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Our investment
in sustainable
homes
CAIRN HOMES PLC ANNUAL REPORT 2021
ABOUT CAIRN
Our investment in sustainable homes.
Cairn has been leading the way in the Irish
housing market since 2015. In that time the
business has scaled and today we are active
on 21 residential development sites with the
resources to deliver a broad choice of new
homes, to a broad and widening buyer pool
in great locations where people want to live
now and into the future.
IN THIS REPORT
Strategic Report 02-73
02 2021 Highlights
04 At a Glance
06 Chairman’s Statement
12 Chief Executive Officer’s Statement
18 Market Overview
26 Business Model
28 Our Strategy
30 Stategy in Action
50 Stakeholder Engagement
52 Sustainability
60 Chief Financial Officer’s Report
62 Risk Report
04AT A GLANCE
An analysis of our historic low-cost
c. 17,700 unit landbank by individual
site, location, planning status and
average plot cost.
Read more about our portfolio
on pages 4 and 5.
28OUR STRATEGY AND
STRATEGY IN ACTION
Our end to end business model and
the five strategic pillars under which
we run our business: customers,
homes, places, people and
operational excellence.
Find out more about our strategy and
what we are doing on pages 28 to 49.
18MARKET OVERVIEW
A focus on the fundamentals of the
Irish economy, the Irish homebuilding
sector and Cairn’s positioning within
the Irish new homes market.
You can also read our Annual Report
online at cairnhomes.com/investors
Learn more about how the property
market is developing on pages 18 to 25.
52OUR SUSTAINABILITY
COMMITMENTS
We are building on the enthusiasm,
commitment and culture for
sustainability that already exists
in Cairn and have disclosed our
sustainability metrics against
which our Sustainability Agenda
can be measured.
Read more on our sustainability
commitments on pages 52 to 59.
62MANAGING RISKS
Our risk management framework
is embedded into all of our business
processes to protect and bolster
our operations.
Read more about our risk
management on pages 62 to 73.
Corporate Governance 74-110
74 Board of Directors
76 Senior Leadership Team
78 Corporate Governance Report
87 Audit & Risk Committee Report
91 Nomination Committee Report
94 Directors’ Remuneration Report
108 Directors’ Report
Financial Statements 111-161
112
Statement of Directors’
Responsibilities in respect
of the Annual Report and
the Financial Statements
113
Independent Auditor’s Report
119
120
121
123
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
124
Notes to the Consolidated
Financial Statements
151
152
154
155
Company Statement
of Financial Position
Company Statement
of Changes in Equity
Company Statement
of Cash Flows
Notes to the Company
Financial Statements
Additional Information 162
162
Company Information
Cover image: Archer’s Wood, Delgany
CAIRN HOMES PLC ANNUAL REPORT 2021
01
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT 2021 HIGHLIGHTS
FINANCIAL HIGHLIGHTS
2021 was another year
of building a sustainable,
long-term, profitable
business which will
contribute greatly to
Irish society.
GROSS MARGIN
+350 bps
19.8%
16.3%
OPERATING PROFIT
+139%
€58.4m
€24.4m
REVENUE
+62%
€261.9m
€424.0m
2020
2021
OPERATING MARGIN
+450 bps
13.8%
9.3%
2020
2021
2020
2021
2020
2021
OPERATING CASHFLOW*
NET DEBT**
+€138.2m
€132.3m
-€58.8m
-€168.3m
-€109.5m
2021
-€5.9m
2020
2021
2020
* Before any capital allocation considerations,
including reductions of debt, dividends or accretive
strategic acquisitions, JVs or investments.
Calculated as €88.5 million net cash from operating
activities plus €43.8 million invested in accretive
strategic land acquisitions (2020: operating cash
outflow of €5.9 million, defined as €40.6 million net
cash used in operating activities plus €34.7 million
invested in accretive strategic land acquisitions).
** See Chief Financial Officer’s Report on
pages 60 and 61 for details of net debt.
*** Defined as Profit after Tax divided by Total Equity
at Year End. Calculated as €43.2m/€778.8m
(2020 ROE: €12.7m/€750.6m).
02
GROSS PROFIT
+€41.2m
€83.9m
€42.7m
2020
2021
EPS
+4.1 cent
5.8 cent
1.7 cent
2020
2021
ROE***
+390 bps
5.6%
1.7%
2020
2021
OPERATIONAL HIGHLIGHTS
Building a long-term competitive and market advantage.
OUR CONTINUED INVESTMENT
In people, our operating platform and
supply chain providing our business with
a unique and compelling long-term
competitive and market advantage.
Mariavilla, Maynooth
Donnybrook Gardens, Dublin 4
OUR INVESTMENT IN INNOVATION
Continued use of innovative off-site
manufacturing and new construction
methodologies, in addition to programme
management tools and standardisation
of construction programme delivery.
RECORD SALES LEVELS
Agreed the sale of over 1,400 new homes
in 2021, including our 5,000th since our IPO
in 2015, with this strong sales momentum
continuing in the early months of 2022,
particularly from starter home and
trade-up/down schemes with private,
mortgage-backed customers. 1,218 closed
and forward sales as at 2 March 2022, with
a net sales value of €463m, underpins 2021
guidance of 1,500 sales completions.
Mariavilla, Maynooth
CONTINUING TO SCALE
Currently active on 21 sites, including eight
new site commencements since May 2021.
In 2022, Cairn will be supporting over 3,000
full-time positions on an average of
22 active sites building high quality,
sustainable new homes on well-located
developments with full planning permission.
Read more in our Chief Financial Officer’s
review on pages 60 to 61.
CAIRN HOMES PLC ANNUAL REPORT 2021
03
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT AT A GLANCE
Our investment
in growth
We have the land and operating platform to deliver our growth
agenda and create shareholder value into the long-term.
c. 17,700
Units within our landbank across
37 separate sites
21Active sites today, with up to 6 new site
commencements scheduled over the
coming months
€970m
Invested in our landbank through
site acquisitions since June 2015
M2
M1
M3
MEATH
M4
KILDARE
M50
M50
N7
N81
DUBLIN
N11
WICKLOW
Active at year-end
Future
High capacity public
transport routes
Coastal commuter train
Rapid city train red line
Rapid city train green line
Commuter rail
c.17,700 UNIT LANDBANK - BALANCE SHEET CARRYING VALUE €672 MILLION
Source: Cairn Management data
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
70%of total capital deployed
in 2015 and 2016
65%of existing landbank units
acquired within one year of IPO
10,000
units granted planning
permission since 2015,
including c. 1,100 units in 2021
2015
2016
2017
2018
2019
2020
2021
Acquisitions in Period (€’m)
Cumulative Units Acquired
500
450
400
350
300
250
200
150
100
50
0
04
LANDBANK PLANNING STATUS
SUCCESS THROUGH THE SHD PLANNING PROCESS
37sites with limited planning risk, enhanced by our unrivalled
31applications
17grants
planning track record
14site
commencements
28%
28%
26%
• As at 2 March 2022, Cairn had received planning permission
for 5,734 new homes under the Strategic Housing Development
(“SHD”) process from 17 successful grants of planning.
• This equates to 7.7% of all new homes granted planning
permission through this fast-track process.
• Cairn also accounts for over 15% of all new homes
commenced under this process.
16%
2%
■ Strategic Development Zone ■ Full Planning Permission ■ In Planning
■ Residentially Zoned ■ Unzoned
WE OFFER A DIVERSE RANGE OF HIGH QUALITY NEW HOMES ACROSS ALL PRICE POINTS FROM ENTRY
LEVEL STARTER HOMES TO PREMIUM APARTMENTS
c. 13,000
houses within our landbank
€29,000
average house site cost
HOUSES
c. 4,700
apartments within our landbank
€53,000
average apartment site cost
APARTMENTS
27 sites:
23
4
housing sites
(average c. 570 units)
housing and apartment sites
(average c. 300 units)
14 sites:
10
4
apartment sites
(average c. 350 units)
housing and apartment sites
(average c. 300 units)
CAIRN HOMES PLC ANNUAL REPORT 2021
05
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT CHAIRMAN’S STATEMENT
Our investment
in Quality &
Sustainability
is at the heart
of everything
we do
“At Cairn, our sustainability approach
is considered and responsible:
building high-quality, sustainable
homes; crafting communities and
striving to improve the built
environment in Ireland.”
John Reynolds
Chairman of the Board
06
Our focus at Cairn is not
simply building houses.
Our purpose is to build
places and homes where
people love to live
and creating thriving,
sustainable communities.
A focus on quality and
sustainability has brought
us to the forefront of the
Irish new homes market.
BOARD GENDER DIVERSITY
30%
TOTAL DIVIDEND PER SHARE FOR 2021
5.5c
This ensures that we remain an ambitious,
committed and growing business; one
which is both an attractive place to work
for our growing team and the people within
our supply chain, and which can deliver
strong long-term returns for shareholders.
High-quality, competitively priced and
energy efficient new homes, an inclusive
work environment, sustainable business
practices and strong returns are not
mutually exclusive. We believe we are
delivering against each of these objectives.
They sustained our business throughout
2020 and 2021 and ensure we are
positioned to deliver for all stakeholders
in 2022 and beyond as our business
continues to grow.
2021 Review
As the year started, the pandemic
continued to impact our business. Strict
government restrictions remained in place
and directly affected our ability to operate
with effectively full residential development
site closures until 12 April 2021, albeit we
could continue to build and deliver
contracted social houses and onsite utility
connections. While there was an impact
on performance in the first half, we
demonstrated the strength of our operating
platform in the second half as restrictions
eased, delivering the strongest ever
half-year performance in the history of the
company. This is a performance of which
the Board is very proud and a reflection of
the strength of our Senior Leadership Team
and the dedication of our entire team.
Throughout the pandemic, our absolute
number one priority has been to protect the
health, safety and wellbeing of all of our
people, customers and the communities in
which we operate. While many of us have
adjusted to virtual working – several of our
board meetings continued to be held
virtually during the year – much of the work
we do as a homebuilder cannot be done
remotely. The safety of our people on our
construction sites, while it has always been
a priority, took on new meaning during 2020
and 2021. A key priority during the year was
to include the full leadership team in site
tours to enable them to get a clear
understanding of the issues on the ground.
While these visits were not possible at the
start of the year, the leadership team was
still able to complete more than 30 visits
across our active sites. We will continue
these visits in 2022 ensuring that we have
first-hand insight into the challenges that
our teams face each and every day.
Strong Financial Performance
Our financial and operational results were
characterised by a disruptive first half. The
second half represented Cairn’s strongest
ever performance in terms of new homes
sold, margin progression, profitability and
cash generation. The market demand for
high quality, competitively priced and
energy efficient new homes in great
locations remains strong.
Despite a shutdown of our sites in the first
half and the general challenging external
conditions that prevailed, we closed 1,120 new
home sales, delivered a gross margin of 19.8%
and reported an operating profit of €58 million
for the full year. Notwithstanding build cost
inflation of c. €15,000 per new home in 2021
(or c. 6%), we achieved strong margin growth
through improved mix with more apartments
sold, embedded supply chain efficiencies and
improved pricing in middle and upper end
apartments and houses. The affordability of
our starter homes remains a key objective -
our 2021 average selling price was €350,000,
including VAT, compared to €348,000 in 2020,
in prime, sought-after suburban locations. In
the context of the impact which the pandemic
restrictions had on our business last year, the
performance of our leadership team and
wider workforce, under the stewardship of our
Chief Executive Officer, Michael Stanley, is
fully acknowledged by your Board who have
observed the exceptional agile and effective
response to the multidimensional issues
confronting our business during this time.
Their hard work and commitment delivered
our strong operating and financial
performance in 2021, with an outstanding
second half in particular. The number of new
homes where we handed over keys to new
customers and our profitability in 2021, allied
with our large forward order book which stood
at 1,218 new homes as at 2 March 2022, are
testament to both our business model and the
hard work and ambition of the Cairn team,
ably led by Michael.
Delivering Returns
The uncertain and unpredictable impact
of COVID-19 led the Board to make the
difficult, but prudent decision in late March
2020 to withdraw the final 2019 dividend
and suspend our share buyback
programme. As we enter a more stable
period, supported by strong operating
cashflow generation, we have proposed a
final 2021 dividend of 2.8 cent per ordinary
share subject to shareholder approval at
our 2022 AGM. This follows a 2.66 cent
interim ordinary dividend per share paid in
October 2021. Given the significant levels of
CAIRN HOMES PLC ANNUAL REPORT 2021
07
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT CHAIRMAN’S STATEMENT CONTINUED
operating cashflow which is being
generated, after funding the future growth
of our business, and the value inherent in
our share price, we also commenced a
€75 million share buyback programme
on 13 January 2022. This programme
augments our dividend payment, is
accretive to earnings per share and
supports a stronger long-term valuation
for our business. It is also a strong
statement of intent from the Board on our
ambitious future outlook and prospects.
health and safety practices which are
supplemented by targeted external audits.
During 2021, Cairn obtained a Grade A
Safe-T rating for the first time, a
demonstration of the importance, effort
and continued focus everyone in Cairn
places on our health and safety agenda.
Cairn also undertakes periodic reviews
of our Safety Management System to
ensure that this is updated for any
changing regulations and legislation
and supports our continued growth.
attract and retain the best people Ireland has
to offer. As a Board and a senior leadership
team, we place a relentless focus on ensuring
our people are excited to be a part of our
journey and constant feedback loops are a
central part of that. I was particularly pleased
that our external Board evaluation found that
the Board demonstrates a strong tone from
the top and promotes the desired culture
within the organisation.
Board Refreshment & Evaluation
There have been a number of changes on
the Board during the year. Jayne McGivern
stepped down from the Board due to her
executive commitments, and Andrew
Bernhardt retired from his role at the end
of 2021, having served on the Board as
a non-executive Director for six years.
We are grateful to Jayne and Andrew for
their contribution to Cairn.
Following a search led by the Nomination
Committee, we were delighted to welcome
Julie Sinnamon and Orla O’Gorman as
independent Directors and who bring deep
and valuable experience to Cairn in addition
to bringing important gender diversity to
the Board. Both Julie and Orla have joined
the Audit & Risk, and the Nomination
Committee, ensuring gender balance
at a committee level also.
In addition to the Board changes that
occurred during the year, Mr. David
O’Beirne has signalled his intention to step
down from the Board of Directors at this
year’s Annual General Meeting. He will
accordingly also be stepping down from
the Nomination and Remuneration
Committees. David joined the Board in 2019
and brought a wealth of experience and
insight into our deliberations, and the Board
would like to thank him for his contribution
to Cairn during this period.
I would also like to acknowledge the
ongoing engagement with our office-based
staff working from home during the
pandemic to ensure their health and
wellbeing was and continues to be
supported. This engagement focuses on
resources for individuals, continuous
education and learning, virtual social
events, delivery of care packages to
employees’ homes and regular
communication and messaging.
People
Beyond issues of Health and Safety, we
continued to engage with our workforce
during 2021. We have a nominated workforce
Director to ensure the Board is apprised of the
views of the workforce, as well as conducting
semi-annual engagement surveys with
employees to hear their views. We are pleased
that the feedback from these surveys was
positive. Despite the difficult backdrop at times
over the past two years, 150 new people have
joined the Cairn team. However, we remain
aware that competition for talent has grown
since the onset of the pandemic, as individuals
seek more from their relationship with
employers. As a business, we have always
sought to be an employer of choice and
consider our culture and values, in addition
to competitive remuneration, benefits and
flexibility as a cornerstone of our efforts to
“During 2021, Cairn obtained a
Grade A Safe-T rating for the first
time, highlighting the importance
placed on health and safety.”
Against this improved overall operating
environment and as we reinstate dividends
and return value to our shareholders, we also
seek to recognise the impressive work carried
out by our Executive Directors and Senior
Leadership Team in steering the Company
over the past two years.
Health and Safety
The Board and Senior Leadership Team
are committed to the highest standards of
health and safety on our sites. The health
and wellbeing of all our employees,
subcontractors, customers and the
communities in which we build is of
paramount importance to everyone in Cairn.
Over the past two years we invested heavily
in additional safety measures at our sites
including new work protocols, procedures
and practices in full compliance with all
social distancing, hygiene and cleaning
requirements. Site compounds, including
welfare facilities, have been reconfigured
to facilitate these new requirements and
we have invested in appropriate personal
protective equipment. Additional resources
have also been deployed to all of our sites
to undertake compliance supervision.
From a construction perspective and as a
homebuilder with ambitious growth targets,
increased construction activity levels can
increase the risk of accidents on active sites
and the Company continually promotes the
importance of a safe working environment
and ensures the highest industry health and
safety standards are set. Specific and
measurable KPIs within health and safety
inform and guide our health and safety
strategy. Each active site has a dedicated
health and safety officer, ensuring that our
health and safety policies are implemented.
Health and safety is a standing agenda item
at all Board and Audit & Risk Committee
meetings ensuring the regular review,
oversight, assessment and monitoring of
health and safety practices. The Company
undertakes regular internal audits of
08
Rostrevor Place, Dublin 6
CAIRN HOMES PLC ANNUAL REPORT 2021
09
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT CHAIRMAN’S STATEMENT CONTINUED
Following his departure, Orla will take
on the important role of Workforce
Engagement Director, which has been
carried out by David to date. Since joining the
Nomination Committee, Orla has been part
of the discussions around our workforce
engagement efforts and stands in a good
position to successfully carry out this role.
During the past year, the Institute of Directors
conducted our triennial external Board
evaluation. As Chair, I was pleased that the
results indicated that the Board continues to
operate at a high standard in almost all areas.
While full details of the outcomes are
provided on page 84, one area identified for
improvement was the consistent availability
of training and education for Board members.
We will be implementing changes in this
regard during 2022 and will report on the
outcome in next year’s Annual Report.
Diversity
The importance of diversity continues to
be highlighted by the Board, investors and
other stakeholders. In 2019, the Board
adopted a formal Diversity Policy applicable
to the Company as a whole. We continued to
develop on our practices to elevate diversity
and inclusion throughout the organisation in
2021. At the end of 2021, female employees
made up 27% of our total workforce and
29% of our leadership team. At Board level,
gender diversity is 30% and as we come to
alignment with market best practice in this
regard, we will seek to continue to improve
gender representation on our Board.
Furthermore, our female Board
representation will be 33.33% following
David’s retirement in May 2022, which
represents a pleasing step on our journey to
appropriate gender diversity on our Board.
We recognise, however, that diversity is
far wider than just gender and have
actively reviewed the guidance of the
Parker Review in the UK. Despite the
different demographics in Ireland, it is
something the Nomination Committee is
aware of and continues to seek ways to
promote greater ethnic diversity in the
organisation and recruitment practices.
Another important diversity consideration is
in the skillset, thinking and background of
our Directors. Our most recent additions to
the Board, Julie and Orla, not only bring
gender diversity but also valuable and
diverse career expertise: leading the Irish
government organisation focused on the
development of Irish business; and in the
capital markets respectively. We will
continue to evaluate the needs of the
business and diversity across a range of
10
measures as we add further Directors to the
Board in the period ahead.
Oversight & Stakeholder Engagement
We recognise the importance of
engagement with our many stakeholders.
This is an important process of ensuring
effective oversight of the business. As
we engage with, and understand, the
perspective of our stakeholders, we have a
more holistic understanding of the business
which can inform our decision making.
As we have done in the past, I met with many
of our shareholders on strategy, governance
and remuneration matters. Throughout the
course of 2021 and in the first part of this
year, I have met with shareholders
representing over 60% of our shareholder
register. In line with best practice, we used
these meetings as a forum to discuss a
range of issues relating to strategy,
remuneration and environmental,
social and other governance issues.
Acknowledging that the resolution on the
Directors’ Remuneration Report received
opposition of approximately 25%
at the 2021 AGM, we have set out our
response through the voting results
disclosure, a six-month update and
through the 2021 Remuneration Report.
In addition to shareholders, the Board
receives regular updates and reports on the
workforce through our nominated Director,
David O’Beirne (who will be replaced by Orla
O’Gorman following our 2022 AGM) and
directly during site visits; and also conducted
a survey among subcontractors to ensure
that we are apprised of the perspective of
an important supplier to our business.
Engagement builds understanding and
through understanding we can ensure
we protect and enhance our business
performance in all market conditions.
Engagement and communication are key
to ensuring the Board understands the
stakeholder perspective and enables us
balance stakeholder interests in all decisions.
It also allows us to assess perceptions of our
corporate culture and whether the Board’s
ambitions for the business are aligned with
those of our stakeholders.
Sustainability & Reporting
Since our establishment as a homebuilding
company with ambitions to shape the future
of the sector in Ireland, we have been
acutely conscious of the short and
long-term impact our developments
have on our communities and environment.
A fundamental aspect of our approach to
acting responsibly and sustainably is
incorporating these considerations into
our everyday decisions and, thereafter,
reporting clearly on them to our
stakeholders through a defined set of
measurable non-financial disclosures.
While the Board has always been
responsive to these important matters, we
recognise the need to consistently enhance
our efforts in communicating our approach
to stakeholders. Building on last year’s
sustainability disclosures in our Annual
Report, this year we have published our
inaugural standalone Sustainability Report.
2021 was a year of considerable progress
at a global scale, the year of COP 26 with
the role of the financial sector further
highlighted, the year the EU Taxonomy
entered into law, but also a year marked
by a significant focus on employees, and
the challenges of economic progress on
society at large. Last year, we placed a
formal governance structure around
our sustainability journey with the
establishment of a Sustainability Steering
Group which reported directly to the Board
who held ultimate responsibility to oversee
the rollout of our ESG strategy. This
structure has evolved again with the
establishment of a formal Executive
Committee with overall accountability
to deliver on the ambitious strategy we
have set ourselves from 2022 and beyond.
The Board continues to support the
development of this strategy, from our first
standalone Sustainability Report which sets
out our progress and targets in relation to
our environment, social and governance
responsibilities to the incorporation of ESG
related metrics and targets within our
remuneration framework. Further details of
the priorities and objectives of the business
are detailed extensively in our Sustainability
Report and further details on the positive
changes we have within our remuneration
frameworks can be found in the Directors’
Remuneration Report.
As environmental and social concerns took
centre stage across the world over the
past year, we welcomed the increased
focus of stakeholders on ESG. In every
region, the need to act to address climate
change is growing by the day, while
the broader impact of COVID-19 has
heightened the awareness of the
interdependencies between business,
the community and wider society. As a
homebuilder, we believe sustainability is
central to everything we do. It needs to be
embedded into every new home we deliver
from initial design through to build and
use. Our approach to sustainability is
detailed in our inaugural standalone
Sustainability Report which we will
continue to expand on in the years ahead.
Outlook
2021 was an outstanding year for the Cairn
business and most particularly its people.
We are proud of the performance delivered
and the outlook for 2022. Reflecting on the
challenges of 2020 and the first half of 2021,
it is gratifying to say we are now poised to
deliver a record year across all financial
measures in 2022. While acutely focused on
delivering a strong financial performance
and shareholder returns, we also recognise
our responsibility to the communities and
society in which we operate. As mentioned
at the outset, delivering a sustainable
product, respecting our environment and
generating strong returns are not mutually
exclusive. Cairn has established itself as
the homebuilder of choice in Ireland. That is
a reputation we have invested in and we will
work to ensure we maintain that reputation
in the eyes of our employees, customers,
shareholders and other stakeholders.
Your Board, the Leadership Team and wider
employee base are profoundly saddened by
the continuing escalation and gravity of the
ongoing conflict in Ukraine and first and
foremost, our thoughts are with the people
of Ukraine at this intensely distressing time.
We will continue to monitor the situation
and the impact which this will have both
domestically and on the broader global
landscape. Notwithstanding this, our
outlook for 2022 remains encouraging.
I would like to record my appreciation for
the industry and collegiality of my fellow
Board members and to Michael and all
of the Cairn team. It is their hard work
which delivers for Cairn every day.
John Reynolds
Chairman
WHY INVEST IN US?
Cairn expects to deliver between 5,000 and 5,500
new homes in the three years to the end of 2024.
Our ambitious growth will be underpinned by an
efficient, sustainable self-delivery model across all new
home and building types and our ability to provide
competitively priced new homes for all segments of
our market. Here are the main reasons to invest in us:
TRACK RECORD
€970m invested in a c. 17,700 unit
low-cost landbank. Brought 10,000
homes successfully through planning
and sold over 5,500 new homes since
2015 in award winning developments.
CAIRN DIFFERENTIATORS
Strong asset-backed balance sheet,
delivering new homes to all buyer
types across housing and self-build
apartments. A brand synonymous
with quality, value for money and
customer service. An industry leading
reputation with strong customer and
stakeholder recognition.
MARKET OPPORTUNITY
8,000 private units in our landbank
priced under €400,000 for first time
buyers. With regional expansion
underway, we are a counterparty
of choice for multifamily investors.
The Irish Government demonstrated
its commitment to increasing supply
through the “Housing for All” strategy
launched in 2021 and supported
by €4bn in committed capital each
year to 2025.
SCALE AND PROCUREMENT
ADVANTAGES
Industry leading procurer of labour
and materials with €1.15bn procured
from loyal and established supply
chain since IPO. Plc platform of
scale across housing and apartment
delivery. Innovation agenda and
procurement initiatives driving
value through supply chain.
GREAT PEOPLE
Growing our team of experienced
homebuilders aligned to our growth
strategy. Committed to driving
employee engagement to continue to
deliver a high-performance culture,
in a rewarding working environment
where we harness insights and
knowledge from our talented team.
CAPITAL DISCIPLINE AND ALLOCATION
A commitment to deliver shareholder
value now and into the long-term. We
now expect to generate in excess of
€500 million in operating cashflow to
invest in further growth and increase
capital returns to shareholders in the
three year period to the end of 2024.
We expect ROE to be c. 11% in 2022
growing to 15% by the end of 2024, with
shareholder returns of €115m in 2022.
Read our full investment case at cairnhomes.com/investors/reasons-to-invest
CAIRN HOMES PLC ANNUAL REPORT 2021
11
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT CHIEF EXECUTIVE OFFICER’S STATEMENT
Investing in
better homes
“We sold our 5,000th home during 2021 in our
seventh year in business and we expect to build
at least the same number again in the coming
three years. Our financial performance enables
us to reinvest strongly in our business to drive
this significant growth in delivery and to
underpin our contribution to addressing
the housing needs of our society.”
Michael Stanley
Chief Executive Officer
12
Cairn has an unrivalled
track record in delivering
much-needed new homes
for customers in both the
Irish sales and rental market.
We build a full suite of new
home types, right from our
core starter homes through
to being the largest self-build
apartment developer in the
Irish market.
With our continued focus
on innovation through all
of our construction activities,
we deliver new homes
which appeal to a broad
and widening customer base.
This starts at pre-construction
stage and continues all the
way through to customer
after-care.
Our future growth will be
underpinned by our core
customer base as well as
partnerships with Approved
Housing Bodies (“AHB”) for
social and affordable homes.
2021 STARTER HOME ASP (INCL. VAT)
€350,000
FORECAST SALES COMPLETIONS IN 2022
1,500
Before I reflect on Cairn’s 2021 results
and our 2022 outlook, I would like to
acknowledge the distressing events we
have witnessed following Russia’s invasion
of Ukraine. Our thoughts are very much
with the people of Ukraine at this dreadful
time. As we report today, the impact that
this will have on our business pales into
insignificance when we consider the plight
and suffering of our European neighbours.
Turning to Cairn, 2021 was our most
positive and successful trading period in
our seven-year history, even allowing for a
13 week construction lockdown at the start
of the period. The strategic decisions we
made in 2020 to continue to invest heavily in
our construction activities and importantly,
new site commencements, after the
outbreak of the pandemic ensured we were
in a position throughout 2021 to bring new
product to the market, at all price points,
and meet the significant demand which
we are witnessing for new Cairn homes.
We recorded our highest ever new home
completion volumes in the period and
started 2022 with over 1,000 new homes
forward sales which provides us with a
very strong platform for the year ahead.
All of these sales and completions were
delivered by leveraging our digital sales
platform given the varying level of
restrictions which were in operation
for the entire year, including our new
customer website which we launched
earlier in 2021. I was particularly pleased
that our customers recognised both our
commitment and performance with an
NPS (net promoter score) of 55 achieved,
which is equivalent to 5 stars in the Home
Building Federation model.
Our business has and will continue to
benefit from the significant investments
we have made in our people by growing our
team to 300 full time employees today, our
integrated delivery platform across low
and high density developments and our IT
platforms to underpin our digital strategy.
2021 was another year of significant
growth and development for our people
and the rewarding opportunities which
our business offers our talented team.
We pride ourselves on our employee
engagement initiatives and this has never
been more important for us than during
the events of the past two years. Our
employee engagement scores reflect this
commitment and the leadership shown,
with 90% of our employees believing their
voice is heard and they can impact change
in their role. We were delighted to be
recognised as a Great Place to Work for
2022 which demonstrates that we are
putting our talented team at the heart
of our strategy.
We continued to partner with our
subcontractor and supply chain partners,
predominantly through nearly €270 million
of labour and materials procured, but
also through strategic and supportive
operational and financial initiatives. Our
growing scaled platform and our supply
chain strategy continues to be very
attractive, and we added 70 new supply
chain partners during 2021.
All of this led to the second half of 2021
representing our strongest ever financial
performance with 717 sales completions,
total revenue of €293.4 million, a gross
margin of 20.3% and €108.7 million
operating cashflow generated (before
we invested €43.6 million in strategic
land acquisitions).
We also progressed a number of new sites
through the planning process and have
commenced construction on eight new
sites since last May which will deliver
over 1,800 new homes. Our land strategy
remains opportunistic in the context of
portfolio managing our long-term c. 17,700
unit historic low-cost landbank. We
acquired three sites towards the end of
2021, with the capacity for c. 1,800 new
homes with full and partial planning, at a
cost of €43.6 million. We are already active
on two of these sites and will commence
the third over the coming months. These
acquisitions are quick capital turn sites
which will deliver an internal rate of return
in excess of our 15% hurdle rate.
As ever, we have been very grateful for the
continued support from our shareholders
during 2021 and it was important for our
business to be in a position to reinstate
shareholder returns during 2021 in the
context of our strong cash generation.
It is our intention to provide a long-term,
progressive ordinary dividend stream
to our shareholders, supplemented by
additional returns through either share
buybacks or special dividends.
We have taken the opportunities presented
over the last two years to emerge as a
stronger business, ready for significant
growth over the coming years. The main
objective of our actions throughout the
pandemic has been to protect the business
in the short-term while ensuring we
position ourselves to take advantage of
opportunities that will strengthen the
business for the future and increase
shareholder returns.
CAIRN HOMES PLC ANNUAL REPORT 2021
13
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT CHIEF EXECUTIVE OFFICER’S STATEMENT CONTINUED
The Company’s strategic objectives are
fully aligned to the Government’s “Housing
For All” strategy, launched in September
2021 with a target of delivering 300,000 new
homes in Ireland by 2030, including 54,000
affordable homes. The plan recognises the
important role the private sector will play in
the delivery of this much needed social and
affordable housing for the 375,000
households in Ireland earning between
€50,000 and €80,000 who cannot access
social housing and have limited access
to mortgage finance.
Our innovative approach to customer-
focused product evolution is now more
important than ever as many people will
view the family home as a place to both live
and work in close proximity to recreational
and other amenity facilities which is
informing our approach to design. With our
approach to sustainability and this focus on
innovation informing both our construction
activities and our design-led approach, the
foundations are now well-established for
Cairn to be a leading homebuilder in Ireland
into the long-term.
Leading Sustainably
At Cairn, we strive to build homes that will
stand the test of time, being mindful of the
changes in our climate that those homes
and the communities living in them will
face in the future and to build in a way that
respects both people and planet. We cannot
achieve all of our ambitions overnight but
we can target the most important areas,
defining what we will achieve, how we will
get there and when. To that end, we have
put in place a sustainability strategy that
will help us to make meaningful
improvements each year.
Health and safety is our number one
priority and we will maintain the very
high standards we have set so far –
including achieving an A rating from
Safe-T certificate during 2021.
We will build on our expertise in ecology
and biodiversity, investing more so that
we achieve biodiversity net gain across
40% of our commencements by 2024.
We will go beyond our stakeholders’
expectations to deliver innovative and
biodiverse new schemes.
Our Growth Strategy
We are investing in the capacity and
capability of our business to support our
growth strategy, set us up for scale and
optimise our product delivery, all of which
will be delivered through a combination of:
• Business Expansion and Strategy:
Cairn has built a strong reputation for
delivering high quality homes in Dublin
and surrounding counties over the last
number of years. As we expand our
business, we will bring our skills and
efficient homebuilding model to other
regions in Ireland. We have commenced
a large site in Cork and this year we will
be starting new schemes in Limerick
and Galway. The three largest cities in
Ireland outside of Dublin are
significantly undersupplied from a new
homes perspective and we look forward
to delivering high quality, energy
efficient homes in these areas. Cairn
strongly believes that our extremely
efficient business model and capability
should be used to support the
development of affordable and social
houses. We will look to further increase
our partnerships with the State and
AHB’s and leverage our scale to deliver
homes for people in Ireland who
otherwise would find it very difficult to
purchase their own home or indeed get
access to mortgage finance.
• The Strength of our Team: we are
investing in our people and increased
employment within our business with
150 new people joining the Cairn team
over the last 2 years across all areas of
our business, including key
management appointments.
• “Better Ways to Build”: an initiative
established to ensure our competitive
and market advantage continues into the
future, focused on: lean and efficient
processes and ways of working; uptake
of new technologies, products and
systems; and improved productivity,
including onsite logistics; and Increasing
Annual Volumes: with a target of 1,500
closed sales in 2022 (a 34% increase on
2021 closed sales and on sites which are
all active with full planning permission)
and between 5,000 and 5,500 closed
sales in the three years to 2024. We are
currently active on 21 sites with a
number of new site commencements
scheduled over the coming months.
14
We will introduce new initiatives and
continue to pilot new technologies to
reduce our carbon footprint in line with
our commitment to the SBTi (Science
Based Targets Initiative). This builds on
our achievements to date including
pioneering rapid impact compaction in
Ireland, reducing waste and haulage
through better soil management, and for
our customers, providing air source heat
pumps meaning our homes no longer
rely on gas central heating.
We have always said our business is not
simply about building homes – we are
creating places and communities that
will last long after our work is done.
Delivering To Our Customers
Cairn delivered 1,120 closed sales in 2021
across 16 developments at an average
selling price, including VAT (“ASP”) of
€428,000 (2020: 743 closed sales across
15 developments at an ASP of €377,000).
Competitive starter home prices remain
a key objective for our business and our
2021 average selling price was €350,000
including VAT (2020: €348,000), in prime,
sought-after suburban locations.
Cairn agreed the sale of over 1,400 new
homes in 2021. The demand we are
witnessing from private purchasers, across
all price points from entry level starter
homes to trade-up/down, remains
exceptionally strong and has continued into
the early months of 2022. Enquiry lists
across all our active selling sites remain
at historic highs, with particularly strong
interest in our starter home and trade-up/
down commuter locations. As at 2 March
2022 we had 1,218 new homes in our closed
and forward sales pipeline with a net sales
value of €463 million.
The Company completed a number of
contracted multifamily sales during 2021,
including The Quarter at Citywest,
Shackleton Park and Gandon Park (both
Lucan) and Rostrevor Place. Cairn has two
other multifamily transactions contracted
at Griffith Wood and Shackleton Park with
phased delivery dates during 2022.
“As a business, our future success
will also be defined by the quality
of the homes we build and the
long-term impact of our actions on
our customers and the communities
in which we operate.”
Cairn’s track record as a self-build
apartment developer is unrivalled in
the Irish market with eleven apartment
developments complete or under
construction, comprising 2,000 units. With
a long-term landbank containing c. 4,700
apartment units, Cairn is the counterparty
of choice for institutional investors. With the
location and price points of our apartment
developments in established residential
areas, demand for this product from the
more traditional trade-down market has
also picked up considerably.
Expanding Our Production Capacity
Following the second construction
lockdown (8 January 2021 – 12 April 2021),
we were able to get back to near full
production capacity within a short
space of time. Including recent new site
commencement activity, Cairn is now
averaging 3,000 people (including direct
employees, subcontractors and other
sector professionals) working across
our active sites.
Since the start of 2022, we have
commenced a number of new sites
including starter home developments
at Leixlip Gate (Kildare) and Navan
(Co. Meath), a trade-up/down development
at Dunboyne Road (Maynooth) and a new
apartment development at Citywest (Dublin
24). Our pre-construction development
team continues to progress design team
appointments, construction programmes
and phasing plans across our future
sites, with enabling works commencing
on a number of these ahead of 2022
site commencements.
The Company again demonstrated our
commitment and partnership approach to
our subcontractor and supply chain during
2021. The depth, capacity and capability of
our supply chain is of vital importance to
Cairn and through the different and
innovative manner in which we interact with
our supply chain partners, we are further
strengthening the breadth and resilience
of these relationships and partnerships
through continual engagement, supportive
financial and strategic initiatives and
visibility over a pipeline of committed future
work. We have invested heavily in our
supply chain strategy which is framed
around three pillars: securing our current
supply chain (utilising multiple
procurement strategies); supplementing
suppliers by expanding our supply chain;
and substituting delivery methods (through
innovation, more efficient and secure
delivery methodologies). These pillars are
underpinned by our proactive approach to
supplier relationship management and
category management activity (informing
future spend and indicative resource
levels). Our collaborative approach and the
value which our business model offers has
strengthened our capacity and flexibility
during 2021 to support future growth.
We are operating in a challenging build cost
environment in Ireland today. There is more
uncertainty around build cost inflation now
as a lot of commodities relating to building
materials are sourced from Eastern
Europe. The region is a significant producer
and exporter of timber, plastics, steel and
copper. It is likely that energy intensive
manufacturing will also be impacted. Cairn
is responding to this in a numbers of ways,
including a central procurement function
which will leverage a €1.3 billion spend
across the next 3 years, detailed category
management, working closely with the
strategic and preferred partners with
whom we collaborate through our
supply chain tiering and engaging with
our suppliers at the earliest possible
stage in our process during design
and pre-construction.
CAIRN HOMES PLC ANNUAL REPORT 2021
15
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT CHIEF EXECUTIVE OFFICER’S STATEMENT CONTINUED
We absorbed c. €15,000 build cost inflation
in 2021 per new home, equating to c. 6%
build cost inflation and we expect there to
be an additional c. €10,000 increase, or
c. 4%, in 2022. This will continue to be a key
watchout area for us, particularly with the
ongoing situation in Ukraine.
Enabling Successful Delivery
Having successfully incorporated the Cairn
Integrated Delivery Platform in 2021 across
our low and high density development
activities, we have enhanced both our
pre-construction and construction
programming capability through our
dedicated Innovation Team. We are focused
on enabling successful product delivery
which is informed by a blended approach to
three key areas, each of which are central
to our ongoing Innovation Agenda:
1. Ways of Working: Lean and efficient
processes and ways of working,
programme management and
standardisation;
2. Technology: New alternative systems,
products and technologies, adopting a
digital approach and leveraging both
off-site manufactured (“OSM”)
methodologies and modern methods
of construction (“MMC”); and
3. Productivity: improvements using lean
principles, enhanced onsite logistics
and an emphasis on manufacturing
and assembly methods.
As a business, our future success will
also be defined by the quality of the homes
we build and the long-term impact of
our actions on our customers and the
communities in which we operate. Two
material areas from a construction
perspective are climate change and
biodiversity, and a number of innovative
construction methods have been
implemented to specifically address our
carbon footprint and habitat creation
under our biodiversity strategy. Cairn has
a detailed and time lined “Innovation and
Ways of Working” implementation strategy
over the coming years which will enhance
our delivery platform and complement our
Sustainability Agenda.
With hybrid working models in both the
workplace and remotely likely to become
more of a feature of the labour market,
our customers are looking for homes
where they can both live and work. This
informs our approach to customer-focused
product innovation with a greater emphasis
on the importance of delivering high quality
residential accommodation with
playgrounds, parks, greenways and
other amenities in our developments.
Residential Property Market
Annual housing demand of 33,000 new
homes is forecast to 2040 in a high
international migration scenario that would
see our population growing to 6 million by
2040 from 5.01 million today (source: ESRI
- Regional Demographics and Structural
Housing Demand, December 2020). There
were 20,433 new homes built in Ireland
in 2021 (-0.5% YoY). We estimate that less
than 35% of these homes were purchased
by owner occupiers. The three year average
delivery stands at just 20,669 new homes,
notwithstanding the pandemic (source all:
CSO). New home commencements
increased considerably by 48% in 2021
to 30,724 housing starts which is likely
to increase completions in 2022, however
it remains to be seen what the impact of
challenges to the Irish planning system,
particularly through judicial reviews, will
have on supply levels post 2022 (source:
Department of Housing).
“On average, a residential property
in England is traded once every
19.6 years. This increases to 23
years in the USA and compares
to 37 years in Ireland.”
16
House price inflation is running at 5.1% for
new homes and 16.7% for second-hand
homes in the year to December 2021
(source all: CSO). The lack of liquidity in the
Irish second-hand home market remains a
feature. The stock of homes listed for sale
on MyHome.ie, Ireland’s largest property
portal, was at a record low of just 11,300
homes on 1 January 2022, down 21% on
the prior year. This equates to c. 0.1% of the
total housing stock in Ireland. On average,
a residential property in England is traded
once every 19.6 years. This increases to 23
years in the USA and compares to 37 years
in Ireland.
The stock of homes available to rent in
Ireland was at a historic 15-year low of just
1,397 homes on 1 February 2022, some
85% below the 15-year average of 9,300
homes and national rental inflation in the
full year 2021 was 10.3%. This is reflective
of the acute shortage of homes across all
tenures in Ireland. Rents increased 10.4%
in 2021 (source all: Daft.ie Q4 2020 Rental
Price Report) and the difference in the cost
of owning a Cairn starter home in Dublin
compared to the cost of renting the same
home remains stark – it is 80% or €1,041
more expensive to rent than own.
Mortgage Market
Mortgage-backed demand, underpinned
by a pandemic-related increase in
household savings of €23 billion between
April 2020 and December 2021, has driven
an increase in both mortgage approvals
and drawdowns.
2021 saw the highest number of mortgage
drawdowns since 2009 with 43,494
mortgages (value €10.5 billion) drawn
down, an increase of 22% over 2020
volumes. Our core first time buyer market
drove this growth accounting for 22,901
(52.7%) of mortgage drawdowns, of which
7,289 were for new homes (+14.8% on 2020).
First time buyer mortgage approvals also
increased by 25% to 28,954 approvals in
2021 (source: all BPFI).
Both Ulster Bank and KBC announced their
departure from the Irish mortgage market
during 2021. This is a very disappointing
outcome for Irish consumers, and while we
expect a number of new entrants into the
Irish mortgage market during 2022 and
beyond, it is essential that new entrants
are encouraged to move into our market to
increase competition in what is a critical
sector underpin for the new homes market.
Outlook
As we look into 2022 and beyond, our
economy is stronger than it was pre-
pandemic and we are continuing to
operate in a market which remains
significantly undersupplied.
We expect to deliver 1,500 completions,
in excess of €600 million revenue,
a €100 million operating profit and an
operating margin of c. 16.5% in the year
ahead. We also expect to generate
€175 million operating cashflow (before
any capital allocation considerations,
including reductions of debt, dividends
or accretive strategic acquisitions) and
return €115 million to our shareholders.
As we look into the medium term with
regional expansion supporting our growth,
our ROE is forecast to grow to 15% in 2024
and we expect to generate €500 million
in operating cashflow in the three-year
period from 2022 to 2024.
Overall, we remain very positive and
ambitious for our future growth prospects.
Michael Stanley
Chief Executive Officer
Government Initiatives
The Government launched its flagship
housing strategy “Housing for All” on
2 September 2021, which we welcomed,
a 10 year plan to increase new housing
supply, support home ownership and
improve affordability. Total capital funding
of €20 billion (€4 billion a year) is
committed until 2025 to finance the
implementation of this plan.
The First Homes Shared Equity scheme is
one of a number of key initiatives within the
plan and is scheduled to commence during
2022, specifically for our core first time
buyer market for new homes only. An equity
stake of up to 20% plus an additional 10%
Help-to-Buy rebate will be available to
eligible purchasers who will then require a
70% loan to value mortgage. This scheme’s
target is to finance an average of 2,000 new
home purchases every year until 2025.
The Help to Buy income tax rebate scheme
is continuing for the remainder of 2022
at its current enhanced level (maximum
rebate of €30,000 or 10% of the purchase
price, whichever is lower) after which it
is expected to revert back to its original
€20,000 cap or 5% of the purchase price,
whichever is lower.
The Cairn Team
I share my Chairman’s sentiments in
thanking each of my colleagues for their
hard work, contribution and commitment
to our business throughout 2021 as we
reached our milestone 5,000th new home
sale and I am excited that we have the team
in place to deliver on our next growth phase
to 2024. I would also like to thank our
subcontractor partners, our broader
mature and integrated supply chain and the
other property sector professionals with
whom we collaborate in delivering our high
quality, competitively priced new homes.
CAIRN HOMES PLC ANNUAL REPORT 2021
17
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT MARKET OVERVIEW
Our investment
in the markets
we serve
Cairn remains uniquely positioned
to meet the growing demand for
new homes across a broad and
widening customer base and
deliver on our growth agenda.
18
The Irish economy was
one of the fastest growing
economies in the EU in
2021 and this strong
expansionary momentum
has continued into the
early months of 2022.
With record exchequer
returns in 2021, consumer
spending has rebounded
and is leading this
economic growth.
HOUSEHOLD SAVINGS AT THE END OF 2021
€136bn
INCOME TAX 2021
+17.4%
YOY GDP GROWTH 2021
%
4
1
14
12
10
8
6
4
2
0
%
8
%
6
%
5
Ireland
EU
UK
USA
EXCHEQUER TAX RECEIPTS 2021 (€BN)
Other
Excise
Duty
4.7
5.1
5.4
5.8
Corporation
Tax
Value
Added Tax
Income Tax
Total
11.8
15.3
12.4
15.4
22.7
26.7
2021
2020
57.2
68.4
As a business, we recognise the significant
impact which the ongoing events in Eastern
Europe are having on the global economy.
Notwithstanding these geo-political risks,
the housing crisis in Ireland persists. New
homes supply averaged 20,714 in the three
years to 2021, or more than 40% below
annual demand for c. 35,000 new homes.
Market Backdrop
The supply of new homes in Ireland has
averaged 15,945 per annum since 2015 at
a time when the Central Bank of Ireland
forecasts annual demand at 35,000 new
homes. While this average annual supply
increased to 20,714 in the three years to
2021, supply decreased by 561 units
between 2019 and 2021.
The demand for new homes is driven by a
number of factors, including nearly 10
years of under-supply and a population
which continues to grow at 3 times the
EU 27 average. The population of Ireland
now stands at 5.01m, its highest level since
1851. Our population increased by 9.6% in
the 10 years to 2021, yet we only built 25
new homes for every 100 person increase
in our population compared to 215 in the
1980’s and 111 in the 1990’s.
Home ownership rates in Ireland continue
to decline, particularly amongst the
younger cohort of our population. We
estimate that only 12% of all homes in
Ireland today are owned by people aged
under 39, compared to 22% in 2011.
The Government launched its new housing
strategy, “Housing For All” on 2 September
2021. This is a detailed 10-year plan focused
on increasing new housing supply and
supporting home ownership. It is a strategy
which is highly geared towards stimulating
housebuilding. While the strategy has an
appropriate bias towards social housing, we
are now seeing measures that will benefit
Cairn’s prospective customers, particularly
middle-income families. The strategy has
set a target of delivering 300,000 new
homes by 2030 with significant involvement
of the private sector to meet this target.
Funding for the first five years of the
strategy is fully committed with €4bn
annual capital funding allocated for a
total of €20bn.
The multifamily sector continues to
dominate the Irish investment sector with
the Irish market offering favourable yields,
steady, stable rental streams and strong
occupancy levels for institutional investors
seeking long-term exposure to the Irish
residential market.
The Irish Economy
Ireland’s economic performance in 2021
was exceptionally strong. With GDP growth
of 13.5%, Ireland was amongst the best
performing economies in the EU 27
(average 5.7%). Government tax receipts
surged to a record €68.4 billion in 2021
as consumer spending and employment
rebounded from the pandemic at a
sharper-than-expected rate, with
income tax (+17.4%) and VAT (+24.3%)
receipts particularly strong.
The unemployment rate fell to 5.1% in
December 2021 from 6.2% in December
2020, having peaked at 7.8% in March 2021
during the second national lockdown.
A strengthening labour market is being
driven by a workforce which grew to 2.51m
in Q4 2021, an increase of over 190,000.
The labour force participation rate in
Q4 2021 stood at 65.1%, up from 60.6%
a year earlier.
Mortgage Market
Competition in the Irish mortgage market
continues to benefit homeowners with
mortgage interest rates continuing to
gradually fall, albeit at a slow rate and
Irish mortgage interest rates remain more
than double the EU 27 average. Mortgage
lenders are competing for new customers
through fixed rate offerings. The
introduction of longer-tenor fixed rates
of up to 20 years from a number of
mortgage providers was a welcome
feature of the market in 2021.
Mortgage drawdowns grew to €10.5bn in
2021 which is forecast to grow to up to
€12bn in 2022, driven by increased housing
supply and more transactional activity.
While the departure of Ulster Bank and
KBC is an unwelcome development, there
are more non-bank lenders scaling up and
up to two new entrants are expected to
enter the Irish mortgage market in 2022.
The new equity loan scheme will
commence during H1 2022. The scheme
will provide first-time buyers of newly built
homes with a 20% “equity loan” on top of
the existing 3.5x regulatory threshold on
loan-to-income ratios. With a Help to Buy
contribution of up to €30,000, first-time
buyers will only require a mortgage for
70% of the purchase price of new homes
priced at €300,000 or less.
CAIRN HOMES PLC ANNUAL REPORT 2021
19
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT MARKET OVERVIEW CONTINUED
MARKET OVERVIEW
Demand drivers
The housing market in Ireland has been chronically undersupplied for
the past decade with strong demand underpinned by a number of factors.
ECONOMIC BACKDROP
STRONG EMPLOYMENT RECOVERY
CONSUMERS DRIVING ECONOMIC GROWTH
RECORD EXCHEQUER RECEIPTS IN 2021
2.5m
Number of people in employment at
December 2021, representing Ireland’s
highest ever labour market participation.
2021 GDP GROWTH HIGHEST IN EU 27
€23bn
Household savings between April 2020
and December 2021.
€68.4bn
collected by the exchequer in 2021.
14%
12%
10%
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Q
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8%
6%
4%
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DEMOGRAPHICS SUPPORT DEMAND
With the youngest population and the highest birth rate in Europe, demographic factors underpin long-run demand for housing in Ireland.
IRISH POPULATION AGE PROFILE (‘000)
ANNUAL POPULATION INCREASE %
ESRI HOUSING DEMAND FORECAST
5.1
5.0
4.9
4.8
4.7
4.6
2016 2017 2018 2019 2020 2021
40,000
35,000
30,000
25,000
20,000
15,000
High
Baseline
Low
2
2
0
2
3
2
0
2
4
2
0
2
5
2
0
2
6
2
0
2
7
2
0
2
8
2
0
2
9
2
0
2
0
3
0
2
1
3
0
2
2
3
0
2
3
3
0
2
4
3
0
2
5
3
0
2
6
3
0
2
7
3
0
2
8
3
0
2
9
3
0
2
0
4
0
2
0-14 15-24 25-39 40-49 50-64 65-79 80+
Age
1,200
1,000
s
d
n
a
s
u
o
h
T
800
600
400
200
0
20
MORTGAGE MARKET FUNDING DEMAND
MORTGAGE DRAWDOWNS
€10.5bn
value in 2021.
AVERAGE MORTGAGE INTEREST RATES
MORTGAGE APPROVALS
2.72%EU average mortgage interest rate on new
€13.4bn
value in 2021.
mortgages is 1.29%.
20
15
10
5
0
2016
2017
2018
2019
2020
OWNING VERSUS RENTING
CAIRN 3 BED STARTER HOME
PRIVATE SALES IN 2021
€378,000
Average selling price (including VAT)
across Cairn developments in Dublin
for first time buyers (“FTB”):
• Shackleton Park (Lucan);
• Gandon Park (Lucan);
• Graydon (Newcastle); and
• Parkside (Malahide Road).
5
4
3
2
1
0
Variable
3+ years fixed
3.13%
2.59%
2016
2017
2018
2019
2020
20
15
10
5
0
2016
2017
2018
2019
2020
FTB MONTHLY MORTGAGE COST
MONTHLY RENTAL COST
Purchase price €378,000
Mortgage –
90% LTV
€340,200
Mortgage
interest rate
2.30%
Lucan
Lucan
Newcastle
€2,400
€2,400
€2,200
Malahide Road €2,400
Monthly
Mortgage
Repayment
(30 year C&I) €1,309
Average
€2,350
Cheaper
to Own
€1,041
More Expensive
to Rent than Own +80%
OWNING VERSUS RENTING BY PEOPLE AGED < 39
12%of all houses owned are
58%of all houses rented are by
by people aged under 39.
people aged under 39.
Home ownership in Ireland
has fallen to 68%, below the
EU average of 69.8%.
CAIRN HOMES PLC ANNUAL REPORT 2021
21
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT MARKET OVERVIEW CONTINUED
MARKET OVERVIEW
Housing for All
Government’s “Housing
for All” strategy to deliver
300,000 new homes by 2030.
The Minister for Housing, Darragh O’Brien
TD, launched the Government’s signature
housing policy, “Housing for All” in
September 2021. The plan commits to a
€4 billion annual investment in housing and
sets yearly targets across social, affordable
and cost rental housing. The Government
is aiming to deliver 300,000 new homes
by 2030 and an average of 33,000 homes
per year, split 90,000 social (30%), 36,000
affordable (12%), 18,000 cost rental (6%) and
156,000 private rental and purchase (52%).
The private sector will play a significant
role in this delivery, and other important
features of the plan include the equity loan
scheme which has an annual target of 2,000
new homes to fund 10,000 new homes by
2025 and €4.5bn funding for Irish Water
infrastructure to support accelerated and
increased housing delivery. The equity loan
will be subject to regional price caps set at
€450,000 in parts of Dublin, €400,000 in
Cork, Wicklow and Galway and €350,000
in Meath and Kildare.
Affordable housing is not currently available
to a large segment of the Irish population:
there are over 575,000 people in Ireland in
households with incomes between €50,000
and €80,000 who cannot access social
housing. This cohort of our population has
limited access to mortgages and are the
‘squeezed middle’ stuck in the rental trap.
Enhanced Help to Buy remains
until the end of 2022
• Income tax rebate to first time buyers
of new homes priced up to €500,000.
• 10% of the purchase price of a new
home up to €30,000.
• Positive initiative accelerating first time
buyers ability to purchase new homes.
22
The Quarter at Citywest, Dublin 24
OUR BUYERS PROFILE
60
50
40
30
20
10
0
57%
19%
14%
First time buyers
Trade up / Mover
Premium
10%
Social
FIRST TIME BUYERS
90%of our First Time Buyers
are couples or families.
AVERAGE WEEKLY STARTER HOME SALES RATE
4.2xPer active starter home
sales outlet in 2021.
IMPACT OF 20% SHARED EQUITY ON A €350K STARTER HOME
Reduced salary of €74k required. 231,000 households in Ireland earn between
€60k and €90k. The scaled shared equity scheme is essential for those earning
less than €90k.
New home price
€350,000
New home price
€350,000
Help to Buy
(lower of €30k or 10%)
€30,000
Help to Buy
(lower of €30k or 10%)
Deposit (own funds)
€5,000
Shared equity (20%)
Mortgage (A)
€315,000
Mortgage (A)
€30,000
€60,000
€260,000
Salary required (A/3.5x)
€90,000
Salary required (A/3.5x)
€74,286
Monthly mortgage
repayment (B)
€1,212
Monthly mortgage
repayment (B)
Net monthly income (C)
€5,705
Net monthly income (C)
DSR (B/C)
21.2%
DSR (B/C)
€1,000
€5,031
19.9%
CAIRN HOMES PLC ANNUAL REPORT 2021
23
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT MARKET OVERVIEW CONTINUED
MARKET OVERVIEW
Central Bank of Ireland –
Mortgage Measures Framework Review
The Central Bank of Ireland (“CBI”) is undertaking a detailed
framework review of the mortgage measures framework to ensure
the continued appropriateness of the borrower-based macro-
prudential rules (“MPRs”). Cairn believes that low and middle
income families have become totally disenfranchised with their
inability to access the mortgage market as they are stuck in more
expensive rental accommodation and the MPRs have become much
more binding over this time period due to the blunt Loan to Income
(“LTI”) measure. The LTI limits a borrower to securing a maximum
mortgage equivalent to 3.5 times their single or joint income.
In their current form, Ireland’s MPRs are amongst the strictest in
the developed world and restrict access to mortgages resulting in
insufficient mortgage-backed demand to drive increased supply.
Cairn strongly advocates a shift to a 30% Debt Servicing Ratio
(“DSR”) approach to assessing affordability. Importantly, with the
Central Bank’s now successful implementation of the Consumer
Credit Register, a pivot to a DSR approach would mean that
mortgage lenders could adhere to the underlying objectives of
the MPRs and could do so in a resilient and prudent manner.
In 2015, a potential homebuyer earning €75,000 could purchase
a new home costing €292,000 at a DSR of 25.3%. In 2021, the
same potential homebuyer can still only buy a new home costing
€292,000, however the DSR for this purchaser has reduced to
21.3%. Applying the 2015 DSR today would enable this purchaser to
access a family home up to €347,000 (equivalent to a 4.2 times LTI).
Find out more about the Mortgage Measures Framework Review
at cairnhomes.com/investors/market-overview/
LTI ratio
Gross income (A)
Maximum mortgage (A x 3.5 = 90% LTV = B)
Maximum house price (B/90%)
Net annual income
Net monthly income (C)
Average mortgage interest rate
Monthly mortgage repayment (D)
DSR (D/C)
2015
3.5
2021
3.5
€75,000
€75,000
€262,500
€262,500
€291,667
€291,667
€58,587
€60,740
€4,882
3.89%
€1,237
25.3%
€5,062
2.79%
€1,077
21.3%
25.3% DSR
in 2021
4.2
€75,000
€312,407
€347,119
€60,740
€5,062
2.79%
€1,282
25.3%
The following table highlights the difference between a 3.5x LTI, a 25% DSR and a 30% DSR approach to affordability for consumers:
House price (including VAT)
90% LTV mortgage
Monthly mortgage repayment
Household monthly income required
Gross annual household income required
3.5x LTI
25% DSR
30% DSR
€350,000
€350,000
€350,000
€315,000
€315,000
€315,000
€1,293
€5,705
€1,293
€5,172
€1,293
€4,310
€90,000
€77,500
€61,000
Mortgage cost/net income = DSR
22.7%
25.0%
30.0%
Market rent
Owning cheaper than renting by
Households earning between €60,000 and €90,000
€2,100
€807
175,000
In both DSR scenarios, the consumers demonstrate clear affordability and critically this would allow those on lower incomes to access
mortgages. While these consumers are taking on higher value mortgages, they would do so in the knowledge that they can afford to.
The consumers are still subject to the same rigorous underwriting rules of mortgage lenders through a more flexible and equitable
approach to affordability. The framework review will conclude in H2 2022.
24
The Multifamily Market
With eleven apartment developments completed
or under construction comprising 2,000 units, Cairn
is the self-build developer counterparty of choice
for institutional investors.
We bring our experience and learnings to each new
apartment scheme, including off-site manufacturing
and modern methods of construction, and will continue
to leverage these efficiencies on future projects.
STRONG 2021 MULTIFAMILY TRANSACTIONAL ACTIVITY
c. 3.75%
prime residential yields in 2021.
€2.1bn
transactional value in 2021 accounting for
nearly 40% of the Irish investment market.
c. 4,700
apartment units in our landbank at an average
site cost of €53k.
c. 6%multifamily share of the Irish rental sector.
€’bn
2.5
2.0
1.5
1.0
0.5
0
Yield %
4.6
4.4
4.2
4.0
3.8
3.6
3.4
3.2
2017
2018
2019
2020
2021
Investment Amount
Dublin Prime Yield
CAIRN HOMES PLC ANNUAL REPORT 2021
25
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT BUSINESS MODEL
OUR PURPOSE
Building homes and creating
places where people love to live.
Our resources
What makes us different
PEOPLE
Our building teams take great pride in delivering our quality, energy
efficient, A-rated new homes. The proven Cairn methodology
combined with our approach to training builds on the experience of
our staff, from apprentices to engineers to site foremen, surveyors
and site managers, ensuring that best-in-class standards are
maintained. This is ably supported by our central support functions
in pre-planning, design, sales and marketing, finance, HR and
IT in a fit for purpose organisational platform.
27%increase in employees. 3,000
full-time jobs supported
across our 21 active sites.
HISTORIC LOW COST LANDBANK
With c. 17,700 landbank units, we will continue to increase
our annual contribution of new homes to the market into the
long-term across all tenures and all price points to a broad
and widening customer base.
65%of landbank units acquired
within one year of IPO.
57%of our private new homes are
expected to be priced below
€400,000 (incl. VAT).
SUPPLY CHAIN
We have forged sustainable partnerships with key
subcontractors and our supply chain over the last six years,
aligned to our long-term growth strategy. We financially and
operationally support these partnerships, enabling successful
delivery of new homes through ways of working, technology
and productivity from an integrated delivery platform,
supplemented by our focus on our ongoing innovation agenda.
€1.15bn
labour and materials
procured since 2015.
63%of all procurement from our
top 20 subcontractors.
26
PLANNING & DESIGN
• An agile and proactive approach to innovation
and standardisation across our construction
activities, integrating off-site manufactured (“OSM”)
methodologies, modern methods of construction
(“MMC”) and our own construction intellectual property.
• Placemaking and design driven by creating vibrant,
sustainable communities and taking customer centric
design to our products to ensure innovative and best in
class new home delivery.
• Nearly 10,000 new homes granted planning permission
since IPO, including 1,065 new homes during 2021.
• Over 4,500 incremental units granted planning
permission or expected to be gained on existing
sites through increased densities.
CUSTOMER EXPERIENCE
• Launched a new customer website during 2021,
increased our digital marketing capability and
launched the “Home Together” initiative.
• Eight new brand launches in 2021.
• Mapped the customer experience to deliver a
supportive, engaged and collaborative home buying
process from start to end.
• Fully integrated Customer Relationship Management
system streamlined across sales and customer
legal management process.
Our values drive our business,
AGILE & INNOVATIVE
HONEST & STRAIGHT
TALKING
OUR VISION
To lead the future of homebuilding in Ireland by valuing people,
building responsibly and creating vibrant, sustainable communities.
THE HOMES WE BUILD
• Standardised starter home and apartment product
across multiple sites, using innovative OSM and MMC,
through the Cairn Integrated Delivery Platform.
• Developer-Contractor – site management teams
supported by central support functions and largest
self-build apartment developer in the market.
• Strategic procurement and supply chain initiatives
aligned to our plan for longevity and sustainability
in delivery.
• Sustainable, energy efficient new homes with
minimum A2 energy ratings following the adoption
of nZEB standards.
CULTURE
• Focus on developing our diverse talent pool and
building long-term careers through our continuous
learning and innovation agenda.
• Developing a strong culture as a source of
competitive advantage.
• Fully embedded sustainability within our day to day
operations and how we build and deliver our homes.
Read more in our Strategy in Action on
pages 30 to 49.
underpinning everything we do
COLLABORATIVE
COMMITTED &
ENGAGED
COMMERCIALLY
MINDED
Creating value for stakeholders
OUR PEOPLE
We attract and retain the best talent with 150 new people
joining in the last two years. Cairn received best in class scores
and “Great Place to Work® certification for 2021, validating the
initiatives and work implemented on our culture and employee
benefits and offerings.
91%of employees rated Cairn as
a highly inclusive employer.
84%eNPS score
(employee net promoter score).
OUR CUSTOMERS
Creating new sales opportunities outside of our traditional
social, private and institutional customer base.
€463m
net sales value of
forward sales.
1,218
forward sales as
at 2 March 2022.
OUR SHAREHOLDERS
We outlined our capital allocation policy during 2021.
We are committed to delivering shareholder value now
and into the long-term with ordinary dividends reinstated,
and we recommenced a sizeable €75m share buyback
programme in January 2022.
€115mshareholder returns
committed for 2022 from a
minimum €40m ordinary
dividend and a €75m share
buyback programme.
5.8 cent
earnings per share in 2021.
POLICYMAKERS
We engage with key policy
makers leveraging the learnings
from our relevant, market
leading and on-the-ground
experience.
OUR SUPPLY CHAIN
We manage strong,
established and growing
subcontractor and
supplier partnerships.
OUR COMMUNITIES
We create sustainable, vibrant communities centred around
well designed and high quality landscaped environments with
all associated amenities.
CAIRN HOMES PLC ANNUAL REPORT 2021
27
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT OUR STRATEGY
Cairn is a leading Irish homebuilder
committed to building homes and
creating places where people
love to live.
Leveraging our scalable operating
platform, established supply chain
partnerships and a historic low-cost
c. 17,700 unit landbank, Cairn will
continue to play a leading role in
providing greater access to new homes
in Ireland across all tenures and price
points through increasing our annual
volumes into the medium to long-term.
Our strategy links back to our purpose,
with each pillar aligning to one of the
three key component parts – homes,
people and places.
Building
homes and
creating
places where
people love
to live.
OUR STRATEGY IS INTRINSICALLY
LINKED TO OUR THREE
SUSTAINABILITY PRIORITIES WHICH
ARE ENABLING US TO ACHIEVE OUR
PURPOSE IN A TANGIBLE WAY.
Read our full
Sustainability Report at
www.cairnhomes.com/
sustainability
28
STRATEGIC PILLAR #1
People
We are committed to driving employee engagement to deliver a
high-performance culture in a rewarding working environment.
2021 progress
• Drove our Organisation and Talent Development agenda.
• Increased our capability and capacity across all functions.
• Expanded our Health & Welfare programme partnerships.
2022 targets
• Deploy a clear external employer brand in external recruitment.
• Sponsorship of apprentices and trainees within our supply chain.
• Develop In-house career management capability with clear
progression pathways.
Read more on pages 30 to 35.
STRATEGIC PILLAR #3
Homes
We design and build high quality, well-located, energy efficient
A-rated homes that people will love living in now and into the future.
2021 progress
• Delivered 1,120 new homes to the market across all tenures.
• Sustainable homes reinforced with an approach led by
placemaking and design.
• Successful implementation of Light Gauge Steel
apartments and duplexes.
2022 targets
• Deliver 1,500 new homes and commence up to 10 new sites.
• Expand regionally and extend our development and sales
footprint into Cork, Galway, Limerick and Kilkenny.
• Evolve our designs technically so they can meet our
ambitious sustainability and environmental targets.
Read more on pages 40 and 41.
STRATEGIC PILLAR #5
Places
We create places for communities to prosper.
2021 progress
• Our Six Hanover Quay project was the winner of the Irish
Green Cities Award 2021.
• Biodiversity was the key area of focus for “Places” and was
further embedded into our design and innovation agenda.
• Our Biodiversity Policy was fully incorporated within our
internal gateway system.
• Construction of three new children’s play areas in our Graydon,
Citywest Quarter and Archers Wood developments and the
refurbishment of a play area in Parkside.
• Construction of an all-weather sports court in Parkside Square.
• Nearly 8 acres of parks and green spaces delivered.
STRATEGIC PILLAR #2
Customers
We ensure we deliver an optimal customer experience.
2021 progress
• Prioritised the delivery of an exceptional
customer experience at each stage of the journey.
• Safety as a priority throughout the closing process.
• Use of customer surveys to inform and improve
our service.
2022 targets
• Full rollout of our new customer care portal.
• Refine our customer satisfaction framework.
• Expand and enhance our “Home Together” initiative.
Read more on pages 36 to 39.
STRATEGIC PILLAR #4
Operational Excellence
We create a commercial and profitable operating
platform to turn land into great places to live.
2021 progress
• Expanded our internal teams and 70 new subcontractor
and supply chain relationships created.
• Leveraged nearly €270m procurement/buying power.
• Focused on category management to inform future
spend and indicative resource levels.
2022 targets
• Focus on lean project planning and execution methods.
• Implement 4D planning on all projects.
• Improve productivity and onsite logistics.
• Expand our use of predictive analysis.
Read more on pages 42 to 45.
2022 targets
• Commence construction at the new town of Clonburris
with a key focus on critical infrastructure delivery.
• Adopt our Biodiversity Strategy as a headline item at
all major internal project gateways.
• Complete our largest piece of infrastructure to date, a road
bridge in Cork to our new Bayly development, which will
also service a new school being built for the local area.
• Deliver on a series of greenways as part of our
developments including Bayly in Cork and Three
Trouts Way in Greystones.
Read more on pages 46 to 49.
PEOPLE
HOMES
PLACES
OUR SUSTAINABILITY PRIORITIES:
Health and Safety
We are committed to providing a safe working
environment but beyond that we have developed
mental health initiatives to expand our support
for employees.
Employees
We strive to attract and retain the best talent to
support our growing business. We are successfully
embedding an equality, diversity and inclusion
strategy, which saw the introduction of a new
employee forum, as well as taking part in the
Great Place To Work program.
Customer
Our Customer Satisfaction Commitment features a
dedicated Customer Care team who look after the
needs of our customers during all stages of the
buying process and most importantly, after our
customer has moved into their new home.
Supplying Energy-Efficient Homes
The largest proportion of our emissions is
associated with the use of our homes. In order to
mitigate this, we ensure that every new home
brought to the market is BER (building energy
rating) A rated. This allows our customers to
contribute to a more sustainable future in Ireland.
Reducing GHG Emissions
We formally committed to setting emissions
reductions targets in line with the Science
Based Targets initiative. We are currently in
the process of setting these targets. To date,
we have measured our Scope 1 and 2 emissions.
We are in the process of completing a Life Cycle
Analysis of our house types to complete
measuring our Scope 3 emissions.
Climate Action
We value the places we create with a focus on
placemaking that makes a positive contribution
to the environment. We believe successful
developments contribute positively to their
residents and the broader communities in
which they are located.
Biodiversity
We recognise the negative impacts that
construction can have on local ecosystems.
Our approach is to mitigate any negative impacts
our activities may have and seek out ways to
support the creation of new habitats. In support
of this objective, we formally adopted a Biodiversity
Policy centered on an ambition to achieve
Biodiversity Net Gain.
CAIRN HOMES PLC ANNUAL REPORT 2021
29
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT STRATEGY IN ACTION
STRATEGIC PILLAR #1
People
We are committed to driving employee
engagement to continue to deliver a high-
performance culture, in a rewarding working
environment where we harness insights and
knowledge from our talented team.
30
EMPLOYEES WHO CONSIDER US
AS A HIGHLY INCLUSIVE EMPLOYER
EMPLOYEES WHO FEEL THAT CAIRN
SUPPORTS THEIR CAREER ADVANCEMENT
EMPLOYEES WHO BELIEVE THEIR VOICE IS
HEARD AND THEY CAN IMPACT CHANGE
91%
85%
90%
KEY PERFORMANCE
INDICATORS
• Recruitment, attrition and
retention targets met to keep
pace with our growing number
of active sites.
• Accreditations achieved from
Irish Centre for Diversity
(“ICD”) and Great Places to
Work (“GPTW”) supporting
an increased employer
brand presence.
• Tailored talent development
programmes complementing
employee career pathways
enabling building from within.
• Continued positive
engagement scores across
our team and broader
supply chain.
What we did in 2021
• Embedded our HR partner model
supporting an increasing number
of delivery sites.
• Established a workforce planning
capability which drove an improvement
of the forecasting process to provide
one view of pre-construction
and construction.
• Continued to drive the Organisation and
Talent Development agenda increasing
capability and capacity across all
functions, ensuring our people are
supported to do their best work.
• Increased our talent pipeline with
agency partnerships and an expanded
graduate program.
• Continued to focus on developing our
people at all levels with specific focuses
on onboarding, management capability
and enterprise leadership.
• Expanded our Health & Wellbeing
(“H&W”) programme partnerships with
Spectrum Life and the Wellness Crew.
• Established an Equality, Diversity &
Inclusion (“ED&I”) agenda and forum
to better understand our diverse
workforce’s needs.
• Employee engagement sentiment
remains high, with 52% of employees
intending to stay at Cairn for over 5 years
and 91% of our staff rating us as a highly
inclusive employer.
What we’ll do in 2022
• Digitise processes and integrate
systems to deliver a scalable and best in
class HR platform and support model.
• Market a clear external employer brand
that we are consistently deploying in
external recruitment for all talent pools.
• Sponsorship of apprentices and trainees
within subcontractor chain.
• Enhance our robust in-house career
management capability with clear
progression pathways.
• Targeted mentoring, coaching and
development cascaded through the
organisation and underpinning
succession planning activities.
• Further embed our well-established
ED&I agenda, underpinning our
HR strategy.
• Promote a reporting capability
that supports decision making by
understanding HR metrics and
return on investment.
Employee engagement will remain a key
priority for the People Team and our
established Cairn Culture Committee,
CairnLive engagement platform, and
various employee forums such as the H&W
and ED&I forum, will continue to drive
social, health, wellbeing and fun initiatives
for our staff, which has proven to be
a critical component to our increased
engagement scores.
“ The culture is unrivalled to any other company
that I have experienced. Everyone gets along
really well but has a high achieving ambitious
mindset. All in a really collaborative and
empowering environment.”
2021 employee feedback
CAIRN HOMES PLC ANNUAL REPORT 2021
31
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT STRATEGY IN ACTION CONTINUED
Our investment in our people
2021 has been a year of growth and
development for our people and our
capabilities within Cairn.
• Grew our team in 2021 with 101 new
hires resulting in additional strength
across all business functions.
• Invested in building talent from within
with 10% of our staff progressing into
new roles.
• Expanded our Project Manager
Development Program with diagnostics,
group development workshops and
detailed coaching and development
plans to equip our people within
the biggest growth areas of
our business.
• Delivered our mentoring programme
to rising stars to provide exposure to
senior management and identify
personal development opportunities.
• Implemented a leadership development
programme supporting our executive
team in their roles as enterprise leaders.
• Facilitated our first women in leadership
programme supporting high-potential
women to thrive at Cairn with support
from executive level mentors.
• Invested in our ED&I agenda facilitating
unconscious bias and inclusive
interviewing training to all people
managers to deliver an inclusive and
positive candidate experience.
We expanded industry partnerships such as
CIOB, Engineers Ireland, Korn Ferry and
IBEC. These partnerships support us to
develop critical skills in our workforce and
support our teams career development as
they prepare to move into senior or more
complex roles in the future.
We continue to engage heavily with our
supply chain through our relationship
management model. Our annual
subcontractor survey on our partnerships
continues to drive many internal initiatives
and changes to the way in which we work
and engage with our partners to remain
their “partner of choice”. Additionally we
have supported our supply chain in their
workforce planning to access the
necessary skilled labour to support our
pipeline, understanding their needs and
facilitating agency support to access
international labour.
32
Cairn is a Great Place to Work
In November 2021, Cairn took part in the
Great Place to Work® employee survey to
continue to understand our workforce’s
needs and to support us on our journey to
sustain and grow our culture. With an 85%
participation rate and an eNPS (employee
net promoter score) of 84%, we are
delighted to be recognised as a Great Place
to Work for 2022. This accreditation
validates our culture and values and the
work we are doing at putting our employees
at the heart of our strategy. Employees
scored Cairn the highest for ED&I (91%),
Empowerment & Accountability (87%),
Career & Development (82%) and
Engagement (83%).
With this accreditation we have an opportunity
to attract top talent as we grow and provide
a sense of pride to our existing teams that
they are a part of a Great Place to Work.
“ I feel valued and trusted
in my role and that
I am contributing to
something great. It really
is a team effort and we
all respect each other.”
2021 employee feedback
The valuable feedback employees
have provided, alongside GPTW
recommendations, will feed into our HR
strategy, alongside organisational and
functional action plans to address focus
areas and further enhance existing
processes and ways of working.
A COMPELLING VALUE PROPOSITION
TO ATTRACT AND RETAIN TALENT
COVID-19 has exacerbated the war for talent which is impacting companies’
strategies for retention and talent acquisition. The same employers are competing
within a limited talent pool and only those companies with a strong employer
brand proposition that speaks to the needs of today’s employees will win that
war. Through our extensive research, candidates and employees are looking
for organisations that mirror their values, a place where they feel they belong
and where they can bring all their identities to work (ED&I), and a place that
authentically delivers upon their philanthropic aspirations (charities, giving
back to the community).
In response, we invested heavily in Cairn’s employer brand to solidify our
value proposition, increase awareness of our culture and values, and
market our employment opportunities through innovative and
multi-pronged recruitment campaigns.
JOURNEY TO DEVELOP
OUR EMPLOYER BRAND
We conducted an employee survey and
focus group to find out what makes Cairn
an attractive place to work. With a 75%
participation rate, our employees have
worked with us to craft a value proposition
that reflects the unique culture, values
and ways of working at Cairn.
• 90% of employees feel connected to
the company vision, goals and the
part they play (connect).
• 85% of employees feel that Cairn
supports their career advancement
and progression (develop).
• 90% of employees believe their voice
is heard and they can impact change
in their role (inspire).
These employee insights, along with
extensive management and leadership
consultation, led to the creation of Cairn’s
employee experience journey. This
promotes a continued focus on employee
engagement, from attraction through to
onboarding and development and beyond,
helping us to understand how employees
needs change as their careers evolve.
From this we crafted a framework for
Cairn’s employer value proposition (“EVP”),
encapsulating our employee’s sentiment –
Connect, Develop, Inspire.
“Join Cairn, Together we Connect,
Develop and Inspire Ireland’s Future”:
• Connect with likeminded people
and turn colleagues into friends.
• Develop your career and work on
innovative local Irish projects.
• Inspire you to get involved in building
Ireland’s future.
With our EVP developed, we worked with
our marketing colleagues to create a video
showcasing the “connect develop inspire”
message, shared it externally on our social
channels and website and internally to all
teams through our CairnLive
communication platform.
As the EVP’s main purpose is to enhance
our ability to attract candidates, we
launched the “connect develop inspire”
branding through all local and international
recruitment campaigns, and invested in print
publications to target specific talent pools:
• Graduate and career fairs at TUD and
Graduate Ireland in Q3 2021.
• Cairn Website, CairnLive comms
platform, LinkedIn page and a Social
Media Campaign.
• December 2021 Women in STEM
article in the Irish Independent.
“ Cairn shows a positive interest in employees’
wellbeing and shows an energy into having
a ‘family’ rather than just employees.”
2021 employee feedback
• CIF magazine full page ad in January 2022.
• Full page ads in the Irish Times, Sunday
Times and SBP in December 2021.
• “New Year, New Career” full page ad in
the Irish Independent in January 2022.
• Digital recruitment campaign targeting
Quantity Surveyors and Engineers in
Q4 2021.
• December 2021 recruitment campaign
at Dublin Airport on Aerpods.
Our 2022 Employer Brand strategy builds
upon this foundation and will see Cairn
invest in innovative local and international
recruitment campaigns and marketing
strategies, that showcase our authentic
value proposition and brings to life our
commitment to connect, develop and
inspire our current and future employees.
CAIRN HOMES PLC ANNUAL REPORT 2021
33
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT STRATEGY IN ACTION CONTINUED
PEOPLE
E
L
P
O
E
P
Investing
in the
right people
34
to ensure
they are
motivated
to be part of
Cairn’s future
CAIRN RATED AS A HIGHLY
INCLUSIVE EMPLOYER
91%
eNPS
84%
CAIRN IS A GREAT
PLACE TO WORK
In November 2021, Cairn participated in the
Great Place to Work® employee survey to
continue to understand our workforce’s
needs and support us on our journey to
sustain and grow our culture.
With an 85% participation rate and an
eNPS score of 84%, we are delighted to be
recognised as a Great Place to Work for
2022. This accreditation validates our
culture and values and the work we are
doing at putting our employees at the
heart of our strategy.
Read the full case study on page 32.
CAIRN HOMES PLC ANNUAL REPORT 2021
35
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT STRATEGY IN ACTION CONTINUED
STRATEGIC PILLAR #2
Customers
Ensure we deliver an optimal customer
experience and gain the trust of all
Cairn homeowners.
36
CUSTOMER CARE TEAM CASES
RESOLVED WITHIN 30 DAYS
CUSTOMERS WHO MET NEW NEIGHBOURS
THROUGH HOME TOGETHER EVENTS
RESIDENTS WHO FEEL HOME TOGETHER
MAKES THE COMMUNITY MORE FRIENDLY
90%
97%
89%
What we did in 2021
• We continued to prioritise the delivery of
an exceptional customer experience at
each stage of the journey with every
touchpoint optimised including:
– a redesigned and more user-friendly
and intuitive website;
– timely and informative emails
triggered at each stage of the
buying process;
– an enhanced customer care case
process; and
– the digitisation of homeowner
manuals with all appliance,
system manuals and warranties
available digitally.
• Our Customer Care Team added three
new operatives, two maintenance
coordinators and appointed a dedicated
aftercare manager, helping to reduce
our case resolution time.
• Over 90% of Customer Care cases were
resolved within 30 days and post case
surveys show a satisfaction rate of 86%.
• Successfully moved 1,120 new
customers and families into their
new homes.
• Agreed the sale of over 1,400 new
homes across multiple developments.
• Continued focus on safety as a priority
with improved viewing, snagging,
valuation and closing procedures through
our sales and customer care team, all
overseen by a health and safety adviser.
• With over 13,000 people now living in a
Cairn home, our customers have a
substantial voice in our business. Our
customer surveys provide us with a
source of in-depth feedback and
invaluable insights which enable us to
continuously improve on our services
and product offering.
• Our “Home Together” partnership with
Neighbourhood Network was
successfully launched with a series of
community building exercises to help
create happy, healthy places for people
to live, where neighbours feel connected
and supported by each other. Key to the
success of this initiative was our
engagement with residents to help
establish their community themselves,
supporting local leaders to build
inclusive, resilient groups.
What we’ll do in 2022
• Full rollout of our new customer care
portal to allow for more streamlined
24-hour online self-service channels to
manage customer aftercare through
ticketing systems, online resources
and video tutorials.
• Refine customer satisfaction
framework across three pillars –
customer delivery, customer experience
and customer aftercare.
• Expansion of our Home Together
initiative to additional developments,
with all customer surveys and
interviews informing our approach.
KEY PERFORMANCE
INDICATORS
• 99% of new homes delivered
across 16 separate
developments on time and in line
with customer expectations.
• Net Promoter Score of 55
achieved in the period
(equivalent to 5 stars on the UK’s
Home Building Federation
model).
• Consistently positive feedback
from direct engagement with
our private and institutional
customer base.
• 95% of customers responded to
within a 24 hour window and a
96% case closure rate within the
30 day service level agreement.
INNOVATION
Full integration of customer data, feedback and surveys into our systems allows us
to effectively serve as the voice of the customer, providing real world insights to our
planning and design teams – ensuring an ever improving approach to how we create
places where people love to live.
STRATEGY IN ACTION
A measure of the success of Home Together are the community driven initiatives that
have grown organically from our activations, including groups with an interest in
gardening, crafts, tidy towns, woodworking, mothers and toddlers, yoga, women in
STEM groups, fitness and Tai Chi classes to name a few.
Our ongoing community surveys serve as a great testimonial to the success of
the initiative, with 97% of those surveyed telling us they had met new neighbours
through Home Together events and 89% of residents said that their community feels
more friendly since the programme kicked off.
Our intention of a light-touch facilitation of these groups has been key to its success
and we look forward to expanding the programme over the coming years across
our developments.
CAIRN HOMES PLC ANNUAL REPORT 2021
37
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT STRATEGY IN ACTION CONTINUED
CUSTOMERS
Our
investment
in customer
experience
E
L
P
O
E
P
38
INCREASE IN WEBSITE TRAFFIC ON 2020
35%
INCREASE IN DIGITAL BROCHURE
DOWNLOADS ON 2020
26%
LAUNCH OF OUR NEW WEBSITE
Our redesigned website provides a
seamless experience at each point in
the customer journey, at every digital
touchpoint and across all devices.
We achieved this through features like
custom brand-specific micro-sites for
new development launches, enhanced
digital brochures specifically designed
for screen and download, increased video
and feature-rich interactive virtual 3D
tours and fully digitised homeowner
manuals with guides and appliance
documentation at their fingertips.
The success of the site lies in its versatile
design and deep integration with our CRM
system, and our use of analytics, feedback
and surveys to allow us to tailor and deliver
content to the customer wherever they
are – both physically and along the
customers journey.
Read more about this on page 37.
makes it
seamless and
exceptional
CAIRN HOMES PLC ANNUAL REPORT 2021
39
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT STRATEGY IN ACTION CONTINUED
STRATEGIC PILLAR #3
Homes
Designing and building high quality,
well located, energy efficient, A-rated
new homes that our customers will love
living in now and into the future.
40
NEW HOMES DELIVERED
TO THE MARKET IN 2021
1,120
AVERAGE FIRST TIME BUYER
SALES PRICE IN 2021
€350,000
What we did in 2021
• Delivered 1,120 new homes to
new customers.
• Built quality homes reinforced with an
attitude led by placemaking and design.
• Successful product evolution including
new design for Archers Wood and new
suite of house types for Clonburris.
• Successful implementation of Light
Gauge Steel Apartments and Duplexes
to take advantage of modern methods
of construction.
• Further developed our standardised
homes, while also strategically
designing flexibility so each home can
be adapted to suit the customer needs
and local site requirements.
• Refined design and implementation of
work from home initiatives and designs.
• Implemented the Cairn Integrated
Delivery Platform which enhanced our
collective agility by actively managing
our pipeline more accurately.
• Focused on broadening our product
range with strategic design
specifications developed for specific
customer pools and institutions, so all of
our customer types can acquire a new
home that matches their needs.
• Supported our integrated delivery
platform with a common Document
Management System across our sites
and central office.
• Commenced construction on two new
quality schemes at Mercers Vale (South
Dublin) and Castletreasure (Cork).
• Completed the well-received schemes
of Mariavilla (Maynooth) and Glenheron
(Greystones).
• Focused on our core starter home
market and delivering competitively
priced housing at price points where
first-time buyers can access
mortgage finance.
• The affordability of our starter homes
remains a key objective - our 2021
average selling price was €350,000,
including VAT, compared to €348,000
in 2020, in prime, sought-after
suburban locations.
• Carried out strategic research
improving the energy efficiency of
our homes, further developing and
enhancing our Mechanical and
Electrical Design.
• Enhanced PreCon and Construction
Programming Capability with integrated
detailed project programs developed for
each project.
Operational improvements around our
homes during 2021
• Developed our technology and
innovation capability.
• Introduced a series of Operational
Dashboards Innovations and a working
group Engineers’ Forum.
• Further innovated Cairn’s Way of
Working by introducing Productivity
Planning, Offsite Manufacturing and
BIM (building information modelling)
Strategies.
• Implemented a working Programme
Management Office to reinforce
business processes and functions
as we scale.
What we’ll do in 2022
• Deliver 1,500 new homes across
all tenures.
• Commence up to 10 new developments
and be on an average of 22 sites during
the year.
HOMES & INNOVATION
Our approach to customer-focused
product has been cemented with
innovation and sustainability in
mind, married with further
developing our extensive
specification range with a number
of customer types in mind.
We continued to explore more
innovative and efficient ways to
deliver our new homes during
2021, implementing new technical
build innovations and maintaining
quality levels.
• Expand regionally and extend our
development and sales footprint
beyond the Greater Dublin Area.
• Continue work already underway in
Cork and also start preconstruction
design in Galway, Limerick and Kilkenny
in the first quarter of 2022.
• Bring a number of new schemes to the
market across all price points from
starter homes to premium apartments.
• Continue to enhance the standard of new
homes that we build through our
in-house design development
processes, with a best value approach.
• Grow our brand and separate ourselves
from the market through quality
thoughtful design.
• Evolve our designs technically so they
can meet our ambitious sustainability
and environmental targets with Modern
Methods of Construction (MMC) and Off
Site Manufacturing (OSM). Refine our
Cairn Standard Designs with our
Integrated supply chain in mind.
KEY PERFORMANCE
INDICATORS
• Maintained the
competitiveness of our core
starter home offering with
an average selling price of
€350,000, including VAT.
• Focus on innovation and
sustainability of new homes
built, including introducing
light gauge steel systems for
duplexes and apartments.
• 67% of our new homes were
rated A2 and 33% were
rated A3.
• Further innovated by
introducing productivity
planning, offsite
manufacturing and BIM
(building information
modelling) strategies.
CAIRN HOMES PLC ANNUAL REPORT 2021
41
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT
STRATEGY IN ACTION CONTINUED
STRATEGIC PILLAR #4
Operational
Excellence
Create a commercial and profitable
operating platform to turn land into
great places to live.
42
Griffith Wood, Griffith Avenue, Dublin 9
NEW SUBCONTRACTOR AND SUPPLIER
RELATIONSHIPS CREATED
LABOUR AND MATERIALS
PROCURED IN 2021
SAFE T CERT RATING ACHIEVED IN 2021
70
€270 million
A rating
What we did in 2021
• Continued to expand our internal teams
in addition to growing our subcontractor
base with 70 new subcontractor and
supplier relationships created.
• Leveraged nearly €270 million
procurement and buying power despite
the continuing challenges a second year
of COVID-19 has brought.
• This has also served to hedge against
growing build cost inflation in a year with
substantial commodity and product
increases with build cost inflation of
c. €15,000, or c. 6%, per new home built.
• Continued to focus on category
management within our supply chain
to inform future spend and indicative
resource levels.
• Maintained subcontractor performance
tracking across projects and completed
our second supplier engagement survey,
retaining a strong and positive score.
• Supported our supply chain to address
the current labour skill shortages.
• Secured planning consent for 1,065
new homes.
What we’ll do in 2022
• Mobilise for and commence up to ten
new schemes, including a number of
new locations outside of the Greater
Dublin Area.
• Focus on lean project planning and
execution methods.
• Implement 4D planning on all projects
to maximise delivery efficiencies.
• Improve productivity and onsite logistics.
• Expand our use of predictive analysis in
category management to assist our
supply chain in understanding multiple
project commitments and informing
supply chain expansion requirements.
• Proactively engage with our supply chain
in providing pipeline commitment to
secure future capacity aligned to our
growth ambitions. This will strengthen
supplier relationships and enable supply
chain growth and development.
• Continue to use modern methods of
construction (MMC) to improve
efficiency and remove constraint risks
within the supply chain.
• Develop sustainability as a critical
• Commenced delivery of five new
metric of our supply chain.
KEY PERFORMANCE
INDICATORS
• Expanded the depth and capacity
of our supply chain with 70 new
subcontractor and supplier
relationships established.
• Advanced our digital strategy
through productivity trackers
and dashboards and utilising
IT systems in programme
delivery and template
standardisation.
• Further integration of modern
methods of construction into our
standard designs while
maintaining best in class quality
standards for new homes
delivered.
• Delivered greater construction
programme and cost efficiencies
as evidenced by improved 2021
gross and operating margins.
schemes, continuing partnerships with
key suppliers and customers.
• Completed seven schemes (The Quarter
at Citywest, Shackleton Phases 3B and
C, Gandon Park, Rostrevor Place, Oak
Park, Mariavilla and Parkside).
• Continued to introduce modern methods
of construction (MMC) within our
schemes in order to drive product
standardisation, create efficiencies and
reduce construction programmes.
• Utilised project dashboards to monitor
progress and productivity.
• Achieved a Safe T Cert rating of A, an
increase from previous years reflecting
the high standard of health and safety
across our construction sites.
MAXIMISING OPERATIONAL EFFICIENCY
Our use of modern methods of
construction (MMC) has consciously
evolved over the last year and we
have introduced light gauge steel
(LGS) and offsite balcony fabrication
to our schemes.
specified periods of time. This will be
delivered in tandem with expanding our
current supply chain pool, allowing new
and existing subcontractors to grow
their businesses with Cairn as
we deliver on our growth agenda.
These construction methods improve
site efficiency and programme, along
with product standardisation.
In addition to expanding our use
of new construction methods, we
are also growing our supply base
of providers of these services, including
at a local level.
Category management has continued to
be a key focus, and we are now able to
utilise our order and spend data to
predict future category spend over
Our Supplier Relationship Management
strategy continues to work well, with
subcontractors invited to regular
meetings and kept abreast of our
pipeline plans, performance items in
addition to development and innovation
opportunities. We will continue to
engage to ensure our supply chain
maintain sustainability as a key
deliverable which we will seek
to align to our Sustainability Agenda.
CAIRN HOMES PLC ANNUAL REPORT 2021
43
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT Light Gauge Steel
Light Gauge Steel is a construction
methodology we have been researching
in depth for the last two years having set
up a working group in 2020 to develop
two blocks of apartments using this
methodology.
Suitability Assessment
To embed and integrate a new construction
methodology onto a project, we need to
ensure it meets the requirements of our
technical, commercial and construction
departments.
Our working group reviewed and liaised
with a series of Light Gauge Steel
companies and interrogated the product.
After working through the designs and
requesting a number of changes to the
system, we settled on a final design
fully aligned to our standardised final
product requirements.
We developed the onsite installation
prototypes to de-risk this new construction
method and to use it as an educational tool
for our team and subcontractor base.
Delivering Significant Efficiencies
Benefits of Light Gauge Steel include:
• Significant reduction in the structural
frame programme and the overall
building loads on foundations. These
combine to deliver a building requiring
significantly less concrete, which is
carbon intensive to produce.
• Utilising factory made, precision
components delivers a better
quality product.
• Steel is more recyclable than timber
or concrete.
• Similar process to timber frame in
terms of how it is constructed and the
efficiencies this delivers through a
panelised offsite system.
• Reduction in personnel onsite which
is better for health and safety.
• Majority of internal walls become load
bearing and structural.
STRATEGY IN ACTION CONTINUED
Ground Stabilisation, Cut and Fill
Design and the Circular Economy
Cairn has embarked on further specialised
use of both Ground Stabilisation and Cut
and Fill exercises to introduce a working
circular economy into our projects.
What is Soil Stabilisation
Soil stabilising is an accepted global
practice for treatment of materials that may
otherwise be classified as unacceptable.
Through remediation techniques such as
treatment with lime or cement, the material
may be rendered as structurally
appropriate.
The process for stabilising soil begins with
classification and sampling of the material
intended for re-use. This process will
identify the material type and produce a
treatment plan for the stablising process.
For example, materials of a clay type may
require lime for the stablising process,
while sandy soils may require a cement
stabilising additive.
Cairn has identified strategic schemes
using specifically procured Site
Investigation Material to rollout this
innovative and sustainable process on a
bigger scale across our c. 17,700 unit
landbank. Cairn now has a standard suite
of Site Investigation packages that are
procured early in the process. This allows
us to make advanced business decisions
about our landbank to provide a best value
approach and achieve a substantial
reduction in our carbon footprint.
Being more efficient in how we measure,
control and use our soil is a key target for
Cairn as we seek to find value in how we
approach our groundworks. A better use of
soil and a reduction in material to land fill
has the added benefit of being significantly
better for the environment.
Cut and Fill
Cairn has embarked on carrying out
specialised Cut and Fill exercises on pilot
sites to ensure we are managing our soil
bank effectively. This further peer review
challenges efficiencies in our site plan
design and also ensures sensible design
decisions are being made.
Placing new homes at optimum levels on
our sites mitigates unnecessary expense
and soil cut, which would otherwise result
in soil being moved off site.
The goal of the strategy is to make better
use of our landbank and ultimately to send
less soil to land fill, the outcome of which is
more economically viable and fully aligned
to our overall environmental strategy.
We are fully focused on this strategy
and are leveraging this experience to
design sites with a net zero soil import
and export where this is feasible from
a construction perspective.
Where cut and fill is not possible, we ensure
that additional soil generated from sites
is used for fill on other sites, with the end
goal of sending as little soil to land fill
as possible.
Testing for a wider range of soil types in
our pre-design stage allows contaminates
to be identified early and this ensures the
soil can be better managed. Areas with
contaminates can be identified and the
construction program can be designed
around their removal.
These innovations reduce our exposure to
the increased cost of stone and introduces a
practical and more sustainable alternative
as quarry reserves reduce.
“ This transition towards further
use of offsite manufacturing is
another step in Cairn’s journey
in becoming a modern methods
of construction leader.”
44
Light Gauge Steel is a quick and efficient
method of construction. It also allows us
to free up and reduce our reliance on
certain trades.
This transition towards further use of
offsite manufacturing is another step in
Cairn’s journey in becoming a modern
methods of construction leader.
Evolving this construction
methodology in 2022
Having proven this new form of
construction, we are extending its use to
apartment blocks of 3-4 storeys in height.
This innovative construction methodology is
scalable and will be used across multiple
Cairn developments in 2022 and beyond.
CIRCULAR ECONOMY - INNOVATIVE SOIL MANAGEMENT
LOWER CARBON
FOOTPRINT
INCREASED
REUSABILITY OF
MATERIAL ONSITE
REDUCTION IN WASTE
DISPOSAL TO LANDFILL
SIGNIFICANT
REDUCTION OF
MATERIALS SENT
TO LANDFILL
COMPLY WITH THE
REQUIREMENTS OF
CIRCULAR ECONOMY
REDUCTION IN
POTENTIAL IMPACTS
ON THE PUBLIC
SOIL STABILISATION
Note that 8,000m3 is hypothetical but typical. The calculation below is based on a typical removal and
the related savings of carbon arising from the transport of the soil.
Amount of soil onsite
8,000m³
=
Number of
trucks needed
1,000
Distance to
travel for each
Diesel required
per trip
27 litres
Carbon produced
per trip
100km
70 kg
=
Total reduction
140,000
kg CO2
All carbon calculations
made using the Vehicle
Energy Consumption
Calculation Tool (VECTO).
One litre of standard
diesel fuel creates about
2.6 kg carbon dioxide.
CAIRN HOMES PLC ANNUAL REPORT 2021
45
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT STRATEGY IN ACTION CONTINUED
STRATEGIC PILLAR #5
Places
Creating places for
communities to prosper.
Marianella, Dublin 6
46
DEVELOPMENTS WHERE WE DELIVERED
NEW HOMES DURING 2021
16
WINNER OF THE IRISH GREEN
CITIES AWARD IN 2021
Six Hanover
Quay
CLONBURRIS WILL BE IRELAND’S FIRST
LARGE TOWN WHERE WE ARE TARGETING
Biodiversity
Net Gain
KEY PERFORMANCE
INDICATORS
• 1,120 new homes delivered
across 16 separate
developments.
• Community engagement
programme impact evidenced
through 89% of customers
saying their community feels
more friendly following the
“Home Together” initiative.
• 100% of Cairn sites had a
Biodiversity Impact
Assessment completed,
aligned to our Biodiversity
Strategy.
• €105m invested to date in
infrastructure benefitting
local communities.
• Our Six Hanover Quay project was
the winner of the Irish Green Cities
Award 2021.
• We lodged our first planning application
for 570 new homes at Clonburris, a new
town which will house 30,000 new
residents just 13km from Dublin City
Centre. Cairn will deliver 5,500 new
homes in Clonburris into the long-term
and this will be Ireland’s first new major
town where we are targeting a
biodiversity net gain.
What we’ll do in 2022
• Create sustainable communities
around the 1,500 new homes which
we will deliver.
• Continue to deliver major infrastructure
and public realm for the benefit of new
and existing communities.
• Adopt our Biodiversity Strategy as a
headline item at all major internal
project gateways.
• Complete our largest piece of
infrastructure to date, a road bridge in
Cork to our new Bayly development,
which will also service a new school
being built for the local area.
• Deliver on a series of greenways as
part of our developments including
Bayly in Cork and Three Trouts Way
in Greystones.
• Deliver more planning applications
focused on placemaking and design.
What we did in 2021
• Biodiversity was the key area of focus for
our ‘Places’ pillar in 2021. Despite the
challenges presented by the COVID-19
pandemic, we continued to maintain a
high standard of design and innovation,
informed at all times by Biodiversity.
• In delivering 1,120 new homes across
16 developments in 2021, we focused
on ensuring vibrant, prosperous places
for communities to live.
• With a greater global focus on
environmental management and
sustainability, we moved biodiversity
to the forefront of our innovation and
places conversations.
• This supported us in continuing to make
a positive contribution to the
communities in which we operate and
participating in better serving the needs
of society.
• Our customers want to live in
sustainable developments where
biodiversity is paramount and are
looking for homes and companies
that support this message.
In addition, we also delivered the following
during 2021:
• Nearly 8 acres of parks and green
spaces completed.
• Formal adoption of Cairn Biodiversity
Policy which was fully incorporated
within our internal gateway system
(project pre-planning and design
process).
• Construction of three new children’s
play areas in our Graydon, The Quarter
at Citywest and Archers Wood
developments and the refurbishment
of a play area in Parkside.
• Construction of an all-weather sports
court in Parkside Square.
CAIRN HOMES PLC ANNUAL REPORT 2021
47
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT
80%of trees planted
are native species
100%of sites have had
a biodiversity
assessment
7.5 trees planted per
unit sold in 2021
Biodiversity Agenda
A series of further site-specific Biodiversity
actions are described below:
Graydon
In our Graydon development in Newcastle,
Co. Dublin, we commenced additional
understorey planting to regenerate a
hedgerow which is 200 metres in length.
We also planted a 50 square metre micro
woodland and completed a new park centred
on a burgage plot hedgerow of medieval
origins with new native tree planting and
wildflower meadows.
We also donated pollinator friendly plants
to the Newcastle Tidy Towns to add to the
planting beds in their village.
Archers Wood
Within our Archers Wood development we
have constructed 230 metres of Green Wall,
a more sustainable alternative to concrete
retaining walls. The Green Walls have been
seeded with a bespoke mix of grasses and
native wildflowers. We also completed the
planting of over 4,000 native trees in
perimeter woodlands and hedgerow
alignments, and the installation of 70 bird
boxes, including boxes specifically for
barn owls, woodpeckers and dippers.
Griffith Wood
We have planted a new tree belt of native
Pines, Oaks, Hazel, Holly and Birch along
our site boundary at Griffith Avenue,
Dublin 9, with an existing school using
specially grown semi-mature stock for
immediate impact.
The Quarter at Citywest
We completed the installation of 200 square
metres of wildflower meadow within the
apartment courtyard gardens in Citywest,
Dublin 24, and 270 square metres of green
roof over the bike stores.
Hawkins Wood
We have sown 1,500 square metres of
wildflower meadow in the adjoining and
existing Seabourne apartment complex as
part of the reinstatement works associated
with a new storm drain.
These site-specific projects are bolstered
further by our pollinator-friendly strategies
across all Cairn schemes, including:
• Pollinator-friendly mixes of
perennials and flowering shrubs
in all front gardens.
• Native tree planting in open spaces and
private gardens (6 trees per completed
dwelling to date).
• Mixed bulb drifts of pollinator-
friendly plants.
• The provision of a packet of pollinator-
friendly bulbs and information to every
new homeowner.
STRATEGY IN ACTION CONTINUED
Biodiversity Actions 2021
Cairn formally adopted a Biodiversity
Policy which states:
“Cairn will mitigate the direct impact
on local biodiversity of each of our
developments, regardless of type, size
or location. This will be achieved through
a development-specific biodiversity
programme that replaces or improves
the local biodiversity of each new Cairn
development, or otherwise contributes to
the improvement of Ireland’s biodiversity.”
Our Biodiversity Policy will influence all
stages of product delivery from site
planning, detailed design and operations
through to customer aftercare. Starting in
2022, all Cairn developments are now
subject to indepth Biodiversity Impact
Assessments with Biodiversity Plans
developed to minimise the impact and
optimise the opportunities for habitat
creation within what will be ultimately
completed residential developments.
Cairn continues to support the All Ireland
Pollinator Plan with our Pollinator Friendly
planting and landscape works across all
of our developments. We have been
acknowledged by the National Biodiversity
Data Centre as a pollinator Friendly
Business since 2018.
We have also become business supporters
of Birdwatch Ireland, an independent
conservation organisation, and in 2022 we
will sponsor the Irish Garden Bird Survey.
We have collaborated with Birdwatch
Ireland in implementing a nesting box
project as part of our Archers Wood
development in Delgany, Co. Wicklow,
including the installation of barn owl,
woodpecker and dipper nesting boxes.
Cairn has commissioned a Wildlife-Friendly
Show Garden for our Hawkins Wood
development in Greystones, Co. Wicklow. It
is hoped the Wildlife-Friendly Show Garden
will be impactful in showcasing to our
customers the potential for supporting
Biodiversity in small urban spaces.
For our future Clonburris development in
West Dublin, and in collaboration with a
local nursery, we collected seeds from
native Hawthorn trees on the site. From
these seeds we will propagate Clonburris
Hawthorns that will be replanted when we
commence this exciting new development
and gifted to our customers when we
deliver our first new homes.
48
Custom made bird boxes
With the assistance and direction of Birdwatch Ireland we installed
70 bird boxes in the Woodland and Hedgerows of our Archers Wood
development. The boxes were designed and supplied by Birdwatch
Ireland and all have been handmade in Ireland. The boxes will
support the bird life along the Three Trouts River valley.
Harvesting native seeds
Harvesting the Haws of the Whitethorn trees on our Clonburris site.
The Haws contain seeds and these will be used to grow new plants
which in 2 years time will ready for planting in the green spaces and
shared with our home owners.
CAIRN HOMES PLC ANNUAL REPORT 2021
49
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT STAKEHOLDER ENGAGEMENT
Investing in
our partnerships
CUSTOMERS
How and why we engage
Our customer team not only strive to deliver
an exceptional experience to our customers
throughout the buying process and beyond,
we also act as the voice of the customer
within Cairn. We listen to what they tell us
in person, via surveys, through analytics
and data to find actionable insights that we
can use to improve our service and refine
our product design. We work across
functions to ensure that the customer
needs are addressed, be they private or
institutional buyers. We also partner with
organisations like Network Neighbourhood
to help our customers to form cohesive and
resilient communities. Following our
successful Home Together initiative, we
have committed to increasing funding,
scope and timescale of the project. Over the
coming years this authentic community-
driven model will allow community activity
to become self-sustaining and effective
over the long-term.
EMPLOYEES
How and why we engage
Our employee engagement strategy
ensures an ongoing rhythm is in place for
collating, analysing and reporting on
feedback received through employee
surveys, polls and check-ins. From inviting
our employees to help us develop Cairn’s
employer brand proposition, to asking
employees how we can better support their
health and wellbeing, we aim to survey our
employees every six months so that they
have the opportunity to share their views.
The insights we gain from these direct our
focus for future initiatives. Examples
include identifying and training mental
health first aiders on all active sites, to the
establishment of a Health and Wellbeing
forum that supports and promotes all
aspects of employee physical, mental
and emotional wellbeing.
SUPPLY CHAIN
How and why we engage
We employ an active Supplier Relationship
programme that creates a regular rhythm
of engagement with our supply chain, led by
dedicated Supplier Relationship Managers
and supported by our customer, operational
and commercial teams. Through this active
engagement we are ensuring the needs of
the business and the needs of the supply
chain are continuously aligned. Forward
planning of workloads is critical to this
engagement to ensure the expectations
of our homebuyers are met. This also
ensures that each supply chain member
can strategically plan their own business
growth by having visibility on their own
resource requirements to meet the
demands of their future workload with
Cairn. We continue to measure our
performance through the lens of the supply
chain to ensure we also pursue a process of
continuous improvement.
HOW THIS HELPS OUR SUSTAINABILITY AGENDA
Our community-centred approach
empowers our customers to build social
cohesion, community resilience and a
better quality of life for all. Regular
communication with our customers helps
us to include sustainability matters which
are most important to them in our agenda
from the future spec of our homes to the
biodiversity and placemaking initiatives
we roll out across each site.
Our employees are a vital part of our value
chain. They are the people who work the
closest to our primary activity. Organic
conversation amongst employees helps to
shape the direction we take in Sustainability.
It is through constant engagement with our
employees that these thoughts and ideas
are developed and deepened. We also
believe that involvement in our Sustainability
Agenda lends itself to part of our employee
value proposition and covers everything
from wellbeing initiatives to equality,
diversity and inclusion workstreams.
Strengthening partnerships with our supply
chain is critical to understanding and
achieving our Sustainability targets in
respect of our commitment to the Science
Based Targets Initiative and delivering our
low carbon pledge. Engagement with the
supply chain ensures that it remains
transparent and does not incorporate many
of the issues faced by our industry such
as Modern Slavery.
50
SHAREHOLDERS
How and why we engage
Executive Directors and the Head of
Investor Relations proactively engage in
regular dialogue with shareholders after
the announcement of interim and
preliminary results through detailed
presentations and roadshows, and also
through capital markets days, regular
attendance at sell-side investor
conferences and ad-hoc one to one
meetings, including site visits. The majority
of these interactions have been virtual
since the start of the pandemic. Regular
engagement ensures we update
shareholders on all areas of our progress,
our growth plans and strategic initiatives.
The Company also maintains an ongoing
programme of shareholder engagement on
our corporate governance framework and
policies to understand evolving shareholder
expectations. We have engaged extensively
with shareholders in refining our
Sustainability Agenda and strategy.
COMMUNITIES
How and why we engage
Our approach to placemaking factors in the
need of communities to grow and develop
safely in outdoor public spaces. We design
our shared spaces, cycle paths, play areas,
green ways, parks and public realm to
allow people to interact in a positive and
relaxing environment. In addition to our
partnership with Network Neighbourhood
we also sponsor multiple local youth sports
clubs, local amenities and artists through
our sponsorship and arts programmes.
By engaging with communities of interest,
such as sports or the arts in the locations
in which we build, we create bonds with
the existing wider community around our
developments and help them integrate in
meaningful ways.
POLICYMAKERS
How and why we engage
We regularly engage with key policy
makers at local and national government
level through proactive and open
communication on matters of common
interest in the residential construction
industry. With our track record, Cairn is
in a unique position to provide valuable
and relevant insights into all aspects of
the industry, including planning, design
and construction, and how this feeds
into housing policies. We engage with
Government departments, state agencies
and local authorities both directly
and through membership of industry
lobbying groups.
We have set Sustainability targets, against
which our shareholders can measure our
performance, which will be reported in
line with SASB and GRI frameworks.
Engagement with shareholders from
the materiality assessment stage to the
execution stage of many sustainability
actions ensures we have incorporated their
expectations into our Sustainability Agenda.
Placemaking plays an important role in the
social strand of our Sustainability Agenda.
To ensure that we continue to foster a sense
of community and belonging in the areas
were we build, we must engage with both
the communities we create and the existing
communities where we develop.
Collaboration with these existing
communities continues to foster
meaningful outputs which is incorporated
into our decision making around future
community and placemaking initiatives.
Sustainability in a broad sense is constantly
changing. There are many frameworks,
regulations and legislations coming into
force which requires constant horizon
scanning. Leveraging this platform ensures
our Sustainability Agenda is aligned to any
legal requirements relating to our industry.
The focus on climate change and the
impending legislative changes in this space
is something Cairn continues to monitor
and prepare for.
Read our full Sustainability Report at
www.cairnhomes.com/sustainability
CAIRN HOMES PLC ANNUAL REPORT 2021
51
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT SUSTAINABILITY
Leading
sustainably
Our sustainability strategy supports us to meet our purpose and ensure our material
Environmental and Social impacts and opportunities are managed. The strategy is
centred around three pillars: People, Homes and Places and aligned with the UN
Sustainable Development Goals for business.
Social impacts are incorporated in our People pillar and Environmental in our Homes
and Places pillars covering climate action, protecting biodiversity, the shift to a circular
economy, green procurement and responsible sourcing in our supply chains.
Read our full Sustainability Report at www.cairnhomes.com/sustainability
PEOPLE
Health and Safety
We are committed to providing a
safe working environment but beyond
that we have developed mental health
initiatives to expand our support
for employees.
Employee Welfare
Workforce pipeline and protection is
our priority. Without happy and healthy
teams, we cannot achieve our vision.
We provide a range of wellness
supports to our people as well as
pursuing ED&I accreditations to
ensure we continue to create a
workplace that provides a sense
of belonging for everyone.
Customer
Our focus is on providing an excellent
customer experience with on-time
delivery, end-to-end support through
the buying process and beyond,
showing consistent care for our
customers and their neighbourhoods.
PLACES
Placemaking
We are dedicated to developing lasting
and sustainable communities. We plan
our new developments carefully to
ensure that each is well served by
amenities and transport options
that allow residents to thrive.
Communities
We work with expert partners to
initiate community participation
and identify leaders who will
strengthen connections between
neighbours. We go beyond the basic
needs of our communities and add a
bespoke arts, heritage or design
project to each development.
Protecting Biodiversity
This is an area of increasing focus
for Cairn. Our developments have
a material environmental impact
on local biodiversity – we strive
to mitigate these impacts
wherever possible.
HOMES
Climate Action
We are taking action to reduce our
carbon footprint though a variety
of initiatives that tackle the areas
where our activities create the most
substantial carbon impacts. This
includes soil and waste management,
modern methods of construction, the
energy efficiency of our homes, and
working with our supply chain to
identify better ways of working.
Supplying Energy-Efficient Homes
We have a unique opportunity to
supply sustainable homes. We deliver
A-rated homes that contribute to a
more sustainable built environment
in Ireland and offer comfort and
long-term savings for our customers
at competitive prices.
We are aligning our strategy to the following United Nations Sustainable Development Goals (SDGs):
52
LEADING SUSTAINABLY ACROSS ESG VERTICALS
Environmental
CATEGORY
HIGHLIGHTS
Climate change
• In 2022, we formally committed to setting Greenhouse Gas (‘GHG’) emissions reduction targets in line with
the Science Based Targets Initiative (‘SBTi’);
• We are in the process of setting Scope 1 & 2 targets, measuring our Scope 3 baseline and conducting
Lifecycle Assessments (‘LCA’) on our homes to understand their embodied carbon footprint;
• Energy and carbon initiatives that we have implemented include: FSC certified timber frames, light gauge
steel construction and air source heat pumps, contributing to the certified minimum A rating for each of
our homes; and
• Awarded a B for our first full submission to the Carbon Disclosure Project (‘CDP’).
• Waste and carbon savings and diversion from landfill through soil management techniques including soil
stabilisation; and
• 100% of the timber we procure is FSC certified.
Circular economy,
waste and responsible
sourcing
Biodiversity
• In 2022, we incorporated sustainability into our remuneration framework including biodiversity metrics
within our Long-Term Incentive Plan (‘LTIP’);
• Numerous site biodiversity actions across developments including hedgerows, planting native trees,
pollinator friendly planting, nesting boxes, green walls, native trees, wildflower meadows, provision
of packets of pollinator friendly bulbs and information packs to each new homeowner; and
• Building on our support of Birdwatch Ireland and the All-Ireland Pollinator Plan.
Social
CATEGORY
Placemaking
HIGHLIGHTS
• In 2021 ‘Home Together’ was launched, an initiative with Neighbourhood Network to create strong,
well-connected communities; and
• Following this successful pilot, we are working to roll the initiative out across additional developments
in 2022 and beyond.
Charity
• Cairn wants to do more to support families with children facing life-threatening medical conditions,
and as part of our commitment to communities, we announced a partnership with Make-A-Wish Ireland
in early 2022.
Employee welfare
- health, safety
and wellbeing
• Upgraded Safe-T certification score from B to A;
• Launched new health and wellbeing offering with Spectrum Life;
• 123 wellbeing events completed with our partners;
• 20 mental health first aiders have been trained, representing all sites and teams; and
• Since 2021, we are certified as a Great Place to Work.
Equality, Diversity and
Inclusion (‘ED&I’)
• We have attained the Bronze standard from the Irish Centre for Diversity (‘ICD’);
• With the guidance of the ICD, we will improve continuously on our journey to achieving the Gold standard; and
• In 2021 we launched our Employee Forum on ED&I to ensure employees’ lived experiences inform our policies
Governance
CATEGORY
Governance
and procedures.
HIGHLIGHTS
• Top-down and bottom-up approach from Board to day–to-day site operations with the ESG Reporting
and Research Team facilitating collaboration across the business while embedding the culture of
sustainable thinking;
• From 2022, remuneration frameworks linked to environmental and social KPIs;
• Rolled out a suite of new ESG related policies to be published alongside our Sustainability Report; and
• Achieved London Stock Exchange Green Economy Mark.
CAIRN HOMES PLC ANNUAL REPORT 2021
53
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT SUSTAINABILITY CONTINUED
TASK FORCE ON CLIMATE RELATED FINANCIAL DISCLOSURES (“TCFD”) INDEX
Area
Recommended
Disclosures
Performance
& Disclosures
GOVERNANCE
Disclose the
organisation’s
governance around
climate-related
risks and
opportunities
a) Describe the
Board’s oversight of
climate-related risks
and opportunities
The Board comprises 10 members, of which two (the Chief Executive, Michael Stanley and
the Chief Financial Officer, Shane Doherty) are executive members. The Board is led by the
Non-Executive Chairman, John Reynolds. Reporting to the Board, the Executive Directors
maintains full strategic and operational oversight of the Company’s sustainability agenda,
which incorporates our response to the transition risks associated with the shift to a
lower-carbon economy, and the physical risks it faces in respect of climate change.
The Board is informed of and has oversight of climate-related issues through
two channels:
Strategy channel
At each Board meeting (of which there are approximately eight each year), the Executive
Directors present a comprehensive overview of progress towards our strategic objectives,
together with factors that are affecting or may affect those objectives, and factors that may
influence future strategy. Climate-related issues are identified as a key lever in our
strategic focus areas and, consequently, form an integral part not only of the strategic
reporting cycle, but also the annual strategic review.
Risk management channel
The Audit & Risk Committee of the Board monitors and reviews the effectiveness of
the Company’s risk management system, and advises the Board on principal risks and
uncertainties, as well as the risk aspects of its strategy, specifically climate-related risk
as a principal risk, and core element of strategy. As part of this activity, the Audit & Risk
Committee maintains oversight of the risk register and monitors our response to risk.
We have identified that a failure to anticipate and address the strategic, market, regulatory
and operational impacts of climate change as a principal risk. The appetite for this risk
reflects that identifying and proactively responding to the challenges of climate change
is core to our purpose and strategy. Consequently, the risk management framework
supports and promotes the identification and management of climate-related issues
on a business wide basis, managed through our embedded risk management process.
The Board actively considers both strategic climate-related influences and risks (as
identified through the channels described above) when guiding the Company’s strategy,
considering its response to risk, and overseeing the development, implementation and
outcome of associated goals, objectives and budgets. This culminated in the inclusion of
sustainability within our LTIP, which in turn is underpinned by sustainability metrics
incorporated into our remuneration frameworks (approved by Board), ensuring that
targets and objectives of employees, including Executive Directors, and the business,
are aligned.
b) Describe
management’s role
in assessing and
managing climate
related risks and
opportunities
The Executive Directors and Senior Leadership Team, supported by Cairn’s ESG Reporting
and Research Team and ESG Innovation Forum, direct the management of climate-related
issues, in the context of their impact on the Company’s strategic intent, as well as the
risks posed to the business (including as identified by the Company’s risk management
framework). Where necessary, these teams are advised by third party experts, ensuring
advice is objective and current.
The Chief Executive Officer retains responsibility for defining the strategic direction of
the business and Cairn’s climate-related performance and does so with the benefit of
guidance from specialist teams within the business including the Technical and ESG
Research and Reporting Team. Separately, the Chief Financial Officer is responsible
for ensuring the financial impacts of climate-related issues are fully understood and
reflected in company budgets.
All employees in Cairn, regardless of seniority, are responsible for supporting the
delivery of goals and objectives, identifying and managing risks, and generally promoting
company values. Through our People Strategy, the Chief People Officer ensures that
climate-related issues, and our response to them, is both communicated and incorporated
into employees’ annual objectives and associated incentives. The Chief People Officer
is also responsible for ensuring the Company’s resources and capabilities match its
climate-related responses.
54
Area
Recommended
Disclosures
Performance
& Disclosures
STRATEGY
Disclose the actual
and potential
impacts of climate-
related risks and
opportunities on
the organisation’s
businesses,
strategy, and
financial planning
where such
information
is material
a) Describe the
climate-related risks
and opportunities the
organisation has
identified over the
short, medium,
and long-term
Our risk management framework, which identifies climate-related issues as a principal
risk and uncertainty, considers all risks on the basis of three horizons:
• “Here and now”, being risks to the immediate term (one year or less) goals and
objectives of the business;
• “medium-term”, being risks with a horizon of between 1 year and 3 years; and
• “long-term”, being risks with a horizon of more than 3 years.
These horizons have been adopted bearing in mind the development cycle, as well as
overall strategic timeframes, and have been reviewed by the Audit & Risk Committee
of the Board.
The risk management framework supports the assessment of climate-related risks and
opportunities, requiring engagement at all levels of the business to ensure comprehensive
identification and evaluation. The Senior Leadership Team actively engages in this process
and regularly meets throughout the year to review risks and opportunities identified by
functional management, augment those with risks identified by the Senior Leadership
Team, and ensure new and emerging risks and opportunities are identified and managed.
The assessment of risks requires that we consider the likelihood of the risk occurring,
and then the impact of the risk should it occur (having regard to controls we have already
effectively implemented). This assessment supports decisions on how we apply Cairn’s
risk appetite to each risk and informs the materiality of the risk (or associated opportunity).
Here and now
Cairn is actively addressing current transition risks and physical risks. In the context of
development planning, we are already responding to greater planning constraints and
associated conditions that reflect both a policy shift toward developments that have a
lower carbon impact, and a need to respond to the physical impacts of climate change.
These conditions can have an impact on the fundamental design of developments, the
specification of individual units, and the density of housing that can be provided. Equally,
the conditions can impact on the construction methodologies adopted, as well as the
timeframe for development. All of these factors impact both the underlying cost of
developments, and the development capacity of the Company.
During the construction phase of developments, the adverse impact of climate driven
events such as prolonged periods of intense rainfall, an increase in the severity of winter
storms, or extremes of temperature, are factors that are monitored, evaluated and
managed by the Company.
Our Technical, Construction and Environmental teams develop responses and
remediations on a development-by-development basis with a view to mitigating
the financial and other impacts.
Medium to long-term
Whilst also a “here and now” climate-related issue, the carbon-intensity associated with
our construction activities has a medium and long-term horizon. The failure of Cairn to
address this could adversely impact our ability to develop sites that meet climate-led
demands or conditions, or which are affordable to our target market.
We have also identified climate-related issues as being generally a risk and an opportunity
for our business. This means ensuring our environmental, climate change and
sustainability responses meet the needs of our home buyers, whilst also following
rapidly changing national housing and climate strategies.
CAIRN HOMES PLC ANNUAL REPORT 2021
55
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT SUSTAINABILITY CONTINUED
TASK FORCE ON CLIMATE RELATED FINANCIAL DISCLOSURES (“TCFD”) INDEX CONTINUED
Area
Recommended
Disclosures
Performance
& Disclosures
STRATEGY (CONTINUED)
Disclose the actual
and potential
impacts of climate-
related risks and
opportunities on
the organisation’s
businesses,
strategy, and
financial planning
where such
information
is material
(continued)
b) Describe the
impact of climate-
related risks and
opportunities on the
organisation’s
businesses, strategy,
and financial planning
Cairn recognises that climate change represents a principal risk and uncertainty to its
strategic intent. As a consequence, our process for identifying and reviewing that strategic
intent incorporates a comprehensive analysis and understanding of the climate-related
risks and opportunities presented by Our Purpose and Our Vision.
This understanding, defined by our risk appetite in this respect, then informs our strategy,
its underlying goals and objectives, and the outcomes we plan.
This creates a positive feedback process in which climate-related risks and opportunities
play a fundamental role in defining strategy, with associated goals and objectives to
mitigate or capitalise on opportunities having budgeted cost and margin impacts.
c) Describe the
resilience of the
organisation’s
strategy, taking into
consideration
different climate
related scenarios,
including a 2°C or
lower scenario
Both our Sustainability and Climate Action policies outline our intentions with regards to
business strategy and climate change. The business is aware that our changing climate is
exceedingly putting pressure on current business models. The risks associated with the
changes that will be incurred over time are incorporated into our sustainability strategy.
Our science based target setting is underway and with this process we have decided to
model various reduction targets on current and future developments. This allows us to
understand the potential changes that will be required operationally from the business and
the outcomes they will cause. The next step in our strategy workstream is to incorporate
climate scenario analysis into our planning. This will be completed in 2022 and will result
in the alignment of possible action plans to each scenario.
56
Area
Recommended
Disclosures
Performance
& Disclosures
RISK MANAGEMENT
Disclose how the
organisation
identifies,
assesses, and
manages climate-
related risks
a) Describe the
organisation’s
processes for
identifying and
assessing climate-
related risks
Identification
The identification and assessment of climate-related risks and opportunities is supported
by Cairn’s risk management process (as described in the Risk Report). Risk management is
an important business driver and its value as a process means we take a business-wide
approach, allowing us to consider the potential impact and opportunity presented by all
types of risk affecting our business, including climate-related risks.
When considering climate-related risks, the Company seeks to identify and consider all
material existing and emerging factors relevant to our core activities:
• policy risks (how Government policy in respect of climate may impact on our business
model, for example through planning policies or economic policies);
• brand risks (how our brand is impacted by our response to climate-related risk,
for example because our developments do not meet customer requirements);
• economic risks (how climate-led factors impact economic conditions, such as increases
in supply chain costs);
• development risks (how climate-related issues impact on our ability to deliver
developments, including through local development plans); and
• compliance risks (such as how the Company complies with regulatory constraints
on what and how we build).
Within our risk register, specific climate-related risks include the risk that the cost of
appropriately dealing with extracted waste exceeds expectations, that environmental
demands require development design or other changes and risks to the resilience of
our supply chain.
b) Describe the
organisation’s
processes for
managing climate-
related risks
Managing climate-related risk
Identifying and proactively responding to the challenges of climate change is core to our
purpose and strategy. This means that all risks (other than “low” risks), are managed and
mitigated unless they are accepted by the business, with high risks being tolerable only
with the approval of the Board, and extreme risks not being tolerated in any circumstances.
c) Describe how
processes for
identifying,
assessing, and
managing climate-
related risks are
integrated into the
organisation’s overall
risk management
In line with our risk management framework, decisions on how risks are to be managed
are determined on a case-by-case basis, informed by a range of factors that are
considered in the context of the specific risk and its wider business impact. These decisions
are reviewed by functional management and the Senior Leadership Team, and is subject
to oversight by the Audit & Risk Committee. This ensures that risk responses align with
and inform our strategy and purpose and that appropriate materiality assessments have
been made.
Integration
The risk management process has been designed to:
• help define strategies, including controls, to mitigate risks, or capitalise on the
opportunities they may present;
• establish a process to consider risks and opportunities in the context of Cairn’s risk
appetite; and
• ensure risks, mitigating controls and responsibilities for managing risk and
opportunities are recorded and monitored.
Our approach to the assessment of risk is consistently applied by reference to the
probability of the risk arising, and the consequences of the risk (which includes a
materiality assessment based on a range of financial and non-financial factors).
Our response to the risk is then dependent on:
• the overall risk rating (low, medium, high, or extreme); and
• the Company’s appetite for the risk.
In respect of climate-related risk, identifying and proactively responding to the challenges
of climate change is core to our purpose and strategy. This means that as part of our
overall risk management process, we proactively identify and manage risks associated
with climate change in a way that ensures we can continue to deliver on our vision.
CAIRN HOMES PLC ANNUAL REPORT 2021
57
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT SUSTAINABILITY CONTINUED
TASK FORCE ON CLIMATE RELATED FINANCIAL DISCLOSURES (“TCFD”) INDEX CONTINUED
Area
Recommended
Disclosures
Performance
& Disclosures
METRICS AND TARGETS
Disclose the
metrics and targets
used to assess and
manage relevant
climate-related
risks and
opportunities
where such
information
is material
a) Disclose the
metrics used by the
organisation to
assess climate
related risks and
opportunities in line
with its strategy and
risk management
process
For the 2021 reporting period we will be disclosing the following metrics to assess and
manage climate related risks and opportunities as set out within the “Disclosures and
Performance” section of our 2021 Sustainability Report.
• Building Energy Intensity Ratio;
• Gross direct (Scope 1) GHG emissions;
• Gross location and market-based energy indirect (Scope 2) GHG emissions;
• GHG emissions (S1&S2) intensity ratio for the organisation (per home built);
• Total energy consumption within the organisation; and
• Total weight of general waste generated, including breakdown by disposal route.
b) Disclose Scope 1,
Scope 2, and, if
appropriate, Scope 3
greenhouse gas
(GHG) emissions, and
the related risks
In 2022, we are taking our commitments further by incorporating sustainability into our
remuneration frameworks. This demonstrates the importance we place on accountability
for our sustainability commitments. We are:
• Incorporating environmental metrics on biodiversity net gain into our long-term
incentive plan; and
• Incorporating social metrics, including our customer and people framework with
a health and safety underpin, into our short-term incentive plan.
All metrics and targets are reported in line with appropriate standards including SASB,
GRI, EPRA and DEFRA.
Our Scope 1 and 2 emissions are reported under GRI-405-1 and GRI-405-2. We are in the
process of measuring our Scope 3 baseline and expect to disclose that information over
the coming year. These will be measured in line with the GHG protocol.
As a homebuilder, we operate in an energy intensive industry. Emissions are the key driver
of global temperature rise and result in many of the regulatory changes we are now faced
with. Measuring our carbon emissions allows us to gain a full and thorough understanding
of the emissions we produce directly and indirectly. This allows us to inform the choices we
make in our activities and procurement processes. A business-as-usual trajectory could
impose the following non-exhaustive sample of risks to our stakeholders:
Customer: A home that is not efficient or resilient to potential climate scenarios.
Shareholder: An investment that would not be adaptable in the face of climate change
and lose value.
Operations: A method of construction that is outdated, energy and carbon intensive
and behind the curve within the industry.
c) Describe the
targets used by the
organisation to
manage climate-
related risks and
opportunities and
performance
against targets
As a homebuilder operating in an energy intensive industry, we have a responsibility
to ensure we set meaningful targets to abate and mitigate GHG emissions.
In response to this we have:
• Committed to setting science-based targets with the SBTi for scope 1, 2, and 3.
We expect to make that submission within the next 12 months;
• Committed to ensuring 40% of our unit commencements are on verified biodiversity
net gain developments by 2024;
• We are signatories of Business in the Community Ireland’s Low Carbon Pledge.
58
Graydon, Newcastle, Co. Dublin
CAIRN HOMES PLC ANNUAL REPORT 2021
59
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT CHIEF FINANCIAL OFFICER’S REPORT
Revenue
Despite the impact of public health restrictions early in the year,
where the majority of our development activity and production
capacity was curtailed for a 13-week period, our revenues grew by
62% to €424.0 million (2020: €261.9 million). Our closed sales grew
by 51% to 1,120 new homes (2020: 743 new homes), with an average
selling price (“ASP”) of €428,000, including VAT (2020: €377,000). The
increase in ASP is primarily mix driven as a result of multifamily new
homes completions at Griffith Wood and Rostrevor Place, in addition
to completing the sale of a greater volume of higher ASP trade-up/
down homes in the year (197 compared to 122 in 2020). Most
importantly, the pricing of our first time buyer homes remained very
competitive. Our 2021 average selling price for starter homes was
€350,000 including VAT (2020: €348,000), notwithstanding c. €15,000
build cost inflation which we absorbed per new home built.
Gross Profit and Operating Profit
Gross profit of €83.9 million (2020: €42.7 million) was 96% ahead
of 2020 which delivered a gross margin of 19.8% (2020: 16.3%), having
trended higher in the second half of the year at 20.3%. Margin
progression was driven by a number of factors, including increased
supply chain efficiencies and improved pricing in middle and upper
end apartments and houses, partially offset by the impact of build
cost inflation.
Operating profit of €58.4 million (2020: €24.4 million) was 139%
ahead of 2020, with a return to top-line growth driving operating
leverage expansion. This included operating expenses of €25.5
million (2020: €18.3 million) and resulted in an operating margin
of 13.8% (2020: 9.3%). Within that figure, we incurred €0.3 million
of unproductive labour costs in 2021, owing to the 13-week site
closures early in the year.
Profit after Tax and Earnings per Share
Finance costs for the year were €8.1 million (2020: €9.7 million)
reflecting both a lower average cost of funds and lower average
drawings on committed debt facilities compared to 2020.
Profit after tax of €43.2 million compared to €12.7 million in 2020,
which resulted in earnings per share of 5.8 cent (2020: 1.7 cent).
60
“Our strong balance sheet
position, significant available
liquidity and substantial
expected operating cashflow
generation leaves us well
placed to continue on our
scaling journey, whilst being
able to make capital returns
to our shareholders.”
Shane Doherty
Chief Financial Officer
Financial Position
We had total assets of €1,013.0 million at 31 December 2020 (2020:
€1,018.8 million), with net assets of €778.8 million at that date
(2020: €750.6 million).
Our balance sheet continues to be very well capitalised, with
inventories at year-end of €940.0 million (2020: €968.2 million),
comprising land held for development of €671.7 million (2020:
€690.3 million) and construction work in progress (“WIP”) of
€268.3 million (2020: €277.8 million).
At 31 December 2021, our net debt had reduced to €109.5 million
(2020: €168.3 million), comprising drawn debt of €149.5 million
(net of unamortised arrangement fees and issue costs) (2020:
€202.8 million) and available cash of €40.0 million (2020:
€34.5 million). Available liquidity (cash and undrawn facilities) of
€234.0 million (2020: €174.5 million) affords us significant flexibility
and strategic optionality as we focus on the continued growth of our
business. Net debt to inventories (at cost) was just 11.7% (2020:
17.4%), reflective of our lowly leveraged balance sheet.
Cash Flow
We generated €88.5 million of cash from operations in 2021
(2020: net cash used in operating activities of €40.6 million), owing
to improved profitability and a reduction in both land and WIP held
at year end. €65.1 million of that operating cash was generated in
the second half of the year as a result of significantly higher new
home completions in that period. This operating cash generation
was after we invested €43.6 million in strategic land acquisitions
in the second half of the year. We also returned €19.9 million to
shareholders through our ordinary dividend programme during
the year.
Outlook
We look forward to both the near and medium-term with
confidence. Our closed and forward order book of 1,218 units at
2 March 2022, with a net sales value of €463.0 million, includes
completions forecast for both 2022 and 2023 and already underpins
over 70% of our delivery target of 1,500 new homes for 2022. Our
strong balance sheet position, significant available liquidity and
substantial expected operating cashflow generation leaves us well
placed to continue on our scaling journey, whilst being able to make
capital returns to our shareholders. Our talented team of people
and our supply chain partners continue to drive us towards our
strategic objectives as well as our ambitious Sustainability targets
which we also announced today with the publication of our inaugural
Sustainability Report.
In line with our commitment to shareholder returns, our Board
outlined our capital allocation policy and reimplemented our
long-term annual dividend programme during 2021. The Board
proposed a final dividend of 2.8 cent per ordinary share which, when
combined with the interim dividend of 2.66 cent per ordinary share,
will represent a total dividend for the year of 5.46 cent per ordinary
share. Additionally, we announced a €75 million share buyback
programme on 12 January 2022 supported by the significant levels
of cash being generated and what the Board believe to be an
undervalued share price. As at 22 March 2022, the €75 million
share buyback programme was 51.7% complete with 31,336,127
shares repurchased at an average purchase price of €1.24.
All repurchased shares have been cancelled.
Everybody in Cairn and those associated with our business
recognise the gravity of the evolving and upsetting events in
Ukraine. Whilst we are fully cognisant of the geopolitical
uncertainty which this situation presents, we remain confident
of the opportunities which lie ahead for our business in the Irish
new homes market into the long-term. We will continue to play a
leading role in the delivery of much needed new homes, across
all customer and buyer types. We sold our 5,000th new home
during 2021 and we expect to deliver over 5,000 additional new
homes by the end of 2024.
Shane Doherty
Chief Financial Officer
REVENUE
€424.0m
GROSS MARGIN
19.8%
OPERATING PROFIT
€58.4m
EARNINGS PER SHARE
5.8 cents
DIVIDENDS PER SHARE
5.46 cents
TOTAL EQUITY
€778.8m
LAND & WIP
€940.0m
NET DEBT
(€109.5m)
CAIRN HOMES PLC ANNUAL REPORT 2021
61
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT RISK REPORT
Building risk
management into
our way of working
Identifying, understanding and managing risk is fundamental
to the delivery of our strategy, our financial performance, and
the effectiveness of our business operations. We continue to
improve and refine our risk management controls, ensuring
they are fully integrated into our activities, from the Board
and Executive to site development, whilst informing business
improvement plans and our ongoing strategy.
BOARD OF DIRECTORS
Risk overview | Risk appetite
AUDIT & RISK COMMITTEE
Risk process effectiveness | Advise on principal risks
EXECUTIVE
Identify principal risks | Approve mitigation plans
MANAGEMENT
Identify risks | Define mitigation plans
PROCESS DELIVERY TEAMS
Identify risks | Implement mitigation plans
y
g
e
t
a
r
t
S
k
s
i
R
k
r
o
w
e
m
a
r
F
k
s
i
R
62
The Board has overall responsibility for ensuring the Group’s level of risk is appropriate to its objectives and risk profile, and that the process
of identifying, assessing and managing risk is effective. Led by our Senior Management Team, our risk management framework drives and
facilitates a persistent, dynamic and fully integrated risk management process. This process involves all Group and operational functions,
and ensures all levels of the business identify, assess and respond to risk in a way that provides assurance to our stakeholders that risk is
being managed effectively. The risk management framework is periodically reviewed to ensure it remains effective as our business grows,
and the nature of the risks we face develop or change.
Role of the Audit & Risk Committee (“ARC”)
The ARC supports the Board by monitoring the effectiveness of the risk management framework and its implementation, and maintains
oversight of the Group’s risk register. This includes ensuring the Group’s principal risks and uncertainties are identified, assessed and
controlled, as well as the impact of risks on the Group’s strategy. The Group’s risk register is reviewed regularly by the ARC in the context
of the principal risks and uncertainties.
Risk Landscape
COVID-19
The Group’s risk profile has been influenced by COVID-19. However, the impacts of COVID-19 were effectively mitigated by the business and
are now diminishing.
Climate
Risks associated with climate change have become increasingly critical to our strategy. As a consequence, climate risks are now considered
a principal risk to the Group and its operations. During 2021 the Group started a process of ensuring its current and prospective climate
related risks are identified and managed, particularly in the context of risks associated with a transition to a net-zero carbon economy and
physical risks associated with climate change. This work is reflected in the future risks and opportunities we have identified for the Group
(as discussed below) and our Sustainability agenda. Given the importance of effectively responding to climate risks, these are identified
separately in our principal risks and uncertainties, even where the impact of those risks may have broader implications on areas such as
financial or development risk.
The Group will continue to closely examine climate risks and responses through 2022.
Ukraine
The Group has reviewed its principal risks and uncertainties in light of recent events in Ukraine and the imposition of sanctions against the
Russian Federation. It is anticipated that the most immediate impact of those sanctions will be to further increase inflationary pressures on
the macro-economy (economic risk), and potentially disrupt some supply chains (development risk). The cyber-security threat level has also
been heightened (financial risk).
The Group will continue to actively monitor and manage these risks, as described below. However, the situation in Ukraine means that the
trends for these specific risks are now considered to be worsening.
Future Risks & Opportunities
To help ensure our strategic plans respond to changes in the risk landscape, our risk management process formally identifies future risks
and opportunities.
The main risks and opportunities that will inform future plans will be driven by policy, economic, climate and people factors:
POLICY
ECONOMIC
Housing policy changes, driven by factors outside our control, impact on our strategy.
Macro-economic factors, such as interest rate increases, reduce future demand for the homes we build.
CLIMATE
Ensuring our environmental, climate change and sustainability responses adequately meet the
challenges of climate change and the need for a net-zero carbon economy.
PEOPLE
Changes in working practices and increasing demands for talent create challenges for our people
strategy and ability to scale.
CAIRN HOMES PLC ANNUAL REPORT 2021
63
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT
RISK REPORT CONTINUED
THE RISK PROCESS
Identification
of risks
We engage with our people at all levels in the business, ensuring comprehensive and insightful risk
identification and evaluation. Functional management teams in particular are facilitated by professional
risk advisers to ensure the persistent identification of risks that could impact strategic goals and
operational activities.
When a risk is identified, it is aligned to a principal risk area to validate the risk and help identify
emerging principal risks and uncertainties.
We also align our risks to macro-risk factors, such as interest rate changes. These are risks we cannot
control, but which give rise to a range of specific consequences that we can anticipate in the context of
the macro-risk and so specifically manage.
The Senior Leadership Team actively engages in this process and meets formally on a regular
basis throughout the year to review risks identified by functional management, augment those with
risks identified by the senior management team, and ensure new and emerging risks are identified
and managed.
Assessment
of risks
Our approach to the assessment of risk remains consistent. For all risks we firstly consider the likelihood
of the risk occurring, and then the impact of the risk should it occur (having regard to controls we have
already effectively implemented). This assessment supports decisions on how we apply our risk appetite
to each risk.
Mitigating
and managing risk
Our risk management framework requires our risks to be actively managed in line with our risk appetite.
All risks are assigned to risk owners, who are responsible for ensuring the risk is appropriately managed.
Plans for managing risks are documented and are monitored for implementation and progress by the
Senior Leadership Team. The management of Cairn’s principal risks is overseen by the Audit & Risk
Committee on behalf of the Board.
The management of risk is supported by a comprehensive risk register presenting a consolidated view of
our risks and how they are being addressed. The risk register is an important point of record for both the
Board’s and the Audit & Risk Committee’s evaluation and oversight of the risks to the business and our
response to them.
No data
64
PRINCIPAL RISKS AND UNCERTAINTIES
The risk management process described above has supported the identification of eight principal risks that, should they arise, could have a
material impact on the Group’s ability to meet its strategic and financial objectives. These risks are described in further detail on pages 65 to
72. As described on page 63, these principal risks now include a developing climate risk and have been considered and reviewed by the Board.
RISK HEAT MAP
2
4
8
7
6
5
3
1
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Principal Risks
1 Policy
2 Brand
5 Development
6 Compliance
3 Economic
7 People
4 Financial
8 Climate
Likelihood
Risk increased
Risk decreased
Risk Trend
Risk unchanged
Principal risk: Policy
Local and National policy or regulation in respect of residential property development adversely impacts the Group.
APPETITE Cairn will always adhere to policy and regulation, but as a national homebuilder it will seek to positively address, as well as
ensure it is always prepared for, policy and regulatory change.
RISK FACTORS
RESPONSE
RISK TREND AND STATUS
Planning applications,
including Strategic
Housing Developments
(‘SHD’) and Large-
Scale Residential
Developments (‘LRD’)
can be adversely
affected by planning
objections, appeals or
judicial reviews. This
can lead to delayed
starts and the potential
for increased cost of
development.
Changes to zoning
and planning policy as
part of revised local
development plans
reduce or eliminate
the opportunities
to develop Cairn’s
land bank.
Housing policy
changes impact
Cairn’s fundamental
business model.
The Group maintains the necessary skills and experience
to design and promote developments that maximise
planning potential whilst responding effectively to
potential planning and community concerns.
As well as engaging with planning authorities through
formal procedures, the Group actively engages with
Local Councils and other stakeholders to identify
concerns and issues at the earliest possible stage so
decision making is fully informed - reducing the risk of
refusals and/or significant conditions.
Monitoring of planning and policy decisions informs the
Group’s design and development strategy.
Developments at risk of zoning change have been identified
and prioritised for development specific response plans.
In priority cases, the Group has accelerated the submission
of planning applications for prospective developments, and
brought forward development start dates.
The Group is actively engaging with local authorities as
part of the consultation process.
The Group’s core target market is first time buyers.
Given the size of its landbank, the Group engages with
a broad and widening buyer pool, including customers
in the trade-up/down and premium market, and
institutional buyers of multifamily homes. It also actively
engages with the state, Local Authorities and AHBs
(Approved Housing Bodies) in respect of social and
affordable homes.
The SHD planning
process is expiring in
2022 and will be replaced
with the LRD. The impact
of the LRD process on this
risk is not yet known.
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2
4
8
7
6
5
3
1
Likelihood
Draft Local Development
Plans for 2022-2028 were
made available from
mid-2021 onwards.
“Housing for All” has
been published with
positive reaction from all
political parties. There is
now greater stability in
housing policy, which
does not adversely affect
the Group’s product mix.
CAIRN HOMES PLC ANNUAL REPORT 2021
65
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT RISK REPORT CONTINUED
Risk increased
Risk decreased
Risk Trend
Risk unchanged
Principal risk: Brand
Brand reputation is damaged through Cairn’s failures or the failures of its supply chain.
APPETITE Cairn has a limited appetite for risks that may adversely affect its brand and the ability to market and sell its
homes effectively.
RISK FACTORS
RESPONSE
RISK TREND AND STATUS
A failure in the
quality of designs,
materials, supplies
and construction
can have an adverse
impact on the Cairn
brand and the strength
of its position in
the market.
Failures in the supply
chain lead to Cairn not
meeting its
environmental, social
and governance
commitments, such
as those relating to
respect for human
rights and labour
standards.
The Group maintains systems that ensure developments
and individual homes consistently meet expectations, as
well as regulatory and quality standards. These systems
have been further improved through 2021 and ensure
quality issues are detected and resolved before sale,
and that recurring issues are identified and managed.
A new quality process/implementation lead has been
appointed. This appointment is responsible for setting
quality benchmarks and having oversight of quality
in the context of the Group’s technical guides, building
regulations and quality plan/deliverables.
An after care team has been established to manage any
defects arising post-sale once they have been raised with
the customer care team. The customer care and after
care teams ensure post-sale issues are managed
promptly and effectively.
As part of its environmental, social and governance
commitments, the Group has adopted policies,
procedures and/or practices designed to identify risk in
the supply chain and ensure those risks are managed.
This includes an Anti-Slavery Policy which imposes a
procurement process that allows the Group to evaluate
slavery risks associated with individual contractors and
ensure only those contractors who can meet Cairn’s
standards are met. The policy also facilitates training in
identifying the risk, and confidential reporting to highlight
failing practices.
Regular meetings with, and surveys of, key suppliers will
support the identification of potential risks to standards
and commitments.
Ensuring the Group’s
systems for preventing
and managing issues
that affect its brand is a
continued focus across
the entire business.
2
4
8
7
6
5
3
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Likelihood
NEW
As the Group’s
environmental, social and
governance commitments
increase, the risks
associated with failing
to mitigate those risks
also increases.
66
Risk increased
Risk decreased
Risk Trend
Risk unchanged
Principal risk: Economic
Economic conditions, including mortgage availability and affordability, may adversely affect house prices
and sales rates.
APPETITE Economic conditions and other macro factors that affect house prices and sales rates are monitored and Cairn will make
adjustments to its plans to ensure the adverse impact of changing economic conditions are minimised.
RISK FACTORS
RESPONSE
RISK TREND AND STATUS
Economic/policy
factors adversely
impact the demand for
the Group’s multifamily
schemes. This could
impact the saleability
of current or planned
schemes and/or limit
the scope for future
schemes.
Economic factors,
including inflation,
rising interest rates,
adverse mortgage
conditions, or falling
employment, create
uncertainty in the
demand for residential
housing.
Land value reductions
adversely impact the
Group’s balance sheet
and its current land
cost advantage in
respect of planned
developments.
The Group actively engages with the multifamily
schemes market and its participants. It monitors for
prospective challenges to the market in Ireland, as
well as other emerging risks so their impacts can be
assessed and managed.
The demand for housing in Ireland continues to exceed
supply, allowing the Group to rapidly address alternative
markets for the sale of multifamily schemes.
There remains limited
risk of economic or policy
factors adversely
impacting multifamily
schemes or the
foreseeable demand
for housing in Ireland.
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2
4
8
7
6
5
3
1
Likelihood
The Group persistently monitors, reviews, and analyses
all aspects of Irish housing market conditions to
ensure its development activities match anticipated
market demand.
Monitoring includes mortgage availability, impact from
Central Bank of Ireland (‘CBI’) mortgage rules and
regulations, mortgage lending, mortgage market
participants and mortgage interest rates, and is a
standing agenda item at the Board.
The Group maintains strong liquidity to enable the
business to withstand any short-medium term changes
in market fundamentals.
The Group also engages with key policy-makers in
the areas of social and affordable housing, general
affordability and new homes supply.
The Group actively manages its landbank and associated
carrying value to ensure that at all times the landbank
does not exceed the requirements of its development
strategy, and the value does not expose the Group to
carrying value risks.
Cairn’s target market
continues to drive demand
for new homes. This
demand is expected to
continue, even if interest
rates rise. However, there
is a risk the Ukraine crisis
may have material
adverse affects on
the global economy.
The market for
development land
continues to support
development land values,
and under current and
anticipated conditions,
a collapse in land values
is considered unlikely.
CAIRN HOMES PLC ANNUAL REPORT 2021
67
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT RISK REPORT CONTINUED
Risk increased
Risk decreased
Risk Trend
Risk unchanged
Principal risk: Financial
Cairn substantively fails to meet financial targets or obligations, suffers unexpected financial loss,
or misstates its financial position.
APPETITE Cairn has no appetite for a failure of this nature and implements controls to ensure financial risk is identified and controlled.
RISK FACTORS
RESPONSE
RISK TREND AND STATUS
The Group persistently monitors its facilities against
actual and projected needs and financial position, as well
as against emerging financial factors and risks. Its
existing facilities also afford sufficient flexibility to meet
likely future needs and Cairn’s projected performance.
The Group’s credit
facilities match its
requirements and
projected performance.
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A robust financial controls framework is maintained by
the Group. The framework is overseen by the Audit &
Risk Committee of the Board and is subject to audit,
which supports an ongoing programme of feedback,
review and improvement.
The Group continues to
review and refine its
financial controls.
2
4
8
7
6
5
3
1
Likelihood
Through 2021 the Group has designed and implemented
additional methodologies, systems and processes to
ensure it can continue to meet its current plans and is
in a position to deliver on its future plans.
These are underpinned by key systems and processes
that ensure persistent alignment of the construction
and sales programmes, and high visibility of all
underlying performance, including construction
costs and sales prices.
Information security and IT risks are identified and
managed through the Group’s information security
frameworks, which include controls for detecting,
preventing, and recovering from, system failures.
The Group continues to
refine and improve its
methodologies for
meeting its current
and future plans.
Information security risks
persistently evolve, and in
response to the Ukraine
crisis, national cyber-
security response
centres have raised
the threat level.
To counter this, the Group
has enhanced its controls
in addition to its
continuous review and
improvement of
information security
frameworks and controls.
The credit and funding
arrangements of the
Group do not meet
Cairn’s strategic or
operating needs or
prevailing trading
conditions.
A failure of internal
financial controls
could lead to potential
financial
misstatement,
impairment,
undetected fraud,
or financial loss.
The Group’s systems
and processes for
delivering house sales
are unable to meet
future growth plans.
A significant failure in
key Information
Security or IT systems
(including by way of
cyber-security
breaches) impacts
the Group’s ability to
conduct its business or
manage its finances.
68
Risk increased
Risk decreased
Risk Trend
Risk unchanged
Principal risk: Development
Developments fail to meet the operational or financial targets set for them.
APPETITE There is inherent risk associated with the planning, delivery, and sale of any development. Cairn is willing to accept levels
of financial or operational risk that are consistent with the planned outcomes of its developments but will always seek to minimise
those risks accordingly.
RISK FACTORS
RESPONSE
RISK TREND AND STATUS
Failure to meet
development
milestones and
schedules, and/or
release developments
to the market in line
with the Group’s
commitments, can
adversely affect
development costs,
the ability to meet
development targets,
and the maintenance
of appropriate levels
of cashflow.
Availability of
materials and
supplies, or supply
chain disruption,
causes development
delays or an
unexpected increase in
development costs.
Build cost inflation
(including materials,
supplies and labour
cost) adversely impact
the Group’s margin
and profitability.
The Group has developed and implemented a robust and
systematic, integrated methodology for development
launches, construction scheduling and supply chain
capacity management, delivery, and sales.
A common approach to construction design, planning
and management is adopted across the development
portfolio to increase efficiency and reduce risk. This is
supported by the appointment of a Head of Construction
to oversee and manage all construction activity.
During 2021 the Group
has evaluated its
methodology in the
context of its scaling
plans and development
activity. Improvements in
the methodology have
been identified and
implemented.
2
4
8
7
6
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3
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Likelihood
Construction planning and activity is measured and
assessed on a number of critical factors. This is
supported by a variety of complementary technology
platforms and systems to support planning,
programming, reporting and programme remediation.
Cairn’s construction planning and management
processes ensure that construction activity progresses
in accordance with the requirements of the Group’s
methodologies.
Maintaining availability of materials and supplies in line
with development milestones and schedules is a core
function of the Group’s commercial function.
Supply chain risks are managed on a strategic and
tactical basis. This includes expanding the supplier base,
identifying and managing specific category risks, forward
planning and purchasing, and developing alternatives for
existing materials and supplies.
To support this, a Supply Risk Monitoring team has been
put in place who meet on a monthly basis. This team
persistently review the supply categories, the risk
categories attributable to them, and the discrete action
plans developed to reduce the risks.
The Group commercial function closely monitor and
analyse costs to establish trends and support
forecasting. This is supplemented by rigorous cost
management and the deployment of best in class
procurement strategies.
Baseline costs on a category-by-category basis were
established at the beginning of 2021 and since then are
reassessed on a quarterly basis to monitor change and
establish trends. The monitoring and assessment of
costs changes is supported by a quantity surveyor team
who participate in procurement decisions.
Operating efficiencies are actively identified to reduce
unforeseen costs in product utilisation, logistics and
construction activity.
The Group monitors risks
on a category-by-
category basis. Macro
factors means supply
chains risks (labour
supply, materials, and
transport capacity)
persist, but are actively
managed as part of the
Group’s core activities.
Build Cost Inflation is
impacting materials,
supplies and labour costs,
with these costs rising,
and is expected to
continue to be a feature.
These costs are offset by
an improved mix with
more apartments sold,
embedded supply chain
efficiencies and improved
pricing in middle and
upper-end apartments
and houses.
CAIRN HOMES PLC ANNUAL REPORT 2021
69
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT RISK REPORT CONTINUED
Risk increased
Risk decreased
Risk Trend
Risk unchanged
Principal risk: Development continued
Developments fail to meet the operational or financial targets set for them.
APPETITE There is inherent risk associated with the planning, delivery, and sale of any development. Cairn is willing to accept levels of
financial or operational risk that are consistent with the planned outcomes of its developments but will always seek to minimise those
risks accordingly.
RISK FACTORS
RESPONSE
RISK TREND AND STATUS
Delivering an
increasing number of
developments to a
consistent quality and
costs standard,
requires greater
standardisation of
product and delivery.
Utility companies
(water, drainage,
electricity) are unable
to provide sufficient
connections, supply, or
capacity for proposed
developments.
The Group’s design and development standards have
been designed specifically to facilitate the ambitions of
the Group and ensure consistency and deliverability at
scale.
As part of the development of these standards, building
design has been challenged and more efficient
construction modes incorporated into design briefs.
The Group proactively engages with utility providers
through regular meetings at which current and future
requirements are communicated and subsequently
managed. Potential supply risks for a development are
managed through development level risk processes with
specific mitigating strategies developed.
The Group’s design and
development standards
are tested, reviewed
and modified on a
persistent basis.
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4
8
7
6
5
3
1
Likelihood
Infrastructure and
capacity constraints
means it is becoming
more difficult for
utility providers to
keep pace with existing
and prospective
demand and there is
no current indication
these constraints will
improve in the short to
medium term.
Principal risk: Compliance
Cairn fails to meet its legal and regulatory obligations (such as health & safety or data protection).
APPETITE Cairn has no appetite for failures that give rise to injury or loss or life. Cairn will manage legal and regulatory risks in a
manner that is consistent with good practice.
RISK FACTORS
RESPONSE
RISK TREND AND STATUS
A failure by the Group
to meet the
requirements of health
& safety legislation or
best practice, giving
rise to death or
personal injury in the
workplace for which
Cairn is responsible.
A failure of the
business to meet its
data protection
obligations arising
under Irish and EU
data protection laws.
The Group has implemented a health & safety system
and supporting framework that exceeds legislative
standards. This framework is intended to ensure safe
systems of work throughout all Cairn’s activities.
The Health & Safety function is led by a senior manager
reporting to executive management. This is
supplemented by independent, periodic reviews of the
health & safety systems and their effectiveness.
An accountability framework managed by the Company
Secretary supported by an independent Data Protection
Officer supports the processing of personal data in
accordance with data protection laws. The framework is
periodically assessed against established standards.
2
4
8
7
6
5
3
1
Likelihood
Maintaining, delivering
and constantly improving
the Group’s health &
safety system continues
to be central to its
response to health &
safety risks.
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Data protection regulation
remains a business risk.
The accountability
framework is actively
managed and
improvements
persistently targeted.
70
Risk increased
Risk decreased
Risk Trend
Risk unchanged
Principal risk: People
Cairn fails to recruit, engage, and retain the right employees, in the right positions, to deliver its strategy.
APPETITE Cairn’s appetite for people risk is limited with a view to ensuring that the overall strategy can be delivered by the wider
Cairn team.
RISK FACTORS
RESPONSE
RISK TREND AND STATUS
A lack of skilled and/or
professionally
qualified entrants to
the construction
industry creates a
shortage of skills
available in the supply
chain which are
required to facilitate
Cairn’s development
plans, scaling goals
and succession
planning strategies.
The Group fails to
retain top talent and
build from within, and/
or acquire top talent,
reducing its ability to
meet its goals and
objectives, and/or
maintain a pool of
talent to meet its
succession plans.
The Group’s people
engagement strategy
fails to engender or
facilitate the optimal
performance of its
employees, so that
people performance
does not match its
potential.
Cairn actively engages with and supports its supply chain
to attract, develop and retain talent. This includes
apprenticeship and traineeship support, supporting
contractors with talent management, and securing
labour from overseas markets.
The construction industry
continues to experience
skills shortages, which
the Group addresses
through its people
strategy.
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4
8
7
6
5
3
1
Likelihood
Cairn positions itself as an employer of choice to acquire
top talent by expanding its employer brand awareness,
investing in innovative talent attraction strategies and
utilising alternative resourcing models.
Building and retaining talent is supported through
effective employee engagement and industry leading
remuneration and benefits.
People performance is optimised through extensive
employee wellbeing and development programmes and
clear progression pathways based on performance,
merit and ability.
NEW
Skills and talent
shortages in the
industry create a
significant people
retention and
development risk.
The Group’s people
strategy targets this risk.
NEW
The current employee-led
employment market
creates perfomance and
engagement challenges
that are addressed by the
Group’s people strategy.
CAIRN HOMES PLC ANNUAL REPORT 2021
71
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT RISK REPORT CONTINUED
Risk increased
Risk decreased
Risk Trend
Risk unchanged
Principal risk: Climate
Cairn fails to anticipate and address the strategic, market, regulatory, and operational impacts
of climate change.
APPETITE Identifying and proactively responding to the challenges of climate change is core to Cairn’s purpose and strategy.
Cairn will proactively identify and manage risks associated with climate change in a way that ensures it can continue to deliver
on its vision.
RISK FACTORS
RESPONSE
The Group assesses and monitors its impact on the
climate, as well as the demands associated with
responding to climate change. It aims to continue to
meaningfully address its impact and these demands
with innovative and sustainable solutions.
The Group actively engages with all stakeholders to
identify environmental concerns and issues relating to
proposed developments, so decision making is fully
informed and likely environmental conditions identified
at the earliest possible stages of a development’s
evaluation.
A dedicated environmental manager engages with
planning authorities to ensure environmental adherence
and monitoring plans are developed and implemented so
environmental conditions are met in a manner that
meets planning conditions, but with the least impact on
development costs and timing.
2
4
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Likelihood
RISK TREND AND STATUS
New
Changes to policy,
regulation and
stakeholder expectation
in response to climate
change are persistent and
continue to evolve rapidly.
New
Environmental related
planning conditions are
increasingly a key aspect
of planning approvals
granted by planning
authorities. This is a
trend that is expected
to continue.
The impacts of severe weather events and extreme
conditions are actively monitored and evaluated by the
Group’s Technical, Construction and Environmental
teams on a site-by-site basis with remediations
(such as site drainage methods) developed to respond
to site-specific risk and mitigate the cost impact.
New
Ireland is experiencing
more extreme weather
driven events and the
frequency of such events
is not anticipated to abate.
The Group is active in identifying materials and products
that have a carbon impact, as well as other activities that
have a carbon cost or incur carbon charges.
The Group’s technical and construction teams
persistently seek alternative materials and
methodologies to reduce these impacts and costs.
New
The direct and indirect
costs of carbon impact
activities is increasing and
is subject to greater
scrutiny by all
stakeholders.
The Group fails
to change its
development designs
to respond
appropriately
to climate or
environmental
related demands.
Planning approvals
for developments are
subject to a greater
number of
environmental-related
planning conditions,
increasing development
costs and development
times.
Construction activity
and costs are
adversely affected by
climate-driven events,
such as prolonged
periods of intense
rainfall, an increase in
the severity of winter
storms, or extremes
of cold or heat.
The carbon costs
associated with the
Group’s construction
activity adversely
impacts its ability to
develop sites that meet
climate change
conditions, or which
are affordable to its
target market.
72
GOING CONCERN AND VIABILITY STATEMENT
Going Concern
The COVID-19 pandemic has had an impact
on the Group during the year ended
31 December 2021, resulting in an
interruption in development activity in the
earlier part of the year. The Group entered
the COVID-19 pandemic from a position of
strength and continues to operate from that
position with a long-term strategy that
focuses on minimising financial risk and
maintaining financial flexibility. The
business has strong liquidity, a robust
balance sheet and sustainable, lowly
leveraged debt facilities.
To mitigate any risk the Group applies a
prudent cash management policy ensuring
the production activities in the near term
are focused towards forward sold
inventories, inventories which will continue
to be attractive to buyers, and directing
housing production pipeline towards new
family homes which are at the lower end
of the price band. The Group has also
expanded its regional footprint during 2021
with further expansion planned in 2022 and
continues to have a broad and widening
customer base.
The Group did not avail of any wage subsidy
support from the Irish Government during
2021 or 2020.
The Group held €40.0 million of cash at
31 December 2021 (31 December 2020:
€34.5 million) and has strong liquidity with
the Group’s loan facilities being repayable
between 31 December 2022 and 31 July
2026. While some of the Group’s loan
facilities are repayable on 31 December
2022, a refinancing project is underway.
This is considered to be a routine matter
with no foreseeable issues given the
Group’s financial position and strong
outlook. The Group had undrawn revolving
credit facilities of €194 million as at
31 December 2021 (€140 million as
at 31 December 2020).
During the thirteen-week shutdown period
at the beginning of the year during which
the majority of the Group’s construction
sites were closed or operating at
significantly reduced capacity (some
construction activity continued on new
homes contracted to close by 31 January
2021, social homes contracted to close by
31 March 2021 and utility connections
during this period), the Group successfully
maintained operational momentum,
making detailed preparations for a safe
return to work, which allowed build
programmes to restart efficiently on a
phased basis from 12 April 2021. All
residential sites were successfully
reopened, under strict compliance with
operating procedures adhering to social
distancing requirements. The Group also
commenced construction on two new
sites in the second half of the year and five
new sites since the start of 2022. While
COVID-19 has had an impact on gross and
operating margins, the business has
recovered well and has seen an
improvement in gross margins, a strong
recovery in sales and an increase in
profitability when compared the prior year.
The Group is also encouraged by the level
of underlying demand and the forward
sales pipeline with strong demand
continuing into the early months of 2022
with our enquiry lists across all our active
selling sites remaining at historic highs
and particularly strong interest in our
starter home and trade-up/down
commuter locations.
The Directors have carried out a robust
assessment of the principal risks facing
the Group and have considered the impact
of these risks on the going concern of the
business. In making this assessment,
consideration has been given to the
uncertainty inherent in financial forecasting
including future market conditions for
construction costs and sales prices.
Where appropriate, severe but plausible
downside-sensitivities have been applied to
the key factors affecting the future financial
performance of the Group.
Having considered the Group’s forecasts
and significant liquidity, the Directors have
a reasonable expectation that the Group
has adequate resources to continue in
operational existence for the foreseeable
future. Accordingly, they are satisfied that
it is appropriate to continue to adopt the
going concern basis in preparing the
consolidated financial statements and there
are no material uncertainties in that regard
which are required to be disclosed.
Viability Statement
In accordance with the UK Corporate
Governance Code Provision 31, the
Directors have assessed the prospects
of the business and its ability to meet its
liabilities as they fall due over the medium
term. The Directors have concluded that
three years is an appropriate period for
assessment as this constitutes the
Group’s rolling strategic planning horizon.
The Group has developed a financial model
as part of our three-year plan, which is
updated at least annually and is regularly
tested and assessed by the Board.
Progress against the three-year plan is
regularly reviewed by the Board through
presentations from senior management
on the performance of the business.
The Group’s Principal Risks and
Uncertainties aggregate the risks identified,
as well as the mitigation plans implemented
as part of this process, and they include the
risks that may have short-term impacts as
well as those which may threaten the long
term viability of the Group. The Directors
have made a robust assessment of the
potential impact that these risks may have
on the Group’s business model, future
performance, solvency and liquidity.
The three-year plan has been tested for
a range of scenarios which assess the
potential impact of severe but plausible
downside-sensitivities to the long-term
viability of the Group. These scenarios
included the stress testing of the Group’s
business model and assumes that a
combination of events result in a continued
reduction in sales over the three-year
period from 2022 to 2024, with a
deterioration in employment levels and
consumer confidence, coupled with a
reduced bank risk appetite, leading to a
material reduction in credit availability in
the mortgage market. In assessing these
severe downside scenarios, it was assumed
that there was an inability to undertake
construction or sales activities for an
extended period of time, and a sudden
decline in demand compared to the Group’s
forecast, leading to reduced sales volumes,
a reduction in sales prices, increased cost
for materials and labour and increased
finance costs, followed by a gradual
recovery. In these scenarios, the Directors
assumed they would take appropriate
actions to ensure that the overall financial
risk was minimised through this cycle,
including:
• suspending capital returns
to shareholders;
• disposing of non-core sites;
• deferring certain planned site
commencements;
• short term rental of unsold new units;
and
implementing cost-cutting initiatives.
•
Having reviewed the three-year plan
and considered the above stress testing,
the Directors confirm that they have a
reasonable expectation that the Group will
continue to operate and meet its liabilities
as they fall due over the aforementioned
three-year period.
CAIRN HOMES PLC ANNUAL REPORT 2021
73
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT BOARD OF DIRECTORS
JOHN REYNOLDS (63)
Chairman
Appointed: 28 April 2015
MICHAEL STANLEY (56)
Chief Executive Officer (CEO)
Appointed: 12 November 2014
SHANE DOHERTY (47)
Chief Financial Officer (CFO)
Appointed: 13 April 2020
Skills and experience:
Michael Stanley co-founded Cairn Homes plc and
was appointed CEO prior to the IPO in June 2015.
Michael has a strong pedigree in residential
development and the broader property industry.
He was previously CEO of Stanley Holdings,
a large Irish homebuilder and real estate
investment company. Michael also has extensive
experience in the packaging, energy, agritech
and healthcare sectors.
Other current appointments:
None.
Skills and experience:
Shane Doherty was previously Group CFO
at Morgan McKinley Ltd, an international
professional staffing and resourcing solutions
business, since March 2018. Prior to that, he was
Group CFO at green energy developer, Gaelectric
Holdings Ltd, European Finance Director at
Paddy Power Group plc and Head of PaddyPower.
com. Prior to his time at Paddy Power, he worked
in various senior finance leadership roles in
Eircom Group plc.
Other current appointments:
None.
Skills and experience:
John Reynolds 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. John is a Chartered Director, an
Economics graduate of Trinity College Dublin,
and holds a Masters degree in Banking and
Finance from UCD.
Other current appointments:
Non-Executive Director of Computershare
Investor Services (Ireland) Limited, Business in
the Community Limited, Institute of Directors
Ireland and the National Concert Hall. Senior
Advisor in Alantra Credit Portfolio Advisors,
Ireland and Patron of Chapter Zero Ireland,
an entity established to build a community
of Non-Executive Directors equipping them
to lead crucial boardroom discussions on
the impacts of climate change.
COMMITTEES
A Audit & Risk
R Remuneration
N Nomination
A R N Chair
I Denotes Independence
74
ALAN MCINTOSH (54)
Non-Executive Director
Appointed: 12 November 2014
Skills and experience:
Alan McIntosh has been a principal investor and
part of successful investor groups for over
20 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. 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.
Other current appointments:
None.
JULIE SINNAMON (63)
Non-Executive Director
Appointed: 15 September 2021
A N I
Skills and experience:
Julie Sinnamon brings deep experience in
assisting Irish businesses to grow and scale
having had a highly successful career at
Enterprise Ireland where she held a number of
senior roles including the position of CEO from
2013 until her retirement in 2021. Julie is a
business graduate of the University of Ulster,
holds a Master’s in International Business from
Fordham University, USA and is a graduate of
the Stanford Executive Programme, USA.
Other current appointments:
Chair of European Movement Ireland, Co-Chair
of Balance for Better Business, Director of PwC
Ireland Public Interest Body, The Agricultural
Trust, Social Entrepreneurs Ireland and The
Young Scientist & Technology Exhibition. Member
of the Investment Committee of the Irish Strategic
Investment Fund and a member of the Irish
Government’s Climate Change Advisory Council.
LINDA HICKEY (60)
Non-Executive Director
Appointed: 12 April 2019
A R I
GARY BRITTON (67)
Non-Executive Director
Appointed: 28 April 2015
A R I
GILES DAVIES (53)
Non-Executive Director
Appointed: 28 April 2015
R N I
Skills and experience:
Linda Hickey was previously Head of Corporate
Broking at Goodbody Stockbrokers, where she
worked for fifteen years, and where she advised
clients on a range of capital markets and
corporate governance matters. Prior to this,
Linda worked at both NCB Stockbrokers in
Dublin and Merrill Lynch in New York. Linda
also has a degree in Business Studies from
Trinity College Dublin.
Other current appointments:
Non-Executive Director at Kingspan Group plc
and Greencore Group plc; Chair of the Board of
The Irish Blood Transfusion Service and member
of Quanta Capital Advisory Board.
Skills and experience:
Gary Britton 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 was formerly a non-executive
director of the Irish Stock Exchange plc and KBC
Bank Ireland plc. Gary is a fellow of Chartered
Accountants Ireland and a member of the
Institute of Directors in Ireland.
Other current appointments:
Non-Executive Director of Origin Enterprises plc.
Skills and experience:
Giles Davies 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 international practice in the emerging
field of conservation enterprise, ESG and related
investment financing. He previously served
as Non-Executive Chairman of Wilderness
Scotland, Non-Executive Chairman of
Capital Management & Investment plc,
and as a Non-Executive Director of
Algeco Scotsman Group.
Other current appointments:
None.
ORLA O’GORMAN (49)
Non-Executive Director
Appointed: 10 November 2021
A N I
DAVID O’BEIRNE (64)
Non-Executive Director
Appointed: 1 March 2019
R N I
Skills and experience:
Orla O’Gorman spent seven years at the Irish
Stock Exchange (“ISE”), where she was Head of
Equity. She was centrally involved in the sale of
the ISE to Euronext in 2018 and, following that
transaction, was appointed as Head of Listing
for UK and Ireland. Prior to joining the ISE,
Orla founded OR Associates, and previously
held senior management positions at Eurologic
Systems, ABN AMRO and PwC. Orla is a qualified
accountant, holds a Bachelor of Commerce
from University College Dublin and a Master
of Accounting from UCD Smurfit School.
Other current appointments:
Member of the European Commission’s SME
Technical Expert Group and the Chartered
Accountants Ireland Sustainability Expert
Working Group. Advisory Board member of
Elkstone Ventures and Non-Executive Director
of Elite SpA.
Skills and experience:
David O’Beirne is a former Managing Partner of
the international law firm Eversheds Sutherland,
Dublin, is a former Head of the firm’s Corporate
& Commercial Department and is currently
a Partner in its Corporate & Commercial
Department. David’s primary practice areas are
mergers, acquisitions, disposals, private equity
investments, corporate restructurings and
corporate reorganisations, and he has advised
clients, both domestic and international, for
almost 40 years.
Other current appointments:
None.
CAIRN HOMES PLC ANNUAL REPORT 2021
75
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT SENIOR LEADERSHIP TEAM
MICHAEL STANLEY
Chief Executive Officer (CEO)
SHANE DOHERTY
Chief Financial Officer (CFO)
MAURA WINSTON
Chief People Officer
GAVIN WHELAN
Head of Construction and Operations
Maura joined Cairn in June 2019. Formerly
Director of Innovation and Change at
Federal Court of Australia, Maura spent
10 years with Accenture specialising in
Organisational Development.
Gavin joined Cairn in January 2021. Previously
Managing Director and founder of Bailey
Brothers Construction Management Services.
Gavin also held senior roles in Skanska and
Laing O’Rourke. Most notably Gavin acted as
Construction Delivery Lead on the £1.7bn mixed
use Battersea Power Station redevelopment.
SARAH MURRAY
Director of Customer (B2C)
Sarah joined Cairn in April 2019. Formerly
Director of Sherry FitzGerald New Homes with
specialist experience in the sales and marketing
of large-scale residential developments with
some of Ireland leading developers.
76
FERGUS MCMAHON
Commercial Director
Fergus joined Cairn in April 2016. Previously
Cairn Group Managing Surveyor responsible
for our team of quantity surveyors. Formerly
an Associate Director of McInerney Homes Ltd.
GERALD HOARE
Head of Corporate Development (B2B)
Ger joined Cairn in June 2017. Previously
Group Pre-Construction Manager and also
Student Accommodation portfolio Delivery
Lead. Formerly worked with leading Main
Contractors in the UK specialising in
residential developments.
TARA GRIMLEY
Company Secretary and
Head of Sustainability
DECLAN MURRAY
Head of Investor Relations and
Corporate Affairs
Tara joined Cairn in March 2018. Previously
Deputy Company Secretary & Head of Group
Integration at UDG Healthcare plc. Member of
the Chartered Governance Institute.
Declan joined Cairn in February 2016. Previously
Director, Structured Solutions at Royal Bank of
Scotland plc. Formerly held management
positions in two domestic banks.
“We continued to invest in our people in
2021 increasing our headcount to 270 at
year-end. Our team has grown further in
2022 to c. 300 full time employees today,
with a target of 400 by the end of the year
to meet our ambitious growth agenda.”
Michael Stanley
Chief Executive Officer
CAIRN HOMES PLC ANNUAL REPORT 2021
77
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT CORPORATE GOVERNANCE REPORT
“Consistently enhancing our
governance framework”
John Reynolds
Chairman of the Board
On behalf of the Board, I am pleased to present the corporate
governance report for the year ended 31 December 2021. The report
explains how the Board operates and how reporting and oversight
functions in Cairn.
In the year under review, Cairn was subject to the UK Corporate
Governance Code published in July 2018 by the Financial Reporting
Council and the Irish Corporate Governance Annex (together “the
Code”) and this report sets out how we have applied the principles
and provisions of the Code. I am pleased to confirm that the
Company has complied with the provisions of the Code, save for
Provision 38 of the UK Corporate Governance Code, which states
that the pension contribution rates for Executive Directors, or
payments in lieu, should be aligned with those available to the
workforce. As detailed in the 2019 Annual Report, the pension
contribution rate for the Chief Financial Officer on appointment was
set at 15% of base salary, the same rate of pension contribution that
applied with effect from 2021 for the Chief Executive Officer who
voluntarily agreed to reduce his contractual pension contribution
entitlement over a two year period from 25% of base salary in 2019
to 15% in 2021. In addition, a commitment was made that all future
Executive Directors will receive a pension contribution rate in line
with the workforce.
Purpose, Vision, Values And Culture
The Board recognises its role in establishing the purpose and
values of our Company and embedding these throughout the
organisation. Our Purpose, Vision, Values and Culture define us and
drive us to create places where people love to live. They drive us to
build our homes better and more sustainably, to build a skilled and
diverse team and to make a positive impact in communities where
we live and work. During the year, discussions were held with a wide
range of employees from across the business in order to assess any
changes in our colleagues’ engagement with our purpose and
values over the last two years driving further understanding of how
our culture needs to evolve to best support our purpose and values.
The key themes arising from the review were considered by the
Board and action plans developed for driving further understanding
of our culture. The changes to the Code designed to ensure greater
engagement between employees and Board members have been
welcomed by the Board as providing a more rounded picture of
our operations for consideration during discussions on strategy
and outlook.
Document and Reporting Framework
During 2021, led by the Company Secretary, we reviewed and
refreshed the key documents governing the Company, including
Terms of Reference for each key Committee, the Schedule of
Matters Reserved for the Board and policies on Diversity and
Inclusion. As our business matures, and the expectations of the
business evolve, we consider it important that our practices are
consistently reviewed and, if needed, altered. The finalised
documents are available on our website, www.cairnhomes.com.
Workforce Engagement
In recognition of the requirement under the Code for the Board to
establish a mechanism for engaging directly with our employees,
David O’Beirne is designated as the non-executive director with
responsibility for employee engagement on behalf of the Board.
David held a number of meetings with employees at all levels of
the organisation during the year, at which he shared with employees
a perspective on the Board’s priorities and provided an opportunity
for them to ask questions. Further details are provided later in the
report. Feedback from these meetings has continued to be very
positive, with employees welcoming the opportunity to meet with a
non-executive member of the Board, and the insights from these
interactions continue to provide valuable input to the Board’s
deliberations. We fully recognise our obligation to engage with
and consider the impact of the Board’s decisions on all of our
stakeholders. Further details on our approach can be found in the
Nomination Committee Report.
Board Effectiveness and Refreshment
With the easing of COVID-19 restrictions during the year, the Board
was able to resume in-person meetings on a more frequent basis,
as well as recommencing site visits. In addition to the gradual return
of in-person meetings, we continued to interact with the
management of the business and other employees remotely,
helping the Board’s understanding of both the challenges and
opportunities within our business.
There were also significant changes to the Board’s composition
during the past year, which has deepened the diversity and
experiences of us as a collective. Jayne McGivern stepped down
from the Board due to her executive commitments, and Andrew
Bernhardt also retired from his role at the end of 2021, having
served on the Board as a Non-Executive Director for six years.
78
BOARD MEMBERS BY GENDER
NUMBER OF SCHEDULED BOARD MEETINGS
70%
Male
BOARD MEMBERS BY TENURE
8
30%
Female
30%
<2 years
20%
50%
3-6 years
7-9 years
NUMBER OF NEW DIRECTORS
2
We are grateful to Jayne and Andrew for their contribution to Cairn.
Following a search led by the Nomination Committee, we were
delighted to welcome Julie Sinnamon and Orla O’Gorman as
independent Directors who bring deep and valuable experience to
Cairn in addition to increasing the gender diversity of the Board.
Both Julie and Orla have joined the Audit & Risk Committee, and the
Nomination Committee, ensuring gender balance at a committee
level also. One of my key focuses during 2022 is to ensure our new
Directors continue to develop a deep understanding of Cairn’s
business and operations.
Since the end of the fiscal year, David O’Beirne announced his
intention to step down from the Board following the conclusion of
the 2022 AGM. We thank David for his service and insight during his
tenure and, in particular, for leading the development of the role of
Director responsible for workforce engagement. He will be
succeeded in that role by Orla O’Gorman.
Board Evaluation
During 2021, through the Institute of Directors (‘IOD’), we conducted
our triennial external Board evaluation. As a process, external
evaluations are extremely insightful, allowing my fellow Board
members and I to reflect on what works well or could be improved.
The expertise, oversight and independence of the external evaluator
is a core part of us getting the most from the exercise.
I was pleased that the evaluation found that the Board continues
to operate to a high standard, and our scoring increased in each
category from our last external evaluation, also conducted by the
IOD. We are, however, always looking to function even more
effectively. There were two areas that will form the basis of an
action plan over the coming 12 months, relating to how we measure
culture and training programmes for Directors. On culture, we
are increasing interaction with key employees, supported by our
Chief People Officer, as well as refining alignment of reward and
performance throughout the organisation. Together with external
support, we are also developing a further comprehensive training
programme for Directors to refresh their knowledge and skills.
Further details on the Board Evaluation process and findings can
be found on page 84.
John Reynolds
Chairman
CAIRN HOMES PLC ANNUAL REPORT 2021
79
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT CORPORATE GOVERNANCE REPORT CONTINUED
Board Leadership And Company Purpose
Role of the Board
The Board is collectively responsible for promoting the long-term sustainable success of the Group, generating value for shareholders as a
whole and contributing to wider society by fulfilling its purpose. In exercising this responsibility, the Board takes into account all relevant
stakeholders including customers, employees, suppliers, shareholders, regulators and governments and the effect of the activities of
the Group on the environment. The Board provides effective leadership by setting the strategic priorities of the Group and overseeing
management’s execution of the strategy in a way that enables sustainable long-term growth, while maintaining a balanced approach
to risk within a framework of prudent and effective controls.
Our Purpose
Our purpose is building homes and creating places where people love to live and our sustainability priorities help us to achieve this purpose
in a tangible way. Developing a business based on strong, sustainable foundations, and where our employees have the opportunity to achieve
their full potential, provides the platform for our continued success. We recognise that this success is dependent upon strong engagement
with, and delivery for, all our stakeholders.
Our Values
Agile & Innovative
We are creative and open
to new ideas, ready to
implement change when
required. We are
prepared and able to
adapt to changing market
conditions and customer
requirements.
Honest & Straight
Talking
Maintaining an open and
transparent dialogue.
Saying what needs to be
said and not just what
people want to hear.
Being open and
transparent, means that
we can get to a better
solution quicker.
Collaborative
Collaboration is at the
core of our homebuilding.
Projects involve hundreds
of people from varied
disciplines and
professions working
together to achieve a clear
common goal – to build
great homes.
Commercially Minded
Being sector aware.
Knowing the customer.
Seeking value and making
savings. As well as
building great and
competitively priced new
homes, we are building
sustainable long-term
value for our
stakeholders.
Committed & Engaged
We are all in. We will be
there to deliver on
stakeholder needs
throughout their journey
with us, sharing our
knowledge, our insights
and our expertise
to guide, support
and reassure.
The Board and management aim to ensure that these values are lived within the business and integrated into decision making at all levels.
Where behaviour is not aligned with these values, the Board and management seek to ensure that appropriate action is taken.
80
Division Of Responsibilities
Roles and Responsibilities
The Board has a formal schedule of matters reserved for its
decision which includes the approval of significant acquisitions or
disposals, significant capital expenditures, financial statements and
budgets, risk management processes and the Principal Risks &
Uncertainties, and, the approval of the Terms of Reference for each
of the Committees of the Board. Certain governance responsibilities
have been delegated by the Board to Board Committees, to ensure
that there is independent oversight of internal control and risk
management and to assist the Board with carrying out its
responsibilities. Three Committees have been established which
are the Audit & Risk Committee, the Nomination Committee and
the Remuneration Committee. Each of the Board Committees are
comprised of independent Non-Executive Directors. Each individual
Committee’s Chair reports to the Board on matters discussed at
Committee meetings and highlights any significant issue that
requires Board attention. The roles of Chairman and Chief Executive
Officer are set out in writing, clearly defined and approved by the
Board. Day-to-day management responsibility rests with the
Senior Leadership Team, the members of which are listed on
pages 76 and 77.
Chairman
Chief Executive Officer
Senior Independent Director
JOHN REYNOLDS
Responsible for leadership of the Board
and ensuring effectiveness in all aspects
of its role.
MICHAEL STANLEY
Specific responsibility for recommending
the Group’s strategy to the Board and for
delivering the strategy once approved.
He is responsible for setting the Board’s
agenda and ensuring adequate time is
available for discussion of all agenda items,
including strategic issues. He is responsible
for encouraging and facilitating active
engagement by and between all Directors,
drawing on their skills, knowledge and
experience. He was independent when
appointed to the role in 2015.
In undertaking such responsibilities, the
Chief Executive Officer takes advice from,
and is provided with support by, his Senior
Leadership Team and all Board colleagues.
Together with the Chief Financial Officer,
the Chief Executive Officer monitors the
Group’s operating and financial results and
directs the day-to-day business of the
Group. The Chief Executive Officer is also
responsible for recruitment, leadership
and development of the Group’s senior
management team below Board level.
GILES DAVIES
Giles is the Senior Independent Non-
Executive Director. He acts as a sounding
board for the Chairman and acts as
an intermediary for the other Directors
when necessary.
He is also available to address
shareholders’ concerns that have not
been resolved through the normal channels
of communication with the Chairman,
Chief Executive Officer or Chief Financial
Officer. He is responsible for evaluating
the performance of the Chairman
in consultation with the other
Non-Executive Directors.
Non-Executive Directors
Company Secretary
The Non-Executive Directors provide an
external perspective, sound judgement and
objectivity to the Board’s deliberations and
decision making. With their diverse range of
skills and expertise, they support and
constructively challenge the Executive
Directors and monitor and scrutinise the
Group’s performance against agreed goals
and objectives. The Non-Executive Directors
are also responsible for determining
appropriate levels of executive
remuneration, appointing and removing
Executive Directors, and succession
planning through their membership of the
Remuneration and Nomination Committees.
The Non-Executive Directors together with
the Chairman meet regularly without any
Executive Directors being present.
TARA GRIMLEY
Supports and works closely with the
Chairman, the Chief Executive Officer and
the Chairs of the Board Committees in
setting agendas for meetings of the Board
and its Committees.
She supports accurate, timely and clear
information flows to and from the Board
and the Board Committees, and between
Directors and senior management. In
addition, she supports the Chairman in
designing and delivering Directors’
induction programmes and the Board
and Committee performance evaluations.
She also advises the Board on corporate
governance matters and Board procedures,
and is responsible for administering the
Share Dealing Code and the AGM.
CAIRN HOMES PLC ANNUAL REPORT 2021
81
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT CONTINUED
Conflicts of Interest
The Board reviews potential conflicts of interest as a standing agenda item at each Board meeting. Directors have continuing obligations to
update the Board on any changes to these conflicts.
Induction and Training
An induction procedure for new Board members was established in early 2019 which was further enhanced in 2021 as we inducted two new
members to the Board. Board members engage with senior management on a regular basis to assist and enhance 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. In addition, as part of our action plan emanating from the external evaluation, there will be
an increase in the availability of training for Directors in 2022.
D&O Insurance
The Company maintains appropriate Directors’ and Officers’ liability insurance cover in respect of legal action against Directors, the level
of which is reviewed annually. Subject to the provisions of, and so far as may be permitted by the Companies Act 2014 and the Company’s
Constitution, every Director, 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.
Board Meetings in 2021
The Board meets regularly and would typically hold seven scheduled meetings during the year, including a strategy day. The Board met eight
times for Board meetings during 2021. Generally each formal Board meeting follows a carefully tailored agenda agreed in advance by the
Chairman, Chief Executive Officer, Chief Financial Officer and Company Secretary. A typical meeting will comprise reports on current trading
and financial performance from the Chief Executive Officer and Chief Financial Officer, sustainability, risk, governance, health & safety and
investor relations updates and ‘deep dives’ into areas of particular strategic importance.
Attendance Table
Director
John Reynolds (Chairman)
Andrew Bernhardt*
Gary Britton
Giles Davies
Shane Doherty
Linda Hickey
Jayne McGivern*
Alan McIntosh
David O’Beirne
Orla O’Gorman*
Julie Sinnamon*
Michael Stanley
No. of Meetings Held/Attended
Board Tenure
8/8
8/8
8/8
8/8
8/8
8/8
5/5
8/8
8/8
1/1
2/2
8/8
7 years
7 years
7 years
7 years
2 years
3 years
3 years
7 years
3 years
< 1 year
< 1 year
7 years
* Andrew Bernhardt and Jayne McGivern stepped down from the Board on 31 December 2021 and 3 September 2021 respectively. Orla O’Gorman and Julie Sinnamon joined the
Board on 10 November 2021 and 17 September 2021 respectively.
Commitment and External Appointments
As part of the Board evaluation process, the Board has considered the individual Directors’ attendance, their contribution, and their external
appointments, and is satisfied that each of the Directors is able to allocate sufficient time to the Group to discharge his or her responsibilities
effectively. As evidenced by the attendance table above, the Directors have maintained the ability to devote sufficient time to their roles and
the Company. Contracts and letters of appointment with Directors are made available at the AGM or upon request.
Executive Directors are permitted to take up non-executive positions on the boards of other listed companies so long as this is not deemed to
interfere with the business of the Group. Executive Directors’ appointments to such positions are subject to the approval of the Board which
considers, amongst other things, the time commitment required. In line with the Code, Non-Executive Directors are also encouraged to seek
Board approval prior to taking on any additional external appointments.
82
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 their 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 Constitution, 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 re-election annually.
Accordingly, all Directors will retire at the Annual General Meeting
currently scheduled for 12 May 2022 and, being eligible, each will
offer themselves for re-election with the exception of David
O’Beirne. 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 of the Directors.
Information and Support
All members of the Board are supplied with appropriate, clear and
accurate information in a timely manner covering matters which are
to be considered at forthcoming Board or Committee meetings. The
papers for each meeting are made available via an electronic Board
portal along with a wealth of supporting and reference material.
Should Directors judge it necessary to seek independent legal
advice about the performance of their duties with the Group, they
are entitled to do so at the Group’s expense. Directors also have
access to the advice and services of the Company Secretary, who
is responsible for advising the Board on all governance matters
and ensuring that Board procedures are complied with. The
appointment and removal of the Company Secretary is a matter
requiring Board approval.
Independence
As is done annually, the independence of the Non-Executive
Directors was reviewed during 2021. In doing so, the Board
considered factors such as length of tenure and relationships or
circumstances that are likely to affect, or appear to affect, the
Directors’ judgement, in determining whether they remain
independent. Following this year’s review, the Board concluded
that, excluding Alan McIntosh who is deemed non-independent
given his prior role as an Executive and a Founder, all of the other
Non-Executive Directors remain independent in character and
judgement and are free from any business or other relationships
that could materially affect the exercise of their judgement. The
Chairman of the Board was deemed independent on appointment.
In assessing the independence of Linda Hickey, the Committee had
due regard for her former position as a senior executive at
Goodbody Stockbrokers (“Goodbody”), one of the Company’s
corporate brokers, as well as on the Board of Kingspan Group plc
(“Kingspan”), one of the Company’s suppliers. The Committee
concluded that Ms Hickey was fully independent, taking into account
the following material factors:
• Ms Hickey retired from her role at Goodbody in April 2019,
prior to her joining the Board
• Kingspan is the largest supplier of timber frame housing in
Ireland. The availability of alternative suppliers at such scale
simply does not exist in the Irish market and procurement
of these products was subject to the Company’s strict
procurement procedures
• Non-Executive Directors are not involved in the procurement
process; and, the total purchases from Kingspan in 2021 were
€19.4 million (2020: €10.95 million), which is not material for a
business of Kingspan’s size.
Ms Hickey has deep experience in capital markets and particularly
with Irish public companies, which is very valuable to the Company
and our shareholders. In addition, we consider experience gained
through her role as a non-executive director of a global building
materials company to be an asset to the Company. Ms Hickey has
met with many of our major shareholders and was re-elected to
the Board with over 99% shareholder support in both years since
her appointment.
Board Appointment Process
During the past year, there were significant changes made to
the Board’s composition. When making Board appointments,
the Nomination Committee reviews and approves an outline brief
and role specification and appoints an external search consultancy
for the assignment.
The Chairman of the Board (except in relation to his own succession)
alongside representation from the Nomination Committee and the
Chief People Officer, meets with the external search consultancy to
discuss the specification and search as well as the Group’s need for
enhancing diversity. The external search consultancy prepares an
initial long list of candidates from which the Nomination Committee
assembles a shortlist. Interviews are held with the Chairman, Chief
Executive Officer and a selection of Non-Executive Directors.
The Nomination Committee then makes a recommendation to
the Board for its consideration. Following Board approval, the
appointment is announced in line with requirements of the rules
applying to public companies.
Board Policy on Diversity
In 2019, the Board adopted a formal Diversity and Equality Policy
applicable to the Company as a whole. The Board and management
continues to be cognisant of the benefits of diversity and the
recommendations of the Hampton-Alexander and Parker reviews,
and recognise the clear benefits of increasing diversity at all levels
of the organisation.
Cairn made good progress in this area during 2021. At 31 December
2021, our female employees made up 27% of our total workforce,
while 33% of the Chief Executive Officer’s direct reports were
female. Many of the Company’s employee base are also from
varying backgrounds of nationality, ethnicity, and religion. In
response to the embedding of the Parker Review in market practice,
the Board is reviewing succession planning and recruitment policies
to ensure an appropriate focus on ethnicity. Further details on
diversity within the Company can be found within our 2021
Sustainability Report.
CAIRN HOMES PLC ANNUAL REPORT 2021
83
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT CORPORATE GOVERNANCE REPORT CONTINUED
Board Evaluation
During 2021, the Board and each of its Committees completed an external evaluation questionnaire to assess their performance and
effectiveness. Overall, the feedback from the external evaluation was very positive with the Board recognising management’s efforts to drive
the business through the ongoing challenges presented by the COVID-19 pandemic, from strong health and safety procedures, clearly defined
back-to-work protocols, and the quality and frequency of Board engagement and information flow over the course of 2021. In terms of actions,
the Board will place a particular focus on continuing to drive enhancements in Director training and the monitoring of culture within the
organisation. During 2022, the Board will also focus on the continued integration of ESG factors into strategy development and Director training.
Preparation
Data Gathering
& Analysis
Interviews
Reporting
& Action Plan
• Institute of Directors appointed by the Nomination Committee
• Institute of Directors assigned Independent Assessor
• Assessor meets with Chairman and Company Secretary to determine scope of engagement,
key objectives, focus areas and the overall structure of the evaluation
• Comprehensive online questionnaire completed by each Board and Committee member, tailored to
meet the objectives of the evaluation
• Following completion of questionnaires and analysis of responses, the Independent Assessor held
one-to-one interviews with each Board member to give them an opportunity to discuss their
questionnaire responses, to expand upon them, and to raise any other issues which are not directly
covered by the questionnaire. The interviews also incorporated review of Committee work as relevant
by membership
• Draft report of findings and key recommendations shared with the Chairman and Company
Secretary for review to ensure the process and output met the initial evaluation objectives,
without compromising the integrity of the process or the recommendations made
• The final report was circulated to the full Board and the Independent Assessor attended the
following Board meeting to present findings and key recommendations to the Board
• Discussion held during Board meeting to consider the outcomes and agree recommended actions
84
Audit, Risk and Internal Controls
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 year under review and up to the date of
approval of the Annual Report and Financial Statements. The Board
has reviewed the effectiveness of the Company’s risk management
and internal control systems, with the assistance of the Audit & 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. The Company’s risk framework
continues to evolve, and the Company will continue to monitor and
improve its risk management framework. Further details are
available in the Risk Report on pages 62 to 73.
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:
Clearly defined organisation structure and lines of authority;
• Company policies for financial reporting, treasury management,
information technology and security and project appraisal;
• Annual budgets and business plans; and
• Monitoring performance against budget.
The preparation and issuance of financial reports is managed by
the finance function. The financial reporting process is controlled
using the Company’s accounting policies and reporting system. The
financial information is reviewed by the Chief Financial Officer and
the Chief Executive Officer. The interim and preliminary results and
the Annual Report and Financial Statements are reviewed by the
Audit & Risk Committee who recommend their approval to the Board.
Risk Management
The Company considers risk management to be of paramount
importance. The Board, together with Senior Leadership Team,
deals with risk management on behalf of the Company as part of
its regular monitoring of the business. The Board and the Audit &
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. Further information on the
principal risks applicable to the Company is given in the Risk Report
on pages 62 to 73.
Financial Risk Management
The financial risk management objectives and policies of
the Company are set out in note 29 to the consolidated
financial statements.
Health and Safety Policy
It is the policy of the Company and its 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 - 2016
• the Safety Health and Welfare at Work (Construction)
Regulations, 2013 and all amendments to date
• All codes of practice applicable to the work undertaken
by the Company or its 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 whilst 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 the Group 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
workplace. 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 Health and Safety Policy is available at all work locations for
consultation and review by all employees. The Policy is kept up-to-
date and amended as necessary to meet changes in the nature and
size of the business. The Policy is communicated to employees at
the 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 ongoing integration of health
and safety into all of its activities, with the objective of retaining high
standards of health and safety performance. The Company seeks
the full co-operation of all concerned in the carrying through of its
commitment. Health and safety has also been integrated into the
remuneration arrangements for the Executive Directors, with
pay opportunity reduced in the event of unsatisfactory Health and
Safety performance
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.
The 2022 Annual General Meeting of the Company is scheduled to
be held at The Merrion Hotel, Merrion Street Upper, Dublin 2, D02
KF79 at 11.00 a.m. on 12 May 2022. The 2021 Annual Report and
2022 Notice of the Annual General Meeting will be circulated at
least 20 working days prior to the meeting and will be available
to download from the Company’s website. The Notice contains a
description of the business to be transacted at the Annual General
Meeting. The Chairman, Chief Executive Officer, Chief Financial
Officer and Non-Executive Directors will be available at the
Annual General Meeting to answer shareholder questions.
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 ANNUAL REPORT 2021
85
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT CORPORATE GOVERNANCE REPORT CONTINUED
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/she/it 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 75% or more
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:
• altering the Objects of the Company;
• altering the Constitution of the Company; and
• approving a change of the Company’s name.
Communication 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 preliminary results.
The Executive Directors meet with institutional investors
during the year and participate in broker/investor conferences.
The Chairman has overall responsibility for ensuring that the views
of our shareholders are communicated to the Board. Contact with
major shareholders is principally maintained by the Executive
Directors. During 2021, meetings between the Chairman and in
the majority of cases, the Chair of the Remuneration Committee,
were held with c. 60% of our shareholders on a broad range of
governance and strategic areas. The Executive Directors also
report regularly to the Board on their engagement with
shareholders. The Board also regularly receives analysts’ reports
on the Company. The Company’s website www.cairnhomes.com
provides the full text of all announcements including the
interim and preliminary results and investor presentations.
Other
The Company discloses information to the market as required by the
Listing Rules of Euronext Dublin and the Listing Rules of the London
Stock Exchange and Financial Conduct Authority, including inter alia:
• Periodic financial information such as interim and preliminary
results;
• Price-sensitive information, which for example, 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;
• Any changes to the Board once a decision has been made, and
• 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 ongoing negotiations of a
price-sensitive nature. Any decisions by the Board which might
influence the share price must be announced as soon as possible
and in any event 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).
Remuneration
Details on the Company’s compliance with the provisions of the UK
Corporate Governance Code in relation to remuneration are set out
in the Directors’ Remuneration Report.
86
AUDIT & RISK COMMITTEE REPORT
“The Committee continues to
ensure the maintenance of
effective risk management
and internal control
frameworks”
Gary Britton
Chair of the Audit & Risk Committee
The below table sets out the Committee membership including their attendance and tenure:
Committee Member
Gary Britton (Chair)
Andrew Bernhardt*
Giles Davies*
Linda Hickey
Jayne McGivern*
Orla O’Gorman*
Julie Sinnamon*
Meeting
Attendance
Committee
Tenure
6/6
6/6
5/5
6/6
4/5
1/1
1/1
7 years
7 years
7 years
3 years
3 years
< 1 year
< 1 year
*Andrew Bernhardt and Jayne McGivern stepped down from the Board and Committee on 31 December 2021 and 3 September 2021 respectively. Giles Davies stepped down from the
Committee on 10 November 2021. Julie Sinnamon and Orla O’Gorman were appointed to the Committee on 10 November 2021.
Dear Shareholder,
This report describes how the Audit & Risk Committee (the
“Committee”) has fulfilled its responsibilities during the year under
its Terms of Reference and under the relevant requirements of the
UK Corporate Governance Code and Irish Corporate Governance
Annex (together “the Code”).
The Committee is satisfied that its role and authority include those
matters envisaged by the UK Corporate Governance Code that
should fall within its remit and that the Board has delegated
authority to the Committee to address those tasks for which
it has responsibility.
Committee Membership
The Committee currently comprises four Non-Executive Directors
having had several changes to the composition throughout the
year. I’m delighted to welcome both Julie Sinnamon and Orla
O’Gorman to the Committee and wish to express my thanks to
each of Jayne McGivern, Andrew Bernhardt and Giles Davies
for their individual contributions to Committee deliberations
during their respective tenures.
All members of the Committee are determined by the Board to be
independent Non-Executive Directors in accordance with provision
24 of the UK Corporate Governance Code. In accordance with the
requirements of provision 24 of the UK Corporate Governance Code,
several members of the Committee are deemed to have recent and
relevant financial experience. The biographical details on pages 74
and 75 demonstrate that members of the Committee have a wide
range of financial, capital markets, commercial and business
experience relevant to the sector in which the Group operates.
The Committee met six times during the year and the attendance of
each member is laid out in the table above. Meetings are attended
by members of the Committee and others being principally the
Chairman, the Company Secretary, the Chief Financial Officer,
representatives from the finance function, the Health & Safety
Manager, and representatives of the External Auditor as well as the
outsourced Internal Audit function who also attend by invitation.
Other members of management may be invited to attend to provide
insight or expertise in relation to specific matters.
The Committee also met privately with the External Auditor and
representatives of the outsourced Internal Audit function without
management present at least once during the year.
The Chair of the Committee reports to the Board following
each meeting, on the work of the Committee and on its findings
and recommendations.
CAIRN HOMES PLC ANNUAL REPORT 2021
87
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT • Reviewing the scope, resourcing, findings and effectiveness
of the Internal Audit function;
• Monitoring and reviewing the overall effectiveness of the
Group’s risk management systems, and overseeing its
strategic response to risk, in particular, the principal and
emerging risks to its strategic objectives;
• Reviewing the adequacy and effectiveness of the Group’s
systems and controls for risks associated with health &
safety, bribery and fraud, and the use of personal data; and
• Reporting to the Board on how the Committee has
discharged its responsibilities.
Health & Safety and Data Protection
The Committee met with the Group’s Health & Safety Manager
and Commercial Director on three occasions during the year.
These meetings included reviewing key health and safety statistics,
monitoring resourcing requirements for the function and
overseeing the achievement of key objectives during 2021 which
were set at the beginning of the year. The Chairman of the
Committee also frequently engaged with the Health & Safety
Manager outside of meetings.
The Committee has engaged with the Company Secretary who has
overall responsibility for the Group’s lawful use of personal data in
accordance with Irish and European data protection laws, including
Regulation (EU) 2016/679 (the General Data Protection Regulation
“GDPR”). The Group has designated an independent Data Protection
Officer who has access to the Committee, advises the Company
Secretary and carries out the tasks mandated by the GDPR.
Throughout 2021, the Committee continued to monitor the progress
and effectiveness of the Group’s data protection programme,
consistent with the data protection risks faced by the Group.
Going Concern, Viability and Directors’ Compliance Statements
The Committee reviewed the draft Going Concern Statement,
Viability Statement and Directors’ Compliance Statement prior to
recommending them to the Board for its review and approval. The
Going Concern Statement and the Viability Statement are contained
in the Risk Report on page 73. The Directors’ Compliance Statement
is included in the Directors’ Report on page 110.
AUDIT & RISK COMMITTEE REPORT CONTINUED
KEY DUTIES
• Monitoring the integrity of the Group’s financial statements
and announcements relating to the Group’s performance;
• Advising the Board on whether the Annual Report and
Financial Statements, taken as a whole, is fair, balanced and
understandable, and whether it provides the information
necessary for shareholders to assess the Group’s
performance, business model and strategy;
• Monitoring the effectiveness of the external audit process
and making recommendations to the Board in relation to the
appointment, re-appointment and remuneration of the
External Auditor;
• Overseeing the relationship between the Group and the
External Auditor including the terms of engagement and
the scope of audit;
KEY AREAS OF ACTIVITY DURING 2021
A summary of the key activities of the Committee during the year
is set out below:
Financial Reporting
The Committee reviewed the draft trading updates, draft
preliminary results, draft annual report and draft interim results
before recommending their approval to the Board. The Committee
considered the appropriateness of the relevant accounting policies
and significant judgements and key estimates adopted in the
preparation of the financial statements. The Committee also
considered the views of the External Auditors in making these
assessments. The significant issues in relation to the financial
statements considered by the Committee and how these were
addressed are set out on pages 89 and 90. The Committee also
reviewed the observations on internal control prepared by the
External Auditor as part of the audit process.
In accordance with the reporting requirements of the Code, the
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
Group’s position and performance, business model and strategy.
Risk Management and Internal Control
Responsibility for monitoring the effectiveness of the Group’s
system of risk management and internal control is delegated to the
Committee by the Board. Following the comprehensive review of
the Group’s risk management process in 2020, the Committee in
2021 embedded the effectiveness of the process through its
oversight of risk and associated controls. The Committee is satisfied
with the procedures established for identifying, assessing and
managing key risks, and will continue to evaluate those procedures
against best practice for the industry. Further information on the
Group’s risk management process is outlined in the Risk Report
on pages 62 to 73.
88
Internal Audit
The Group’s Internal Audit function is outsourced, however the
Committee continues to maintain oversight of and responsibility for
the function’s effectiveness on an annual basis. The Internal Audit
function completed four Internal Audit reviews during the year;
(1) Review of Procurement; (2) Review of Cyber Security; (3) Review
of Delegated Authorities; and (4) Review of Funding & Liquidity.
The Committee considered reports and updates from the Internal
Audit function for each of these reviews which summarised the
work undertaken, findings, recommendations and management
responses to audits conducted during the year. A register is
maintained internally which monitors progress against any
recommended process and control enhancements to ensure
that they are implemented appropriately and in a timely and
controlled manner.
The Committee considered and approved the programme of work to
be undertaken by the Internal Audit function in 2021 and the planned
programme of work for 2022. The Committee also met with the
members of the Internal Audit function privately without
management present.
External Auditor
Our External Auditor, KPMG, was appointed in 2015. The Group
currently has no plans to tender for audit services, although is
cognisant of the EU Audit Regulation requirements on auditor
rotation. The Committee reviewed the External Auditor’s overall
audit plan for the 2021 audit and approved the remuneration
and terms of engagement of the External Auditor. The Committee
also considered the quality and effectiveness of the external
audit process and the independence and objectivity of the
External Auditor.
In order to ensure the independence of the External Auditor, the
Committee received confirmation from the External Auditors
that they are independent of the Group under the requirements of
the Irish Auditing & Accounting Supervisory Authority (“IAASA”)
Ethical Standard for Auditors (Ireland). The External Auditors
also confirmed that they were not aware of any relationships
between the firm and the Group or between the firm and persons in
financial reporting oversight roles in the Group that may affect its
independence. The Committee considered and was satisfied that the
relationships between the External Auditor and the Group including
those relating to the provision of non-audit services did not impair
the External Auditor’s judgement or independence.
Non-Audit Services
The Committee reviews the engagement of the External Auditor to
provide non-audit services on an ongoing basis. In considering any
proposal for the provision of non-audit services by the External
Auditor, the Committee considered several matters including:
• Threats to independence and objectivity resulting from the
provision of such services and any safeguards in place to
eliminate or reduce these threats to a level where they would
not compromise the External Auditor’s integrity and objectivity;
• The nature of the non-audit services;
• Whether the skills and experience of the external audit firm
make it the most suitable supplier of the non-audit services;
• The fees incurred, or to be incurred, for non-audit services both
for individual services and in aggregate, relative to the audit fee;
and
• Any relevant legislation.
The External Auditor will not be engaged for any non-audit services
without the approval of the Committee. The External Auditor is
precluded from providing certain services under Regulation (EU)
No 537/2014 or from providing any non-audit services that have
the potential to compromise its independence or judgement.
Details of the audit and non-audit services provided by the External
Auditor for 2021 and their related fees are disclosed in Note 9 to the
consolidated financial statements. The Committee has undertaken
a review of non-audit services provided during 2021 and is satisfied
that these services were efficiently provided by the External Auditor
with the benefit of their knowledge of the business and did not
prejudice their independence or objectivity.
In line with EU audit regulations, the Group’s non-audit fees for 2021
were less than 70% of the average of the audit fees over the
previous three-year period.
Confidential Reporting and Anti-Bribery & Corruption
The Group’s Confidential Reporting and Anti-Bribery & Corruption
Policies were reviewed and updated during 2021 and were formally
adopted by the Committee and rolled out within the business in
early 2022. The policies are published on the Group’s website and
intranet, and employees are required to confirm they have read
them. The Committee continues to monitor and review any breaches
to these policies.
Estimates and Judgements
The Committee reviewed in detail the areas of significant
judgement, complexity and estimation in connection with the
financial statements for 2021. The Committee considered a report
from the External Auditors on the audit work undertaken and
conclusions reached as set out in their audit report on pages 113
to 118. The Committee also had an in-depth discussion on these
matters with the External Auditors. These significant areas were
the carrying value of inventories and profit recognition.
Carrying Value of Inventories and Profit Recognition
The Group continued to invest capital in developing its landbank
and construction work in progress as the business continues to
scale its construction activities. Consequently, the carrying value
of inventories is a critical area in terms of judgement from a
management and audit perspective. The Group engaged in a
detailed annual impairment test during 2021 to ensure that the
investment in such development land and the related construction
work in progress is not impaired. The impairment exercise was
conducted with input from the relevant stakeholders across the
business and external input, where appropriate. The annual
impairment test looks at all aspects of site performance on an
individual site by site basis, in order to determine the net realisable
value of the individual site. This involves assessing the number of
units that can be achieved on each individual site, together with a
full assessment of the likely sales prices of those individual units,
which are then compared to actual sales prices achieved to date.
CAIRN HOMES PLC ANNUAL REPORT 2021
89
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT AUDIT & RISK COMMITTEE REPORT CONTINUED
All costs associated with the individual sites are assessed and
updated on a regular basis as new information becomes available,
based on actual experience. In the event that the net realisable
value is lower than the cost of any particular site, the individual site
would be considered impaired and it would be written down to its
net realisable value. This process is reviewed by management and
is also tested extensively as part of the annual audit process.
The annual impairment test did not show any evidence of
impairment on a site by site basis.
The Group recognises its gross profit on each sale, based on the
particular unit sold and the total cost attaching to that unit. As the
build cost on a site can take place over a number of reporting
periods the determination of the cost of sale to release on each
individual unit sale is dependent on up-to-date cost forecasting and
expected profit margins across the scheme. There is a risk that one
or all of the assumptions could be inaccurate, with a resulting
impact on the carrying value of inventories or the amount of profit
recognised. This risk is managed through ongoing site profitability
reforecasting, with any necessary adjustments being accounted for
in the relevant reporting period.
The Committee considered the evidence from impairment reviews
and profit forecasting models across the various sites and
discussed the results with management and is satisfied with the
carrying values of inventories (development land and construction
work in progress) and with the methodology for the release of costs
on the sale of individual units.
As Chair of the Committee, I engaged with the Company Secretary,
the Chief Financial Officer, and representatives from the finance
function and health and safety function, the Internal Audit function
and the External Auditor in preparation for each Committee
meeting. I also attend the Annual General Meeting and am
available to respond to any questions that shareholders
may have concerning the activities of the Committee.
Gary Britton
Chair of the Audit & Risk Committee
90
NOMINATION COMMITTEE REPORT
“2021 was a busy year for the
Nomination Committee,
with a focus on improving
diversity at Board level”
Giles Davies
Chair of the Nomination Committee
Dear Shareholder,
Meeting attendance can be found in the table below:
I am pleased to present the Nomination Committee (the
‘Committee’) report on the progress made during 2021. The main
purpose of the Committee is to ensure plans are in place for
orderly succession of Board and senior management positions
whilst maintaining an appropriate balance of skills, experience,
independence and diversity. The Committee regularly reviews
the structure, size and composition of the Board and makes
recommendations to the Board with regard to any changes.
Following a search led by the Nomination Committee, we oversaw
the appointment process which resulted in the appointment of
Julie Sinnamon on 17 September, followed by the appointment
of Orla O’Gorman on 10 November. We were delighted to
recommend the appointment of these Directors to the Board,
who bring different but equally important skills to the Board and
the key Committees they sit on. Both Jayne McGivern and Andrew
Bernhardt stepped down from the Board during the past year,
and we thank them for their input over the years. Gary Britton
and Alan McIntosh also stepped down from the Nomination
Committee during the year and we thank them for their
contributions during their respective tenures. Following the end
of the financial year, David O’Beirne announced his intention to
step down from the Board at the conclusion of the 2022 AGM.
The Committee will continue to lead the refreshment process
to appoint further Non-Executive Directors in the period ahead.
All members of the Committee are Independent Non-Executive
Directors and their biographies can be found on pages 74 and 75.
Members of the Leadership Team, primarily the Chief People
Office Maura Winston, and the Board Chairman John Reynolds,
are invited to attend meetings. The Company Secretary Tara
Grimley also acts as Secretary to the Committee.
The Committee met four times during the year and after each
Committee meeting, the Board was apprised of key issues
discussed during our meetings.
Committee Member
Giles Davies (Chair)
Gary Britton*
Alan McIntosh*
David O’Beirne
Orla O’Gorman
Julie Sinnamon
Meeting
Attendance
Committee
Tenure
4/4
4/4
3/3
4/4
1/1
1/1
7 years
7 years
2 years
3 years
< 1 year
< 1 year
* Gary Britton and Alan McIntosh stepped down from the Committee on
10 November 2021.
With new Board members and two departures during the year,
there have been a number of changes to the Board’s key
Committees as part of our consistent focus on Board refreshment
and diversification of the Board’s skillset. Gary Britton and Alan
McIntosh stepped down from the Nomination Committee and both
Orla O’Gorman and Julie Sinnamon were appointed. I stepped down
from the Audit & Risk Committee and both Orla O’Gorman and Julie
Sinnamon were appointed. All changes were effective from
10 November 2021.
Audit & Risk
Committee
Remuneration
Committee
Nomination
Committee
Gary Britton (Chair)
Linda Hickey (Chair) Giles Davies (Chair)
Linda Hickey
Gary Britton
Julie Sinnamon
Julie Sinnamon
Giles Davies
Orla O’Gorman
Orla O’Gorman
David O’Beirne
David O’Beirne
Role of the Committee
The Committee is responsible for Board recruitment and will
conduct regular assessments of the Board’s composition against
the Company’s strategic priorities and the main trends and
factors affecting the long-term success and future viability
of the Company. The Committee’s key objective is to ensure
that the Board comprises individuals with the necessary
skills, knowledge, experience and diversity (including gender
diversity) to ensure that the Board is effective in discharging
its responsibilities.
CAIRN HOMES PLC ANNUAL REPORT 2021
91
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT NOMINATION COMMITTEE REPORT CONTINUED
The Committee strongly believes that diversity and developing an
inclusive culture is a key driver of business success and the
Committee is committed to having a diverse and inclusive
management team which provides a range of perspectives, insights
and critical challenge needed to support good decision-making,
helping with risk management and strategic planning.
Committee Responsibilities and Key Activities
Details of the key areas of responsibility of the Committee and the
time spent on each area during 2021 are set out below:
Board Composition
The Committee has sought to balance the composition of the Board
and its Committees and to refresh them progressively over time.
In discharging its responsibilities, the Committee regularly reviews
the structure, size and composition of the Board and its
Committees, including skills, knowledge, independence and
diversity, to ensure they are aligned with the Group’s strategy.
Our Non-Executive Directors are drawn from a wide range of
industries and backgrounds, including capital markets, legal,
investment banking, entrepreneurial, environmental and financial
industry experience and have a wealth of experience in complex
organisations with global reach.
The Committee recognises the importance of the Board’s
awareness of and preparations for the future, and ensuring that
the skills, experience and knowledge of individuals reflect the
changing demands of the business, all while upholding the culture
and values of the Group. Building on the work done in 2020 that set
out clear skills against the evolution of our strategy, during the
year, a Non-Executive Director succession plan was developed
from this. This provides a structured and systematic approach
to refreshing the Board.
Board Diversity
The Committee and Board are committed to ensuring that together
the Directors possess the requisite diversity of skills, experience,
knowledge and perspectives to support the long-term success of
the Company. In this regard, the role of diversity in promoting
balanced and considered decision making which aligns with the
Group’s purpose, values and strategy is fully recognised. All Board
appointments are made on an objective and shared understanding
of merit, in line with required competencies relevant to the
Company as identified by the Committee, and consistent with
the Board’s Diversity Policy.
The Committee will identify suitable candidates based on merit
against objective criteria and with due regard for the benefits of
diversity on the Board including social and ethnic background,
cognitive and personal strengths as well as diversity of gender.
Where there is a known requirement to improve the diversity of
the Board, the Committee will ask to see a higher proportion of
candidates fitting the diversity criteria. However, the final selection
will, as stated, always be on merit.
The Committee will once again review the composition of the Board in
the coming year, taking into account the recommendations set out in
the Hampton Alexander Review (which recommends that at least 33%
of Board and Executive Committee members of FTSE 350 companies
should be female), and from an Irish perspective, Balance for Better
Business, which sets a target for 33% and 25% representation on
Irish Boards and Executive Committees, respectively, by 2023. We are
pleased to report that, following the changes to the Board during
92
2021, at the year end the female representation was 30% (three out
of ten). Following David O’Beirne stepping down at the 2022 AGM,
33% of the Board will be female.
The Committee also oversees the development of a diverse
pipeline for future succession to Board and senior management
appointments, including reviewing the gender balance of senior
management and its direct reports. As at 31 December 2021, the
Senior Leadership Team had 33% female representation, and
27% of our total workforce were female. Further details on our
Equality, Diversity and Inclusion agenda can be found in our 2021
Sustainability Report.
Non-Executive Directors and Planning for the Future
To support strategic succession planning for Non-Executive
Directors, led by the Company Secretary, during 2020, a skills
matrix was developed to ensure the Board and its Committees
have and maintain the necessary skills to deliver the Group’s
strategic priorities. During 2021, we found the matrix extremely
useful as we announced significant changes to Board and
Committee composition. Further details on our diverse Board and
the skillsets of our Non-Executive Directors are detailed on page 93.
Workforce Engagement
The changes instigated by the revisions to the UK Code in 2018
have spurred greater engagement between Board members and
the views of workers. While, at Cairn, we believe the employee
voice has always played a role in Board decisions and
deliberations, it has challenged us to go further.
Through our director responsible for workforce engagement,
David O’Beirne, and our Chief People Officer, Maura Winston, the
Committee received regular updates on the welfare of employees,
employee initiatives including learning and development
programmes and the detailed results of the employee engagement
survey conducted during the year. One of the key elements of
engagement with the workforce was our employee engagement
survey. While we are fully aware that these surveys do not represent
a full engagement strategy, they provide key insight into employee
satisfaction and are part of the Committee and the Board’s tools in
monitoring culture.
In addition, as restrictions allowed, David attended two sites in
November and met directly with employees without management
present. The areas covered were culture generally, life in Cairn and
the challenges and success stories. David in particular noted that
the discussions were informal, open, honest, informative and
overall very positive. One area where certain issues were raised
related to the pace and increasing workload which had the ability to
add to day-to-day stresses. It was also recognised by employees
that they felt supported and were happy with the levels of
communications from management, particularly throughout the
COVID-19 lockdowns when there had been a lot of job market
uncertainty. The fact that career prospects and opportunities for
progression were evident throughout the business was highlighted
as a particular positive from the employee base.
As a Committee, we will continue to review direct workforce
engagement practices as a means of understanding how successful
our strategy is, what are people are thinking and, ultimately, as a
means of understanding whether our culture and values are
effectively being brought to light throughout the organisation.
A DIVERSE AND EFFECTIVE BOARD
GENDER
ROLE
TENURE
INDEPENDENCE
30%
70%
20%
80%
30%
20%
50%
33%
67%
Female
Male
Executive
Non-Executive
< 2 years
3-6 years
7-9 years
Non-independent
Independent
The Chairman was independent on appointment and is not
included in the overall assessment of independence.
Non-Executive Director Skills Matrix
Key Skills Identified for Calm
Leadership, Strategy & Commercial
Industry Relevant Background
Policy & Government Engagement
Sustainability
Capital Markets
Financial & Risk Management
Giles Davies
Chair of the Nomination Committee
John
Reynolds
•
•
•
•
•
Gary
Britton
•
•
•
•
Giles
Davies
•
Linda
Hickey
•
•
Alan
McIntosh
•
•
David
O’Beirne
•
Orla
O’Gorman
•
Julie
Sinnamon
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
CAIRN HOMES PLC ANNUAL REPORT 2021
93
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT DIRECTORS’ REMUNERATION REPORT
“2021 was a year of continued
integration of ESG metrics
into our remuneration
framework, further aligning
reward and strategy”
Linda Hickey
Chair of the Remuneration Committee
Dear Shareholder
Performance Overview
As detailed throughout the Annual Report, performance across the
Group this year has been exceptional, with growth across all our key
indicators, including new homes sales, gross margin and cash flow.
While we would be pleased with such performance in any year, it is
testament to the resilience of our business and the strength of our
people to be able to achieve such results following the impact of the
pandemic. In addition to the strong financial performance achieved,
the Committee also noted the strength of personal contributions from
the Executive Directors. During 2021, the business continued to be
highly cash generative, resulting in the reinstatement of dividend
payments, increasing our headcount and recommencing our share
buyback programme.
Implementation of Policy - 2021
Both executive directors are being awarded a maximum bonus, at
150% and 115% of salary for the CEO and CFO, respectively, which
is reflective of the delivery of strong performance. The increased
bonus potential for the CEO and CFO had been deferred during 2020
in light of the onset of the COVID-19 pandemic. Having gained a
clearer line of sight over future performance expectations, and
as the impact of the pandemic on business started to subside,
the Committee determined it was appropriate to put in the place
the revised limits, which remain reasonable versus direct and
market peers.
The maximum financial EBIT target of €45m was exceeded
resulting in a full payout for the 50% of the bonus based on financial
performance, in line with the wider financial performance detailed
above. Over the past two years, we have also looked to be a leader in
integrating ESG and stakeholder measures throughout our reward
structure. Specifically, during FY 2021, 20% of bonuses were based
on a customer metric, which was also subject to a health & safety
underpin, two clear priorities in our aims of creating and protecting
value. This portion of the bonus also paid out in full, reflecting the
largest volume of unit closings by management and the customer
team in a single year, despite restrictions on viewings for a portion
of the year. Health and safety performance remained strong,
resulting in no changes being made to the customer performance
outturn. Further details on the 30% personal and strategic
performance measures are set out on pages 98 and 99. Under this
portion of the bonuses, both Executive Directors received full
pay-outs for a range of contributions during the year which set
the foundation for record financial results and future growth.
There were no LTIP awards eligible to vest in 2021, as the first
award under the plan was granted to the CFO in 2020 and the
CEO commenced participation in 2021.
Shareholder Engagement
The Board believes regular engagement with shareholders is a
cornerstone of good governance, ensuring there are established
channels of communication and providing an opportunity to gauge
views on the Company’s strategy, remuneration and governance.
Throughout the first half of 2021, and on occasion since then,
I engaged with a significant number of our major shareholders
to detail our proposal to include the CEO in the LTIP for the first
time. At the 2021 AGM, the Directors’ Remuneration Report received
the support of 75% of shareholders. While pleased that the majority
of shareholders supported the resolution, based on our
engagement with shareholders before and after the AGM, certain
shareholders did not support the proposal based on concerns
related to the timing of the CEO’s inclusion in the LTIP. Throughout
the entire process, as a Committee, we were responsive to
shareholder feedback, which led to material changes to our final
decisions, including a reduction in award level. The Committee
and the Board are fully satisfied that the decision was in the best
interests of the Company and its shareholders and hope the
performance in 2021 was evidence of that.
Outside of the discussion around the CEO’s revised incentive
arrangements, certain shareholders also noted the absence of any
market-based performance measure (i.e. TSR) under the current
LTIP. The absence of a relevant listed peer-set renders the use of
Relative TSR unsuitable as an appropriate metric, and the
Committee was mindful that an Absolute TSR metric, which it has
used in the past, could result in windfall gains in the current
environment. Since the AGM, we have continued to engage with
shareholders on a range of issues, and will continue to ensure
targets set under the LTIP will be stretching as the business
continues to grow and scale. One of the key aspects of our approach
94
to pay is to keep raising the bar, which we will continue to do.
As detailed below, we have responded to certain aspects of
shareholder feedback and have included a new Return on
Equity (‘ROE’) measure in the LTIP, which is designed to further
align with shareholder experience and drive the delivery of
long-term performance.
stakeholders increasingly understand and value. As we focus on the
creation of environmentally sustainable and ecologically friendly
developments, we have decided to incorporate these considerations
into our remuneration policy, demonstrating a level of
responsiveness not just to shareholder feedback, but also our
attempts to be a leader as we develop our approach to sustainability.
As a Board and a business, we will continue to engage with
shareholders as regularly as possible, to ensure there is
consistent fostering of mutual understanding of our expectations.
We will be reaching out to shareholders again in 2022 as part
of our consultation on a new remuneration policy, to be put to
shareholders at the 2023 AGM.
Within our annual bonus plan, awards for 2022 will also have
ESG measures under the strategic focus areas of our customer
experience and our people agenda weighted at 10% each, totalling
20% of the award. Payout under the annual bonus plan for ESG
measures will be contingent on the achievement of a strong and
sustained performance under our health and safety strategy.
Future Implementation
There are no significant changes to the remuneration policy
approved by shareholders at the 2020 AGM. Instead, the Committee
has implemented certain changes to the incentive plans for 2022,
with an evolution of measures in line with the growing maturity of
the business and our refined approach to sustainability and ESG.
With a view to rebalancing the financial and non-financial metrics in
the annual bonus, we have reduced the weighting of the personal
goals metric from 30% to 20% of the total opportunity, with the
weighting of the financial metric, EBIT, increased to 60%. The
weighting of the stakeholder measure will remain unchanged at
20%; however, a people component will also be included to reflect
the importance of culture and talent in the delivery of Cairn’s
long-term strategy. Against a backdrop of COVID-19, our focus on
attracting and retaining the best talent has only increased, with a
growing recognition that a robust and sustainable people strategy is
necessary to support our efforts to scale. The stakeholder metric
for 2022 will be based on an even mix between people and customer
measures and will continue to include a Health and Safety underpin.
Under the LTIP, we are making two changes to the incentive
measures. On the financial side, ROE (defined as profit after tax
divided by total equity at year end) will be included as a metric for
2022 awards, in line with shareholder feedback received over the
past number of years, as well as to reflect the growing maturity of
the business. As we integrate it into the remuneration policy, it will
represent 20% of the overall award for 2022. ROE has been a very
important KPI for the business, as it reflects the importance of
returns on the provision of long-term capital, which enables our
business to grow and scale.
In line with our commitment to sustainability, we are also refining
our focus on ESG measures under the LTIP. As homebuilders, what
we do can have a profound and permanent impact on the land we
develop, which has led to our inclusion of biodiversity as a measure
in the 2022 LTIP, weighted at 20% of the overall award. Biodiversity
is a key tenet of our sustainability strategy and is an area our
In terms of wider workforce remuneration, the Save as You Earn
(‘SAYE’) plan is expected to be withdrawn from Irish markets and
as such, is not currently open to new registrations. Since its
approval in 2019, the SAYE has proven very popular at all levels of
the organisation. While there are currently no service providers
in the market offering that type of plan, as a Company, we consider
it important to ensure all employees continue to receive an
opportunity to share in the success of the business, a key facet of
our people strategy. As such, it is intended that during 2022, an
Approved Profit-Sharing Scheme (‘APSS’) will be established and
offered to employees from 2023. The APSS will allow employees
to invest part of their annual bonus, plus salary, in Company shares
in a tax-efficient manner.
Separate to the SAYE, each year the Committee oversees the award
of LTIP to all eligible employees, not just Executive Directors. In
doing so, a town hall is called with all LTIP grant recipients to
explain the target-setting process and advising that the targets set
apply to all recipients, including Executive Directors in each grant
year. The objectives for the coming three year performance period,
and how they as employees can impact on the achievement of the
targets set is also discussed. During 2022, the Committee will be
involved in refining the reward principles that apply to all levels of
the organisation.
Conclusion
We thank each of our shareholders for their continued confidence in,
and support for, our business. We trust you will agree that reward
for 2021 is appropriate and reflective of the record performance of
the business in the year.
Linda Hickey
Chair of the Remuneration Committee
CAIRN HOMES PLC ANNUAL REPORT 2021
95
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT DIRECTORS’ REMUNERATION REPORT CONTINUED
REMUNERATION AT A GLANCE
The purpose of this section is to provide an overview of the Group’s performance in 2021 as well as the remuneration received by
our Executive Directors. This section also highlights the proposed approach to the implementation of our 2020 Remuneration Policy
(the ‘2020 Remuneration Policy’) in 2022.
2021
FIXED PAY AND SHAREHOLDING
Base Salary
€425,000
(CEO)
€375,000
(CFO)
Pension
15% of base salary
Benefits
Health insurance and car allowance
ANNUAL BONUS
2021 Annual Bonus Earned
€637,500
(CEO)
€431,250
(CFO)
LONG TERM INCENTIVE PLAN
2021 LTIP Grant
€637,500
(CEO)
€562,500
(CFO)
2021 Annual Bonus Outcome
Performance Conditions
Measure
EBIT
Stakeholder
Personal/Strategic
Weighting
Outcome
Measures Weighting Threshold
Target
50%
20%
30%
100%
100%
100%
EPS
80%
14.2c
23.7c
Stakeholder
20% Customer Experience with
Health & Safety underpin
2021 Bonus Delivery
CEO
150%
Total
CFO
115%
Total
125%
Delivered in cash
115%
Delivered in cash
25%
Delivered in shares
2022
FIXED PAY AND SHAREHOLDING
Base Salary
€425,000
(CEO)
0% movement
ANNUAL BONUS
Target % of base salary
150%
(CEO)
115%
(CFO)
LONG TERM INCENTIVE PLAN
Target awards % of base salary
150%
(CEO)
150%
(CFO)
0% movement
2022 Annual Bonus Framework
Performance Conditions
€375,000
(CFO)
Pension
15% of base salary
Benefits
Health insurance and car allowance
96
Measure
EBIT
ESG Measures
Personal/Strategic
Weighting
60%
20%
20%
Metric
EBIT
ROE
ESG Measures
Weighting
60%
20%
20%
CEO (Maximum Performance)
CFO (Maximum Performance)
28%
31%
72%
69%
Fixed
Variable
Fixed
Variable
IMPLEMENTATION OF THE 2020 REMUNERATION POLICY DURING 2021
Single Total Figure of Remuneration
Remuneration Outcomes for Executive Directors for the Year Ended 31 December 2021
The table below sets out the details of the remuneration paid to the Executive Directors for the year ended 31 December 2021,
with comparatives for the prior year ended 31 December 2020.
Salary
Retirement
Benefit
Allowances
Recruitment
Bonus
Total Fixed
Annual
Incentive
Total
Variable
Total
Remuneration
Ratio of Fixed
to Variable
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
2021 2020
425
425
64
375
273
56
85
41
10
15
10
11
–
–
–
499
520
638
185
446
510
431
–
–
638
– 1,137
520 44:56 100:0
431
–
877
510 51:49 100:0
Executive
Director
Michael
Stanley
Shane
Doherty(1)
(1) Mr Doherty was appointed to the Board on 13 April 2020.
Pension
The maximum pension contribution for incumbent Executive Directors was reduced from 25% to 15% of salary in 2019, bringing it further in
line with the broader employee population; this reduction applied to the current Chief Executive Officer equally over the two years from 2019
to 2021, with his contribution now at 15% of salary. The current Chief Financial Officer joined the Company on a 15% contribution. For all new
appointments, pension contributions will be aligned with levels available to the majority of the employee base.
2021 Annual Bonus
The maximum bonus opportunity for 2021 was 150% of salary for the Chief Executive Officer and 115% of salary for the Chief Financial Officer.
Annual incentives were based on a mix of financial, stakeholder and personal objectives. The financial and non-financial measures employed
were a mix of EBIT (50% of maximum), customer satisfaction with a health and safety underpin, and personal objectives relating to strategy,
land bank, risk, brand, talent development and technology and innovation.
There were full pay-outs under each component of the bonus, which the Committee considers aligned with financial performance, strategic
developments, the personal contribution of Executives and the stakeholder experience. Further details are set out below:
Financial
EBIT
50%
€35.0m
€41.9m
€45.0m
€58.4m
Measure
Weighting
Threshold
(20%)
Target (50%)
Max (100%)
2021
Performance
Non-Financial
Customer
(Health &
Safety
underpin)
Personal &
Strategic
20%
30%
N/A
N/A
N/A
N/A
N/A
See below
N/A
See below
Payout
100%
100%
100%
The overall macroeconomic environment and the uncertainty brought about by lockdowns presented difficulties for the setting of targets in
2021, particularly toward the start of the year and this was reflected in the guidance issued to the market in March 2021. With the frequent
changes to the potential date for the reopening of our construction sites, and in order to avoid any cliff-edge events at the year end with
respect to target setting, our guidance reflected our two-year ambition of selling 2,500 units over 2021 and 2022. The 2021 target of 950-1,050
units to be built and 1,450-1,550 units in 2022, were the base figures upon which our EBIT targets were derived. In 2021, we recorded the
construction of 1,120 units, leading us to exceed our EBIT target, and a full pay-out under the financial elements of the bonus.
CAIRN HOMES PLC ANNUAL REPORT 2021
97
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT DIRECTORS’ REMUNERATION REPORT CONTINUED
Led by the Executive Directors, the Customer team agreed the sale of over 1,400 new homes in 2021 and successfully facilitated the closing
of 1,120 homes to new customers, the largest volume of unit closings in a single year by the Company, despite the challenges of the pandemic.
The three pillars employed under the customer segment of the bonus scheme were Delivery, Experience and Aftercare, and performance
under each pillar is set out below:
Pillar
Delivery
Objective
Measure delivery of product
on time and in line with
customer expectations
Target
75% of homes
on target
Performance
99% of homes on target
Experience Capture experience &
insights from 10% of
customer base to influence
future performance
Positive feedback from
direct engagement with
10% of customer base
Net Promoter
Score: 40
Aftercare
Measure after care
performance against
agreed criteria
Strong performance
in wider categories,
including case review
Consistently positive feedback from new customers
Net Promoter Score: 55
(equivalent to 5 stars on the UK’s Home Building
Federation (‘HBF’) model)
Positive feedback received from all institutional
customers
80% of cases reviewed, triaged, and assigned to
aftercare within 1 – 5 days
95% of customers responded to within a 24hr window and a 96% case
closure rate within the 30-day SLA (Service Level Agreement)
As we finish another challenging year, and also a year of strong results, the performance of both the Chief Executive Officer and Chief
Financial Officer has been a key driver in restoring significant growth to our business. As we come to the second anniversary of the pandemic,
the protection of our business and workforce throughout this period, as well as the continuous efforts towards further developing and
communicating our strategy through continuous stakeholder engagement, have been core elements of their contributions. Their
performance against their specific objectives is set out below:
Chief Executive Officer - Michael Stanley
Area
Aims and Measures
Performance Review
Strategy &
Leadership
Define and lead strategy to
continue to grow and scale
the business
Landbank &
Portfolio
Identify & influence market
opportunities to capture
addressable opportunity across
all customer segments
Strategic management of existing
landbank to balance market
demand, maximise revenue and
deliver unit targets
Risk balanced approach and best
in class risk governance
Defined the refreshed Corporate Strategy as presented to the Board in November 2021,
which detailed ambitious growth targets and is based on an evolving and considered
approach to Cairn’s expansion nationally which will be delivered through a regional
model. Execution of this strategy is underpinned by an integrated and scalable operating
platform and delivering on an innovation agenda across Cairn and its mature and growing
supply chain. The CEO’s personal contribution to this task demonstrated keen leadership
skills and commercial and strategic acumen, in line with the ask set by the Committee.
The CEO led, identified and executed on significant market opportunities to a broad and
widening customer pool. Over 1,400 new homes agreed for sale in the year across social
(the State and Approved Housing Bodies), private and multi-family buyers. The CEO’s
management of the Company’s landbank was driven by agile decision-making with
regard to existing land use and product mix in line with planning changes to deliver
Cairn’s strongest ever performance on new home completions and strong operating
cashflow generation. In addition, strategic land acquisitions were executed as part of
Cairn’s long-term portfolio management strategy.
The CEO has driven the management of the public health crisis across the extended Cairn
team to include the subcontractor base and our supply chain, including critical financial and
operational support initiatives to underpin the long-term viability of critical partners whilst
securing stronger relationships and loyalty as a result of these efforts over the period.
Exceptional leadership to
support corporate reputation,
brand and position within the
external market
Instrumental in efforts to influence solutions on Ireland’s housing crisis and utilised
Cairn’s scaled platform and leading market position to engage with a broad pool of key
stakeholders and policy-makers, thereby enhancing Cairn’s reputation both as a critical
enabler in delivering new homes at scale and pace across all tenures, and its relevance
to all of its key stakeholders and policy-makers.
Talent
Management
Embed new leadership team to
support delivery of targets and
strengthen future succession
Focussed significantly on the ongoing development of the Leadership Team including the
delivery of an Executive Leadership Programme covering individual and team coaching,
succession planning and career mapping, underpinned by an improved business
reporting and engagement rhythm.
Continue to engage and support
staff, partners and customers
through continued uncertainties
and COVID impacts.
During the year, under the CEO’s leadership, Cairn achieved the highest staff engagement
annual scores despite the difficult backdrop and secured the Great Place to Work
certification in the first year of application.
98
Risk
Brand
Chief Financial Officer - Shane Doherty
Area
Aims and Measures
Performance Review
Strategy &
Leadership
Support the CEO in the definition
and leadership of strategy to grow
and scale the business
In supporting the CEO’s refreshed Corporate Strategy, the CFO led the development
of key themes specifically on the financial components, focussing on value creation,
capital allocation and long-term shareholder value, underpinned by benchmarking
around value creation trends.
Financial
Frameworks
Provide the financial frameworks
and roadmap to enable all
business leaders to drive towards
profit and cash maximisation
Drive commercial decision
making across all functions to
align outcomes/performance with
company targets
Risk,
Governance
& Reporting
Ensure excellence in all matters
pertaining to the Board,
specifically around reporting,
governance and strategy in a
PLC environment
Relationship
Management
Cultivate and develop key
relationships with existing
shareholders, banks and the
wider Investor community
Technology
& Innovation
Create a robust core IT function
and support innovation agenda
The CFO led, and detailed to the Board, a proactive all-encompassing and risk aware
modelling of key initiatives to ascertain the impact on the Company’s returns profile
as measured by growth in NAV (Net Asset Value), IRR (Internal Rate of Return) and
NPV (Net Present Value). This discipline and heightened focus on returns-based
modelling was an important prelude to the Group introducing ROE (Return on Equity)
as a key short and medium-term target into both its remuneration framework and
market guidance.
In addition, the CFO developed an IRR tool around strategic investments and
acquisitions which included realtime P&Ls on pricing and cost changes.
In reviewing the contribution of the CFO, feedback was extremely positive. In particular,
ensuring best in class governance and risk oversight has resulted in significant
improvements to the risk management framework, governance and reporting.
The CFO has continued to strengthen and deepen trust and relationships with all of our
key investors, through ongoing structured and individual engagements.
In addition, we successfully completed the onboarding of a second corporate broker,
which was further evidence of his capability to build lasting and critical relationships
that benefit the business and shareholders.
During a year characterised by work from home, cyber security threats and macro
disruption, the core IT function demonstrated robustness to all challenges. As a
means of ensuring continued success, the CFO led the expansion of the team through
investment in key senior people. This investment further consolidated the function
whilst both protecting and underpinning the integrity of the business.
Bonus Deferral
As part of the revisions to the bonus framework announced in 2020, and implemented during 2021, any portion of bonus paid out over
125% of salary for the CEO would be deferred into shares. The following was the resulting breakdown of the pay-out for 2021:
Name
Michael Stanley (CEO)
Maximum Bonus
(% of salary)
150%
Payout
(% of salary)
150%
Actual Bonus Awarded
Value of Bonus
Deferred into Shares
€637,500
€106,250
Vesting of Awards in 2021
No share awards vested to any Executive Director or prior Director in 2021.
Awards Granted During the Past Year
On 19 May 2021, the following conditional share awards were granted under the LTIP to Michael Stanley, CEO and Shane Doherty, CFO:
Name
Michael Stanley (CEO)
Shane Doherty (CFO)
Number of Shares
Granted
Share Price at Date
of Grant
Face Value at Date
of Grant
612,981
540,865
€1.04
€1.04
€637,500
€562,500
CAIRN HOMES PLC ANNUAL REPORT 2021
99
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT DIRECTORS’ REMUNERATION REPORT CONTINUED
Following the conclusion of the 2021 AGM, the Committee confirmed the grants to the two Executive Directors. The 2021 LTIP targets were:
Metric
Cumulative EPS
Stakeholder Measures:
• Customer Satisfaction
• Health and Safety
Weighting
80%
Threshold Target (25% vesting)
Maximum Target (100% vesting)
14.2c
23.7c
20% Stakeholders measures will pay out based on customer satisfaction performance. In order
for the stakeholder measure to begin to pay out, a Health & Safety gateway must be
achieved. The gateway will require a sustained and strong level of Health & Safety
performance over the performance period which will be assessed by the Audit & Risk
Committee which will then make a recommendation to the Remuneration Committee.
As detailed in previous Annual Reports, upon joining the Company, the Chief Financial Officer received an LTIP award of €700,000, within the
exceptional limit permitted by the Policy. The award was formally granted in September 2020 and is eligible to vest following the completion
of the performance period at the conclusion of the year ended 31 December 2022 based on the following performance measures and targets:
Metric
Cumulative EPS
Stakeholder Measures:
• Customer Satisfaction
• Health and Safety
Weighting
80%
Threshold Target (25% vesting)
Maximum Target (100% vesting)
9.0c
15.0c
20% Stakeholders measures will pay out based on customer satisfaction performance. In order
for the stakeholder measure to begin to pay out, a Health & Safety gateway must be
achieved. The gateway will require a sustained and strong level of Health & Safety
performance over the performance period which will be assessed by the Audit & Risk
Committee which will then make a recommendation to the Remuneration Committee.
The primary measure for these awards, cumulative EPS over the three year performance periods was designed to provide an easily
understandable and transparent framework for all stakeholders during a period of significant disruption and will motivate participants to
deliver our strategy over the performance period. Vesting between threshold and maximum targets will be calculated on a straight-line
basis. The targets for the financial measures were set after a rigorous review of internal forecasts and took into account external
expectations of future performance.
In the context of the effect on markets of COVID-19, the Committee will continue to monitor the risk of ‘windfall gains’ and will take this into
account when determining the final vesting outcome for the 2020 and 2021 awards. The overall shareholder experience over the performance
period will also play a role in the Committee’s determination of final vesting levels.
Non-Executive Directors’ Remuneration Details
No changes were proposed or made to Non-Executive Director fees during 2021. The fees paid to Non-Executive Directors in respect of
the year ended 31 December 2021 with comparatives for the prior year ended 31 December 2020 are set out below. All remuneration for
Non-Executive Directors is fixed with no variable elements.
Non-Executive Director
John Reynolds
Andrew Bernhardt
Gary Britton
Giles Davies
Linda Hickey
Jayne McGivern (1)
Alan McIntosh
David O’Beirne
Orla O’Gorman (2)
Julie Sinnamon (3)
Base Fee
2021
€’000
150
2020
€’000
150
60
60
60
60
41
60
60
8
17
60
60
60
60
60
60
60
–
–
Committee Chair Fee
2020
€’000
2021
€’000
SID Fee
2021
€’000
2020
€’000
–
–
15
12
12
–
–
–
–
–
–
–
15
12
12
–
–
–
–
–
–
–
–
10
–
–
–
–
–
–
–
–
–
10
–
–
–
–
–
–
Total
2021
€’000
150
2020
€’000
150
60
75
82
72
41
60
60
8
17
60
75
82
72
60
60
60
–
–
(1) Jayne McGivern stepped down from the Board in September 2021 and the fees paid are reflective of her time spent in the role.
(2) Orla O’Gorman joined the Board in November 2021 and the fees paid are reflective of time spent in the role.
(3) Julie Sinnamon joined the Board in September 2021 and the fees paid are reflective of time spent in the role.
Payments for Loss of Office
There were no payments for loss of office paid during 2021.
Payments to Former Directors
There were no payments to former Directors during 2021.
100
IMPLEMENTATION OF THE 2020 REMUNERATION POLICY IN 2022
This section provides an overview of the how the Committee is proposing to implement the Policy in 2022.
As noted in the Committee Chair’s statement, Cairn’s approach to remuneration is evolving in line with strategy and our growth as a business,
while also taking into account external pressures and factors. In particular, there has been continued integration of ESG measures into
incentive plans. In addition, the inclusion of a return on equity measure reflects consistent feedback from a number of shareholders.
While it was not felt that the business had reached sufficient maturity in previous years, it was considered more appropriate to include
an ROE measure now, particularly in light of the strength of performance in 2021.
Base Salary
Over prior benchmarking exercises and reviews, it has become clear that base salaries at Cairn remain low relative to Irish listed and UK
sector comparable peers and are below median. Despite this fact, the Committee has not sought to adjust base salaries for 2022.
It should also be noted that the Chief Executive Officer has not had a base salary increase since the Company was founded in 2015,
reinforcing the commitment to restrained fixed salaries in preference for variable, performance based pay.
Executive Director
Michael Stanley (Chief Executive Officer)
Shane Doherty (Chief Financial Officer)
Base Salary
€425,000
€375,000
Pension and Benefits
The Chief Executive Officer and Chief Financial Officer will receive a pension contribution worth 15% of salary. Any future Executive Director’s
pension contribution will be set at the level for the wider workforce.
Annual Bonus
Key features of the annual bonus plan for Executive Directors for 2022 remains as follows:
• The maximum annual bonus potential is 150% and 115% of base salary for the Chief Executive Officer and Chief Financial Officer
respectively.
• Any portion of bonus earned over 125% of salary will be deferred into shares for two years; and,
• Annual bonuses awarded in respect of performance in 2022 will be subject to potential withholding (malus) or recovery (clawback).
The annual bonus for 2022 for Executive Directors will be determined based on the following criteria:
Measure
Earnings Before Interest and Tax (‘EBIT’)
Personal and Strategic Objectives
ESG Measures
Percentage of Max Opportunity
60%
20%
20%
The selection of measures and targets takes into account the Company’s strategic priorities. The personal and strategic measures will
continue to include areas of strategic importance that may not be linked to a financial measure but are central to the Company’s long-term
performance and provide additional insight into the unique contributions of our executives in driving our strategy. EBIT reflects a controllable
and understandable measure at all levels of the business, and the broad scope of insight it provides has led us to increase its weighting from
50% to 60% of the bonus, with a corresponding reduction of 10% on the personal and strategic objectives.
As we develop and integrate ESG and sustainability factors into remuneration policy, the stakeholder measure, which accounts for 20% of
the bonus opportunity will be focused on positive performance against quantitative people and customer satisfaction measures. To further
sharpen this approach, the Committee defined two metrics under the stakeholder metric, i) Customer satisfaction and ii) People, each
weighed equally at 10% of the bonus. With the underlying and overarching role of health and safety considerations across all our operations,
the stakeholder metric will continue to be subject to a health and safety underpin. The achievement of the underpin will only be confirmed
following a review by the Audit & Risk Committee based on all key health and safety priorities throughout the year.
While the focus of targets, in terms of time-horizon and level, remain distinctly separate, the Committee is aware that there is a level of
overlap between the stakeholder measures employed under the bonus scheme and that of the LTIP. This was commenced with the customer
metric, which is weighted at 10% in the bonus opportunity, and will also apply to the third year of the 2020 LTIP and the second year of the
2021 LTIP, accounting for 20% of these awards. From 2022, the customer metric will no longer be included in the LTIP.
When initially including an ESG and stakeholder measure, the Committee was of the view that the inclusion of a customer measure under
both the annual bonus and long-term incentive plans was appropriate as we drove further scaling of the business, reflecting the steps taken
across the value chain to put the customer at the heart of our product offering including investments and emphasis on quality checking and
product improvements.
CAIRN HOMES PLC ANNUAL REPORT 2021
101
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT DIRECTORS’ REMUNERATION REPORT CONTINUED
For 2022, as detailed below, a biodiversity measure will be included in the LTIP, with a weighting of 20% of the award. Over the second half
of 2021, significant effort was put in to ensuring that the biodiversity measure was quantitative and designed to impact the behaviour of
participants and the evolution of our biodiversity strategy. The Committee is satisfied that the measure for 2022 has achieved these initial
aims and as further measures are detailed in best practice guidelines, we will consistently review the continued appropriateness of its design
and the stretch ambitions therein in future year grant cycles.
Long-Term Incentives
In April 2022, awards will be made at 150% of base salary for both the CEO and CFO. Awards will vest subject to the criteria set out below over
a three-year performance period up to 31 December 2024. Awards will be subject to a two year holding period following any vesting. During
2021, following an extensive review of incentive measures and our sustainability strategy, we adopted a biodiversity metric into the LTIP
to replace the customer metric which will remain in the Annual Bonus plan. Furthermore, as part of the Committee’s review process
and shareholder feedback, we have incorporated a Return on Equity metric in the LTIP. These are reflected in the updated LTIP structure
going forward:
Measure
Earnings Per Share (‘EPS’)
Return on Equity (‘ROE’)
ESG: Biodiversity Measures
Weighting
60%
20%
20%
The Committee is in the process of setting challenging three-year targets for the 2022 LTIP awards, taking into account growth objectives,
business plans and internal and external forecasts. Following the strong results in 2021, we intend to keep the stretch of this metric,
as the business continues to deliver superior and sustainable growth. As set out previously, return on equity is a key metric for the business,
as it is for shareholders’ ability to understand the Company’s financial performance and long-term prospects. While we have confirmed the
Biodiversity targets (detailed below) for the 2022 LTIP, the targets applying to the financial metrics will be disclosed in the RNS announcement
detailing their grant in early April 2022.
In order to ensure that our focus on biodiversity is reflected in management reward, we have incorporated a biodiversity measure (at 20% of
the overall award) in our long-term incentive plan, adding to the focus on customer, people and health and safety incorporated into the annual
bonus plan. Biodiversity is a key strategic priority for Cairn, in that it leverages our existing capabilities to achieve broader sustainability aims,
while also enhancing our brand in line with the evolving market expectations. Furthermore, as it is set to become part of future legislative
requirements, and given its inextricable role in addressing climate change, the Committee believes that the inclusion of a biodiversity metric
in the LTIP will provide additional support to drive the necessary change to achieve our ambitious targets. With the support of the
sustainability team and our external consultants, our approach, which is summarised below, will be based on the proportion of units
across our biodiversity net gain sites relative to all units commenced in 2022 and going forward:
Metric
Weighting Threshold
Target Maximum
Units Commencing on Biodiversity Net Gain sites as a Percentage of All Units Commencing
20%
25%
30%
40%
Projects will be assessed individually and by a consultant ecologist, with the input and assistance of our internal landscape architect as
part of the planning process. The biodiversity loss and gain of each site will be calculated based on the UK’s Department for Environment,
Food & Rural Affairs (DEFRA) metrics. DEFRA metrics are used to calculate how a development, or a change in land management,
will change the biodiversity value of a site, a strategic pillar for our aim of creating places where people love to live, and protecting the
environment everywhere the Company operates. Further details of this assessment are provided in our Sustainability Report and are
inclusive of items such as Baseline Habitat Assessments, habitats for retention, assessment of habitats being created, DEFRA metrics
used to calculate loss and/or gain, and, meeting any shortfall with potential offsite provision.
The Committee was very pleased to be able to confirm a quantitative target for biodiversity in 2022, aligning with a key strategic priority
for our business (as detailed in our Sustainability Report) and equally importantly, for society as a whole. In Ireland, we work primarily on
greenfield sites, which means our standards must be higher to keep those sites green, as opposed to enhancing brownfield sites. As we
continue to integrate this KPI throughout our business and reward framework, we will continue to raise our ambitions and stretch the
targets as appropriate. The target outlined above was confirmed after rigorous evaluations of our landbank and future planning aims,
a factor which will be integrated into any future target-setting.
A holding period for the LTIP awards granted for the financial year 2022 will apply for two years from the vesting date. No further
performance conditions attach to the LTIP awards during the holding period.
102
Directors’ & Secretary’s Interests in the Long Term Incentive Plan (“LTIP”)
Details of outstanding share awards granted to the Directors’ and the Company Secretary under the LTIP are set out below:
Number of Shares Under Award
At
1 January
2021
Granted
During
the Year
Exercised
During
the Year
Lapsed
During
the Year
At
December
2021
Market
Price at
Date of
Award €
Exercise
Price €
Market
Price at
Date of
Vesting
Date of
Award
Vesting
Date
Expiry
Date
Michael Stanley (Chief Executive Officer)
–
612,981
Shane Doherty (Chief Financial Officer)
921,053
–
–
540,865
Tara Grimley (Company Secretary)
96,507
63,348
141,612
–
–
–
103,486
–
–
–
–
–
–
–
–
–
–
612,981
612,981
921,053
540,865
1,461,918
96,507
–
–
–
–
63,348
141,612
103,486
308,446
1.04
Nil
N/A 18.05.21
18.05.24
17.05.28
0.76
1.04
1.09
1.326
0.76
1.04
Nil
Nil
Nil
Nil
Nil
Nil
N/A 22.09.20
22.04.23
21.09.27
N/A 18.05.21
18.05.24
17.05.28
N/A
19.12.18
19.04.21
18.12.25
N/A 15.04.19
15.04.22
14.04.26
N/A 22.09.20
22.04.23
21.09.27
N/A 18.05.21
18.05.24
17.05.28
Directors’ & Secretary’s Interests in Other Share Plans
The CFO held options at 31 December 2021 to acquire 21,951 shares through the Company’s Save as You Earn (‘SAYE’) scheme in April 2024.
The Company Secretary held options at 31 December 2021 to acquire 30,664 shares through the SAYE scheme in April 2023. The SAYE
scheme is a Revenue approved savings plan where participants are granted a right to acquire discounted shares in the Company following
a three year savings period. The Company Secretary also held a right at 31 December 2021 over 47,511 shares under the Restricted Share
Unit (‘RSU’) Plan. The RSU is a time vested award and these shares are due to vest in May 2022.
Directors’ & Secretary’s Interests in Ordinary Share Capital
The interests of the Directors’ and Company Secretary who held office at 31 December 2021 in the issued ordinary share capital of the
Company are set out in the table below. The interests disclosed below include both direct and indirect interests in shares.
Director
John Reynolds (Chairman)
Michael Stanley (Chief Executive Officer)
Shane Doherty (Chief Financial Officer)
Andrew Bernhardt (Non-Executive Director)
Gary Britton (Non-Executive Director)
Giles Davies (Non-Executive Director)
Linda Hickey (Non-Executive Director)
Alan McIntosh (Non-Executive Director)
David O’Beirne (Non-Executive Director)
Orla O’Gorman (Non-Executive Director)
Julie Sinnamon (Non-Executive Director)
Tara Grimley (Company Secretary)
No. of Ordinary Shares at
31 December 2021
No. of Ordinary Shares at
31 December 2020
(or date of appointment if later)
129,174
21,557,409
–
–
130,000
50,000
75,000
40,141,464
–
–
–
82,031
129,174
21,557,409
–
–
130,000
50,000
75,000
40,141,464
–
–
–
–
All of the interests noted above are beneficially owned. Aside from the interests disclosed above and the Founder Shares and Deferred
Shares held by the Founder Directors disclosed on page 107, the Directors and the Company Secretary had no interests in the share capital
of the Company or any other group undertaking at 31 December 2021.
There were no changes in the above Directors’ and Secretary’s interests between 31 December 2021 and 22 March 2022 with the exception
of Michael Stanley who purchased 87,101 shares on 4 March 2022 in satisfaction of bonus deferral obligations. The Company’s Register of
Directors Interests (which is open to inspection) contains full details of Directors’ shareholdings and other interests. The Company has a
policy on dealing in shares that applies to all Directors. Under this policy, Directors are required to obtain clearance from the Company
before dealing in Company shares. Directors are restricted from dealing during designated close periods and at any other time when
they are in possession of Inside Information (as defined by the Market Abuse Regulation).
CAIRN HOMES PLC ANNUAL REPORT 2021
103
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT DIRECTORS’ REMUNERATION REPORT CONTINUED
Change in Remuneration of the Directors Compared to the Average Employee
The table below shows the annual percentage change in remuneration paid to the Executive and Non-Executive Directors in comparison
to the average overall percentage change for employees (excluding Executive Directors) across the Group (on a full-time equivalent basis)
over the past five years.
Director
John Reynolds (Chairman)
Michael Stanley (Chief Executive Officer)
Shane Doherty (Chief Financial Officer)(1)
Andrew Bernhardt (Non-Executive Director)
Gary Britton (Non-Executive Director)
Giles Davies (Non-Executive Director)
Linda Hickey (Non-Executive Director)(2)
Jayne McGivern (Non-Executive Director)(2)
Alan McIntosh (Non-Executive Director)(3)
David O’Beirne (Non-Executive Director)(2)
Orla O’Gorman (Non-Executive Director)(4)
Julie Sinnamon (Non-Executive Director)(4)
Tim Kenny(5)
Group Performance
Profit Before Tax
2017
v 2016
2018
v 2017
2019
v 2018
2020
v 2019
2021
v 2020
2021
€’000
25%
-14%
–
18%
8%
18%
–
–
20%
15%
–
15%
7%
15%
–
–
-13%
-55%
–
–
–
–
–
–
0%
5%
–
0%
0%
0%
N/A
N/A
-75%
N/A
–
–
0%
-46%
N/A
0%
0%
0%
47%
20%
0%
20%
–
–
N/A
218%
5%
-100%
0%
119%
72%
0%
0%
0%
0%
-32%
0%
0%
100%
100%
N/A
150
1,137
877
60
75
82
72
41
60
60
8
17
–
312%
530%
56%
-75%
240%
50,235
Average Remuneration on a full-time equivalent basis of employees
Employees of the Group
-5%
-2%
15%
2%
2%
95
(1) Mr Doherty was appointed as an Executive Director on 13 April 2020.
(2) Ms Hickey, Ms McGivern and Mr O’Beirne were appointed as Non-Executive Directors on 12 April 2019, 1 March 2019 and 1 March 2019 respectively.
Ms McGivern resigned as a Director on 3 September 2021.
(3) Mr McIntosh stepped down as an Executive Director in August 2018 to become a Non-Executive Director.
(4) Ms O’Gorman and Ms SInnamon were appointed on 10 November 2021 and 17 September 2021 respectively.
(5) Mr Kenny was appointed as an Executive Director on 22 August 2017 and resigned effective 7 January 2020.
Relative Importance of Spend on Pay
The table below shows total employee remuneration (excluding LTIP awards) and distributions to shareholders, in respect of 2021 and 2020.
Total Employee Remuneration
Distributions to Shareholders*
* Dividends and purchase of own shares in 2020 and 2021
2021
€25.2m
€19.9m
2020
€21.0m
€23.3m
Directors’ Shareholding as Percentage of Salary
The table below sets out the percentage of base salary held in shares in the Company by the Executive Directors, as at 31 December 2021,
based on the closing share price of €1.13.
Name
Michael Stanley (Chief Executive Officer)
Shane Doherty (Chief Financial Officer)*
Base Salary
No. of Shares
Held
Percentage of
Salary Held
€425,000
21,557,409
5,732%
€375,000
–
–
*S Doherty has five years from date of appointment to meet the minimum shareholding requirements under the Remuneration Policy
104
Statement of Shareholder Voting
The Company is committed to ongoing shareholder dialogue and takes shareholder views into consideration when formulating remuneration
policy and practice. As set out in the Chair’s statement, a significant minority of votes were registered against the Remuneration Report at
the 2021 AGM and the Board and the Committee has engaged extensively with shareholders as a means of understanding any continuing
concerns. The following table sets out the actual votes at the 2021 Annual General Meeting in respect of the Directors’ Remuneration Report
and at the 2020 AGM for the Remuneration Policy.
Directors’ Remuneration Report
Number of Votes
Percentage
Remuneration Policy
Number of Votes
Percentage
For
Against
Withheld*
261,138,666
87,496,920
3,735,876
74.90
25.10
–
For
Against
Withheld*
593,745,820
548,848
16,799,417
99.91
0.09
–
* A vote withheld is not a vote in law and is therefore excluded from the calculation of votes for and against the resolution.
Advisors
The Committee’s independent advisor during the year was Mercer Kepler, having been appointed in September 2016 following a competitive
tender process. Mercer Kepler attends Committee meetings on an ad hoc basis and provides advice on remuneration for Executive Directors,
benchmarking analysis, and updates on market developments and best practice. Mercer Kepler is a founding member of the Remuneration
Consultants Group and adheres to its code of conduct. The Committee reviews the performance of its advisors annually and remains satisfied
that Mercer Kepler provides independent and objective remuneration advice to the Committee and does not have any connections with Cairn
that may impair its independence. The fees paid to Mercer Kepler in respect of work carried out for the Committee in the year under review
amounted to €27,885.
In addition to Mercer Kepler, the Committee also sought periodic advice from FTI Consulting (“FTI”), engaged by the Company to provide
independent advisory corporate governance support to the Board, as well as both the Nomination and Remuneration Committees. The
Committee is satisfied that the advice from FTI was objective and independent and that FTI does not have any connections with Cairn that
may impair its independence.
CAIRN HOMES PLC ANNUAL REPORT 2021
105
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT DIRECTORS’ REMUNERATION REPORT CONTINUED
COMMITTEE RESPONSIBILITIES
The Committee currently consists of four Non-Executive Directors whose collective role includes ensuring that the Group’s remuneration
arrangements are aligned with the Group’s strategic priorities. The Terms of Reference of the Committee include the determination of the
remuneration packages for Executive Directors, the Company Secretary and other members of the senior management team. The Chairman
and the Executive Directors determine the fees for the Non-Executive Directors. The Terms of Reference for the Committee are reviewed
annually and are updated as appropriate and are available on the Group’s website, www.cairnhomes.com
The below table sets out the Committee membership including their attendance and tenure:
Committee Member
Linda Hickey (Chair)
Andrew Bernhardt*
Gary Britton
Giles Davies
David O’Beirne
Meeting
Attendance
Committee
Tenure
6/6
6/6
6/6
6/6
6/6
3 years
7 years
7 years
7 years
3 years
* A Bernhardt stepped down from the Committee on 31 December 2021.
The Company Secretary acts as Secretary to the Committee. During the year, the Chief Executive Officer, Chief Financial Officer and the Chief
People Officer attended meetings on an ad hoc basis at the invitation of the Committee and provided information and support as requested.
However, no individual was present when their own remuneration was being discussed.
Our Role
The Committee’s role is to determine and agree the Remuneration Policy for Executive Directors and senior management and to monitor and
report on it. The Committee’s responsibilities, delegated by the Board as set out in its Terms of Reference, are to:
• Determine the remuneration packages of the Chairman, Chief Executive Officer, Chief Financial Officer and oversee the remuneration for
certain other senior managers, including salary, annual incentive, pension contributions and compensation payments;
• Oversee remuneration structures for senior management and to oversee any major changes in employee benefits structures throughout
the Company;
• Nominate Executive Directors and management for inclusion in the LTIP, to grant awards under the LTIP, to determine whether the criteria
for the vesting of awards have been met and to make any necessary amendments to the rules of the LTIP;
• Ensure that contractual terms on termination or redundancy, and any payments made, are fair to the individual and the Company;
• Be exclusively responsible for establishing the selection criteria, selecting, appointing and setting the Terms of Reference for any
consultants who advise the Committee; and
• Obtain up to date information about remuneration in other companies of comparable scale and complexity.
Key Responsibilities and Activities during 2021
An overview of the Committee’s activities during 2021 are laid out in the table below:
EXECUTIVE REMUNERATION
• Reviewed annual performance of the Executive Directors.
• Determined fixed and variable remuneration for Executive
Directors and senior management.
• Set 2021 LTIP targets.
• Ensured LTIP awards were linked to succession planning.
• Assessed efficacy and stretch of LTIP targets through
all cycles.
GOVERNANCE
• Reviewed and made progress against the remuneration
strategy agreed to execute the Remuneration Policy.
• Worked with the Committee’s consultants during 2021 to
ensure rigour of Committee analysis and decisions as well
as reviewing remuneration trends and market practice.
• Considered and approved the Directors’ Remuneration
Report and remuneration disclosure requirements.
• Reviewed and approved its annual agenda and Terms
of Reference.
106
Additional Interests of Founder Shareholders who are Founder Directors
In addition to the shareholdings noted on page 103, the Founder Directors have the following additional interests. Following changes made
during 2021, the CEO relinquished all entitlements to his Founder Shares.
No. of Deferred Shares at
31 December 2021
No. of Founder Shares at
31 December 2021
No. of Deferred Shares at
31 December 2020
No. of Founder Shares at
31 December 2020
Founder Directors
Michael Stanley
Alan McIntosh
Total
9,990,000
9,990,000
19,980,000
Nil
9,591,075
9,591,075
9,990,000
9,990,000
19,980,000
6,713,752
9,591,075
16,304,827
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 was tested initially over the first test period
in 2016 (the first test period was 1 March 2016 to 30 June 2016), and is tested again over the six subsequent test periods (from 1 March to
30 June).
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, returns of capital or distributions 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 TSR in the periods described below.
TSR is calculated as the sum of the increase in market capitalisation, plus dividends, returns of capital or other distributions in each case in
the relevant period, being:
i. the first time the performance condition is satisfied, the period from initial public offering 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.
The effect of this is that the calculation of TSR 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% of the incremental increase
in TSR since the previous conversion or redemption.
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 TSR, not just that element of TSR above the hurdle contained in
the performance condition.
Subject to satisfying the performance condition there is no limitation on the amount to be converted into ordinary shares (or otherwise issued
as ordinary shares at nominal value to fulfil the Founder Share Value) or paid out in cash, other than the seven year limit.
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.
All New Ordinary Shares issued in respect of the conversion of Founder Shares are subject to a one year lock-up period, with 50%
of the New Ordinary Shares remaining subject to a further one year lock-up period thereafter.
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.
CAIRN HOMES PLC ANNUAL REPORT 2021
107
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT DIRECTORS’ REPORT
The Directors present their report to the shareholders together with the audited financial statements for the year ended 31 December 2021.
Principal Activities, Business Review and Future Developments
Cairn Homes plc is one of Ireland’s leading homebuilders, constructing high quality new homes with an emphasis on design, innovation and
customer service. At 31 December 2021, the Group consisted of the Company, Cairn Homes plc, and a number of subsidiaries, which are
detailed in note 26 to the consolidated financial statements. Shareholders are referred to the Chairman’s Statement, Chief Executive Officer’s
Statement and the Chief Financial Officer’s Report which contain a review of operations and the financial performance of the Group for 2021,
the outlook for 2022 and the key performance indicators used to assess the performance of the Group. These are deemed to be incorporated
in the Directors’ Report.
Results for the Year
The Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2021 and the Consolidated
Statement of Financial Position at that date are set out on pages 119 and 120 respectively. The Group’s profit for the year ended 31 December
2021 was €43.2 million (2020: €12.7 million).
Dividends
The Company paid an interim dividend of 2.66 cent per ordinary share on 8 October 2021 to shareholders on the record date of 17 September
2021. The Board have also proposed a final dividend of 2.80 cent per ordinary share for the year ended 31 December 2021. Subject to
shareholder approval at the Company’s Annual General Meeting on 12 May 2022, the proposed final dividend of 2.80 cent per ordinary share
will be paid on 17 May 2022 to ordinary shareholders on the Company’s register at 5.00 p.m. on 22 April 2022.
Directors
The names of the Directors and a biographical note on each appear on pages 74 and 75. In accordance with the provisions contained in the UK
Corporate Governance Code (the “Code”), all Directors at that time retired at the Annual General Meeting of the Company on 18 May 2021 and,
being eligible, offered themselves for re-election, and all were re-elected to the Board on the same day.
Ms Jayne McGivern and Mr Andrew Bernhardt resigned as Directors on 3 September 2021 and 31 December 2021 respectively. Ms Julie
Sinnamon was appointed as a Director on 17 September 2021 and Ms Orla O’Gorman was appointed as a Director on 10 November 2021.
On 3 March 2022, the Company announced that Mr David O’Beirne would not be seeking re-election at the upcoming Annual General Meeting
and as such, will step down from the Board on 12 May 2022.
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 his/her appointment. Furthermore, under the Company’s Constitution, one third of all Directors must retire by rotation at each
Annual General Meeting and may seek re-election. However, in accordance with the provisions of the Code, the Board has decided that all
Directors should retire at the 2022 Annual General Meeting and offer themselves for re-election.
Directors’ and Company Secretary’s Interests
Details of the Directors’ and Company Secretary’s share interests and interests in unvested share awards of the Company are set out in the
Directors’ Remuneration Report on pages 103 and 107.
Share Dealing
The Company has in place a share dealing code which gives guidance to the Directors and certain employees of the Company to be followed
when dealing in the shares of the Company or any other type of securities issued by or related to the Company. It is designed to ensure that
these individuals neither abuse, nor set themselves under suspicion of abusing, information about the Company which is not in the public
domain. It is also designed to ensure compliance with the EU Market Abuse Regulation (596/2014) which came into effect on 3 July 2016.
A copy of the Share Dealing Code is available on the Company’s website at www.cairnhomes.com.
Share Capital
The Company has four authorised classes of shares: Ordinary Shares; A Ordinary Shares; Founder Shares and Deferred Shares. As at
31 December 2021 and 22 March 2022, the latest practicable date prior to printing this report, the Company had 749,932,223 and 718,596,096
Ordinary Shares in issue respectively, each with a nominal value of €0.001, all of which are of the same class and carry the same rights and
obligations. The Company also had 19,182,149 Founder Shares and 19,980,000 Deferred Shares in issue at the same dates.
The percentage of the total issued share capital represented by each class of shares on the above dates was:
Share Class
Ordinary Shares
Founder Shares
Deferred Shares
108
% of Total Issued
Share Capital
31 December
2021
22 March
2022
95.04
2.43
2.53
94.83
2.53
2.64
Further information on the Company’s share capital, including the rights attached to different classes of shares, is set out in note 17 to
the consolidated financial statements.
The Company has a Long Term Incentive Plan in place, the details of which are set out in the Directors’ Remuneration Report and in note 18
to the consolidated financial statements.
Substantial Shareholdings
As at 31 December 2021 and 22 March 2022, the Company had been notified of the following details of interests of over 3% in the ordinary
share capital of the Company.
Except as disclosed below, the Company has not been notified as at 22 March 2022, the latest practicable date prior to printing this report,
of any interest of 3% or more in its ordinary share capital, nor is it aware of any person who directly or indirectly, jointly or severally,
exercises or could exercise control over the Company.
Shareholder
Lansdowne Partners International Ltd
Fidelity Investments Limited
Fidelity Management & Research Company
Ameriprise Financial
Mr. Alan & Mrs. Deirdre McIntosh(1)
T. Rowe Price Associates, Inc
The Capital Group Companies, Inc.
PM Capital Limited
Norges Bank
Mr. Michael Stanley
Total Shares in Issuance
Notified Holding
22 March 2022
Notified Holding
31 December 2021
%
73,383,907
10.21%
70,972,927
56,759,581
54,625,693
40,141,464
36,730,886
28,685,000
22,847,283
22,446,031
21,644,510
9.88%
7.90%
7.60%
5.59%
5.11%
3.99%
3.18%
3.12%
3.01%
68,095,173
65,465,178
56,759,581
54,625,693
40,141,464
37,399,952
50,799,200
22,847,283
%
9.08%
8.73%
7.57%
7.28%
5.35%
4.99%
6.77%
3.05%
Below 3% Below 3%
Below 3% Below 3%
718,596,096
749,932,223
(1) Alan McIntosh (Non-Executive Director of Cairn), his spouse Deirdre McIntosh and Emerald Everleigh Limited Partnership (the “LP”), are the beneficial owners of the interests
described above. 500,000 shares are owned by Alan McIntosh directly, 32,897,957 shares are owned by Deirdre McIntosh directly and 6,743,507 shares are owned by the LP.
The LP is ultimately owned by a discretionary trust (constituted under English and Welsh law) and Alan McIntosh and Deirdre McIntosh are the beneficiaries of that trust.
Principal Risks and Uncertainties
Under Irish company law, the Group is required to give a description of the Principal Risks and Uncertainties which it faces. These Principal
Risks and Uncertainties are set out in the Risk Report on pages 62 to 73 and are deemed to be incorporated in the Directors’ Report.
Accounting Records
The Directors are responsible for ensuring that adequate accounting records are maintained by the Group as required by Sections 281-285 of
the Companies Act, 2014. The Directors believe that they have complied with this requirement through the employment of suitably qualified
accounting personnel and the maintenance of appropriate accounting systems. The accounting records of the Company are maintained at the
registered office: 7 Grand Canal, Grand Canal Street Lower, Dublin 2, D02 KW81.
Takeover Regulations 2006
For the purposes of Regulation 21 of Statutory Instrument 255/2006 “European Communities (Takeover Bids (Directive 2004/25/EC))
Regulations 2006”, the details provided on share capital in note 17 to the consolidated financial statements, substantial shareholdings above,
and the disclosures on Directors’ remuneration and interests in the Directors’ Remuneration Report on pages 94 to 107 are deemed to be
incorporated in this section of the Directors’ Report.
Transparency Regulations 2007
For the purposes of information required by Statutory Instrument 277/2007 “Transparency (Directive 2004/109/EC) Regulations 2007”
concerning the development and performance of the Group, the following sections of this Annual Report shall be treated as forming part
of this Directors’ Report:
1. The Chairman’s Statement on pages 06 to 11, the Chief Executive Officer’s Statement on pages 12 to 17 and the Chief Financial Officer’s
Report on pages 60 and 61.
2. The Corporate Governance Report on pages 78 to 86.
3. The Principal Risks and Uncertainties on pages 65 to 72.
4. Details of Earnings Per Share on pages 144 and 145.
5. Details of the Capital Structure of the Company on pages 136 to 138.
Corporate Governance Regulations
As required by company law, the Directors have prepared a Corporate Governance Report which is set out on pages 78 to 86 and which, for
the purposes of Section 1373 of the Companies Act 2014, is deemed to be incorporated in this part of the Directors’ Report. Details of the
capital structure and employee share schemes are included in notes 17 and 18 to the consolidated financial statements respectively.
CAIRN HOMES PLC ANNUAL REPORT 2021
109
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT DIRECTORS’ REPORT CONTINUED
Non-Financial Information Statement
The Group aims to comply with the requirements of the Non-Financial Reporting Directive (SI 360/2017) and these requirements are
addressed throughout the Strategic Report and Corporate Governance Report.
The following non-financial information constitutes our Non-Financial Information Statement, pursuant to the EU Directive 2014/95/EU and covers the
requirements in respect of the environment, people, social and community issues, human rights, anti-bribery & corruption, and is intended to help
stakeholders understand our position on these non-financial matters.
Certain of the non-financial information required pursuant to the EU Directive 2014/95/EU is also provided by reference to the following location:
Non-financial
Information Section
Description of our Business Model
Business Model
Pages
26 and 27
Environmental, Social & Employee Matters
Sustainability Report
See our website for further information
Human Rights, Bribery & Corruption
Sustainability Report
See our website for further information
Our Policies
Principal Risks
Sustainability Report
See our website for further information
Risk Report
62 to 73
Non-Financial Key Performance Indicators
Our Strategy and Sustainability Report
28 to 49 and within our Sustainability Report
available on our website
Our Annual Report and Sustainability Report collectively contains a range of non-financial information. We have a variety of policies and guidance that
support our key outcomes for all our stakeholders. Policies, guidance and statements of intent are in place to ensure consistent governance and are
available to view within our inaugural Sustainability Report and on our website at www.cairnhomes.com.
Directors’ Compliance Statement
The Directors, in accordance with Section 225(2) of the Companies
Act 2014, acknowledge that they are responsible for securing
the Company’s compliance with certain obligations specified in
that section arising from the Companies Act 2014, the Market
Abuse (Directive 2003/6/EC) Regulations 2005, the Prospectus
(Directive 2003/71/EC) Regulations 2005, the Transparency
(Directive 2004/109/EC) Regulations 2007, and Tax laws
(“relevant obligations”).
The Directors confirm that:
• A compliance policy statement has been drawn up setting out the
Group’s policies that in their opinion are appropriate with regard
to such compliance;
• Appropriate arrangements and structures have been put in place
that, in their opinion, are designed to provide reasonable
assurance of compliance in all material respects with those
relevant obligations; and
• A review has been conducted, during the financial year, of those
arrangements and structures.
Going Concern and Longer Term Viability
The Directors’ statements on going concern and longer term
viability are included in the Risk Report on page 73.
Subsidiaries
Information on the Company’s subsidiaries is set out in note 26
to the consolidated financial statements.
Political Contributions
No political contributions were made by the Group during the year
that require disclosure in accordance with the Electoral Acts 1997
to 2002 and the Electoral Political Funding Act 2012.
Post Balance Sheet Events
Information in respect of events since the year end is contained
in note 32 to the consolidated financial statements.
Audit & Risk Committee
The Group has an established Audit & Risk Committee comprising
of four independent Non-Executive Directors. Details of the
Committee and its activities are set out on pages 87 to 90.
External Auditor
KPMG, Chartered Accountants, were appointed statutory auditor on
10 June 2015 and pursuant to Section 383(2) of the Companies Act
2014 will continue in office. A resolution authorising the Directors to
fix their remuneration will be proposed at the forthcoming 2022
Annual General Meeting.
Disclosure of Information to the External Auditor
Each of the Directors who held office at the date of approval of the
Directors’ Report confirms that:
• So far as they are aware, there is no relevant audit information
of which the External Auditor is unaware; and
• That they have taken all steps that they ought to have taken as
a Director to make themselves aware of any relevant audit
information and to establish that the External Auditor is aware
of such information.
Approval of Financial Statements
The Financial Statements were approved by the Board on
25 March 2022.
Signed on behalf of the Board
Michael Stanley
Director
Shane Doherty
Director
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CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Statement of Directors’ Responsibilities
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
112
113
119
120
121
123
124
CAIRN HOMES PLC ANNUAL REPORT 2021
111
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT 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 for each financial 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 applicable law including Article 4 of the IAS Regulation. The Directors 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 the 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 profit or loss of the Group for that year. In preparing each of the
consolidated and company financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the
financial statements;
• assess the Group’s and Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
• use the going concern basis of accounting unless they either intend to liquidate the Group or Company or to cease operations, or have no
realistic alternative but to do so.
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 Company, and which enable them to ensure that the financial statements of the Company
comply with the provisions of the Companies Acts 2014. The Directors are also responsible for taking all reasonable steps to ensure such
records are kept by the Company’s subsidiaries which enable them to ensure that the financial statements of the Group comply with the
provisions of the Companies Act 2014 and Article 4 of the IAS Regulation. They are also responsible for such internal control as they
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or
error, and have general responsibility 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 also responsible for preparing a Directors’ Report that
complies with the requirements of the Companies Act 2014.
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.
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 74 and 75 of this Annual Report, confirm that, to the best of each
person’s knowledge and belief:
• 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 the
Companies Act 2014, give a true and fair view of the assets, liabilities and financial position of the Group and Company at 31 December
2021 and of the profit of the Group for the year 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
Michael Stanley
Director
Shane Doherty
Director
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INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF CAIRN HOMES PLC
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Cairn Homes plc (‘the Company’) and its consolidated undertakings (‘the Group’) for the year
ended 31 December 2021 contained within the reporting package 635400DPX6WP2KKDOA83-2021-12-31-en.zip, 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 related notes,
including the summary of significant accounting policies set out in note 3 for the Group and note 1 for the Company. The financial reporting
framework that has been applied in their preparation is Irish Law, including the Commission Delegated Regulation 2019/815 regarding the
single electronic reporting format (ESEF), 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.
In our opinion:
• the financial statements give a true and fair view of the assets, liabilities and financial position of the Group and Company as at
31 December 2021 and of the Group’s profit for the year then ended;
• 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 consolidated financial statements and company 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.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities section of our report. We believe that the
audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is consistent with our report to the
Audit and Risk Committee.
We were appointed as auditor by the Directors on 10 June 2015. The period of total uninterrupted engagement is the six years ended
31 December 2020. We have fulfilled our ethical responsibilities under, and we remained independent of the Group in accordance with, ethical
requirements applicable in Ireland, including the Ethical Standard issued by the Irish Auditing and Accounting Supervisory Authority (IAASA)
as applied to public interest entities. No non-audit services prohibited by that standard were provided.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of
the financial statements is appropriate. In our evaluation of the directors’ assessment of the Group’s and Company’s ability to continue to
adopt the going concern basis of accounting we considered the inherent risks to the Group’s and Company’s business model and analysed
how those risks might affect the Group’s and Company’s financial resources or ability to continue operations over the going concern period.
The risks that we considered most likely to adversely affect the Group’s and Company’s available financial resources over this period were
currently unforeseen factors leading to one or a combination of the following: inability to undertake construction or sales activities for an
extended period of time; material reductions in sales arising from a deterioration in employment levels and consumer confidence; material
reduction in credit availability in the mortgage market; increased materials, labour and finance costs.
We evaluated the going concern assessment by carrying out the following procedures among others:
• considering the cash and undrawn bank loan facilities available to the Group, the related covenants in the facility agreement which are
currently applicable in the going concern period, and the expected ability of the Group to refinance existing bank facilities which are
scheduled to expire on 31 December 2022;
• analysing the base-case scenario cashflow projections prepared by management showing forecast available liquidity and considering
the reasonableness of the underlying assumptions; and
• analysing downside scenario cashflow projections prepared by management illustrating the impact of materially reduced sales compared
to the base-case scenario and examining the reasonableness of management’s conclusion that liquidity would be maintained throughout
the going concern period in this scenario.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group or the Company’s ability to continue as a going concern for a period of at least twelve
months from the date when the financial statements are authorised for issue.
In relation to the Group’s and the Company’s reporting on how they have applied the UK Corporate Governance Code and the Irish Corporate
Governance Annex, we have nothing material to add or draw attention to in relation to the directors’ statement in the financial statements
about whether the directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections
of this report.
CAIRN HOMES PLC ANNUAL REPORT 2021
113
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT INDEPENDENT AUDITOR’S REPORT CONTINUED
TO THE MEMBERS OF CAIRN HOMES PLC
Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial statements and
include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had
the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
The key audit matters are unchanged relative to the prior year. In arriving at our audit opinion above, the key audit matters, in decreasing
order of audit significance, were as follows:
Group: Carrying values of inventories €940.0 million (2020: €968.2 million) and profit recognition
Refer to pages 89 and 90 (Audit and Risk Committee Report), page 128 (accounting policy for inventories) and Note 14 to the consolidated
financial statements (financial disclosures – inventories)
Description of the key audit matter
Inventories consist of the costs of land, materials, design and related production and site development costs to date, less amounts
recognised as cost of sales on properties which have been sold. The carrying value of development land and work in progress depends
on key assumptions relating to forecast selling prices for houses or apartments, site planning (including planning consent), build costs
and other direct cost recoveries, all of which contain an element of 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 a number of reporting periods the determination of profit is
dependent on the accuracy of the assumptions used in the forecasts about future selling prices, build costs and other direct costs.
There is a risk that one or all of the assumptions may be inaccurate with a resulting impact on the carrying value of inventories or
the amount of profit recognised.
How the matter was addressed in our audit
Our audit procedures included, among others:
a) We documented our understanding of the processes, and tested the design and implementation of relevant controls, over the accuracy
and completeness of the input data and assumptions made in the Group’s financial models which support the carrying value of
development land and work in progress, and the allocation of costs to individual residential units.
b) We inspected management’s detailed year-end assessments of the net realisable value of development sites. These calculations were
primarily based on residual value calculations whereby the estimated total costs of the development were deducted from total forecast
sales proceeds. We challenged the key data inputs and assumptions in the following ways, among others:
•
• agreeing a sample of forecast costs to supplier agreements or other relevant documentation from third parties and, for sites not yet
in development, considering the consistency of estimates for the major cost categories with the estimates for sites in development;
inspecting forecast residential unit sales prices for consistency with sales prices achieved for similar properties;
• evaluating the assumptions in relation to forecast numbers of units to be constructed based on appropriate documentary support;
• enquiring of management as to whether there were any site-specific factors which may indicate that an individual site could be
impaired; and
• considering wider market evidence relating to the demand for housing in Ireland.
c) For sites in development, we compared actual revenues and costs to estimates to assess whether net realisable values were updated and
that the overall expected sales margins were adjusted accordingly. We evaluated the sensitivity of margins on these sites to changes in
sales prices and costs and considered whether this indicated a risk of impairment of the inventories balance.
d) For completed sales in the year, we tested the accuracy of the release from inventories to cost of sales recorded in the general ledger for
consistency with the financial cost models for the relevant sites.
e) For new development land acquisitions in the year, we inspected purchase contracts and other supporting documentation to agree the
costs of acquisition, including related direct purchase costs and we agreed amounts paid to corroborating documentary evidence.
f) We agreed a sample of additions to construction work in progress during the period to invoices/payment certificates and examined
whether these additions were construction related and had been appropriately recorded as part of the costs of the relevant site.
g) We considered the adequacy of the Group’s disclosures regarding the carrying value of development land and work in progress.
We found that the Group had appropriate processes in place to regularly update forecasts of development site profitability to take account of
costs incurred, updated forecast costs to complete and estimated sales prices. We found that the profit margins recognised on sales during
the year appropriately reflected the costs attributable to units sold based on the Group’s financial models.
114
We found that, for sites not yet in development, the assumptions for numbers and mix of units to be built were supported by appropriate
documentation, and the estimates of sales prices and costs used in the assessment of the net realisable value of these sites were reasonable
compared to similar sites in development.
Our audit procedures on the key assumptions underpinning the year-end assessments of the net realisable value of development sites, and
the related sensitivity analysis, did not identify any misstatements in relation to the Group’s conclusion that inventories are stated at the lower
of cost and net realisable value and therefore are not impaired.
We found that the costs of new development site acquisitions during the year, and of the sample of additions to construction work in progress
inspected, were appropriately recorded. We also found that the disclosures in the financial statements relating to inventories are adequate to
provide an understanding of the accounting policy and key assumptions relating to the Group’s inventories and profit recognition.
Group: Revenue recognition €424.0 million (2020: €261.9 million)
Refer to page 128 (accounting policy for revenue) and Note 6 to the consolidated financial statements (financial disclosures – revenue)
Description of the key audit matter
A relatively high proportion of total revenue was recorded in the latter part of the year, which required particular emphasis on the recognition
of revenue in the correct accounting period. Also, as well as traditional sales of residential units to private individuals, the Group has other
types of contractual arrangements with certain customers for the sale of multiple units, which require particular consideration in relation
to the application of the relevant accounting standard.
How the matter was addressed in our audit
Our audit procedures included, among others:
a) We documented our understanding of the processes in relation to revenue recognition. We tested the design and implementation of
relevant controls over the existence of revenue for individual and multiple-unit sales, and the completeness and accuracy of multiple-unit
sales.
b) We agreed a sample of sales of residential units and residential sites to signed contracts and cash proceeds and examined whether there
was appropriate evidence that control over those properties had transferred to customers prior to the year-end, and hence that revenue
had been recognised in the correct accounting period.
c) We evaluated the approach adopted by management in relation to the timing and amount of revenue to be recognised in accordance with
the relevant accounting standard from material contracts with customers for the sale of multiple units. In this regard, we independently
inspected the related contract documentation and considered the appropriate application of the revenue recognition model in the relevant
accounting standard, including whether revenue should be recognised (i) at a point in time or (ii) over time.
We found that the Group had appropriate processes in place in relation to the recording of revenue.
Appropriate documentary evidence was available for all of the sample of sales of residential units and residential sites that we tested and
as a result we found that revenue had been accurately recorded for those sales in the year.
We found that the approach taken in the financial statements by the Group for the recognition of revenue from contracts for the sale of
multiple units, whereby the revenue in the year was recognised at a point in time on legal completion of those particular sales, was consistent
with the requirements of the relevant accounting standard.
Company: Amounts due from subsidiary undertakings €621.6 million (2020: €635.3 million)
Refer to Note 6 to the Company financial statements (financial disclosures – Amounts due from Subsidiary Undertakings).
Description of the key audit matter
The Company financial statements include material amounts due from subsidiary undertakings. Due to the financial position of the Group,
this was not considered to give rise to a significant risk of material misstatement. However, due to the materiality of the amounts due from
subsidiary undertakings in the context of the Company financial statements, this is considered to be the area that had the greatest focus of
our overall audit of the Company financial statements.
How the matter was addressed in our audit
Our audit procedures included among others:
a) We agreed the amounts due from each subsidiary to the counterparty balance as included in the matrix of intercompany balances which
eliminate on consolidation.
b) We reviewed the financial position of each subsidiary undertaking.
c) We considered the results of management’s assessment of the recoverability of intercompany balances and the rationale for their
conclusion that no expected credit loss provision was required.
We found management’s assessment of the carrying value of the amounts due from subsidiary undertakings to be appropriate.
CAIRN HOMES PLC ANNUAL REPORT 2021
115
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT INDEPENDENT AUDITOR’S REPORT CONTINUED
TO THE MEMBERS OF CAIRN HOMES PLC
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 €2.4 million (2020: €2.4 million). This has been calculated for
the year ended 31 December 2021 with reference to a benchmark of profit before taxation, which is a benchmark typically applied for listed
groups which have reached a mature stage. Materiality represents approximately 4.8% 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.
In the prior year, in our view profit before taxation was not the most appropriate benchmark on which to base materiality because the impact
of Covid-19 significantly reduced the level of profit in 2020. The use of a profit before taxation benchmark for 2020 would have led to a low
level of materiality that was not commensurate with the scale of the Group. We calculated materiality for 2020 with reference to a benchmark
of revenue and it represented approximately 0.9% of that benchmark. In assessing materiality in absolute terms for 2020 we also had regard
to the level of total assets and net assets.
We report to the Audit and Risk Committee any corrected and uncorrected misstatements we identified through our audit with a value in
excess of €0.12 million (2020: €0.12 million), in addition to other audit misstatements below that threshold that we believe warrant 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.
Materiality for the Company financial statements as a whole was set at €1.6 million (2020: €1.6 million), determined with reference to a
benchmark of total assets, of which it represents 0.24% (2020: 0.24%).
We used materiality to assist us to determine what risks were significant risks and to determine the audit procedures to be performed
including those discussed above.
Other information
The Directors are responsible for the preparation of the other information presented in the Annual Report together with the financial
statements. The other information comprises the information included in the Directors’ Report, 2021 Highlights, At a Glance section,
Chairman’s Statement, Chief Executive Officer’s Statement, Market Overview, Business Model, Our Strategy section, Strategy in Action,
Stakeholder Engagement, Sustainability section, Chief Financial Officer’s Report, Risk Report, Board of Directors section, Senior Leadership
Team section, Corporate Governance Report, Audit & Risk Committee Report, Nomination Committee Report, Directors’ Remuneration
Report and Company Information section.
The financial statements and our auditor’s report thereon do not comprise part of the other information. Our opinion on the financial
statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below,
any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the
information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work
we have not identified material misstatements in the other information.
Based solely on our work on the other information undertaken during the course of the audit, we report that:
• we have not identified material misstatements in the Directors’ Report;
•
•
in our opinion, the information given in the Directors’ Report is consistent with the financial statements; and
in our opinion, the Directors’ Report has been prepared in accordance with the Companies Act 2014.
Disclosures of principal risks and longer-term viability
Based on the knowledge we acquired during our financial statements audit, we have nothing material to add or draw attention to in relation to:
• the Principal Risks disclosures describing these risks and explaining how they are being managed and mitigated;
• the directors’ confirmation within the Viability Statement on page 73 that they have carried out a robust assessment of the principal
risks facing the Group, including those that would threaten its business model, future performance, solvency and liquidity; and
• the directors’ explanation in the Viability Statement of how they have assessed the prospects of the Group, over what period they have
done so and why they considered that period to be appropriate, and their statement as to whether they have a reasonable expectation that
the Group will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any
related disclosures drawing attention to any necessary qualifications or assumptions.
116
Other corporate governance disclosures
We are required to address the following items and report to you in the following circumstances:
• Fair, balanced and understandable: if we have identified material inconsistencies between the knowledge we acquired during our financial
statements audit and the directors’ statement that they consider that the annual report and financial statements taken as a whole is fair,
balanced and understandable and provides the information necessary for shareholders to assess the Group’s position and performance,
business model and strategy;
• Audit and Risk Committee Report: if the section of the Annual Report describing the work of the Audit and Risk Committee does not
appropriately address matters communicated by us to the Audit and Risk Committee;
• Statement of compliance with UK Corporate Governance Code: if the directors’ statement does not properly disclose a departure from
provisions of the UK Corporate Governance Code specified by the Listing Rules of Euronext Dublin and the UK Listing Authority for our
review;
if the directors’ statement relating to Going Concern required under the Listing Rules of Euronext Dublin and the UK Listing Authority
set out on page 73 is materially inconsistent with our audit knowledge
•
We have nothing to report in these respects.
In addition as required by the Companies Act 2014, we report, in relation to information given in the Corporate Governance Report on pages
78 to 86 and the Directors’ Report, that:
• based on the work undertaken for our audit, in our opinion, the description of the main features of internal control and risk management
systems in relation to the financial reporting process, and information relating to voting rights and other matters required by the European
Communities (Takeover Bids (Directive 2004/EC) Regulations 2006 and specified for our consideration, is consistent with the financial
statements and has been prepared in accordance with the Act;
• based on our knowledge and understanding of the company and its environment obtained in the course of our audit, we have not identified
any material misstatements in that information; and
• the Directors’ Report contains the information required by the European Union (Disclosure of Non-Financial and Diversity Information
by certain large undertakings and groups) Regulations 2017.
We also report that, based on work undertaken for our audit, the information required by the Act is contained in the Corporate Governance
Report.
Our opinions on other matters prescribed by the Companies Act 2014 are unmodified
We have obtained all the information and explanations which we consider necessary for the purpose of our audit.
In our opinion, the accounting records of the Company were sufficient to permit the financial statements to be readily and properly audited
and the financial statements are in agreement with the accounting records.
We have nothing to report on other matters on which we are required to report by exception
The Companies Act 2014 requires us to report to you if, in our opinion:
• the disclosures of directors’ remuneration and transactions required by Sections 305 to 312 of the Act are not made;
• the Company has not provided the information required by Section 1110N in relation to its remuneration report for the financial year
ended 31 December 2020.
We have nothing to report in this regard.
The Listing Rules of Euronext Dublin and the UK Listing Authority require us to review:
• the Directors’ Statements, set out on page 73 in relation to going concern and longer-term viability;
• the part of the Corporate Governance Report on pages 78 to 86 relating to the Company’s compliance with the provisions
of the UK Corporate Governance Code and the Irish Corporate Governance Annex specified for our review; and
• certain elements of disclosures in the report to shareholders by the Remuneration Committee of the Board of Directors.
We have nothing to report in this regard.
Respective responsibilities and restrictions on use
Directors’ responsibilities
As explained more fully in their statement set out on page 112, the directors are responsible for: the preparation of the financial statements
including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group’s and Company’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting
unless they either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
CAIRN HOMES PLC ANNUAL REPORT 2021
117
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT INDEPENDENT AUDITOR’S REPORT CONTINUED
TO THE MEMBERS OF CAIRN HOMES PLC
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not
guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a material misstatement when it exists. Misstatements
can arise from fraud, other irregularities or error and are considered material if, individually or in aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of the financial statements. The risk of not detecting a material
misstatement resulting from fraud or other irregularities is higher than for one resulting from error, as they may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control and may involve any area of law and regulation and not just
those directly affecting the financial statements.
A fuller description of our responsibilities is provided on IAASA’s website at http://www.iaasa.ie/Publications/Auditing-standards/
International-Standards-on-Auditing-for-use-in-Ire/Description-of-the-auditor-s-responsibilities-for
The purpose of our audit work and to whom we owe our responsibilities
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 our report, or for the opinions we have formed.
Ryan McCarthy
for and on behalf of
KPMG
Chartered Accountants, Statutory Audit Firm
1 Stokes Place
St. Stephen’s Green
Dublin 2
25 March 2022
118
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
Continuing operations
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Finance costs
Profit before taxation
Tax charge
Profit for the year attributable to owners of the Company
Other comprehensive income
Total comprehensive income for the year attributable to owners of the Company
Basic earnings per share
Diluted earnings per share
Note
2021
€’000
2020
€’000
6
7
8
10
27
27
423,983
(340,112)
83,871
(25,489)
58,382
(8,147)
50,235
(6,994)
43,241
–
43,241
5.8 cent
5.8 cent
261,883
(219,180)
42,703
(18,257)
24,446
(9,660)
14,786
(2,077)
12,709
–
12,709
1.7 cent
1.7 cent
CAIRN HOMES PLC ANNUAL REPORT 2021
119
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT Note
2021
€’000
2020
€’000
11
12
13
14
15
16
17
17
17
18
19
20
22
19
20
23
1,165
490
1,434
3,089
1,447
722
552
2,721
940,000
968,184
28,482
1,379
40,028
11,388
2,028
34,526
1,009,889
1,016,126
1,012,978
1,018,847
789
199,616
40
11,795
566,537
778,777
788
199,616
40
7,572
542,556
750,572
72,461
202,793
74
3,808
76,343
77,094
558
80,206
157,858
234,201
490
4,562
207,845
–
334
60,096
60,430
268,275
1,012,978
1,018,847
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2021
Assets
Non-current assets
Property, plant and equipment
Right of use assets
Intangible assets
Current assets
Inventories
Trade and other receivables
Current taxation
Cash and cash equivalents
Total assets
Equity
Share capital
Share premium
Other undenominated capital
Share-based payment reserve
Retained earnings
Total equity
Liabilities
Non-current liabilities
Loans and borrowings
Lease liabilities
Deferred taxation
Current liabilities
Loans and borrowings
Lease liabilities
Trade and other payables
Total liabilities
Total equity and liabilities
120
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
Attributable to owners of the Company
Share Capital
Ordinary
shares
€’000
Deferred
shares
€’000
Founder
shares
€’000
Share
premium
€’000
Other
undenom-
inated
capital
€’000
Share-
based
payment
reserve
€’000
Retained
earnings
€’000
Total
€’000
As at 1 January 2021
749
20
19
199,616
40
7,572
542,556
750,572
Total comprehensive income for the year
Profit for the year
Transactions with owners of the Company
Equity-settled share-based payments
(Note 18)
Shares issued on vesting of share awards
Transfer from share-based payment reserve
to retained earnings re vesting or lapsing of
share awards
Dividends paid to shareholders (Note 24)
–
–
–
1
–
–
1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
43,241
43,241
43,241
43,241
4,911
–
–
–
(688)
688
4,911
1
–
–
(19,948)
(19,948)
4,223
(19,260)
(15,036)
As at 31 December 2021
750
20
19
199,616
40
11,795
566,537
778,777
CAIRN HOMES PLC ANNUAL REPORT 2021
121
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2020
Attributable to owners of the Company
Share Capital
Ordinary
shares
€’000
Deferred
shares
€’000
Founder
shares
€’000
Share
premium
€’000
Other
undenom-
inated
capital
€’000
Share-
based
payment
reserve
€’000
Retained
earnings
€’000
Non-
controlling
interests
€’000
Total
€’000
Total
equity
€’000
As at 1 January 2020
771
20
19
199,616
18
8,002
552,796
761,242
2,496
763,738
–
–
–
–
12,709
12,709
12,709
12,709
–
–
12,709
12,709
22
–
(23,346)
(23,346)
–
(23,346)
–
(33)
–
(33)
–
(33)
–
(397)
397
–
–
–
–
(2,496)
(2,496)
–
22
40
–
–
(430)
(22,949)
(23,379)
(2,496)
(25,875)
7,572
542,556
750,572
–
750,572
Total comprehensive
income for the year
Profit for the year
Transactions with
owners of the
Company
–
–
Purchase of own shares
(Note 17)
(22)
Equity-settled share-
based payments
(Note 18)
Transfer from share-
based payment
reserve to retained
earnings re vesting or
lapsing of share
awards
Acquisition of shares in
subsidiary from
non-controlling
shareholder (Note 28)
As at 31 December 2020
–
–
–
(22)
749
–
–
–
–
–
–
–
20
–
–
–
–
–
–
–
–
–
–
–
–
–
–
19
199,616
122
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
Cash flows from operating activities
Profit for the year
Adjustments for:
Share-based payments expense/(credit)
Finance costs
Depreciation of property, plant and equipment
Depreciation of right of use assets
Amortisation of intangible assets
Taxation
Decrease/(increase) in inventories
(Increase)/decrease in trade and other receivables
Increase in trade and other payables
Tax paid
Net cash from/(used in) operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Purchases of intangible assets
Net cash used in investing activities
Cash flows from financing activities
Purchase of own shares
Proceeds from loans and borrowings
Repayment of loans and borrowings
Acquisition of shares in subsidiary from non-controlling shareholder
Dividends paid
Repayment of lease liabilities
Interest and other finance costs paid
Net cash (used in)/from financing activities
Net increase/(decrease) in cash and cash equivalents in the year
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
2021
€’000
2020
€’000
43,241
12,709
3,499
8,147
205
404
200
6,994
62,690
30,081
(17,094)
19,938
(7,098)
88,517
(410)
(1,082)
(1,492)
(277)
9,660
203
361
135
2,077
24,868
(70,176)
313
8,410
(3,973)
(40,558)
(182)
(14)
(196)
–
170,000
(23,751)
194,000
(224,000)
(140,000)
–
(19,948)
(364)
(7,211)
(81,523)
5,502
34,526
40,028
(2,496)
–
(314)
(8,969)
18,470
(22,284)
56,810
34,526
CAIRN HOMES PLC ANNUAL REPORT 2021
123
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Basis of Preparation
Key Judgements and Estimates
Significant Accounting Policies
Measurement of Fair Values
Segmental Information
Revenue
Administrative Expenses
Finance Costs
Statutory and Other Information
Taxation
Property, Plant and Equipment
Right of Use Assets
Intangible Assets
Inventories
Trade and Other Receivables
Cash and Cash Equivalents
Share Capital and Share Premium
Share-Based Payments
Loans and Borrowings
Lease Liabilities
Reconciliation of Movement of Liabilities to Cash Flows Arising from Financing Activities
Deferred Taxation
Trade and Other Payables
Dividends
Related Party Transactions
Group Entities
Earnings Per Share
Non-Controlling Interests
Financial Instruments and Risk Management
Other Commitments and Contingent Liabilities
Profit or Loss of the Parent Company
Events After the Reporting Period
Approval of Financial Statements
125
126
126
131
131
131
131
132
132
133
133
134
135
135
136
136
136
138
140
140
141
142
143
143
143
144
144
145
145
149
149
149
149
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
124
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, D02 KW81. These consolidated financial statements cover the year ended 31 December 2021 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
The following standards and interpretations were effective for the Group for the first time from 1 January 2021. They did not have a material
effect on the consolidated results of the Group:
• Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform – Phase 2;
• Amendments to IFRS 16, COVID-19 Related Rent Concessions beyond 30 June 2021;
• Amendments to IFRS 4 Insurance Contracts – deferral of effective date of IFRS 9;
The following standards and interpretations are not yet endorsed by the EU. The potential impact of these standards on the Group is
under review:
• Amendments to IAS 1 Classification of Liabilities as Current or Non-current;
• Amendments to IFRS 17, Insurance contracts: Initial application of IFRS 17 and IFRS 9;
• Amendments to IAS 1 and IFRS Practice Statement 2, Disclosure of Accounting Policies;
• Amendments to IAS 8, Definition of Accounting Estimates;
• Amendments to IAS 12, Deferred Tax related to Assets and Liabilities arising from a single transaction;
• Amendments to IFRS 10 and IAS 28, Sale of contribution of Assets between an investor and its Associate or Joint Venture;
The following amendments to standards have been endorsed by the EU, and are effective from 1 January 2022. The Group has not adopted
these amendments early. The potential impact of these amendments on the Group is under review:
• A number of narrow-scope amendments to IFRS 3, IAS 16 and some annual improvements on IFRS 1, IFRS 9, IAS 41 and IFRS 16;
• Amendments to IAS 37 Onerous contracts, clarification on cost of fulfilling contracts.
(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) Going concern basis of accounting
The COVID-19 pandemic has had an impact on the Group during the year ended 31 December 2021, resulting in an interruption in
development activity in the earlier part of the year. The Group entered the COVID-19 pandemic from a position of strength and continues
to operate from that position with a long-term strategy that focuses on minimising financial risk and maintaining financial flexibility.
The business has strong liquidity, a robust balance sheet and sustainable, lowly leveraged debt facilities.
To mitigate any risk the Group applies a prudent cash management policy ensuring the production activities in the near term are focused
towards forward sold inventories, inventories which will continue to be attractive to buyers, and directing housing production pipeline
towards new family homes which are at the lower end of the price band. The Group has also expanded its regional footprint during 2021
with further expansion planned in 2022 and continues to have a broad and widening customer base.
The Group did not avail of any wage subsidy support from the Irish Government during 2021 or 2020.
The Group held €40 million of cash at 31 December 2021 (31 December 2020: €34.5 million) and has strong liquidity with the Group’s
loan facilities being repayable between 31 December 2022 and 31 July 2026. While some of the Group’s loan facilities are repayable on
31 December 2022, a refinancing process is underway. This is considered to be a routine matter with no foreseeable issues given the
Group’s financial position and strong outlook. The Group had undrawn revolving credit facilities of €194 million as at 31 December 2021
(€140 million as at 31 December 2020).
CAIRN HOMES PLC ANNUAL REPORT 2021
125
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2021
1. Basis of Preparation continued
(e) Going concern basis of accounting continued
During the thirteen-week shutdown period at the beginning of the year during which the majority of the Group’s construction sites were
closed or operating at significantly reduced capacity (some construction activity continued on new homes contracted to close by 31 January
2021, social homes contracted to close by 31 March 2021 and utility connections during this period), the Group successfully maintained
operational momentum, making detailed preparations for a safe return to work, which allowed build programmes to restart efficiently on
a phased basis from 12 April 2021. All residential sites were successfully reopened, under strict compliance with operating procedures
adhering to social distancing requirements. The Group also commenced construction on two new sites in the second half of the year and five
new sites since the start of 2022. While COVID-19 has had an impact on gross and operating margins, the business has recovered well and
has seen an improvement in gross margins, a strong recovery in sales and an increase in profitability when compared the prior year.
The Group is also encouraged by the level of underlying demand in the market as evidenced by the strength of our forward sales pipeline.
This level of demand continued into the early months of 2022 with our enquiry lists across all our active selling sites remaining at historic
highs and particularly strong interest in our starter home and trade-up/down commuter locations.
The Directors have carried out a robust assessment of the principal risks facing the Group and have considered the impact of these risks on
the going concern of the business. In making this assessment, consideration has been given to the uncertainty inherent in financial
forecasting including future market conditions for construction costs and sales prices. Where appropriate, severe but plausible
downside-sensitivities have been applied to the key factors affecting the future financial performance of the Group.
Having considered the Group’s forecasts and significant liquidity, the Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future. Accordingly, they are satisfied that it is appropriate to continue to
adopt the going concern basis in preparing these consolidated financial statements and there are no material uncertainties in that regard
which are required to be disclosed.
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 significant accounting judgement impacting these financial statements is:
• scale and mix of each development and the achievement of associated planning permissions.
This may involve assumptions on new or amended planning permission applications. This judgement then feeds into the process of
forecasting expected profitability by development which is used to determine the profit that the Group is able to recognise on its
developments in each reporting period and the net realisable value of inventories.
The key sources of estimation uncertainty impacting these financial statements are:
• forecast selling prices; and
• carrying value of inventories and allocations from inventories to cost of sales (see notes 3 (f) and 14).
Due to the nature of the Group’s activities and, in particular the scale of its development costs and the length of the development cycle,
the Group has to allocate site-wide development costs between units completed in the current year and those in future years. It also has
to forecast the costs to complete on such developments and make estimates relating to future sales prices. Forecast selling prices are
inherently uncertain due to changes in market conditions. These estimates impact management’s assessment of the net realisable value
of the Group’s inventories and also determine the extent of profit or loss that should be recognised in respect of each development in each
reporting period. Note 14 includes disclosures on the impact of COVID-19 on judgements and estimates in relation to profit margins and
carrying values of inventories.
In making such assessments and allocations, there is a degree of inherent estimation uncertainty. The Group has developed internal
controls designed to effectively assess and review profit recognition and carrying values of inventories including the appropriateness
of estimates made.
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 its subsidiary undertakings for the year ended
31 December 2021.
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.
126
3. Significant Accounting Policies continued
(a) Basis of consolidation continued
Business combinations continued
Any goodwill that arises is capitalised and tested annually for impairment. 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 is classified
as equity, then it is not remeasured, and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of
contingent consideration that meets the definition of a financial instrument 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. Changes in the ownership interest in a subsidiary that do not result in loss of control are recognised in equity.
Non-controlling interests, as stated in the statement of financial position, represents the portion of the equity of subsidiaries which is not
attributable to the owners of the Company.
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:
• Leasehold improvements 7 years;
• Motor vehicles 4 years; and
• Computers & equipment 3-7 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.
(c) Leases
All assets held by the Group under lease agreements which are greater than twelve months in duration are recognised as right-of-use assets
within the statement of financial position representing its rights to use the underlying asset. The present value of future payments to be made
under those lease agreements is recognised as a liability representing its obligation to make lease payments.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date or date of application of IFRS 16 if later. The
lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using
the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. The lease liability is
subsequently increased by the interest costs on the lease liability and decreased by the lease payments made. The right-of-use asset is initially
measured at cost, which comprises the initial amount of the lease liability plus any initial direct costs, and subsequently at cost less accumulated
depreciation. Depreciation is charged on a straight-line basis over the lease term from the lease commencement date.
The right-of-use asset and lease liability recognised under IFRS 16 represents the Group’s lease on the central support office and leased
vehicles. The right-of-use assets and related lease liabilities have been determined by discounting the lease payments over the expected
term of the leases at discount rates reflecting the Group’s incremental borrowing rate at inception.
(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 those periods. Other costs in respect of computer software are recognised as an expense or capitalised as part of
inventory costs as incurred.
CAIRN HOMES PLC ANNUAL REPORT 2021
127
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2021
3. Significant Accounting Policies continued
(d) Intangible assets continued
Computer software continued
The assets’ useful 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 at the point in time
when control over the property has been transferred to the customer, which occurs at legal completion. Revenue is measured at the
transaction price agreed under the contract.
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 and the final payment 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. Where a multiple unit contract involves a number of phases being delivered over phased delivery
dates, the Group recognises revenue on legal completion of each phase when control passes to the customer, with each phase having its
own pre-agreed pricing for a defined number of units and a pre-determined handover date. Rental income is recognised on a straight-line
basis over the life of the operating lease. This income principally arises from properties let on a short-term basis.
(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, direct labour, direct wages and salaries 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 inventories to be recognised as cost of sales on units sold, there is a degree of inherent uncertainty.
The Group is predominantly involved in the development of residential property units for sale. Because the nature of such individual units is
that they are produced in large quantities on a repetitive basis over a relatively short period of time, the Group’s inventories are not
considered to be qualifying assets for the purposes of capitalisation of borrowing costs.
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 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 or vacated as part of the planned
redevelopment of the site, the full cost of the site is classified within inventories.
Contract deposits for purchases of development property are recognised as deposits when paid and are transferred to inventories on legal
completion of the contract when the remainder of the contract price is paid.
(g) Share-based payments
The Group has issued equity-settled share-based payments to certain employees (long-term incentive awards, restricted share unit awards
and 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.
The amount recognised as an expense is not adjusted for market conditions not being met. 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.
(h) Taxation
Tax expense comprises current tax and deferred tax. Tax expense 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 years.
128
3. Significant Accounting Policies continued
(h) Taxation continued
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 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:
• 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.
The measurement of uncertain tax positions within tax assets and liabilities requires judgement in interpreting tax legislation and current
case law in order to estimate the amount to be recognised. In line with accounting standards, the Group reflects the effect of an uncertainty
using either the ‘most likely amount’ method or the ‘expected value’ method, as appropriate for the particular uncertainty.
(i) Pensions
The Group operates defined contribution schemes for employees. The Group’s contributions to the schemes are charged to profit or loss in
the year in which the contributions fall due.
(j) Construction bonds receivables
Construction bonds are development bonds that are put in place with local authorities or utilities providers until sites are fully completed and
conditions of planning have been met. All construction bonds are considered current assets as they will be realised in the Group’s normal
operating cycle, which is such that a proportion of construction bonds will not be recovered within 12 months. Construction bonds not
recoverable in 12 months are disclosed in note 15.
(k) Cash and cash equivalents
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.
Any 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 year are classified as
non-current assets.
(l) 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.
(m) 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.
(n) Exceptional items
Items that are material in size and unusual or infrequent are presented as exceptional items in the statement of profit or loss and other
comprehensive income. The Directors are of the opinion that the separate presentation of exceptional items, where applicable, provides
helpful information about the Group’s underlying business performance.
(o) 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 (“CODM”) (designated as the Board of Directors), which is responsible
for allocating resources and assessing performance of operating segments.
CAIRN HOMES PLC ANNUAL REPORT 2021
129
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2021
3. Significant Accounting Policies continued
(p) 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.
The Group is required to capitalise borrowing costs directly attributable to the acquisition, construction and production of a qualifying asset,
as part of the costs of that asset. Inventories which are produced in large quantities on a repetitive basis over a short period of time are not
qualifying assets. The Group does not generally produce qualifying assets.
(q) Financial instruments
(i) Financial assets and financial liabilities
Under IFRS 9, financial assets and financial liabilities are initially recognised at fair value and are subsequently measured based on their
classification as described below. Their classification depends on the purpose for which the financial instruments were acquired or issued,
their characteristics and the Group’s designation of such instruments. IFRS 9 requires that all financial assets and financial liabilities be
classified as fair value through profit or loss (“FVTPL”), amortised cost or fair value through other comprehensive income (“FVOCI”).
(ii) Classification of financial instruments
The following summarises the classification and measurement the Group has elected to apply to each of its significant categories of
financial instruments:
Type
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Loans and borrowings
Trade payables and accruals, including deferred consideration
Amounts owed to related parties
IFRS 9 classification
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Amortised cost
(iii) Trade and other receivables
Trade and other receivables are initially recognised at fair value when they are originated and are subsequently measured at amortised cost
using the effective interest method. The amortised cost is reduced by impairment losses, which are measured using an expected credit loss
model. Any interest income and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.
(iv) Financial liabilities
Financial liabilities are initially recognised at fair value and are subsequently measured at amortised cost using the effective interest method.
(v) Derecognition and modification of financial liabilities
The Group derecognises a financial liability when it is extinguished (when its contractual obligations are discharged or cancelled, or expire).
The Group also derecognises a financial liability when there is a substantial modification of the liability. A substantial modification is deemed
to have occurred when the present value of the cash flows under the modified terms, discounted using the original effective interest rate, is at
least 10% different from the discounted present value of the remaining cash flows under the original terms. If the financial liability is deemed
to have been substantially modified, a new financial liability is recognised at fair value. The difference between this fair value and the previous
carrying amount of the financial liability prior to its derecognition is recognised in profit or loss.
A non-substantial modification of a financial liability is deemed to have occurred when the present value of the cash flows under the modified
terms, discounted using the original effective interest rate, is less than 10% different from the discounted present value of the remaining
cash flows under the original terms, and there are no other qualitative factors which indicate that a substantial modification has occurred.
For non-substantial modifications, the amortised cost of the liability is recalculated by discounting the modified cash flows at the original
effective interest rate and any resulting gain or loss is recognised in profit or loss. For non-substantial modifications where the impact is that
the interest on floating rate liabilities has been repriced at current market terms, the original effective interest rate is adjusted to reflect the
current market terms at the time of the modification. Any costs and fees directly attributable to the modification of the financial liability are
recognised as an adjustment to the carrying amount of the modified financial liability and amortised over its remaining term under the
effective interest method. Any unamortised costs attributable to the original financial liability, with the exception of unamortised
arrangement fees, are recognised as an adjustment to the carrying amount of the modified financial liability and amortised over the
remaining term of the modified liability under the effective interest method. Unamortised arrangement fees relating to the original
financial liability are recognised in profit or loss on modification.
130
4. Measurement of Fair Values
Certain 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:
• 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); and
• 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 year during which the change
has occurred.
Further disclosures about the assumptions made in measuring fair values are included in Note 29 Financial Instruments and
Risk Management.
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 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. The Group is managed as a single business unit, building and property
development. As the Group operates in a single geographic market, Ireland, no geographical segmentation is provided.
6. Revenue
Residential property sales
Residential site and other sales
Revenue from contracts with customers
Other revenue
Income from property rental
Residential property sales
Houses
Apartments
7. Administrative Expenses
Employee benefits expense (Note 9)
Other expenses
2021
€’000
419,406
4,217
423,623
2020
€’000
246,881
14,651
261,532
360
351
423,983
261,883
2021
€’000
2020
€’000
220,306
199,100
419,406
211,522
35,359
246,881
2021
€’000
16,911
8,578
25,489
2020
€’000
10,170
8,087
18,257
CAIRN HOMES PLC ANNUAL REPORT 2021
131
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2021
8. Finance Costs
Interest expense on financial liabilities measured at amortised cost
Other finance costs
Interest on lease liabilities
2021
Total
€’000
6,671
1,451
25
8,147
2020
Total
€’000
9,061
569
30
9,660
Interest expense includes interest and amortised arrangement fees and issue costs on the drawn term loans, revolving credit facility and
loan notes. Other finance costs include commitment fees on the undrawn element of the revolving credit facility.
9. Statutory and Other Information
(i) Employees
The average number of persons employed by the Group (including Executive Directors) during the year was:
Number of employees
The aggregate payroll costs of these employees were:
Wages and salaries
Social welfare costs
Pension costs – defined contribution schemes
Share-based payments charge/(credit)
Amounts capitalised into inventories
Amounts capitalised into intangibles
Employee benefits expense
(ii) Other information
Net foreign currency loss/(gains) recognised in profit or loss
Auditor’s remuneration
Audit of Group, Company and subsidiary financial statements
Other assurance services
Tax advisory services
Other non-audit services
Auditor’s remuneration for the audit of the Company financial statements was €15,000 (2020: €15,000).
Directors’ remuneration
Salaries, fees and other emoluments
Pension contributions – defined contribution schemes
132
2021
239
2020
209
2021
€’000
24,251
2,713
906
4,911
32,781
(15,703)
(167)
16,911
2021
€’000
47
308
20
68
98
494
2,519
120
2,639
2020
€’000
20,158
2,115
853
(33)
23,093
(12,923)
–
10,170
2020
€’000
(3)
295
20
30
48
393
1,523
126
1,649
10. Taxation
Current tax charge for the year
Corporation tax – current year
Adjustment in respect of prior year
Deferred tax credit for the year (Note 22)
Total tax charge
The tax assessed for the year differs from the standard rate of tax in Ireland. The differences are explained below.
Profit before tax
Tax charge at standard Irish income tax rate of 12.5%
Effects of:
Amounts deductible for tax purposes at higher rate of tax
Income not subject to tax
Expenses not deductible for tax purposes
Adjustment in respect of prior year
Total tax charge
11. Property, Plant and Equipment
Cost
At 1 January 2021
Additions
At 31 December 2021
Accumulated depreciation
At 1 January 2021
Depreciation
At 31 December 2021
Net book value
At 31 December 2021
2021
€’000
7,664
84
7,748
(754)
6,994
2021
€’000
50,235
6,279
–
–
631
84
6,994
2020
€’000
2,281
318
2,599
(522)
2,077
2020
€’000
14,786
1,848
(39)
(79)
29
318
2,077
2021
Total
€’000
3,716
410
4,126
(2,269)
(692)
(2,961)
Leasehold
improvements
€’000
Motor
vehicles
€’000
Computers &
equipment
€’000
483
–
483
(325)
(69)
(394)
77
–
77
(30)
(19)
(49)
3,156
410
3,566
(1,914)
(604)
(2,518)
89
28
1,048
1,165
CAIRN HOMES PLC ANNUAL REPORT 2021
133
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2021
11. Property, Plant and Equipment continued
Depreciation of €0.487 million (2020: €0.51 million) in relation to construction related assets was included in construction work in progress
in inventories. All property, plant and equipment is pledged as security against the Group’s borrowings (Note 19).
Cost
At 1 January 2020
Additions
At 31 December 2020
Accumulated depreciation
At 1 January 2020
Depreciation
At 31 December 2020
Net book value
At 31 December 2020
12. Right of Use Assets
Cost
At 1 January
Additions
At 31 December
Accumulated depreciation
At 1 January
Depreciation
At 31 December
Net book value
At 31 December
Leasehold
improvements
€’000
Motor
vehicles
€’000
Computers &
equipment
€’000
483
–
483
(256)
(69)
(325)
77
–
77
(11)
(19)
(30)
2,974
182
3,156
(1,291)
(623)
(1,914)
2020
Total
€’000
3,534
182
3,716
(1,558)
(711)
(2,269)
158
47
1,242
1,447
2021
€’000
1,443
172
1,615
(721)
(404)
(1,125)
2020
€’000
1,443
–
1,443
(360)
(361)
(721)
490
722
Following the adoption of IFRS 16 in 2019, the Group recognised a right-of-use asset in respect of the lease of its central support office
property. On initial application of IFRS 16, the asset and related lease liability (Note 20) were determined by discounting the lease payments
over the expected remaining term of the lease at a discount rate of 2.6% reflecting the Group’s incremental borrowing rate at 1 January 2019.
The additions during the year ended 31 December 2021 related to vehicle leases and were determined by discounting the lease payments
over the expected remaining term of the leases at a discount rate of 2.6% reflecting the Group’s incremental borrowing rate during the year.
134
13. Intangible Assets
Software
Cost
At 1 January
Additions
At 31 December
Accumulated amortisation
At 1 January
Amortisation
At 31 December
Net book value
At 31 December
14. Inventories
Land held for development
Construction work in progress
2021
€’000
2020
€’000
1,117
1,082
2,199
(565)
(200)
(765)
1,103
14
1,117
(430)
(135)
(565)
1,434
552
2021
€’000
671,652
268,348
940,000
2020
€’000
690,347
277,837
968,184
The Directors consider that all inventories are essentially current in nature although the Group’s operational cycle is such that a considerable
proportion of inventories will not be realised within 12 months. It is not possible to determine with accuracy when specific inventories will be
realised as this will be subject to a number of factors such as consumer demand and the timing of planning permissions.
The cost of inventories includes direct labour costs and other direct wages and salaries as well as the cost of land, raw materials, and other
direct costs. In the thirteen-week shutdown period during which sites were closed in 2021 due to the pandemic, the Group continued to
capitalise direct labour costs in inventories in relation to direct labour costs which continued on permitted works on social and affordable
housing, other units with sales contracted to close by 31 January 2021 and utility connections. During the year ended 31 December 2021
€0.3 million (31 December 2020: €nil) of other direct wages and salaries for employees in construction related roles were estimated to
be non-productive and were expensed and included in administrative expenses. All other direct wages and salaries for employees in
construction related roles incurred during this period were included in the cost of inventories, as the Group’s operational activities did
continue in the areas of site planning, scheduling, and design activities.
As the build costs on each site can take place over a number of reporting periods the determination of the cost of sales to release on each
sale is dependent on up to date cost forecasting and expected profit margins across the various developments. The directors review
forecasting and profit margins on a regular basis and have incorporated any additional forecasted costs arising from the extension of
development timetables and changes to work practices arising from the ongoing COVID-19 pandemic. Nearer term costs are largely
fixed as they are in most cases fully procured, and others are variable and particular focus has been given to these items to ensure
they are accurately reflected in forecasts and profit margins.
There is a risk that one or all of the assumptions may require revision as more information becomes available, with a resulting impact on the
carrying value of inventories or the amount of profit recognised. The risk is managed through ongoing site profitability reforecasting with any
necessary adjustments being accounted for in the relevant reporting period. The Directors considered the evidence from impairment reviews
and profit forecasting models across the various active and not yet in development sites. These sites costs and profit margins have been
reviewed at year end and judgments and estimates carefully considered to ensure they have incorporated any anticipated impact of the
ongoing COVID-19 pandemic. Based on the review performed there were no indications that any sites were impaired.
Under IFRS, instances where market capitalisation (quoted share price multiplied by the number of ordinary shares in issue) is below net
assets are considered to be a potential indicator that assets may be impaired. The Group’s principal assets are represented by inventories.
Such assets are stated at the lower of cost and net realisable value and are therefore, in any event, assessed for impairment (i.e. any evidence
that the net realisable value was less than the carrying amount) as at 31 December 2021. On 31 December 2021, the market capitalisation of
the Group was higher than the net assets of the Group.
All active sites on which construction has commenced are profitable and due to the forecasting process by which cost of sales is determined
as referred to above, the Directors therefore concluded that the net realisable value of active sites was greater than their carrying amount at
31 December 2021 and hence those sites were not impaired.
CAIRN HOMES PLC ANNUAL REPORT 2021
135
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2021
14. Inventories continued
All sites on which construction has not yet commenced were also assessed for impairment at 31 December 2021. This assessment was
based on the current development plan for the site, reflecting the number and mix of units expected to be built. For each of these sites,
the forecast revenue based on current market prices was greater than the sum of the site cost and the estimated construction costs.
The Directors therefore concluded that the net realisable value of sites on which construction has not yet commenced was greater
than their carrying amount at 31 December 2021 and hence those sites were not impaired.
There were no reasonably foreseeable changes in assumptions that would have resulted in an impairment of inventories at 31 December 2021.
As a result of the detailed reviews undertaken the directors are satisfied with the carrying values of inventories (development land and
work in progress), which are stated at the lower of cost and net realisable value, and with the methodology for the release of costs on
the sale of inventories.
The total amount charged to cost of sales from inventories during the year was €338.0 million (2020: €218.4 million).
15. Trade and Other Receivables
Trade receivables
Prepayments
Construction bonds
Other receivables
2021
€’000
15,269
845
10,864
1,504
28,482
2020
€’000
1,265
860
8,332
931
11,388
Trade receivables relate to remaining amounts due in relation to residential property sales to institutional investors.
The Directors consider that all construction bonds are current assets as they will be realised in the Group’s normal operating cycle, which
is such that a proportion of construction bonds will not be recovered within 12 months. It is estimated that €5.5 million (2020: €4.6 million)
of the construction bond balance at 31 December 2021 will be recovered after more than 12 months from that date.
The carrying value of all trade and other receivables is approximate to their fair value.
Trade receivables of €1.3 million and prepayments €0.9 million have been reclassified from other receivables for the year ended
31 December 2020 for consistency with the current year presentation.
16. Cash and Cash Equivalents
Cash and cash equivalents
2021
€’000
40,028
2020
€’000
34,526
Cash deposits are made for varying short-term periods depending on the immediate cash requirements of the Group. All deposits can be
withdrawn without significant changes in value and accordingly the fair value of cash and cash equivalents is identical to the carrying value.
17. Share Capital and Share Premium
Authorised
Ordinary Shares of €0.001 each
Founder Shares of €0.001 each
Deferred Shares of €0.001 each
A Ordinary Shares of €1.00 each
Total authorised share capital
136
Number
2021
€’000
Number
1,000,000,000
1,000 1,000,000,000
100,000,000
120,000,000
20,000
100,000,000
120,000,000
20,000
100
120
20
1,240
2020
€’000
1,000
100
120
20
1,240
17. Share Capital and Share Premium continued
Issued and fully paid
As at 31 December 2021
Ordinary Shares of €0.001 each
Founder Shares of €0.001 each
Deferred Shares of €0.001 each
Total issued and fully paid
Issued and fully paid
As at 31 December 2020
Ordinary Shares of €0.001 each
Founder Shares of €0.001 each
Deferred Shares of €0.001 each
Total issued and fully paid
Number
749,932,223
19,182,149
19,980,000
Number
749,450,129
19,182,149
19,980,000
Share
capital
€’000
Share
premium
€’000
Total
€’000
750
19
20
789
199,597
200,347
19
–
38
20
199,616
200,405
Share
capital
€’000
Share
premium
€’000
Total
€’000
749
19
20
788
199,597
200,346
19
–
38
20
199,616
200,404
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 Prime
Developments Ltd (“PDL”) (the ultimate beneficiaries of PDL are Alan McIntosh, a Director, and his spouse) and Kevin Stanley to receive
20% of the Total Shareholder Return (which is the increase in the market capitalisation of the Company, plus dividends, returns of capital
or distributions in the relevant periods) (the Founder Share Value), over the seven years following the Initial Public Offering in 2015, 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, returns of capital or distributions 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 Founder Share Value. Subject to satisfying the
Performance Condition there is no limitation on the amount to be converted into Ordinary Shares (or otherwise issued as Ordinary Shares
at nominal value to fulfil the value of 20% of Total Shareholder Return achieved) or paid out in cash, other than the seven year limit referred
to above.
The Chief Executive Officer Michael Stanley signed a Deed of Surrender on 17 May 2021 relinquishing any future entitlements from the
remaining 6,713,752 Founder Shares held by him at the time. All rights, title and interest in those 6,713,752 Founder Shares were
surrendered to the Company for nil consideration on 17 May 2021 but were in place up to this point.
The following restrictions apply to the transfer of Founder Shares before they are converted to Ordinary Shares: any Founder Shareholder
may at any time transfer some or all of the Founder Shares held by him to a family member or (one or more) trustees to be held under a
Family Trust and/or any other Founder Shareholder. None of the Founder Shares transferred to the above mentioned parties may
subsequently be transferred save to a person or a party to which the shares in question could have been transferred as defined above.
The following restrictions apply to the Ordinary Shares which are issued as a result of the Founder Shares conversions:
• during the period of 365 days from the date of conversion, none of the Founders will, without the prior written consent of the Board,
offer, sell or contract to sell, or otherwise dispose of such Ordinary Shares (or any interest therein or in respect thereof) or enter into
any transaction with the same economic effect as any of the foregoing; and
• for a second period of 365 days commencing one year following conversion of Founder Shares into Ordinary Shares, the Founders shall
be entitled to offer, sell, or contract to sell, or otherwise dispose of 50% of such Ordinary Shares (or any interest therein or in respect
thereof) or enter into any transaction with the same economic effect as any of the foregoing but the lock-up restriction described above
will continue to apply to the remaining 50% of such Ordinary Shares during that second period of 365 days.
The total number of Ordinary Shares impacted by these restrictions amounted to Nil at 31 December 2021 (2020: Nil).
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.
The holders of A Ordinary Shares (Nil issued) are not entitled to receive dividends and do not have voting rights at meetings of the Company.
CAIRN HOMES PLC ANNUAL REPORT 2021
137
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2021
17. Share Capital and Share Premium continued
Share Issues
On 4 May 2021, the Company issued 482,094 (2020: 116,066) Ordinary Shares at a nominal value of €0.001 per share in respect of the vesting
of awards under the restricted share unit plan.
Share buyback programmes
Further to the authority granted at the Annual General Meeting on 22 May 2019, the Company commenced a €25 million share buyback
programme on 13 September 2019. As at 31 December 2019, the total cost of shares repurchased under the buyback programme was
€22,646,683. In accordance with the share buyback programme, all repurchased shares were subsequently cancelled. 18,128,083
repurchased shares were cancelled in the year ended 31 December 2019. This programme completed on 13 January 2020.
On 16 January 2020, the Company announced an extension of that €25 million share buyback programme to include up to a further €35
million, thereby increasing the size of the overall share buyback programme to €60 million. This programme was suspended on 24 March
2020, as a consequence of the emergence of the COVID-19 pandemic, when the total number of shares repurchased under the buyback
programme was 39,449,108 at a total cost of €46.0 million. The total number of shares repurchased under the buyback programme in
the period from 1 January 2020 to 24 March 2020 was 21,321,025 at a total cost of €23.3 million. All repurchased shares were cancelled.
On 13 January 2022, the Company commenced a new €75 million share buyback programme and all repurchased shares under this
programme are subsequently cancelled. In total, in the period from 13 January 2022 to 22 March 2022, the Company repurchased 31,336,127
shares at a total cost of €38.8 million.
Other Undenominated Capital
At 1 January
Nominal value of own shares purchased
At 31 December
2021
€’000
40
–
40
2020
€’000
18
22
40
18. Share-Based Payments
Founder Shares
A valuation exercise was undertaken in 2015 to fair value the Founder Shares (the terms of which are outlined in Note 17), which resulted 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 was no overall impact on total equity. This non-cash charge to profit or loss for the period ended 31 December 2015
was for the full fair value of the award relating to the Founder Shares, all of which was required to be recognised up front under the terms
and conditions of the Founder Share agreement. No charge has been or will be recognised in subsequent years.
The valuation exercise was completed using the “Monte Carlo” simulation methodology and the following key assumptions:
• Share price volatility of 25% per annum, based on a basket of comparative UK listed entities;
• Risk free rate of 0.1% per annum;
• Dividend yield of 3% per annum, effective from 2018; and
• 15% discount based on restrictions on sale once Founder Shares convert to Ordinary Shares
There were no conversions of Founder Shares to Ordinary Shares during the year ended 31 December 2021 or 31 December 2020.
Long-Term Incentive Plan
The Group operates an equity settled Long-Term Incentive Plan (“LTIP”), which was approved at the May 2017 Annual General Meeting, under
which conditional awards of 10,717,994 shares made to employees remain outstanding as at 31 December 2021 (2020: 7,659,629). The shares
will vest on satisfaction of service and performance conditions attaching to the LTIP, to include earnings per share performance and other
stakeholder metrics over a 3 year period.
The 2021 LTIP awards are subject to both financial and non-financial metrics. 80% of the award will vest subject to the achievement of
cumulative EPS targets over the three year performance period from 2021 to 2023. 20% of the award will vest subject to the achievement
of stakeholder metrics which includes customer satisfaction performance with a health and safety underpin.
Awards to Executive Directors and senior management are also subject to an additional two year holding period after vesting.
The EPS-related performance condition is a non-market performance condition and does not impact the fair value of the EPS-based awards
at the grant date, which is equivalent to the share price at grant date.
The Group recognised a charge related to the LTIP during the year ended 31 December 2021 of €3.296 million (2020: €0.561 million credit)
of which €2.407 million (2020: €0.598 million credit) was charged to administrative expenses in profit or loss and a charge of €0.889 million
(2020: €0.037 million) was included in construction work in progress within inventories. The net credit recognised during the year ended
31 December 2020 arose due to the charge in respect of the 2020 LTIP net of a credit in relation to the non-vesting of the 2018 LTIP EPS-
based awards and the expected non-vesting of the 2019 LTIP EPS-based awards.
138
18. Share-Based Payments continued
Long-Term Incentive Plan continued
Cairn engaged extensively with shareholders during 2020 with respect to the Chief Executive Officer, Michael Stanley, participating in the
Company’s LTIP from 2021 onwards. One of the conditions of participation was an agreement that the Chief Executive Officer would surrender
any future entitlements, pursuant to the Founder Share Agreement, from the remaining 6,713,752 Founder Shares held by him at the time.
The Chief Executive Officer signed a Deed of Surrender on 17 May 2021 relinquishing any future entitlements from those Founder Shares.
All rights, title and interest in those 6,713,752 Founder Shares were surrendered to the Company for nil consideration.
The number of outstanding conditional share awards under the LTIP are as follows:
Outstanding at beginning of year
Forfeited during the year
Lapsed during the year
Granted during the year
Outstanding at end of year
2021
’000
2020
’000
7,659,629
3,889,750
(227,429)
(515,943)
(2,026,297)
(1,347,512)
5,312,091
5,633,334
10,717,994
7,659,629
Dividend Equivalents
The Group operates a dividend equivalent scheme linked to its equity settled LTIP. Under this scheme employees are entitled to shares or
cash (the choice of settlement is as determined by the Group) to the value of dividends declared over the LTIP’s vesting period based on the
number of shares that vest. The Group recognised a charge related to dividend equivalents during the year ended 31 December 2021 of
€0.285 million (2020: €nil) of which €0.206 million (2020: €nil) was charged to administrative expenses in profit or loss and a charge of
€0.079 million (2020: €nil) was included in construction work in progress within inventories.
Restricted share unit plan
The Group operates a restricted share unit plan, which was approved at the Annual General Meeting on 20 May 2020, under which conditional
awards of 1,175,267 (2020: 482,094) shares made to employees remain outstanding as at 31 December 2021. The fair value of the awards at
the grant date is equivalent to the share price at the grant date. The shares will vest on satisfaction of service over a 1 year period. The Group
recognised a charge related to these restricted share units during the year ended 31 December 2021 of €1.040 million (2020: €0.348 million)
of which €0.782 million (2020: €0.266 million) was charged to profit or loss and €0.258 million (2020: €0.082 million) was included in
construction work in progress within inventories. During the year, the Group issued 482,094 ordinary shares at a nominal value of
€0.001 per share due to the vesting of awards granted in May 2020 under the terms of the 2020 restricted share unit plan.
Save as you earn scheme
The Group operates a Revenue approved savings related share option scheme (“save as you earn scheme”), which was approved at the
May 2019 Annual General Meeting, under which the Group recognised a charge during the year ended 31 December 2021 of €0.290 million
(2020: €0.179 million) of which €0.104 million (2020: €0.055 million) was charged to profit or loss and €0.186 million (2020: €0.124 million)
was included in construction work in progress within inventories.
Share Options
500,000 ordinary share options were issued in the year ended 31 December 2015, to a Director at that time and none have been exercised as
at 31 December 2021. 250,000 of these options vested during 2018 and the remaining 250,000 vested during 2019. The exercise price of each
ordinary share option is €1.00. At grant date, the fair value of the options that vested during 2018 was calculated at €0.219 per share while the
fair value of options that vested during 2019 was calculated at €0.220 per share. The related charge to profit or loss during the year ended
31 December 2021 was €nil (2020: €nil).
CAIRN HOMES PLC ANNUAL REPORT 2021
139
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2021
19. Loans and Borrowings
Current liabilities
Bank and other loans
Repayable within one year
Non-current liabilities
Repayable as follows:
Between one and two years
Between two and five years
Greater than five years
Total borrowings
2021
€’000
2020
€’000
77,094
77,094
–
–
–
130,399
72,461
–
72,461
149,555
29,956
42,438
202,793
202,793
The Group has a €77.5 million term loan (fully drawn at 31 December 2021 and 31 December 2020) and €200 million revolving credit facility
with Allied Irish Banks plc, Ulster Bank Ireland DAC and Barclays Bank Ireland plc, which are repayable by 31 December 2022. €6 million of
the revolving credit facility is represented by a construction bond facility (these are development bonds that can be put in place with local
authorities until sites are fully completed and conditions of planning have been met). While these loan facilities are repayable on 31 December
2022, a refinancing process is underway. This is considered to be a routine matter with no foreseeable issues given the Group’s financial
position and strong outlook.
Additionally, the Group has €72.5 million of loan notes with Pricoa Private Capital Group, repayable on 31 July 2024 (€15 million), 31 July 2025
(€15 million) and 31 July 2026 (€42.5 million).
These debt facilities are secured by a debenture incorporating fixed and floating charges and assignments over all the assets of the Group.
The carrying value of inventories as at 31 December 2021 pledged as security is €940 million.
The Group had undrawn revolving credit facilities of €194 million at 31 December 2021 (€140 million as at 31 December 2020).
The amount presented in the financial statements is net of related unamortised arrangement fees and transaction costs of €0.4 million
(2020: €1.2 million).
20. Lease Liabilities
Current liabilities
Lease liabilities
Repayable within one year
Non-current liabilities
Lease liabilities
Repayable as follows:
Between one and two years
Between two and five years
Total lease liabilities
2021
€’000
2020
€’000
558
558
55
19
74
632
334
334
490
–
490
824
Following the adoption of IFRS 16 in 2019, the Group recognised a lease liability in respect of the lease of its central support office property.
On initial application of IFRS 16 the lease liability and related right-of-use asset (Note 12) were determined by discounting the lease payments
over the expected remaining term of the lease at a discount rate of 2.6% reflecting the Group’s incremental borrowing rate at 1 January 2019.
The additions during the year ended 31 December 2021 related to vehicle leases and were determined by discounting the lease payments
over the expected remaining term of the leases at a discount rate of 2.6% reflecting the Group’s incremental borrowing rate during the year.
140
20. Lease Liabilities continued
The movements in total lease liabilities during 2021 and 2020 were as follows:
At 1 January
Additions
Interest on lease liabilities
Lease payments
At 31 December
The undiscounted remaining contractual cash flows at 31 December 2021 were as follows:
As at 31 December 2021
Lease liability
Contractual cash flows
Total
€’000
(652)
6 months
or less
€’000
(201)
6-12
months
€’000
(373)
The undiscounted remaining contractual cash flows at 31 December 2020 were as follows:
As at 31 December 2020
Lease liability
Contractual cash flows
Total
€’000
(858)
6 months
or less
€’000
(172)
6-12
months
€’000
(172)
21. Reconciliation of Movement of Liabilities to Cash Flows Arising from Financing Activities
2021
€’000
824
172
25
(389)
632
1-2
years
€’000
(59)
1-2
years
€’000
(514)
2020
€’000
1,138
–
30
(344)
824
2-5
years
€’000
(19)
2-5
years
€’000
–
Balance at 1 January 2021
202,793
707
824
204,324
Liabilities
Accrued
interest and
other finance
costs
€’000
Loans and
borrowings
(Note 19)
€’000
Lease
liabilities
€’000
Total
€’000
Cash flows from financing activities
Proceeds from borrowings
Repayment of loans
Interest and other finance costs paid
Repayment of lease liabilities
Total changes from financing cash flows
Other changes
Amortisation of borrowing costs
Interest and other finance costs for the year
Recognition of lease liabilities for new leases
Total other changes
Balance at 31 December 2021
170,000
(224,000)
–
–
–
–
(7,211)
–
(54,000)
(7,211)
762
–
–
762
149,555
–
7,385
–
7,385
881
–
–
–
(364)
(364)
–
–
172
172
632
170,000
(224,000)
(7,211)
(364)
(61,575)
762
7,385
172
8,319
151,068
CAIRN HOMES PLC ANNUAL REPORT 2021
141
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2021
21. Reconciliation of Movement of Liabilities to Cash Flows Arising from Financing Activities continued
Balance at 1 January 2020
148,041
768
1,138
149,947
Liabilities
Accrued
interest and
other finance
costs
€’000
Loans and
borrowings
(Note 19)
€’000
Lease
liabilities
€’000
Total
€’000
Cash flows from financing activities
Proceeds from borrowings
Repayment of loans
Interest and other finance costs paid
Repayment of lease liabilities
Total changes from financing cash flows
Other changes
Amortisation of borrowing costs
Interest and other finance costs for the year
Total other changes
Balance at 31 December 2020
22. Deferred Taxation
Movement in net deferred tax liability:
Opening balance
Credit to profit or loss
As at year end
194,000
(140,000)
–
–
–
–
(8,969)
–
54,000
(8,969)
752
–
752
202,793
–
8,908
8,908
707
–
–
–
(314)
(314)
–
–
–
194,000
(140,000)
(8,969)
(314)
44,717
752
8,908
9,660
824
204,324
2021
€’000
4,562
(754)
3,808
2020
€’000
5,084
(522)
4,562
Deferred tax arises from temporary differences relating to tax losses (deferred tax asset of €0.07 million at 31 December 2021) and land
held for development (net deferred tax liabilities of €3.878 million at 31 December 2021). The movements in gross deferred tax assets and
liabilities are set out below.
2021
Opening balance
Credit/ (charge) to profit or loss
Closing balance
2020
Opening balance
Credit to profit or loss
Closing balance
Deferred tax
assets
€’000
Deferred tax
liabilities
€’000
Net deferred
tax liability
€’000
744
(61)
683
(5,306)
815
(4,491)
(4,562)
754
(3,808)
Deferred tax
assets
€’000
Deferred tax
liabilities
€’000
Net deferred
tax liability
€’000
744
–
744
(5,828)
522
(5,306)
(5,084)
522
(4,562)
There are unrecognised deferred tax assets of €0.129 million at 31 December 2021 (2020: €0.129 million).
142
23. Trade and Other Payables
Trade payables
Amounts owed to related parties (Note 25)
Deferred consideration
Accruals
VAT liability
Other creditors
2021
€’000
21,060
–
10,000
28,277
19,726
1,143
80,206
2020
€’000
15,285
7,000
–
22,166
14,522
1,123
60,096
Deferred consideration relates to development land purchased during the year.
Other creditors represents amounts due for payroll taxes and Relevant Contracts Tax.
The carrying value of all trade and other payables is approximate to their fair value.
24. Dividends
On 8 September 2021 the Board declared an interim dividend of 2.66 cent per ordinary share. This interim dividend was paid on 8 October
2021 to shareholders on the register on the record date of 17 September 2021. Based on the ordinary shares in issue, the amount of dividends
paid was €19.9 million (2020: €nil). Details of proposed dividends subsequent to the year end are set out in Note 32.
25. Related Party Transactions
On 27 October 2020, the Group acquired a 1.35 acre site in Stillorgan, Co. Dublin known as “the Esmonde Motors site” which adjoins its
existing Blakes development site for a total consideration of €14 million, €7 million of which was paid on completion in October 2020 with the
remaining €7 million paid in July 2021 (Note 23). The seller of the Esmonde Motors site was The Emerald Fund ICAV (acting on behalf of the
Emerald Opportunity Investment Fund) (“Emerald”). Alan McIntosh, co-founder and non-executive Director of Cairn, and his spouse are the
beneficiaries of a discretionary trust that is the ultimate owner of Emerald and as such Alan McIntosh is considered a related party.
A Circular was posted to shareholders on 11 September 2020 detailing the particulars of the transaction including details of the independent,
Red Book valuation from Hooke & McDonald, the property valuation advisors engaged by the Company, as well as advice provided to the
Company by Goodbody Stockbrokers UC and A&L Goodbody solicitors. Shareholders voted in favour of the transaction at an Extraordinary
General Meeting of the Company held on 12 October 2020.
Key management personnel compensation (which comprise the Board of Directors of the Company) was as follows:
Short-term employee benefits
Post-employment benefits (pension contributions – defined contribution schemes)
Share-based payment expense – LTIP
Total key management personnel compensation
2021
€’000
2,519
120
657
3,296
2020
€’000
1,523
126
187
1,836
CAIRN HOMES PLC ANNUAL REPORT 2021
143
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2021
26. Group Entities
The Company’s subsidiaries as at 31 December 2021 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.
Company’s holding
Group company
Cairn Homes Holdings Limited
Cairn Homes Properties Limited
Cairn Homes Construction Limited
Cairn Homes Butterly Limited
Cairn Homes Galway Limited
Cairn Homes Killiney Limited
Cairn Homes Navan Limited
Cairn Homes Finance Designated Activity Company
Cairn Homes Montrose Limited
Balgriffin Investment No.2 HoldCo Designated Activity Company
Cairn Homes Property Holdco Limited
Cairn Homes Property Management Limited
Cairn Homes Property Holding One Limited
Cairn Homes Property Holding Two Limited
Cairn Homes Property Holding Three Limited
Cairn Homes Property Holding Four Limited
Cairn Homes Property Holding Five Limited
Cairn Homes Property Holding Six Limited
Cairn Homes Property Holding Seven Limited
Cairn Homes Property Holding Eight Limited
Balgriffin Investment No.2 Designated Activity Company
Principal activity
Holding company
Holding of property
Construction company
No activity in period
Holding of property
Holding of property
No activity in period
Financing activities
Holding of property
Holding company
Holding company
No activity in period
No activity in period
No activity in period
No activity in period
No activity in period
No activity in period
No activity in period
No activity in period
No activity in period
No activity in period
Direct
100%
–
–
100%
100%
100%
100%
100%
100%
100%
–
–
–
–
–
–
–
–
–
–
–
Indirect
–
100%
100%
–
–
–
–
–
–
–
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
27. Earnings Per Share
The basic earnings per share for the year ended 31 December 2020 is based on the earnings attributable to ordinary shareholders of
€43.2 million (2020: €12.7 million) and the weighted average number of ordinary shares outstanding for the period.
Profit for the year attributable to the owners of the Company
Numerator for basic and diluted earnings per share
Weighted average number of ordinary shares for the year (basic)
Dilutive effect of restricted share unit awards and options
Denominator for diluted earnings per share
Earnings per share (cent)
– Basic
– Diluted
2021
€’000
43,241
43,241
2020
€’000
12,709
12,709
Number of
Shares
Number of
Shares
749,771,525
752,029,760
1,215,267
482,095
750,986,792
752,511,855
5.8
5.8
1.7
1.7
There is no dilution in respect of Founder Shares. It is assumed, as is required under IAS 33, that the test period for the Founder Share
conversion calculation is from 1 September 2021 to 31 December 2021, however the actual test period for determining the Founder Share
conversion in 2021 is 1 March 2022 to 30 June 2022. Based on the assumed test period, no ordinary shares would be issued through
conversion of Founder Shares as the relevant performance condition was not met.
Additional ordinary shares may be issued under the Founder Share scheme in 2022 if the performance condition under the rules of the
scheme is reached (Note 17).
144
27. Earnings Per Share continued
There is no dilution in respect of the LTIP as the performance conditions are not met as at 31 December 2021. The diluted earnings per share
calculation reflects the dilutive impact of restricted share unit awards and share options (Note 18).
28. Non-Controlling Interests
The non-controlling interest at 31 December 2019 of €2.5 million related to the 25% share of the net assets of a subsidiary entity, Balgriffin
Investment No. 2 HoldCo DAC (Note 26), which was held by National Asset Management Agency (“NAMA”). Cairn Homes plc held the
remaining 75% of the equity share capital in this subsidiary which was involved in the development of residential property. On 3 July 2020,
Cairn Homes plc acquired NAMA’s 25% share for €2.5 million which increased its holding to 100% of the equity share capital of Balgriffin
Investment No. 2 HoldCo DAC from that date.
Name
Principal activities
Country of incorporation
Ownership interest held by
non-controlling interest %
2020
2021
Balgriffin Investment No. 2 HoldCo DAC
development company
Ireland
0%
0%
Holding company for property
29. Financial Instruments and Risk Management
The Group has exposure to the following risks arising from financial instruments:
• credit risk;
• liquidity risk; and
• market risk.
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for
measuring and managing risk, and the Group’s management of capital.
(a) Risk management framework
The 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 & 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 trade and other receivables and cash and cash equivalents. The carrying amount of
financial assets represents the maximum credit exposure.
Exposure to credit risk
Group management, in conjunction with the Board, manages the risk associated with cash and cash equivalents by depositing funds with
a number of Irish financial institutions and AAA rated international institutions.
None of the trade and other receivables (excluding prepayments) of €27.6 million at 31 December 2021 were past due. These trade and
other receivables have been reviewed, and considering the nature of the counterparties which are real estate institutional investors and
public sector bodies no credit losses are expected. As a result, no expected credit loss provision has been recognised.
The maximum amount of credit exposure is therefore:
Trade and other receivables (excluding prepayments)
Cash and cash equivalents
2021
€’000
27,637
40,028
67,665
2020
€’000
10,528
34,526
45,054
Expected credit losses in relation to all financial assets are immaterial.
(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.
CAIRN HOMES PLC ANNUAL REPORT 2021
145
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2021
29. Financial Instruments and Risk Management continued
(c) Liquidity risk continued
The Group monitors the level of expected cash inflows on receivables together with expected cash outflows on trade and other payables and
commitments. All trade and other payables at 31 December 2021 are considered current with the expected cash outflow equivalent to their
carrying value.
Management monitors the adequacy of the Group’s liquidity reserves (comprising undrawn borrowing facilities as detailed in Note 19 and
cash and cash equivalents as detailed in Note 16 i.e. available funds) against rolling cash flow forecasts. In addition, the Group’s liquidity risk
management policy involves monitoring short-term and long-term cash flow forecasts. The Group had undrawn revolving credit facilities of
€194 million at 31 December 2021 (2020: €140 million).
Financial liabilities due in less than one year
Trade payables and accruals
Deferred consideration
Amounts owed to related parties
Lease liabilities
Borrowings
Financial liabilities due after more than one year
Lease liabilities
Borrowings
Available funds:
Cash and cash equivalents
Revolving credit facilities undrawn
2021
€’000
49,337
10,000
–
558
77,094
136,989
74
72,461
72,535
40,028
194,000
234,028
2020
€’000
37,451
–
7,000
334
–
44,785
490
202,793
203,283
34,526
140,000
174,526
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 the financial forecasts.
These forecasts are based on:
• detailed forecasting by site for the period 2022-2024, reflecting trends experienced up to the date of preparation of the financial forecasts;
and
• future revenues for 2022-2024 based on management’s assessment of trends across principal development sites.
While some of the Group’s loan facilities are repayable on 31 December 2022, a refinancing process is underway. This is considered to be a
routine matter with no foreseeable issues given the Group’s financial position and strong outlook (Note 1 (e)). The Directors expect that the
Group will meet all of its obligations as they fall due on the basis that there is expected to be 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 of financial liabilities at the reporting date. The amounts are gross and undiscounted
and include contractual interest payments.
Contractual cash flows
Carrying
amount
€’000
Total
€’000
6 months
or less
€’000
6-12
months
€’000
49,337
(49,337)
(49,337)
–
10,000
(10,000)
–
(10,000)
1-2
years
€’000
–
–
2-5
years
€’000
–
–
632
(652)
(201)
(373)
(59)
(19)
149,555
(161,668)
(2,225)
(79,726)
(2,436)
(77,281)
209,524
(221,657)
(51,763)
(90,099)
(2,495)
(77,300)
>5
years
€’000
–
–
–
–
–
31 December 2021
Trade payables and accruals
Deferred consideration
Lease liabilities
Loans and borrowings
146
29. Financial Instruments and Risk Management continued
(c) Liquidity risk continued
Contractual cash flows
31 December 2020
Trade payables and accruals
Amounts owed to related parties
Lease liabilities
Loans and borrowings
Carrying
amount
€’000
Total
€’000
6 months
or less
€’000
6-12
months
€’000
37,451
(37,451)
(37,451)
–
7,000
824
(7,000)
(858)
–
(7,000)
(172)
(172)
(514)
1-2
years
€’000
–
–
2-5
years
€’000
>5
years
€’000
–
–
–
–
–
–
202,793
(222,529)
(3,059)
(3,059)
(137,618)
(35,460)
(43,333)
248,068
(267,838)
(40,682)
(10,231)
(138,475)
(35,460)
(43,333)
(d) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s
income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimising the return.
(i) Currency risk
The Group is not exposed to significant currency risk. The Group operates only in the Republic of Ireland.
(ii) Interest rate risk
At 31 December 2021, the Group had the following facilities:
(a) €277.5 million term loan and revolving credit facilities with Allied Irish Bank plc, Ulster Bank Ireland DAC and Barclays Bank Ireland plc
that had principal drawn balances of €77.5 million (term loan) (2020: €77.5 million) and €nil (revolving credit facility, excluding €6 million
construction bond facility) (2020: €54 million) at a variable interest rate of Euribor (with a 0% floor), plus a margin of 2.6% (2020: 2.8%).
The Group has an exposure to cash flow interest rate risk where there are changes in Euribor rates; and
(b) a €72.5 million (2020: €72.5 million) private placement of loan notes with Pricoa Capital which have a fixed coupon of 3.36% (2020: 3.36%).
Cash flow sensitivity analysis for variable-rate instruments
A reasonably possible change of 100 basis points in Euribor benchmark 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 and the rate change is only applied
to the loans that are exposed to movements in Euribor.
31 December 2021
Variable-rate instruments – borrowings
Cash flow sensitivity (net)
31 December 2020
Variable-rate instruments – borrowings
Cash flow sensitivity (net)
Profit or loss
Equity
100 bp
increase
€’000
(1,283)
(1,283)
100 bp
decrease
€’000
–
–
100 bp
increase
€’000
(1,283)
(1,283)
Profit or loss
Equity
100 bp
increase
€’000
(1,602)
(1,602)
100 bp
decrease
€’000
–
–
100 bp
increase
€’000
(1,602)
(1,602)
100 bp
decrease
€’000
–
–
100 bp
decrease
€’000
–
–
The Group is also exposed to interest rate risk on its cash and cash equivalents. These balances attract low interest rates and therefore a
relative increase or decrease in their interest rates would not have a material effect on profit or loss.
(e) 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 the future development of the business. The Group takes a conservative approach to bank financing and the net debt
to total asset value ratio was 10.8% at 31 December 2021 (2020: 16.5%). Net debt is defined as loans and borrowings (Note 19) less cash and
cash equivalents (Note 16). Net debt of €109.5 million as at 31 December 2021 (31 December 2020: €168.3 million) comprised of drawn debt of
€149.5 million (net of unamortised arrangement fees and issue costs) (31 December 2020: €202.8 million) and available cash of €40 million
(31 December 2020: €34.5 million). The €58.8 million decrease in net debt in 2021 versus 2020 was mainly as a result of higher sales volumes.
CAIRN HOMES PLC ANNUAL REPORT 2021
147
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2021
29. Financial Instruments and Risk Management continued
(e) Capital management continued
Further to the authority granted at the Annual General Meeting on 22 May 2019, the Company commenced a €25 million share buyback
programme on 13 September 2019. As at 31 December 2019, the total cost of shares repurchased under the buyback programme was
€22,646,683. In accordance with the share buyback programme, all repurchased shares were subsequently cancelled. 18,128,083
repurchased shares were cancelled in the year ended 31 December 2019. This programme completed on 13 January 2020.
On 16 January 2020, the Company announced an extension of that €25 million share buyback programme to include up to a further €35
million, thereby increasing the size of the overall share buyback programme to €60 million. This programme was suspended on 24 March
2020, as a consequence of the emergence of the COVID-19 pandemic, when the total number of shares repurchased under the buyback
programme was 39,449,108 at a total cost of €46.0 million. The total number of shares repurchased under the buyback programme in the
period from 1 January 2020 to 24 March 2020 was 21,321,025 at a total cost of €23.3 million.
On 13 January 2022, the Company commenced a €75 million share buyback programme. In total, in the period from 13 January 2022 to
22 March 2022, the Company repurchased 31,336,127 shares at a total cost of €38.8 million.
Dividends of €19.9 million were paid by the Company during the year ended 31 December 2021 (2020: €nil). Details of proposed dividends
subsequent to the year end are set out in Note 32.
(f) Fair value of financial assets and financial liabilities
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.
For financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which inputs to the fair
value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as
follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2: valuation techniques for which the lowest level of inputs which have a significant effect on the recorded fair value are observable,
either directly or indirectly; and
• Level 3: valuation techniques for which the lowest level of inputs that have a significant effect on the recorded fair value are not based on
observable market data.
The following table shows the Group’s financial assets and liabilities and the methods used to calculate fair value.
Asset/Liability
Carrying value
Level
Method
Assumptions
Borrowings
Amortised cost
2
Discounted Cash Flow
Valuation based on future repayment and interest cashflows
discounted at a year-end market interest rate.
The following table shows the carrying values of financial assets and liabilities including their values in the fair value hierarchy. A fair value
disclosure for lease liabilities is not required. The table does not include fair value information for other financial assets and liabilities not
measured at fair value if the carrying amount is a reasonable approximation of fair value.
2021
Carrying
value
€’000
27,637
40,028
67,665
49,337
10,000
149,555
208,892
Fair value
Level 1
€’000
Level 2
€’000
Level 3
€’000
149,555
Financial assets measured at amortised cost
Trade and other receivables (excluding prepayments)
Cash and cash equivalents
Financial liabilities measured at amortised cost
Trade payables and accruals
Deferred consideration
Borrowings
148
29. Financial Instruments and Risk Management continued
(f) Fair value of financial assets and financial liabilities continued
Financial assets measured at amortised cost
Trade and other receivables (excluding prepayments)
Cash and cash equivalents
Financial liabilities measured at amortised cost
Trade payables and accruals
Amounts owed to related parties
Borrowings
2020
Carrying
value
€’000
10,528
34,526
45,054
37,451
7,000
202,793
247,244
Fair value
Level 1
€’000
Level 2
€’000
Level 3
€’000
202,793
30. Other Commitments and Contingent Liabilities
Pursuant to the provisions of Section 357, Companies Act 2014, the Company has guaranteed the liabilities and commitments of its subsidiary
undertakings for their financial years ending 31 December 2021 and as a result such subsidiary undertakings have been exempted from the
filing provisions of Companies Act 2014. Details of the Group’s subsidiaries are included in Note 26 and all subsidiaries listed there are
covered by the Section 357 exemption.
As at 31 December 2021 Cairn Homes Properties Limited had contracted as follows:
• To sell 150 apartments at Shackleton Park, Lucan, Co. Dublin to Carysfort Capital for €48.6 million (incl. VAT). These apartments are
currently under construction with a phased delivery across 2022.
• To sell 342 apartments at Griffith Wood, Griffith Avenue, Dublin 9 to Greystar for €176.5 million (incl. VAT). 88 of these units were
completed and sold in 2021 for €45.4 million (incl. VAT) with the remaining 254 apartments under construction with a phased delivery
in 2022 for €131.1 million (incl. VAT).
At 31 December 2021, the Group had a contingent liability in respect of construction bonds in the amount of €3.4 million.
On 23 December 2021 the Group entered into a 10 year lease agreement for a new office with a lease commencement date of 01 January 2022
with an initial annual rent of €0.8 million.
The Group is not aware of any other commitments or contingent liabilities that should be disclosed.
31. Profit or 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 year ended 31 December 2021, determined in accordance
with IFRS as adopted by the EU, is €8.4 million (2020: loss of €6.2 million).
32. Events After the Reporting Period
On 13 January 2022, the Company commenced a €75 million share buyback programme. In total, in the period from 13 January 2022 to
22 March 2022, the Company repurchased 31,336,127 shares at a total cost of €38.8 million.
On 03 March 2022, the Company proposed a final 2021 dividend of 2.8 cent per ordinary share. This final dividend will be paid on 17 May 2022
to shareholders on the record date of 22 April 2022. Based on the ordinary shares in issues at 22 March 2022, the amount of dividends
proposed is €20.1 million. However, in view of the ongoing share buyback programme it is not possible to precisely determine the total
amount at this stage.
33. Approval of Financial Statements
The financial statements were approved by the Board of Directors on 25 March 2022.
CAIRN HOMES PLC ANNUAL REPORT 2021
149
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT COMPANY FINANCIAL STATEMENTS
Company Statement of Financial Position
Company Statement of Changes in Equity
Company Statement of Cash Flows
Notes to the Company Financial Statements
151
152
154
155
150
COMPANY STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2021
Assets
Non-current assets
Property, plant and equipment
Right of use assets
Intangible assets
Investments in subsidiaries
Current assets
Amounts due from subsidiary undertakings
Trade and other receivables
Cash and cash equivalents
Total assets
Equity
Share capital
Share premium
Other undenominated capital
Share-based payment reserve
Retained earnings
Total equity
Liabilities
Non-current liabilities
Lease liabilities
Current liabilities
Trade and other payables
Lease liabilities
Total liabilities
Total equity and liabilities
On behalf of the Board
Michael Stanley
Director
Shane Doherty
Director
Note
2021
€’000
2020
€’000
2
3
4
5
6
7
8
8
9
10
11
10
401
361
1,434
36,809
39,005
344
722
552
36,809
38,427
621,596
635,303
540
1,031
623,167
662,172
789
199,616
40
11,795
406,321
618,561
–
–
43,109
502
43,611
43,611
576
3,031
638,910
677,337
788
199,616
40
7,572
433,983
641,999
490
490
34,514
334
34,848
35,338
662,172
677,337
CAIRN HOMES PLC ANNUAL REPORT 2021
151
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
Share Capital
Ordinary
shares
€’000
Deferred
shares
€’000
Founder
shares
€’000
Share
premium
€’000
Other
undenominated
capital
€’000
Share-
based
payment
reserve
€’000
Retained
earnings
€’000
Total
€’000
As at 1 January 2021
749
20
19
199,616
40
7,572
433,983
641,999
Total comprehensive loss for the year
Loss for the year
Transactions with owners of
the Company
Equity-settled share-based payments
(Note 9)
Shares issued on vesting of share
awards
Transfer from share-based payment
reserve to retained earnings re
vesting or lapsing of share awards
Dividends paid to shareholders (Note 8)
–
–
–
1
–
–
1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(8,402)
(8,402)
(8,402)
(8,402)
4,911
–
–
–
(688)
688
4,911
1
–
–
(19,948)
(19,948)
4,223
(19,260)
(15,036)
As at 31 December 2021
750
20
19
199,616
40
11,795
406,321
618,561
152
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
Share Capital
Ordinary
shares
€’000
Deferred
shares
€’000
Founder
shares
€’000
Share
premium
€’000
Other
undenominated
capital
€’000
Share-
based
payment
reserve
€’000
Retained
earnings
€’000
Total
€’000
As at 1 January 2020
771
20
19
199,616
Total comprehensive loss for the year
Loss for the year
Transactions with owners of
the Company
Purchase of own shares
Equity-settled share-based payments
Transfer from share-based payment
reserve to retained earnings re
vesting or lapsing of share awards
As at 31 December 2020
–
–
(22)
–
–
(22)
749
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
20
19
199,616
18
–
–
22
–
–
22
40
8,002
463,109
671,555
–
–
–
(6,177)
(6,177)
(6,177)
(6,177)
(23,346)
(23,346)
(33)
–
(33)
(397)
397
–
(430)
(22,949)
(23,379)
7,572
433,983
641,999
CAIRN HOMES PLC ANNUAL REPORT 2021
153
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT 2021
€’000
2020
€’000
(8,402)
(6,177)
3,499
21
–
200
361
200
(4,121)
15,121
36
8,595
19,631
(277)
30
(4,879)
201
361
135
(10,606)
(80,710)
(187)
12,575
(78,928)
–
102,548
(257)
(1,082)
(1,339)
(107)
(14)
102,427
–
(23,751)
(19,948)
–
(322)
(22)
(20,292)
(2,000)
3,031
1,031
–
(2,496)
(314)
(30)
(26,591)
(3,092)
6,123
3,031
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
Cash flows from operating activities
Loss for the year
Adjustments for:
Share-based payments expense/(credit)
Finance costs
Interest income
Depreciation of property, plant and equipment
Depreciation of right of use assets
Amortisation of intangible assets
Decrease/(increase) in amounts due from group undertakings
Decrease/(increase) in trade and other receivables
Increase in trade and other payables
Net cash from/(used in) operating activities
Cash flows from investing activities
Loan repayments from subsidiary undertakings
Purchases of property, plant and equipment
Purchases of intangible assets
Net cash (used in)/from investing activities
Cash flows from financing activities
Purchase of own shares
Dividends paid
Acquisition of shares in subsidiaries from non-controlling shareholder
Repayment of lease liabilities
Interest paid
Net cash used in financing activities
Net decrease in cash and cash equivalents in the year
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
154
NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
Significant Accounting Policies
Property, Plant and Equipment
Right of Use Assets
Intangible Assets
Investments in Subsidiaries
Amounts due from Subsidiary Undertakings
Trade and Other Receivables
Share Capital and Share Premium
Share-Based Payments
Lease Liabilities
Trade and Other Payables
Financial Instruments
Related Party Transactions
Events after the Reporting Period
Approval of Financial Statements
156
156
157
157
157
157
157
158
158
158
159
159
160
161
161
CAIRN HOMES PLC ANNUAL REPORT 2021
155
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2021
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 31 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 year ended 31 December 20201 is €8.4 million (2020: loss of €6.2 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) 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 any impairment.
(b) 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. Property, Plant and Equipment
Leasehold
improvements
€’000
Computers &
equipment
€’000
483
–
483
(325)
(69)
(394)
89
694
257
951
(508)
(131)
(639)
312
Leasehold
improvements
€’000
Computers &
equipment
€’000
587
107
694
(376)
(132)
(508)
483
–
483
(256)
(69)
(325)
158
186
344
2021
Total
€’000
1,177
257
1,434
(833)
(200)
(1,033)
401
2020
Total
€’000
1,070
107
1,177
(632)
(201)
(833)
Cost
At 1 January 2021
Additions
At 31 December 2021
Accumulated depreciation
At 1 January 2021
Depreciation
At 31 December 2021
Net book value
At 31 December 2021
Cost
At 1 January 2020
Additions
At 31 December 2020
Accumulated depreciation
At 1 January 2020
Depreciation
At 31 December 2020
Net book value
At 31 December 2020
156
3. Right of Use Assets
Cost
At 1 January
Additions
At 31 December
Accumulated depreciation
At 1 January
Depreciation
At 31 December
Net book value
At 31 December
2021
€’000
1,443
–
1,443
(721)
(361)
(1,082)
2020
€’000
1,443
–
1,443
(360)
(361)
(721)
361
722
Following the adoption of IFRS 16 in 2019, the Company recognised a right-of-use asset in respect of the lease of its central support office
property. On initial application of IFRS 16, the asset and related lease liability were determined by discounting the lease payments over the
expected remaining term of the lease at a discount rate of 2.6% reflecting the Group’s incremental borrowing rate at 1 January 2019.
4. Intangible Assets
For further information on Intangible Assets refer to Note 13 of the consolidated financial statements.
5. Investments in Subsidiaries
Cost
At the beginning of the year
Additions during the year
At the end of the year
2021
€’000
36,809
–
36,809
2020
€’000
34,313
2,496
36,809
Details of subsidiary undertakings are given in Note 26 of the consolidated financial statements.
Additions during 2020 relate to 25% of the equity share capital of Balgriffin Investment No. 2 HoldCo DAC. On 3 July 2020, Cairn Homes plc
acquired NAMA’s 25% shareholding in that company for €2.5 million which increased its holding to 100%.
6. Amounts due from Subsidiary Undertakings
Amounts due from subsidiary undertakings
2021
€’000
621,596
621,596
2020
€’000
635,303
635,303
All amounts due from subsidiary undertakings are repayable on demand.
The amounts owed by subsidiaries have been reviewed and no credit losses are expected based on the financial position of subsidiaries.
In circumstances where a subsidiary had a net liability position at year end management assessed the future economic benefits expected
to be generated by that subsidiary to ensure balances were recoverable. As a result, no expected credit loss provision has been recognised
(see Note 12).
7. Trade and Other Receivables
Prepayments
2021
€’000
540
540
2020
€’000
576
576
CAIRN HOMES PLC ANNUAL REPORT 2021
157
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2021
8. Share Capital and Share Premium
For further information on Share Capital and Share Premium refer to Note 17 of the consolidated financial statements.
For further information on dividends refer to Note 24 of the consolidated financial statements.
9. Share-Based Payments
For further information on Share-Based Payments refer to Note 18 of the consolidated financial statements.
10. Lease liabilities
Current liabilities
Lease liabilities
Repayable within one year
Non-current liabilities
Lease liabilities
Repayable as follows:
Between one and two years
Total lease liabilities
The movements in total lease liabilities during 2021 and 2020 were as follows:
At 1 January
Interest on lease liabilities
Lease payments
At 31 December
2021
€’000
2020
€’000
502
502
–
–
502
2021
€’000
824
22
(344)
502
334
334
490
490
824
2020
€’000
1,138
30
(344)
824
Following the adoption of IFRS 16 in 2019, the Company has recognised a lease liability in respect of the lease of its central support office
property. On initial application of IFRS 16 the lease liability and related right-of-use asset were determined by discounting the lease payments
over the expected remaining term of the lease at a discount rate of 2.6% reflecting the Group’s incremental borrowing rate at 1 January 2019.
The undiscounted remaining contractual cash flows at 31 December 2021 were as follows:
As at 31 December 2021
Lease liability
Contractual cash flows
Total
€’000
(515)
6 months
or less
€’000
(172)
6-12
months
€’000
(343)
The undiscounted remaining contractual cash flows at 31 December 2020 were as follows:
Contractual cash flows
Total
€’000
(858)
6 months
or less
€’000
(172)
6-12
months
€’000
(172)
As at 31 December 2020
Lease liability
158
1-2
years
€’000
–
1-2
years
€’000
(514)
2-5
years
€’000
–
2-5
years
€’000
–
11. Trade and Other Payables
Trade payables
Accruals
Amounts due to subsidiary undertakings
VAT liability
Payroll taxes
2021
€’000
271
6,346
16,290
19,726
476
43,109
2020
€’000
97
2,937
16,290
14,552
638
34,514
12. Financial Instruments
The carrying value of the Company’s financial assets and liabilities, comprising amounts due from and to subsidiary undertakings,
other receivables, cash and cash equivalents, trade payables and accruals are a reasonable approximation of their fair value.
(a) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Company’s amounts due from subsidiary undertakings and cash and cash equivalents.
The carrying amount of financial assets represents the maximum credit exposure.
Exposure to credit risk
Company management, in conjunction with the Board, manages the risk associated with cash and cash equivalents by depositing funds
with a number of Irish financial institutions and AAA rated international institutions.
The amounts owed by subsidiaries have been reviewed and no credit losses are expected based on the financial position of subsidiaries.
In circumstances where a subsidiary had a net liability position at year end management assessed the future economic benefits expected
to be generated by that subsidiary to ensure balances were recoverable. As a result, no expected credit loss provision has been recognised.
The maximum amount of credit exposure is therefore:
Amounts due from subsidiary undertakings
Cash and cash equivalents
2021
€’000
621,596
1,031
622,627
2020
€’000
635,303
3,031
638,334
Expected credit losses in relation to all financial assets are immaterial.
(b) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are
settled by delivering cash or other financial assets. The Company’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 Company’s reputation.
The Company monitors the level of expected cash inflows on receivables together with expected cash outflows on trade and other payables
and commitments. All trade and other payables at 31 December 2021 are considered current with the expected cash outflow equivalent to
their carrying value.
CAIRN HOMES PLC ANNUAL REPORT 2021
159
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2021
12 Financial Instruments continued
(b) Liquidity risk continued
Financial liabilities due in less than one year
Trade payables and accruals
Amounts due to subsidiary undertakings
Lease liabilities
Financial liabilities due after more than one year
Lease liabilities
Available funds:
Cash and cash equivalents
Revolving credit facilities undrawn
2021
€’000
6,617
16,290
502
23,409
–
23,409
2020
€’000
3,034
16,290
334
19,658
490
20,148
1,031
194,000
195,031
3,031
140,000
143,031
The Company has access to the Group’s revolving credit facilities (see Note 29 of the consolidated financial statements). As a result the
Directors expect that the Company will meet all of its obligations as they fall due on the basis that there is expected to be sufficient liquidity
available to the Company for the period beyond one year from the date of approval of these financial statements.
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted
and include contractual interest payments.
31 December 2021
Trade payables and accruals
Amounts due to subsidiary undertakings
16,290
(16,290)
(16,290)
Lease liabilities
502
(515)
(172)
23,409
(23,422)
(23,079)
31 December 2020
Trade payables and accruals
Amounts due to subsidiary undertakings
16,290
(16,290)
(16,290)
Lease liabilities
824
(858)
(172)
20,148
(20,182)
(19,496)
The company is not exposed to significant currency risk or interest rate risk.
Contractual cash flows
Carrying
amount
€’000
Total
€’000
6 months
or less
€’000
6-12
months
€’000
1-2
years
€’000
2-5
years
€’000
>5
years
€’000
6,617
(6,617)
(6,617)
–
–
(343)
(343)
–
–
–
–
–
–
–
–
–
–
–
–
Contractual cash flows
Carrying
amount
€’000
Total
€’000
6 months
or less
€’000
6-12
months
€’000
1-2
years
€’000
2-5
years
€’000
>5
years
€’000
3,034
(3,034)
(3,034)
–
–
(172)
(172)
–
–
(514)
(514)
–
–
–
–
–
–
–
–
Relevant disclosures on Group financial instruments and risk management are given in Note 29 of the consolidated financial statements.
13. 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 26 of the consolidated financial statements). During the year the Company had the following transactions with
its subsidiary undertakings:
• Cairn Homes Construction Limited, management fee income €1.4 million (2020: €1.2 million).
• Cairn Homes Properties Limited, management fee income €14.6 million (2020: €5.8 million).
For amounts due from and to subsidiary undertakings please refer to Note 6 and Note 11.
Key management personnel compensation is set out in Note 25 of the consolidated financial statements.
160
14. Events after the Reporting Period
On 13 January 2022, the Company commenced a €75 million share buyback programme. In total, in the period from 13 January 2022
to 22 March 2022, the Company repurchased 31,336,127 shares at a total cost of €38.8 million.
On 03 March 2022, the Company proposed a final 2021 dividend of 2.8 cent per ordinary share. This final dividend will be paid on 17 May 2022
to shareholders on the record date of 22 April 2022. Based on the ordinary shares in issues at 22 March 2022, the amount of dividends
proposed is €20.1 million. However, in view of the ongoing share buyback programme it is not possible to precisely determine the total
amount at this stage.
15. Approval of Financial Statements
The financial statements were approved by the Board of Directors on 25 March 2022.
CAIRN HOMES PLC ANNUAL REPORT 2021
161
FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT Solicitors
A&L Goodbody
IFSC
25-28 North Wall Quay
Dublin 1
Eversheds Sutherland
One Earlsfort Centre
Earlsfort Terrace
Dublin 2
Pinsent Masons LLP
30 Crown Place
Earl Street London
EC2A 4ES
Beauchamps
Riverside Two
Sir John Rogerson’s Quay
Dublin 2
Principal Bankers/Lenders
Allied Irish Banks plc
10 Molesworth St
Dublin 2
Ulster Bank Ireland DAC
33 College Green
Dublin 2
Barclays Bank Ireland plc
One, 2 Molesworth Place
Dublin 2
Pricoa Private Capital
One London Bridge
8th Floor
London
SE1 9BG
COMPANY INFORMATION
Directors
John Reynolds (Non-Executive Chairman)
Michael Stanley (Chief Executive Officer)
Shane Doherty (Chief Financial Officer)
Gary Britton (Non-Executive)
Giles Davies (Non-Executive)
Linda Hickey (Non-Executive)
Alan McIntosh (Non-Executive)
David O’Beirne (Non-Executive)
Orla O’ Gorman (Non-Executive)
Julie Sinnamon (Non-Executive)
Secretary and Registered Office
Tara Grimley
7 Grand Canal
Grand Canal Street Lower
Dublin 2
D02 KW81
Registrars
Computershare Investor Services (Ireland) Limited
3100 Lake Drive
Citywest Business Campus
Dublin 24
D24 AK82
Auditor
KPMG
Chartered Accountants
1 Stokes Place
St. Stephen’s Green
Dublin 2
Website
www.cairnhomes.com
Contact Information
7 Grand Canal
Grand Canal Street Lower
Dublin 2
D02 KW81
T: +353 1696 4600
E: info@cairnhomes.com
www.cairnhomes.com
162
NOTES
CAIRN HOMES PLC ANNUAL REPORT 2021
163
NOTES
164
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CAIRN HOMES PLC
7 Grand Canal
Grand Canal Street Lower
Dublin 2
D02 KW81
T: +353 1696 4600
E: info@cairnhomes.com
www.cairnhomes.com