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Crest Nicholson HoldingsAnnouncement

15/02/2016 11:40

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
+44 (0) 1932 580 555
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.

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