CAIRN HOMES PLC
ANNUAL
REPORT
20
15
C
A
I
R
N
H
O
M
E
S
P
L
C
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
5
7 Grand Canal
Grand Canal Street Lower
Dublin 2
P: +353 1 696 4600
E: info@cairnhomes.com
www.cairnhomes.com
Leading the way
At Cairn, build quality is at the heart of everything
we do. Our design-led process continually
questions outmoded practices and their relevance
to new ways of living. We strive to understand our
customers’ needs and aspirations and then bring
together the most talented designers and
craftsmen to interpret and deliver that vision.
Our company structure is professional, well
governed and considered. Cairn Board members
have held senior positions in a number of
successful public and private companies and bring
a great deal of experience to bear.
As well as offering home buyers peace of mind our
distinct approach also engenders the trust and
collaboration of planners, local authorities,
regulators and other important stakeholders in the
industry.
Given our existing and future development
pipeline we believe we are making a meaningful
contribution to the current shortage of quality new
homes in Ireland.
Key highlights
(cid:129) Deployed €554m1 of capital in 9 months since
(cid:129)
Initial Public Offering (IPO)
Total core landbank of 252 sites and 11,229
homes3
(cid:129) Acquisition of 9 separate sites post IPO (2 sites
in 2016) plus Ulster Bank residential land loan
portfolio
(cid:129) Successful launch of Phase 1 at Parkside with
sale of 52 houses now agreed as of February
2016
(cid:129) Continued strategic focus on the Greater
Dublin Area (“GDA”) (89% of landbank)
(cid:129) Skilled personnel in place to deliver on
increased operational activity
Note:
1. Includes c.€40m deployed in 2016 and €4m for Project Clear related construction bonds.
2. Includes the conditionally acquired Navan site and properties currently secured as collateral for loans acquired from Ulster Bank.
3. Estimated number of homes.
CONTENTS PAGE
CONTENTS
Company Overview
Chairman’s Statement
Operations & Financial Review:
Chief Executive’s Statement
Financial Director’s Review
Company Information
Board of Directors
Directors’ Report
Corporate Governance Report
Audit and Risk Committee Report
Nomination Committee Report
Remuneration Committee Report
Consolidated Financial Statements
2
14
17
20
22
24
28
36
48
53
54
74
Company Financial Statements
122
Cairn Homes PLC
1
COMPANY OVERVIEW
About Cairn Homes
Cairn Homes Plc is an Irish homebuilder founded
in 2015 by Michael Stanley and Alan McIntosh.
The Company was re-registered as a public
company in May 2015 and completed a successful
IPO in June 2015. The Group is committed to
constructing much needed high quality new homes
in Ireland. Our design-led process continually
questions outmoded practices and their relevance
to new ways of living. We strive to understand our
customers' needs and aspirations and then bring
together the most talented designers and
craftsmen to interpret and deliver that vision.
Cairn acquires greenfield or brownfield sites in
Ireland that are suitable for residential
development, with an emphasis on Dublin and the
Dublin commuter belt, as well as other major
urban centres. Our distinct approach not only
offers home buyers peace of mind but engenders
the trust and collaboration of planners, local
authorities, regulators and other important
stakeholders in the industry.
The Group’s strategy is to capitalise on the
recovery of the Irish residential property market by
establishing itself over the medium term as a
leading Irish homebuilder, constructing high
quality new homes, with an emphasis on
innovation, design and customer service.
The Group intends to achieve its strategy through
site acquisitions in targeted regions with attractive
supply/demand characteristics; the development
of high quality sites that meet the needs of the
local market; and prudent use of debt.
The Group intends to retain an efficient workforce,
which will manage the acquisition and
development of sites, while engaging specialist
sub-contractors for building and related work.
A key part of the Group’s strategy is to strive for
excellence in all areas of its operations and to
operate on a scale that allows continued
Management Team involvement in the material
decisions of the Group. The Group intends to
operate in a responsible and ethical manner,
focusing on the needs of the communities where it
builds and operating within defined environmental
limits. The Group intends to seek to deliver high
quality homes and to maintain a culture focused
on customer service which seeks to make the
homebuying process as stress free as possible and
which seeks to address any future service needs of
customers in a timely and courteous manner.
The following pages outline a geographic overview
of core sites and highlight a sample of the
Company’s current and future developments.
2
Annual Report 2015
COMPANY OVERVIEW
Geographic overview
of core sites
Note: Project Clear sites represent the collateral security underlying the loans acquired by the Group.
Cairn Homes PLC
3
COMPANY OVERVIEW
Core land bank composition
LANDBANK
PREDOMINANTLY HOUSES
(Breakdown by homes)
(Breakdown by homes)
11%
16%
1%
26%
71%
74%
Dublin Suburbs
Dublin City Centre
Houses
Apartments
Dublin Commuter Belt
Other
Current core landbank
Sites 1
Acres
Potential
homes 2
Average unit
site cost 3
Live within
the next 12 months 4
Commencement
2017/2018
Commencement
2019+
7
11
7
288
2,945
€69k
161
2,190
€63k
485
6,094
€21k
Medium term
target of 1,000
completions
per annum
Total
25
934
11,229
€42k
Note:
1. Includes land secured as collateral for loan portfolio.
2. Potential homes over the life of the development scheme.
3. Calculated as value of sites divided by number of potential homes.
4. Including sites already live. Live defined as schemes where construction has commenced.
4
Annual Report 2015
COMPANY OVERVIEW
Helpful Government initiatives
(cid:129) Measures introduced in November 2015 in an effort to tackle housing crisis;
Rent certainty
measures
(cid:129)
(cid:129)
In addition to other measures, the legislation will require 24 months
between all rent reviews;
This is expected to assist buyers in saving for mortgage deposits.
(cid:129) Recently introduced Planning Guidelines on Design Standards for New
Apartments contain a number of provisions to reduce build costs and
improve the economic feasability of apartment developments;
(cid:129) Number of completed units that must be provided for social housing
Housing
regulations
reduced from 20% to 10%;
(cid:129) Reduction in development levies;
(cid:129)
(cid:129)
Focus on improvement of Special Development Zones (SDZ) to fast track
planning and delivery of homes;
Supply side initiatives being considered by Government.
Cairn Homes PLC
5
COMPANY OVERVIEW
Parkside
Malahide Road, Dublin 13.
www.parksidehomes.ie
Construction and sales are well underway on this
brand new development of stylish three and four
bedroom A-rated family homes situated in a
superbly landscaped setting just off the Malahide
Road. Only 25 minutes from the city centre by DART
(rail network), Parkside is very close to the M1,
Airport, the DART station at Clongriffin and the
Quality Bus Corridor (QBC) on Malahide Road.
KEY SITE CHARACTERISTICS
Comprising 50 acres (20.2 hectares) the site is
situated between the Malahide Road and the
newly upgraded Fr. Collins Park, just 10km from
Dublin city centre. The proposed 433 homes range
in size from c.110-150 sq.m (1,189-1,615 sq.ft).
6
Annual Report 2015
COMPANY OVERVIEW
Marianella
Orwell Road, Dublin 6.
Marianella represents one of Dublin’s best
residential development opportunities.
The property is located in the highly sought after
suburb of Rathgar, easily accessible to Dublin City
and the south city suburbs of Ranelagh,
Rathmines, Milltown and Clonskeagh. It is
approximately 4.2km south of St. Stephen’s Green,
in Dublin city centre.
KEY SITE CHARACTERISTICS
The lands extend to over 8 acres (3 hectares) and
are located on the northern side of Orwell Road in
Rathgar, opposite Rostrevor Terrace, approximately
450m south east of Rathgar Village. Planning
permission exists for a high quality residential
scheme incorporating 211 apartments and houses
with additional development potential on other
parts of the lands. The Group is currently targeting
a total of 238 apartments and houses on the scheme.
Cairn Homes PLC
7
COMPANY OVERVIEW
Cherrywood
Carrickmines, Dublin 18.
The Company recently announced it had reached
agreement to purchase two lots with an option to
purchase a third on receipt of planning
permission. Cherrywood has unrivalled potential
and will ultimately be home to approximately
25,000 residents.
The visionary masterplan for this landmark site,
developed by Hines, includes the construction of a
new retail-led, mixed use town centre and up to
3,800 apartments and houses.
KEY SITE CHARACTERISTICS
The initial plot extends to 10 acres (4.225 hectares)
and is situated on an elevated site with views out
to the sea. The planning applications for the town
centre, will further progress the site masterplan
and leverage Cherrywood’s unique attributes
including four LUAS (light rail) stops and links to
the country’s motorway network at the junction of
the N11 and the M50 ring road.
8
Annual Report 2015
COMPANY OVERVIEW
Hanover Quay
Dublin 2.
The recent agreement to acquire this site, located
in the South Dublin docklands Strategic
Development Zone (“SDZ”), provides the
opportunity to provide much-needed quality
waterfront homes in the Dublin business centre
and ‘Silicon Docks’ area of the city which has a
particularly acute demand for new homes.
KEY SITE CHARACTERISTICS
With the benefit of an existing planning
permission for in excess of 100 apartments, this
1.05 acre (0.43 hectares) site allows us to
commence construction during 2016.
However, the Cairn planning team are currently
re-appraising the site and intend lodging an
application for an improved development.
Cairn Homes PLC
9
COMPANY OVERVIEW
Building to the highest quality
A Cairn home stands out because we only work
with tradespeople, designers, craftsmen and
suppliers who are experienced in their fields
and our team is fortunate to have forged
longstanding relationships with many of
these people.
Cairn is a member of the Construction Industry
Federation (CIF). All Cairn homes are protected by
HomeBond, the leading provider of structural
cover operating in Ireland since 1978.
10
Annual Report 2015
COMPANY OVERVIEW
Better regulations - Higher Standards
Ireland’s Building Regulations for new homes are
continually being amended and improved and set
a high quality benchmark fully deserving of the
homebuyers confidence.
The 2011 amendments to the Regulations require a
further reduction in primary energy consumption
and carbon dioxide emissions. An additional
increase in the levels of insulation for walls, roofs
and floors is required along with a better U value
for doors and windows, increased levels of air
tightness and an improvement in the minimum
efficiency of oil and gas boilers.
At Cairn one of our goals is to achieve building
enhancements that aim to go beyond the current
regulations. All our homes are designed to be
airtight, fully insulated and to consume the least
amount of energy possible. We set ourselves the
highest quality benchmark to ensure that buyers
can buy a Cairn home with confidence.
Cairn Homes PLC
11
Market Outlook
Consumer confidence is now at a 15 year high and
the strong employment market is leading to an
expectation of a return to wage growth across the
broader Irish economy during 2016, which is an
important ingredient needed for a stronger
residential property market.
These strong macro-economic trends,
underpinned by external factors such as
government initiatives in the areas of housing
regulations, rent certainty measures and house
price recoveries, all contribute to a significant
opportunity for the continued growth of the Irish
housing market.
The Irish macro-economic backdrop remains
strong, with GDP growth now accelerating and
Ireland is experiencing its fastest growth since the
mid-2000s. The country continues to be the fastest
growing economy in the European Union and
unemployment has declined from a peak of 15.1%
to a current level of 8.8%.
Recent forecasts (source: Goodbody) for the Irish
economy are now predicting GDP growth of 7.0% in
2015 and growth of 5% in 2016, with further strong
growth of 3.7% in 2017. Importantly, this
performance is taking place without either
inflation or credit expansion, the dynamics of
which are similar to the strong growth period
experienced by Ireland in the 1990s. Encouragingly,
the consumer economy remains very strong, with
the recovery in spend accelerating during 2015,
with 3.5% growth in consumption expected for
2015, against a growth level of 2% in 2014.
12
Annual Report 2015
COMPANY OVERVIEW
IRISH HOUSING MARKET
MORTGAGE MARKET ENVIRONMENT
The market for new homes in Ireland remains
strong, with the housing market as a whole being
characterised by a growing demand and a
significant continued under supply. While there is
an ongoing need for 25,000 to 30,000 new homes
nationally and a need for 8,000 to 10,000 new
homes a year in Dublin alone (Source; Goodbody,
Irish Property. From stabilisation to recovery,
September 2014), completions are falling
significantly short of this. It is estimated that just
over 3,000 houses were completed in Dublin in
2015, with a similar level expected for 2016, which
underlines the worsening rather than improving
demand/supply imbalance.
Since the lows of 2011, the mortgage market in
Ireland has significantly improved, with a 105%
increase in the number of mortgage approvals.
The introduction of macro-prudential rules by the
Central Bank of Ireland (CBI) in February 2015,
including loan-to-income caps and maximum LTV
ratios had an impact on the growth volumes and
availability of mortgages during the second half of
2015. The recently appointed Governor of the
Central Bank has indicated that a review of the
rules will be undertaken over the coming months,
with the results of the review and any proposed
change to the existing rules to be made public
during November 2016.
HOUSING OUTLOOK
The underlying demand for new housing in Ireland
is expected to remain strong as supply is unlikely
to meet demand in the medium term. We will
commence construction on 5 further schemes
within the next twelve months and look forward to
making a meaningful contribution to the much
needed supply of quality new homes in Ireland
over the coming years.
Rising rent levels across the country and in Dublin
in particular continue to be a strong feature of the
residential housing market, illustrating the
worsening demand / supply imbalance. A recent
industry report highlighted the continued rise in
rents across the country, with national rents up 9%
and Dublin rents up 8.2% in 2015. Dublin rents are
now up 43% against their 2010 low. These
continued rent increases are directly related to an
acute shortage of housing availability, which is
evidenced by the fact that there was an average of
almost 5,200 properties available to rent in Dublin
between 2008 and 2012, whereas today there are
only 1,400 houses to rent, in a city of almost half a
million households.
Long-term demand for new homes is also directly
related to population growth and the rate of new
household formation. Population growth of 2.2% in
Dublin in Q3 of 2015 was the highest seen since
2007. Coupled with annual employment growth of
2.9% in the same period last year, these trends, as
they have in the past, will likely contribute to an
increase in home ownership and demand for new
homes in Ireland.
Cairn Homes PLC
13
Chairman’s
Statement
John Reynolds
“At Cairn Homes a key part of
our strategy is to strive for
excellence in all areas of our
business. We believe that
residential construction must
aspire to the highest possible
environmental standards.”
In my first report to you as Chairman, I am pleased
to note that, since Cairn Homes floated on the
London Stock Exchange in June 2015, we have seen
an exceptional period of acquisitions by the
Company, in accordance with our stated objective
at the time of flotation.
During this time, the Company has successfully
deployed IPO proceeds and secured strategic land
banks for the development of residential dwellings
in areas of demographically underpinned demand.
The Company’s clarity of focus and commitment to
our sustainable business model remains steadfast.
14
Annual Report 2015
THE WAY WE DO BUSINESS
CORPORATE GOVERNANCE
For Cairn Homes, the Board is firmly committed to
developing and maintaining a sustainable home
building business model. This requires the
Company to meet the demands of a growing
cohort of potential customers with viable and
profitable housing solutions. Our land acquisition
strategy, coupled with the current and foreseeable
demand/supply dynamic within the Irish
residential property market, presents a significant
opportunity for the Company. Our aim as a
business, both for the immediate and longer term
is to build on the emerging confidence in and
recovery of the Irish residential property market
and establish the Company as the leading Irish
homebuilder, working to meet the growing demand
for quality homes, and in turn maximising return
for our shareholders.
In our first year of business, we have achieved our
objectives of securing strategic land banks suitable
for sustainable residential building development.
With advanced negotiations to acquire further
sites in Dublin and the Dublin commuter belt
ongoing, we are well placed to firmly position the
Company at the heart of the Irish residential
property recovery in 2016 and beyond.
The Board is firmly of the view that operational
excellence is and will continue to be the
cornerstone of our success. At Cairn Homes a key
part of our strategy is to strive for excellence in all
areas of our business and to operate on an
ambitious scale while ensuring that our
management standards are consistently applied
throughout all of the development sites under the
Company’s control. We believe that residential
construction must aspire to the highest possible
environmental standards. It is our commitment to
all ongoing and future residential developments to
ensure the highest specification of energy
efficiencies are incorporated into each and every
Cairn Homes development.
Cairn Homes has an unwavering commitment to
excellence in corporate governance which the
Board will continue to strengthen, supported by a
robust and effective governance framework and
risk management structure.
We understand the importance of high quality
health and safety standards and the Group aims to
maintain these high standards of health and
safety performance, focusing on hazard
elimination, risk reduction, regular monitoring, and
training, auditing and individual behaviour.
The Board has put in place an Audit and Risk
Committee which is responsible for monitoring the
effectiveness of the Group’s financial statements
and its systems for internal control and risk
management. It also monitors the independence,
objectivity and tenure of the external auditor and
considers whether the Annual Report and
Financial Statements are fair, balanced and
understandable.
In addition, a Remuneration Committee,
responsible for determining packages for Executive
Directors, Chairman and senior management team,
including pension rights and compensation
payments has also been established.
A Nomination Committee has also been
established and its responsibilities include
reviewing the structure, size and composition of
the Board and leading the process for new Board
appointments.
RETURNS TO SHAREHOLDERS
The Board of Cairn Homes has declared it does not
anticipate paying a dividend in the immediately
foreseeable future as the Company’s primary focus
is seeking to achieve capital growth. However, in
the longer term the Directors are committed to
following a progressive dividend policy on behalf
of shareholders, reflecting both confidence in our
performance and the resilience of the Irish
residential property market.
Cairn Homes PLC
15
OUR PEOPLE
OUTLOOK
We are well placed for continued growth and
development and achievement of our strategic
objectives.
I would like to thank you, our shareholders, for
your continued support.
John Reynolds
Chairman
Cairn Homes operates the typical operational
model of a large homebuilding Company with 4-10
employees per site, who act as the on-site
management team working with sub-contractor
partners. With strong development and growth
plans in place, the group intends to increase both
direct and indirect employee numbers in line with
Company growth.
I would like to take this opportunity to
acknowledge the breadth and depth of experience
of our management and operational teams, led by
our Chief Executive, Michael Stanley, who are
committed to the growth and development of
Cairn Homes.
On behalf of the Board, I would like to thank all
employees of Cairn Homes, for their continued
commitment and contribution.
16
Annual Report 2015
Chief Executive’s
Statement
Michael Stanley
“We are now clearly focused
on the next phase of our
Company’s development
which will be the continued
scaling of our homebuilding
activities.”
2015 SUMMARY / RESULTS
2015 has been an exceptional first year for Cairn
Homes. Following a highly successful IPO in June -
raising in excess of €440m and an additional
€52m in our December 2015 placing, we have
focused on investing in a strong strategic pipeline
of development land to ensure we are well
positioned in 2016 and beyond.
Our land investment strategy has been pivotal to
our success, with significant ‘off market’
acquisitions adding to our wins in the two
competitive bidding processes we entered. Off
market transactions completed include: Barrington
Tower (Foxrock) and Ard Na Glaise (Stillorgan) and
agreements have been signed to acquire Hanover
Quay (Dublin Docklands SDZ) and Cherrywood.
Through our success in the Ulster Bank Project
Clear process, we will also unlock the most
significant residential land bank ever to come to
the Irish market.
Since IPO we have invested over €500m in various
land transactions. We had targeted a period of 12
to 18 months for the successful deployment of our
IPO proceeds, so we are pleased to have achieved
this target in a much shorter timeframe due to our
focus on securing key strategic transactions and
our successful prospecting of off-market
opportunities. We are now clearly focused on the
next phase of our Company’s development which
will be the continued scaling of our homebuilding
activities.
To support the expansion of our operations we
have added new talent to our team across many
disciplines including; planning, engineering,
surveying, programme and site management.
Many of the new people who have joined Cairn
Homes are returning to Ireland having gained
valuable experience working in the construction
industry abroad.
Cairn Homes PLC
17
ECONOMIC CONDITIONS
CAIRN HOMES STRATEGY AND OUTLOOK
In 2015, we also saw the benefit of strengthening
macroeconomic conditions in Ireland, and
supportive property market conditions indicating
strong growth opportunities. The Central Bank’s
macro-prudential rules appear to be having an
impact on the pace and timing of home
acquisitions by aspirant owners. Compensating for
this impact, growing employment, increased
earnings and tax cuts are all helping affordability
which in turn increases the capability of those
aspirant home owners to acquire their homes.
Recent government measures which reduce the
cost of residential development are progressive
and welcome. However, the extremely low level of
housing completions in 2015, and escalating
residential rents suggests that more will be done
to relieve the bottleneck, particularly in the speed
and responsiveness of the planning process.
Our strategic objectives are clear. Having acquired
exceptionally well located sites in targeted regions,
we will utilise our in-house expertise, our
professional teams and our skilled sub-contractors
to capitalise on the recovery of the Irish residential
property market. We aim to be synonymous with a
design-led approach, build quality, and
exceptional customer service.
I would like to take this opportunity to reiterate
our Chairman’s words of thanks to the team and
the individuals across our business. Cairn Homes
is committed to striving for excellence in all areas
of our operations. I believe we have the best
people in the industry and look forward to making
Cairn Homes the employer of choice in our sector.
Our team will continue to develop a culture which
recognises the importance of a home purchase for
our customers. We will seek to make the home
buying process as stress-free as possible and
address any future service needs of customers in a
timely and courteous manner.
As well as offering home buyers peace of mind, our
distinctive approach also engenders the trust and
collaboration of planners, local authorities,
regulators and other important stakeholders in the
industry.
18
Annual Report 2015
OUTLOOK
Looking forward, we are currently operating in a
housing market underpinned by a significant
structural demand and supply imbalance. Housing
remains high on the political agenda with strong
recognition of the importance of our industry to
Ireland’s continued economic recovery.
As we progress the transformation of our
operational land bank, we remain confident in our
strategy and look forward to being a significant
contributor in the delivery of much needed new
homes in Ireland.
I am proud to lead a superb team of skilled and
dedicated people with a clear vision to deliver high
quality new homes to the marketplace. Cairn
Homes has had an exceptional first year. We are
confident of the outlook, and we look forward to
steady and sustainable growth over the coming
financial year.
Michael Stanley
CEO
Cairn Homes PLC
19
Financial Director’s
Review
Eamonn O’Kennedy
2015 represented the Group’s
first period of operation,
following its incorporation on
12 November 2014 and its
successful Initial Public
Offering (“IPO”) in June 2015.
CAPITAL RAISING
The Company’s IPO raised gross cash proceeds of
€443 million, with a follow on share placing in
December 2015 raising further gross proceeds of
€52 million. After deducting the various costs of
the two equity issuances, the net proceeds raised
were €479 million.
In addition, we announced a €150 million Senior
Debt Facility (“Facility”) with Allied Irish Bank p.l.c
in December 2015. This Facility was increased to
€200 million in March 2016 after Ulster Bank
joined the banking group. The Facility has a 4 year
term and is comprised of a €150 million term loan
and a €50 million working capital facility and
provides the Group with flexible and efficient
financing.
INVESTMENT
2015 was very much a year of investment for the
Group, with seven separate site transactions in the
course of the year, four of which were sites
conditionally purchased at the time of the Group’s
IPO. The initial cash outlay on these sites was a
total of €92.5 million. In addition to the cost of
these sites, the Group spent a further €378 million
on the Project Clear loan portfolio acquisition in
December 2015, which secured for the Group
access to the largest land-bank available in Ireland.
One of the sites, Parkside, was acquired through
the acquisition of Emerley Holdings Limited
(subsequently renamed Cairn Homes Holdings
Limited), the owner of the Parkside site.
The consideration paid for the acquisition was
€26.7 million, which was satisfied by the issue of
26.7 million ordinary shares in the Company, at a
value of €1 per share.
20
Annual Report 2015
The net assets acquired by the Company were
€23.7 million, which included the €18.1 million
Emerley Properties Loan, which was repaid in
December 2015. The difference between the
consideration paid and the net assets acquired of
€2.9 million, relating to the costs incurred by
Emerley Holdings Limited on behalf of the
Company and its shareholders, was charged to
profit or loss as an exceptional item.
As a result of the above acquisitions, in addition to
investment in inventories, the Group had an
investment in inventories and loan assets of
€532.3 million at 31 December 2015.
OPERATING PROFIT
The Group made a gross profit of €0.7 million and
after central overheads of €4.5m, made an
operating loss of €3.8 million, before exceptional
items. The Group had exceptional charges in the
year of €30.2 million, which comprised of the
founder share fair-value charge of €29.1 million
and a €1.1 million charge under administrative
expenses, relating to costs incurred by Emerley
Holdings Limited, prior to its acquisition by the
Group. This €1.1 million charge was deemed to be a
cost that was incurred for the benefit of the
Company and its shareholders.
REVENUE
FINANCE INCOME/COST
Finance income represents the interest earned by
the Company on the proceeds of the IPO which
were placed on deposit, prior to investment.
Finance costs incurred during the period under
review of €3.7 million primarily consisted of
interest payments in connection with the Emerley
Properties Loan. €1.9 million of this total
represents the pre-existing interest costs of
Emerley Holdings Limited prior to its acquisition
which were assumed by the Group and
consequently were treated as an exceptional item.
Eamonn O’Kennedy
Group Finance Director
Total revenue in the period was €3.7 million, of
which €3.4 million arose on the completed sales of
11 houses in the Group’s first development site at
Parkside, North Dublin.
In addition, the Group earned ancilliary rental
income of €0.3 million from a temporary school on
its Parkside site and some commercial units on its
Butterly site.
FOUNDER SHARE CHARGE
A valuation exercise was undertaken during 2015 to
determine the fair value of the Founder Shares,
which were issued to the Founders of the
Company, prior to the IPO. This resulted in a non-
cash charge in the financial period to 31 December
2015 of €29.1 million, with a corresponding
increase in the share-based payment reserve in
equity, such that there is no overall effect on the
total equity of the Company.
This non-cash charge to the income statement for
the period is for the full fair value of the award
relating to the founder shares, as a result of the
specific terms of the award. No charge will be
recognised in subsequent years.
Cairn Homes PLC
21
Company
Information
Directors
Michael Stanley (Chief Executive Officer)
Alan McIntosh (Executive, British)
Eamonn O’Kennedy (Group Finance Director)
John Reynolds (Non-Executive Chairman)
Andrew Bernhardt (Non-Executive, British)
Giles Davies (Non-Executive, British)
Gary Britton (Non-Executive)
Aidan O’Hogan (Non-Executive)
Secretary and Registered Office
Andrew Donagher
Cairn Homes plc
7 Grand Canal
Grand Canal Street Lower
Dublin 2
Registrars
Computershare Investor Services (Ireland) limited
Heron House
Corrig Road
Sandymount Industrial Estate
Dublin 18
Auditor
KPMG
Chartered Accountants
1 Stokes Place
St. Stephens Green
Dublin 2
Website
www.cairnhomes.com
Solicitors
A&L Goodbody
IFSC
North Wall Quay
Dublin 1
Eversheds
One Earlsfort Centre
Earlsfort Terrace
Dublin 2
Pinsent Masons LLP
30 Crown Place
Earl Street
London EC2A 4ES
Principal Bankers
Allied Irish Banks plc
Bankcentre
Ballsbridge
Dublin 4
Bank of Ireland
87-89 Pembroke Road
Ballsbridge
Dublin 4
Ulster Bank Ireland Limited
33 College Green
Dublin 2
22
Annual Report 2015
Cairn Homes PLC
23
Board of Directors
Chairman and Executive Directors
John Reynolds
Non-Executive Chairman
Age: 57
Nationality: Irish
Appointment to the Board: 28 April 2015
Committee Membership: Member of the
Nomination Committee since 29 April 2015.
John Reynolds is also the Chairman of the
Nomination Committee. He was previously Chief
Executive Officer of KBC Bank Ireland plc (2009 to
2013) and President of the Irish Banking Federation
(2012 to 2013), during which time he was also a
board member of the European Banking Federation.
He is currently a non-executive director of
Computershare Investor Services (Ireland) Limited
and Business in the Community Limited.
Michael Stanley
Chief Executive Officer,
Co-Founder and Executive Director
Age: 50
Nationality: Irish
Appointment to the Board: 12 November 2014
Michael Stanley has a strong pedigree in home
and property development. He was appointed
chief executive officer (2005-2007) of Stanley
Holdings, following the demerger of Shannon
Homes. The Stanley family founded Shannon
Homes in 1970 and it became a top ten Irish house
builder with a peak turnover of in excess of €200
million. Michael also co-founded Coastland
Partnership (2001 to 2009), a partnership focusing
on property development in Dublin and London.
In recent years, Michael has served as non-
executive director of Oneview Healthcare (2011 to
2015), and adviser to Endeco Limited, an Irish
energy company (2011 to 2014). In 2012, he
established Lead Asset Management Limited, a
property development company which
subsequently completed planning and
redevelopment of a number of residential and
commercial schemes in Dublin.
24
Annual Report 2015
Alan McIntosh
Co-Founder & Executive Director
Eamonn O’Kennedy
Group Finance Director
Age: 48
Nationality: British
Age: 43
Nationality: Irish
Appointment to the Board: 12 November 2014
Appointment to the Board: 28 April 2015
Alan McIntosh has been a principal investor and
part of successful investor groups for over 17 years.
During this time he has had operational
management roles and been part of management
teams that have successfully grown a number of
different businesses including Topps Tiles Plc,
PizzaExpress and Centre Parcs propco. Alan was a
co-founder of each of Pearl Group (now listed as
Phoenix Group plc), Punch Taverns plc, Spirit Group
plc and Wellington Pub Company Ltd.
Alan’s private investment vehicle, Emerald
Investment Partners, has interests in real estate,
healthcare, biotech and technology in Europe and
North America. He qualified as a chartered
accountant with Deloitte & Touche in 1992.
Eamonn O’Kennedy was previously Chief Financial
Officer (2012 to 2014) of Independent News and
Media plc.
Prior to this role, Eamonn held a number of senior
management roles with Independent News and
Media plc between 1999 and 2012, including
Finance Director (Ireland) and Group Finance
Manager. He is a fellow of the Institute of
Chartered Accountants in Ireland, having qualified
with PricewaterhouseCoopers in 1996.
Cairn Homes PLC
25
Board of Directors
Non-Executive Directors
Gary Britton
Non-Executive Director
Age: 61
Nationality: Irish
Aidan O’Hogan
Non-Executive Director
Age: 64
Nationality: Irish
Appointment to the Board: 28 April 2015
Committee Membership: Member of the Audit and
Risk Committee and the Nomination Committee
since 29 April 2015.
Appointment to the Board: 18 May 2015
Committee Membership: Member of the
Nomination Committee and Remuneration
Committee since 18 May 2015.
Gary is also Chairman of the Audit and Risk
Committee. He is currently a Non-Executive
Director of The Irish Stock Exchange plc, KBC Bank
Ireland plc, Origin Enterprises plc and The
Cheshire Foundation in Ireland. He was previously
a partner in KPMG where he served in a number of
senior positions, including the firm’s Board, the
Remuneration and Risk Committees and as head
of its Audit Practice.
Gary is a member of the Institute of Chartered
Accountants in Ireland, the Institute of Directors
and the Institute of Banking. He is also a Certified
Bank Director as designated by the Institute of
Banking.
Aidan O'Hogan is a Chartered Surveyor and a
fellow of the Royal Institution of Chartered
Surveyors and the Society of Chartered Surveyors
in Ireland. Aidan is a past President of the Irish
Auctioneers and Valuers Institute. In 2009, he
retired as chairman of Savills Ireland after 40 years
as a real estate professional.
Aidan is currently a council member and former
Chairman of Property Industry Ireland and was
previously Managing Director and Chairman of
Hamilton Osborne King, with almost 20 years'
experience there. He is also a non-executive
director of IRES REIT PLC and Chairman of their
Audit Committee.
26
Annual Report 2015
Andrew Bernhardt
Non-Executive Director
Age: 55
Nationality: British
Giles Davies
Non-Executive Director
Age: 47
Nationality: British
Appointment to the Board: 28 April 2015
Committee Membership: Member of the Audit and
Risk Committee and Remuneration Committee
since 29 April 2015.
Appointment to the Board: 28 April 2015
Committee Membership: Member of the Audit and
Risk Committee and Remuneration Committee
since 29 April 2015.
Andrew currently serves on the board of ALMC,
where he was previously CEO.
Prior to joining ALMC, Andrew had a 29 year career
in commercial banking at Barclays Bank and GE
Capital. He was heavily involved in supporting the
growth of a number of well-known property
companies (including Canary Wharf, Hammerson,
Slough Estates and Howard de Walden Estates)
during his time at Barclays Bank.
Giles Davies is also Chairman of the Remuneration
Committee and a member of the Audit and Risk
Committee. Giles qualified as a chartered
accountant with PwC in London and spent five
years in management consultancy in London and
New York. He went on to found Conservation
Capital, a leading practice in the emerging field of
conservation finance and enterprise.
He is also non-executive chairman of Capital
Management & Investment plc and non-executive
Chairman of Wilderness Scotland (Wilderness
Ireland is a subsidiary). Until recently, Giles was a
non-executive director of the Algeco Scotsman
group - a leading global provider of modular space
with operations in 29 countries and revenues
approaching US$1.5 billion.
Cairn Homes PLC
27
Directors’ Report
The Directors present the first Report of the Directors of Cairn Homes Public Limited Company (the
“Group” or “Company”) together with the audited financial statements for the period from incorporation
on 12 November 2014 to 31 December 2015. The Chairman’s Statement, Chief Executive’s Statement,
Financial Director’s Review, Corporate Governance Report and all other sections of the Report and
financial statements, to which cross reference is made, are incorporated into the Report of the Directors
by reference.
Directors’ responsibilities
These are set out in the Statement of Directors’ Responsibilities on pages 75 to 76 of this report.
Principal activity and review of the business
The Company was incorporated on 12 November 2014 as a private limited company and was re-registered
as a public limited company on 19 May 2015. The Company completed an initial public offering on 10 June
2015 and its shares were admitted to trading on the London Stock Exchange with a Standard Listing on 15
June 2015.
The principal activity of the Group is to establish itself over the medium term as a leading Irish
homebuilder, constructing high quality new homes with an emphasis on design, innovation and customer
service. The Group consists of the Company, Cairn Homes plc, and a number of wholly owned subsidiaries
which are detailed in Note 23 to the Consolidated Financial Statements. The Chairman’s Statement,
Chief Executive’s Statement and Financial Director’s Review provide a review of the Company’s business
for 2015.
Results and dividends
The Group’s consolidated loss after taxation for the period under review was €37.2 million. The Directors
do not propose a payment of a dividend in respect of the period under review.
Events since the Year End
Information in respect of events since the year end is contained in Note 30 to the Consolidated Financial
Statements.
28
Annual Report 2015
GOVERNANCE
Directors’ Report - continued
Memorandum and Articles of Association
The Memorandum and Articles of Association set out the basic management and administrative structure
of the Company. The Articles of Association regulate the internal affairs of the Company and cover such
matters as the issue and transfer of shares, Board and shareholder meetings, powers and duties of
Directors and borrowing powers. In accordance with the Articles of Association, Directors can be
appointed or removed by shareholders in a general meeting.
The Memorandum and Articles of Association may only be amended by special resolution at a general
meeting of shareholders. Copies are available by writing to the Company Secretary or through the Irish
Companies Registration Office.
Corporate governance
The Group is committed to high standards of corporate governance, details of which are given in the
Corporate Governance Report on pages 36 to 47 which forms part of the Report of the Directors.
Principal risks and uncertainties
Under Irish company law, the Company is required to give a description of the principal risks and
uncertainties which it faces.
The Board recognises that there are certain risks in the structure, operation and management of the
Group and Company and acts to mitigate these risks through its close and active management. The
Group’s exposure to financial risk is further described in Note 26 to the Consolidated Financial
Statements. Some of the risks set out below have not impacted directly on the Group in the current
period given that the Group only commenced operations during the financial period under review.
However, such risks are expected to be applicable in the coming financial year.
Cairn Homes PLC
29
GOVERNANCE
Directors’ Report - continued
Principal risks and uncertainties (continued)
The principal risks faced by the Group are:
Economic Conditions
Succession Planning
(cid:129)
(cid:129) Mortgage Availability & Affordability
(cid:129) Health & Safety
(cid:129) Availability & Strength of Sub-Contractors
(cid:129)
(cid:129) Recruitment & Retention of Key Personnel
(cid:129)
(cid:129)
(cid:129)
(cid:129) Planning Regulations
(cid:129) Programme Risk/Project Planning
Financial Controls Framework
Liquidity Management
Loan to Own
Risk Description
Mitigation
Economic Conditions
Cairn’s business is sensitive to the performance of
the wider economy and particularly changes in
interest rates, employment and general consumer
confidence. Changes in economic conditions in
Ireland (which are linked to the performance of the
broader global economy, given Ireland’s open
economy) are likely to impact on house prices and
house sales rates.
Cairn’s business strategy reflects the cyclical nature
of the industry.
The Board and the management team closely
monitor economic indicators for indications of
weakness in the economy.
Internal systems in place to track margin impact of
reduction in sales prices.
Regular impairment reviews.
Mortgage Availability & Affordability
The availability of mortgage finance, particularly
the deposit and income requirements set by the
Regulator on mortgage lending, is fundamental to
customer demand.
The Group monitors mortgage availability including
any impact from regulations on mortgage lending
and rates on an ongoing basis and it is a standing
item at Board meetings for discussion.
The Group also considers the benefits of products
used in other jurisdictions to stimulate supply in
the market and considers whether such an
approach is appropriate for the Irish market.
30
Annual Report 2015
GOVERNANCE
Directors’ Report - continued
Principal risks and uncertainties (continued)
Risk Description
Mitigation
Health & Safety
Health and safety breaches can result in injuries to
Cairn staff or sub-contractors operating on Cairn
sites and/or result in delays in construction or
increased costs, in addition to reputational damage
and potential litigation.
Availability and Strength of Sub-Contractors
The risk that the Group is unable to attract the right
quantity and quality of sub-contractors, which are
critical to delivery of the Group’s homes, due to the
outsourced business model applied by the Group.
The Health & Safety department operates
independently of the construction division and
reports directly to Head Office in order to maintain
independence.
Reportable and non-reportable incidents are
measured across sites and reported to
management and the Board on a regular basis in
order to track trends across and within sites.
A strong Health & Safety culture exists across the
organisation.
A formalised (industry standard) Safety Cert system
is being introduced, which will include a robust
management system and include regular safety
audits and scoring of results.
Supply agreements are fixed for all, or a significant
portion of a scheme in order to ensure supply is
guaranteed.
Given the size of the Group’s land-bank and its
position in the market-place, it is a very attractive
client for sub-contractors.
Senior and middle management have many years
of experience in the industry and strong
relationships with and knowledge of key suppliers.
The Group ensures payments are made on time to
key suppliers in order to maximise their liquidity as
they scale their operations in conjunction with the
Group.
A panel of approved sub-contractors is in place and
circulated on all relevant tenders.
Cairn Homes PLC
31
GOVERNANCE
Directors’ Report - continued
Principal risks and uncertainties (continued)
Risk Description
Mitigation
Succession Planning
A risk that the loss of key staff will result in a loss
of key corporate knowledge and consequential
impact on operations.
Recruitment and Retention of Key Personnel
The risk that the Group does not have a sufficiently
robust HR strategy in place in order to ensure the
Group’s recruitment policy/plans are delivered and
that key staff are retained.
Financial Controls Framework
The risk or failure to adhere to agreed policies,
procedures and processes due to a lack of financial
controls, leading to potential financial
misstatement, fraudulent behaviour or a potential
financial loss to the Company and Group.
Liquidity Management
The risk that the Company does not maintain
sufficient liquidity headroom to ensure that it can
always meet its working capital requirements as
they fall due. Risk that slower than expected sales
impact on the Company’s liquidity position.
The risk that failure to comply with the Group’s
banking covenants results in the withdrawal of
funding lines.
Ensuring that a strong number two is in place
across all key functional areas.
Regular interaction across the various departments
in order to ensure strong knowledge transfer.
Performance monitoring of key individuals.
Active talent management and staff development.
Ensuring that remuneration policy is robust enough
to meet market demands.
The Group has recently commenced operations and
its ambitious growth plans make it an attractive
place of employment for high calibre staff.
The Group will ensure that it has a remuneration
policy in place that is competitive in the marketplace.
The Group is putting a HR policy in place in order to
ensure a positive work environment is always in place.
Performance reviews to keep staff motivated.
Policies are in place across the Group in order to
minimise risks in key areas.
The Group only commenced its principal activities
from the date of IPO in June 2015, as a result the
financial control environment continues to be
developed in conjunction with the growth in the
underlying business.
Head Office personnel with direct site operational
knowledge being put in place to monitor site
activity as operational activity increases.
The Group will ensure that it always has sufficient
liquidity in place to meet its cash flow
requirements for the next 18 months.
The Group prepares regular forecasts that look at
both its short-term and longer-term requirements.
Regular monitoring, forecasting and reporting of
banking covenants.
Speed of delivery on individual schemes takes
account of sales absorption rates across each
individual scheme.
32
Annual Report 2015
GOVERNANCE
Directors’ Report - continued
Principal risks and uncertainties (continued)
Risk Description
Mitigation
Loan to Own
The risk that the Group does not adequately
prepare for or manage the Debtor relationships it
has acquired through the acquisition of the Ulster
Bank loan portfolio, which could have legal,
operational and/or financial implications for the
Group.
Planning Regulations
Inability to adhere to the complex and stringent
regulatory environment that applies to the building
industry. Risk that the Government will introduce
new legislation that results in material cost, or time
delays for the Group.
The Group has put business plans in place to
ensure that it deals appropriately with each
individual Debtor.
The Group has appointed Hudson Advisors, who are
an experienced Central Bank approved loan servicing
agent, to manage the relationship with all Debtors.
Regular meetings with the Group’s loan service
agent and all relevant advisors in order to ensure
that the Group is fully briefed on all interaction
with Debtors and on the implementation of its loan
to own strategy.
Group monitors all policy changes through its
planning department and the experienced team is
well placed to interpret regulatory changes.
The Group uses external advisors who advise it on
any changes to relevant legislation.
Rigorous design standards for the homes that the
Group develops.
Participation in industry advocacy groups.
Programme Risk/Project Planning
The risk that the Group incurs costs which are
higher than expected or experiences delays in
construction due to poor planning.
Robust project plans and controls are in place.
Monthly reporting of all project costs, with variances
and explanations highlighted in monthly reports.
Key oversight personnel in place across all projects.
Cairn Homes PLC
33
GOVERNANCE
Directors’ Report - continued
Going concern
The Group’s activities, strategy and performance are explained in the Chief Executive’s Statement on
pages 17 to 19 of this Report. Further detail on the financial performance and financial position of the
Group is provided in the financial statements. In addition, Note 26 to the Consolidated Financial
Statements includes details on the Company’s financial risk management and exposures.
Having assessed the relevant business risks, the Directors believe that the Company is well placed to
manage these risks successfully, and they have a reasonable expectation that the Company, and the
Group as a whole, have adequate resources to continue in operational existence for 12 months from the
date of approval of the financial statements. For this reason, they have prepared the financial statements
on a going concern basis.
Viability Statement
The Directors have assessed the prospects of the business and its ability to meet its liabilities as they fall
due and have concluded that four years was an appropriate period for the assessment given that the
Company is in its first year in business. The four year period was selected as this is a key period in the
Company’s strategic planning.
The Company has developed a financial model which is regularly tested and assessed by the Board.
The model includes financing requirements over the period. The model takes account of the potential
impact of some of the principal risks of the Company as set out in this report. The Directors confirm that
they have a reasonable expectation that the Company will continue to operate and meet its liabilities as
they fall due over the four year period, given its initial investment phase and its completions target of
1,000 units per annum by 2019.
Directors and Officers
The Directors of the Company, their biographical details and details of the dates of their appointments
are detailed on pages 24 to 27.
Unless otherwise determined by the Company in a general meeting, the number of Directors shall not be
more than ten nor less than two. A Director is not required to hold shares in the Company.
Any Director appointed to the Board by the Directors will be subject to election by the Shareholders at
the first Annual General Meeting held following after his/her appointment. Furthermore, under the
Articles, one third of all Directors must retire by rotation at each Annual General Meeting and may seek
re-election. However, in keeping with best corporate governance practice, all Directors intend to seek
re-election each year at the Annual General Meeting.
The Directors’ interests in the share capital of the Company are shown on pages 69, 70 and 72.
Mr. Andrew Donagher was appointed Company Secretary to the Company on 25 November 2015 in place of
Castlewood Corporate Services Limited.
34
Annual Report 2015
GOVERNANCE
Directors’ Report - continued
Substantial shareholdings
As at 14 March 2016, the Company has been notified of the following substantial interests in the
Company’s shares:
FMR LLC
FIL Limited
Lansdowne Partners International Limited
Wellington Management Group LLP
Henderson Group plc
Oppenheimer Funds Inc
No of Interests in
Ordinary Shares
% of Issued
Share Capital
49,538,168
43,807,546
33,276,612
25,910,591
24,252,393
15,746,050
9.59
8.48
6.44
5.01
4.69
3.05
Other than these holdings, the Company has not been notified as at 14 March 2016 of any interest of 3% or
more in its Ordinary Share Capital.
Auditor
KPMG Chartered Accountants were appointed as Auditor to the Company in 2015 and will continue in
office in accordance with Section 383 of the Companies Act 2014. A resolution authorising the Directors to
fix the Auditor’s remuneration will be proposed at the Company’s Annual General Meeting.
On behalf of the Board.
J. Reynolds
Chairman
14 March 2016
G. Britton
Director
14 March 2016
Cairn Homes PLC
35
Corporate
Governance Report
Introduction
Cairn Homes Limited was incorporated on 12 November 2014 and was re-registered as Cairn Homes Public
Limited Company (“Company”) on 19 May 2015. The Company completed an initial public offering on 10
June 2015 and its shares were admitted to trading on the London Stock Exchange with a Standard Listing
on 15 June 2015.
The Company is wholly committed to attaining the highest standards of corporate governance. Whilst the
Company has a Standard Listing on the London Stock Exchange and is therefore not required to report
under the 2014 UK Corporate Governance Code (the “UK Code”), the Board has committed to reporting
under and complying with the requirements of the UK Code. The Company complied with the provisions
of the UK Code during the period from IPO in June 2015 to 31 December 2015. The Company’s shares were
listed on the London Stock Exchange on 10 June 2015 and this Corporate Governance Report sets out the
Company’s compliance with the UK Code from that date.
This section, including the Report of the Audit and Risk Committee and the Report of the Remuneration
Committee, details how the Company has applied the principles and provisions of the UK Code. A copy of
the UK Code is available on the Financial Reporting Council’s website www.frc.org.uk.
The Board of Directors
The Company has a strong Board comprising Board members who have held senior positions in a number
of public and private companies, bringing a wealth of property, construction and public company experience,
with a majority of independent directors (including, upon appointment, the Chairman) in compliance with
the UK Code. The Board is responsible for the leadership, control and overall strategy of the Company.
This includes establishing goals for management and monitoring the achievement of these goals.
The Board has a formal schedule of matters specifically reserved to it for decision, including:
(cid:129) Approval of significant acquisitions or disposals;
(cid:129) Approval of material contracts;
(cid:129) Approval of interim and full year financial statements;
(cid:129) Approval of annual budgets;
(cid:129) Risk management;
(cid:129)
(cid:129)
Terms of reference of Chairman, Chief Executive and other Executive Directors;
Terms of reference and membership of Board Committees.
36
Annual Report 2015
GOVERNANCE
Corporate Governance Report - continued
The Board of Directors (continued)
The Board comprises of five Non-Executive Directors (including the Chairman) and three Executive
Directors and the biographies of these directors are set out on pages 24 to 27. The Board considers that
all four Non-Executive Directors, A Bernhardt, G Britton, G Davies and A O’Hogan are independent and
therefore at least half the Board consists of Independent Non-Executive Directors. The composition of the
Board will be reviewed on a regular basis with due regard for the benefits of diversity on the Board,
including gender, to ensure the appropriate balance of skills is maintained. The Board is satisfied with the
size of the Board and the Board considers that the Directors bring a strong range of skills and experience
required to lead the Company.
All Directors are furnished with information necessary to assist them in the performance of their duties.
The Board intends to hold at least eight scheduled meetings each calendar year and will meet on an ad-
hoc basis as otherwise required. Prior to all meetings taking place, an agenda and board papers are
circulated to the Directors so that they are adequately prepared for the meetings. The Company Secretary
is responsible for the procedural aspects of the Board meetings and all Directors have access to his
advice and services. Directors are, where appropriate, entitled to have access to independent professional
advice at the expense of the Company.
An induction procedure for new directors has been established. Directors engage with the executive and
senior management on an ongoing basis to aid their understanding of the business. The Board considers
on an ongoing basis the need for additional training in respect of any matters relevant to the
development and operation of the Board or any of its Committees.
The Company has an insurance policy in place which insures the Directors in respect of legal action taken
against them in respect of their reasonable actions as officers of the Company.
Subject to the provisions of, and so far as may be permitted by, the Companies Act 2014 and the
Company’s Articles of Association, every Director, auditor, secretary or other officer of the Company is
entitled to be indemnified by the Company against all costs, charges, losses, expenses and liabilities
incurred by them in the execution and discharge of their duties.
Cairn Homes PLC
37
GOVERNANCE
Corporate Governance Report - continued
Directors Terms of Appointment
The Executive Directors have service agreements with the Company which have notice periods of 12
months or less. The Non-Executive Directors have letters of appointment which set out the terms of
appointment. The initial period of appointment is three years and any term renewal is subject to the
approval of the Board and appointments are terminable on one month’s notice.
Under the Company’s Articles of Association, one third of all Directors must retire by rotation at each
Annual General Meeting and may seek re-election. However, in keeping with best corporate governance
practice, the Board has decided that all Directors will seek annual re-election. Accordingly all Directors
will retire at the Annual General Meeting and being eligible will offer themselves for re-election.
The Board is satisfied that the Company benefits greatly from the services of all Directors and
accordingly, the Board recommends the re-election of all the Directors.
Directors Remuneration
Details of Directors’ remuneration are set out in the Report of the Remuneration Committee on pages 54
to 71.
Directors’ attendance at Board and Committee meetings
A schedule of Board and Committee meetings and the Directors’ attendance for the period under review
is disclosed below:
Attendance at Board and Committee Meetings during the financial period ended 31 December 2015
Board
A
10
10
10
10
10
10
10
10
B
10
10
9
9
9
9
9
7
M Stanley
E O’ Kennedy
A McIntosh
J Reynolds
A Bernhardt
G Britton
G Davies
A O’ Hogan
Audit and Risk
Committee
Remuneration
Committee
A
B
A
B
4
4
4
4
4
4
1
1
1
1
1
1
M Stanley and A McIntosh were appointed as Directors on 12 November 2014, J Reynolds, E O’Kennedy, A Bernhardt, G Britton and
G Davies were appointed on 28 April 2015 and A O’Hogan was appointed on 18 May 2015.
The attendance details are outlined in the format “A/B” where “A” represents the total number of meetings held during the period for
which the Director was in place and “B” represents the number of meetings attended by the Director. The number of meetings is from
the date the Company re-registered as a public limited company. The Nomination Committee did not meet during the period.
38
Annual Report 2015
GOVERNANCE
Corporate Governance Report - continued
Performance Evaluation
The UK Code requires that the Board should undertake a formal and rigorous annual evaluation of its
own performance and that of its Committees and individual Directors. The Board considered that a self-
evaluation process was appropriate at this stage. To facilitate this a Board Evaluation Questionnaire was
completed by each Director for the period under review. The questionnaire included the following areas:
(cid:129) Review of the performance of the Board
(cid:129) Review of the performance of the Chairman
(cid:129) Review of the performance of the Directors
(cid:129) Review of the independence of Directors
The Chairman considered the results of the completed questionnaires and reported to the Board.
The Board is committed to having its own performance and the performance of individual Directors
externally evaluated at least every three years.
During the period the Chairman met with the Non-Executive Directors without the Executive Directors
present. The Non-Executive Directors, led by the Senior Independent Director, met without the Chairman
present to review the performance of the Chairman.
Chairman
J Reynolds was appointed as Chairman on 29 April 2015. The Chairman is responsible for the effective
working of the Board and the Chief Executive Officer is responsible for the day-to-day running of the
business. The roles of Chairman and Chief Executive Officer are separately held and the Chairman was
considered independent as at the date of his appointment. The Chairman is responsible for the effective
conduct of the Board and shareholder meetings and for ensuring that each Director contributes to
effective decision-making. The Chief Executive Officer has day-to-day executive responsibility for the
running of the Company’s businesses. His role is to develop and deliver the strategy to enable the
Company to meet its objectives. The Chairman ensures that the Board is provided with the information
necessary to discharge its duties. The Chairman holds other non-executive directorships and the Board
considers that these do not interfere with the discharge of his duties to the Company.
Cairn Homes PLC
39
GOVERNANCE
Corporate Governance Report - continued
Senior Independent Director
The Board has appointed G Davies as the Senior Independent Director. The role of the Senior
Independent Director is mainly to:
(cid:129) provide a sounding board for the Chairman and to serve as an intermediary for the other Directors
(cid:129)
(cid:129)
(cid:129)
when necessary.
facilitate shareholders if they have concerns which contact through the normal channels of Chairman,
or Executive Directors has failed to resolve or for which such contact is inappropriate.
to hold a meeting with non-executive Directors at least annually (and on such other occasions as are
deemed appropriate) to appraise the Chairman’s performance, taking into account the views of
Executive Directors.
to attend sufficient meetings with a range of major shareholders to listen to their views in order to
help develop a balanced understanding of the issues and concerns of major shareholders.
Committees of the Board
The Board has established three committees with formal terms of reference: the Audit and Risk
Committee, the Nomination Committee and Remuneration Committee. The duties and responsibilities of
each of these committees are set out clearly in written terms of reference, which have been approved by
the Board and are available on the Company’s website at www. cairnhomes.com or from the Company
Secretary.
Audit and Risk Committee
Membership: G Britton (Chair), A Bernhardt and G Davies.
The Terms of Reference for the Audit and Risk Committee were approved and adopted by the Board on 29
April 2015 and noted by the Audit and Risk Committee at its inaugural meeting held on 15 June 2015.
The Terms of Reference are available from the Company Secretary and on the Company’s website at
www.cairnhomes.com.
The Audit and Risk Committee is chaired by Gary Britton, who is also an independent Non-Executive
Director and is considered by the Board to have sufficient financial experience and sufficient
understanding of financial reporting and accounting principles. All members of the Audit and Risk
Committee are independent Non-Executive Directors and the Audit and Risk Committee is constituted in
compliance with the UK Code. The Audit and Risk Committee is responsible for monitoring and reviewing
the financial reporting and accounting policies of the Group, reviewing the adequacy of internal controls
in respect of risk management, reviewing the activities of the Group’s internal audit activities which are in
the process of being outsourced and overseeing the overall relationship with the external auditor.
There were four meetings of the Committee during the period and attendance details of each of the
members of the Committee are set out on page 38 of this report. The report of the Committee is set out
on pages 48 to 52 of this report.
40
Annual Report 2015
GOVERNANCE
Corporate Governance Report - continued
Nomination Committee
Membership: J Reynolds (Chair), G Britton and A O’Hogan.
The Terms of Reference for the Nomination Committee were approved and adopted by the Board on 29
April 2015.
The Nomination Committee is responsible for reviewing, within the agreed terms of reference, the
structure, size and composition of the Board, undertaking succession planning, leading the process for
new Board appointments and making recommendations to the Board on all new appointments and the
re-appointments of existing directors.
In line with its terms of reference the Nomination Committee meets at least once per year and as
otherwise required. The Committee’s first meeting was in February 2016.
Remuneration Committee
Membership: G Davies (Chair), A Bernhardt and A O’Hogan.
The Terms of Reference for the Remuneration Committee were approved and adopted by the Board on 29
April 2015 and noted by the Remuneration Committee at its inaugural meeting held on 15 October 2015.
The Remuneration Committee has responsibility for determining, within its agreed Terms of Reference,
the Group’s policy on the remuneration of senior executives and specific remuneration packages for the
Executive Directors and the Non-Executive Chairman, including pension rights and compensation
payments. It is also responsible for making recommendations for grants of options under share-based
schemes for Group employees. The remuneration of the Non-Executive Directors is a matter for the Board.
No Director may be involved with any discussions as to their own remuneration.
There was one meeting of the Committee during the period and attendance details of each of the
members of the Committee are set out on page 38 of this report. The report of the Committee is set out
on pages 54 to 71 of this report.
Cairn Homes PLC
41
GOVERNANCE
Corporate Governance Report - continued
Internal control
The Board has overall responsibility for the Company’s system of internal control, for reviewing its
effectiveness and for confirming that there is an ongoing process in place for identifying, evaluating and
managing the significant risks facing the Company. The process was in place throughout the period under
review. The Board has reviewed the effectiveness of the Company’s internal control systems, with the
assistance of the Audit and Risk Committee. Effective risk management is critical to the achievement of
the Company’s strategic objectives. Risk management controls are in place across the business. Given the
Company’s recent incorporation, the Group’s risk framework is evolving, with some risk mitigants only in
existence for a short period of time. The Group will continue to monitor and improve its risk management
framework throughout 2016.
The Company has documented its financial policies, processes and controls which will be reviewed and
updated on an ongoing basis. The key elements of the system of internal control include the following:
(cid:129) Clearly defined organisation structure and lines of authority;
(cid:129) Company policies for financial reporting, treasury management, information technology and security
and project appraisal;
(cid:129) Annual budgets and business plans; and
(cid:129) Monitoring performance against budget.
The preparation and issue of financial reports is managed by the Company finance department.
The financial reporting process is controlled using the Company’s accounting policies and reporting
system. The financial information is reviewed by the Finance Director and the Chief Executive Officer.
The interim and preliminary results and the Annual Report and Financial Statements are reviewed by the
Audit and Risk Committee on behalf of the Board. The Directors have ensured that measures are in place
to secure compliance with the Company’s obligations to keep adequate accounting records.
The accounting records are kept at the Company’s registered office.
Risk management
The Company considers risk management to be of paramount importance. The Board, together with the senior
management, deals with risk management on behalf of the Company as part of its regular monitoring of
the business. The Board and the Audit and Risk Committee have put in place procedures designed to ensure
that all applicable risks pertaining to the Company can be identified, monitored and managed at all times.
The Board has carried out a robust assessment of the principal risks of the Group. The Board has
considered, approved and maintains on an ongoing basis a Risk Register in which the risks pertaining to
the Group are identified and assessed. The Board considers the appropriateness of risk mitigation
measures and any gaps identified in such measures are addressed. The Risk Register is updated and
reviewed by the Board and the Audit and Risk Committee at least annually or more frequently if
specifically required. The Board has reviewed the effectiveness of the risk management systems and is
satisfied that the Group’s risk management function has the necessary authority, resources, expertise and
access to relevant information to fulfil its role. Further information on the principal risks applicable to the
Group is given on pages 29 to 33.
42
Annual Report 2015
GOVERNANCE
Corporate Governance Report - continued
Financial risk management
The financial risk management objectives and policies of the Company are set out in Note 26 to the
Consolidated Financial Statements.
Model Code on share dealing
The Company must comply with the Model Code which imposes restrictions on share dealings for the
purposes of preventing the abuse, or suspicion of abuse, of inside information by Directors and other
persons discharging managerial responsibilities within the Company. The Board is responsible for taking
all proper and reasonable steps to ensure compliance with the Model Code by the Directors and others to
whom the Model Code is applicable.
The Company has in place a share dealing code which gives guidance to the Directors and any persons
discharging managerial responsibilities as defined in regulation 12(8) of the Market Abuse Regulations
and persons identified by the Board to fulfil this role, to be followed when dealing in the shares of any
class of the Company or any other type of securities issued by or related to the Company.
Communications with shareholders
The Company attaches considerable importance to shareholder communication. There is regular dialogue
with institutional shareholders including detailed presentations and roadshows after the announcement
of interim and full year results. The Executive Directors meet with institutional investors during the year
and participate in broker/investor conferences.
The Executive Directors report regularly to the Board on their contacts with shareholders.
The Chairman, Chief Executive and other Directors will be available at the Annual General Meeting to
answer shareholder questions. The Annual Report for 2015 will be made available 20 working days prior to
the Annual General Meeting.
Cairn Homes PLC
43
GOVERNANCE
Corporate Governance Report - continued
General Meetings
The Company holds a general meeting each year as its annual general meeting in addition to any other
meeting in that year. Not more than 15 months shall elapse between the date of one annual general
meeting and that of the next. The Board is responsible for the convening of general meetings. Information
is distributed to shareholders at least 20 business days prior to the annual general meeting.
Quorum
No business other than the appointment of a chairman shall be transacted at any general meeting unless
a quorum is present at the time when the meeting proceeds to business. Two members present in person
or by proxy shall constitute a quorum in accordance with the Articles of Association of the Company.
Voting Rights
(a) Votes of Members: Votes may be given either personally or by proxy. Subject to any rights or
restrictions for the time being attached to any class or classes of shares, on a show of hands every
member present in person and every proxy shall have one vote, so, however, that no individual shall
have more than one vote, and on a poll every member shall have one vote for every share carrying
voting rights of which he is the holder. The Chairman shall be entitled to a casting vote where there is
an equality of votes.
(b) Resolutions: Resolutions are categorised as either ordinary or special resolutions. The essential
difference between an ordinary resolution and a special resolution is that a bare majority of more
than 50% of the votes cast by members voting on the relevant resolution is required for the passing
of an ordinary resolution, whereas a qualified majority of more than 75% of the votes cast by
members voting on the relevant resolution is required in order to pass a special resolution. Matters
requiring a special resolution include for example:
(cid:129) altering the Objects of the Company;
(cid:129) altering the Articles of Association of the Company; and
(cid:129) approving a change of the Company's name.
44
Annual Report 2015
GOVERNANCE
Corporate Governance Report - continued
General Meetings (continued)
Other
The Company discloses information to the market as required by the Listing Rules of the London Stock
Exchange and Financial Conduct Authority including inter alia:
(a) periodic financial information such as annual and half yearly results.
(b) price-sensitive information, which might be a significant change in the Company’s financial position
or outlook, unless there is a reason not to disclose such information (e.g. prejudicing commercial
negotiations).
information regarding major developments in the Company’s activities.
information regarding dividend decisions.
(c)
(d)
(e) any changes to the Board must be announced immediately once a decision has been made.
(f )
information in relation to any significant changes notified to the Company of shares held by a
substantial shareholder.
The Company will make an announcement if it has reason to believe that a leak may have occurred about
any on-going negotiations of a price-sensitive nature. Any decisions by the Board which might influence
the share price must be announced before the start of trading the next day. Information relayed at a
shareholders’ meeting which could be price-sensitive must be announced no later than the time the
information is delivered at the meeting.
In relation to any uncertainty regarding the communication of a particular matter, advice will be sought
from the Company’s sponsors and/or legal advisor(s).
European Communities (Takeover Bids (Directive 2004/25/EC)) Regulations 2006
The information on the Board of Directors on pages 24 to 27 and the disclosures on Directors’
Remuneration on pages 54 to 71 cover the information required for the purposes of Regulation 21 of the
European Communities (Takeover Bids(Directive 2004/25/EC)) Regulations 2006.
Directors’ conflict of interest
Section 231 of the Companies Act 2014 requires each Director who is in any way, either directly or
indirectly, interested in a contract or proposed contract with the Company to declare the nature of his
interest at a meeting of the Directors. The Company keeps a record of all such declarations which may be
inspected by any Director, the Secretary, Auditor or member of the Company at the registered office of the
Company.
Subject to certain exceptions, the Articles generally prohibit Directors from voting at Board meetings or
meetings of committees of the Board on any resolution concerning a matter in which they have a direct
or indirect interest which is material or a duty which conflicts or may conflict with the interests of the
Company. Directors may not be counted in the quorum in relation to resolutions on which they are not
entitled to vote.
Cairn Homes PLC
45
GOVERNANCE
Corporate Governance Report - continued
Political contributions
The Group made no political contributions during the period.
Health and Safety policy
It is the policy of the Company and subsidiaries to comply with the following legislation as a minimum
standard for all work activities.
Safety, Health and Welfare at Work Act, 2005,
the Safety, Health and Welfare at Work (General Application) Regulations, 2007,
the Safety Health and Welfare at Work (Construction) Regulations, 2013 and all amendments to date
(cid:129)
(cid:129)
(cid:129)
(cid:129) All codes of practice applicable to the work undertaken by the Company or subsidiaries
In complying with the statutory requirements and implementing our safety management system the
Company ensures so far as reasonably practicable the safety, health and welfare of all employees, while
at work, and provides such information, training and supervision as is required for this purpose.
It is the policy of the Company to protect, so far as is reasonably practicable, persons not employed by
this organisation who may be affected by our activities.
It is the policy of the Company to ensure that adequate consultation takes place between management
employees, contractors and others on all health and safety related matters and employees are
encouraged to notify management of identified hazards in the work place.
All employees have the responsibility to co-operate with supervisors and management to achieve a
healthy and safe work place and to take reasonable care of themselves and others.
The policy is to be available at all work locations for consultation and review by all employees. The policy
will be kept up to date and amended as necessary to meet changes in the nature and size of the
business. The policy is communicated to the employees at commencement of their employment and on
an annual basis thereafter as the safety statement review is carried out.
The Company will strive to work for the on-going integration of safety and health into all of its activities
with the objective of attaining high standards of safety and health performance. The Company seeks the
full co-operation of all concerned in the carrying through of its commitment.
46
Annual Report 2015
GOVERNANCE
Corporate Governance Report - continued
Disclosure of information to auditors
The Directors who held office at the date of approval of this Report of the Directors confirm that, so far as
they are each aware there is no relevant information of which the Group’s auditors are unaware; and each
Director has taken all the steps that they ought to have taken as Directors to make themselves aware of
any relevant audit information and to establish that the Group’s auditors are aware of that information.
Independent auditors
The auditors, KPMG, have indicated their willingness to continue in office and a resolution that they be
reappointed will be presented to the Annual General Meeting.
Re-election of Directors
In keeping with best corporate governance practice all Directors will seek re-election at the Annual
General Meeting. The Board recommends the re-election of all Directors.
Annual General Meeting
The Annual General Meeting of the Company is to be held at Westbury Hotel, Grafton Street, Dublin 2 at
11.00am on 10 May 2016. The Notice of the Annual General Meeting will be circulated separately to this
Report and will be available to download on the Company website. The Notice contains a description of
the business to be transacted at the Annual General Meeting.
Every Shareholder has the right to attend and vote at the annual General Meeting and to ask questions
related to the items on the agenda of the Annual General Meeting.
Cairn Homes PLC
47
Report of the Audit
and Risk Committee
Dear Shareholder,
As Chairman of Cairn Homes PLC Audit & Risk Committee I am pleased to present the Committee’s Report
for the period under review.
The Audit Committee comprises of three Independent Non-Executive Directors. The members are G
Britton (Chairman), G Davies and A Bernhardt. There were four meetings of the Committee and details of
the members’ attendance are set out on page 38.
The key responsibilities of the Audit and Risk Committee as set out in its terms of reference are as
follows:
Financial Reporting
Monitoring the integrity of the financial statements of the Company, including its annual and half-yearly
reports and accounts and any other formal announcement relating to its financial performance.
The Audit and Risk Committee also reviews and reports to the Board on summary financial statements,
significant financial returns to regulators and any financial information contained in certain other
documents, such as announcements of a price sensitive nature.
In particular, the Audit and Risk Committee reviews and challenges where necessary:
(a)
(b)
the consistency of, and any changes to, accounting policies both on a year on year basis and across
the Company/Group;
the methods used to account for significant or unusual transactions where different approaches are
possible;
(c) whether the Company has followed appropriate accounting standards and made appropriate
(d)
estimates and judgements, taking into account the views of the Auditor;
the clarity and completeness of disclosures in the Company's financial reports and the context in
which statements are made; and
(e) all material information presented with the financial statements, such as the operating and financial
reviews and the corporate governance statement (insofar as it relates to the audit and risk
management).
The Audit and Risk Committee also reviews the content of the annual report and advises the Board on
whether, taken as a whole, it is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company's performance, business model and strategy.
48
Annual Report 2015
GOVERNANCE
Report of the Audit and Risk Committee - continued
Internal Controls Risk Management Systems
The Audit and Risk Committee keeps under review the categorisation, monitoring and overall
effectiveness of the Company's risk assessment and internal control processes, including the
methodology adopted. It sets a standard for the accurate and timely monitoring of large exposures and
certain risk types of critical importance in order to allow for a reviewing framework that focuses on
material potential risks and those outside of agreed tolerance levels. The Audit and Risk Committee also
reviews and approves any statements to be included in the Company's annual report concerning internal
controls and risk management.
Whistleblowing and Fraud Prevention
The Audit and Risk Committee reviews the adequacy and security of the Group’s arrangements for its
employees and contractors to raise concerns in confidence about possible wrongdoing in the Company in
terms of financial reporting or other areas. The Audit and Risk Committee ensures that these
arrangements allow proportionate and independent investigation of such matters and appropriate follow
up action.
The Audit and Risk Committee also reviews the following:
(a)
(b)
(c)
(d)
the Company's procedures for detecting fraud;
the Company's systems and controls for the prevention of bribery;
the adequacy and effectiveness of the Company's anti-money laundering systems and controls; and
the adequacy and effectiveness of the Company's compliance function.
Internal Audit
The Company did not have an internal audit function during the entire period. The Audit and Risk
Committee considered this matter and the Committee was satisfied that as the Company was only listed
on the London Stock Exchange in June 2015 the absence of a full time internal audit function for the
entire period was not a matter of concern, given the Company’s limited trading during 2015. Towards the
end of the period the Company developed an outsourced internal audit function. The Audit Committee is
satisfied that this will be sufficient given the current scale and complexity of the Company’s current
financial and operating activities. The Committee will keep this arrangement under review.
Cairn Homes PLC
49
GOVERNANCE
Report of the Audit and Risk Committee - continued
External Audit
The Audit and Risk Committee considers and makes recommendations to the Board, to be put to
shareholders for approval at the AGM, in relation to the appointment, re-appointment or removal of the
Auditor.
The Audit and Risk Committee oversees the relationship with the Auditor, including Auditor independence
and meets regularly with the Auditor, including at least once at the planning stage before the audit and
once after the audit at the reporting stage. The Audit and Risk Committee also meets the Auditor at least
once a year, without executive management being present, to discuss their remit and any issues arising
from the audit.
The Audit and Risk Committee reviews and approves the annual external audit plan and ensures that it is
consistent with the scope of the audit engagement and reviews the findings of the audit with the Auditor.
The review of the findings of the audit includes the following:
(a) a discussion of any major issues which arose during the audit;
(b) any significant or material accounting estimates and audit judgements;
(c)
(d)
levels of errors identified during the audit; and
the effectiveness of the audit process.
Matters considered at the meetings during the period included;
(cid:129)
(cid:129)
(cid:129)
(cid:129)
the interim financial statements;
the report from the external auditors on the interim statements;
the external audit plan; and
the provision of non-audit services by the external auditor.
During the period the fees paid to the external auditor exceeded the audit fee. The Committee considered
that this was not unusual in the current period as the Company completed its initial public offering in the
period and accordingly it is normal to incur professional fees with the independent auditor that exceeds
the audit fee. The policy on the supply of non audit services includes a case by case assessment of the
services to be provided and the costs of the services by the external auditor taking into account any
relevant ethical guidance on the matter.
The auditors described how auditor independence is managed in their firm and also confirmed that they
complied with all regulatory and ethical guidelines in this matter. The Committee was satisfied with the
explanations received.
50
Annual Report 2015
GOVERNANCE
Report of the Audit and Risk Committee - continued
Financial Statements including significant judgements
In accordance with the reporting requirements of the UK Code the Audit and Risk Committee confirms to
the Board that, in our view, the Annual Report, 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.
As part of this work, the Committee considered whether the financial statements are consistent with the
operating and financial reviews elsewhere in the annual report and, in particular, whether the financial
statements contain any significant matters that are not addressed in those reviews. The Committee
reviewed and approved the group’s policy in respect of the arrangements in place to ensure that the
annual report is fair, balanced and understandable.
The key areas of judgement considered by the Committee in relation to the financial statements for the
period from incorporation (12 November 2014) to 31 December 2015 and how these were addressed are
outlined below. In addition, each of these areas received particular focus from the external auditor, who
provided detailed analysis and assessment of the matter in their report to the Committee:
Key Areas
Valuation of and Accounting for Founder Shares
The founder shares (“Founder Shares”) issued by the Company entitle New Emerald LP (a limited
partnership, the ultimate beneficiaries of which are Alan McIntosh and his spouse), Michael Stanley and
Kevin Stanley to receive 20% of the total shareholder return of the Company over the seven years
following admission of the Company’s shares to the LSE, subject to the satisfaction of the achievement of
a compound rate of return of 12.5% per annum in the Company’s share price.
In advance of reporting the Company’s interim results, the Group engaged a third party expert (“Towers
Watson”) to undertake a valuation exercise to value the Founder Shares. The fair value of the Founder
Shares has been estimated at €29.1 million. The €29.1 million valuation has no impact on the Company’s
shareholder funds, nor is it an indication of the likely value of the Founder Shares over their term, but it
represents a point in time fair value estimate arrived at by Towers Watson, taking account of a variety of
factors, including equity volatility (for a range of similar companies), the expected term of the shares, the
impact of potential dividends and a risk free interest rate.
Given the contractual position attaching to the Founder Shares, it was deemed appropriate to expense
the entire cost as a one-time charge in the interim financial statements to 30 June 2015. The Committee
reviewed the approach to the valuation and the assumptions used and was satisifed with the accounting
treatment for the charge.
Cairn Homes PLC
51
GOVERNANCE
Report of the Audit and Risk Committee - continued
Financial Statements including significant judgements (continued)
Acquisition of Cairn Homes Holdings (formerly Emerley Holdings Limited)
On 15 June 2015 and conditional on the Company IPO, the Company acquired 100% of the share capital of
Emerley Holdings Limited (“Emerley”) for a consideration of €26.7 million, all of which was satisfied by the
issue of ordinary shares in the Company. The purposes of the acquisition was to acquire Emerley’s
business (of the development of its Parkside site). In addition to the Parkside site and the value of the
work in progress thereon, Emerley also had a number of other assets and liabilities that the Company
also acquired. The principal liability of Emerley was the €18.1 million Emerley Properties Loan, which was
subsequently repaid in December 2015. The net assets of Emerley acquired at the time of the acquisition
were €23.8 million, for which the Company paid €26.7 million. The difference of €2.9 million was
expensed to the Income Statement as the Company considered that these were costs incurred by Emerley
in contemplation of the IPO taking place at a later date. The Committee reviewed and was satisfied with
this accounting treatment and with the composition of the costs incurred by Emerley prior to its
acquisition by the Company.
Carrying value of work in progress and development land
The Company has made a significant investment in development land, together with the cost of work in
progress thereon. Detailed annual impairment tests will be carried out in order to ensure that the
investment in such development land and the related work in progress is not impaired. Conducting an
impairment test is complex and judgemental. This process involves the Company reassessing its forecast
profitability on an individual development site basis, through updating the key appraisal inputs for the
appraisal, which are principally the expected number of sales units and end sales prices of the individual
units on the site, together with all costs related to the site development. If this exercise indicates that the
net realisable value of the site is lower than its cost, the Company will impair the site cost to write it
down to its net realisable value. The year-end exercise did not show any evidence of impairment. The
Committee reviewed the evidence of this approach across the various sites and discussed the results with
management, and was satisfied with the carrying value of work in progress and development land at
year-end.
Recognition and measurement of loan assets
The acquisition of the Ulster Bank residential land loan portfolio in December 2015 was a material
transaction for the Company. The loan receivables acquired by the Company are recorded at their fair
value, which is the price paid by the Company to acquire the loan assets, plus directly attributable
transaction costs. The loan portfolio has, as its underlying security, collateral that consists principally of
residential development land. The Company’s strategy is to move to direct ownership of those sites over
the near-term. Given the Company’s strategy, the loan assets have been valued by the Company based on
the value of those underlying residential development land sites. The Committee has reviewed the basis
of valuation of the loan portfolio and its recognition in the Financial Statements and is satisfied with the
accounting treatment.
G. Britton
Chairman Audit and Risk Committee
52
Annual Report 2015
Report of the
Nomination Committee
Membership; J Reynolds (Chairman), G Britton and A O’ Hogan
No external recruitment consultants were used in the recruitment of the current Board who were all
appointed while the Company was still a private limited company and prior to the establishment of the
Nomination Committee and the listing of the Company. No vacancies have arisen during the period since
the Company became a public limited company and therefore no selection process has been undertaken.
Appropriate procedures are however in place for the identification, selection and recruitment of new
Board members.
The Nomination Committee reviews the structure, size and composition (including the skills knowledge,
experience and diversity) required of the Board and makes recommendations to the Board with regard to
any changes. It assesses the effectiveness and performance of the Board and each of its committees
including consideration of the balance of skills, experience, independence and knowledge on the Board,
its diversity, including gender, how the Board works together as a unit, and other factors.
The Nomination Committee gives full consideration to succession planning for the Board, taking into
account the challenges and opportunities facing the Company and the skills and expertise that will be
needed in the future to address these to ensure the continued ability of the Company to compete
effectively in the marketplace. The Nominations Committee is responsible for identifying and nominating
for the approval of the Board, candidates to fill Board vacancies as and when they arise.
The Nominations Committee shall also make recommendations to the Board concerning the
re-appointment of any Non-Executive Director at the conclusion of his or her specified term of office and
the re-election by shareholders of Directors having due regard to their performance and ability to
continue to contribute to the Board in light of the knowledge, skills and experience required and the
need for progressive refreshing of the Board.
The Nomination Committee did not meet during the period under review. With the exception of the two
Founder Directors, M Stanley and A McIntosh who were appointed as Directors of the Company in
November 2014 all of the other Directors were appointed in April and May 2015. The Nomination
Committee was established in May 2015 and there were no appointments to the Board since the
establishment of the Committee. The Committee held its first meeting in February 2016.
J Reynolds
Chairman Nomination Committee
Cairn Homes PLC
53
Report of the
Remuneration
Committee
The Remuneration Committee comprises three independent non-executive Directors. The members of the
Committee are G Davies (Chairman) A Bernhardt and A O’Hogan. Biographical details for the members of
the Remuneration Committee are set out on pages 24 to 27.
Dear Shareholder,
As Chairman of Cairn Homes’ Remuneration Committee, I am pleased to present our Remuneration
Report. This is our first report, which has been prepared by the Committee and approved by the Board. It
covers the period to 31 December 2015.
The role and responsibilities of the Remuneration Committee are summarised in the table on page 56.
The Committee’s Terms of Reference are available on the Cairn Homes website www.cairnhomes.com.
As noted in the Prospectus issued for the Initial Public Offering, the Board indicated that it intended to
review executive management compensation following the listing to ensure it is in line with comparable
listed companies. The Board also indicated that it would introduce arrangements under which employees,
other than the Founder Directors, would be offered the opportunity to acquire shares. This would include
a long term incentive scheme to align the interests of qualifying employees with the shareholders.
The Committee has accordingly developed appropriate annual and long term incentive arrangements as
part of its Remuneration Policy which reflect the commitments given in the Prospectus.
The Remuneration Policy seeks to incentivise executives to create shareholder value and consequently,
their remuneration is strongly performance related with targets to incentivise the delivery of strategy over
the short and long term.
The Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations
2013 (the ‘UK Regulations’) are in effect in the UK. While Cairn Homes, as an Irish incorporated company, is
not subject to these regulations, we recognise that they represent best practice in remuneration reporting
and we have accordingly, substantially applied the UK Regulations to this Remuneration Report on a
voluntary basis.
The proposed Remuneration Policy and the Annual Report on Remuneration, as set out on pages 57 to 71,
will be put to a non-binding advisory vote by shareholders at the 2016 Annual General Meeting.
54
Annual Report 2015
GOVERNANCE
Report of the Remuneration Committee - continued
Performance in 2015
The Committee reviewed the performance of executives and senior management for 2015. In conducting
this review the Committee considered a number of significant matters including; the successful Initial
Public Offering of the Company’s shares in June 2015; the acquisition of a significant number of
development sites, in particular the acquisition of a large portfolio of residential land represented by the
Ulster Bank Project Clear loan portfolio; the launch of the Company’s first residential development; the
share placing in December 2015, and the completion of a new Bank Facility also in December 2015.
Annual Performance Incentive
The annual incentive payments earned by the Executive Directors in respect of the period ended 31
December 2015 are set out on page 67.
Long Term Incentive Plan
The Finance Director was given an award of market priced options on joining the company.
Details of these are set out on page 70.
The Committee has set out in this report details of a Long Term Incentive Plan which will be effective from
2016 onwards.
It is our intention to operate in line with the approved Remuneration Policy. We welcome and will
consider any shareholder feedback on the Remuneration Policy and Annual Report on Remuneration.
G Davies
Chairman, Remuneration Committee
Cairn Homes PLC
55
GOVERNANCE
Report of the Remuneration Committee - continued
Role and Responsibilities
The role and responsibilities of the Committee which are set out in detail in its Terms of Reference
includes the following:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
To determine and agree with the Board the policy for the remuneration of the Chief Executive Officer,
Finance Director and certain Executives (as determined by the Committee).
To determine the remuneration packages of the Chairman, Chief Executive Officer, Finance Director
and certain Executives, including salary, annual incentive, pension rights and compensation payments.
To oversee remuneration structures for other Company and subsidiary senior management and to
oversee any major changes in employee benefits structures throughout the Company.
To nominate Executives for inclusion in the Company’s Long Term Incentive Plan, to grant options or
awards under this Plan, to determine whether the criteria for the vesting of options or awards have
been met and to make any necessary amendments to the rules of the Plan.
To ensure that contractual terms on termination or redundancy, and any payments made, are fair to
the individual and the Company.
To be exclusively responsible for establishing the selection criteria, selecting, appointing and setting
the terms of reference for any remuneration consultants who advise the Committee.
To obtain up to date information about remuneration in other companies of comparable scale and
complexity.
To agree the policy for authorising claims for expenses from the Directors.
56
Annual Report 2015
GOVERNANCE
Report of the Remuneration Committee - continued
Remuneration Policy
Cairn Homes Remuneration Policy (‘the Policy’) is set out below.
The Company intends to operate its remuneration arrangements in line with the approved Remuneration
Policy.
Through the implementation of the Policy, the Board seeks to align the interests of Executive Directors
and other Executives with those of shareholders, within the framework set out in the UK Corporate
Governance Code. Central to this policy is the Company’s commitment to long-term, performance based,
incentivisation and the encouragement of share ownership.
The basic objective under the Policy is to have overall remuneration reflect business performance and
personal contribution, while having basic salary rates and the short term element of incentive payments
at the median of an appropriate comparator group.
Through the operation of the Policy, the Remuneration Committee seeks to ensure:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
that the Company will attract, motivate and retain individuals of the highest calibre;
that Executives are rewarded in a fair and balanced way for their individual and team contribution to
the Company’s performance;
that Executives receive a level of remuneration that is appropriate to their scale of responsibility and
individual performance;
that the overall approach to remuneration has regard to the sectors and geographies within which the
Company operates and the markets from which it draws its Executives; and
that risk is properly considered in setting remuneration policy and in determining remuneration
packages.
The Policy requires well designed incentive plans that reward the creation of shareholder value through
organic and acquisition growth while maintaining high returns on capital employed, strong cash
generation and a focus on good risk management. The elements of the remuneration package for the
Executive Directors and other Executives are annual salary, retirement benefits and allowances, annual
performance related incentives and participation in a long term performance plan which promotes the
creation of sustainable shareholder value.
The Remuneration Committee takes external advice from remuneration consultants on market practice to
ensure that the remuneration structures continue to support the key remuneration objectives.
Cairn Homes PLC
57
GOVERNANCE
Report of the Remuneration Committee - continued
Remuneration Policy (continued)
The key elements of the remuneration for Executive Directors and other Executives under the Policy are
set out in the table below. The Founder Directors, M Stanley and A McIntosh, and Executive K Stanley will
not participate in the LTIP.
Element and link to
Remuneration Policy
Annual Salary
Attract and retain skilled and
experienced Executives.
Annual Incentives
Reward the achievement of
annual performance targets.
Approach
Maximum Opportunity
No prescribed maximum annual
salary or maximum annual
increase.
Annual salaries are reviewed
annually. The factors taken into
account in the review include:
(cid:129) Role and experience
(cid:129) Company performance
(cid:129) Personal performance
(cid:129) Competitive market practice
(cid:129) Benchmarking against an
appropriate comparator group.
When setting salaries, account is
taken of movements in salaries
generally across the Company.
Annual Incentive payments to
Executive Directors and other
Executives are based on (a)
meeting the Company’s
objectives and (b) the overall
contribution and attainment of
personal objectives.
The contribution and personal
targets are focused on areas
such as delivery on strategy,
organisational development,
risk management and talent
development/succession
planning.
The measures, their weighting
and the objectives are reviewed
on an annual basis.
The target and maximum awards,
as a percentage of annual salary,
for the Executive Directors and
Senior Executives are as follows:
Target
70%
Max.
105%
50%
75%
Chief Executive
Officer
Executive
Directors
Chief Operating 50%
Officer
75%
50%
75%
Chief
Commercial
Officer
58
Annual Report 2015
GOVERNANCE
Report of the Remuneration Committee - continued
Remuneration Policy (continued)
Element and link to
Remuneration Policy
Annual Incentives - continued
Approach
Maximum Opportunity
The maximum award, as a
percentage of annual salary, for
other Executives ranges from 10%
to 25% of annual salary, and may
in exceptional circumstances
reach 50%.
The Committee can apply
appropriate discretion in
specific circumstances in
respect of determining the
incentive payment to be
awarded.
A formal clawback policy is in
place for the Executive Directors
and other Executives, under
which Annual Incentive
payments are subject to
clawback for a period of three
years in the event of a material
restatement of financial
statements or other specified
events. Further details on the
clawback policy are set out on
page 61. The Committee has
discretion in relation to incentive
payments to joiners and leavers.
The Long Term Incentive Plan,
during the Company’s initial
development phase, will grant
Executive Directors and other
Executives options over a number
of Company shares, the face
value of which at the date of
grant (numbers of shares X share
price) will be such percentage of
the annual incentive payment in
respect of the previous financial
year as the Remuneration
Committee determines, subject
generally to a maximum
percentage of 60% of the value.
Long Term Incentive Plan (‘LTIP’)
Align the interests of Executives
with those of the Company’s
shareholders and reflect the
Company’s policy of long term
performance based
incentivisation.
This Long Term Incentive Plan
was not active during the period
ended 31 December 2015.
Cairn Homes PLC
59
GOVERNANCE
Report of the Remuneration Committee - continued
Remuneration Policy (continued)
Element and link to
Remuneration Policy
Approach
Maximum Opportunity
Long Term Incentive Plan (‘LTIP’) - continued
Options will vest after two years
from the date of grant provided
the Remuneration Committee is
satisfied that there has been a
meaningful improvement in the
company’s operations over the
vesting period.
Vested options may then be
exercised, in full or in part, after
a further two years from the date
of vesting for a period of 7 years
from the date the option is
granted.
As soon as the Remuneration
Committee considers that the
Company has completed its
initial development phase it is
proposed to introduce a share-
based long term incentive plan
which is in line with the plans
offered by comparator companies.
A formal clawback policy is in
place, under which awards are
subject to clawback in the event
of a material restatement of
financial statements or other
specified events. Further details
on this clawback policy are set
out on page 61.
No more than 5% of the issued
ordinary share capital of the
Company may be issued or
reserved for issuance under the
LTIP and any other executive or
discretionary share scheme
operated by the Company over
any ten year period.
60
Annual Report 2015
GOVERNANCE
Report of the Remuneration Committee - continued
Remuneration Policy (continued)
Element and link to
Remuneration Policy
Retirement Benefits
Reward sustained contribution.
Allowances
Provide market competitive
benefit.
Approach
Maximum Opportunity
The Company contributes to a
defined contribution pension
scheme for employees at rates
reflecting their seniority and
experience.
Executives participate in a
defined contribution pension
scheme. The pension scheme
gives the Company full
discretion to pay appropriate
contribution levels. The
Committee takes account of
market and benchmarking data
for pension contributions for
each employee group.
The main benefit is a car
allowance.
The Committee reviews market
and benchmarking data in
relation to allowances.
Maximum levels have not been
set as payments depend on
individual Executive’s
circumstances.
Payments from Existing Awards
Subject to the achievement of the applicable performance conditions, Executives are eligible to receive
payment from any award made prior to the approval and implementation of the Remuneration Policy
detailed in this Report.
Clawback Policy
Annual Incentive payments made to Executives may be subject to clawback for a period of three years
from date of payment in certain circumstances including:
a material restatement of the Company’s audited financial statements;
(cid:129)
(cid:129) business or reputational damage to the Company or a subsidiary arising from a criminal offence,
serious misconduct or gross negligence by the individual Executive, or
a material breach of applicable health and safety regulations.
(cid:129)
The rules of the LTIP allow for the giving of discretion to the Remuneration Committee to reduce or impose
further conditions on awards prior to or subsequent to vesting in the circumstances outlined above.
Cairn Homes PLC
61
GOVERNANCE
Report of the Remuneration Committee - continued
Remuneration Policy for Recruitment of New Executives
In determining the remuneration package for new executives, the Remuneration Committee will be guided
by the principle of offering such remuneration as is required to attract, retain and motivate a candidate
with the particular skills and experience required for a role. The Remuneration Committee will generally
set a remuneration package which is in accordance with the terms of the approved Remuneration Policy
in force at the time of the appointment, though the Committee may make payments outside of the Policy
if required in the particular circumstances and if in the best interests of the Company and the
shareholders. Any such payments which relate to the buyout of variable pay (annual incentives or awards)
from a previous employer will be based on matching the estimated fair value of that variable pay and will
take account of the performance conditions and the time until vesting of that variable pay.
For an internal appointment, any variable pay element awarded in respect of the prior role and any other
ongoing remuneration obligations existing prior to the appointment will be honoured.
Remuneration Policy for Other Employees
While the Remuneration Committee’s specific oversight of individual executive remuneration packages
extends only to the Executive Directors and a number of Executives, it aims to create a broad policy
framework, to be applied by management to Executives throughout the Company, through its oversight of
remuneration structures for other Company and subsidiary senior management and of any major
changes in employee benefits structures throughout the Company.
Cairn Homes currently employs 27 people in the Republic of Ireland.
Consultation with Shareholders
The Company will engage in dialogue with major shareholders on remuneration matters, particularly in
relation to planned significant changes in policy.
The Committee acknowledges that shareholders have a right to have a ‘say on pay’ by putting the
Remuneration Policy and the Annual Report on Remuneration to advisory votes at the Annual General
Meeting.
62
Annual Report 2015
GOVERNANCE
Report of the Remuneration Committee - continued
Policy for “Leavers”
The provisions for “leavers” in respect of each of the elements of remuneration are as follows:
Salary and Benefits
Payments are made only in respect of annual salary excluding benefits for the relevant notice period.
The notice period for the Chief Executive is 12 months and for the other Executive Directors and Senior
Executives the notice period is a maximum of 12 months. In all cases, the notice period applies to both
the Company and the Executive.
Annual Incentive
The Remuneration Committee can apply appropriate discretion in respect of determining the annual
incentives, if any, to be awarded based on actual achieved performance and the period of employment
during the financial year.
Long Term Incentive Plan
To the extent that an option has vested on the participant’s date of cessation, the participant may
exercise the option during a specified period following such date but in no event may the option be
exercised later than the expiry date as specified in the Award Certificate.
In general, an option that has not vested on the participant’s cessation date immediately lapses.
The Committee would normally exercise its discretion when dealing with a participant who ceases to be
an employee by reason of certain exceptional circumstances e.g. death, injury or disability, redundancy,
retirement or any other exceptional circumstances. In such circumstances, any option that has not
already vested on the participant’s cessation date would be eligible for vesting on a date determined by
the Remuneration Committee. The number of shares, if any, in respect of which the option vests would be
determined by the Remuneration Committee.
In the event that a participant ceases to be an employee by reason of a termination of his employment
for serious misconduct, each option held by the participant, whether or not vested, will automatically
lapse immediately on the service of notice of such termination, unless the Committee in its sole
discretion determines otherwise.
Cairn Homes PLC
63
GOVERNANCE
Report of the Remuneration Committee - continued
Policy for Non-Executive Directors
Element and link to strategy
Operation
Maximum Opportunity
No prescribed maximum annual
increase.
Non-Executive Directors do not
participate in the Company’s LTIP
and do not receive any
retirement benefits from the
Company.
Fees
The fees paid to Non-Executive
Directors reflect their
experience and ability and the
time demands of their Board
and Board Committee duties.
A basic fee is paid for Board
membership. Additional fees
are payable to the Chairman,
Chairman of the Audit and Risk
Committee (from 2016 onward)
and the Senior Independent
Director.
Additional fees may be paid for
membership of a Board
Committee.
The remuneration of the
Chairman is determined by the
Remuneration Committee for
approval by the Board.
The remuneration of the other
Non-Executive Directors is
determined by the Chairman
and the Chief Executive Officer
for approval by the Board.
The fees are reviewed from time
to time, taking account of any
changes in responsibilities and
benchmarking advice from
remuneration consultants.
Non-Executive Directors Letters of Appointment
Non-Executive Directors have letters of appointment which set out their duties and responsibilities.
The appointments are initially for a three year term but are terminable on one month’s notice.
64
Annual Report 2015
GOVERNANCE
Report of the Remuneration Committee - continued
Annual Report on Remuneration
This section of the Remuneration Report sets out the basis of how Cairn Homes’s Remuneration Policy
will operate in the year to 31 December 2016, gives details of remuneration outcomes for the period
ended 31 December 2015 and explains how the Remuneration Committee works.
Salary
The salaries of the Executive Directors for the year to 31 December 2016 are set out below. The annual rate
of salary is unchanged from 2015.
Period from
12 November 2014 to
31 December 2015
€
455,000
372,000
230,000
Year to
December 2016
€
425,000
325,000
250,000
Michael Stanley
Alan McIntosh
Eamonn O’Kennedy
Annual Incentive
The maximum annual incentives for the Executive Directors for the year to 31 December 2016 are as
follows:
Michael Stanley
Alan McIntosh
Eamonn O’Kennedy
Target Incentive
Maximum Incentive
70% of annual salary
105% of annual salary
50% of annual salary
75% of annual salary
50% of annual salary
75% of annual salary
The Committee has set individual performance objectives for 2016 which will determine the extent of
payment of annual incentives to the Executive Directors.
Annual incentives for other Executives are based upon meeting pre-determined objectives which relate to
their areas of responsibility.
The Committee will keep the performance objectives under review in light of acquisitions and other
business activity during the year to 31 December 2016.
Cairn Homes PLC
65
GOVERNANCE
Report of the Remuneration Committee - continued
Retirement Benefits
The Executive Directors are entitled to participate in a Defined Contribution Pension Scheme. No changes
are proposed to this Scheme in the year to 31 December 2016.
Long Term Incentives
Details of the LTIP are set out in the Remuneration Policy section of this Report. The LTIP will operate for
the year to 31 December 2016 in accordance with these Terms.
Eamonn O’Kennedy was awarded 500,000 options over shares in Cairn Homes plc on 9 June 2015 with an
exercise price of €1.00 per share. Under the terms of the awards 250,000 of these options will vest on the
3rd anniversary of the admission of the shares on a regulated market and 250,000 will vest on the 4th
anniversary. As the shares were admitted to the London Stock Exchange on 15 June 2015 the relevant
vesting dates are 15 June in 2018 and 2019.
Remuneration outcomes for the period ended 31 December 2015
The Executive Directors have service agreements which set out their terms of employment. The service
agreements contain notice provisions of a maximum of 12 months. Remuneration for Executive Directors
consists of annual salary, annual incentive (subject to the approval of the Remuneration Committee) and
car allowance. In addition one Executive Director, E O’ Kennedy, participates in a share option scheme.
Executive Directors are eligible to participate in a defined contribution pension scheme and the Company
contribution is currently 10% of base salary. Executive Directors do not receive any additional fees for
serving as a Director of any Group company.
The Committee concluded that the targets set in respect of overall contribution and attainment of
personal objectives, in particular with regard to delivery on strategy, acquisitions and organisational
development were largely met by the Executive Group in 2015. Accordingly, the Executive Directors were
awarded the incentive payments set out in the table below.
The table below sets out the details of the remuneration payable to the Executive Directors for the period
from 12 November 2014 to 31 December 2015.
66
Annual Report 2015
GOVERNANCE
Report of the Remuneration Committee - continued
Remuneration outcomes for the period ended 31 December 2015 (continued)
Michael Stanley
Alan McIntosh
Eamonn O’Kennedy
Total
Salary
€’000
Annual Retirement
Benefit
€’000
Incentive
€’000
Car
Allowance
€’000
455
372
230
1,057
212
162
185
559
46
0
23
69
6
6
9
21
Total
€’000
719
540
447
1,706
Note. The annual incentive paid to Eamonn O’ Kennedy includes a one off bonus of €40,000 as outlined in the Prospectus for the
Initial Public Offering and which was determined to be payable by the Remuneration Committee. A McIntosh receives additional
salary of €27,000 per annum in lieu of Company pension contribution.
LTIP awards
The incentive award of options in respect of 2016 will be made based on the annual incentive payments
in 2016.
Policy on External Board Appointments
Executives may accept external non-executive directorships with the prior approval of the Board.
The Board recognises the benefits that such appointments can bring both to the Company and to the
Director in terms of broadening their knowledge and experience.
The fees received for such roles may be retained by the Executives.
Non-Executive Directors’ Remuneration Details
Non-Executive Directors have letters of appointment which set out their duties and responsibilities.
The appointments are initially for a three year term but are terminable on one month’s notice.
The Chairman receives a fee of €80,000 per annum (this increased to €100,000 per annum on 1 January
2016) and the Non-Executive Directors are paid a basic fee of €50,000 per annum with additional fees
payable to the Senior Independent Director of €10,000 per annum. Non-Executive Directors are not
eligible to participate in any company pension plan.
The remuneration of the Chairman is determined by the Remuneration Committee for approval by the
Board. If present the Chairman absents himself from the Committee meeting while this matter is being
considered. The remuneration of the other Non-Executive Directors is determined by the Chairman and
the Chief Executive Officer for approval by the Board.
Cairn Homes PLC
67
GOVERNANCE
Report of the Remuneration Committee - continued
Non-Executive Directors’ Remuneration Details (continued)
The fees are reviewed periodically, taking account of any changes in responsibilities and benchmarking
advice from remuneration consultants on the level of fees in a range of comparable Irish companies.
The fees paid to non-executive Directors in respect of the period to 31 December 2015 are set out below:
Non- Executive Directors
John Reynolds (Chairman)1
Andrew Bernhardt1
Gary Britton1
Giles Davies (Senior Independent Director)1
Aidan O’Hogan2
Total
1 Date of Appointment 28 April 2015
2 Date of Appointment 18 May 2015
Basic Fee
2015
€’000
Additional
Fees
2015
€’000
56
35
35
35
32
193
7
7
Total
2015
€’000
56
35
35
42
32
200
The non-executive Director fee structure for the year to 31 December 2016 is set out below:
Chairman
Basic Director Fees
Additional Fees
Chairman of Audit Committee
Senior Independent Director
€
100
50
15
10
68
Annual Report 2015
GOVERNANCE
Report of the Remuneration Committee - continued
Total Directors’ Remuneration
Executive Directors
Annual Salary
Annual Incentive
Retirement Benefits
Allowances
Total Executive Directors’ remuneration
Non-Executive Directors
Fees
Total Directors’ remuneration
Total 2015
€’000
1,057
559
69
21
1,706
200
1,906
Executive and Non-Executive Directors’ and Company Secretary’s Interests
The interests of the Directors and Company Secretary in the issued ordinary share capital of the Company
as at 31 December 2015 are set out in the table below. The interests disclosed below include both direct
and indirect interests in shares.
Directors
M Stanley
A McIntosh
E O’Kennedy
G Britton
G Davies
A O’Hogan
J Reynolds
A Bernhardt
A Donagher (company secretary)
Total
No. of Ordinary Shares
At 31 December 2015
3,106,868
16,928,614
50,000
50,000
50,000
200,000
-
-
-
20,385,482
All of the above interests were beneficially owned. Apart from the interests disclosed above and the
Founder and Deferred Shares held by the Founder Directors - see page 72, the Directors and the Company
Secretary had no interests in the share capital of the Company or any other Company undertaking at 31
December 2015.
There were no changes in the above Directors and Secretary’s interests between 31 December 2015 and 14
March 2016.
Cairn Homes PLC
69
GOVERNANCE
Report of the Remuneration Committee - continued
Executive and Non-Executive Directors’ and Company Secretary’s Interests (continued)
The Company’s Register of Directors Interests (which is open to inspection) contains full details of
Directors’ shareholdings and share options.
The Company has a policy on dealing in shares that applies to all Directors. This policy adopts the terms
of the Model Code as set out in the Listing Rules published by the UK Listing Authority and the Irish Stock
Exchange. Under this policy, Directors are required to obtain clearance from the Company before dealing
in Cairn Homes shares during designated close periods and at any other time when they are in
possession of Inside Information (as defined by the Market Abuse Directive 2003/6/EC Regulations 2005).
The interests of Directors in Share Options as at 31 December 2015 is as follows:
E O’Kennedy
Issued
Balance at
31 December 2015
Exercise
Price
500,000
500,000
€1.00 each
The options were granted on 9 June 2015. 250,000 options will vest on the 3rd anniversary of the date of
the admission of the shares on a regulated market and 250,000 options will vest on the 4th anniversary.
The shares were admitted to trading on 15 June 2015.
The market price of Ordinary Shares of €0.001 each was €1.19 at 31 December 2015 and ranged from €1.00
to €1.22 during the period.
70
Annual Report 2015
GOVERNANCE
Report of the Remuneration Committee - continued
Governance
Meetings
The Committee met once during the period ended 31 December 2015 and has met four times since the
year end. The main agenda items included determining the annual incentives payable for 2015,
remuneration policy and the operation of the long term incentive plan, remuneration trends and market
practice, the remuneration packages of the Chairman, the Chief Executive Officer, pension matters and
approval of this report.
The Company Chairman, the Chief Executive Officer and the Finance Director may be invited to attend
meetings of the Committee, except when their own remuneration is being discussed. No Director is
involved in consideration of his or her own remuneration. The Company Secretary acts as secretary to the
Remuneration Committee.
Reporting
The Chairman of the Remuneration Committee reports to the Board on the activities of the Committee.
The Chairman of the Remuneration Committee attends the Annual General Meeting to answer questions
on the report on the Committee’s activities and matters within the scope of the Committee’s
responsibilities.
External Advice
The Remuneration Committee seeks independent advice when necessary from external consultants.
Mercer acted as independent remuneration advisors to the Committee and have provided advice in
relation to market trends, competitive positioning and developments in remuneration policy and practice.
Mercer is a signatory to the Remuneration Consultants Group Code of Conduct and any advice was
provided in accordance with this code. In light of this, and the level and nature of the service received,
the Committee remains satisfied that the advice is objective and independent.
Cairn Homes PLC
71
GOVERNANCE
Additional interests of Founder Directors
In addition to the shareholdings noted above the Founder Directors have the following additional
interests:
Founder Directors
Michael Stanley
Alan McIntosh
Total
No. of Deferred Shares
At 31 December 2015
No. of Founder Shares
At 31 December 2015
9,990,000
9,990,000
19,980,000
35,000,000
50,000,000
85,000,000
The total number of Founder Shares in issue is 100,000,000.
The Founder Shares are convertible into Ordinary Shares subject to the Performance Condition, which is
the achievement of a compound annual rate of return of 12.5% in the company’s share price.
The Founder Shares do not carry a right to a dividend or voting rights. The Performance Condition is
tested initially over the first Test Period in 2016 (the first test period is 1 March 2016 to 30 June 2016), and
again over the six subsequent Test Periods.
The Performance Condition is that for a period of 15 or more consecutive Business Days during the
relevant Test Period, the Closing Price exceeds such price as is derived by increasing the Adjusted Issue
Price by 12.5% for each Test Period starting with the first in 2016 and ending with the last in 2022, such
increase to be on a compound basis.
In calculating whether the Performance Condition is satisfied during any Test Period, any dividends
declared in the 12 months ending at the end of the relevant Test Period are added to the Closing Price.
If the Performance Condition is satisfied, the Company may elect within 20 Business Days of the date on
which the satisfaction of the Performance Condition was notified to the holders of Founder Shares, to
convert Founder Shares into such number of Ordinary Shares which, at the Highest Average Closing Price
of an Ordinary Share during the Test Period, have an aggregate value equal to the Founder Share Value.
The “Founder Share Value” shall be calculated as 20% of the Total Shareholder Return in the periods
described below.
The Total Shareholder Return is calculated as the sum of the increase in market capitalisation plus
dividends or other distributions in each case in the relevant period, being (i) the first time the
Performance Condition is satisfied, the period from Admission to the Test Period in which the
Performance Condition is first satisfied; and (ii) for subsequent Test Periods, the period from the end of
the previous Test Period in respect of which Founder Shares were last converted or redeemed to the Test
Period in which the Performance condition is next satisfied. In each Test Period, the increase in market
capitalisation is calculated by reference to the Highest Average Closing Price.
72
Annual Report 2015
GOVERNANCE
Additional interests of Founder Directors (continued)
The effect of this is that the calculation of Total Shareholder Return rebases to a “high watermark” equal
to the market capitalisation used to calculate the most recent conversion or redemption of Founder
Shares, so that the holders of Founders Shares only receive 20 per cent. of the incremental increase in
Total Shareholder Return since the previous conversion or redemption (or, in respect of the first time the
Performance Condition is satisfied, since Admission).
The calculation of Founder Share Value is made without reference to the 12.5% per annum hurdle so that
once the Performance Condition is satisfied, the holders of Founder Shares are entitled to share in 20% of
the Total Shareholder Return, not just that element of Total Shareholder Return above the hurdle
contained in the Performance Condition.
Rather than convert the Founder Shares into Ordinary Shares, the Board may elect (subject to compliance
with the Companies Act 2014 and provided the Company has sufficient distributable reserves) to redeem
such Founder Shares for payment of a cash equivalent to that holder of Founder Shares.
The holders of Deferred Shares do not have any voting rights and are not entitled to receive dividends
other than the right to receive €1 in aggregate for every €100,000,000,000 paid to the holders of ordinary
shares.
The Deferred Shares are not listed.
Cairn Homes PLC
73
FINANCIAL STATEMENTS
Consolidated Financial Statements
For the period from incorporation on 12 November 2014 to 31 December 2015
CONTENTS
Statement of Directors’ Responsibilities
in respect of the Annual Report and
the Financial Statements
Independent Auditor’s Report
Consolidated Statement of Profit
or Loss and Other Comprehensive Income
Consolidated Statement
of Financial Position
Consolidated Statement
of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated
Financial Statements
75
77
83
84
85
86
87
74
Annual Report 2015
Statement of
Directors’
Responsibilities
in respect of the Annual Report and the Financial Statements
The Directors are responsible for preparing the annual report and the consolidated and company
financial statements, in accordance with applicable law and regulations.
Company law requires the directors to prepare consolidated and company financial statements each year.
Under that law, the Directors are required to prepare the consolidated financial statements in accordance
with IFRS as adopted by the European Union and have elected to prepare the company financial
statements in accordance with IFRS as adopted by the European Union as applied in accordance with the
provisions of Companies Act 2014.
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 assets, liabilities and financial position of the Group and
Company and of the Group’s profit or loss for that period. In preparing each of the consolidated and
company financial statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
(cid:129)
(cid:129) make judgements and estimates that are reasonable and prudent;
(cid:129)
state that the financial statements comply with IFRS as adopted by the European Union, and as
regards the Company, as applied in accordance with the Companies Act 2014; and
(cid:129) prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the Group and the Company will continue in business.
The Directors are also required by the Transparency (Directive 2004/109/EC) Regulations 2007 and the
Transparency Rules of the Central Bank of Ireland to include a management report containing a fair
review of the business and a description of the principal risks and uncertainties facing the Group.
The Directors are responsible for keeping adequate accounting records which disclose with reasonable
accuracy at any time the assets, liabilities, financial position and profit or loss of the Group and Company,
and which enable them to ensure that the financial statements of the Group and Company comply with
the provision of the Companies Acts 2014. 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 corporate and financial
information included on the Group’s and Company’s website www.cairnhomes.com. Legislation in the
Republic of Ireland concerning the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Cairn Homes PLC
75
FINANCIAL STATEMENTS
Statement of Directors’ Responsibilities - continued
Responsibility Statement as required by the Transparency Directive and UK Corporate Governance Code
Each of the Directors, whose names and functions are listed on pages 24 to 27 of this Annual Report,
confirm that, to the best of each person’s knowledge and belief:
(cid:129)
(cid:129)
(cid:129)
The consolidated financial statements, prepared in accordance with IFRS as adopted by the European
Union, and the company financial statements, prepared in accordance with IFRS as adopted by the
European Union as applied in accordance with the provisions of Companies Act 2014, give a true and
fair view of the assets, liabilities and financial position of the Group and Company at 31 December
2015 and of the loss of the Group for the period then ended;
The Directors’ Report contained in the Annual Report includes a fair review of the development and
performance of the business and the position of the Group and Company, together with a description
of the principal risks and uncertainties that they face; and
The Annual Report and financial statements, taken as a whole, provides the information necessary to
assess the Group’s position and performance, business model and strategy and is fair, balanced and
understandable and provides the information necessary for shareholders to assess the Company's
position and performance, business model and strategy.
On behalf of the Board.
J. Reynolds
Chairman
14 March 2016
G. Britton
Director
76
Annual Report 2015
Independent
Auditor’s Report
to the members of Cairn Homes plc
Opinions and conclusions arising from our audit
1. Our opinion on the financial statements is unmodified
We have audited the financial statements of Cairn Homes plc for the period from incorporation on 12
November 2014 to 31 December 2015 which comprise the consolidated statement of profit or loss and
other comprehensive income, the consolidated and company statements of financial position, the
consolidated and company statements of changes in equity, the consolidated and company statements of
cash flows and the related notes. The financial reporting framework that has been applied in their
preparation is Irish law and International Financial Reporting Standards (IFRS) as adopted by the
European Union, and, as regards the company financial statements, as applied in accordance with the
provisions of the Companies Act 2014. Our audit was conducted in accordance with International
Standards on Auditing (ISAs) (UK & Ireland).
In our opinion:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
the consolidated financial statements give a true and fair view of the assets, liabilities and financial
position of the Group as at 31 December 2015 and of its loss for the period then ended;
the company statement of financial position gives a true and fair view of the assets, liabilities and
financial position of the Company as at 31 December 2015;
the consolidated financial statements have been properly prepared in accordance with IFRS as
adopted by the European Union;
the company financial statements have been properly prepared in accordance with IFRS as adopted by
the European Union as applied in accordance with the provisions of the Companies Act 2014; and
the company financial statements and consolidated financial statements have been properly prepared
in accordance with the requirements of the Companies Act 2014 and, as regards the consolidated
financial statements, Article 4 of the IAS Regulation.
2. Our assessment of risks of material misstatement
The risks of material misstatement detailed in this section of this report are those risks that we have
deemed, in our professional judgement, to have had the greatest effect on: the overall audit strategy; the
allocation of resources in our audit; and directing the efforts of the engagement team. Our audit
procedures relating to these risks were designed in the context of our audit of the financial statements as
a whole. Our opinion on the financial statements is not modified with respect to any of these risks, and
we do not express an opinion on these individual risks.
Cairn Homes PLC
77
FINANCIAL STATEMENTS
Independent Auditor’s Report to the members of
Cairn Homes plc - continued
2. Our assessment of risks of material misstatement (continued)
In arriving at our audit opinion above on the consolidated financial statements the risks of material
misstatement that had the greatest effect on our group audit were as follows:
Carrying values of inventories and profit recognition
Refer to page 52 (Report of the Audit and Risk Committee), page 91 (accounting policy for inventories) and
Note 13 to the consolidated financial statements (financial disclosures - inventories).
Inventory represents the costs of land, materials, design and related production and site costs to date.
Development commenced on two of the group’s sites in 2015 and sales of completed residential units
were recorded from one of the sites. The carrying value of land and work in progress depends on
assumptions of forecast selling prices, site planning (including planning consent), build costs and cost
recoveries, all of which contain an element of judgement and uncertainty.
The Group recognises profit on each sale, based on the particular unit sold, by reference to the overall
expected site margin. As site development and the resulting sale of residential units can take place over
many years the determination of profit is dependent on the accuracy of the forecasts about future selling
prices and build costs. There is a risk that one or all of the assumptions could be inaccurate with a
resulting impact on the carrying value of inventory or the amount of gross profit recognised.
Our response - In this area our audit procedures included:
(cid:129)
Testing the controls over the accuracy and completeness of the assumptions made in the Group’s
financial models supporting the carrying value of land and work in progress and the allocation of
costs to completed residential units. This involved checking approvals over reviewing and updating
selling prices and cost forecasts and the authorising and recording of costs.
(cid:129) We tested a sample of forecast costs to supplier agreements/tenders. We agreed forecast residential
(cid:129)
unit sales prices to estimates from auctioneers.
For sites in development we compared actual revenues and costs to estimates to ensure that net
realisable values were updated and that the overall expected sales margin was adjusted. We evaluated
the sensitivity of the margin to a change in sales prices and costs and considered whether this
indicated a risk of impairment of the inventory balance.
For all new land acquisitions we inspected purchase contracts to agree the costs of acquisition
including related purchase costs. We agreed amounts paid to corroborating documentary evidence.
(cid:129) We considered the adequacy of the Group’s disclosures regarding the carrying value of land and work
(cid:129)
in progress.
78
Annual Report 2015
FINANCIAL STATEMENTS
Independent Auditor’s Report to the members of
Cairn Homes plc - continued
2. Our assessment of risks of material misstatement (continued)
Share-based payments - accounting for awards relating to Founder Shares
Refer to page 51 (Report of the Audit and Risk Committee), page 91 (accounting policy for share-based
payments) and Note 18 to the consolidated financial statements (financial disclosures - share-based
payments).
The risk - The Founder Share transaction is a share-based payment. This carries a risk of material
misstatement. The relevant accounting standard is complex, the measurement of the award depends on a
number of significant assumptions and the recognition of the award in the financial statements is based
on the terms and conditions of the award.
Our response - We obtained a copy of the terms and conditions of the Founder Share award and ensured
that the Group had reflected all of the relevant terms and conditions in the measurement of the
estimated cost of the award and the recognition of this cost in the financial statements.
The Group employed the services of a valuation expert to assist in the determination of the fair value of
the award. We read the report produced as a result of this work and considered whether the key
assumptions used in estimating the fair value of the award were reasonable.
We considered the disclosures made with respect to the measurement and recognition of the award and
in particular the disclosure of the key judgements.
Carrying value of loan assets
Refer to page 52 (Report of the Audit and Risk Committee), page 94 (accounting policy for financial
instruments) and Note 12 to the consolidated financial statements (financial disclosures - loan assets).
The risk - The Group purchased a large portfolio of distressed loans in December 2015 which are
principally secured on residential development land. This includes a number of development sites which
the Group intends to acquire for future residential developments. Given the scale of the loan portfolio
there is a risk of significant misstatement if the carrying value of the loan assets is not reflected in
accordance with relevant accounting standards.
Our response - Our audit procedures included, among others: agreeing costs related to loan asset
acquisitions to contracts and cash flows; inspecting supporting evidence for estimated values of property
collateral on which the loans are secured; and assessing the adequacy of the disclosures in relation to
loan assets in the financial statements.
Cairn Homes PLC
79
FINANCIAL STATEMENTS
Independent Auditor’s Report to the members of
Cairn Homes plc - continued
3. Our application of materiality and an overview of the scope of our audit
The materiality for the consolidated financial statements as a whole was set at €2.9m. This has been
calculated with reference to a benchmark of total assets. Materiality represents 0.5% of this benchmark,
which we consider to be one of the principal considerations for members of the Company in assessing
the financial performance of the Group for the period, given that the principal focus of the Group to date
has been in relation to asset acquisition and commencement of some residential developments.
We report to the Audit Committee all corrected and uncorrected misstatements we identified through our
audit with a value in excess of €0.12m, in addition to other audit misstatements below that threshold that
we believe warranted reporting on qualitative grounds.
We subjected all of the Group’s reporting components to audits for group reporting purposes. The work
on all components was performed by the Group audit team.
4. We have nothing to report on the disclosures of principal risks
Based on the knowledge we acquired during our audit, we have nothing material to add or draw attention
to in relation to:
(cid:129)
the directors’ statements on Risk Management on pages 29 to 33 and pages 42 to 43, concerning the
principal risks, their management, and, based on that, the directors’ assessment and expectations of
the Group’s continuing in operation over the 4 years to 31 December 2019; or
the disclosures in note 1 of the consolidated financial statements concerning the use of the going
concern basis of accounting.
(cid:129)
5. We have nothing to report in respect of the matters on which we are required to report by exception
ISAs (UK & Ireland) require that we report to you if, based on the knowledge we acquired during our audit,
we have identified information in the Annual Report that contains a material inconsistency with either
that knowledge or the financial statements, a material misstatement of fact, or that is otherwise
misleading.
In particular, we are required to report to you if:
(cid:129) we have identified any inconsistencies between the knowledge we acquired during our audit and the
directors’ statement that they consider the Annual Report is fair, balanced and understandable and
provides information necessary for shareholders to assess the entity’s performance, business model
and strategy; or
the Audit and Risk Committee Report does not appropriately disclose those matters that we
communicated to the Audit and Risk Committee.
(cid:129)
The terms of our engagement require us to review :
(cid:129)
(cid:129)
the directors’ statement, set out on page 34, in relation to going concern;
the part of the Corporate Governance Statement on pages 36 to 47 relating to the Company’s
compliance with the provisions of the UK Corporate Governance Code specified for our review; and
certain elements of disclosures in the report to shareholders by the Board of Directors’ Remuneration
Committee.
(cid:129)
In addition, the Companies Act 2014 requires us to report to you if, in our opinion, the disclosures of
directors’ remuneration and transactions specified by law are not made.
80
Annual Report 2015
FINANCIAL STATEMENTS
Independent Auditor’s Report to the members of
Cairn Homes plc - continued
6. Our conclusions on other matters on which we are required to report by the Companies Act 2014 are
set out below
We have obtained all the information and explanations which we consider necessary for the purposes of
our audit.
The company statement of financial position is in agreement with the accounting records and, in our
opinion, adequate accounting records have been kept by the Company.
In our opinion the information given in the Directors’ Report is consistent with the financial statements
and the description in the Corporate Governance Statement of the main features of the internal control
and risk management systems in relation to the process for preparing the consolidated financial
statements is consistent with the consolidated financial statements.
In addition we report, in relation to information given in the Corporate Governance Statement on pages
36 to 47, that:
(cid:129) based on knowledge and understanding of the Company and its environment obtained in the course
of our audit, no material misstatements in the information identified above have come to our
attention;
(cid:129) based on the work undertaken in the course of our audit, in our opinion:
- the description of the main features of the internal control and risk management systems in relation
to the process for preparing the consolidated financial statements, and information relating to
voting rights and other matters required by the European Communities (Takeover Bids (Directive
2004/25/EC) Regulations 2006 and specified by the Companies Act 2014 for our consideration, are
consistent with the financial statements and have been prepared in accordance with the Companies
Act 2014, and
- the Corporate Governance Statement contains the information required by the Companies Act 2014.
Cairn Homes PLC
81
FINANCIAL STATEMENTS
Independent Auditor’s Report to the members of
Cairn Homes plc - continued
Basis of our report, responsibilities and restrictions on use
As explained more fully in the Statement of Directors’ Responsibilities set out on pages 75 to 76, the
Directors are responsible for the preparation of the financial statements and for being satisfied that they
give a true and fair view. Our responsibility is to audit and express an opinion on the consolidated and
company financial statements in accordance with applicable law and International Standards on Auditing
(ISAs) (UK & Ireland). Those standards require us to comply with the Financial Reporting Council’s Ethical
Standards for Auditors.
An audit undertaken in accordance with ISAs (UK & Ireland) involves obtaining evidence about the
amounts and disclosures in the financial statements sufficient to give reasonable assurance that the
financial statements are free from material misstatement, whether caused by fraud or error. This includes
an assessment of: whether the accounting policies are appropriate to the Group’s circumstances and
have been consistently applied and adequately disclosed; the reasonableness of significant accounting
estimates made by the Directors; and the overall presentation of the financial statements.
In addition, we read all the financial and non-financial information in the Annual Report to identify
material inconsistencies with the audited 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 audit. If we become aware of any apparent material misstatements or
inconsistencies we consider the implications for our report.
Whilst an audit conducted in accordance with ISAs (UK & Ireland) is designed to provide reasonable
assurance of identifying material misstatements or omissions it is not guaranteed to do so. Rather the
auditor plans the audit to determine the extent of testing needed to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected misstatements does not exceed
materiality for the financial statements as a whole. This testing requires us to conduct significant audit
work on a broad range of assets, liabilities, income and expense as well as devoting significant time of
the most experienced members of the audit team, in particular the engagement partner responsible for
the audit, to subjective areas of the accounting and reporting.
Our report is made solely to the Company’s members, as a body, in accordance with section 391 of the
Companies Act 2014. Our audit work has been undertaken so that we might state to the Company’s
members those matters we are required to state to them in an auditor’s 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 and the Company’s members as a body, for our audit work, for this report, or for the
opinions we have formed.
Sean O’Keefe
for and on behalf of
KPMG, Chartered Accountants, Statutory Audit Firm
1 Stokes Place, St. Stephen’s Green, Dublin 2
14 March 2016
82
Annual Report 2015
FINANCIAL STATEMENTS
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
For the period from incorporation on 12 November 2014 to 31 December 2015
Before Exceptional Total
Exceptional Items
Items
Note €’000 €’000 €’000
Continuing operations
Revenue 6 3,717 - 3,717
Cost of sales (3,015) - (3,015)
Gross profit 702 - 702
Administrative expenses 7 (4,492) (1,086) (5,578)
Fair value charge relating to Founder Shares 18 - (29,100) (29,100)
Operating loss (3,790) (30,186) (33,976)
Finance income 8 114 - 114
Finance costs 8 (1,800) (1,858) (3,658)
Loss before taxation (5,476) (32,044) (37,520)
Income tax credit 10 312
Loss for the period attributable to owners of the Company (37,208)
Other comprehensive income -
Total comprehensive loss for the period attributable
to owners of the Company (37,208)
Basic loss per share 24 15.9 cents
Diluted loss per share 24 15.9 cents
Cairn Homes PLC
83
FINANCIAL STATEMENTS
Consolidated Statement of Financial Position
At 31 December 2015
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Restricted cash
Current assets
Loan assets
Inventories
Deposits paid
Trade and other receivables
Cash and cash equivalents
Total Assets
Equity
Share capital
Share premium
Share-based payment reserve
Retained earnings
Total equity
Liabilities
Non-current liabilities
Loans and borrowings
Derivative liability
Deferred taxation
Current liabilities
Trade and other payables
Total liabilities
Total equity and liabilities
On behalf of the Board:
Mr John Reynolds
Chairman
Mr Gary Britton
Director
84
Annual Report 2015
Note
€’000
11
16
12
13
14
15
16
17
17
18
19
26
10
20
130
130
27,000
27,260
382,951
149,331
5,000
2,962
6,551
546,795
574,055
637
521,390
29,118
(53,155)
497,990
63,543
514
815
64,872
11,193
76,065
574,055
FINANCIAL STATEMENTS
Consolidated Statement of Changes in Equity
For the period from incorporation on 12 November 2014 to 31 December 2015
Share Capital
Ordinary A Ordinary Deferred Founder Share Share- Retained Total
shares shares shares shares premium based earnings
payment
reserve
€’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000
As at
12 November 2014 - - - - - - - -
Total
comprehensive
loss for the period
Loss for the period - - - - - - (37,208) (37,208)
Other
comprehensive
income - - - - - - - -
- - - - - - (37,208) (37,208)
Transactions with
owners of the
company
Issue of ordinary
shares for cash 490 - - - 494,660 - - 495,150
Share issue costs - - - - - - (15,947) (15,947)
Issue of founder
shares for cash - - - 100 100 - - 200
Issue of ordinary
shares for business
combination 27 - - - 26,630 - - 26,657
Issue of A
ordinary shares
for cash - 20 - - - - - 20
Conversion of A
ordinary
shares to
deferred shares - (20) 20 - - - - -
Equity-settled
share-based
payments - - - - - 29,118 - 29,118
517 - 20 100 521,390 29,118 (15,947) 535,198
As at 31
December 2015 517 - 20 100 521,390 29,118 (53,155) 497,990
Cairn Homes PLC
85
FINANCIAL STATEMENTS
Consolidated Statement of Cash Flows
For the period from incorporation on 12 November 2014 to 31 December 2015
Cash flows from operating activities
Loss for the period
Adjustments for:
Share-based payments expense
Non-cash expense in relation to the acquisition of Emerley Holdings Limited
Other finance costs
Finance income
Taxation
Increase in inventories
Increase in loan assets
Increase in deposits paid
Increase in trade and other receivables
Increase in trade and other payables
Net cash used in operating activities
Cash flows from investing activities
Cash acquired on acquisition of Emerley Holdings Limited
Purchases of property, plant and equipment
Purchases of intangible assets
Interest received
Transfer to restricted cash
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of share capital, net of issue costs paid
Proceeds from borrowings
Repayment of loans
Interest paid
Net cash from financing activities
Net increase in cash and cash equivalents in the period
Cash and cash equivalents at incorporation
Cash and cash equivalents at 31 December 2015
Note
€’000
(37,208)
29,118
2,944
1,800
(114)
(312)
(3,772)
(105,521)
(382,951)
(5,000)
(2,048)
8,186
(491,106)
1,963
(130)
(83)
114
(27,000)
(25,136)
480,174
64,375
(18,130)
(3,626)
522,793
6,551
-
6,551
18
25
8
25
16
19
19
16
86
Annual Report 2015
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the period from incorporation on 12 November 2014 to 31 December 2015
1. Basis of Preparation
(a) Reporting entity
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. These consolidated financial statements cover
the period from incorporation on 12 November 2014 to 31 December 2015 for the Company and its
subsidiaries (together referred to as “the Group”). The Group is predominantly involved in the
development of residential property for sale.
(b) Statement of compliance
These consolidated financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) and their interpretations approved by the International
Accounting Standards Board (IASB), as adopted by the European Union (EU), and those parts of the
Companies Act 2014 applicable to companies reporting under IFRS and Article 4 of the IAS Regulation.
(c) New standards and interpretations
A number of new standards, amendments to standards and interpretations are effective for financial
periods beginning on various dates after 12 November 2014, and have not been applied in preparing
these financial statements. The Group does not plan to adopt these standards early; instead it
intends to apply them from their effective dates as determined by their dates of EU endorsement.
Having considered all upcoming endorsed and unendorsed standards and amendments, the
Directors have determined that the following may have an effect on the consolidated financial
statements of the Group, and the potential impact of these standards on the Group is under review.
Amendments to IAS 1: Disclosure Initiative
IFRS 15: Revenue from contracts with
customers (May 2014) including
amendments to IFRS 15:
Effective date of IFRS 15 (September 2015)
IFRS 9 Financial Instruments (July 2014)
IFRS 16 Leases (January 2016)
EU effective date
(periods beginning)
1 January 2016
(early adoption permitted)
Not endorsed, expected
to be endorsed Q2 2016.
IASB effective date
(periods beginning)
1 January 2016
1 January 2018
Not endorsed, expected
to be endorsed H1 2016.
Not endorsed, no indicative
endorsement date provided.
1 January 2018
1 January 2019
Cairn Homes PLC
87
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
1. Basis of Preparation (continued)
(d) Functional and presentation currency
These 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.
(e) Basis of accounting
The Directors consider that it is appropriate that the financial statements have been prepared on the
going concern basis, which assumes that the Group will continue to be able to meet its liabilities as
they fall due for the foreseeable future.
The significant accounting policies applied in the preparation of these financial statements are set
out in Note 3.
2. Key Judgements and Estimates
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 key judgements and estimates impacting these financial statements are:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129) presentation of exceptional items (Note 25).
accounting for share-based payments (Note 18)
carrying value of inventories and allocations from inventories to cost of sales (See Notes 3(f ) and 13)
carrying value of loan assets (Note 12)
accounting for acquisitions, including allocation of fair value of consideration (Note 25)
3. Significant Accounting Policies
The accounting policies set out below have been applied in these financial statements.
(a) Basis of consolidation
The consolidated financial statements include the results of Cairn Homes plc and all of its subsidiary
undertakings for the period to 31 December 2015. The financial statements of the subsidiary
undertakings are consolidated from the date when control passes to the Group using the purchase
method of accounting and up to the date control ceases.
88
Annual Report 2015
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
3. Significant Accounting Policies (continued)
(a) Basis of consolidation (continued)
Business combinations
The Group accounts for business combinations using the acquisition method when control is transferred
to the Group. The consideration transferred in the acquisition is generally measured at fair value, as are
the identifiable net assets acquired. Goodwill arising on consolidation represents the excess of the fair
value of the consideration over the fair value of the separately identifiable net assets and liabilities
acquired. Any goodwill that arises is capitalised and tested annually for impairment. Impairment arises
when the carrying value of the Group’s cash generating unit (residential property development) is greater
than its fair value. Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction
costs are expensed as incurred, except if related to the issue of debt or equity securities.
The consideration transferred does not include amounts related to the settlement of pre-existing
relationships. Such amounts are generally recognised in profit or loss.
Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay
contingent consideration that meets the definition of a financial instrument is classified as equity, then it
is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes in the
fair value of the contingent consideration are recognised in profit or loss.
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. The financial statements of subsidiaries are included in the consolidated
financial statements from the date on which control commences until the date on which control ceases.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated.
(b) Property, plant and equipment
Property, plant and equipment are initially recognised at cost. Depreciation is provided using the
straight line method to write off the cost less any residual value over the estimated useful life of the
asset on the following basis:
Computers & Equipment 3-7 years
Leasehold Improvements 7 years
The assets’ useful economic lives and residual values are reviewed and adjusted, if appropriate, at
each financial reporting date. An impairment loss is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount.
Cairn Homes PLC
89
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
3. Significant Accounting Policies (continued)
(c) Leases
Lease payments
Payments made under operating leases are recognised in profit or loss on a straight-line basis over
the term of the lease. Lease incentives received are recognised as an integral part of the total lease
expense, over the term of the lease.
(d)
Intangible Assets
Computer Software
Acquired computer software is capitalised as intangible assets on the basis of the costs incurred to
acquire and bring to use the specific software.
Costs that are directly attributable to the production of identifiable and unique software products
controlled by the Group, and that will probably generate economic benefits exceeding costs beyond
one year, are recognised as intangible assets.
Computer software costs are amortised over their estimated useful lives from seven to ten years for
specialised software which is expected to provide benefits over a longer period. Other costs in
respect of computer software are recognised as an expense as incurred.
The assets’ useful economic lives and residual values are reviewed and adjusted, if appropriate, at
each financial reporting date. An impairment loss is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount.
(e) Revenue
Revenue represents the fair value of consideration received or receivable, net of value-added tax.
Revenue is recognised once the value of the transaction can be reliably measured and the significant
risks and rewards of ownership have been transferred. Revenue is recognised on residential property
sales at legal completion.
Booking and contract deposits on units sold by the Group are held by the Group’s legal advisors,
externally to the Group, until legal completion of the sale, at which point all such deposits are paid
to the Group and recognised as revenue. Where a contract, on which a contract deposit has been
paid, is not completed, the Group will recognise the forfeited deposit (arising in accordance with the
contract’s terms) as revenue.
Rental income is recognised on a straight line basis over the life of the lease. Any lease incentives
are recognised as an integral part of the total rental income.
90
Annual Report 2015
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
3. Significant Accounting Policies (continued)
(f)
Inventories
Units in the course of development and completed units are valued at the lower of cost and net
realisable value. Cost includes the cost of land, raw materials, stamp duty, directly attributable
interest (if any), direct labour and development costs, but excludes indirect overheads. Land
purchased for development, including land in the course of development, is initially recorded at cost.
For development property acquired through business combinations, cost is the sum of the fair value
at acquisition plus subsequent direct costs. The Group’s developments can take place over several
reporting periods and the Group has to allocate site-wide development costs between units built in
the current year and in future years. It also has to estimate the costs to completion of such
developments. In making these assessments, which impact on estimating the appropriate amounts
from inventory to be recognised as cost of sales on units sold, there is a degree of inherent uncertainty.
Inventories are carried at the lower of cost and net realisable value, such that provision is made, where
appropriate, to reduce the value of inventories and work in progress to their net realisable value.
Where a site has commenced selling units, the Group compares the margin recognised on a site in
the year to the forecast margin on a site over the life of the development, taking account of updated
sales prices and cost estimates. Where a site has not yet commenced selling, the Group compares
the most recent forecast to prior forecasts for that site. The Group assesses whether any such
updated margin forecasts indicate that the inventory balance needs to be adjusted to reflect the net
realisable value.
Where a site purchased for redevelopment includes existing rental properties which will be demolished
as part of the planned redevelopment of the site, the full cost of the site is classified within inventory.
Contract deposits for purchases of development property are recognised as deposits when paid and
are transferred to inventory on legal completion of the contract when the remainder of the contract
price is paid.
(g) Share-based payments
The Group issues equity-settled share based payments to certain employees (share options) and
founders (Founder Shares).
The grant-date fair value of equity-settled share-based payment awards granted to employees is
generally recognised as an expense, with a corresponding increase in equity over the vesting period
of the awards. The amounts recognised as an expense are adjusted to reflect the number of awards
for which the related service and non-market performance conditions are expected to be met, such
that the amount ultimately recognised is based on the number of awards that meet the related
service and non-market performance conditions, where applicable at the vesting date. For share-
based payment awards with non-vesting conditions, the grant-date fair value of the share-based
payment is measured to reflect such conditions and there is no true-up for differences between
expected and actual outcomes.
Cairn Homes PLC
91
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
3. Significant Accounting Policies (continued)
(h) Taxation
Income tax comprises current tax and deferred tax. Income tax is recognised in profit or loss except
to the extent that it relates to a business combination or items recognised in other comprehensive
income or equity.
Current tax is the expected tax payable on taxable profit or loss for the period and any adjustment to
tax payable in respect of previous periods. It is measured using tax rates that have been enacted or
substantively enacted by the reporting date.
Deferred tax is recognised in respect of temporary timing differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for:
(cid:129)
(cid:129)
(cid:129)
temporary differences on the initial recognition of assets or liabilities in a transaction that is not
a business combination and that affects neither accounting nor taxable profit or loss;
temporary differences relating to investments in subsidiaries to the extent that the Group is able
to control the timing of the reversal of the temporary differences and it is probable that they will
not reverse in the foreseeable future; and
taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible
temporary differences to the extent that it is probable that future taxable profits will be available
against which they can be used. Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related tax benefit will be realised; such
reductions are reversed when the probability of future taxable profits improves.
Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent
that it has become probable that future taxable profits will be available against which they can be
used.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences
when they reverse, using tax rates enacted or substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner
in which the Group expects, at the reporting date, to recover or settle the carrying amounts of its
assets and liabilities.
(i) Pensions
The Group operates defined contribution schemes for certain employees. The Group’s contributions
to the schemes are charged to profit or loss in the period in which the contributions fall due.
92
Annual Report 2015
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
3. Significant Accounting Policies (continued)
(j) Cash and cash equivalents and restricted cash
Cash and cash equivalents include cash and bank balances in bank accounts with no notice or on
short-term deposits which are subject to insignificant risk of changes in value.
Cash and bank balances that are not available for use by the Group are presented as restricted cash.
Amounts of restricted cash which are restricted from being exchanged or used to settle a liability for
at least 12 months after the end of the reporting period are classified as non-current assets.
(k) Provisions
Provisions are recognised in the statement of financial position when the Group has a present legal
or constructive obligation as a result of a past event and it is probable that an outflow of economic
benefits will be required to settle the obligation, and the amount can be reliably estimated.
(l) Ordinary shares
Incremental costs directly attributable to the issue of ordinary shares, net of any tax effects, are
recognised as a deduction from equity through retained earnings.
(m) Exceptional items
Items that are material in size or unusual or infrequent are presented as exceptional items in the
statement of comprehensive income. The Directors are of the opinion that the separate presentation
of exceptional items provides helpful information about the Group’s underlying business
performance.
(n) Segmental reporting
Operating segments are reported in a manner consistent with the internal organisational and
management structure and the internal reporting information provided to the Chief Operating
Decision Maker (designated as the Board of Directors), who is responsible for allocating resources
and assessing performance of operating segments.
(o) Finance income and costs
Interest income and expense is recognised using the effective interest method. The effective interest
method is a method of calculating the amortised cost of a financial asset or financial liability (or
group of financial assets or financial liabilities) and of allocating the interest income, interest
expense and fees paid and received over the relevant period.
Commitment fees in relation to undrawn loan facilities are accounted for on the accruals basis,
within finance costs.
Cairn Homes PLC
93
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
3. Significant Accounting Policies (continued)
(p) Financial instruments
The Group classifies non-derivative financial assets into the categories: (1) financial assets at fair
value through profit or loss; (2) held to maturity financial assets, (3) loans and receivables; and (4)
available-for-sale financial assets. The Group classifies non-derivative financial liabilities into the
following categories: (5) financial liabilities at fair value through profit or loss and (6) other financial
liabilities category. During the period, the Group held no financial instruments in the following
categories, (1), (2), (4) and (5), as referred to above.
(i) Non-derivative financial assets and financial liabilities - recognition and derecognition
The Group initially recognises loans and receivables and borrowings on the date when they are
originated. All other financial assets and financial liabilities are initially recognised on the trade date
when the entity becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from the
asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which
substantially all of the risks and rewards of ownership of the financial asset are transferred, or it
neither transfers nor retains substantially all of the risks and rewards of ownership and does not
retain control over the transferred asset. Any interest in such derecognised financial assets that is
created or retained by the Group is recognised as a separate asset or liability.
The Group derecognises a financial liability when its contractual obligations are discharged or
cancelled, or expire.
Financial assets and financial liabilities are offset and the net amount presented in the statement of
financial position when, and only when, the Group currently has a legally enforceable right to offset
the amounts and intends either to settle them on a net basis or to realise the asset and settle the
liability simultaneously.
(ii) Non-derivative financial assets - measurement
Loans and receivables
These assets are initially measured at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition, they are measured at amortised cost using the effective interest
method, as adjusted for any impairments.
94
Annual Report 2015
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
3. Significant Accounting Policies (continued)
(iii) Non-derivative financial liabilities - measurement
Non-derivative financial liabilities are initially measured at fair value less directly attributable
transaction costs. Subsequent to initial recognition, these liabilities are measured at amortised cost
using the effective interest method.
For interest-bearing borrowings any difference between initial carrying value and redemption value is
recognised in profit or loss over the period of the borrowings on an effective interest basis, or if
appropriate, the Group capitalises borrowing costs directly attributable to the acquisition and
development of a qualifying asset as part of the cost of that asset. Embedded derivatives requiring
separation are measured at fair value through profit or loss (see policy (p)(iv)).
(iv) Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and
are subsequently remeasured at their fair value. Any directly attributable transaction costs are
recognised in profit or loss as incurred.
The Group held an embedded derivative (interest rate floor) in its bank borrowings. Embedded
derivatives are separated from the host contract and accounted for at fair value through profit or
loss if certain criteria are met.
(q)
Impairment of financial assets
An impairment loss is calculated as the difference between an asset’s carrying amount and the
present value of the estimated future cash flows discounted at the asset’s original effective interest
rate. Losses are recognised in profit or loss when they occur and are reflected in an allowance
account. When the Group considers that there are no realistic prospects of recovery of the asset, the
relevant amounts are written off. If the amount of impairment loss subsequently decreases and the
decrease can be related objectively to an event occurring after the impairment was recognised, then
the previously recognised impairment is reversed through profit or loss.
Cairn Homes PLC
95
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
4. Measurement of Fair Values
A number of the Group’s accounting policies and disclosures require the determination of fair value, for
both financial and non-financial assets and liabilities. Fair value is defined in IFRS 13, Fair Value
Measurement, as 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. When measuring the fair
value of an asset or a liability, the Group uses observable market data as far as possible. Fair values are
categorised into different levels in a fair value hierarchy based on the inputs used in the valuation
techniques, as follows:
(cid:129)
(cid:129)
(cid:129)
Level 1: quoted prices, (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair
value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair
value hierarchy as the lowest level input that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting
period during which the change has occurred.
Further disclosure about the assumptions made in measuring fair values is included in the following
notes:
(cid:129) Note 12 - Loan assets;
(cid:129) Note 15 - Trade and other receivables;
(cid:129) Note 16 - Cash and cash equivalents;
(cid:129) Note 19 - Loans and borrowings;
(cid:129) Note 20 - Trade and other payables;
(cid:129) Note 25 - Business combination;
(cid:129) Note 26 - Financial instruments and risk management.
96
Annual Report 2015
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
5. Segmental Information
Segmental information is presented on the same basis as that used for internal reporting purposes.
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief
Operating Decision Maker (‘CODM’). The CODM has been identified as the Board of Directors of the
Company.
Having considered the criteria in IFRS 8 Operating Segments and considering how the Group manages its
business and allocates resources, the Group has determined that it has one reportable segment. In
particular, the Group is managed as a single business unit, building and property development.
Management of the loan receivables acquired (Note 12) forms an integral part of the single reportable
segment as the value of these loans is primarily derived from the underlying value of development
properties on which they are secured.
As the Group operates in a single geographic market, Ireland, no geographical segmentation is provided.
6. Revenue
€’000
Revenue
Residential property sales 3,401
Income from property rental 316
3,717
7. Administrative Expenses
Before Exceptional Total
Exceptional Items
Items
Note €’000 €’000 €’000
Administrative Expenses
Employee benefits expense 9 (i) 3,003 - 3,003
Other expenses 1,489 1,086 2,575
4,492 1,086 5,578
Costs of €1.1 million treated as exceptional relate to costs assumed as part of the acquisition of Emerley
Holdings, see Note 25.
Cairn Homes PLC
97
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
8. Finance Income and Finance Costs
Before Exceptional Total
Exceptional Items
Items
€’000 €’000 €’000
Finance Income
Interest income on short term deposits 114 - 114
Finance Costs
Interest expense on financial liabilities
measured at amortised cost (1,927) (1,858) (3,785)
Gain on fair value of derivative 127 - 127
(1,800) (1,858) (3,658)
€3.6m of the above finance cost is attributable to a loan which was acquired as part of the acquisition of
Emerley Holdings Limited, see note 25. The amount of €1.9 million treated as exceptional represents the
pre-existing interest cost of Emerley Holdings Limited prior to its acquisition by the Company, that the
Company assumed on acquisition of Emerley Holdings Limited as part of the Group’s Initial Public
Offering process. That loan and interest were repaid in full in December 2015.
9. Statutory and other information
(i) Employees
The average number of persons employed by the Group (including executive Directors) during the
period was:
2015
Number of Employees 14
The aggregate payroll costs of these employees were: €’000
Wages and salaries 2,884
Social welfare costs 277
Pension costs - defined contribution schemes 170
Other 33
3,364
Amounts capitalised into inventories (361)
Employee benefit expense 3,003
98
Annual Report 2015
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
9. Statutory and other information (continued)
(ii) Other Information
€’000
Operating lease rental expense 36
Net foreign currency losses recognised in profit or loss (8)
Auditor’s Remuneration
Audit of Group, Company and subsidiary financial statements* 95
Tax advisory services 72
Other non-audit services 339
506
Directors’ Remuneration
Salaries, fees and other emoluments 1,837
Pension contribution - defined contribution schemes 69
1,906
* Inclusive of review of interim financial statements for period to 30 June 2015.
10. Current and Deferred Taxation
Note €’000
Current tax charge for the period -
Deferred tax credit for the period (312)
Total income tax credit (312)
Deferred tax
The deferred tax liability is comprised of the following:
On incorporation - 12 November 2014 -
Liability on acquisition of Emerley Holdings Limited 25 1,127
Credited to profit or loss (312)
As at 31 December 2015 815
Cairn Homes PLC
99
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
10. Current and Deferred Taxation (continued)
Deferred tax arises from temporary differences relating to:
Acquired in Recognised Net
business in profit deferred
combinations or loss tax
€’000 €’000 €’000
Land held for development (2,361) - (2,361)
Tax losses 1,234 312 1,546
(1,127) 312 (815)
No deferred tax assets have been recognised in these financial statements in relation to €4.1 million
of unused tax losses. The potential deferred tax asset not recognised is €1.0 million.
The tax assessed for the period differs from the standard rate of tax in Ireland for the period.
The differences are explained below:
€’000
Loss before tax (37,520)
Tax credit at standard Irish income tax rate of 12.5% (4,690)
Effects of:
Income taxed/expenses deductible at the higher rate of corporation tax (423)
Expenses not deductible for tax purposes 3,781
Unused tax losses not recognised as deferred tax assets 1,020
Total income tax credit (312)
100
Annual Report 2015
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
11. Property, Plant and Equipment
Leasehold Computers &
Improvements Equipment Total
€’000 €’000 €’000
Cost
At 12 November 2014 - - -
Additions 67 63 130
At 31 December 2015 67 63 130
Accumulated Depreciation and Impairment
At 12 November 2014 - - -
Depreciation - - -
At 31 December 2015 - - -
Net Book Value
At 31 December 2015 67 63 130
Additions were mainly acquired in late 2015, and will be depreciated from January 2016.
Cairn Homes PLC 101
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
12. Loan Assets
31 Dec 2015
€’000
Loan Assets
Loan receivables 378,681
Construction bonds 4,270
Total loan assets 382,951
Loan receivables on the Group’s Statement of Financial Position at the period end were purchased as a
portfolio acquisition on 11 December 2015, subject to a sub participation period. Under the terms of the
sub participation and related agreements, the original lender continued to administer the loans for a
short period until formal legal transfer to the Group, however, the Group had effective control over these
loan assets from 11 December 2015. As detailed in Note 30, 94% of the loans legally transferred to the
Group on 19 February 2016, and 6% are still currently subject to sub participation. The portfolio of loans is
secured on real estate collateral all of which is located in the Republic of Ireland.
The nominal value outstanding on the loans at period end is €1.7 billion. The loans were acquired at a
substantial discount to their nominal value reflecting their distressed state at the time of acquisition.
Direct transaction costs incurred relating to the acquisition of these loans have been capitalised.
Construction bonds associated with the underlying real estate collateral were also acquired as part of the
portfolio and the value of these bonds is due to be recovered on either completion of the site
development or expiry of the related planning permission.
All of the loans are past due and in default and hence fall due for immediate repayment and are classified
as current assets. Limited income is expected to be generated on some of the underlying collateral assets.
A limited number of the loans are expected to be repaid by recourse to the original borrower. €197.9
million of the purchase price relates to loans which were the subject of a receivership when acquired.
The objective in purchasing the portfolio of loans was to generate future returns for the Group in the
following ways:
(cid:129)
acquisition of collateral assets by the Group for inclusion as inventory in its development portfolio
subject to compliance with the Group ’s development strategy;
(cid:129) disposal of collateral assets over time to achieve a redemption of the loan at a value greater than the
acquisition cost; and
income from the underlying portfolio.
(cid:129)
The fair value of the loan receivables was based on the value of the secured real estate collateral.
The Directors do not consider further impairment allowances are required against these loans as they
expect that the loans will be resolved at least at their carrying value due to the value of the collateral on
which they are secured. The Group expects to recover these loans within a two year period. It is not
possible to determine with accuracy the specific amount of loan assets that will be recovered within 12
months of the reporting date.
102
Annual Report 2015
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
13. Inventories
31 Dec 2015
€’000
Land held for development 132,074
Construction work in progress 17,257
149,331
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 of the reporting date. It is not possible to determine with accuracy when specific inventory will be
realised as this will be subject to a number of factors such as consumer demand and the timing of
planning permissions.
Having considered the current market conditions compared to the market conditions when the Group’s
various development sites were acquired, the Directors do not consider there to be any factors that give
rise to concern in relation to the net realisable value of the Group’s inventories as at 31 December 2015.
Consequently, the Directors believe that the carrying value of all land held for development and
construction work is stated at the lower of cost and net realisable value.
14. Deposits Paid
31 Dec 2015
€’000
Deposits Paid
Exclusivity deposit 5,000
5,000
The deposit of €5 million (“Exclusivity Deposit”) represents a payment made by the Group in December
2015 to give it the ability to contract to acquire a business (“Business”) by 28 February 2016 (this date was
subsequently extended, see Note 30). The Business owns five sites (one of which has commenced
construction) and has a conditional contract to acquire a sixth site, located in Dublin and the Dublin
commuter belt. In the event that the Group acquires the Business, the Exclusivity Deposit will be re-
categorised as part of the consideration for the acquisition of the Business. In the event that the Group
decides not to proceed with the transaction, it will forfeit the Exclusivity Deposit. In the event that the
vendor decides not to proceed with the transaction, the Exclusivity Deposit will be returned to the Group.
Cairn Homes PLC 103
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
15. Trade and Other Receivables
31 Dec 2015
€’000
VAT recoverable 2,101
Other receivables 861
Total trade and other receivables 2,962
The carrying value of trade and other receivables approximate to their fair value.
16. Restricted Cash and Cash and Cash Equivalents
31 Dec 2015
€’000
Non-current
Restricted cash 27,000
€27 million of restricted cash is required to be maintained in an interest-bearing blocked deposit for the
duration of the Group’s senior debt facilities (Note 19), as part of the collateral for those facilities.
The estimated fair value of restricted cash at 31 December 2015 is its carrying value.
31 Dec 2015
€’000
Current
Cash and cash equivalents 6,551
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.
104
Annual Report 2015
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
17. Share Capital and Share Premium
31 Dec 2015
Authorised Number €’000
Ordinary Shares of €0.001 each 1,000,000,000 1,000
Founder Shares of €0.001 each 100,000,000 100
Deferred Shares of €0.001 each 120,000,000 120
A Ordinary Shares of €1.00 each 20,000 20
Total Authorised Share Capital 1,240
Share Share Total
Capital Premium
Number €’000 €’000 €’000
Ordinary Shares of €0.001 each 516,663,977 517 521,290 521,807
Founder Shares of €0.001 each 100,000,000 100 100 200
Deferred Shares of €0.001 each 19,980,000 20 - 20
A Ordinary Shares of €1.00 each - - - -
637 521,390 522,027
The Company has four authorised classes of shares: Ordinary Shares; A Ordinary Shares; Founder Shares;
and Deferred Shares.
The holders of Ordinary Shares are entitled to receive dividends as declared from time to time, and are
entitled to one vote per Ordinary Share at meetings of the Company.
The holders of Founder Shares are not entitled to receive dividends and do not have voting rights at meetings
of the Company save in relation to a resolution to wind up the Company or to authorise the directors to issue
further Founder Shares. Founder Shares entitle New Emerald LP (the sole limited partner and economic
beneficiary of which is the Emerald QIAIF, the ultimate beneficiaries of which are Alan McIntosh, a director, and
his spouse), Michael Stanley and Kevin Stanley to receive 20% of the Total Shareholder Return (which is the
increase in the market capitalisation of the Company, plus dividends or distributions in the relevant period),
over the seven years following Admission of the Company’s Ordinary Shares to the London Stock
Exchange, subject to the satisfaction of the Performance Condition, being the achievement of a compound
rate of return of 12.5%. per annum in the Company’s share price, as adjusted for any dividends paid in the
period. The Founder Shares will be converted into Ordinary Shares or paid out in cash, at the option of the
Company, in an amount equal to the return earned by the Founders, if any.
The holders of Deferred Shares do not have voting rights at meetings and are not entitled to receive
dividends except for the right to receive €1 in aggregate for every €100,000,000,000 paid to the holders of
Ordinary Shares.
Cairn Homes PLC 105
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
17. Share Capital and Share Premium (continued)
The holders of A Ordinary Shares are not entitled to receive dividends and do not have voting rights at
meetings of the Company.
Issue costs of €15.9 million in relation to Ordinary Shares issued in the period have been charged directly
in equity to retained earnings.
Share Issues
On incorporation, on 12 November 2014, the Company issued 100 Ordinary Shares for cash consideration of €100.
On 2 April 2015, the Company passed a resolution whereby every one Ordinary Share of €1 each was sub-
divided into 1,000 Ordinary Shares of €0.001 each.
On 2 April 2015, the Company issued 100 Ordinary Shares for cash consideration of €100,000.
On 2 April 2015, 20,000 A Ordinary Shares were issued for cash consideration of €20,000.
On 2 April 2015, 100,000,000 Founder Shares of €0.001 each were issued for cash consideration of €200,000.
On 4 May 2015, the Company issued 4 Ordinary Shares for cash consideration of €0.04.
On 9 June 2015, 20,000 A Ordinary Shares were converted to 20,000 Ordinary Shares of €0.001 each and
19,980,000 Deferred Shares of €0.001 each.
On 10 June 2015, the Company issued 400,000,000 Ordinary Shares at €1.00 each by way of an Initial
Public Offering, raising gross proceeds of €400 million.
On 10 June 2015, the Company issued 26,657,224 Ordinary Shares at €1.00 each in consideration for the
transfer to the Company of the entire share capital of Emerley Holdings Limited (See Note 25).
On 10 June 2015, the Company issued 2,579,900 Ordinary Shares at €1.00 each as part of the Admission
Founders Subscription, raising proceeds of €2,579,900.
On 10 June 2015, the Company issued 380,000 Ordinary Shares at €1.00 each as part of the Additional
Persons Subscription, raising proceeds of €380,000.
On 23 June 2015, the Company issued 40,000,000 Ordinary Shares at €1.00 each by way of the exercise of
an Over-Allotment Option, raising gross proceeds of €40 million.
On 2 December 2015, the Company issued 46,926,749 Ordinary Shares at €1.11 each by way of a Share
Placing, raising gross proceeds of €52.1 million.
The proceeds of share issues were or will be used to acquire assets to develop the Group’s business of
property development and construction of residential units and for general corporate purposes.
106
Annual Report 2015
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
18. Share-Based Payments
Founder Shares
A valuation exercise has been undertaken to fair value the Founder Shares (the terms of which are
outlined in Note 17), which results in a non-cash charge in the period to 31 December 2015 of €29.1
million, with a corresponding increase in the share-based payment reserve in equity such that there is no
overall impact on total equity. This non-cash charge to profit or loss for the period is for the full fair value
of the award relating to the Founder Shares, all of which must be recognised up front under the terms
and conditions of the Founder Share agreement. No charge will be recognised in subsequent years.
Share price volatility of 25% per annum, based on a basket of comparative UK listed entities;
The valuation exercise was completed using the “Monte Carlo” simulation methodology and the following
key assumptions:
(cid:129)
(cid:129) Risk free rate of 0.1% per annum;
(cid:129) Dividend yield of 3% per annum, effective from 2018;
(cid:129)
15% discount based on restrictions on sale once Founder Shares convert to Ordinary Shares.
Share Options
500,000 ordinary share options were issued in the period, to a director. 250,000 of these options vest
during 2018 and the remaining 250,000 vest during 2019. The exercise price of each ordinary share option
is €1.00. The fair value of the options that vest during 2018 is €0.219 per share while the fair value of
options that vest in 2019 is €0.220 per share. A valuation exercise has been undertaken to fair value the
share options, which results a non-cash charge in administrative expenses in the period to 31 December
2015 of €0.018 million with a corresponding increase in the share-based payment reserve in equity.
19. Loans and Borrowings
31 Dec 2015
€’000
Non-current liabilities
Bank loans
Repayable as follows:
Between one and two years -
Between two and five years 63,543
63,543
On 30 November 2015, the Group entered into a €150 million Term Loan and Revolving Credit Facility with
AIB for a term of 4 years from initial drawdown at an interest rate of Euribor (subject to a 0% floor) plus a
margin ranging from 2.5%-3%. The first drawdown by the Group in December 2015 amounted to €65.5 million
(gross). Undrawn facilities of €84.5 million were available as at 31 December 2015. The facility is repayable by
11 December 2019 and is secured by way of a floating charge over the assets of the Company and its subsidiaries.
The Directors confirm that all covenants have been complied with and are kept under regular review.
Cairn Homes PLC 107
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
19. Loans and Borrowings (continued)
The amount presented in the financial statements is net of related unamortised arrangement fees and
transaction costs. In addition, the fair value of an embedded derivative (interest-rate floor) was deducted
and separated from the fair value of the host loan at inception.
The key covenants under the Facility Agreement are that the Group must convert 60% of all loan assets
into direct site ownership within 12 months of acquisition. In addition, loan assets must not represent
greater than 70% of the Gross Asset Value (as defined in the Facility Agreement) of the Group during year
1 of the Facilities, 35% during year 2 and 20% during year 3. In addition, Total Debt (as defined in the
Facility Agreement) must not exceed 40% of Gross Asset Value and in the event that Senior Debt (i.e. the
amount due under the Facility Agreement) exceeds 30% of Gross Asset Value, the Group must achieve
defined EBITDA hurdles in each of 2017, 2018 and 2019.
During the period, the Group held a loan of €18.1 million due from Emerley Properties Limited to Northern
Trust Fiduciary Services Limited (acting in its capacity as trustee to the Emerald QIAIF, the ultimate
beneficiaries of which are Alan McIntosh, a director, and his spouse). The loan was acquired as part of the
acquisition of Emerley Holdings Limited (see Note 25). The loan was repaid in full together with the
minimum interest amount payable under the loan agreement of €3.6m on 3 December 2015.
20. Trade and Other Payables
31 Dec 2015
€’000
Trade payables 583
Accruals 10,610
11,193
The carrying value of all trade and other payables is approximate to their fair value. Accruals include €5.1
million in relation to accrued transaction costs applicable to the purchase of the loan assets in Note 12.
21. Dividends
There were no dividends declared and paid by the Company during the reporting period and there were
no dividends proposed by the Directors in respect of the reporting period up to the date of authorisation
of these financial statements.
108
Annual Report 2015
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
22. Related Party Transactions
For the period from incorporation on 12 November 2014 to 31 December 2015, the following related party
transactions have taken place requiring disclosure:
(cid:129) On 15 June 2015, 100% of the share capital of Emerley Holdings Limited, subsequently renamed Cairn
Homes Holdings Limited, was acquired by the Company from Everleigh Investment Partners Limited
(an entity, in which the ultimate beneficiaries are Alan McIntosh, a director, and his spouse) and
Stanbro Property Holdings Limited (a company, of which over 96 per cent. of the ultimate beneficial
interest is held by Michael Stanley, a director, together with family members) for €26.7 million, the
consideration for which was satisfied by the issue of 26,657,224 Ordinary Shares of €0.001 each in the
Company (see Note 25);
(cid:129) As part of the acquisition of Emerley Holdings Limited, subsequently renamed Cairn Homes Holdings
Limited, a loan of €18.1 million due to Northern Trust Fiduciary Services Ireland Limited (acting in its
capacity as trustee to the Emerald QIAIF, the ultimate beneficiaries of which are Alan McIntosh, a
director, and his spouse) was acquired. The loan was secured by a fixed and floating charge over the
assets of Emerley Properties Limited, subsequently renamed Cairn Homes Properties Limited. If all of
any part of the loan were repaid by 31 December 2015, a minimum interest amount of €3.6 million was
payable and thereafter interest would accrue at a rate of 20 per cent per annum. This loan was repaid
in full by 31 December 2015, incurring the minimum interest charge of €3.6 million which was paid on 3
December 2015.
(cid:129) Butterly Business Park, Kilmore Road, Artane, Dublin 5 was acquired by Cairn Homes Butterly Limited, a
100% subsidiary of the Company, from Butterly Capital Investments Limited an entity in which the
ultimate economic interest is indirectly held by Alan McIntosh, a director, and his spouse, for cash
consideration of €9.3 million. In addition, Cairn Homes Butterly Limited was charged management fees
of €0.1 million in the period by Butterly Capital Investments Limited in respect of Butterly Business
Park;
(cid:129) Development land at Letteragh Road, Rahoon, Galway was acquired by Cairn Homes Galway Limited, a
100% subsidiary of the Company, from Emerald Opportunity Investment (Galway) Limited, an entity in
which the ultimate economic interest is indirectly held by Alan McIntosh and his spouse, for cash
consideration of €4.9 million;
(cid:129) Development land at Albany House, Shanganagh Road, Ballybrack, Co. Dublin was acquired by Cairn
Homes Killiney Limited, a 100% subsidiary of the Company, from Albany House Investments Limited, an
entity in which the ultimate economic interest is indirectly held by Alan McIntosh and his spouse, for
cash consideration of €5.7 million;
(cid:129) Development land at Moathill, Navan, Co Meath was agreed to be conditionally acquired by Cairn
Homes Navan Limited, a 100% subsidiary of the Company, from Sonbrook Property Moathill Limited, an
entity in which the ultimate economic interest is held by Kevin Stanley, a member of the management
team, and his spouse. The consideration for the acquisition, which has not been completed, will be
80% of a Red Book valuation of the land to be carried out by an appropriate valuer when appropriate
planning permission has been granted.
Edward Square Limited, an entity directly held by Alan McIntosh, a director, recharged €0.35 million in
the period to the Group for professional services and expenses incurred on its behalf.
Emerald Opportunity Investment Fund, an entity indirectly held by Alan McIntosh, a director, recharged
€0.2 million in the period to the Group for professional services incurred on its behalf.
(cid:129)
(cid:129)
Cairn Homes PLC 109
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
22. Related Party Transactions (continued)
(cid:129)
The remuneration of key management personnel (which comprise the Board of Directors of the
Company) during the period from incorporation on 12 November 2014 to 31 December 2015 was as
follows:
31 Dec 2015
Note €’000
Short-term employee benefits 1,837
Post-employment benefits (pension contributions - defined contribution schemes) 69
Share based payment expense - share options 18
Total Remuneration of key management personnel 1,924
Share based payment expense - fair value charge relating to Founder Shares
of key management personnel 18 24,735
23. Group Entities
The Company’s subsidiaries are set out below. All of the Company’s subsidiaries are resident in Ireland,
with their registered address at 7 Grand Canal, Grand Canal Street Lower, Dublin 2.
All group companies operate in Ireland only.
Group Company
Principal Activity
Company's holding
Direct
Indirect
Holding company
100%
-
Cairn Homes Holdings Limited
(formerly Emerley Holdings Limited)
Cairn Homes Properties Limited
(formerly Emerley Properties Limited)
Cairn Homes Construction Limited
(formerly Emerley Construction Limited)
Cairn Homes Butterly Limited
Cairn Homes Galway Limited
Cairn Homes Killiney Limited
Holding of property
Construction company
Holding of property
Holding of property
Holding of property
-
-
100%
100%
100%
100%
100%
100%
100%
-
-
-
-
-
Cairn Homes Navan Limited
No activity in period
Cairn Homes Finance
Designated Activity Company
Financing activities and
acquisition/management of loan assets
110
Annual Report 2015
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
24. Earnings Per Share
The basic loss per share for the period ended 31 December 2015 is based on the loss attributable to
ordinary shareholders of €37.2 million and the weighted average number of ordinary shares outstanding
for the period. There is no difference between basic and diluted loss per share. The potential ordinary
shares from share-based payment arrangements are not dilutive in view of the loss made in the period.
31 Dec 2015
Loss for the period attributable to ordinary shareholders (€’000) (37,208)
Weighted average number of ordinary shares for period 233,546,612
Basic and diluted loss per share 15.9 cents
25. Business Combination
On 15 June 2015, the Company acquired 100% of the share capital of Emerley Holdings Limited
(subsequently renamed Cairn Homes Holdings Limited), for a consideration of €26.657 million, all of
which was satisfied by the issue of 26,657,224 ordinary shares in the Company (Note 17). This acquisition
had been conditional on the successful completion of the Company’s IPO. The fair value of the
consideration was €26.657 million based on the Company’s IPO share issue price of €1.00 per share.
The purpose of the acquisition was to acquire Emerley Holdings Limited’s business of the development of
residential property at Parkside, Dublin. The fair value of recognised amounts of assets acquired and
liabilities assumed were as follows:
€’000
Inventories 43,810
Cash and cash equivalents 1,963
VAT recoverable 369
Other receivables 545
Trade payables (60)
Accruals (3,658)
Borrowings (18,130)
Deferred tax liability (1,127)
Net assets acquired 23,713
Charge to profit or loss - exceptional item 2,944
Consideration - fair value of shares issued 26,657
Cairn Homes PLC
111
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
25. Business Combination (continued)
The fair value of consideration exceeded the fair value of net assets and liabilities acquired by €2.94
million. The Directors believed that certain expenses incurred directly by Emerley Holdings Limited in
advance of the acquisition were incurred for the benefit of the Company and its shareholders and the
Group assumed these pre-existing costs at its own expense. The costs assumed were as follows:
(cid:129) €0.94 million of certain costs relating to the restructuring of the Emerley Holdings Limited Group prior
to its acquisition by the Group as part of the Initial Public Offering and €0.15 million of other
administrative expenses;
(cid:129) €1.86 million in accrued interest in relation to the Emerley Properties Loan (see Note 19);
The above costs have been expensed to profit or loss and disclosed as exceptional items (see Notes 7 and
8). From the acquisition date to 31 December 2015, this acquisition contributed revenue of €3.6 million
and a loss of €1.9 million to the consolidated results of the Group. If the acquisition had occurred with
effect from the beginning of the period, it would have contributed revenue of €3.6 million and a loss of
€4.8 million to the consolidated results of the Group for the period (including the impact of the €2.9
million exceptional costs noted above).
26. Financial Instruments and Risk Management
The Group has exposure to the following risks arising from financial instruments:
(cid:129)
(cid:129)
(cid:129) market risk
credit risk
liquidity risk
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives,
policies and processes for measuring and managing risk, and the Group’s management of capital.
(a) Risk management framework
The Company’s Board of Directors has overall responsibility for the establishment and oversight of
the Group’s risk management framework.
The Group’s risk management policies are established to identify and analyse the risks faced by the
Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk
management policies and systems are reviewed regularly to reflect changes in market conditions and
the Group’s activities.
The Group Audit and Risk Committee keeps under review the adequacy and effectiveness of the
Group’s internal financial controls and the internal control and risk management systems.
(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 loan
assets, trade and other receivables and cash and cash equivalents. The carrying amount of financial
assets represents the maximum credit exposure.
112
Annual Report 2015
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
26. Financial Instruments and Risk Management (continued)
(b) Credit risk (continued)
Exposure to credit risk
The Group's main financial assets are loan receivables, construction bonds, cash and cash equivalents
and restricted cash.
Loan receivables, which totalled €378.7 million (Note 12) at 31 December 2015 and are secured on real
estate collateral in Ireland, will either be recovered by the direct acquisition of the properties by the
Group, through the sale of collateral properties and the receipt of income from these properties or
through the sale of the loan assets. As at 31 December 2015, the Directors estimate the value of real
estate collateral less costs to be incurred in acquiring the underlying properties approximates to the
carrying value of loan receivables.
Based on the nature of the loan receivables there is a concentration of risk in these assets which relates
to the value of development property in Ireland and the achievability of future profitable development of
such property.
Construction bonds which total €4.3 million (Note 12) at 31 December 2015 and relate to the underlying
real estate collateral, will either be recovered on completion of the site development or expiry of the
related planning permission.
Group management in conjunction with the Board manage risk associated with cash and cash equivalents
and restricted cash by depositing funds with a number of Irish financial institutions and AAA rated
international institutions. At 31 December 2015, the Group’s deposits were held in two Irish financial
institutions with a minimum credit rating of BBB-.
The maximum amount of credit exposure is therefore:
31 Dec 2015
€’000
Loan receivables (Note 12) 378,681
Construction bonds (Note 12) 4,270
Other receivables (Note 15) 861
Restricted cash - non-current 27,000
Cash and cash equivalents - current 6,551
417,363
Other receivables of €0.9 million and construction bonds of €4.3 million were all neither past due nor
impaired.
Cairn Homes PLC
113
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
26. Financial Instruments and Risk Management (continued)
(b) Credit risk (continued)
At 31 December 2015, the aging of loan receivables was as follows:
31 Dec 2015
€’000
Neither past due nor impaired -
Past due, in default and not impaired 378,681
Total loan receivables 378,681
As described in Note 12, the Group purchased these loan receivables, which are all in default, in
December 2015 for their fair value plus directly attributable transaction costs. The total nominal amounts
outstanding on the loans are €1.7 billion. Based on the value of collateral held, the Directors are satisfied
that the carrying value of these assets is not impaired.
(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 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 receivables and expected residential property sales together with
expected cash outflows on borrowings, trade and other payables, commitments and site acquisition
costs. All trade and other payables (€11.2 million) at 31 December 2015 are considered current with
the expected cash outflow equivalent to their carrying value.
Management monitors the adequacy of the Group’s liquidity reserves (comprising undrawn borrowing
facilities as detailed in note 19 and cash and cash equivalents as detailed in note 16) against rolling
cash flow forecasts. In addition, the Group’s liquidity risk management policy involves monitoring
short term and long term cash flow forecasts.
114
Annual Report 2015
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
26. Financial Instruments and Risk Management (continued)
(c) Liquidity risk (continued)
31 Dec 2015
€’000
Liabilities due in less than one year
Trade and other payables 11,193
Total liabilities due in less than one year 11,193
Liabilities due after more than one year
Borrowings 63,543
Derivative liability 514
Total liabilities due after more than one year 64,057
Total Funds available:
Cash and cash equivalents (excluding restricted cash) 6,551
Revolving credit facility undrawn 34,500
Term loan facility undrawn 50,000
Total funds available 91,051
The Board has reviewed the Group financial forecasts and associated risks for the period beyond one
year from the date of approval of the financial statements. The forecasts reflect key assumptions,
based on information available to the Directors at the time of the preparation of this financial
information. These forecasts are based on:
(cid:129) detailed monthly forecasting by site for the period 2016-2019, reflecting trends experienced up to
(cid:129)
the date of preparation; and
future revenues for 2016-2019 based on management’s assessment of trends across principal
development sites.
The critical assumptions underlying the forecast were then stress-tested to ensure sufficient
financial covenant headroom exists to cope with a reasonable level of negative movement in the key
assumptions. Having completed this forecasting process, the Directors expect that the Group will
meet the covenants under its bank facilities and consider that there is sufficient liquidity available to
the Group for the period beyond one year from the date of approval of these financial statements.
The following are the remaining contractual maturities at the reporting date. The amounts are gross
and undiscounted and include contractual interest payments.
Cairn Homes PLC
115
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
26. Financial Instruments and Risk Management (continued)
(c) Liquidity risk (continued)
Contractual cash flows
Carrying Total 6 months 6-12 months 1-2 years 2-5 years
Amount or less
€’000 €’000 €’000 €’000 €’000 €’000
Non-derivative
financial liabilities
Trade and
other payables 11,193 (11,193) (11,193) - - -
Loans and
borrowings 63,543 (73,868) (977) (1,009) (2,180) (69,702)
74,736 (85,061) (12,170) (1,009) (2,180) (69,702)
Derivative financial
liabilities
Embedded interest-
rate floor 514 (514) (48) (68) (144) (254)
(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.
(e) Currency risk
The Group is not exposed to currency risk. The Group operates only in the Republic of Ireland.
116
Annual Report 2015
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
26. Financial Instruments and Risk Management (continued)
(f)
Interest rate risk
At 31 December 2015, the Group had Term Loan and Revolving Credit facilities with AIB that had a
principal drawn balance of €65.5 million, with a variable interest rate of Euribor (with a 0% floor) plus
a margin of 3%. The Group has an exposure to cashflow interest rate risk where there are changes in
Euribor rates.
The loan facilities have an embedded interest rate floor derivative, whereby if the Euribor benchmark
is negative at the commencement of an interest period the benchmark rate is set to zero. The fair
value of this embedded derivative liability at 31 December 2015 was €0.51 million.
Cash flow sensitivity analysis for variable-rate instruments
A reasonably possible change of 100 basis points in interest rates at the reporting date would have
increased (decreased) profit or loss by the amounts shown below. This analysis assumes that all
other variables, remain constant.
Profit or loss Equity
100 bp 100 bp 100 bp 100 bp
increase decrease increase decrease
€’000 €’000 €’000 €’000
31 December 2015
Variable-rate instruments - borrowings 36 (36) 36 (36)
Cash flow sensitivity (net) 36 (36) 36 (36)
(g) Capital management
The Board’s policy is to maintain a strong capital base (defined as shareholders’ equity) so as to
maintain investor, creditor and market confidence and to sustain future development of the
business. The Group takes a conservative approach to bank financing and the debt to total asset
value ratio was 11% at 31 December 2015.
(h) 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;
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.
Cairn Homes PLC
117
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
26. Financial Instruments and Risk Management (continued)
(h) Fair value of financial assets and financial liabilities (continued)
The following table shows the Group’s financial assets and liabilities and the methods used to
calculate fair value.
Asset/ Liability
Loan assets
Carrying
value
Amortised
cost
Borrowings
Derivative
liability
Amortised
cost
Fair value
Level
Method
Assumptions
3
3
2
Assessed in
relation to
collateral value
Discounted
Cash Flow
Valuation of collateral is subjective
based on agents’ guide sales prices
and market observation of similar
property sales where available,
expected scale of development and
development costs assumptions.
Variable rate loan which is interest
bearing at market rates. Carrying
value approximates to fair value.
Black Scholes
Valuation Model
Valuation is based on Euribor
interest rate forecasts.
118
Annual Report 2015
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
26. Financial Instruments and Risk Management (continued)
(h) Fair value of financial assets and financial liabilities (continued)
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.
31 Dec 2015 Fair Value
Carrying Value Level 1 Level 2 Level 3
€’000 €’000 €’000 €’000
Financial Assets measured at amortised cost
Loan assets 382,951 382,951
Trade and other receivables 861
Cash and cash equivalents - current 6,551
Restricted cash - non current 27,000
417,363
Financial Liabilities measured at amortised cost
Trade and other payables 11,193
Borrowings 63,543 63,543
74,736
Financial Liabilities measured at fair value
Derivative liability 514 514
514
27. Commitments
(a) Capital Commitments
31 Dec 2015
€’000
No later than one year 150
Later than one and no later than five years -
Later than five years -
150
Cairn Homes PLC 119
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
27. Commitments (continued)
(b) Operating Lease Commitments
The Group’s operating lease commitments relate to the lease of its Head Office property.
At the period end, the Group had outstanding commitments under this non-cancellable operating
lease which fall due as follows:
31 Dec 2015
€’000
No later than one year 389
Later than one and no later than five years 1,558
Later than five years 789
2,736
28. Contingent Liabilities
Pursuant to the provisions of Section 357, Companies Act 2014, the Company has guaranteed the liabilities
of its subsidiary undertakings for their financial periods ending 31 December 2015 and as a result such
subsidiary undertakings have been exempted from the filing provisions of Companies Act 2014.
The Group is not aware of any other contingent liabilities that should be disclosed in these financial
statements.
29. Profit/(Loss) of the Parent Company
The parent company of the Group is Cairn Homes plc. In accordance with Section 304 of the Companies
Act 2014, the Company is availing of the exemption from presenting its individual statement of profit or
loss and other comprehensive income to the Annual General Meeting and from filing it with the Registrar
of Companies. The Company’s loss after tax for the period of incorporation on 12 November 2014 to 31
December 2015, determined in accordance with IFRS as adopted by the EU, is €32.8m.
120
Annual Report 2015
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements - continued
For the period from incorporation on 12 November 2014 to 31 December 2015
30. Events After the Reporting Period
On 4 January 2016, the Group contracted to acquire a 2 acre site in Hanover Quay, Dublin 2 at a cost of €18
million. The contract is expected to complete in March 2016.
On 11 February 2016, the Group contracted to acquire a site in Cherrywood, Dublin 18 at a cost of €21.5
million and conditionally contracted to acquire a second site at the same location, on the receipt of
planning permission, at a cost of €9.5 million.
On 16 February 2016, on payment of a further €2.5 million, the Group extended the exclusivity agreement
relating to the agreement to purchase the Business referred to in Note 14. The exclusivity period now
ends on 21 April 2016.
On 19 February 2016, the sub participation period relating to the residential land loan portfolio acquired
by the Company (Note 12) ended and 94% of all loans were legally transferred to the Group, with 6% still
subject to sub participation. On 14 March 2016, 3 of the underlying development sites (15% of the
residential land loan portfolio) moved into the Company’s direct asset ownership. If the necessary
consent to transfer the 6% to the Group has not been obtained by 31 December 2016, enforcement action
will be taken by Ulster Bank.
On 3 March 2016, the Senior Debt Facility was amended and restated following the accession of Ulster
Bank to the Banking Group and the Facility increased to €200 million.
On 7 March 2016, the Group contracted to acquire a site in Maynooth at a cost of €27 million. The contract
is expected to complete in April 2016.
31. Approval of Financial Statements
The financial statements were approved by the Board of Directors on 14 March 2016.
Cairn Homes PLC
121
FINANCIAL STATEMENTS
Company Financial Statements
For the period from incorporation on 12 November 2014 to 31 December 2015
CONTENTS
Company Statement of Financial Position
Company Statement of Changes in Equity
Company Statement of Cash Flows
123
124
125
Notes to the Company Financial Statements
126
122
Annual Report 2015
FINANCIAL STATEMENTS
Company Statement of Financial Position
At 31 December 2015
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Investments in subsidiaries
Current assets
Amount due from subsidiary undertakings
Inventories
Deposits paid
Trade and other receivables
Cash and cash equivalents
Total Assets
Equity
Share capital
Share premium
Share-based payment reserve
Retained earnings
Total equity
Liabilities
Current liabilities
Trade and other payables
Total liabilities
Total equity and liabilities
On behalf of the Board:
Mr John Reynolds
Chairman
Mr Gary Britton
Director
Note
€’000
2
3
4
5
6
7
7
8
9
75
130
26,657
26,862
394,712
72,899
5,000
990
4,506
478,107
504,969
637
521,390
29,118
(48,732)
502,413
2,556
2,556
504,969
Cairn Homes PLC 123
FINANCIAL STATEMENTS
Company Statement of Changes in Equity
For the period from incorporation on 12 November 2014 to 31 December 2015
Share Capital
Ordinary A Ordinary Deferred Founder Share Share- Retained Total
shares shares shares shares premium based earnings
payment
reserve
€’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000
As at
12 November 2014 - - - - - - - -
Total
comprehensive
loss for the period
Loss for the period - - - - - - (32,785) (32,785)
Other
comprehensive
income - - - - - - - -
- - - - - - (32,785) (32,785)
Transactions with
owners of the
company
Issue of ordinary
shares for cash 490 - - - 494,660 - - 495,150
Share issue costs - - - - - - (15,947) (15,947)
Issue of founder
shares for cash - - - 100 100 - - 200
Issue of ordinary
shares for business
combination 27 - - - 26,630 - - 26,657
Issue of A ordinary
shares for cash - 20 - - - - - 20
Conversion of A
ordinary shares to
deferred shares - (20) 20 - - - - -
Equity-settled
share-based
payments - - - - - 29,118 - 29,118
517 - 20 100 521,390 29,118 (15,947) 535,198
As at 31
December 2015 517 - 20 100 521,390 29,118 (48,732) 502,413
124
Annual Report 2015
FINANCIAL STATEMENTS
Company Statement of Cash Flows
For the period from incorporation on 12 November 2014 to 31 December 2015
Cash flows from operating activities
Loss for the period
Adjustments for:
Share-based payments expense
Finance income
Increase in inventories
Increase in amounts due from group undertakings
Increase in deposits paid
Increase in trade and other receivables
Increase in trade and other payables
Net cash used in operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Purchases of intangible assets
Interest received
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of share capital, net of issue costs paid
Net cash from financing activities
Net increase in cash and cash equivalents in the period
Cash and cash equivalents at incorporation
Cash and cash equivalents at 31 December 2015
€’000
(32,785)
29,118
(114)
(3,781)
(72,899)
(394,712)
(5,000)
(990)
1,758
(475,624)
(75)
(83)
114
(44)
480,174
480,174
4,506
-
4,506
Cairn Homes PLC 125
FINANCIAL STATEMENTS
Notes to the Company Financial Statements
For the period from incorporation on 12 November 2014 to 31 December 2015
1. Significant accounting policies
The individual financial statements of the Company have been prepared in accordance with IFRS as
adopted by the EU and as applied in accordance with the Companies Act 2014. As described in Note 29 of
the consolidated financial statements, the Company has availed of the exemption from presenting its
individual statement of profit or loss and other comprehensive income. The Company’s loss after tax for
the period from 12 November 2014 to 31 December 2015 is €32.8 million.
The significant accounting policies applicable to these individual company financial statements, which
are not reflected within the accounting policies for the consolidated financial statements, are detailed
below.
(a)
(b)
Investments in subsidiaries
Investments in subsidiaries are accounted for in these individual financial statements on the basis of
the direct equity interest, rather than on the basis of the reported results and net assets of investees.
Investments in subsidiaries are carried at cost less impairment.
Intra-group guarantees
The Company has given guarantees in respect of borrowings and other liabilities arising in the
ordinary course of business of the Company and subsidiaries. The Company considers these
guarantees to be insurance contracts and accounts for them as such. These guarantees are treated
as contingent liabilities until such time as it becomes probable that a payment will be required
under such guarantees.
2. Investment in Subsidiaries
31 Dec 2015
€’000
Shares in subsidiary undertakings 26,657
26,657
Details of subsidiary undertakings are given in Note 23 of the consolidated financial statements.
3. Amounts due from Subsidiary Undertakings
Amounts due from subsidiary undertakings are non-interest bearing and are repayable on demand.
126
Annual Report 2015
FINANCIAL STATEMENTS
Notes to the Company Financial Statements
For the period from incorporation on 12 November 2014 to 31 December 2015
4. Inventories
31 Dec 2015
€’000
Development land 72,899
72,899
For further information on inventories refer to Note 13 of the consolidated financial statements.
5. Deposits Paid
For further information on Deposits Paid refer to Note 14 of the consolidated financial statements.
6. Trade and Other Receivables
31 Dec 2015
€’000
VAT recoverable 792
Other receivables 198
990
7. Share Capital and Share Premium
For further information on Share Capital and Share Premium refer to Note 17 of the consolidated financial
statements.
8. Share-Based Payments
For further information on Share-Based Payments refer to Note 18 of the consolidated financial statements.
9. Trade and Other Payables
31 Dec 2015
€’000
Trade payables 248
Accruals 2,308
2,556
Cairn Homes PLC
127
FINANCIAL STATEMENTS
Notes to the Company Financial Statements
For the period from incorporation on 12 November 2014 to 31 December 2015
10. Financial Instruments
The carrying value of the Company’s financial assets and liabilities, comprising amounts due from
subsidiary undertakings, other receivables, cash and cash equivalents, and trade and other payables, are
a reasonable approximation of their fair value. Relevant disclosures on Group financial instruments and
risk management are given in Note 26 of the consolidated financial statements.
11. Related Party Transactions
Under IAS 24, Related Party Disclosures, the Company has related party relationships with key
management and with its subsidiary undertakings (see Note 23 of the consolidated financial statements).
Key management compensation is set out in Note 22 of the consolidated financial statements.
For the period from incorporation on 12 November 2014 to 31 December 2015, the following related party
transactions by the Company have taken place requiring disclosure:
(cid:129) On 15 June 2015, 100% of the share capital of Emerley Holdings Limited, subsequently renamed Cairn
Homes Holdings Limited, was acquired by the Company from Everleigh Investment Partners Limited
(an entity, in which the ultimate beneficiaries are Alan McIntosh, a director, and his spouse) and
Stanbro Property Holdings Limited (a company, of which over 96 per cent. of the ultimate beneficial
interest is held by Michael Stanley, a director, together with family members) for €26.7 million, the
consideration for which was satisfied by the issue of 26,657,224 Ordinary Shares of €0.001 each in the
Company (see Note 25 of the consolidated financial statements);
Edward Square Limited, an entity directly held by Alan McIntosh, a director, recharged €0.35 million in
the period to the Company for professional services and expenses incurred on its behalf.
Emerald Opportunity Investment Fund, an entity indirectly held by Alan McIntosh, a director, recharged
€0.2 million in the period to the Company for professional services incurred on its behalf.
(cid:129)
(cid:129)
12. Approval of Financial Statements
The financial statements were approved by the Board of Directors on 14 March 2016.
128
Annual Report 2015
Leading the way
At Cairn, build quality is at the heart of everything
we do. Our design-led process continually
questions outmoded practices and their relevance
to new ways of living. We strive to understand our
customers’ needs and aspirations and then bring
together the most talented designers and
craftsmen to interpret and deliver that vision.
Our company structure is professional, well
governed and considered. Cairn Board members
have held senior positions in a number of
successful public and private companies and bring
a great deal of experience to bear.
As well as offering home buyers peace of mind our
distinct approach also engenders the trust and
collaboration of planners, local authorities,
regulators and other important stakeholders in the
industry.
Given our existing and future development
pipeline we believe we are making a meaningful
contribution to the current shortage of quality new
homes in Ireland.
Key highlights
(cid:129) Deployed €554m1 of capital in 9 months since
(cid:129)
Initial Public Offering (IPO)
Total core landbank of 252 sites and 11,229
homes3
(cid:129) Acquisition of 9 separate sites post IPO (2 sites
in 2016) plus Ulster Bank residential land loan
portfolio
(cid:129) Successful launch of Phase 1 at Parkside with
sale of 52 houses now agreed as of February
2016
(cid:129) Continued strategic focus on the Greater
Dublin Area (“GDA”) (89% of landbank)
(cid:129) Skilled personnel in place to deliver on
increased operational activity
Note:
1. Includes c.€40m deployed in 2016 and €4m for Project Clear related construction bonds.
2. Includes the conditionally acquired Navan site and properties currently secured as collateral for loans acquired from Ulster Bank.
3. Estimated number of homes.
CAIRN HOMES PLC
ANNUAL
REPORT
20
15
C
A
I
R
N
H
O
M
E
S
P
L
C
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
5
7 Grand Canal
Grand Canal Street Lower
Dublin 2
P: +353 1 696 4600
E: info@cairnhomes.com
www.cairnhomes.com