Annual Financial Report

RNS Number : 0781P

Crest Nicholson Holdings PLC

15 February 2016

 

Crest Nicholson Holdings plc ("the Company")

2015 ANNUAL INTEGRATED REPORT & NOTICE OF ANNUAL GENERAL MEETING

The Company released its preliminary results announcement for the year ended 31 October 2015 on 26 January 2016 and has today published its 2015 Annual Integrated Report for the same period, and Notice of the 2016 Annual General Meeting which is to be held on 17 March 2016.

These documents will shortly be available for inspection at the National Storage Mechanism which is located at http://www.morningstar.co.uk/uk/NSM. Hard copy versions have been posted to shareholders who have elected to receive them in paper form.

The Notice of Annual General Meeting and Annual Integrated Report are also available to view or download in pdf format from the Company's website at www.crestnicholson.com/investor-relations.

The Company's financial statements and extracts of the Strategic Report were included in the Company's preliminary results announcement. That information together with the Appendix to this announcement, which contains additional information that has been extracted from the Annual Integrated Report for the year ended 31 October 2015, constitute the material required to be communicated in unedited full text for the purposes of compliance with DTR 6.3.5. Page numbers and cross references in the extracted information refer to page numbers and cross references in the Annual Integrated Report.

For further information, please contact:

Kevin Maguire

Company Secretary

Crest Nicholson Holdings plc

[phone]

15 February 2016

Appendix

Risk area	Risk	Controls and mitigation
Adverse macro-economic climate, caused by: Global economic slowdown and market volatility; geopolitical instability; political uncertainty around UK EU referendum	Higher unemployment or fear of unemployment undermines consumer confidence and reduces propensity to purchase a new home or ability to secure a mortgage	Maintain review of economic and political environment and consider potential responses to changes in trading conditions
Loss of income at housing associations due to budget changes to rents	Returns on our strategic land holdings could be undermined	Cascade s106 mechanisms to restore viability and continue to develop a balanced portfolio
Pressure on cash headroom and generation due to: Ongoing strong market demand; commitments to development obligations; high London land values; high work-in-progress costs for new sites; investment in Chiltern division	Cash resources may be over-committed, leading to business disruption, reputational issues, covenant breaches and dividend loss	Robust cash management and borrowing/spending controls Access to funding and use of alternative payment mechanisms
Build cost inflation	Increased build costs absorb or exceed higher sales prices Margin squeeze leads to investor dissatisfaction Suppliers seek to 'price in' sales price inflation	Use alternative suppliers and production methods Robust contract arrangements to control costs Leverage volume through long-term partnerships with strategic suppliers
Rapid and extensive changes to planning system introduce uncertainty, delays and potential challenges to viable development	Delays in obtaining planning consents and operational starts Land becomes unviable due to increased planning cost burden	Work closely with key regulators and national/local decision makers Regularly review the Strategic Land Portfolio and forecast operational starts Seek prior planning approval on significant projects Influence new CIL viability testing and appraise costs
Costs not adequately controlled and managed	Inadequate forecasting and sudden cost changes can erode margins Pressure to maintain margins and control costs can impact on product quality	Regular cost and forecast reviews Greater adherence to Agresso procedures Quality standards set, met and reviewed
Litigation relating to legacy risks, future environmental risks and counter-party risks in existing contracts	Dealing with the consequences where risks are uninsured Legal defence costs	Maintain appropriate insurance cover Introduce Environmental Management Plans (EMPs) Periodic review of key contractual obligations
Help to Buy incentive scheme	While Help to Buy scheme has been extended, a change in its eligibility criteria could reduce mortgage access Reduced overall mortgage access impacts demand, sales values and rates of sale, and undermines confidence in the market	Alternative incentives are less compelling Maintain policy-maker awareness of construction sector economic contribution High quality sales training to prepare for a tougher market in due course
Rising complexity of projects	Cost over-runs on complex projects can affect margins Latent defects can generate extra costs and reputational damage, where new materials and systems have been deployed Heightened expectations can result in rushed projects and subsequent problems	Project committee oversight and risk-based review by Group Technical & Quality Director Consultative and partnership approach at planning/ designing stage Robust Crest Nicholson project management New hurdle rate matrix addressing complexity and other risks
Bribery, corruption and fraud	Claims can lead to reputational damage Costly and inefficient land procurement Compliance costs	Training for all employees Policy and guidelines on Bribery Act 2010 Guidance on acceptable land purchase behaviour
Cyber security breach	Loss of operational systems and data Subject to external financial crime Disruption to services	Robust virus protection and internet security Web checking of internet traffic 'Demilitarised zone' linking servers correctly and directly Annual cyber-security breach tests
Reputational damage from a major product failure or significant environmental, health or safety issue	Injury or potential loss of life Remediation costs Loss of projects and associated revenues Damage to Crest Nicholson brand Potential civil or criminal prosecution	Board leadership and scrutiny of health, safety and environment Assess risks and integrate them into management processes from pre-acquisition stage Training for all employees Guidance on land purchase
Employee retention and succession management	Shortages of key staff in critical business areas introduces cost and delay in bringing developments forward Skills and experience lost are difficult to replace in a buoyant market Loss of knowledge within the business	Improved apprentice and graduate programmes Ensure competitive pay, benefits and incentives Improve management development programmes Succession planning
Experience gaps lead to poor outcomes	Customer satisfaction erodes due to delays or quality issues Increased employee turnover can create instability and uncertainty Business and finance targets threatened	New and refreshed divisional structure with new Regional Chairman Good land pipeline and strong market Executive management and coaching creating more internal candidates
Supply of materials and/or labour fails to match desired production levels	Supply chain issues constrain output and efficiency in currently strong market Adverse customer experience as build completion forecasting is difficult and subject to variation	Dialogue with major suppliers Advance planning and call-off by divisions Spread risk across suppliers, e.g., kitchen supply-and-fit contracts Examine alternative production approaches, e.g., timber frame as opposed to blocks Maintain strong apprenticeship and graduate programmes

The Directors are responsible for preparing the Annual Report, the Directors' remuneration report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, and the parent Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors are required to:

·      select suitable accounting policies and then apply them consistently;

·      make judgements and accounting estimates that are reasonable and prudent;

·      state whether IFRS as adopted by the European Union and applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the Group and parent Company financial statements respectively; and

·      prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements and the Directors' remuneration report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Directors consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy.

Each of the Directors, whose names and functions are listed on page 68, confirm that, to the best of their knowledge:

·      the Group financial statements, which have been prepared in accordance with IFRS as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and

·      the Strategic report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

Having assessed the principal risks and the other matters discussed in connection with the Viability statement, the Directors considered it appropriate to adopt the going concern basis of accounting in preparing the financial statements.

 

END

 

 

ACSSFIFFIFMSEDE