TIDMCRN
RNS Number : 1912L
Cairn Homes plc
09 September 2021
Interim Results for the Six Months Ended 30 June 2021
Guidance Upgrade and Significant Increase in Order Book
Dublin / London, 09 September 2021: Cairn Homes plc ("Cairn",
"the Company" or "the Group"), the leading Irish homebuilding
company, announces its interim results for the six months ended 30
June 2021.
Financial Highlights 6 months ended 6 months ended Change
EUR'm June 2021 June 2020
------------------------------- ------------------
Revenue 130.6 80.9 +61%
Gross profit 24.2 13.0 +86%
Gross margin 18.5% 16.1% +240bps
Operating profit 11.7 5.8 +102%
Operating margin 8.9% 7.1% +180bps
Earnings per share (cent) 0.85c 0.16c +0.69c
Cash generated from/(used
in) operations 23.4 (66.8) +90.2m
--------------- ------------------
As at 30 June As at 31 December Change
2020
EUR'm 2021
-------------------------------
Land held for development 676.2 690.3 (14.1)
Construction work in progress
("WIP") 285.0 277.8 +7.2
Total equity 759.2 750.6 +8.6
NAV per share [1] 101 cents 100 cents +1 cent
Net debt 149.4 168.3 (18.9)
------------------------------- ------------------
Commenting on the results, Michael Stanley, CEO, said:
"Cairn has never been better positioned to play a leading role
in the recovery of the housing market in Ireland. We have grown our
order book from EUR214 million in January to a current high for our
business of EUR655 million and we will deliver 2,550 quality-built
family homes between this year and next. We will continue to
leverage our scale and capabilities to deliver competitively priced
starter homes for first time buyers. As we report today, our
average selling price for these starter homes has remained largely
unchanged at EUR371,000, including VAT."
"We welcome the suite of plans and initiatives in the
Government's Housing for All strategy. Cairn for its part will
continue to provide a significant number of quality built new homes
predominantly for prospective homeowners, but also for the rental
market. In order for the Government's plan to have the best chance
of success, it is essential that it is complemented by Central Bank
rules on mortgage lending that are more appropriate to today's
critical needs. A framework that remains prudent but gives
thousands of prospective customers earning good salaries a greater
opportunity to qualify for a mortgage is urgently needed for the
tens of thousands of first-time buyers who remain trapped in the
affordability gap."
H1 2021 Highlights
-- Cairn had a very strong H1 2021. The strategic initiatives
implemented over the last 18 months enabled us to continue to bring
new product to the market during this challenging time for the
sector and satisfy the very strong demand witnessed across all
buyer profiles.
-- We contracted to sell 832 new homes in the first half of this
year in addition to our 403 sales completions (H1 2020: 207).
-- Our closed and forward order book has now grown to 1,750 new
homes as at 8 September 2021, a strong underpin for our target of
2,550 closed sales in the two years to 2022.
-- Our starter home average selling price, excluding VAT, in the
period was very competitive at EUR327,000 (H1 2020:
EUR323,000).
-- Cairn's gross margin has improved again to 18.5% (H1 2020:
16.1%). The impact of build cost inflation during the period was
offset by sales pricing.
-- Our construction sites reopened fully on 12 April 2021 and
Cairn is now back active on 17 developments with three new site
commencements planned before the end of the year. Productivity is
improving and we are now again supporting over 2,000 full-time
positions across our business and supply chain. Our WIP investment
has increased to EUR285 million supporting our continued growth
plans.
-- The Board is recommencing our annual ordinary dividend
programme and has declared an interim dividend of 2.66 cent per
ordinary share to be paid on 8 October 2021.
-- We are making significant progress on our commitment to
implement a sustainability framework and selecting disclosures to
measure our sustainability strategy progress by year-end.
Outlook and Guidance Upgrade
-- 2021 operating profit is now expected to be c. EUR52 million,
increasing to c. EUR85 million in 2022. Our cumulative operating
profit guidance for the two-year period to 2022 has increased by
EUR17 million to c. EUR137 million since March 2021.
-- Our gross margin will continue to improve. We expect gross
margin for the second half of 2021 to be c. 19.5% which would lead
to a full year margin of c. 19.0% in 2021. The Company now expects
our gross margin for 2022 to be just over 20.0%.
-- Cairn's closed and forward pipeline has never been stronger
and is now valued at EUR655 million. This comprises of 1,750 new
homes as at 8 September 2021, an increase in value of EUR95 million
since 30 June 2021.
-- The Company is increasing our unit guidance for the two-year
period to 2,550 new home completions. We now expect to close c.
1,100 new homes this year, increasing to 1,450 completions in
2022.
-- In excess of EUR165 million of operating cashflow [2] is also
expected to be generated between this year and next.
Capital Discipline and Allocation Policy
-- Cairn will continue to invest in our future growth but still
expects to generate EUR350 - EUR400 million in operating cashflow
(2) between 2021 and 2023 which provides a strong platform for
significant returns to shareholders through a combination of
capital returns and accretive strategic investments. We expect to
continue to generate significant free cash into the long-term.
-- Any capital allocated to future investments will be subject
to a 15% target hurdle rate return on capital employed.
-- The Board is reimplementing our long-term annual dividend
programme and we expect annual dividends for 2021 and 2022 will be
at a minimum level of EUR40 million each year and thereafter will
be at a pay-out ratio of 40 - 50% of distributable profits.
Dividends will be paid by way of interim and final dividends,
commencing with today's declared interim dividend.
-- Surplus free cashflow after progressive ordinary dividends
and investment opportunities is intended to be returned to
shareholders through special dividends and/or share buybacks.
For further information, contact:
Cairn Homes plc
+353 1 696 4600
Michael Stanley, Chief Executive Officer
Shane Doherty, Chief Financial Officer
Ian Cahill, Head of Finance
Declan Murray, Head of Investor Relations
Drury Communications
+353 1 260 5000
Billy Murphy
Louise Walsh
Morwenna Rice
An analyst and investor call will be hosted by Michael Stanley,
CEO, and Shane Doherty, CFO, today 9 September 2021 at 8.30am
(BST). Please use the numbers below, quoting the following access
code: 090873:
Ireland UK US
* Toll: 01 536 9584 * Toll: 020 3936 2999 * Toll: 1 646 664 1960
International
* Toll: +44 20 3936 2999
Notes to Editors
Cairn Homes plc ("Cairn") is the leading Irish homebuilder
committed to building high-quality, competitively-priced,
sustainable new homes in great locations. At Cairn, the homeowner
is at the very centre of the design process and we strive to
provide an unparalleled customer service throughout each stage of
the home-buying journey. A new Cairn home is thoughtfully designed
and built to last with a focus on creating shared spaces and
environments where communities prosper. Cairn owns a c. 16,500 unit
land bank across 35 residential development sites, over 90% of
which are located in the Greater Dublin Area ("GDA") with excellent
public transport and infrastructure links.
Note Regarding Forward-Looking Statements
Some statements in this announcement are forward-looking. They
represent our expectations for our business and involve risks and
uncertainties. We have based these forward-looking statements on
our current expectations and projections about future events. We
believe that our expectations and assumptions with respect to these
forward-looking statements are reasonable. However, because they
involve known and unknown risks, uncertainties and other factors,
which are in some cases beyond our control, our actual results or
performance may differ materially from those expressed or implied
by such forward-looking statements. These forward-looking
statements speak only as of the date of this document and no
obligation is undertaken, save as required by law, by the Listing
Rules of Euronext Dublin or by the Listing Rules of the UK Listing
Authority, to reflect new information, future events or
otherwise.
CHIEF EXECUTIVE STATEMENT
IMPLEMENTATION OF STRATEGY
The Company's objective is to be the leading Irish homebuilder
by building homes and creating places where people love to live. By
using our low-cost landbank across our 35 housing and apartment
sites as the foundation for a long-term homebuilding business,
Cairn continues to maximise the significant opportunities which
exist to capitalise on the pent-up demand across all tenures in the
Irish new homes residential property market.
Cairn's historic approach to capital allocation, through a
timely and well executed acquisition strategy in 2015 and 2016, a
period representing a low point in land values in the last few
decades, together with the successful scaling of our business has
resulted in more than 4,900 customers choosing a new Cairn home to
date. Our landbank comprises suburban and commuter belt low-density
housing sites (c. 11,700 units at an average historic site cost of
c. EUR30,000 per unit) and city centre, suburban and commuter belt
high-density apartment sites (c. 4,800 units at an average historic
site cost of c. EUR59,000 per unit).
The Government's recently announced "Housing For All" strategy
has a target of delivering 300,000 new homes in Ireland by 2030,
including 54,000 affordable homes. The plan recognises the
important role the private sector will play in the delivery of this
much needed social and affordable housing for the 375,000
households in Ireland earning between EUR50,000 and EUR80,000 who
cannot access social housing and have limited access to mortgages.
With Cairn's scale, capability and low cost landbank, we are
working on a number of very innovative initiatives in this area. We
are confident that we can deliver high quality new homes at great
value for money with relevant affordable housing partners and
stakeholders across our sites, all of which are located in our main
urban centres where the greatest demand exists in areas of high
employment.
Following the disruption caused to our business since March
2020, Cairn's operational focus is firmly set on scaling our
business. Our growth strategy will be delivered through a
combination of:
-- Regional Expansion: we have extended our development
footprint beyond the Greater Dublin Area with a recent site
commencement in Cork which will be followed by further site
commencements in Galway and Kilkenny in the next year;
-- The Strength of our Team: we are investing in our people and
extending our capacity and capability. We have significantly
expanded our team across all areas of our business, including key
management appointments;
-- "Better Ways to Build": an initiative established to ensure
our competitive advantage continues into the future. This
initiative is focused on: driving further operational excellence
and efficiencies; our innovation agenda; and fostering deeper
partnerships across our stakeholder groups; and
-- Increasing Annual Volumes: with a target of 2,550 closed
sales in the two year period to the end of 2022, we will be active
on an average of 20 sites during this period.
This growth strategy will allow us to respond to demand quicker
and importantly across all tenures of the market. Delivery of our
strategy is supported by our established operating platform and the
strong capabilities within our business. Our loyal and expanding
supply chain is one of our main assets and we are further
strengthening the depth and resilience of these relationships and
partnerships through continual engagement and supportive financial
and strategic initiatives, in tandem with leveraging our scale
across our supply chain. Significant investment in our IT
infrastructure and operational capabilities is also creating a more
unified product delivery platform.
Our approach to customer-focused product innovation is now more
important than ever as many people will view the family home as a
place to both live and work in close proximity to recreational and
other amenity facilities and this is informing our approach to
design. With our approach to sustainability and this focus on
innovation informing both our construction activities and our
design-led approach, the foundations are laid for Cairn to be the
leading homebuilder in Ireland into the long-term across our two
key market segments: competitively priced, well located, A-rated
starter homes on multi-modal transport links in areas of proven
demand at prices where first time buyers can access mortgage
finance; and well located, well-designed and quality built
multifamily new homes where strong demand remains from domestic and
international institutional investors who are seeking a stable,
long-term exposure to the Irish residential sector.
The Company is committed to building homes and creating places
that contribute positively to communities and society and minimise
our impact on the environment. This is a key area of focus for our
business, and we have made significant progress in formalising our
Sustainability Agenda in recent times. Having completed our
materiality assessment in 2020, we are currently implementing our
sustainability framework which our non-financial disclosures (on
which we will report annually) will be aligned to. A strong
governance framework exists from our Steering Group, comprising
board members and senior management, through to our Implementation
Group and Working Groups ensuring layered operational governance
and sustainability management. We will announce these non-financial
disclosures later this year. Our entire business is fully committed
to a sustainable future, and we are embedding this into both our
day to day activities and the overall culture of Cairn.
FINANCIAL REVIEW
Our H1 2021 financial performance is reflective of a business
that is moving on from COVID-19 related disruptions. H1 2021
revenues were EUR130.6 million (H1 2020: EUR80.9 million),
including EUR130.4 million from 403 closed sales (H1 2020: EUR69.7
million from 207 closed sales). Our closed sales had an average
selling price ("ASP") of EUR324,000 (H1 2020: EUR337,000). All ASPs
exclude VAT.
Gross profit for the period was EUR24.2 million (H1 2020:
EUR13.0 million), equating to a gross margin of 18.5% (H1 2020:
16.1%). Despite a 13-week construction shutdown at the start of
2021, COVID-19 related costs have become less impactful as
productivity and programme management becomes more efficient.
Operating profit of EUR11.7 million (H1 2020: EUR5.8 million)
resulted in an operating margin of 8.9% (H1 2020: 7.1%), after
operating expenses of EUR12.5 million (H1 2020: EUR7.3 million),
including areas such as I.T., health & safety and business
effectiveness as well as EUR0.3 million of unproductive labour in
the period owing to site closures as a result of the COVID-19
pandemic. All of this reflects our disciplined approach to cost and
cash management whilst investing in the future of the business.
Finance costs for the period reduced to EUR4.1 million (H1 2020:
EUR4.5 million), reflected both a lower average cost of funds and
lower drawings under committed debt facilities compared to the same
period last year.
Profit after tax for the period was EUR6.4 million (H1 2020:
EUR1.2 million), resulting in earnings per share of 0.85 cent (H1
2020: 0.16 cent).
Our well-capitalised balance sheet had inventories at 30 June
2021 of EUR961.2 million (31 December 2020: EUR968.2 million),
comprised of land held for development of EUR676.2 million (31
December 2020: EUR690.3 million) and WIP of EUR285.0 million (31
December 2020: EUR277.8 million). Continued WIP investment
underpins the construction of new homes predominantly relating to
our strong forward order book, the continued evolution of our
operational scale and is a continuation of the strategic decision
taken in May 2020 to invest in our residential sites which would
deliver sales volumes into 2022 and beyond. The reduction in land
held for development represents the release of land held from our
403 sales completions and aligns with our ambition to monetise a
significant portion of our landbank over time and reduce it to a
more normalised level of c. 4 - 5 years' supply.
We generated EUR23.4 million of cash from operations in H1 2021
(H1 2020: cash used in operations of EUR66.8 million) as our
landbank continues to unwind. Net debt of EUR149.4 million at 30
June 2021 (31 December 2020: EUR168.3 million) comprised of drawn
debt of EUR183.2 million (net of unamortised arrangement fees and
issue costs) (31 December 2020: EUR202.8 million) and available
cash of EUR33.7 million (31 December 2020: EUR34.5 million).
The EUR18.9 million reduction in net debt was due to a number of
factors, including land release associated with unit sales
closings, and profitability for the period. Our total WIP spend in
H1 2021 was EUR98.2 million (H1 2020: EUR105.0 million), reflecting
the 13-week site shut down and our commitment to investing in sites
which will deliver volumes and revenue into the future. We
continued to invest heavily in the future of our business across
recruitment, health and safety and IT.
Available liquidity (cash and undrawn facilities) of EUR193.7
million as at 30 June 2021 (31 December 2020: EUR174.5 million)
leaves us very well placed to focus on the continued growth of our
business.
OUR CUSTOMERS
Cairn delivered 403 closed sales in H1 2021 across 13
developments at an ASP of EUR324,000 comprising 167 houses at an
ASP of EUR356,000 and 236 apartments at an ASP of EUR301,000 (H1
2020: 207 closed sales across 11 developments at an ASP of
EUR337,000 comprising 206 houses at an ASP of EUR337,000 and 1
apartment at an ASP of EUR348,000). Our H1 2021 ASP across our
starter home schemes was EUR327,000 (H1 2020: EUR323,000), starting
at very competitive entry level price points from EUR285,000. Our
product mix in H1 2021 was more heavily weighted towards high
density apartments, including closing the final 182 apartments at
The Quarter at Citywest (cumulative total of 282 apartments sold at
an ASP of EUR294,000).
Our show homes reopened on 10 May 2021 in line with Irish
Government and public health guidelines, with viewings on an
appointment only basis. During the period our show homes were
closed, we continued as scheduled with all planned launches through
virtual sales launches to prospective purchasers.
The demand for new Cairn homes, across all price points from
entry level starter homes to trade-up/down, has never been
stronger. Enquiry lists across all our active selling sites remain
at historic highs, with particularly strong interest in our
commuter locations. Our virtual launches through our online sales
platforms, including virtual reality tours, delivered some of the
strongest sales rates ever recorded by our business. This momentum
continued when we reverted to more traditional launches in mid-May
and has continued into the early Autumn 2021 selling season.
Our year to date closed sales and current forward sales pipeline
is 1,750 new homes as at 08 September 2021 with a net sales value
of EUR655 million. The Company agreed or contracted to sell 832 new
homes in the first six months of 2021 (in addition to 403 new homes
completions), which is testament to the quality and price points of
the new homes we are delivering across all buyer profiles and the
level of demand which exists in the market for well-designed, high
quality new homes.
The Company continued the phased delivery of contracted
multifamily new homes at Shackleton Park and Gandon Park (Lucan -
229 new homes with the final 26 homes to be delivered in H2 2021)
and completed the Quarter in Citywest (Dublin 24 - 282 apartments).
Cairn has two other multifamily transactions contracted with phased
delivery dates out to 2022.
The multifamily investment market recovered strongly in the
first six months of 2021 with investment volumes of EUR1.5 billion
some 25% higher than the full year output in 2020. Demand for
purpose built, well-located multifamily developments remains strong
from domestic and international institutional investors seeking
long-term, stable income with low vacancy rates and voids in an
economy driven by strong demographics and a lack of suitably built
rental accommodation, particularly in the Greater Dublin Area. The
stock of homes available to rent in Ireland was at a historic
15-year low of just 2,455 homes on 1 August 2021, some 74% below
the 15-year average of 9,300 homes and national rental inflation in
the year to June 2021 was 5.6% (source: Daft.ie Q2 Rental report,
RTB). Prime yields remain at c. 3.75%.
With a long-term landbank containing c. 4,800 apartment units
and strong ongoing demand from domestic and international
institutional investors for new, well-designed apartment blocks in
city centre, suburban and commuter belt locations from established
counterparties with proven delivery capability, the Company
continues to see significant demand as a partner of choice from the
multifamily sector for our well located apartment sites. With the
location and price points of our apartment developments in
established residential areas, demand for this product from the
more traditional trade-down market also remains strong, while a
number of our apartment developments are likely to be attractive as
potential affordable rental opportunities.
PRODUCTION
Our residential construction sites reopened fully on 12 April
2021 in line with Irish Government and public health guidelines.
For the duration of the second construction lockdown, which
commenced on 8 January 2021, we were permitted to continue building
out Part V units which were due for practical completion before 30
April 2021, completing new homes contracted to close before 31
January 2021 and proceed with utility connection works. This meant
the majority of our sites remained partially operational during
this period. As a business, our primary priority is operating and
maintaining safe environments for our employees, subcontractors,
suppliers, customers and the communities in which we live and work.
We updated our "return to work" protocols when our sites reopened
fully with safety protocols, procedures and work practices in
adherence to social distancing requirements. As a business, we were
able to get back to near full production capacity within a short
space of time given the successful implementation of this new way
of working by our employees and supply chain previously in
2020.
Cairn averaged in excess of 2,000 people (including direct
employees, subcontractors and other sector professionals) working
across our active sites on a daily basis while fully operational
since April 2021 and to date we have had less than 20 positive
Covid-19 cases, reflecting the effectiveness of our extensive and
thorough work practices.
We continued to demonstrate our enduring commitment to our
subcontractors and supply chain during this second construction
lockdown through tangible and impactful initiatives to assist in
maintaining their financial and operational integrity and
resilience. We remain in constant engagement with our supply chain
and provide assistance in critical cash flow management (in some
instances by accelerating payment runs), maintain regular
communication and have committed to future work pipelines and
planned site commencements. Our collaborative approach and the
value which our business model, growth agenda and long-term
sustainable business offers has strengthened these critical
relationships with our supply chain partners.
Cairn commenced construction on three sites in H1 2021: a new
trade-up/down site at Mercer Vale (South Dublin), our first
regional site at Castletreasure, Douglas (Cork) and the final phase
of our successful starter home development at Shackleton Park
(Lucan). Aligned to our growth strategy, our pre-construction
development team continues to progress design team appointments,
construction programmes and phasing plans across our future sites,
with enabling works commencing on a number of these ahead of H2
2021 and H1 2022 site commencements.
Cairn has a current committed procurement order book of in
excess of EUR350 million on active sites (orders placed and prices
fixed on labour and materials) and our top 20 subcontractors
account for 64% of all procurement since IPO (an average of EUR32
million each), working across an average of 12 developments each.
Build cost inflation has averaged c. 3 - 4% for the last 12 months,
however this is currently running at a higher level on certain
commodities (5% +). The current environment has driven certain
commodity prices to abnormal levels which we believe will be
short-term in nature and our procurement function and scale is
dealing with this on a case by case basis.
We obtained seven grants of planning permission in the year to
date comprising 448 new homes. In addition, Cairn currently has a
number of planning applications in the single-step Strategic
Housing Development ("SHD") planning process and the fast-track
Strategic Development Zone ("SDZ") planning processes.
PRODUCT INNOVATION
Two of the key pillars of our "Better Ways to Build" initiative
are driving further operational excellence and efficiencies and our
innovation agenda:
1. Operational Excellence: continual focus on more efficient
ways to build our new homes through the adoption of further
off-site manufactured ("OSM") methodologies. A key focus area for
our business is standardisation of delivery efficiency in
procurement and operations where key new home components such as
bathrooms, utility rooms, kitchens, service routing, ventilation
systems, heating systems and balcony systems are all refined to be
consistent across our projects. Separately, our innovative use of
panelised light gauge steel structures in the delivery of smaller
multi-unit blocks such as duplex units and apartments blocks of 3-4
storeys in height is being rolled out across more of our
developments over the next year. We have invested heavily in our
broader procurement strategy, leveraging our scale but also
conscious of current challenges with commodity prices. Category and
supplier relationship management within our supply chain is a key
focus area which will deliver further resilience, improved
collaboration and innovation within our dedicated procurement
function.
2. Innovation Agenda: customers now want a home where they can
both live and work, in close proximity to recreational and other
amenity facilities, through a hybrid work-life balance model of
workplace and remote working. Our focus on customer-focused product
innovation has intensified with a greater emphasis on the
importance of delivering high quality residential accommodation
with playgrounds, parks, greenways and other amenities in our
developments. As a business we are investing heavily in our
construction activities on our environmental agenda which we are
pursuing through initiatives like our employment of engineered soil
solutions. We believe that regulators and relevant local
authorities, as key stakeholders in our industry, should adopt more
environmentally friendly construction methods and innovations.
ECONOMY
With GDP growth of 5.9%, Ireland's 2020 economic performance
outpaced that of all other EU countries (EU27, -6%), the US (-3.4%)
and the UK (-9.8%) (source all: CSO, OECD). This growth has
continued in 2021 despite the challenging backdrop with GDP growth
of 10.7% in the year to Q1 2021 (source: CSO), demonstrating the
strength of the Irish economy. At 23.3%, Ireland's two-year GDP
growth to June 2021 is 25.3% above the EU 27 average of -2.0%.
For the period January to July 2021, VAT receipts of EUR9.7
billion were 28% ahead of the same period in 2020, reflecting a
strong recovery in consumption, while income tax receipts at
EUR14.3 billion were 17.9% ahead of 2020 (source all: Department of
Finance). Unemployment stands at 12.4% (August 2021), down from
27.2% in January (source: CSO). This is expected to continue to
fall as the re-opening of our economy gathers pace and as the
Pandemic Unemployment Payment is tapered in line with the removal
of restrictions.
Household savings increased by EUR13.6 billion in the year to
June 2021, a 29% increase compared to the preceding 12 months
(source: CBI). These "pandemic savings", equivalent to 11% of
disposable incomes, will be one of the drivers for the domestic
economy over the coming years.
The impact of these "pandemic savings" is evidenced in mortgage
data. 18,716 mortgages (value EUR4.4 billion) were drawn down in H1
2021, an increase of 22% over H1 2020. First time buyers ("FTB")
drawdowns were even stronger with 9,614 mortgages (value EUR2.2
billion) drawn, an increase of 25% over H1 2020. Mortgage approvals
indicate the scale of pent up demand, with 13,796 FTB mortgages
(value EUR3.4 billion) approved in H1 2021, an increase of 65% in
volume compared to H1 2020. At EUR249,158, the average value for
FTB mortgages approved in H1 2021 is 4.2% ahead of H1 2020 (source:
all BPFI).
Annual housing demand of 33,000 new homes is forecast to 2040 in
a high international migration scenario that would see our
population growing to 6 million by 2040 from 5.01 million today
(source: ESRI - Regional Demographics and Structural Housing
Demand, December 2020). Demographics continue to underpin demand,
with the Irish population increasing to 5.01 million in April 2021
(+ 0.7% YoY), the first time the Irish population has exceeded 5
million since 1851. There were 20,535 new homes built in Ireland in
2020 (-3% YoY).
House price inflation is running at 2.2% for new homes and 6.7%
for second-hand homes in the year to June 2021 (source: CSO).
GOVERNMENT INITIATIVES
The Government's new "Housing For All" strategy was launched on
2 September 2021. This is a signature 10 year plan to increase new
housing supply, support home ownership and increase affordability.
With a target of delivering 300,000 new homes by 2030, the plan
includes a number of encouraging targets including: completing
10,000 shared equity mortgage loans by 2025 (previously only one
year funding approved); the provision of EUR4.5 billion additional
funding for Irish Water to assist in accelerating and increasing
housing delivery for this critical utility; and increased funding
of EUR1 billion for the Land Development Agency (to EUR3.5 billion)
to deliver 5,000 affordable homes on non-State land. Total capital
funding of EUR20 billion (EUR4 billion a year) is committed for the
next 5 years to finance this signature strategy.
The fast track SHD planning process will end on 25 February 2022
and will be replaced by the new Large Scale Residential Development
("LSRD") process for planning applications greater than 100
residential units or 200 student beds. The new LSRD process aims to
incorporate some of the positives from the SHD process. Cairn has
been part of the stakeholder consultation with the Department of
Housing, Planning and Local Government in implementing the new
process. With our continued industry leading track record in
obtaining positive planning decisions through the SHD process, we
are actively progressing all relevant remaining sites through the
fast track route before its expiry in February 2022.
PRINCIPAL RISKS & UNCERTAINTIES
Following a comprehensive review of our risk management
framework during 2020, we have improved our processes around
identifying, assessing, mitigating and managing the risks facing
the Company. Details of this review and the principal risks and
uncertainties facing the Company can be found in the Risk Report
included in our 2020 Annual Report. These risks, in particular
policy, brand, economic, financial, development, compliance and
people remain the most likely to affect Cairn in the second half of
the current year, however as part of our continued forward-looking
focus, we determined that climate change is now also an additional
principal risk for Cairn. We are committed to identifying and
proactively managing risks associated with climate change in ways
that ensure Cairn can both continue to deliver on its mission and
address the key impacts of climate change. Our approach to
identifying and managing risk is active and progressive, with a
focus on operational as well as strategic risk, current risk and
the potential for future risks to our longer-term plans. We will
continue to actively identify and assess internal and external
factors that may change our risk profile throughout the remainder
of the financial year.
OUTLOOK
The demand for new homes in Ireland is at its strongest level
since we started business and with the Irish economy continuing to
rebound and grow, we remain positive and ambitious for our future
growth prospects.
CAIRN HOMES PLC
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE
HALF-YEARLY FINANCIAL REPORT
For the six month period ended 30 June 2021
The Directors are responsible for preparing the half-yearly
financial report in accordance with the Transparency (Directive
2004/109/EC) Regulations 2007 ("the Transparency Directive"), and
the Transparency Rules of the Central Bank of Ireland.
In preparing the condensed set of financial statements included
within the half-yearly financial report, the Directors are required
to:
- prepare and present the condensed set of financial statements
in accordance with IAS 34 Interim Financial Reporting as adopted by
the EU, the Transparency Directive, and the Transparency Rules of
the Central Bank of Ireland;
- ensure the condensed set of financial statements has adequate disclosures;
- select and apply appropriate accounting policies; and
- make accounting estimates that are reasonable in the circumstances.
The Directors are responsible for designing, implementing and
maintaining such internal controls as they determine are necessary
to enable the preparation of the condensed set of financial
statements that is free from material misstatement whether due to
fraud or error.
We confirm that to the best of our knowledge:
(1) the condensed set of consolidated financial statements
included within the half-yearly financial report of Cairn Homes plc
("the Company") for the six months ended 30 June 2021 ("the interim
financial information") which comprises the condensed consolidated
statement of profit or loss and other comprehensive income,
condensed consolidated statement of financial position, condensed
consolidated statement of changes in equity, condensed consolidated
statement of cash flows and the related explanatory notes, have
been presented and prepared in accordance with IAS 34 Interim
Financial Reporting as adopted by the EU, the Transparency
Directive, and the Transparency Rules of the Central Bank of
Ireland.
(2) The interim financial information presented, as required by
the Transparency Directive, includes:
a. an indication of important events that have occurred during
the first 6 months of the financial year, and their impact on the
condensed set of consolidated financial statements;
b. a description of the principal risks and uncertainties for
the remaining 6 months of the financial year;
c. related party transactions that have taken place in the first
6 months of the current financial year and that have materially
affected the financial position or the performance of the
enterprise during that period; and
d. any changes in the related party transactions described in
the last annual report that could have a material effect on the
financial position or performance of the enterprise in the first 6
months of the current financial year.
On behalf of the Board
Michael Stanley Shane Doherty
Chief Executive Officer Chief Financial Officer
CAIRN HOMES PLC
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME (UNAUDITED)
For the six month period ended 30 June 2021
For six month For six month
period ended period ended
30 June 2021 30 June 2020
-------------- --------------
Note EUR'000 EUR'000
Continuing operations
Revenue 2 130,569 80,940
Cost of sales (106,381) (67,915)
-------------- --------------
Gross profit 24,188 13,025
Administrative expenses (12,511) (7,256)
Operating profit 11,677 5,769
Finance costs 3 (4,105) (4,531)
-------------- --------------
Profit before taxation 7,572 1,238
Tax charge 4 (1,165) (39)
-------------- --------------
Profit for the period 6,407 1,199
Other comprehensive - -
income
-------------- --------------
Total comprehensive income for
the period 6,407 1,199
-------------- --------------
Profit attributable to:
Owners of the Company 6,407 1,199
Non-controlling interests - -
-------------- --------------
Profit for the period 6,407 1,199
-------------- --------------
Basic earnings per share 12 0.85 cent 0.16 cent
-------------- --------------
Diluted earnings per share 12 0.85 cent 0.16 cent
-------------- --------------
CAIRN HOMES PLC
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(UNAUDITED)
As at 30 June 2021
30 June 31 Dec 2020
2021
Unaudited Audited
Assets Note EUR'000 EUR'000
Non-current assets
Property, plant and equipment 1,190 1,447
Right of use assets 541 722
Intangible assets 913 552
2,644 2,721
Current assets
Inventories 5 961,201 968,184
Trade and other receivables 6 13,463 11,388
Current taxation 1,564 2,028
Cash and cash equivalents 7 33,742 34,526
---------- ----------------
1,009,970 1,016,126
Total assets 1,012,614 1,018,847
---------- ----------------
Equity
Share capital 8 789 788
Share premium 8 199,616 199,616
Other undenominated capital 40 40
Share-based payment reserve 9,281 7,572
Retained earnings 549,495 542,556
---------- ----------------
Total equity 759,221 750,572
Liabilities
Non-current liabilities
Loans and borrowings 9 183,174 202,793
Lease liabilities 329 490
Deferred taxation 4 4,562 4,562
---------- ----------------
188,065 207,845
Current liabilities
Lease liabilities 334 334
Trade and other payables 11 64,994 60,096
---------- ----------------
65,328 60,430
Total liabilities 253,393 268,275
---------- ----------------
Total equity and liabilities 1,012,614 1,018,847
---------- ----------------
CAIRN HOMES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
For the six month period ended 30 June 2021
Attributable to owners of the Company
--------- ------------------------------------------------------------
Share Share Other Share-Based Retained Total
Capital Premium Undenomin-ated Payment Earnings
Capital Reserve
--- --- --------- ------------- ------------ ---------- ------------
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
------------------------ --------- ------------- --------------- ------------ ---------- ------------
As at 1 January 2021 788 199,616 40 7,572 542,556 750,572
--------------------------- --------- ------------- --------------- ------------ ---------- ------------
Total
comprehensive
income
for the period
---------------- --------- ------------- --------------- ------------ ---------- ------------
Profit for the period - - - - 6,407 6,407
--------------------------- --------- ------------- --------------- ------------ ---------- ------------
- - - - 6,407 6,407
--------- ------------- --------------- ------------ ---------- ------------
Transactions
with owners
of the Company
---------------- --------- ------------- --------------- ------------ ---------- ------------
Equity-settled
share-based
payments
(note 8) 1 - - 2,241 - 2,242
----------------- --------- ------------- --------------- ------------ ---------- ------------
Transfer from
share-based
payment
reserve to
retained
earnings re
vesting or
lapsing of
share awards - - - (532) 532 -
----------------- --------- ------------- --------------- ------------ ---------- ------------
1 - - 1,709 532 2,242
--------- ------------- --------------- ------------ ---------- ------------
As at 30 June 2021 789 199,616 40 9,281 549,495 759,221
--------------------------- --------- ------------- --------------- ------------ ---------- ------------
CAIRN HOMES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
For the six month period ended 30 June 2020
Attributable to owners of the Company
-------- ------------------------------------------------------------- ---------------------------
Share Share Other Share-Based Retained Total Non-Controlling Total
Capital Premium Undenomin-ated Payment Earnings Interests Equity
Capital Reserve (Note 10)
-------- -------- ------------ --------- --------- ---------------- ---------
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
-------- -------- --------------- ------------ --------- --------- ---------------- ---------
As at 1 January
2020 810 199,616 18 8,002 552,796 761,242 2,496 763,738
---------------- -------- -------- --------------- ------------ --------- --------- ---------------- ---------
Total
comprehensive
income
for the period
---------------- -------- -------- --------------- ------------ --------- --------- ---------------- ---------
Profit for the
period - - - - 1,199 1,199 - 1,199
---------------- -------- -------- --------------- ------------ --------- --------- ---------------- ---------
- - - - 1,199 1,199 - 1,199
---------------- -------- -------- --------------- ------------ --------- --------- ---------------- ---------
Transactions
with owners
of the Company
---------------- -------- -------- --------------- ------------ --------- --------- ---------------- ---------
Purchase of own
shares (22) - 22 - (23,345) (23,345) - (23,345)
---------------- -------- -------- --------------- ------------ --------- --------- ---------------- ---------
Equity-settled
share-based
payments - - - (1,224) - (1,224) - (1,224)
---------------- -------- -------- --------------- ------------ --------- --------- ---------------- ---------
(22) - 22 (1,224) (23,345) (24,569) - (24,569)
---------------- -------- -------- --------------- ------------ --------- --------- ---------------- ---------
As at 30 June
2020 788 199,616 40 6,778 530,650 737,872 2,496 740,368
---------------- -------- -------- --------------- ------------ --------- --------- ---------------- ---------
CAIRN HOMES PLC
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
For the six month period ended 30 June 2021
For the six For the six month
month period period ended
ended 30 June 30 June 2020
2021
EUR'000 EUR'000
---------------------------------------- --------------- ------------------
Cash flows from operating activities
--------------- ------------------
Profit for the period 6,407 1,199
---------------
Adjustments for:
---------------
Share-based payments expense/ (credit) 1,573 (1,224)
--------------- ------------------
Finance costs 4,105 4,531
--------------- ------------------
Depreciation and amortisation 345 355
Taxation 1,165 39
--------------- ------------------
13,595 4,900
---------------------------------------- --------------- ------------------
Decrease/(increase) in inventories 7,904 (60,139)
--------------- ------------------
(Increase)/decrease in trade and
other receivables (2,075) 351
--------------- ------------------
Increase/(decrease) in trade and
other payables 4,713 (9,910)
--------------- ------------------
Tax paid (699) (2,009)
--------------- ------------------
Net cash from/(used in) operating
activities 23,438 (66,807)
--------------- ------------------
Cash flows from investing activities
--------------- ------------------
Purchases of property, plant and
equipment (86) (85)
Purchases of intangible assets (434) -
Net cash used in investing activities (520) (85)
--------------- ------------------
Cash flows from financing activities
--------------- ------------------
Purchase of own shares - (23,751)
--------------- ------------------
Proceeds from borrowings 50,000 194,000
--------------- ------------------
Repayment of loans (70,000) -
--------------- ------------------
Repayment of lease liabilities (161) (157)
Interest and other finance costs
paid (3,541) (4,373)
--------------- ------------------
Net cash (used in)/from financing
activities (23,702) 165,719
--------------- ------------------
Net (decrease)/increase in cash
and cash equivalents in the period (784) 98,827
Cash and cash equivalents at beginning
of period 34,526 56,810
--------------- ------------------
Cash and cash equivalents at end
of period 33,742 155,637
--------------- ------------------
CAIRN HOMES PLC
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL
STATEMENTS
1. Accounting Policies
Basis of preparation
Cairn Homes plc ("the Company") is a company domiciled in
Ireland. The Company's registered office is 7 Grand Canal, Grand
Canal Street Lower, Dublin 2. The Company and its subsidiaries
(together referred to as "the Group") is predominantly involved in
the development of residential property for sale.
These unaudited condensed interim consolidated financial
statements and the information set out in this report cover the six
month period ended 30 June 2021 and have been prepared in
accordance with IAS 34 "Interim Financial Reporting" as adopted by
the European Union.
The condensed interim consolidated financial statements do not
include all the information required for a complete set of
financial statements prepared in accordance with IFRS as adopted by
the European Union. However, selected explanatory notes are
included to explain events and transactions that are significant to
an understanding of the changes in the Group's financial position
and performance since 31 December 2020. They should be read in
conjunction with the statutory consolidated financial statements of
the Group, which were prepared in accordance with IFRS as adopted
by the European Union, as at and for the year ended 31 December
2020. Those statutory financial statements have been filed with the
Registrar of Companies and are available at www.cairnhomes.com .
The audit opinion on those statutory financial statements was
unqualified and did not contain any matters to which attention was
drawn by way of emphasis.
The new IFRS standards, amendments to standards or
interpretations that are effective for the first time in the
financial year ending 31 December 2021 have not had a material
impact on the Group's reported profit or net assets in these
interim financial statements.
The Group's other accounting policies, presentation and method
of computations adopted in the preparation of the condensed interim
financial statements are consistent with those followed in the
preparation of the Group's financial statements for the year ended
31 December 2020.
The preparation of consolidated financial statements requires
management to make judgements, estimates and assumptions that
affect the application of policies and reported amounts of assets,
liabilities, income and expenses. Actual results could differ
materially from these estimates. Estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to
estimates are recognised prospectively.
The significant accounting judgement impacting these interim
financial statements is:
-- scale and mix of each development and the achievement of
associated planning permissions.
This may involve assumptions on new or amended planning
permission applications. This judgement then feeds into the process
of forecasting expected profitability by development which is used
to determine the profit that the Group is able to recognise on its
developments in each reporting period and the net realisable value
of inventories.
The key sources of estimation uncertainty impacting these
interim financial statements are:
-- forecast selling prices; and
-- carrying value of inventories and allocations from
inventories to cost of sales (note 5).
Due to the nature of the Group's activities and, in particular
the scale of its development costs and the length of the
development cycle, the Group has to allocate site-wide development
costs between units completed in the current year and those in
future years. It also has to forecast the costs to complete on such
developments and make estimates relating to future sales prices.
Forecast selling prices are inherently uncertain due to changes in
market conditions. These estimates impact management's assessment
of the net realisable value of the Group's inventories and also
determine the extent of profit or loss that should be recognised in
respect of each development in each reporting period. Note 5
includes disclosures on the impact of COVID-19 on judgements and
estimates in relation to profit margins and carrying values of
inventories. In making such assessments and allocations, there is a
degree of inherent estimation uncertainty.
The Group has developed internal controls designed to
effectively assess and review carrying values and the
appropriateness of estimates made.
CAIRN HOMES PLC
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS
(continued)
1. Accounting Policies (continued)
Going Concern
The interim condensed consolidated financial statements are
presented in Euro, which is the functional currency of the Company
and presentation currency of the Group, rounded to the nearest
thousand.
The COVID-19 pandemic has had an impact on the Group during the
period ended 30 June 2021, resulting in an interruption in
development activity. The Group entered the COVID-19 pandemic from
a position of strength and continues to operate from that position
with a long-term strategy that focuses on minimising financial risk
and maintaining financial flexibility. The business has strong
liquidity, a robust balance sheet and sustainable, lowly leveraged
debt facilities.
To mitigate any risk the Group applies a prudent cash management
policy ensuring the production activities in the near term are
focused towards forward sold inventories, inventories which will
continue to be attractive to buyers, and directing housing
production pipeline towards new family homes which are at the lower
end of the price band.
The Group did not avail of any wage subsidy support from the
Irish Government during the period.
The Group held EUR33.7 million of cash at 30 June 2021 (31
December 2020: EUR34.5 million) and has strong liquidity with the
Group's loan facilities being repayable between 31 December 2022
and 31 July 2026. The Group had undrawn revolving credit facilities
of EUR160 million as at 30 June 2021 (EUR140 million as at 31
December 2020).
During the thirteen-week shutdown period at the beginning of the
year during which the majority of the Group's construction sites
were closed (some construction activity continued on social and
affordable housing, other units with sales contracted to close by
31 January 2021 and utility connections in the "shutdown" period),
the Group successfully maintained operational momentum, making
detailed preparations for a safe return to work, which allowed
build programmes to restart efficiently on 12 April 2021. 19
residential sites were successfully reopened (3 new site
commencements are planned for the second half of the year), under
strict compliance with operating procedures adhering to social
distancing requirements. While COVID-19 continues to have an impact
on gross and operating margins, the business has recovered well and
has seen an improvement in gross margins, a strong recovery in in
sales and an increase in profitability when compared to the same
period in the prior year. The Group is also encouraged by the level
of underlying demand and the forward sales pipeline achieved
through our online sales launches in addition to our showhouses
reopening post the lockdown period.
Looking ahead, uncertainty remains in relation to the future
impact of COVID-19 on the Irish economy and the potential impact on
customer confidence. Against this backdrop, the Directors have
carried out a robust assessment of the principal risks facing the
Group and have considered the impact of these risks on the going
concern status of the business.
Having considered the Group's forecasts and significant
liquidity, the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence
for the foreseeable future. Accordingly, they are satisfied that it
is appropriate to continue to adopt the going concern basis in
preparing these condensed consolidated half year financial
statements and there are no material uncertainties in that regard
which are required to be disclosed.
CAIRN HOMES PLC
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS
(continued)
2. Revenue
For six month For six month
period ended period ended
30 June 2021 30 June 2020
EUR'000 EUR'000
-------------- --------------
Residential property sales 130,446 69,734
Site sales 6 11,000
-----------------------------
Income from property rental 117 206
-------------- --------------
130,569 80,940
-------------- --------------
For six month For six month
period ended period ended
30 June 2021 30 June 2020
EUR'000 EUR'000
-------------- --------------
Residential property sales
Houses 59,494 69,386
----------------------------
Apartments 70,952 348
-------------- --------------
130,446 69,734
-------------- --------------
3. Finance costs
For six month For six month
period ended period ended
30 June 2021 30 June 2020
EUR'000 EUR'000
-------------- --------------
Interest expense on financial liabilities
measured at amortised cost 3,350 4,137
-------------------------------------------
Other finance costs 744 379
-------------------------------------------
Interest on lease liabilities 11 15
------------------------------------------- -------------- --------------
4,105 4,531
------------------------------------------- -------------- --------------
Interest expense for the period to 30 June 2021 includes
interest and amortised arrangement fees and issue costs on the
drawn term loans, revolving credit facility and loan notes. Other
finance costs include commitment fees on the undrawn element of the
revolving credit facility.
4. Taxation
For six month For six month
period ended period ended
30 June 2021 30 June 2020
EUR'000 EUR'000
----------------------------------------- ---------------- -----------------
Current tax charge for the period 1,165 552
---------------- -----------------
Deferred tax credit for the period - (513)
---------------- -----------------
Total tax charge 1,165 39
---------------- -----------------
Deferred tax
-----------------------------------------
The deferred tax liability is comprised
of the following: For six month For year ended
period ended 31 December
30 June 2021 2020
---------------- -----------------
EUR'000 EUR'000
---------------- -----------------
Opening balance 4,562 5,084
---------------- -----------------
Credited to profit or loss - (522)
---------------- -----------------
Closing balance 4,562 4,562
---------------- -----------------
CAIRN HOMES PLC
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS
(continued)
5. Inventories
30 June 2021 31 Dec 2020
EUR'000 EUR'000
------------- ------------
Land held for development 676,163 690,347
Construction work in progress 285,038 277,837
-------------------------------
961,201 968,184
------------- ------------
The Directors consider that all inventories are essentially
current in nature although the Group's operational cycle is such
that a considerable proportion of inventories will not be realised
within 12 months. It is not possible to determine with accuracy
when specific inventories will be realised as this will be subject
to a number of factors such as consumer demand and the timing of
planning permissions.
The cost of inventories includes direct labour costs and other
direct wages and salaries as well as the cost of land, raw
materials, and other direct costs. In the thirteen-week shutdown
period during which sites were closed in 2021 due to the pandemic,
the Group continued to capitalise direct labour costs in
inventories in relation to direct labour costs which continued on
permitted works on social and affordable housing, other units with
sales contracted to close by 31 January 2021 and utility
connections . During the period ended 30 June 2021 EUR0.3 million
(30 June 2020: EURnil) of other direct wages and salaries for
employees in construction related roles were estimated to be
non-productive and were expensed and included in administrative
expenses. All other direct wages and salaries for employees in
construction related roles incurred during this period were
included in the cost of inventories, as the Group's operational
activities did continue in the areas of site planning, scheduling,
and design activities.
As the build costs on each site can take place over a number of
reporting periods the determination of the cost of sales to release
on each sale is dependent on up to date cost forecasting and
expected profit margins across the various developments. The
directors review forecasting and profit margins on a regular basis
and have incorporated any additional forecasted costs arising from
the extension of development timetables and changes to work
practices arising from the ongoing COVID-19 pandemic. Nearer term
costs are largely fixed as they are in most cases fully procured,
and others are variable and particular focus has been given to
these items to ensure they are accurately reflected in forecasts
and profit margins. There is a risk that one or all of the
assumptions may require revision as more information becomes
available, with a resulting impact on the carrying value of
inventories or the amount of profit recognised. The risk is managed
through ongoing site profitability reforecasting with any necessary
adjustments being accounted for in the relevant reporting period.
Estimates of profitability over the expected duration of the
Group's developments, which drive the gross margins recognised in
the period, have been updated to fully reflect the estimated impact
of the COVID-19 pandemic. The Directors considered the evidence
from impairment reviews and profit forecasting models across the
various sites and are satisfied with the carrying values of
inventories (development land and work in progress), which are
stated at the lower of cost and net realisable value, and with the
methodology for the release of costs on the sale of
inventories.
6. Trade and other receivables
30 June 2021 31 Dec 2020
EUR'000 EUR'000
--------------- --------------
Construction bonds 9,647 8,332
--------------------
Other receivables 3,816 3,056
--------------- --------------
13,463 11,388
--------------- --------------
The carrying value of all trade and other receivables is
approximate to their fair value.
CAIRN HOMES PLC
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS
(continued)
7. Cash and cash equivalents
30 June 2021 31 Dec 2020
EUR'000 EUR'000
--------------- --------------
Current
--------------- --------------
Cash and cash equivalents 33,742 34,526
--------------- --------------
Cash deposits are made for varying short-term periods depending
on the immediate cash requirements of the Group. All deposits can
be withdrawn without significant changes in value and accordingly
the fair value of current cash and cash equivalents is identical to
the carrying value.
8. Share capital and share premium
30 June 2021 31 Dec 2020
Number EUR'000 Number EUR'000
-------------- -------------- -------------- --------------
Authorised
-------------- -------------- -------------- --------------
Ordinary shares of EUR0.001
each 1,000,000,000 1,000 1,000,000,000 1,000
-------------- -------------- -------------- --------------
Founder shares of EUR0.001
each 100,000,000 100 100,000,000 100
-------------- -------------- -------------- --------------
Deferred shares of EUR0.001
each 120,000,000 120 120,000,000 120
-------------- -------------- -------------- --------------
A Ordinary shares of EUR1.00
each 20,000 20 20,000 20
-------------- -------------- -------------- --------------
Total authorised share
capital 1,240 1,240
-------------- -------------- -------------- --------------
Share Capital Share Premium Total
-------------- -------------- -------------- ------------
As at 30 June 2021 Number EUR'000 EUR'000 EUR'000
------------------------------ -------------- -------------- -------------- ------------
Issued and fully paid
-------------- -------------- -------------- ------------
Ordinary shares of EUR0.001
each 749,932,223 750 199,597 200,347
-------------- -------------- -------------- ------------
Founder shares of EUR0.001
each 19,182,149 19 19 38
-------------- -------------- -------------- ------------
Deferred shares of EUR0.001
each 19,980,000 20 - 20
-------------- -------------- ------------
A Ordinary shares of EUR1.00 - - - -
each
------------------------------ -------------- -------------- ------------
789 199,616 200,405
-------------- -------------- -------------- ------------
Share Capital Share Premium Total
As at 31 December 2020 Number EUR'000 EUR'000 EUR'000
------------------------------ ------------ -------------- -------------- --------
Issued and fully paid
------------ -------------- -------------- --------
Ordinary shares of EUR0.001
each 749,450,129 749 199,597 200,346
------------ -------------- -------------- --------
Founder shares of EUR0.001
each 19,182,149 19 19 38
------------ -------------- -------------- --------
Deferred shares of EUR0.001
each 19,980,000 20 - 20
-------------- -------------- --------
A Ordinary shares of EUR1.00 - - - -
each
------------------------------ -------------- -------------- --------
788 199,616 200,404
------------ -------------- -------------- --------
CAIRN HOMES PLC
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS
(continued)
8. Share capital and share premium (continued)
Long Term Incentive Plan
The Group operates an equity settled Long Term Incentive Plan
("LTIP"), which was approved at the May 2017 Annual General
Meeting, under which conditional awards of 12,971,720 shares made
to employees remain outstanding as at 30 June 2021 (31 December
2020: 7,659,629). The shares will vest on satisfaction of service
and performance conditions attaching to the LTIP, to include
earnings per share performance, total shareholder return (for 2018
and 2019 awards) and other stakeholder metrics (for 2020 and 2021
awards) over a 3 year period.
The Group recognised a charge of EUR1.7 million (period ended 30
June 2020: EUR1.2 million credit) related to the LTIP during the
period ended 30 June 2021, of which EUR1.2 million was charged to
administrative expenses in profit and loss (period ended 30 June
2020: EUR1.0 million credit) and EUR0.5 million was charged to
construction work in progress within inventories (period ended 30
June 2020: EUR0.2m credit). Conditional awards of 5,312,091 shares
were made to employees under the LTIP in the period ended 30 June
2021.
Cairn engaged extensively with shareholders during 2020 with
respect to the Chief Executive Officer (Michael Stanley)
participating in the Company's Long Term Incentive Plan from 2021
onwards. One of the conditions of participation was an agreement
that the Chief Executive Officer would surrender any future
entitlements, pursuant to the Founder Share Agreement, from the
remaining 6,713,752 Founder Shares held by him at the time. The
Chief Executive Officer signed a Deed of Surrender on 17 May 2021
relinquishing any future entitlements from those Founder Shares.
All rights, title and interest in those 6,713,752 Founder Shares
were surrendered to the Company for nil consideration.
Restricted share unit plan
The Group operates a restricted share unit plan, which was
approved at the Annual General Meeting on 20 May 2020, under which
conditional awards of 1,175,267 shares made to employees remain
outstanding as at 30 June 2021 (30 June 2020: 482,094). The shares
will vest on satisfaction of service over a 1 year period. The
Group recognised a charge related to these restricted share units
during the period ended 30 June 2021 of EUR0.424 million (30 June
2020: EURnil) of which EUR0.302 million (30 June 2020: EURnil) was
charged to profit or loss and EUR0.122 million (30 June 2020:
EURnil) was included in construction work in progress within
inventories. During the period ended 30 June 2021, the Group issued
482,094 shares due to the vesting of awards granted in May 2020
under the terms of the 2020 restricted share unit plan.
Save as you earn scheme
The Group operates a Revenue approved savings related share
option scheme ("save as you earn scheme"), which was approved at
the May 2019 Annual General Meeting, under which the Group
recognised a charge during the period ended 30 June 2021 of
EUR0.135 million (30 June 2020: EURnil) of which EUR0.045 million
(30 June 2020: EURnil) was charged to profit or loss and EUR0.09
million (30 June 2020: EURnil) was included in construction work in
progress within inventories.
9. Loans and borrowings
30 June 2021 31 Dec 2020
EUR'000 EUR'000
--------------- --------------
Non-current liabilities
Bank and other loans
--------------- --------------
Repayable as follows:
Between one and two years 110,746 130,399
---------------------------------------
Between two and five years 29,970 29,956
---------------------------------------
Greater than five years 42,458 42,438
--------------------------------------- --------------- --------------
Total borrowings 183,174 202,793
--------------- --------------
The Group has a EUR77.5 million term loan and EUR200 million
revolving credit facility with Allied Irish Banks plc, Ulster Bank
Ireland DAC and Barclays Bank Ireland plc, repayable by 31 December
2022. EUR6 million of the revolving credit facility is represented
by a construction bond facility, (these are bonds that have been
put in place with local authorities until sites are fully completed
and terms of planning conditions have been met).
CAIRN HOMES PLC
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS
(continued)
9. Loans and borrowings (continued)
Additionally, the Group has EUR72.5 million of loan notes with
Pricoa Capital Group, repayable on 31 July 2024 (EUR15 million), 31
July 2025 (EUR15 million) and 31 July 2026 (EUR42.5 million). These
debt facilities are secured by a debenture incorporating fixed and
floating charges and assignments over all the assets of the Group.
The carrying value of inventories as at 30 June 2021 pledged as
security was EUR961.2 million (31 December 2020: EUR968.2 million).
The Group had undrawn revolving credit facilities of EUR160 million
as at 30 June 2021 (EUR140 million as at 31 December 2020). The
amount presented in the financial statements is net of related
unamortised arrangement fees and transaction costs.
10. Non-controlling interest
During the six-month period ended 30 June 2020, the
non-controlling interest of EUR2.5 million related to the 25% share
of the net assets of a subsidiary entity, Balgriffin Investment No.
2 HoldCo DAC, which was held by National Asset Management Agency
("NAMA"). Cairn Homes plc held the remaining 75% of the equity
share capital in this subsidiary which is involved in the
development of residential property. On 3 July 2020, Cairn Homes
plc acquired NAMA's 25% share for EUR2.5 million which increased
its holding to 100% of the equity share capital of Balgriffin
Investment No. 2 HoldCo DAC from that date.
11. Trade and other payables
30 June 2021 31 Dec 2020
EUR'000 EUR'000
--------------- --------------
Trade payables 23,493 15,285
---------------------------------------
Amounts owed to related parties (note
17) 7,000 7,000
---------------------------------------
Accruals 27,959 22,166
---------------------------------------
VAT liability 5,476 14,522
---------------------------------------
Other creditors 1,066 1,123
--------------------------------------- --------------- --------------
64,994 60,096
--------------- --------------
On 27 October 2020, the Group acquired a 1.35 acre site in
Stillorgan known as "the Esmonde Motors site" which adjoins its
existing Blakes development site for a total consideration of EUR14
million, EUR7 million of which was paid on completion in October
2020 with the remaining EUR7 million payable in July 2021 (Note
17). The seller of the Esmonde Motors site was The Emerald Fund
ICAV (acting on behalf of the Emerald Opportunity Investment Fund)
("Emerald"). Alan McIntosh, co-founder and non-executive Director
of Cairn, and his spouse are the beneficiaries of a discretionary
trust that is the ultimate owner of Emerald and as such Alan
McIntosh is considered a related party.
Other creditors represent amounts due for payroll taxes and
Relevant Contracts Tax.
The carrying value of all trade and other payables is
approximate to their fair value.
CAIRN HOMES PLC
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS
(continued)
12. Earnings per share
The basic EPS for the period ended 30 June 2021 is based on the
earnings attributable to ordinary shareholders of EUR6.4 million
and the weighted average number of ordinary shares outstanding for
the period.
For six month For six month
period ended period ended
30 June 2021 30 June 2020
Profit attributable to owners of the Company
(EUR'000) 6,407 1,199
---------------------------------------------- -------------- --------------
Numerator for basic and diluted earnings
per share 6,407 1,199
---------------------------------------------- -------------- --------------
Weighted average number of ordinary shares
for period (basic) 749,610,827 754,704,063
-------------- --------------
Dilutive effect of restricted share unit
awards and options 1,175,267 482,094
---------------------------------------------- -------------- --------------
Denominator for diluted earnings per share 750,786,094 755,186,157
---------------------------------------------- -------------- --------------
Earnings per share
0.85 cent 0.16 cent
* Basic 0.85 cent 0.16 cent
* Diluted
---------------------------------------------- -------------- --------------
There is no dilution in respect of founder shares (note 8) as
the performance condition for conversion of founder shares to
ordinary shares was not met at the period end. Additional ordinary
shares may be issued under the founder share scheme in future
periods up to and including 2022 if the performance condition under
the rules of the scheme is reached. There is no dilution in respect
of the LTIP (note 8) as the performance conditions are not met as
at 30 June 2021.
13. Dividends
There were no dividends paid by the Company during the reporting
period.
14. Related party transactions
There were no related party transactions during the period ended
30 June 2021 other than Directors' remuneration.
15. Financial risk management
The Group has exposure to the following risks arising from
financial instruments:
-- credit risk;
-- liquidity risk; and
-- market risk.
This note presents information about the Group's exposure to
each of the above risks, and the Group's objectives, policies and
processes for measuring and managing risk.
(a) Risk management framework
The Board of Directors has overall responsibility for the
establishment and oversight of the Group's risk management
framework.
(b) Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the
Group's trade and other receivables and cash and cash equivalents.
The carrying amount of financial assets represents the maximum
credit exposure.
CAIRN HOMES PLC
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS
(continued)
15. Financial risk management (continued)
Exposure to credit risk
The Group's principal financial assets comprise cash and cash
equivalents. Group management in conjunction with the Board manage
risk associated with cash and short term deposits by depositing
funds with a number of Irish financial institutions and AAA rated
international institutions. At 30 June 2021, the Group's cash and
cash equivalents were held in two Irish financial institutions with
a minimum credit rating of BBB-.
30 June 31 Dec 2020
2021
Carrying amount - amortised
cost EUR'000 EUR'000
Construction bonds and other
receivables 13,463 11,388
Cash and cash equivalents 33,742 34,526
-------- ------------
47,205 45,914
-------- ------------
Construction bonds and other receivables of EUR13.5 million at
30 June 2021 were not past due. The construction bonds and other
receivables have been reviewed and considering the nature of the
counterparties no credit losses are expected. As a result, no
credit loss provision has been recognised.
(c) Liquidity risk
Liquidity risk is the risk that the Group will encounter
difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or other financial
assets. The Group's approach to managing liquidity is to ensure, as
far as possible, that it will always have sufficient liquidity to
meet its liabilities when they fall due, under both normal and
stressed conditions, without incurring unacceptable losses or
risking damage to the Group's reputation.
The Group monitors the level of expected cash inflows from trade
and other receivables together with expected cash outflows on trade
and other payables and commitments. All trade and other payables
(EUR65.0 million) at 30 June 2021 are considered current with the
expected cash outflow equivalent to their carrying value.
Management monitors the adequacy of the Group's liquidity
reserves (comprising cash and cash equivalents as detailed in note
7 and undrawn loan facilities as detailed in note 9) against
rolling cash flow forecasts. In addition, the Group's liquidity
risk management policy involves monitoring short term and long term
cash flow forecasts.
(d) Market risk
Market risk is the risk that changes in market prices, such as
foreign exchange rates, interest rates and equity prices will
affect the Group's income or the value of its holdings of financial
instruments. The objective of market risk management is to manage
and control market risk exposures within acceptable parameters,
while optimising the return.
(i) Currency risk
The Group is not exposed to significant currency risk. The Group
operates only in the Republic of Ireland.
(ii) Interest rate risk
At 30 June 2021, the Group had the following facilities:
(a) term loan and revolving credit facilities with Allied Irish
Bank plc, Ulster Bank Ireland DAC and Barclays Bank Ireland plc
that had a principal drawn balance of EUR111.5 million at a
variable interest rate of 3-month Euribor (with a 0% floor), plus a
margin of 2.8%. The Group has an exposure to cash flow interest
rate risk where there are changes in Euribor rates; and
(b) a EUR72.5 million private placement of loan notes with
Pricoa Capital which have a fixed coupon of 3.36%.
CAIRN HOMES PLC
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS
(continued)
15. Financial risk management (continued)
(e) Fair value of financial assets and financial liabilities
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
For financial reporting purposes, fair value measurements are
categorised into Level 1, 2 or 3 based on the degree to which
inputs to the fair value measurements are observable and the
significance of the inputs to the fair value measurement in its
entirety, which are described as follows:
Level 1 : quoted prices (unadjusted) in active markets for
identical assets or liabilities;
Level 2: valuation techniques for which the lowest level of
inputs which have a significant effect on the recorded fair value
are observable, either directly or indirectly; and
Level 3: valuation techniques for which the lowest level of
inputs that have a significant effect on the recorded fair value
are not based on observable market data.
The following table shows the Group's financial assets and
liabilities and the methods used to calculate fair value.
Asset/ Liability Carrying Level Method Assumptions
value
----------------- ---------- ------ ----------- ------------------------------------
Borrowings Amortised 2 Discounted Valuation based on future repayment
cost cash flow and interest cash flows discounted
at period end market interest
rates.
----------------- ---------- ------ ----------- ------------------------------------
The following table shows the carrying values of financial
assets and liabilities including their values in the fair value
hierarchy. The table does not include fair value information for
financial assets and liabilities not measured at fair value if the
carrying amount is a reasonable approximation of fair value.
(e) Fair value of financial assets and financial liabilities
30 June 2021 Fair Value
----------------------------
Carrying Level 1 Level 2 Level
Value 3
------------- -------- -------- --------
EUR'000 EUR'000 EUR'000 EUR'000
---------------------------------- ------------- -------- -------- --------
Financial assets measured
at amortised cost
------------- -------- -------- --------
Construction bonds and other
receivables 13,463
------------- -------- -------- --------
Cash and cash equivalents 33,742
-------------
47,205
-------------
Financial liabilities measured
at amortised cost
-------------
Trade payables and accruals 51,452
Amounts owed to related
parties 7,000
Borrowings 183,174 183,174
----------------------------------
241,626
CAIRN HOMES PLC
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS
(continued)
(e) Fair value of financial assets and financial liabilities (continued)
31 Dec 2020 Fair Value
----------------------------
Carrying Level 1 Level 2 Level
Value 3
------------ -------- -------- --------
EUR'000 EUR'000 EUR'000 EUR'000
-------------------------------- ------------ -------- -------- --------
Financial assets measured
at amortised cost
------------ -------- -------- --------
Construction bonds and other
receivables 11,388
------------ -------- -------- --------
Cash and cash equivalents 34,526
------------
45,914
------------
Financial liabilities measured
at amortised cost
------------ -------- -------- --------
Trade payables and accruals 37,451
------------
Amounts owed to related
parties 7,000
------------
Borrowings 202,793 202,793
------------
247,244
16. Commitments and contingent liabilities
As at 30 June 2021 Cairn Homes Properties Limited had contracted
as follows:
-- to sell 229 residential units in Lucan to Carysfort Capital
for EUR78.75 million (incl. VAT). 15 of these units were completed
and sold in 2019 for EUR5.2 million (incl. VAT). 156 of these units
were completed and sold in 2020 for EUR53.8 million (incl. VAT). An
additional 32 of these units were completed and sold in the period
ended 30 June 2021 for EUR11.9 million (incl. VAT) with the
remaining 26 apartments under construction with a phased delivery
in 2021 for EUR7.85 million (incl. VAT).
-- to sell 150 apartments at Shackleton Park, Lucan, Co. Dublin
to Carysfort Capital for EUR48.6 million (incl. VAT). These
apartments are currently under construction with a phased delivery
across 2021 and 2022.
-- to sell 342 apartments at Griffith Wood, Griffith Avenue,
Dublin 9 to Greystar for EUR176.5 million (incl. VAT). These
apartments are currently under construction with a phased delivery
across 2021 and 2022.
The Group is not aware of any other commitments or contingent
liabilities that should be disclosed in these financial
statements.
17. Events after the reporting period
On 1 July 2021, the Group paid the remaining EUR7 million
consideration due in relation to its site in Stillorgan known as
"the Esmonde Motors site" (Note 11).
On 3 September 2021, Jayne McGivern a Non-Executive Director
informed the Board of her decision to step down with immediate
effect, to pursue a new executive opportunity.
On 8 September 2021, the Board declared an interim dividend of
2.66 cent per ordinary share. This interim dividend will be paid on
8 October 2021 to shareholders on the register on the record date
of 17 September 2021. Based on the ordinary shares in issue at 30
June 2021, the amount of dividends declared was EUR19.9
million.
18. Approval of financial statements
These financial statements were approved by the Board on 8
September 2021.
Independent Review Report to Cairn Homes plc
Introduction
We have been engaged by Cairn Homes plc ("the Company") to
review the condensed set of consolidated financial statements in
the half-yearly financial report for the six months ended 30 June
2021 which comprises the condensed consolidated statement of profit
or loss and other comprehensive income, condensed consolidated
statement of financial position, condensed consolidated statement
of changes in equity, condensed consolidated statement of cash
flows and the related explanatory notes. Our review was conducted
having regard to the Financial Reporting Council's ("FRC's")
International Standard on Review Engagements ("ISRE") (UK and
Ireland) 2410, 'Review of Interim Financial Information Performed
by the Independent Auditor of the Entity' .
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of consolidated
financial statements in the half-yearly report for the six months
ended 30 June 2021 is not prepared, in all material respects, in
accordance with IAS 34 Interim Financial Reporting as adopted by
the EU , the Transparency (Directive 2004/109/EC) Regulations 2007
("the Transparency Directive"), and the Transparency Rules of the
Central Bank of Ireland.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report in accordance with
the Transparency Directive and the Transparency Rules of the
Central Bank of Ireland. As disclosed in note 1, the annual
financial statements of the Group are prepared in accordance with
IFRS as adopted by the EU. The Directors are responsible for
ensuring that the condensed set of financial statements included in
this half-yearly financial report has been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of consolidated financial statements in the
half-yearly financial report based on our review.
Scope of review
We conducted our review having regard to the Financial Reporting
Council's International Standard on Review Engagements (UK and
Ireland) 2410 Review of Interim Financial Information Performed by
the Independent Auditor of the Entity. A review of interim
financial information consists of making enquiries, primarily of
persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (Ireland) and consequently
does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
We read the other information contained in the half-yearly
financial report to identify material inconsistencies with the
information in the condensed set of consolidated financial
statements and to identify any information that is apparently
materially incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing the review. If
we become aware of any apparent material misstatements or
inconsistencies, we consider the implications for our report.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the Company in accordance with the
terms of our engagement to assist the Company in meeting the
requirements of the Transparency Directive and the Transparency
Rules of the Central Bank of Ireland . Our review has been
undertaken so that we might state to the Company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company for our
review work, for this report, or for the conclusions we have
reached.
KPMG
8 September 2021
Chartered Accountants
1 Stokes Place
St. Stephen's Green, Dublin 2
CAIRN HOMES PLC
COMPANY INFORMATION
Directors Solicitors
John Reynolds (Non-Executive Chairman) A&L Goodbody
Michael Stanley (Chief Executive Officer) IFSC
Shane Doherty (Chief Financial Officer) 25-28 North Wall
Quay
Andrew Bernhardt (Non-Executive) Dublin 1
Gary Britton (Non-Executive)
Giles Davies (Non-Executive) Eversheds-Sutherland
Linda Hickey (Non-Executive) One Earlsfort Centre
Alan McIntosh (Non-Executive) Earlsfort Terrace
David O'Beirne (Non-Executive ) Dublin 2
Pinsent Masons
LLP
30 Crown Place
Secretary and Registered Office Earl Street
Tara Grimley London EC2A 4ES
7 Grand Canal
Grand Canal Street Lower Beauchamps
Dublin 2 Riverside Two
Sir John Rogerson's Quay
Dublin 2
Registrars
Computershare Investor Services
(Ireland) Limited
3100 Lake Drive
Citywest Business
Campus
Dublin 24
Principal Bankers/Lenders
Auditors Allied Irish
Banks plc
KPMG 10 Molesworth
St
Chartered Accountants Dublin 2
1 Stokes Place
St. Stephen's Green
Dublin 2 Ulster Bank Ireland
DAC
33 College Green
Website Dublin 2
www.cairnhomes.com
Barclays Bank
Ireland plc
One Molesworth Street
Dublin 2
Pricoa Private Capital
One London Bridge
8(th) Floor
London
[1] Defined as net assets (total assets less total liabilities)
divided by the number of ordinary shares in issuance
[2] Before any capital allocation considerations, including
reductions of debt, future dividends or strategic land
acquisitions
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END
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