15,000 16,202 10,000 10,178 10,000 9,229 6,067 5,000 5,000 0 0 National T
Slide 43: New Homes Supply Indicators (contd.)
New Homes Supply Indicators (contd.) Greater Dublin Area planning grants – 12m rolling Significant decline in Dublin multi-unit scheme completions 40,000 35,000 6,000 Rolling 12m Commencements 30,000 5,000 GDA ex Dublin All 25,000 20,000 4,000 15,000 3,000 10,000 Dublin Scheme 5,000 2,000 Houses 0 -
Slide 44: Non-Household Sector Increasing Presence in the Market
Non-Household Sector Increasing Presence in the Market Non-Household Buyers (NHB) comprise 44% of new homes transactions 60% 51% 50% 44% Share Purchased by 40% Non-HH Sector 30% 28% 20% Share Purchased by 7% FTB OO 10% 0% H1 2010 H2 2010 H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014 H2 201
Slide 45: The Irish Multifamily Market – H1 2021
The Irish Multifamily Market – H1 2021 Value of H1 2021 New Build Multifamily Transactions 2,455 Homes for Rent on 1 August 2021 c. 3.75% €1.45bn 74% below long-run average Dublin Multifamily prime yields H1’21 2021 New Build Transactions # Property No. Units Buyer Status Reported Price (€m) 1 Multi
Slide 46: Mortgage Market
Mortgage Market Mortgage drawdowns at pre-pandemic levels Mortgage approvals strength continues 5,500 14,500 12 month rolling € Million 12 month rolling € Million 5,000 12,500 4,500 4,000 10,500 3,500 8,500 3,000 6,500 2,500 4,500 2,000 1,500 2,500 June Dec June Dec June Dec June Dec June Mar Mar Ma
Slide 47: Demographics Support Demand
Demographics Support Demand Strong population growth Average 1.1% annual population growth since 2015 5.1 1.5% 5.01 • Population 5m as at April 2021 - the highest since 1851. 5.0 4.98 1.3% 1.1% • Population forecast to grow to 5.6m by 2040 4.92 4.9 4.86 0.9% • 30k Irish nationals returned to Ireland
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: 7 Grand Canal, Grand Canal Street Lower, Dublin 2,
7 Grand Canal, Grand Canal Street Lower, Dublin 2, D02 KW81 01 696 4600 www.cairnhomes.com