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Edited Transcript of CRN.L earnings conference call or presentation 12-Sep-19 7:30am GMT

Half Year 2019 Cairn Homes PLC Earnings Call

DUBLIN Sep 18, 2019 (Thomson StreetEvents) -- Edited Transcript of Cairn Homes PLC earnings conference call or presentation Thursday, September 12, 2019 at 7:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Declan Murray

Cairn Homes plc - Head of IR

* Ian Cahill

Cairn Homes plc - Head of Finance

* Michael Stanley

Cairn Homes plc - Co-Founder, CEO & Executive Director

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Conference Call Participants

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* Andrew Murphy

Whitman Howard Limited - Head of Research

* Robert Eason

Goodbody Stockbrokers, Research Division - Head of Research

* Robert Gardiner

Davy, Research Division - Industrials Analyst

* Ronan Dunphy

Investec Bank plc, Research Division - Research Analyst & Economist

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Presentation

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Operator [1]

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Hello, and welcome to the Cairn Homes 2019 interim results investor and analyst call. (Operator Instructions) And just to remind you, this conference call is being recorded.

Today, I'm pleased to present Michael Stanley, Co-Founder and CEO. Please go ahead with your meeting.

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Michael Stanley, Cairn Homes plc - Co-Founder, CEO & Executive Director [2]

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Good morning, everybody, and welcome. I'm Michael Stanley, CEO of Cairn Homes. And with me on the call today, our Head of Finance, Ian Cahill; and our Head of Investor Relations, Declan Murray. The presentation will take approximately 20 minutes and will be followed by questions from those on the call.

On behalf of everyone at Cairn, I'm very pleased to be presenting a strong set of results for the half year. Behind the numbers is a very busy operation from design, planning, construction and sales. We've made considerable progress against each of our operational markers in the first half, and this is down to many factors. But our well-grounded strategy, the business model that we've put in place and the exceptional teams delivering across our operations are key factors driving our success.

The market demand for well-built starter homes, our core business, remains vibrant. Despite noise associated with Brexit and other macroeconomic issues, since inception, 2,500 people have chosen to buy a Cairn home, and we all take great pride in this achievement. We've also experienced sustained demand from institutional capital for our multifamily PRS apartments and houses. And all of this has enabled us to reach an important milestone today with the commencement of capital returns by way of our first dividend and share buyback program.

I'll now go on to the detail and our financial highlights on Slide 3: revenues for the first half of EUR 192.4 million, which is a 48% increase; gross profit of EUR 35.7 million; and underlying gross margin of 20.5%. Our reported gross margin, slightly lower due to in the main Hanover Quay where our flagship project has delivered a slightly lower margin than expected on that project. Our operating profit of EUR 27.3 million is a 51% increase on last year. And we have generated EUR 44.7 million in operating cash flow and exited the period with EUR 96 million of net debt.

We are very pleased, as I said, to start the journey of capital returns, which is a EUR 44.7 million shareholder return announcement today, including an interim ordinary dividend to be paid on the 18th of October of EUR 0.025. We believe that at our current valuation, it is appropriate to return excess cash above our ordinary dividend by way of share buyback, and we will commence a EUR 25 million share buyback program tomorrow.

The next slide illustrates how we are now a maturing business and how that business will underpin our cash returns plan going forward. So on Slide 5, since our IPO, we've been growing our WIP spend, and that has now stabilized. What that really means for us is that as we build each unit over the next -- over the coming years, we will not only make our operating profit but release the underlying land value. And the illustrative table shows the level of cash that this will generate for our business. At the end of 2022, we will still have an exceptional land bank of 9,500 units, and that's after generating circa EUR 500 million of free cash without factoring any house price inflation into those numbers.

Our sales performance on Slide 6. We are slightly increasing our own target from 1,075 to 1,100 units for the period -- for the full year, and that's on our active 15 locations. We believe that we are achieving these very strong sales, particularly in the starter home area, because of our competitive price point. And you will see from the slide that EUR 341,000, including VAT, which is the price paid by our customers on our 16 -- 617 closed or forward sales units in 2019. That price point strongly underpins and probably explains the success -- partly the success of our sales as a business allied with, we believe, the quality of our homes and our strong locations. That leads us with 2 point -- and that leads to a 2.87 per active housing sales outlet sales rate per week, which we believe is an exceptional sales rate and has grown from last year. And in fact, in Q2 of this year, our new home sales were 95% year-on-year increased to last year.

Our scale, locations, quality and competitive pricing explain why we are growing at 3x the rest of the market in Ireland. We are seeing strong demand and have had a good start to our transactions in multifamily PRS with EUR 195 million, including the completion of the flagship project in Hanover Quay and our contracted sale of EUR 94 million in the quarter at Citywest. And we do expect further transactions emanating in that area. Our closed sales and forward order pipeline of EUR 446 million is extremely strong and includes 1,250 units at an average sales price of EUR 357,000.

Now on to the full year outlook for our business. We believe that we will be the first Irish house builder to sell and occupy more than 1,000 homes in a trading year, and we're proud of that achievement. We will -- we expect to have a reported gross margin of 19.5% for the full year. We have traded over the last number of years a lot of our noncore assets. However, we still have 2 or 3 larger sites where we have added value through planning. And should those transactions occur before year-end, they will have -- they would improve our expected gross margin and profitability for 2019. And I referenced at the intro the 2,500 people that have chosen to buy a Cairn home, and we're very proud that 1,800 of those customers have already moved into their homes.

Now I will hand you over to our Head of Finance, Ian Cahill, to bring you through the financial slides.

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Ian Cahill, Cairn Homes plc - Head of Finance [3]

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Thank you, Michael, and good morning, everyone. Turning to Slide 9, which is the income statement for the 6-month period to June 30, 2019, and outlines the strong financial performance for the period. Michael has called out many of the major highlights in earlier slides, but let me remind you of and run through the most important numbers on this slide.

We have revenue of EUR 192.4 million from 390 unit closings in the 6-month period. This represents 48% increase over the same period in 2018. New home sales amounted to EUR 175.3 million, and we had a small number of residential site sales in the period amounting to EUR 16.2 million. These included some smaller sites that we identified as noncore to our business. We are very pleased with this revenue growth.

Gross profit increased by 37% to EUR 35.7 million compared to EUR 26.1 million in the same period last year. On a reported basis, our gross margin was 18.6%. Excluding our Six Hanover Quay development, underlying gross margin for the period was in the order of 20.5%.

Administrative expenses of EUR 8.4 million for the 6-month period equate to just 4.4% of revenue and demonstrate that we are the leading low-cost house builder in the sector. Operating profit for the period was EUR 27.3 million, an increase of more than 50% or EUR 9 million when compared with the equivalent period last year.

Finance costs amounted to EUR 5.5 million for the period and reflect lower average cost of funds arising from our debt refinancing in the second half of last year. Earnings per share for the 6-month period were EUR 0.0237, an increase of nearly 150% on last year.

Now moving to Slide 10, which sets out our balance sheet position at June 30 and shows that we have total assets of nearly EUR 1.1 billion and total equity of EUR 775 million. Our inventories totaled EUR 937 million, which includes our land bank of more than 15,000 units. It also includes construction work in progress of EUR 215 million, up from EUR 181 million at the end of 2018. This reflects the fact that we are actively building on 15 sites and demonstrates the continued expansion of development activity across our sites in the 6-month period.

Net debt at the end of the period reduced to approximately EUR 97 million, down from EUR 134 million at the end of 2018. We have available cash of EUR 146 million and further committed undrawn facilities of approximately EUR 150 million at the end of the period, which continue to support our growth plans. Our net debt level was just 10% of inventories across, down from 14% at the end of 2018.

On April 29 of this year, the High Court approved the capital reorganization to reduce the company's share premium account by EUR 550 million. Resulting reserves from this cancellation have been treated as realized profits. The subsequent capital reorganization enables us to announce today the commencement of our capital distribution plan.

Turning over to our cash flow statement which is outlined on Slide 11. We generated almost EUR 45 million of operating -- from operating activities in the 6-month period. As Michael outlined earlier, we expect this strong cash generation to continue into the future, supported by our intention to monetize some of our land bank and reducing us to a more normal level over the medium term.

In summary, this is a very strong set of financial results and a significant milestone for our business today in announcing our first dividend and our share buyback program.

Thank you for listening. I'll now turn the call back over to Michael.

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Michael Stanley, Cairn Homes plc - Co-Founder, CEO & Executive Director [4]

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Thank you very much, Ian. So moving on to Slide 13 on the operations side. We believe we are well underway to starting Cairn as a business with a strong reputation in these really important areas. We believe we're building really high-quality homes. We're embracing innovation. And place-making and community are central to our business. We believe that 90% of our homebuyers are families and couples, and they are making a life decision. And we at Cairn really understand the responsibility that, that brings. And community and place-making is central to how we approach our development and our business.

We are very proud of the team, and we're supported by great subcontractors, many of whom have grown their business with us over the last 4 years. We are very proud that we've created so many career opportunities in this period with over 2,500 net people now working full-time at our central office across our developments and the various support professionals, et cetera, that work for our business. We will continue to support our apprenticeship program and our graduate program, which are very important for our business.

On to Slide 15. Collaboration with our established subcontractor base and supply chain optimization are driving procurement efficiencies as we leverage our scale and business model. Our current committed order book, as you can see from the slide, is EUR 300 million. An important number is that our average top 20 subcontractors have a contract value award averaging EUR 20 million. And most of our large subcontractors work across many of our developments, forging those strong relationships, averaging 6 developments across our main subcontractors.

We've committed EUR 148 million to procurement in H1. And we have seen approximately 2.5% annual build cost inflation, slightly ahead of the HPI number that we showed on the slide earlier in the presentation. We believe we're in a unique position as the biggest procurer of labor and materials, and we believe that will continue to act as a hedge against future build cost inflation.

On to our market and land bank on Slide 17. The slide breaks down our land bank between our houses and apartments. A few important numbers on the slide. We have a land bank of 10,800 houses. And our current average selling price, we estimate, to be EUR 308,000, excluding VAT and HPI, across our portfolio. We believe that, that positions us very well.

On our apartments side, those apartments are appealing to private homeowners but also PRS and institution capital. One of the key numbers in the slide is that our overall land bank at historical cost as a percentage of our NDV is 12.2%. We invested approximately EUR 1 billion in land in 2015 and '16, and we believe we bought an exceptional land bank. And with our planning gains, our overall -- that cost to NDV will strongly support our business and profitability going forward.

Moving on to Slide 18. We do have ambitions to become a national house builder, but our business is currently focused on the GDA. Thankfully, we've seen significant growth in employment. Since our IPO, 250,000 jobs have been added. There's been a 35% increase in FDI employment in the Greater Dublin Area during that period. And despite Brexit having a potentially negative impact on our national economy, we have seen evidence of Brexit displacement job creation in Dublin over the last couple of years. 90%, as I've said, of all units that we bought and contracted in our land bank were done by the end of 2015. And on our buyer profile, 57% of our land bank is clearly focused towards that first-time buyer market.

Slide 19 is a very important slide and further underpins this strategy and where our business is focused. There are many people in Ireland between the age of 25 and 39, and only 16% of those people currently own their own home. It is 50% more expensive to rent a Cairn home than buy one. And we believe, particularly with the macro-prudential rules in Ireland at 3.5x income, that the price points that we sell our homes at are crucially important going forward. If you look at the slide, you will see that 7,100 units in our land bank are currently targeted at a price of below EUR 350,000, and that's the ASP to our customer including VAT.

That leads me on to our sales absorption rates. Q2 was a very strong quarter for the business where we were 95% up year-on-year on our sales. And that sales -- those sales levels have continued through the early part of our autumn selling season over the last 2 to 3 weeks, where we've seen continued strong sales. And the slide here shows the breakdown and the consistency across our home -- across our various sites and the sales rates that we're achieving on a weekly basis for the open sales units. We have more launches coming up over the next couple of months and significantly new site commencements over the next 12 months.

Slide 21, the Irish multifamily PRS market. We believe that Cairn are a very strong counterparty for institutional capital seeking high-quality apartments in great locations where there will be significant rental demand going forward. We build our own projects. We are by far the most active house builder in Ireland, and we are live on 5 apartment sites. We are able to deliver quality apartments on program, which is what institutional capital require. There were only 1,000 apartments completed in Dublin in the first half of this year.

We believe that this market is a strong market for Cairn. There is circa EUR 7 billion chasing these sort of opportunities in Ireland. And when you look at our land bank and our potential to deliver over 3,000 units in this area at an average site cost on our PRS sites of EUR 33,000 per site on average, we believe that, that gives us the opportunity to accelerate the monetization of our low-cost land bank.

We have made very good uses of business of the SHD planning process. We have 7 applications granted over 2,000 units through this new fast-tracked program which was introduced, and we have currently 8 applications in the process. We think it has strongly supported our scale and has certainly facilitated the growth of our business over the last number of years. And as a testament to our team, our design approach, we have had a 98% success rate, delivering close to 6,000 units in our business over the last number of years.

So a couple of summaries on the outlook. We will commence 9 new sites over the next 6 to 12 months. We have a very strong forward pipeline, which we've talked to. We are very confident that we will close circa 1,100 units during the year with an underlying gross margin of -- sorry, with a gross margin of 19.5%.

We expect further multifamily PRS sales across our apartments and housing schemes. And we expect to generate circa EUR 500 million of free cash, which is 60% of our current market cap by the end of 2022. And again, to reiterate what Ian said earlier, we are very pleased to be announcing EUR 44.7 million shareholder returns.

Thank you very much.

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Declan Murray, Cairn Homes plc - Head of IR [5]

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Thank you. Now I turn the call over to questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Robert Eason from Goodbody.

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Robert Eason, Goodbody Stockbrokers, Research Division - Head of Research [2]

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Just a few questions from myself. Maybe if you can just give us some insight into what you're seeing on the ground that kind of allows yourself to kind of grow at such a rate, like your completions are up 33%. If you benchmark that against kind of the general market, you are significantly outpacing the overall market. So what do you put that down to? What are you hearing on the ground that relates to that? And that's kind of my first kind of area of questioning.

The second one is, like you alluded to on one slide, some of the mitigations that you can do to, to use your words, hedge against build cost inflation, I'd just like you to go maybe a bit deeper into that, like what are you doing in terms of procurement? What are you doing in terms of changing some of the building techniques on site, et cetera? So just give us a bit more detail on that.

And if you wouldn't mind, maybe just kind of elaborate on one point in the release in relation to kind of Hanover Quay. You were just talking about gross margin and development was less than anticipated mainly due to unique one-off nature of the complex city center project. Maybe just elaborate on that a bit more and what was it, the extent of it, and likely in relation to that, what learnings are you taking from that to other developments within the portfolio?

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Michael Stanley, Cairn Homes plc - Co-Founder, CEO & Executive Director [3]

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Sure. Thanks, Robert. Yes. Starting with Hanover Quay, Robert, Hanover Quay was very much the flagship project for Cairn. It was designed in a specific way. It's using very different construction techniques because of the unique nature. And we felt that, as a young company, it was important for us to make that statement using curtain walling, polished [concrete] facade, very design-led building and very unique for us. It's not the same method or design structure that we have used in Marianella, for example, in Citywest Quarter, indeed, similarly as we move on to [OTV].

And it was a flagship. It did cost us more, ultimately in the end, to construct it, but we believe -- still believe we've delivered a strong margin on that project. And also, it's a building that we're very proud of in Cairn and certainly it was part of establishing Cairn as a brand.

In terms of lessons, I suppose it's not really that we need to think about lessons learned. It was just a specific one-off project that we took on, and we thought it was a good thing for the company to do, Robert. As I said, it's not something necessarily that we'd think about on other projects. And ...

In terms of our growth, I suppose -- look, the completions numbers and where we've got to on the supply side, more broadly, probably continues to disappoint somewhat. However, Ireland is different. They're -- if we look at the U.K. and other foreign markets, there are many, many companies that possibly enjoy Cairn's advantage. U.K., 56% of homes built by PLCs, all of whom -- many of them are net cash. They've got large land banks. They are established -- very well established, multi-decade companies.

Ireland is very different. And we believe that Cairn has some unique advantages that most of our competition don't enjoy. Now that doesn't mean that we don't need scale private house builders. If we're going to build 30,000 homes or even close to it in Ireland, we do need private house builders to scale, but that does remain difficult and takes time. And that's probably -- that probably explains that difference in our growth rates and the broader market.

On the build cost side, what I would say is that 2.5% is a really -- is a fairly low number and actually does include quite a lot of regulatory changes that we've seen over the last year or 2 in Ireland. We do have strong regulations, strong standards and we're building high-quality homes, not, to be fair, just in Cairn, but across the industry in Ireland, I think. Some of that previous build cost inflation was some wage correction. We've probably seen quite a lot of that working through the industry, Robert.

So when we look at our scale, when we look at how we can make our supply chain more efficient, working more closely with the manufacturers and our subcontractors, we think we can continue to manage our build cost inflation to a low number. And we believe that, as I said, that operates as a hedge against -- that scale, if you like, gives us that hedge.

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Robert Eason, Goodbody Stockbrokers, Research Division - Head of Research [4]

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Okay. If you don't mind, can I just have one just additional question. Just in terms of the interim dividend announced today of EUR 0.025, how should we think of the final dividend in terms of being bigger than that interim dividend or the same? And equally, on kind of the buyback, obviously, you've announced EUR 25 million. Like in the slide deck, you're very clear in saying what you think is the free cash flow generation, [the better see] of the difference out to 2022. How should we think of cash returns beyond that EUR 25 million vis-à-vis that EUR 500 million over the next 3 to 4 years?

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Ian Cahill, Cairn Homes plc - Head of Finance [5]

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Yes. So Robert, we've outlined in the presentation on the call that we have an intention to be progressive on the ordinary dividend, so that will grow.

As regards to buy back special dividends, so we've announced EUR 25 million of a buyback today. Further to that, we will consider that when appropriate for the business and as determined by our cash generation and by our board as to what is absolutely appropriate at the given time. We do acknowledge that we are generating and expect to generate significant free cash levels in the short to medium term, and that affords us fantastic optionality as regards to our capital distribution policy.

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Michael Stanley, Cairn Homes plc - Co-Founder, CEO & Executive Director [6]

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Yes. And obviously, what we're trying to outline as well, to add to what Ian has said, is that we don't believe that it's appropriate for us to reinvest that free cash generation in land. We have an exceptional land bank. We will be strategic on land acquisition. We will have opportunities. And where we invest in new sites, that will be likely balanced by disposals over the next number of years. And so that really, as Ian said, it will be done through our board over the next early part of next year and right through next year to make decisions as to how we distribute that excess cash.

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Operator [7]

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And the next question comes from the line of Ronan Dunphy from Investec.

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Ronan Dunphy, Investec Bank plc, Research Division - Research Analyst & Economist [8]

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Firstly, maybe just turning to the HPI figure of 1.8% that you've referenced this morning. I'm just wondering if that's relatively even across the portfolio, either in terms of different price points or different types of product or location even, or whether there are some areas or some types of product that you're seeing higher price inflation as opposed to some other areas or products.

And then also maybe just turning to -- well, I might say macro uncertainties rather than the Brexit word, but we've seen, I suppose, quite recently sort of consumer sentiment here take quite a hit, not coincidentally around the time that no deal sort of talk has intensified. And I'm just wondering if you're seeing any effect of that maybe perhaps more recently in the last month or 2 on the ground. Or is that just not really a feature for the majority of your buyers?

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Michael Stanley, Cairn Homes plc - Co-Founder, CEO & Executive Director [9]

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Yes, thanks for that. We've always said, as a business, that as we're growing -- and again, it relates back to our margin. I think I previously referred to it as our kind of lumpy margin. As we're a growing business, of course, we have different schemes that -- where we operate at different price points, and the underlying margin can be different. So mix can always play an impact on our business.

Taking one example, we talked about planning earlier. This is the fast-track SHD process. The only real way that people can challenge that process, and they have every right to do so, is through a judicial review process. We haven't -- we've had a couple of schemes, and you'd expect that across our portfolio where we have been in that process. One of them, Parkside, for example, we expected to do between 60 and 70 units this year on a fairly high-margin scheme. So despite losing those units, we're still going to hit our 1,100, which kind of shows the flexibility and scale of our business, but also you can have a blend of margins.

On the HPI side, I would say that, obviously, at higher price points, I think people are more likely to be movers, so either trading up or trading down. It's more of a, let's say, we'll call it maybe a discretionary choice. Those people are more likely to be focused on macro issues and maybe tuned into what's happening globally.

Globally, at the first-time buyer level, the people we're selling to, young families making life decisions, when we meet them on a weekly basis, they're far less likely to worry about a backstop and more likely to worry about where the washer or dryer is and can we fit a trampoline in the backyard. And that's the evidence we're seeing. We've got massive demand in Ireland for starter homes. And we didn't get to talk to it during the call, but we've introduced products like duplex homes. Last weekend, in Elsmore, we launched a 2-bedroom product as part of our duplex homes for EUR 245,000. The 3-bedroom duplex home above was at high 200s. At those price points, we're seeing no evidence. In fact, the opposite, we're seeing stronger demand than we saw last year.

So it's really -- you're correct, there's a couple of different markets at play here, but our core business is extremely strong. And I think also because of the poor supply response, we're also seeing understandable demand from institutional capital for rental property. And again, just repeating what I said earlier about the cost of buying a Cairn home at that circa EUR 300,000 bracket and renting that home, it's an extraordinary difference at about 50% difference in cost.

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Ian Cahill, Cairn Homes plc - Head of Finance [10]

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All right. Look, just on your question as well, Ronan, related to the macro uncertainty, consumer sentiment, et cetera. We have an extremely strong May/June, late spring/early summer selling periods. We're really pleased to see that momentum continue into our early autumn selling season over the last short number of weeks. So certainly, on the ground, we're seeing extremely strong demand for our products.

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Ronan Dunphy, Investec Bank plc, Research Division - Research Analyst & Economist [11]

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Yes, sure. Sure. And maybe just to briefly go back to the duplexes and being able to sell them for less than EUR 250,000. Do you sort of see that product as maybe catering to that sort of lower-priced demand that perhaps wouldn't be able to be catered to from elsewhere, just people being able to purchase the home, whereas they wouldn't have been able to without that type of lower-priced product because it's generally not there in the...

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Michael Stanley, Cairn Homes plc - Co-Founder, CEO & Executive Director [12]

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Yes. I mean we operate -- and I think we touched on this during the presentation. If I didn't, I certainly should have. We operate in an environment in Ireland where our macro-prudential rules are 3.5x income, meaning that entry-level price points are extremely important to people. There's probably, I mentioned, 1 million people at an age bracket earlier, as we understand it, there's about 1 million people in Ireland earning just less than EUR 80,000 a year. And you have to bring product to the market where your addressable market can get access to mortgage finance. And that's why we will constantly strive to bring product to the market where people can get access to that mortgage finance and can buy the home.

And that's why kind of even future projects, large projects like Clonburris that we are going to be on site next year on will be actually, we believe, really brilliant for our business because with that low land cost and the scale of that project and the diverse mix that we'll be able to bring, we will -- we believe we will be able to bring homes in that location, again, significantly under EUR 300,000 in a site very close to Dublin or very close to city center on a good rail network. And we'll do what Cairn does in that location. We believe we will create a place and a community similar to what we might have achieved, for example, already in Shackleton and Parkside and [those schemes]. So yes, absolutely, price point is important to our business, an entry price point.

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Operator [13]

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And the next question comes from the line of Andy Murphy from Whitman Howard.

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Andrew Murphy, Whitman Howard Limited - Head of Research [14]

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I've got 2 questions, one is sort of a bit broader, one is a more specific financials one. But the broader question I wanted to ask is really around the land bank policy. You've mentioned something in the presentation which slightly surprised me, and that was that you're considering moving outside of the GDA to expand the business over the, I guess, the medium to longer term. So perhaps, could you give us a bit of color around that, around timing, around magnitude? And then on the forward sales, could you split the volumes in the ASPs between private and apartments for me, please?

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Michael Stanley, Cairn Homes plc - Co-Founder, CEO & Executive Director [15]

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Forward sales, okay, have you got those numbers to Andy on the forward sales? Yes. In terms of -- I'll just -- while Ian is prepping for those numbers, Andy, I'll just talk a little bit about that sort of longer-term vision. I suppose we just felt, Andy, that we [should] scale in a considered way, we've got a strong central support, office support and exceptional site teams. And we felt that Dublin, ultimately, while it might be 35% to 40% of the population, it represents close to 50% of our economy. And we talked earlier about FDI and possibly Brexit spacing. So we think we were wise, not just in terms of the location of our land and close to the city center, to employment, multimodal transport, all of those were important decisions for us when we decided to where we -- decided where to buy our land.

It doesn't mean that we still -- we have a very good site in Cork, we have a couple of really nice sites in Galway, we have a couple of really nice sites in Kilkenny. So yes, when I say medium term, I'm looking 3 to 5 years out. There's no reason why Cairn can't hopefully leverage on our Dublin and Greater Dublin Area success and look to build more nationally as well, Andy.

Ian, do you want to talk to the split?

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Ian Cahill, Cairn Homes plc - Head of Finance [16]

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Sure, Andy. Yes, just regarding housing and apartments split in forward sales. You have seen our recent Citywest transaction and that's The Quarter at Citywest, which was 282 units, has EUR 94 million revenue. So that's the apartment side. The housing side is the primary chunk of the balance of that.

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Andrew Murphy, Whitman Howard Limited - Head of Research [17]

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I'm not going to work back to the ASP for that.

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Ian Cahill, Cairn Homes plc - Head of Finance [18]

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Yet. Yet.

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Michael Stanley, Cairn Homes plc - Co-Founder, CEO & Executive Director [19]

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Yes. And just a finer point, Andy, just on the land market, I suppose, on Slide 32 on our appendix, we're kind of showing some detail of where the land market is at. There are certainly still very active land buyers, very active land buyers in the Irish market. We've seen the value of land transactions in the year-to-date of over EUR 800 million. We don't genuinely believe that we can buy land today at where we bought it in 2015, and we don't need to. It doesn't mean that we won't be opportunistic, but we're pleased that we have a high-quality land bank.

And when we spend that circa EUR 1 billion, nearly EUR 4 billion of land traded at that time, that's when the bulk of land left the hands of [unnatural] owners. And we took advantage of that, we believe. It doesn't mean that there aren't good sites, maybe a smaller quantity of good sites coming to the market now, but we wouldn't be buying at these prices.

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Operator [20]

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(Operator Instructions) Our next question comes from the line of Robert Gardiner from Davy.

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Robert Gardiner, Davy, Research Division - Industrials Analyst [21]

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I've got a follow-on -- a couple of follow-ons for me. One on land there, so you talked about the land market there. Just wondering, less from your point of view as acquirers, but more in terms of disposing the noncore sites, how has that market been in the first 6 months? Is there a long line of buyers for those for you? Or is that, let's say, quieter?

I also want to get a view or ask you on the Help to Buy, potential changes there, how do you think that potentially affects Cairn?

And finally, maybe just to go back on Hanover Quay. So I was just wondering if you could give us a little bit more color on the impact and the margin there in terms of, was it something -- you mentioned something specific but was it kind of a build cost or an architectural and legal? I'm just wondering what some of the issues were there.

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Michael Stanley, Cairn Homes plc - Co-Founder, CEO & Executive Director [22]

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Yes. It's obviously important not to overly focus for us on Hanover Quay because any kind of small growing business will always have one-off projects that are unique in nature. And that's what -- there is nothing else to say really about that. It was a unique flagship development. The way it was designed, the method of construction were quite unique.

It was the first -- some of those unique features, for example, is the first apartment building built in Dublin City with full open plan with -- using sprinkler systems. It was one of the first, if not the first apartment building in Dublin City that used curtain walls, fully glass facade. There was a number of kind of technical reasons I'd give you on Hanover Quay, but I suppose we don't really want to dwell on it because we decided that it was good for Cairn to build that flagship project.

And ultimately, yes, it cost us more to finish and build at the end, but we still feel that we made a strong margin. And thankfully, for our buyer, we have a very happy buyer, who I only met the other day, and was very pleased that with the level of demand from the maybe the young tech workers that are renting those apartments in Hanover Quay.

On Help to Buy, not for me to comment on Dublin policy. But obviously, the current policy is EUR 500,000, and that policy has been supportive. I think the Help to Buy, and people often misunderstand it, I think it, particularly in Ireland, it operates as a very important counterbalance to the macro-prudential rules. We talked earlier about affordability at that entry price points. And it certainly allows some of these 1 million people in that age bracket that we talked about to help them to get access to mortgage finance and operates as a very necessary counterbalance to those macro-prudential rules. So certainly, from my perspective, I would hope that the government will change that policy, and that would seem tangible, but nothing to comment on government policy.

What I would say from a Cairn perspective is we have over 7,000 units that we can sell at below EUR 350,000, as we said earlier in our investment slides, and that's crucially important.

You asked about the land market, Robert, so just remind me specifically on that, what your thought was on the land -- oh, yes, in terms of our noncore disposals. We really only have a couple of large ones left, Robert. As you probably know, anything we've sold over the last couple of years, we've tended to add value and either it's been too small or, last year, for example, we sold a couple of sites, as you know, that were directed towards the PBSA, the student market. And they were -- we made a good return on those.

So yes, I mean the market still remains strong in the land market for well-located sites, and it seems to be a reasonably deep market. There is -- if you look at the breakdown on Slide 32, across all of those transactions, there's probably like 10 or 11 different acquirers across private homebuilders, private equity-backed private homebuilders, private homebuilders that do have traditional finance and normal bank funding and then institutional buyers. So probably, a smaller number of sites come into the market, and it does seem to be that they're still achieving very strong prices.

And that's not surprising. I mean the reality is, particularly in Dublin, and I said this before, we're 4x the landmass of Copenhagen for the same population. We don't have an abundance of really good-quality residential land close to the city center and close to where people are working. We've made pretty poor use of that land over the last 40 or 50 years. I think Ronan Lyons famously said that we are 3 or 4 years into a 50-year housing crisis. And that's what he meant by that in terms of how we've used our land. So I'm not surprised that there's competition for the land that's available. I wouldn't be surprised to strong competition for the IGB site, which is currently on sale. It's a fantastic site and one of the really good sites that's kind of well-located close to city center.

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Operator [23]

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And as there are no further questions, I'll hand it back to the speakers.

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Michael Stanley, Cairn Homes plc - Co-Founder, CEO & Executive Director [24]

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Okay. Thank you very much. Thank you all for joining us. Thank you for your continued support, and we look forward to seeing many of you over the coming days and weeks on our roadshow.

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Declan Murray, Cairn Homes plc - Head of IR [25]

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Thank you. Bye-bye.

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Operator [26]

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This now concludes our conference call. Thank you all for attending. You may now disconnect your lines.