Crest Nicholson Holdings Annual Report (2011)

CREST NICHOLSON
DIRECTORS
REPORT AND
ACCOUNTS
31st OCTOBER 2011
KEY PERFORMANCE INDICATORS

FINANCIAL AND BUSINESS
SUSTAINABILITY
56.4m
82%
(2010: 47.3m)
(2010: 78%)
Operating profit
28.6%
Gross profit margin
(2010: 27.5%)
40.5m
Net profit/(loss)
(2010: (27.6)m)
42.8m
Net debt
(2010: 303.9m)
14,722
Short-term land bank units

(2010: 13,615)
14,259
Strategic land bank units

(2010: 16,726)
6,256m
Land bank gross development

value (GDV)
(2010: 6,381m)
Homes built on Brownfield land
38%
Homes delivered to Code

for Sustainable Homes
level 3 and above
(2010: 15%)
89%
Waste diverted from landfill

(2010: 84%)
63%
Reduction in Annual Injury

Incidence rate since 2008
(2010: 33%)
5-star
Customer service
independent rating
(2010: 5-star)
9/10
Independently surveyed
people would recommend
Crest to a friend
(2010: 9/10)
The Group selects KPIs

against which to measure
delivery of its strategy and
both financial and nonfinancial targets.
Operating profit is a key indicator of
the health of the business operation
and together with gross operating
margin reflects both the scale and
quality of profits in the business.
Net profit after tax measures the
amount of profit (or loss) in the year
attributable to equity shareholders.
Net debt represents interest-bearing
loans and borrowings, net of cash and
when compared with other amounts
and balances provides an indication
of the scale and serviceability of
loan obligations.
The future health of the business
depends on the value created
through the development of land.
Land bank measures show both the
amount of consented land controlled
by the business to secure nearterm production and the pipeline of
strategic land opportunities from
which the business expects to derive
significant future benefit.
A sustainable business is underpinned
by delivering on non-financial as well
as financial measures. Health and
safety performance is a measure both
of risk reduction and investment in
best practice. Our environmental
KPIs represent Crest Nicholsons
focus on carbon reduction and
resource management.
COVER IMAGE: Kaleidoscope, Cambridge
ABOVE IMAGE: Elements, Epsom
Registered no. 6800600
WELCOME
Chairmans Statement
Chief Executives Review
Financial Review
Risks and Uncertainties
12
Sustainability Review
14
WHO WE ARE AND WHAT WE DO
BUSINESS REVIEW
Crest Nicholson is a leading developer of sustainable housing

and mixed-use communities. We aim to improve the quality of
life for individuals and communities by providing better homes,
workplaces, retail and leisure spaces in which people aspire to live,
work and play now and in the future.
BUSINESS REVIEW
We operate within the southern half of the UK, with an outstanding consented land
bank delivering high quality design-led developments generating strong returns and
offering the prospect of significant equity growth.
On a day-to-day basis we operate through four geographically regional divisions
and a Regeneration business each with their own management boards which are
accountable to the Operating Board of Crest Nicholson PLC.
We are a privately owned Company, with almost 50 years of heritage and experience.
This and other financial and non-financial reports, including our full Sustainability
Report, can be downloaded from www.crestnicholson.com/reports
GOVERNANCE
Board of Directors
21
Directors Report
23
Corporate Governance
25
Statement of Directors
Responsibilities
28
GOVERNANCE
FINANCIALS
Independent Auditors Report 30
CREST NICHOLSON HOLDINGS LIMITED DIRECTORS REPORT AND ACCOUNTS 2011
31
Consolidated Statement
of Comprehensive Income
32
of Changes in Equity
32
of Financial Position
33
Consolidated Cash Flow

Statement
35
Notes to the Consolidated

Financial Statements
36
Company Balance Sheet
61
Notes to the Company

62
FINANCIALS
Consolidated Income
Statement
Chairmans Statement
Chief Executives Review
Financial Review
Risks and Uncertainties
12
Sustainability Review
14
BUSINESS REVIEW
BUSINESS
REVIEW
BUSINESS REVIEW
GOVERNANCE
FINANCIALS
IMAGE: Port Marine, Portishead
CHAIRMANS STATEMENT
Home-buyer confidence and mortgage availability are critically important factors in

determining the health of the housing market. Whilst the former appears to be robust
in the southern half of the UK where Crest Nicholson operates, the macro-economic
environment is still uncertain and mortgage availability remains constrained.
However, the Government has recognised the importance of house building to the
economy and has taken steps both to stimulate housing delivery and to make finance
available, particularly to first time buyers.
The new Government has also committed to reducing the regulatory burden and in
particular to simplifying the planning process. However, little progress has been seen
on deregulation and the much needed new National Planning Policy Framework faces
considerable obstacles to being enacted.
William Rucker,
Chairman
BUSINESS REVIEW
2011 has been an exciting and fulfilling year for Crest Nicholson.
Not only has the Group continued to trade strongly, but it has also
achieved a consensual financial restructuring, leaving the Group
with sound finances, a strong balance sheet and a firm base upon
which to develop and grow the business.
Our continued focus on

excellence in design, customer
satisfaction and sustainability all
underpin our delivery of desirable
places and our ability to deliver
industry-leading value for
our shareholders.
Nevertheless, Crest Nicholsons commitment to constructive dialogue with all

stakeholders places it in a good position to embrace localism and this continuous
engagement with our stakeholders remains a key focus for the business.
Our continued focus on excellence in design, customer satisfaction and sustainability
all underpin our delivery of desirable places and our ability to deliver industry-leading
value for our shareholders.
I would like to thank my predecessor, Alan Goldman, and Non-Executive Director

Andrew Coppel for the significant contributions that they have made to the Group over
the period of their stewardship, in particular for the part they played in securing a
consensual debt restructuring and thereby positioning the Group for future success.
Special thanks must go to Malcolm McCaig who continues to serve following the
Groups debt restructure. I also welcome Pam Alexander to the Board and believe
that the qualities and experience that she brings firmly underpin the Groups
business strategy.
The contribution of an
outstandingly resilient workforce,
who have taken the Group forward
despite the challenges of the
economic downturn, has been an
important factor both in delivering
results and in encouraging
investors into the business.
GOVERNANCE
The contribution of an outstandingly resilient workforce, who have taken the Group
forward despite the challenges of the economic downturn, has been an important
factor both in delivering results and in encouraging investors into the business. The
Board recognises the contribution of our employees and openly thanks them for this.
Crest Nicholson is now well positioned to capitalise on the recovery in the UK house
building sector. It has an established heritage, strong short-term and strategic
land banks and an experienced management team, focused on continuing to
deliver margin and profit growth. Although a time of opportunity, it is also a time of
caution against an uncertain macro-economic outlook and we must face into these
challenges. However, trading conditions remain positive for the Group and I am
delighted to be Chairman of Crest Nicholson in this period.
William Rucker
Chairman
FINANCIALS
BUSINESS REVIEW
CHIEF EXECUTIVES REVIEW

OUR FINANCIAL RESULTS
Our results show the business is performing strongly with higher average house
prices, continued growth in profit and turnover albeit on slightly lower volumes
reflecting the change in mix from apartments to houses. Sales in the summer
period were strong and reservations in the last financial quarter were significantly
ahead of the equivalent period last year.
We are implementing our medium-term growth strategy with a continuing focus on
delivering well-designed, sustainable homes and mixed-use communities within
the southern half of the UK. This operational focus on the southern half of the
country has helped to support a higher than average sales price, improvements in
margin and steady demand.
Stephen Stone,
Chief Executive
We have a track record of

outstanding design and
commitment to sustainability
in its widest sense.
GOVERNANCE
2011 was a year in which we continued to deliver strong operational results and
which culminated with a successful financial restructuring, leaving us with a strong
balance sheet and renewed borrowing facilities.
We have been successful in replenishing our land bank, with plots acquired and
contracted more than covering legal completions in the year. Coupled with a strong
strategic land bank we now have resources in place to drive volume growth in 2012
and beyond.
THE MARKET
The housing market has been relatively stable in our areas of operation; there is
a housing shortage year-on-year and the country is building new homes at half
the rate it needs. Crest Nicholsons focus on design and placemaking delivers
environments that attract strong demand and good margins. Our open market
average selling prices are moving strongly ahead, driven by an increasing proportion
of family homes in the unit mix and some price appreciation.
New London division created,

to capitalise on market
opportunities
FINANCIALS
However we need to be alert in the face of a potentially fragile and uncertain

economic environment. Sluggish GDP growth (or reductions), the as-yet unresolved
Euro debt crisis and rising unemployment remain of concern. Despite ongoing low
interest rates, mortgage availability and affordability remain as key constraints.
The Government recognises that in stimulating the housing market and creating
new homes, it is also stimulating job creation. Crest Nicholson welcomes
Government initiatives such as FirstBuy, Get Britain Building and the new
mortgage indemnity product NewBuy, which underpin and support purchasers.
IMAGE: Blenheim Square, North Weald
BUSINESS REVIEW
With first time buyers accounting for around a quarter of our transactions, these
schemes remain fundamental to ensuring that those at the lower end of the
housing ladder are not excluded from the market.
The Government remains committed to requiring that all homes submitted for
planning in 2016 will be zero carbon. However, some realism is emerging in
recognising the importance of cost per tonne of carbon in delivery and the rate at
which the industry, and its supply chain, can deliver design change while ensuring
customer acceptability.
One key to maintaining growth in the sector will be the successful implementation
of the proposed National Planning Policy Framework which will release resources
from dealing with unnecessarily complex and costly regulations to concentrate
time in the planning process where it matters delivering a sustainable built
environment that meets the needs and desires of local communities and helps
to address the national housing shortage.
Despite the challenging economic conditions, Crest Nicholson continues to
perform well. We have a track record of outstanding design and commitment to
sustainability in its widest sense. This continuing and long-term understanding
of the issues equips us to take a leading role in the localism agenda and achieve
consensual planning outcomes with community focus.
Our Business Strategy

A Sound Business Poised for Growth
GOVERNANCE
Throughout the economic downturn Crest Nicholson maintained solid short- and
long-term land banks, a robust business operation and our sales rates remained
amongst the highest in the sector.
As the financial restructuring drew to a conclusion, the senior management team,
which had ensured the strong underlying health of the business, was able to turn
attention to medium- and long-term strategies for growth. Our medium-term
strategy is to grow the business steadily and by 2016 reach a level of delivery similar
to that achieved before the economic downturn, thereby materially increasing the
number of homes made available.
Reaffirming Core Values

We have interrogated, challenged and reinforced our core values which we
believe maximise benefit for all our stakeholders customers, communities,
local authorities, government, investors and our employees:
rm value creat
g-te
ion
Lon
foc
u
Custo
me
Our
Ou
r
Su
co n
tin uing jo u
rn
st a i n a b il it y
S u cce ss
Providing an outstanding customer

experience from start to finish,
delivering quality homes and realising
high levels of customer satisfaction.
Design
Reinforcing an aspirational design-led
approach and creating vibrant, mixeduse communities where people want
to live, work, learn and play.
Sustainability
Integrating the three pillars of
social, economic and environmental
sustainability to deliver a legacy of
enduring value to communities and
to the business.
FINANCIALS
The Crest
Difference
ur
n
sig
De xpertise
rs
Customers
Design
We are maintaining our commitment that all new sites will be evaluated against the
CABE Building for Life approach with a view to achieving Silver Standard. We regret
the hiatus caused by the reshaping of CABE by the Government and we are reviewing
the Building for Life criteria with the help of independent experts to make this
commitment come to life.
As we progress along the zero carbon agenda, it becomes even more essential that
we maintain this focus on design technological advance alone does not deliver
enduring places and we are introducing a wider range of customer satisfaction
criteria into our technical design and product selection processes.
Gold Building for

Life Standards
92%
BUSINESS REVIEW
We believe that outstanding design is essential to creating the legacy of a successful

sustainable community. We have created the role of Group Design Director to ensure
we maintain and evolve our standards of design and placemaking. We remain proud
to hold eight Gold Building for Life Standards more than any other developer and
exemplified at our ICON development in Somerset.
of our purchasers would

recommend Crest
Nicholson to a friend
Customers
Delivering an outstanding customer experience means we must ensure that our
people have the skills to take the strain of the purchase process. We are continuing
with our Award-winning training for our sales teams to ensure they maintain current
knowledge and confidence in guiding our customers through a successful and
smooth transaction. We will also seek to develop innovative mortgage products with
the financial community, reflecting the substantially reduced running costs of a new
build home.
GOVERNANCE
Our research into how customers interact with their homes, particularly the
innovative low carbon homes of the future, will ensure we deliver homes where
it is our customers who get the full benefits of low running costs and a modern
lifestyle. That is what placing the customer at the heart of our journey means and
is one reason why, for the second year running, we achieved the highest 5-star
rating in the Home Builders Federation (HBF) independent Customer Satisfaction
survey reflecting the accolade that 92% of our purchasers would recommend
Crest Nicholson to a friend.
Sustainability
Crest Nicholsons track record of embedding sustainability in the round
into its operations has been a major part of delivering strong underlying
business fundamentals.
Our commitment to innovation in business processes and in designing the homes
of the future underpins the delivery of our strategy and this year we delivered
38% of our homes to Code for Sustainable Homes level 3 and above (2010: 15%).
We have maintained our commitment to the ground breaking AIMC4 Consortium
working with two other developers, external experts and our supply chain to
research, develop and deliver design-led, affordable low carbon homes of the
future. In 2012 these homes will be completed at our Noble Park site in Epsom
and working with the homeowners we will carry out a comprehensive programme
of post-occupancy evaluation.
FINANCIALS
We remain committed to the fundamentals of environmental sustainability with

strong risk management processes, targets to reduce our carbon footprint and a
systematic programme of resource management to eliminate waste at all stages of
the production process. This year we further increased the amount of waste diverted
from landfill to 89% (2010: 84%).
Partnering
Partnerships remain crucial to the way in which we work and over the last 12 months
we have further developed strong links with our customers, contractors, suppliers
and even our competitors through a series of collaborations into developing new, low
carbon homes.
63%
reduction in
Annual Injury Incidence
rate since 2008
BUSINESS REVIEW
The health, safety and wellbeing of employees, contractors and everyone who comes
into contact with Crest Nicholson is of paramount importance. Last year we decided
to raise the bar again in working towards exceptional safety performance. This focus
has resulted in a 44% reduction in Annual Injury Incidence Rate over the year a
reduction of 63% since 2008. We have now reinforced our health and safety team
with two new members to ensure we continue this step change in risk reduction.
These new roles have been widened to encompass environmental matters thus
developing the synergies of combined safety and environmental risk management
and continuous improvement.
44
apprentices developing just

under 10% of our workforce
Crest Nicholson welcomes the localism agenda and we have a talented skillbase with
unrivalled experience and a serious commitment to community engagement. Good
partnerships with the public sector are also essential for taking on challenging sites
which successfully leave a legacy of job creation and new sustainable communities.
We thrive on this challenge, including difficult brownfield sites (circa 70% of our
portfolio is brownfield) to promote regeneration and bring life back to communities.
Park Central, Birmingham, has been part of our Regeneration Portfolio for over ten
years and has recently had its 1,000th occupation.
Key to this change is the way we interact with our supply chain. We have introduced
long-term Group-wide partnering with all core suppliers with shared risk and reward
as the basis of our business model from consultants and architects, to technical
designers, product suppliers and all sub-contractors.
GOVERNANCE
The Crest Nicholson Operational Board Director for Production is leading a change
programme so that The Crest Difference is reflected at every stage of delivery. The
zero carbon agenda and the continuing growth and complexity of regulation mean
that the early incorporation of intelligent and, above all, flexible technical and design
solutions is essential.
We are transforming the way we work to deliver a modern professional production

process where excellence is designed in and error designed out.
Investing in People
An essential part of ensuring the underlying good health of the business was the
retention of core skills and expertise while downsizing and we are now in the process
of growing our skill base across management, central support services, operations
and site. For our people, its been a very disruptive four years through which they
maintained enthusiasm and pride in Crest Nicholson and we, the Operating Board,
are proud of their commitment. Part of examining our core values has been a
reaffirmation of our strong commitment to our employees and re-igniting involvement
and information sharing. We have also refreshed our performance review process
with an emphasis on growing talent from within.
The creation of our new London Division and our investment in senior central core
skills in planning, design, technical and production will underpin our growth. We have
also reinforced our Strategic Land and Regeneration teams.
We are extremely proud to be developing 44 apprentices just under 10% of

our headcount.
FINANCIALS
We take great pride in helping young people to gain the experience and on-the-job
knowledge they need to develop in our industry. There are a huge number of talented
young people out there and it is a real priority for us to nurture that talent and invest
in developing these individuals alongside our own business growth prospects.
AWARD-WINNING CREDENTIALS
Our focus on high standards of governance, sustainable delivery and transparent

reporting to GRI standards has ensured that we remain a consistent top performer in
the Next Generation industry benchmark. We were delighted to be named Sustainable
Housebuilder of the Year 2011 at the Housebuilder Awards and that our highly
sustainable scheme Icon, Somerset, was highly commended in the category Best
low or zero carbon initiative. These accolades firmly underpin the design quality and
sustainable ethos which Crest Nicholson is striving to replicate across its portfolio.
Consistent Top Performer
BUSINESS REVIEW
The breadth of our experience and the skill base of our employees are continually
reflected in an increasing portfolio of awards, which not only represent the quality
of our end product but also the high standards we endeavour to achieve throughout
the business.
We remain privileged to be one of only two developers to hold the Queens Award for
Enterprise in Sustainable Development.
Once again our people have excelled in their roles and eleven Site Managers received
NHBC Quality Awards, four went on to achieve the award of Seal of Excellence and
one Regional Award was gained. The continued priority given to achieving the highest
standards of health and safety was once again recognised in the NHBC Health
and Safety awards, with Port Marine being for the second year running a Regional
Winner. As part of our community focus, all Crest Nicholson sites participate in the
Considerate Constructors Scheme and our Port Marine development, The Moorings,
achieved runner up as Most Considerate Site at the Schemes first national awards
in 2011.
OUTLOOK
In the short term, the business will continue to face challenges with subdued
prices and difficulties in customers obtaining finance. Over the longer term, the
fundamentals of the housing market remain strong, underpinned by a structural
imbalance between supply and demand.
GOVERNANCE
The volume of housing completions in 2012 is forecast to grow as more sales outlets
come on-stream and the new London Division becomes fully operational. We will
continue to make land acquisitions that meet our criteria, but have a strong shortterm land bank and can therefore be judicious in selecting sites to develop.
The successful restructuring of the business means that we have committed

investors and a sound balance sheet. Along with our strengthened management
team, a focus on partnering and continued commitment to excel in design, customer
focus and sustainability we have a solid platform for future profitability.
We are excited by the opportunities and challenges that lie ahead.
Stephen Stone
Chief Executive
FINANCIALS
BUSINESS REVIEW
FINANCIAL REVIEW
GOVERNANCE
RESULTS
Results for the financial year ended 31st October 2011 reflect a good trading
performance in a market that has proved to be pleasingly resilient in spite of an
increasingly difficult economic outlook.
12.2%
increase in sales revenues
Sales revenues are up 12.2% on 2010, with both housing and commercial revenues
improving over the prior year.
Gross margins improved by 1.1% in the year, to 28.6% (2010: 27.5%) on the back
of favourable house price movements along with good cost controls.
Group operating profits were 56.4m (2010: 47.3m), at a margin of 17.7%
(2010: 16.6%).
40.5m
Group profit after financing

costs and taxation
Bank finance costs include a 63.6m amortisation of bank debt fair value discount
(2010: 61.5m). Following the financial restructuring of the Group described below,
finance costs in the forthcoming year are expected to be comprised only of bank
interest charges and other financial expenses.
FINANCIALS
A deferred tax asset has also been recognised in the year on the grounds that the
financial restructuring of the Group makes realisation of the related tax benefit
through future taxable profits probable.
After financing costs and taxation, the Group recorded a profit of 40.5m
(2010: loss of 27.6m).
The business has continued to exert strong controls over working capital, generating
cash from operations of 8.9m (2010: 38.1m) while continuing to invest in business
growth. At the end of the year, cash and cash equivalents held amounted to
121.9m (2010: 129.8m).
IMAGE: Centenary Quay, Southampton
FINANCIAL POSITION
In all, 368m of debt and accrued interest was converted to equity, comprising
200m of senior debt, plus 150m of subordinated PIK debt and 18m of accrued
or capitalised interest. As a result of this restructuring, the strong operating
performance in the year and other changes as set out in the Consolidated Statement
of Changes in Equity on page 32, the Consolidated Statement of Financial Position at
31st October 2011 shows net assets of 287.0m (2010: net liabilities of 99.0m).
As part of the restructuring process, senior banking facilities were put in place to fund
the working capital requirements of the Group, extending to September 2015. Details
of the revised facility are set out in Note 20.
The restructuring of the Group balance sheet has put the Group on a more
sustainable financial footing and will create a strong platform for business growth.
HOUSING
Total Crest Nicholson housing completions in 2011 were 1,520 units, down 5.5% on
the 1,609 completions achieved in 2010. The reduction in unit volumes reflected a
change in unit mix, with 2011 including a higher proportion of houses, which typically
sell at a higher average selling price but at a slower rate. Unit volumes were also
adversely impacted by a weaker selling environment in the autumn of 2010, which
meant that the Group entered the year with a lower level of forward sales.
Forward sales at 31st October 2011 for 2012 and later years amounted to 142.2m
(2010: 99.1m), which includes 23% of forecast 2012 open market housing sales
(2010: 19%).
of debt and accrued interest

was converted to equity
287m
net assets
224,000
average selling price for open

market units in 2011
28.6%
Group gross profit margin

GOVERNANCE
Average selling prices for open market units in 2011 were 224,000 compared to
198,000 in 2010. This 13.1% increase reflected both the change in unit mix towards a
greater proportion of housing and sales price appreciation.
368m
BUSINESS REVIEW
During the year, a major financial restructuring of the Crest Nicholson Group was
successfully concluded, which has resulted in a significantly strengthened balance
sheet at 31st October 2011.
MIXED-USE COMMERCIAL
The Group has a portfolio of commercial development opportunities, principally
on mixed-use sites, which are delivered as part of a master plan for the overall
development. As a result, revenues from commercial can vary significantly from year
to year. Revenues in 2011 of 30.6m (2010: 2.4m) primarily reflect the final account in
respect of the town centre re-development at Camberley, Surrey.
MARGINS
Group gross profit margin for the period was 28.6% (2010: 27.5%), after sales and
marketing costs. The Group secured modest increases in open market prices during
the year, while maintaining controls over build costs to ensure that pricing benefits
flowed through to margin improvement.
FINANCIALS
10
LAND BANK
2011
Units
Short-term housing
2010
GDV m
Units
GDV m
14,772
3,011
13,615
2,605
285
281
Total short term
14,772
3,296
13,615
2,886
Strategic land
14,259
2,960
16,726
3,495
Total under contract
29,031
6,256
30,341
6,381
Short-term commercial
The short-term housing land bank has increased by 1,157 plots during 2011, as
site acquisitions and conversions from the strategic land bank exceeded legal
completions and other revisions in the year. The GDV of the short-term land bank has
increased by 14.2%.
41
active outlets, an
increase of 20%
GOVERNANCE
At the 2011 level of Crest Nicholson turnover, the short-term housing portfolio
represents over nine years supply, although the growth intentions for the business
would result in a lower figure. The Group is much focused on ensuring that the
business has an appropriate number of sites open for sales at any one time. At the
end of October 2011, the Group was selling from 41 active outlets (2010: 34), an
increase of 20%.
BUSINESS REVIEW
The Groups contracted land bank is summarised in terms of units and gross
development value (GDV) as follows:
The increase in length of the short-term land bank reflects the conversion of over
2,200 plots from the strategic land bank, which has resulted in a corresponding
reduction in the latter at 31st October 2011.
Our strategic land bank continues to provide a source of longer-term development
value as sites are converted to short-term portfolio at the prevailing market price or
at agreed discounts to reflect the promotional investment of the Group. The Group
continues to promote a number of sites for future development and also to engage
with landowners to maintain a strong pipeline of strategic options.
IMAGE: Merchant Quay, Gloucester Docks
FINANCIALS
11
BUSINESS REVIEW
RISKS AND UNCERTAINTIES

GOVERNANCE
Managing risk is a core element of executive management; a

risk management framework must be proactive and dovetail with
normal business processes, to drive business benefits. Making it
part of normal business therefore means:
having a hierarchy of risk assessments
focusing on key risks
linking the assessment of risks to consequential actions
monitoring controls
developing mitigating actions
establishing ownership.
Crest Nicholson operates a risk

management process with a key
risks matrix at Group Board,
Divisional Boards and Business
Improvement Workgroup
(functional) levels.
Crest Nicholson operates a risk management process with a key risks matrix at
Group Board, Divisional Boards and Business Improvement Workgroup (functional)
levels. The risk matrices generated are reviewed and updated at least annually and at
any time when significant new risks emerge.
12
FINANCIALS
The business has a business assurance function which reports to the Audit
Committee. The Audit Committee reports to the Board and the external Auditors
perform controls work as part of the annual audit.
IMAGE: Harbourside, Bristol
RISK
MITIGATION
Macro-economic climate
Consumer confidence is undermined

by a worsening of current economic
conditions, leading to a rise in
unemployment and/or pessimism
about employment prospects.
Keep economic environment under

review, to ensure the business can
respond appropriately to changes in
trading conditions.
Mortgage lending
Mortgage availability will continue to

be constrained, particularly for first
time buyers requiring higher loan-tovalue products.
Monitor lending product availability,

work to increase finance availability
for developments and seek to assist
purchasers through the use of
schemes such as the Governments
HomeBuy Direct and emerging
Mortgage Indemnity scheme.
Manage cash flow by matching
production to finance availability.
Planning uncertainty
The introduction of the principles

of localism to planning matters
and the ongoing debate in relation
to the National Planning Policy
Framework (NPPF), are likely to
cause uncertainty and delay, as local
authorities weigh the benefits of
housing development against other
pressures.
Develop understanding of the new

approach to planning, working
closely with key regulators and
decision makers and incorporating
planning environment uncertainties
into assessment of land
opportunities.
Recruitment and retention
Ability to recruit and retain staff with

the requisite skills to secure and
deliver sustainable developments
that generate appropriate returns.
Ensure Company is a desirable

employer, with competitive
packages, clear career progression,
good communication, training and
review processes.
Regulation
Changes to Government Policy

on housing and planning gain,
increasing regulation, cost and
delay will render schemes and
land buying unviable.
Monitor closely changes/proposed

changes in regulatory environment
and make representations as
necessary.
Injury to persons, potential loss of

life, serious damage to sites and
environment. Reputational damage
and costs.
Executive Board leadership and

scrutiny of health, safety and
environment. Dedicated teams
in place, with comprehensive
procedures and controls.
Health, safety and environmental
GOVERNANCE
AREA
BUSINESS REVIEW
The principal risks facing Crest Nicholson in 2012 include, but are not limited to,
those set out in the table below:
Ensure financial appraisals include

new regulatory cost assessments.
Social and environmental risk are analysed in more detail in our comprehensive 2011 Sustainability Report.
FINANCIALS
13
BUSINESS REVIEW
SUSTAINABILITY REVIEW
GOVERNANCE
Our approach to sustainability is an integral part of Crest

Nicholsons business strategy, driving value through innovation,
high quality design and excellence in customer service. This
approach, which on every scheme carefully balances economic
prosperity with social progress and environmental stewardship,
underpins business success.
In 2010 we undertook a materiality assessment to identify the most significant
issues for our business, from which emerged the four key themes of our
sustainability strategy:
Keeping the customer as the focus of the business
Partnering to deliver sustainable communities
Where good design meets low carbon
A responsible and ethical business
Chris Tinker,
Regeneration Chairman,
Board Director responsible
for Sustainability
Crest Nicholsons sustainability

goals relate directly to our
business strategy and
priorities.
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FINANCIALS
Crest Nicholsons sustainability strategy is driven by the Operational Board, which

regularly reviews performance. The Sustainability Business Improvement Workgroup
comprising of two board members and appropriate members of the senior
management team is responsible for thought leadership, development of policies,
goals and targets and supporting the Operational Business Improvement Workgroups
to put strategy into practice. Embedding sustainability thinking into the everyday
business processes remains a priority and a continuing challenge, given
the rate of change facing the industry.
IMAGE: Grosvenor Place, Swindon
In the short and medium term, our focus will remain on developing cost-effective,
design-led low carbon homes where people want to live and driving resource
efficiency through our business and supply chain. Our commitment to the unique
collaborative R&D project, AIMC4 will in 2012 see the delivery on our Noble Park
development at Epsom of the first Code 4 homes using fabric and building services
only. The diverse learning from this work has resulted in new products being brought
to market which address the technical elements of the low carbon agenda whilst
ensuring quality and reliability for our customers. In 2012 we expect the technical
innovations to cascade through the business, along with resource management and
build efficiencies based on Lean delivery.
Whilst efficient energy utilisation and carbon emission reduction are crucial
elements, the environmental dimension of a sustainable community must also
address waste reduction, water consumption, materials selection and the impact on
local ecology. The natural resources upon which we are heavily reliant are in decline,
energy and commodity costs are predicted to rise and we must find new ways to
design and build homes within our environmental limits. For example, through our
work with the WWF Forest & Trade Network, we can assure our customers that over
99% of our timber is satisfactorily audited to source and that we intend to increase
progressively the proportion of FSC certificated product.
99%
of our timber is satisfactorily

audited to source
Looking ahead, it is critical

that we understand the future
needs of our customers as we
deliver the homes of the future
in a rapidly changing legislative
environment.
GOVERNANCE
Looking ahead, it is critical that we understand the future needs of our customers
as we deliver the homes of the future in a rapidly changing legislative environment.
The specification requirements of the 2016 zero carbon timeline mean that in
addition to a variety of novel energy solutions, the design of new homes is gradually
evolving, becoming more airtight and requiring mechanical ventilation systems.
This, in turn, places increasing demands upon the homeowner who will require a
good understanding of the new products and systems in order that they can fully
realise lower energy costs.
In the short and medium

term, our focus will remain on
developing cost-effective, designled low carbon homes where
people want to live and driving
resource efficiency through our
business and supply chain.
BUSINESS REVIEW
Our commitment to improve the quality of life for those living in our new homes and
communities remains central to everything we do. Building a community starts with
a thorough understanding of the particular needs and desires of the local people
and other local stakeholders. We do this through a continuous programme of honest
communication and engagement, building trusting relationships with a wide range of
stakeholders localism in practice.
We are the first major developer to have carried out a research programme of postoccupancy evaluation with our homeowners living in low carbon homes at our Avante
development near Maidstone. This work, together with further similar studies, will
underpin our understanding of customer needs and desires and their reaction to
living in low carbon homes. We are delighted to report that feedback at Avante was
extremely positive. We will carry out further post-occupancy research in particular
to understand how customers respond to the different energy solutions (microrenewables, district heating etc) deployed to deliver low carbon developments.
These studies provide much needed evidence to help inform future building
regulations and we are working with government and other stakeholders to set
practical and deliverable standards for the future.
We publish an annual Sustainability Report in which we present our progress

including an open discussion of our forward strategy and the challenges we face
and last year we were once more a leader in the Next Generation Corporate
Responsibility Benchmark.
We welcome feedback and comments. www.crestnicholson.com/aboutus/reports
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FINANCIALS
To maintain a sustainable business requires a longer-term view and the successful

financial restructuring in 2011 leaves the Group with a solid platform upon which
to develop and grow. Looking ahead, in 2012 our Executive Board and senior
management team will challenge themselves to look beyond 2016 to identify
the risks and opportunities on the horizon up to 2020. This will build upon our
existing foundations and develop a long-term sustainability strategy to lever future
commercial advantage.
KEEPING THE CUSTOMER AT THE HEART OF THE BUSINESS
Over the past two years, we have been working hard to realign our processes and
foster a culture centred on delivering excellence for our customers. High levels
of customer satisfaction rely upon excellent design, sound construction, quality
materials and a professional, courteous service. This focus on the customer starts
from the very outset at land acquisition stage through to long after legal completion
and remains central to every element of the development process.
The needs and desires of our

customers must remain the focus
of our decisions. We want people
to enjoy living in their new home
and for the benefits of sustainable
living to become reality.
BUSINESS REVIEW
Customers are increasingly looking for better value for money and have higher
expectations of both the design quality of new homes and the service they receive.
We are investing more time and resources in understanding what our customers want
and we are starting to see this drive real change through our business. It is clear from
our studies that homeowners enjoy living in the new higher specification homes, but it
is also clear that for them to realise the benefits fully, developers must enhance home
induction and handover processes.
We are working with lenders and valuers to try and realise the value from the
attributes of new low carbon homes in valuations and mortgage products.
Focus 2011
what we achieved
Delivering excellence in customer service

and care
Achieved a 5-star rating in the HBF Customer Satisfaction Survey for the
second year.
92% of our customers said they would recommend us to a friend.
Began the long-term programme of post-occupancy feedback to drive
customer focused innovation.
Trialled new induction and handover processes, improved our
homeowner guides.
Continued to work with the Zero Carbon Hub on customer engagement for
Tomorrows new Homes.
Developing value for our customers
GOVERNANCE
Ensuring the sustainable homes of the

future are customer focused
Work with lenders resulted in a first mortgage product for low carbon homes,
branded AIMC4.
Continued engagement with RICS on valuation of new low carbon homes.
IMAGE: Customer service visit to

our customers
FINANCIALS
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BUSINESS REVIEW
Partnering to Deliver Sustainable Communities

A sustainable community is a place that adds to peoples quality of life, with a range of
different homes at different prices, all of which have been designed to meet different
lifestyles. Importantly, it must also have been created with respect for the local
environment and local heritage.
We also allocate significant time to support community initiatives in the areas in

which we operate and ensure that we respect the communities as we deliver their
new built environment.
Focus 2011
what we achieved
Responding to local needs
In-depth consultation, along with detailed planning and design, ensure

we offer housing choice and a suitable mix of tenure which will create
neighbourhoods that cater for a wide range of households and socioeconomic groups.
A strategy to understand how our homes

perform and embed new continuous
improvement cycles
Completed our first Building Performance Evaluation studies with Oxford

Brookes University and funding from TSB at our Avante scheme in Kent and
One Brighton.
GOVERNANCE
We are maintaining our commitment that all new schemes will target the silver
standard of the CABE Building for Life evaluation.
Building a community starts

with a thorough understanding
of the particular needs and
desires of the local people and
other local stakeholders.
Introduced enhanced feedback learning processes into the design process.

Prepared further funding bids with University College, London to study
schemes with district heating.
Delivering responsibly and with care
and consideration
An average score of 33 in the Considerate Constructors Scheme against the

Best Practice level of 32.
Building for Life
All new schemes will target silver standard as a minimum.
FINANCIALS
17
IMAGE: Kilnwood Vale Public Consultation Day
Where Good Design meets Low Carbon
To deliver the Crest Difference we must achieve excellence in production. The goal
is greater efficiency and an end-to-end production process that will deliver an
excellent product for our customers and give us a competitive advantage. Partnering
with panels of selected consultants and suppliers has been core to this approach,
stimulating greater collaboration and innovation and is already yielding shared
benefits in new products, delivery processes and resource management to eliminate
waste in all its forms. Price is not the driver shared realised value and excellence
for our customers is the goal.
Technological advance alone

does not deliver enduring
places and we are introducing
a wider range of customer
satisfaction criteria into our
technical design and product
selection processes.
BUSINESS REVIEW
The UK Government has maintained the Zero Carbon Timeline, albeit reducing the
amount of carbon offset required over and above emission reduction on-site. We have
continued to invest in customer focused innovation to develop cost-effective delivery of
low carbon homes.
We have continued to work openly with Government, the Zero Carbon Hub, the
HouseBuilders Federation and the UK Green Building Council to share knowledge and
assist in informing the development of the next generation of building regulations.
Focus 2011
what we achieved
Delivery
535 (34%) of homes delivered were to Code for Sustainable Homes level 3,
58 (4%) to Code 4 and a further 429 (27%) to EcoHomes standards.
Innovation
Continued to drive innovation in cost-effective low carbon homes via the

AIMC4 Consortium.
Developed partnering with suppliers to continue development of cost-effective

innovation in products and delivery processes.
Started the transfer of knowledge into design of low carbon schemes across
the Group.
Regulation
GOVERNANCE
5 exemplar homes will be build complete in early 2012 at our Noble Park
development.
Continued to contribute to the Zero Carbon Hub workgroups.

Shared knowledge from the AIMC4 project and the Building Performance
Evaluation/Post-Occupancy Evaluation studies with Government to work in
partnership in developing the new building regulations.
Measurement and continuous improvement
Set targets for reduction in carbon emissions through energy and water use
and have a focus on resource management and elimination of waste.
In 2011, reduced our office energy use by 7.5%.
We report our carbon footprint annually according to The Greenhouse Gas
Protocol, our data is externally assured.
Responsible procurement
We increased our requirements on suppliers in terms of environmental best

practice for reduction in waste and environmental risk.
We continue to implement our Sustainable Procurement Policy, partnering
with our suppliers to provide quality and shared value.
Over 99% of our timber supply is audited as legally sourced and assured
through our membership of the World Wildlife Fund, Forest & Trade Network.
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FINANCIALS
We will increase our procurement of FSC supply.
A Responsible and Ethical Business

Crest Nicholson has an
outstandingly resilient workforce,
who have taken the Company
forward despite the challenges of
the economic downturn.
BUSINESS REVIEW
In 2011 we significantly increased engagement with employees both to ensure that

our strategy and targets were fully communicated at all levels and to ensure we
harnessed all of the talents in Crest Nicholson to drive success. We invested in
skills development for our sales, customer service and management teams and
introduced a range of new incentives not simply performance related bonuses, but
ongoing recognition for those who make outstanding contributions Going the Extra
Mile. We continue to encourage a culture of openness, creativity and continuous
professional development that rewards their effectiveness and loyalty.
Crest Nicholson has continuously improved its health and safety performance and
this year saw further advances. Our employees, contractors and suppliers have all
been engaged in our management of health and safety so that it remains focused
on risk reduction. Our aim is to promote a safety-first culture by raising awareness
and encouraging positive attitudes and behaviours. We have increased the health
screening options available to all employees, as well as the specialist screening for
forklift operatives.
We continue to publish an annual climate change report and set long- and mediumterm targets to reduce our carbon emissions. Eliminating waste, both material and
time, is a major contribution to resource conservation and further reduction in carbon
emission and has formed a key part of our new partnering relationship with suppliers.
Focus 2011
what we achieved
Employee engagement
Much improved communication of business strategy and achievements

through roadshows and using a variety of media and cascade briefings.
Developing expertise
8.5 hours of training per employee.

Number of apprentices increased from 26 to 44.
GOVERNANCE
Employee survey allowing us to respond with a range of improved working

conditions and welfare support and to improve engagement with
corporate objectives.
5 Graduate trainees.
98% audited Construction Skills carding for employees and sub-contractors.
Health and Safety for all
63% reduction in annual injury incidence rate since 2008.

44% improvement over the past year.
Reinforced the health and safety team with two new members and integrated
environmental site management into the roles.
Zero complaints, prosecutions and fines and 200 days of training (2010: 194).
Continued development of risk assessments and health screening.
Reducing our carbon emissions
Reduced office energy use by 7.5%.

Targeting a 25% reduction by 2020 over 2007 levels.
8% reduction in car fleet cap for CO2 emissions.
Car allowance incentive for vehicles with <130g CO2/km 101 employees
now benefiting, increasing by 60% in the year.
Further reduced waste to landfill 2011: 11% (2010: 16%).
Partnered with our groundworkers to maximise re-use of spoil.
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FINANCIALS
Conserving resources
GOVERNANCE
GOVERNANCE
21
Directors Report
23
Corporate Governance
25
Statement of Directors
Responsibilities
28
BUSINESS REVIEW
Board of Directors
GOVERNANCE
FINANCIALS
20
IMAGE: Avante, Coxheath
BOARD OF DIRECTORS
The Holding Board is responsible for business strategy, risk and oversight of the
Operating Board which has responsibility for the day-to-day operation of the business
and developing strategy for the Holding Boards input and approval. The Holding
Board has three Non-Executive Directors and two Executive Directors.
BUSINESS REVIEW
The Crest Nicholson Group operates through its Holding Board with
day-to-day executive operation conducted by the Operating Board.
HOLDING BOARD
William Rucker
Chairman
William Rucker was appointed as Chairman in September 2011. He is CEO of Lazard
in the UK, Chairman of Quintain Estates & Development PLC and Non-Executive
Director of Rentokil-Initial.
Malcolm McCaig
Non-Executive Director
Pam Alexander, OBE

Non-Executive Director
GOVERNANCE
Malcolm McCaig joined the Board in April 2009. He is Chairman of Kent Reliance
Provident Society. He also holds a number of other independent Director roles,
including London Capital Group, Unum, Renaissance Capital, Jubilee and The House
of Lords. He is a former partner with Deloitte as well as Ernst & Young and is a
technical specialist in risk management, finance, corporate governance, regulatory
compliance, IT and change management.
Pam Alexander, the former Chief Executive of the South East England Development
Agency (SEEDA), joined the Board of Crest Nicholson on 5th December 2011. Pam
has more than 35 years of experience in the public, private and not-for-profit sectors,
having worked closely with boards and government ministers on strategic policy and
direction across numerous areas including regeneration and housing, innovation,
growth and economic development. Pam is also a Non-Executive Director of the
Design Council, the Academy of Urbanism and Brighton Dome and Festival Ltd.
Stephen Stone
Chief Executive
Stephen Stone joined the Group in 1995 and was appointed to the Board in 1999
becoming Chief Executive on 1st November 2005. Stephen is the Board member
responsible for health and safety. He is a Chartered Architect with over 30 years
experience in the construction and house building industry and in 2011 he joined the
Home Builders Federation (HBF) Board.
Patrick Bergin
Group Finance Director
21
FINANCIALS
Patrick Bergin joined the Group in 2006 and became Group Finance Director in 2011.
He is a Chartered Accountant with 17 years experience and has worked in a range of
industries and companies including Touche Ross (now Deloitte), Reed Elsevier and
The BOC Group, in various finance roles.
OPERATING BOARD
Chief Executive
Stephen Stone joined the Group in 1995 and was appointed to the Board in 1999
becoming Chief Executive on 1st November 2005. Stephen is the Board member
responsible for health and safety. He is a Chartered Architect with over 30 years
experience in the construction and house building industry and in 2011 he joined the
Home Builders Federation (HBF) Board.
BUSINESS REVIEW
Stephen Stone
Patrick Bergin
Group Finance Director
Patrick Bergin joined the Group in 2006 and became Group Finance Director in 2011.
He is a Chartered Accountant with 17 years experience and has worked in a range of
industries and companies including Touche Ross (now Deloitte), Reed Elsevier and
The BOC Group, in various finance roles.
Chris Tinker
Regeneration Chairman
Steve Evans
Group Production Director
GOVERNANCE
Chris Tinker, a Chartered Builder, joined Crest Estates in 1988. Through the 90s he
was instrumental in the acquisition and master planning of several of the Groups
major residential projects, leading to his appointment in 2002 as Managing Director
of Crest Nicholson Developments. Chris joined the Group Board in 2007 and is now
Regeneration Chairman and the Board member responsible for sustainability.
Steve Evans was appointed to the Board in January 2011. He had previously served
with the Group from 1995 for nine years, being appointed to Production Director and
then Managing Director of the Eastern Region. Prior to rejoining the Group in 2009 he
was Chief Executive of the Anderson Group.
Robin Hoyles
Group Land and Planning Director
Robin Hoyles joined the Group in May 2011 and was appointed to the Board in
December 2011. He was previously with Countryside Properties for more than
17 years as Managing Director of their Special Projects division. He is a solicitor
and prior to joining Countryside was in private practice in London.
Kevin Maguire
Company Secretary
22
FINANCIALS
Kevin Maguire joined the Group in March 2008 and became Company Secretary in
January 2009. Having a legal background, he is a Chartered Secretary and previously
held roles in retail, pensions and technology.
Directors Report
BUSINESS REVIEW
The Directors present their annual report with the consolidated

accounts of the Company for the year ended 31st October 2011.
PRINCIPAL ACTIVITY AND BUSINESS REVIEW

During the year to 31st October 2011, the principal activity of the Group was the design
and delivery of sustainable housing and mixed-use communities. The Chairmans
statement, the Chief Executive review and the Financial Review discuss the
performance and position of the Group.
Results and dividend

The Groups consolidated profit after taxation for the financial year ending
31st October 2011 was 40.5m (2010: loss 27.6m).
No dividends were declared or paid in the financial year and the Directors do not
propose a dividend.
Share capital
The Company has 10,000,000 ordinary shares, 70,000 A shares, 1,300 B shares,
6,957 C shares, 30,000 D shares and 18,000 deferred shares in issue at
31st October 2011. A further 4,450 B shares were issued on 15th November 2011.
Movements in the share capital of the Company are shown in Note 19.
Directors
The Directors during the year were:
Mr AI Goldman
(Resigned 13th September 2011)
Mr WJ Rucker
(Appointed 14th September 2011)
GOVERNANCE
Chairman
Non-Executive Directors
Mr AM Coppel CBE
Mr MG McCaig
Ms PE Alexander OBE
(Appointed 5th December 2011)
Executive Directors
Mr S Stone
(Resigned 19th January 2011)
Mr NC Tinker
Mr SP Evans
(Appointed 1st January 2011;

Resigned 13th September 2011)
Mr PJ Bergin
(Appointed 1st October 2011)
23
FINANCIALS
Mr DP Darby
Donations
EMPLOYMENT POLICY
The Group maintains and operates an Equal Opportunities Policy. The Group aims
to ensure at all times that all employees and prospective employees and individuals
receive equal and proper treatment regardless of age, gender, creed, medical
conditions, sexual orientation or disability.
BUSINESS REVIEW
During the year the Group made donations to charities of 2,000 (2010: 2,000).
Employees have continued to support the Groups nominated charity, The Variety
Club, and have raised 57,000 (2010: 11,000) to support this cause during the year.
There were no political donations made.
SUSTAINABILITY
The Group publishes a Sustainability Report, which it submits to external
benchmarking. The Groups Sustainability Report can be found earlier in this
Annual Report and Accounts and on the Groups website.
HEALTH AND SAFETY

The Group believes and acknowledges that health and safety is a critical part of
managing our business and staff. Policy management, inspection and training are
carried out by the Groups health and safety team under Stephen Stone, who is the
Director responsible for health and safety.
ESSENTIAL CONTRACTS
DISCLOSURE OF INFORMATION TO AUDITORS

The Directors who held office at the date of approval of this Directors Report
confirm that, so far as they are each aware, there is no relevant audit information of
which the Companys Auditors are unaware; and each Director has taken all the steps
that he ought to have taken as a Director to make himself aware of any relevant
audit information and to establish that the Companys Auditors are aware of
that information.
GOVERNANCE
The Group does not have any contracts that are considered alone to be essential to
the business of Crest Nicholson.
AUDITORS
Pursuant to section 487 of the Companies Act 2006, the Auditors will be deemed to be
reappointed and KPMG Audit Plc will therefore continue in office.
By Order of the Board
KM Maguire
Secretary
28th February 2012
24
FINANCIALS
Crest House
Pyrcroft Road
Chertsey
Surrey
KT16 9GN
CORPORATE GOVERNANCE
BOARD OF DIRECTORS
BUSINESS REVIEW
Structure of the Board

The composition of the Board is designed to ensure effective management and
control of the Group, taking account of the devolved operating structure and ensuring
that the shareholders interests are properly represented. It was restructured on
13th September 2011 and now consists of the Group Chief Executive and Group
Finance Director and three Non-Executive Directors (including an independent
Chairman). The Non-Executive Directors demonstrate a range of experience and
professional backgrounds that enables them to make a valuable contribution to the
Group and to provide independent judgement and challenge to the Board.
Following the restructure of the Group, the Board of the Company reflects the Holding
Company nature, focussing on the overall oversight of the Group with day-to-day
running of the Group conducted by the Operating Board of Crest Nicholson PLC.
Biographies of the members of the Board and the Operating Board are set out on
pages 21 and 22.
Board effectiveness
The Board is responsible for setting and monitoring Group strategy, reviewing
performance, ensuring adequate funding, formulating policy on key issues and
reporting to the shareholders.
GOVERNANCE
The Chairman is primarily responsible for overseeing the working of the Board. The
Chief Executive is responsible for the implementation of the strategy and policies set
by the Board and the day-to-day management of the Group in conjunction with the
Operating Board.
To enable the Board to discharge its duties, all Directors receive appropriate and
timely information, including briefing papers distributed in advance of Board meetings.
The Directors have access to the Company Secretary and may, at the Companys
expense, take independent professional advice and receive additional training as they
see fit. All new Directors participate in an induction training programme.
The Board evaluates its own performance from time to time.
The Board held ten meetings during the year, with the following attendance
by Directors:
Number of Directors
attending
Nov
2010
Dec
2010
Jan
2011
Mar
2011
Apr
2011
May
2011
Jun
2011
Jul
2011
Aug
2011
Sept
2011
6 of 6
6 of 6
6 of 6
6 of 6
6 of 6
5 of 6
6 of 6
6 of 6
6 of 6
3 of 3
COMMITTEES OF THE BOARD

Audit Committee
The Audit Committee comprises:
Malcolm McCaig
William Rucker
Alan Goldman (Chairman) resigned and William Rucker joined the Committee.
25
(Chairman)
FINANCIALS
Audit Committee
BUSINESS REVIEW
The Audit Committee is responsible for reviewing a wide range of financial matters,
including the annual financial statements and accompanying reports, Group internal
and external audit arrangements, accounting policies, internal control and the
actions and procedures involved in the management of risk throughout the Group.
The Audit Committee reviews annually the scope of the external Auditors work and
their fees. It also considers the Auditors independence which is ensured through a
variety of procedures including regular rotation of audit partners. Any non-audit fees
received by the Auditors in excess of 50% of the audit fee are pre-approved by the
Audit Committee.
The Audit Committee meets at least three times a year with the Auditors and is
attended, by invitation, by the Group Chief Executive, Group Finance Director and
other senior personnel as appropriate. The Company Secretary attends each
meeting. The Audit Committee met 3 times during the year, with full attendance
at all meetings.
Nominations Committee
The Group Nomination Committee comprises:
Nominations Committee
Malcolm McCaig
(Chairman)
William Rucker
Stephen Stone
GOVERNANCE
Andrew Coppel (Chairman) and Alan Goldman resigned and Malcolm McCaig and
William Rucker joined the Committee.
The Nominations Committee meets when necessary and is attended, by invitation, by
other senior personnel as appropriate. The Company Secretary attends each meeting.
It is responsible for reviewing the structure of the Board, giving consideration to
succession planning and for making recommendations to the Board with regard to
any changes. It is also responsible for identifying and nominating, for the approval of
the Board, candidates to fill Board vacancies as and when they arise.
Remuneration Committee
The Group Remuneration Committee comprises:
Remuneration Committee
Malcolm McCaig
(Chairman)
William Rucker
Stephen Stone
Andrew Coppel (Chairman) and Alan Goldman resigned and Malcolm McCaig and
William Rucker joined the Committee.
The Remuneration Committee meets at least once a year and is attended by the
Company Secretary. The Chief Executive, Company Secretary or other attendees are
not present when their own remuneration is discussed.
26
FINANCIALS
The Remuneration Committee is responsible for reviewing recommendations and

approving proposals in relation to annual salary increases, bonuses and incentive
programmes to be awarded to staff generally. The Committee also has discretion and
authority in respect of the remuneration of senior employees.
INTERNAL CONTROL
The Board is responsible for the Groups system of internal control and for reviewing
its effectiveness. This is designed to manage, rather than eliminate, the risk of not
achieving business objectives and can provide only reasonable and not absolute
assurance against material misstatement or loss.
BUSINESS REVIEW
The Groups remuneration strategy recognises the importance of attracting, retaining

and motivating executives of the appropriate calibre and experience to enhance the
performance and reputation of the Group. The size and complexity, as well as the
long-term nature of the business, are all important factors. The policy is to provide
competitive potential levels of compensation, benefits and incentive opportunities
within appropriate local markets.
The Board considers that there is a continuous process for identifying, evaluating and
managing significant risks faced by the Group in the course of its business, which
has been in place throughout the year and up to the date of approval of the Annual
Report and Accounts. This process is regularly reviewed by the Audit Committee and
the Board and is consistent with the internal control guidance for Directors in the
Combined Code.
A key part of the system of internal control is the delegation of management
responsibility for the Groups land and property investment, development and
operating activities, together with supporting functions, to Divisional management
teams as appropriate. The Groups Divisions have local operational management
boards, which oversee their operations with direct input and oversight from the
Operating Board. These operational management boards form an integral part of the
overall internal control process.
Risk management is a regular agenda item for all parts of the business with the
emphasis on continuous improvement. Each Regional Divisional board undertakes a
regular assessment of its exposure to financial, operational and strategic risks and
the measures that have been put in place to manage those risks. Significant risks
arising from Divisional assessments are monitored by the Group Operating Board,
the Audit Committee and the Board.
GOVERNANCE
Each Regional Division, Crest Nicholson Regeneration and the Holding Company
has management structures in place to enable effective decision making, supported
by documented procedures and a regular review of financial performance, including
comparisons against budget and forecasts.
The Board carried out its annual assessment of internal control for the year 2011 at
its meeting in October 2011 by considering reports from management and the Audit
Committee and taking account of events since 31st October 2010.
The Group has a Business Assurance function, which carries out reviews and reports
direct to the Audit Committee.
RELATIONSHIPS WITH SHAREHOLDERS AND LENDERS
27
FINANCIALS
Given the private ownership of the Group, the requirements of the Combined Code
to communicate with institutional shareholders are not relevant. All lenders and
shareholders receive monthly management information which includes key financial
performance information and narrative from the Chief Executive and the Group
Finance Director. The Annual Report and Accounts and non-financial reporting are
widely distributed through a variety of delivery channels and the Groups policy is
to maintain close contact during each financial year with shareholders
and stakeholders.
The Directors are responsible for preparing the Directors Report

and the Group and parent Company financial statements in
accordance with applicable law and regulations.
BUSINESS REVIEW
STATEMENT OF DIRECTORS
RESPONSIBILITIES IN RESPECT
OF THE DIRECTORS REPORT AND
THE FINANCIAL STATEMENTS
Company law requires the Directors to prepare Group and parent Company financial
statements for each financial year. Under that law they have elected to prepare the
Group financial statements in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the EU and applicable law and have elected to
prepare the parent Company financial statements in accordance with UK Accounting
Standards and applicable law (UK Generally Accepted Accounting Practice).
Under Company law the Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs of the Group
and parent Company and of their profit or loss for that period. In preparing each of the
Group and parent 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;
for the parent Company financial statements, state whether applicable UK

Accounting Standards have been followed, subject to any material departures
disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Group and the parent Company will continue
in business.
GOVERNANCE
for the Group financial statements, state whether they have been prepared in
accordance with IFRSs as adopted by the EU;
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the parent Companys transactions and disclose with
reasonable accuracy at any time the financial position of the parent Company and
enable them to ensure that its financial statements comply with the Companies Act
2006. They have general responsibility for taking such steps as are reasonably open
to them to safeguard the assets of the Group and to prevent and detect fraud and
other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate
and financial information included on the Companys website. Legislation in the UK
governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
FINANCIALS
28
FINANCIALS
FINANCIALS
30
Consolidated Income
Statement
31
32
32
33
Consolidated Cash Flow

Statement
35
Notes to the Consolidated

36
Company Balance Sheet
61
Notes to the Company

62
BUSINESS REVIEW
Independent Auditors Report
GOVERNANCE
FINANCIALS
29
IMAGE: Noble Park, Epsom
We have audited the financial statements of Crest Nicholson Holdings Limited for the year ended 31st October 2011 set out on
pages 31 to 65. The financial reporting framework that has been applied in the preparation of the Group financial statements is
applicable law and International Financial Reporting Standards (IFRSs) as adopted by the EU. The financial reporting framework
that has been applied in the preparation of the parent Company financial statements is applicable law and UK Accounting
Standards (UK Generally Accepted Accounting Practice).
BUSINESS REVIEW
INDEPENDENT AUDITORS REPORT TO

THE MEMBERS OF CREST NICHOLSON
HOLDINGS LIMITED
This report is made solely to the Companys members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the Companys members those matters we are required to
state to them in an Auditors 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 Companys members, as a body, for our audit work, for this report, or for
the opinions we have formed.
Respective Responsibilities of Directors and Auditors

As explained more fully in the Directors Responsibilities Statement set out on page 28, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit, and
express an opinion on, the financial statements in accordance with applicable law and International Standards on Auditing (UK and
Ireland). Those standards require us to comply with the Auditing Practices Boards (APBs) Ethical Standards for Auditors.
Scope of the Audit of the Financial Statements

A description of the scope of an audit of financial statements is provided on the APBs website at www.frc.org.uk/apb/scope/
private.cfm.
In our opinion:
the financial statements give a true and fair view of the state of the Groups and of the parent Companys affairs as at
31st October 2011 and of the Groups profit for the year then ended;
GOVERNANCE
Opinion on Financial Statements
the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the EU;
the parent Company financial statements have been properly prepared in accordance with UK Generally Accepted
Accounting Practice;
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other Matter Prescribed by the Companies Act 2006

In our opinion the information given in the Directors Report for the financial year for which the financial statements are prepared
is consistent with the financial statements.
Matters on which we are Required to Report by Exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if,
in our opinion:
adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been
received from branches not visited by us; or
the parent Company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of Directors remuneration specified by law are not made; or
WEJ Holland (Senior Statutory Auditor)

for and on behalf of KPMG Audit Plc, Statutory Auditor
Chartered Accountants
15 Canada Square
London
E14 5GL
28th February 2012
30
FINANCIALS
we have not received all the information and explanations we require for our audit.
CREST NICHOLSON HOLDINGS LIMITED
Consolidated Income
Statement
2011
2010
319.1
284.4
Cost of sales
(227.8)
(206.3)
Gross profit
91.3
78.1
Administrative expenses:
(35.1)
(31.0)
0.2
0.2
Note
Revenue continuing activities
Other operating income

Operating profit continuing activities
56.4
47.3
Financial income
8.9
8.2
Nominal bank interest charges
(19.0)
(14.1)
Amortisation of bank debt fair value discount
(63.6)
(61.5)
(82.6)
(75.6)
(8.3)
(8.8)
(82.0)
(76.2)
(1.4)
1.5
(27.0)
(27.4)
67.5
(0.2)
40.5
(27.6)
BUSINESS REVIEW
For year ended 31st October 2011
Bank finance costs:
Net financing expense

Share of (loss)/profit of associates and jointly controlled entities
using the equity accounting method, net of tax
11
Loss before tax

Income tax
Profit/(loss) for the year attributable to equity shareholders
GOVERNANCE
Other financial expenses
FINANCIALS
31
Profit/(loss) for the year
2011
2010
40.5
(27.6)
BUSINESS REVIEW
Other comprehensive income:

Cash flow hedges: effective portion of changes in fair value
Actuarial (loss)/gain on defined benefit pension schemes
(0.2)
(10.2)
6.2
Deferred tax recognised on actuarial loss
8.7
Change in fair value of available for sale assets
2.1
0.2
Other comprehensive income for the year net of income tax
0.6
6.2
41.1
(21.4)
Total comprehensive income attributable to equity shareholders

The notes on pages 36 to 60 form part of these financial statements.
GOVERNANCE
Balance at 31st October 2009
Share
capital
Share
premium
Cash flow
hedging
reserve
Retained
earnings
Total
0.2
(77.8)
(77.6)
Loss for the year
(27.6)
(27.6)
Actuarial gain on pension scheme
6.2
6.2
Change in fair value of available for sale asset
0.2
0.2
Cash flow hedges: effective portion of changes in fair value
(0.2)
(0.2)
(99.0)
(99.0)
40.5
40.5
(10.2)
(10.2)
Deferred tax on actuarial loss
8.7
8.7
Change in fair value of available for sale asset
2.1
2.1
Financial restructuring
10.0
240.3
94.6
344.9
10.0
240.3
36.7
287.0

32
FINANCIALS
Profit for the year

Actuarial loss on pension scheme
2011
2010
Note
29.0
29.0
BUSINESS REVIEW
at 31st October 2011
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
10
2.9
4.0
Investments
11
2.3
3.7
Available for sale assets
12
26.8
21.1
Deferred tax assets
17
75.2
136.2
57.8
Current assets
13
394.2
361.9
14
46.7
39.6
121.9
129.8
562.8
531.3
699.0
589.1
Cash and cash equivalents

Total assets
LIABILITIES
Non-current liabilities
Interest bearing loans and borrowings
15
(162.7)
(433.7)
Trade and other payables
16
(24.7)
(25.0)
Retirement benefit obligations
21
(34.5)
(36.1)
Provisions
18
(11.1)
(12.8)
(233.0)
(507.6)
GOVERNANCE
Inventories
Trade and other receivables
Current liabilities
Interest bearing loans and borrowings
15
(2.0)
Trade and other payables
16
(170.3)
(174.0)
Provisions
18
(6.7)
(6.5)
(179.0)
(180.5)
(412.0)
(688.1)
287.0
(99.0)
Total liabilities
Net assets/(liabilities)
FINANCIALS
33
of Financial Position (continued)
2011
2010
Note
Share capital
19
10.0
Share premium account
19
240.3
BUSINESS REVIEW
SHAREHOLDERS EQUITY
Retained earnings
36.7
(99.0)
287.0
(99.0)
These financial statements were approved by the Board of Directors on 28th February 2012 and were signed on its behalf by:
S Stone
GOVERNANCE
PJ Bergin
Directors
FINANCIALS
34
Consolidated CASH
FLOW STATEMENT
2011
2010
40.5
(27.6)
BUSINESS REVIEW
CASH FLOWS FROM OPERATING ACTIVITIES

Profit/(loss) for the year
Adjustments for:
Depreciation charge
1.2
1.2
Net finance charges
82.6
75.6
1.4
(1.5)
(67.5)
0.2
58.2
47.9
Share of loss/(profit) of joint ventures

Taxation
Operating profit before changes in working capital and provisions
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventories
Decrease in trade and other payables
Interest paid
Net cash (outflow)/inflow from operating activities
1.9
24.1
(9.9)
(35.8)
8.9
38.1
(9.8)
(10.8)
(0.9)
27.3
(0.1)
(0.4)
7.9
GOVERNANCE
Cash generated from operations
(7.1)
(32.3)
CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property, plant and equipment
Loans to joint ventures
Increase in available for sale assets
(3.8)
(6.3)
(3.9)
1.2
Net proceeds from the issue of share capital
0.3
Debt arrangement and facility fees
(3.4)
(0.6)
Net cash flow from financing activities
(3.1)
(0.6)
Net (decrease)/increase in cash and cash equivalents
(7.9)
27.9
Net cash (outflow)/inflow from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
129.8
101.9
Cash and cash equivalents at end of the year
121.9
129.8
35
FINANCIALS
Cash and cash equivalents at the beginning of the year
NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS
ACCOUNTING POLICIES
Crest Nicholson Holdings Limited (the Company) is a company incorporated in the UK.
The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the Group)
and include the Groups interest in associates and jointly controlled entities. The parent company financial statements present
information about the Company as a separate entity and not about its Group.
BUSINESS REVIEW
The Group financial statements have been prepared and approved by the Directors in accordance with International Financial
Reporting Standards as adopted by the EU (Adopted IFRSs). The Company has elected to prepare its parent company financial
statements in accordance with UK GAAP; these are presented on pages 61 to 65.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these
Group financial statements.
Judgements made by the Directors, in the application of these accounting policies, that have significant effect on the financial
statements and estimates with a significant risk of material adjustment in the next year are discussed in Note 25.
Measurement Convention
The financial statements are prepared in accordance with the historical cost convention, except for certain financial instruments
and available for sale assets, which are carried at fair value.
Basis of Preparation Going Concern
The Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future. The
Directors reviewed detailed financial forecasts and covenant compliance covering the period November 2011 to October 2012
and summary financial forecasts for the following two years. The Groups borrowing facilities have been extended to 2015 and
the Group holds net cash (total cash less overdrafts) of 122m at 31st October 2011. For these reasons, the Directors consider it
appropriate to prepare the financial statements of the Group on a going concern basis.
GOVERNANCE
During the year, a major financial restructuring of the Crest Nicholson Group was successfully concluded, which has resulted in
a significant increase in the equity on the Group balance sheet. Debt with a book value of 359m was equitised, leaving the Group
with 150m of long-term financing.
Consolidation
The consolidated accounts include the accounts of Crest Nicholson Holdings Limited and entities controlled by the company (its
subsidiaries) at the reporting date. Control is achieved where the company has the power to govern the financial and operating
policies of an entity so as to obtain benefits from its activities. The profits and losses of subsidiaries acquired or sold during the
year are included as from or up to their effective date of acquisition or disposal.
On acquisition of a subsidiary, all of the subsidiarys separable, identifiable assets and liabilities existing at the date of acquisition
are recorded at their fair values reflecting their condition at that date. All changes to those assets and liabilities and the resulting
gains and losses that arise after the Group has gained control of the subsidiary are charged to the post acquisition income
statement or statement of comprehensive income.
FINANCIALS
36
ACCOUNTING POLICIES (continued)
Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Groups interest in the fair value of the
identifiable assets and liabilities of the acquired entity at the date of the acquisition. Goodwill arising on acquisition of subsidiaries
and businesses is capitalised as an asset. Goodwill allocated to the strategic land holdings is recognised as an asset, being
the intrinsic value within these holdings in the acquired entities, which is realised upon satisfactory planning permission being
obtained and sale of the land.
BUSINESS REVIEW
Goodwill is assessed for impairment at each reporting date by performing a value in use calculation, using a discount factor
based on the Groups pre-tax weighted average cost of capital. It is tested by reference to the proportion of legally completed
plots in the period compared to the total plots that are expected to receive satisfactory planning permission in the remaining
acquired strategic land holdings, taking account of historic experience and market conditions. Any impairment loss is recognised
immediately in the income statement.
Joint Ventures
A joint venture is an undertaking in which the Group has a participating interest and which is jointly controlled under a
contractual arrangement.
Where the joint venture involves the establishment of a separate legal entity, the Groups share of results of the joint venture
after tax is included in a single line in the consolidated income statement and its share of net assets is shown in the consolidated
balance sheet as an investment.
Where the joint venture does not involve the establishment of a legal entity, the Group recognises its share of the jointly controlled
assets and liabilities and income and expenditure on a line by line basis in the balance sheet and income statement.
Revenue comprises the fair value of the consideration received or receivable, net of value-added tax, rebates and discounts but
excludes the sale of properties taken in part exchange.
Revenue is recognised once the value of the transaction can be reliably measured and the significant risks and rewards of
ownership have been transferred.
GOVERNANCE
Revenue and Profit Recognition
Revenue is recognised on house sales at legal completion. Revenue is recognised on land sales and commercial property sales
from the point of unconditional exchange of contracts. Where the conditions for the recognition of revenue are met but the Group
still has significant acts to perform under the terms of the contract, revenue is recognised as the acts are performed.
Profit is recognised on a plot-by-plot basis, by reference to the margin forecast across the related development site.
For affordable housing sales in bulk, revenue is recognised upon practical completion and when substantially all risks and rewards
of ownership are transferred to the buyer.
Provision is made for any losses foreseen in completing a site as soon as they become apparent.
Exceptional Items
Exceptional items are those significant items that are separately disclosed by virtue of their size or incidence to enable a full
understanding of the Groups financial performance.
Taxation
Income tax comprises current tax and deferred tax. Income tax is recognised in the income statement except to the extent that it
relates to items recognised directly in equity, in which case it is also recognised in equity.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are recognised for all
taxable temporary differences, except those exempted by the relevant accounting standard and deferred tax assets are recognised
to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.
37
FINANCIALS
Current tax is the expected tax payable on taxable profit for the period and any adjustment to tax payable in respect of previous
periods. The Groups liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the
balance sheet date.
Dividends
Dividends are recorded in the Groups financial statements in the period in which they are paid.
Property, Plant and Equipment

Property, plant and equipment are initially recognised at cost.
BUSINESS REVIEW
Plant, vehicles and equipment are depreciated on cost less residual value on a straight line basis at rates varying between
10% and 33% determined by the expected life of the assets.
Freehold land is not depreciated.
Available for Sale Assets

Available for sale assets are initially recognised at fair value. Changes in fair value relating to the expected recoverable amount
are recognised in the income statement; changes in fair value arising from a change of discount factor are recognised directly in
equity, until the asset is divested.
On disposal of these assets, the difference between the carrying value and the consideration received plus cumulative fair value
movements previously recognised in equity is recognised in the income statement.
Leases
A finance lease is a lease that transfers substantially all the risks and rewards incidental to the ownership of an asset; all other
leases are operating leases.
Inventories
Inventories are valued at the lower of cost and net realisable value. Land includes land under development, undeveloped land and
land option payments. Work in progress comprises direct materials, labour costs, site overheads, associated professional fees and
other attributable overheads.
GOVERNANCE
Assets acquired under finance leases are capitalised and the outstanding future lease obligations are shown in creditors.
Operating lease rentals are charged to the income statement on a straight line basis over the period of the lease.
Land inventories and the associated land creditors are recognised in the balance sheet from the date of unconditional exchange
of contracts. If land is purchased on deferred settlement terms then the land and the land creditor are discounted to their fair
value. The land creditor is then increased to the settlement value over the period of financing, with the financing element being
charged as interest expense through the income statement.
Cash and Cash Equivalents

Cash and cash equivalents are cash balances in hand and in the bank. For the purpose of the cash flow statement, bank
overdrafts are considered part of cash and cash equivalents as they form an integral part of the Groups cash management.
Offset arrangements across Group businesses are applied to arrive at the net cash figure.
Retirement Benefit Costs

The Group operates a defined benefit pension scheme (closed to new employees and to future service accrual since May 2010) and
also makes payments into a defined contribution scheme for employees.
The Group has applied the requirements of IAS 19 (revised), recognising expected scheme gains and losses via the income
statement and actuarial gains and losses recognised in the period they occur directly in equity through the statement of
recognised income and expense.
Payments to the defined contribution schemes are accounted for on an accruals basis.
38
FINANCIALS
In respect of defined benefit schemes, the net obligation is calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior periods, such benefits measured at discounted present value,
less the fair value of the scheme assets. The discount rate used to discount the benefits accrued is the yield at the balance sheet
date on AA credit rated bonds that have maturity dates approximating to the terms of the Groups obligations. The calculation is
performed by a qualified actuary using the projected unit method. The operating and financing costs of such plans are recognised
separately in the income statement; service costs are spread systematically over the lives of employees and financing costs are
recognised in the periods in which they arise.
Financial Instruments
Trade Receivables
Trade receivables which do not carry any interest are stated at their nominal amount less impairment losses.
Trade Payables
Trade payables are generally stated at their nominal amount; land payables with deferred settlement terms are recorded initially
at their discounted present value, with interest being charged to the income statement over the duration of the deferred payment.
BUSINESS REVIEW
Borrowings
Interest bearing bank loans and overdrafts are measured initially at fair value, net of direct issue costs. Finance charges are
accounted for on an accruals basis in the income statement using the effective interest method and are added to the carrying
amount of the instrument to the extent that they are not settled in the period in which they arise or included within
interest accruals.
Derivative Financial Instruments and Hedge Accounting
Derivative financial instruments are recognised at fair value. The fair value of swaps is the estimated amount that the Group
would receive or pay to terminate the swap at the balance sheet date, taking into account the current creditworthiness of the
swap counterparties.
Where the derivative instrument is deemed an effective hedge over the exposure being hedged, the derivative instrument is treated
as a hedge and hedge accounting applied. Under a fair value hedge the change in the fair value of the derivative is recognised in
the income statement and offsets the movement in fair value of the hedged item. Under a cash flow hedge, gains and losses on
the effective portion of the change in the fair value of the derivative instrument are recognised directly in equity.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies
for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in reserves is retained in
reserves until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or
loss recognised in reserves is transferred to net profit or loss for the period.
GOVERNANCE
Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting and any ineffectiveness in the
hedge relationship are recognised in the income statement as they arise.
Provisions
A provision is recognised in the balance sheet 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. If the effect is
material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and, where appropriate, the risks specific to the liability.
Impact of Standards and Interpretations in Issue but not yet Effective

The below improvements/amendments to Standards will be effective for the Groups 2012 financial statements. The Directors do
not anticipate any material impact on the Group.
Amendments to IFRIC 14 IAS 19 The limit on a defined benefit assets, minimum funding requirements and their interaction
(mandatory for year commencing on or after 1st January 2011).
Revised IAS 24 Related Party Disclosure (mandatory for year commencing on or after 1st January 2011).
Improvements to IFRSs (issued May 2010) (mandatory for the year commencing on or after 1st July 2010 or 1st January 2011).
Amendments to IFRS 7 Financial Instruments: Disclosures (mandatory for year commencing on or after 1st July 2011).
Amendments to IAS 12 Deferred tax: Recovery of Underlying Assets (mandatory for year commencing on or after 1st January
2012; not yet endorsed).
REVENUE
There is no Group revenue in geographical markets outside the United Kingdom.

No segmental information has been presented as the Directors consider that there is only one business and geographical segment.
39
FINANCIALS
IFRS 9 Financial Instruments (mandatory for year commencing on or after 1st January 2013).
EXCEPTIONAL ITEMS
BUSINESS REVIEW
There are no exceptional items in the current year.
OPERATING PROFIT
Operating profit from continuing activities is stated after charging the items set out below:
Staff costs (Note 5)

Depreciation
2011
2010
31.8
25.6
1.2
1.2
Operating lease rentals:

Hire of plant and machinery
0.2
0.2
Other including land and buildings
4.1
4.1
2011
2010
000
000
38
36
112
112
26
247
34
Auditors remuneration

Audit of these financial statements
Audit of financial statements of subsidiaries pursuant to legislation
Other services relating to corporate restructuring
Other services relating to taxation
GOVERNANCE
In addition to the Auditors remuneration disclosed above, fees of 2,000 (2010: 2,000) were paid to the Groups Auditors by the
Crest Nicholson Money Purchase pension scheme in respect of the audit of the scheme.
Amounts paid to the Companys Auditor in respect of services to the Company, other than the audit of the Companys financial
statements, have not been disclosed as the information is required instead to be disclosed on a consolidated basis.
STAFF NUMBERS AND COSTS
2011
2010
Number
Number
494
464
AVERAGE NUMBER OF PERSONS EMPLOYED BY THE GROUP

Development
40
FINANCIALS
The Directors consider all employees of the Group to be employed within the same category of Development.
STAFF NUMBERS AND COSTS (continued)
2011
2010
Wages and salaries
27.3
23.0
Social security costs
3.2
2.7
Other pension costs
1.3
(0.1)
31.8
25.6
STAFF COSTS
BUSINESS REVIEW
Key management comprises the Holdings and Operating Boards, as they are considered to have the authority and responsibility
for planning, directing and controlling the activities of the Group. Details of Directors remuneration, pension and share based
payments are as follows:
2011
2010
000
000
2,397
1,915
DIRECTORS REMUNERATION
Aggregate emoluments
During the year, payments totalling 2.4m were made to former Directors of Crest Nicholson Holdings Limited as compensation
for loss of office.
2011
2010
000
000
1,019
841
117
113
GOVERNANCE
Retirement benefits have accrued to no (2010: three) Directors under the Crest Nicholson defined benefit scheme as this scheme
closed in 2010. The aggregate value of company defined benefit contributions paid for Directors was nil (2010: 107,000). The
aggregate value of the company defined contributions paid for Directors was 60,000 (2010: 111,000).
HIGHEST PAID DIRECTOR

Emoluments
Defined benefit scheme accrued pension at end of year
FINANCIALS
41
FINANCE INCOME AND COSTS
2011
2010
Interest income
0.4
0.7
Imputed interest on available for sale assets
2.6
2.2
Expected return on defined benefit pension plan assets
5.9
5.3
Finance income
8.9
8.2
BUSINESS REVIEW
2011
FINANCE COSTS
Amortisation of
bank debt fair
value discount
Total
Bank term loan Facility B
6.5
11.9
18.4
Bank term loan Facility E
4.8
51.7
56.5
Other interest
7.7
7.7
19.0
63.6
82.6
Imputed interest on deferred land creditors
1.0
1.0
Interest on defined benefit pension plan obligations
7.3
7.3
8.3
8.3
27.3
63.6
90.9
GOVERNANCE
Nominal
bank interest
charges
2010
FINANCE COSTS
Nominal
bank interest
charges
Amortisation of
bank debt fair
value discount
Total
Bank term loan Facility B
5.4
11.5
16.9
Bank term loan Facility E
5.2
50.0
55.2
Other interest
3.5
3.5
14.1
61.5
75.6
Imputed interest on deferred land creditors
1.5
1.5
Interest on defined benefit pension plan obligations
7.3
7.3
8.8
61.5
84.4
FINANCIALS
42
8.8
22.9
TAXATION
2011
2010
UK Corporation tax on profits for the year
(0.3)
Adjustment in respect of prior years
(0.7)
0.2
Total current tax
(1.0)
0.2
CURRENT TAX (CREDIT)/EXPENSE
BUSINESS REVIEW
DEFERRED TAX CREDIT

Origination of temporary differences in the current year
(1.5)
Deferred tax arising on previously unrecognised temporary differences
(65.0)
Total deferred tax (Note 17)
(66.5)
Total tax in income statement
(67.5)
0.2
The total tax credit for the year is higher (2010: expense, higher) than the standard rate of UK corporation tax of 26.83%
(2010: 28%). The differences are explained below:
2010
(27.0)
(27.4)
(7.2)
(7.7)
Expenses not deductible for tax purposes
0.8
0.8
Adjustments to tax charge in respect of prior years
(0.7)
0.2
Deductible temporary differences not recognised
(2.0)
(1.3)
(13.7)
(11.9)
20.1
Loss before tax

Tax on Loss at 26.83% (2010: 28%)
GOVERNANCE
2011
Effects of:
Stock fair value adjustment

Unrecognised tax losses
20.3
Deferred tax credit
(65.0)
Total tax in income statement
(67.5)
0.2
DIVIDENDS
There were no distributions to equity shareholders in the year (2010: nil). No dividend has been proposed by the Directors after the
balance sheet date.
FINANCIALS
43
INTANGIBLE ASSETS
Total
Goodwill
m
BUSINESS REVIEW
Cost

At beginning and end of year
47.7
Impairment

(18.7)
Carrying value

29.0
Goodwill arose on the acquisition of Castle Bidco Limited on 24th March 2009. Goodwill is allocated to acquired strategic land
holdings and is tested annually for impairment. The recoverable amounts are determined by assessing value in use, using a
house building sector weighted average cost of capital of 9.21% (2010: 9.57%), covering a period of 22 years (being the minimum
period that management expects to benefit from the acquired strategic land holdings) and based on current market conditions.
10 PROPERTY, PLANT AND EQUIPMENT
COST
At 31st October 2009
8.3
Additions
0.4
At 31 October 2010
8.7
Additions
0.1
At 31 October 2011
8.8
st
st
GOVERNANCE
Plant, Vehicles
and Equipment
ACCUMULATED DEPRECIATION
3.5
Charged in the year
1.2
At 31 October 2010
4.7
Charged in the year
1.2
At 31 October 2011
5.9
st
st
CARRYING VALUE
4.0
2.9
44
FINANCIALS
Loans
Share of Post
Acquisition
Reserves
Total
11.2
(14.5)
(3.3)
BUSINESS REVIEW
11 INVESTMENTS
Joint ventures
Re-classification (see note below)
13.4
13.4
Share of profit for the year
1.5
1.5
Repayments
(7.9)
(7.9)
At 31 October 2010
3.3
0.4
3.7
(1.4)
(1.4)
3.3
(1.0)
2.3
st
Share of loss for the year

At 31 October 2011
st
The Group has a 50% interest in Crest/Galliford Try (Epsom) LLP, a Limited Liability Partnership set up to develop three sites
in Epsom. The LLP purchased the land and is responsible for developing the infrastructure on the sites. The risks and rewards
of development will accrue to the development partners, Crest Nicholson and Galliford Try. Accordingly, fair value provisions
of 13.4m acquired though business combination are no longer shown as deductions from Investments but are classified as
provisions of the Crest Nicholson Group.
The Group has a 50% interest in Crest Nicholson Bioregional Quintain LLP, a Limited Liability Partnership set up to develop a site
in Brighton. The site was substantially completed during the prior year; at 31st October 2011, Crest Nicholson Bioregional Quintain
LLP had Capital Employed of 3.7m (2010: 3.4m).
GOVERNANCE
At 31st October 2011, Crest/Galliford Try (Epsom) LLP had Capital Employed of 42m (2010: 61m).
The Group owns 500 ordinary shares of 1 each representing 50% of the issued share capital of Brentford Lock Limited, a
Company registered in England, which was set up to redevelop a site in West London. The site was completed and all units
sold in 2006. At 31st October 2011, 3.1m was due from Crest Nicholson Operations Limited to Brentford Lock Limited, pending
declaration of a final dividend (2010: 3.0m).
Subsidiary undertakings
The subsidiary undertakings that are significant to the Group and traded during the year are set out below. The Groups interest
is in respect of ordinary issued share capital that is wholly owned and all the subsidiary undertakings are incorporated in Great
Britain and included in the consolidated financial statements.
Subsidiary
Nature of business
Castle Bidco Limited

Crest Nicholson PLC
Crest Nicholson Operations Limited
Holding Company
Holding Company
Residential and commercial property development
FINANCIALS
45
14.6
Additions
6.5
Disposals
(0.2)
Change in fair value
0.2
At 31 October 2010
21.1
st
Additions
4.3
Disposals
(0.7)
Change in fair value
2.1
26.8
BUSINESS REVIEW
12 AVAILABLE FOR SALE ASSETS
The Group operates an Easybuy scheme, under which up to 25% of the purchase price of selected properties is funded through
a loan from the Group, secured on the property. The Group retains a percentage interest in the market value of the property equal
to the initial percentage of the loan provided. These loans are repayable at the relevant percentage of the market value of the
property upon sale or transfer of ownership of the property or within ten years, whichever is sooner. The purchaser also has an
option to repay the loan earlier than would otherwise be required, subject to a market valuation of the property. Interest is payable
on the outstanding balance from the fifth anniversary of the purchase.
GOVERNANCE
The Group has also participated in the Governments Homebuy schemes, under which up to 30% of the purchase price of
selected properties is funded through loans of up to 15% each from the Group and from the Homes and Communities Agency,
secured on the property. The Group retains an interest in the market value of the property equal to the initial percentage of the
loan provided. These loans mature upon sale or transfer of ownership of the property or within 25 years, whichever is sooner.
The purchaser also has an option to repay the loan earlier than would otherwise be required, subject to a market valuation of the
property. Interest is payable on the outstanding balance from the fifth anniversary of the purchase.
Available for sale assets are held at fair value. The Directors believe that there is sufficient relevant expertise within the Group to
perform this valuation.
13 INVENTORIES
Work in progress: land, building and development

Completed buildings including show houses
2011
2010
343.5
314.9
50.7
47.0
394.2
361.9
Included within inventories is 286.1m (2010: 223.4m) expected to be recovered in more than 12 months.
46
FINANCIALS
Inventories to the value of 219.3m (2010: 190.0m) were recognised as expenses in the year.
2011
2010
7.5
8.7
Recoverable on contracts
20.6
16.5
Due from associate
12.7
9.4
4.8
3.9
CURRENT
Trade receivables
Other receivables
Prepayments and accrued income
1.1
1.1
46.7
39.6
2011
2010
Term loans
150.0
418.5
Other loans
12.7
12.1
Loan notes
3.1
162.7
433.7
2.0
2.0
BUSINESS REVIEW
14 TRADE AND OTHER RECEIVABLES
15 INTEREST BEARING LOANS AND BORROWINGS
NON-CURRENT
GOVERNANCE
CURRENT
Loan notes
FINANCIALS
47
2011
2010
23.3
21.5
1.4
3.5
24.7
25.0
Land payables on contractual terms
35.0
24.0
Other trade payables
21.7
19.2
Payments on account
5.3
28.2
Due to associates
1.6
0.9
Taxes and social security costs
1.6
1.0
30.4
24.9
NON-CURRENT
Land payables on contractual terms
Accruals
BUSINESS REVIEW
16 TRADE AND OTHER PAYABLES
CURRENT
Other payables
Accruals
75.8
174.0
2011
2010
66.5
8.7
75.2
GOVERNANCE
74.7
170.3
17 DEFERRED TAX ASSETS

The deferred tax assets comprises:
At the beginning of year

Amount credited to income statement
Amount credited to equity
At the end of the year
FINANCIALS
48
2011
Recognised
2011
Not
Recognised
2010
Recognised
2010
Not
Recognised
10.6
24.5
53.0
1.5
54.4
71.0
0.9
0.7
66.5
25.4
124.7
8.7
9.7
75.2
25.4
134.4
BUSINESS REVIEW
17 DEFERRED TAX ASSETS (continued)
The deferred tax asset comprises:

Tax losses
Accelerated pension payments
Inventories fair value
Other timing differences
Deferred tax on pension deficit shown in equity
Deferred tax asset
Inventories fair value represents temporary differences on the carrying value of inventory fair valued on the acquisition of Castle
Bidco Ltd in 2009.
Rental and other

obligations in
respect of vacant
properties
Future losses on
joint ventures
(Note 11)
Total
5.6
12.3
17.9
Charged/(credited) to the income statement
0.2
(5.3)
(5.1)
5.8
7.0
12.8
Credited to the income statement
(0.7)
(1.0)
(1.7)
At 31 October 2011
5.1
6.0
11.1
1.2
2.2
3.4
Charged to the income statement
0.5
2.6
3.1
GOVERNANCE
18 PROVISIONS
NON-CURRENT
st
CURRENT
1.7
4.8
6.5
(0.7)
0.9
0.2
1.0
5.7
6.7
49
FINANCIALS
At 31 October 2010
(Credited)/charged to the income statement
st
Shares
issued
Nominal
value
Share
capital
Share
premium
account
Number
Pence
10,000
100
(350)
(3)
50
Balance
9,700
97
Shares re-classified during the year
(9,700)
(97)
A shares (700 reclassified ordinary shares)
70,000
0.0001
18,000
0.005
90
B shares
1,300
0.0001
C shares
6,957
100
6,957
243,043
D shares
25,000
0.0001
29,999
Ordinary shares
10,000,000
100
10,000,000
240,000,000
As at 31 October 2011
10,121,257
10,007,055
240,273,042
As at 31st October 2010

Shares cancelled in the year
Shares allotted in the year
Deferred shares (9,000 reclassified ordinary

shares)
The C shares and D shares were issued during the year for aggregate cash consideration of 250,000 and 30,000 respectively.
The 10,000,000 ordinary shares issued during the year were issued in exchange for the cancellation of certain debt obligations of
the Group, as outlined in Note 1.
GOVERNANCE
st
BUSINESS REVIEW
19 SHARE CAPITAL
Shares Purchased and Cancelled in the Year

During the year the Company purchased and cancelled a total of 350 of its own ordinary shares as a result of the shareholders
leaving the employment of the Group.
Date
Share
type
Number
of shares
Nominal
value
Purchase
price
% of total
capital
December 2010
Ordinary
50
0.50
0.50
0.5%
May 2011
Ordinary
200
2.00
2.00
2.0%
September 2011
Ordinary
100
1.00
2.00
1.0%
In March 2011, 50 ordinary shares were issued at par value to an employee of the Group.
The classes of share in issue at 31st October 2011 hold the following rights:
Deferred and B Shares

The shares do not confer voting or dividend rights and only confer limited capital distribution rights. They do not confer any rights
of redemption.
C Shares and Ordinary Shares
The shares confer voting, dividend and capital distribution (including on winding up) rights. They do not confer any rights
of redemption.
50
FINANCIALS
A Shares and D Shares

The shares do not confer voting rights and only confer limited dividend and capital distribution rights. They do not confer any rights
of redemption.
Group operations are financed through net borrowings, comprising bank and loan facilities which are secured by fixed charges
over land and work-in-progress.
Fair Values
Financial Assets
BUSINESS REVIEW
20 FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The carrying amount of financial assets equates to their fair value. Financial assets of the Group at 31st October 2011 consisted of
sterling cash deposits of 121.9m (2010: 129.8m), with solicitors and on current account and 26.8m (2010: 21.1m) of available
for sale assets.
Financial Liabilities
Fair values of the term loan, other loans and loan notes for 2011 are calculated based on the present value of future principal and
interest cash flows, discounted at the market rate of interest at the balance sheet date. For 2010, the fair values of the B and C
term loans were calculated by reference to an enterprise valuation based on available market information; the E term loan was
valued at nil on the basis that it was expected to be waived as part of the financial restructuring.
The fair values of the facilities determined on this basis are:
2011
Other loans
Face
value
Carrying
value
Fair
value
3 mth LIBOR + 3.5% to

14.09.12 then + 6.5%
150.0
150.0
150.0
2015
6.75%
12.7
12.7
12.7
2015
162.7
162.7
162.7
2.0
2.0
2.0
2.0
2.0
2.0
Total non-current interest

bearing loans
Loan notes
3 mth LIBOR - 0.50%
Total current interest

bearing loans
Year of
maturity
GOVERNANCE
Facility B Term loan
Nominal
interest
rate
2012
2010
Face
value
Carrying
value
Fair
value
12 mth LIBOR + 0.50%
343.5
327.1
281.5
2012
Facility C Term loan
12 mth LIBOR + 0.50%
3.4
3.4
3.4
2012
Facility E Term loan
6 mth LIBOR + 2.50%
158.9
88.0
2012
Loan notes
3 mth LIBOR - 0.50%
3.1
3.1
3.1
2012
Other loans
6.75%
12.1
12.1
12.1
2014
521.0
433.7
300.1
Total non-current and current

interest bearing loans
Year of
maturity
There is no difference between the face value and the carrying value of the term loan. In 2010, 16.4m and 70.9m respectively
(87.3m in total) was charged as interest over the life of the facilities.
The carrying amount of the financial liabilities equates to their fair value. The facility B term loan has a fair value of 150.0m
(2010: 281.5m). The 2011 and 2010 fair valuation are calculated based on the present value of future principal and interest cash
flows, discounted at the market rate of interest at the balance sheet date.
51
FINANCIALS
Nominal
interest
rate
Land purchased on Extended Payment Terms

When land is purchased on extended payment terms, the Group initially records it at its fair value with a land creditor recorded
for any outstanding monies based on its fair value assessment. Fair value is determined by using the effective interest method.
The difference between the nominal value and the initial fair value is amortised over the period of the extended credit term and
charged to finance costs, increasing the value of the land creditor such that at the date of maturity the land creditor equals the
payment required.
BUSINESS REVIEW
20 FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)
Undrawn Borrowing Facilities

The Group had no undrawn committed borrowing facilities at 31st October 2011 (2010: 20m). The repayment terms of the facilities
are set out below. In addition there were undrawn guarantee facilities of 5.9m (2010: 18.4m).
Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or other counterparty fails to meet its contractual obligations.
Surplus cash is placed on deposit with banks with a minimum credit rating, or in accordance with Company policy. The security
and suitability of these banks is monitored by treasury on a regular basis.
Trade and other receivables are mainly amounts due from housing associations and commercial property sales, which are
within credit terms. Management considers that the credit ratings of these various debtors are good and therefore credit risk is
considered low.
The maximum exposure to credit risk at 31st October 2011 is represented by the carrying amount of each financial asset in the
balance sheet. The Group has no substantial exposure to any individual third party.
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
Cash flow forecasts are produced to monitor the expected cashflow requirements of the Group against the available facilities.
The principal risks within these cashflows relate to achieving the level of sales volume and prices in line with current forecasts.
GOVERNANCE
Liquidity Risk
The following are the contractual maturities including estimated cash flows of the financial liabilities of the Group at
31st October 2011:
2011
Carrying
value
Contractual
cash flows
Within
1 year
12 years
23 years
More than
3 years
150.0
190.5
6.8
11.2
11.2
161.3
Loan notes
2.0
2.0
2.0
Other loans
12.7
15.4
15.4
164.7
207.9
8.8
11.2
11.2
176.7
Other loans of 12.7m are from a joint venture partner and repayable at a date based on progress of the development and/or the
termination of the joint venture agreement. The timing and amount of future cash flows given in the table above is based on the
Directors best estimate of the likely outcome.
FINANCIALS
52
2010
Carrying
value
Contractual
cash flows
Within
1 year
12 years
23 years
More than
3 years
327.1
353.1
6.8
346.3
Facility C Term loan
3.4
3.5
0.1
3.4
Facility E Term loan
88.0
164.8
164.8
Loan notes
3.1
3.1
1.0
2.1
Other loans
12.1
15.7
15.7
433.7
540.2
7.9
516.6
15.7
At 31 October 2010
st
BUSINESS REVIEW
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 Groups income or the value of its holdings of financial instruments.
Interest Rate Risk
Borrowings are funded through a term loan which is subject to variable interest rates that are unhedged.
Interest rate risk

At 31st October 2011, the interest rate profile of the financial liabilities of the Group was:
GOVERNANCE
The Group is exposed to interest rate risk due to borrowing funds at floating interest rates. The Group used an interest rate cap in
the period to manage this volatility; the cap expired on 31st October 2011.
2011
Carrying amount
Sterling
Bank borrowings, loan notes and
long-term creditor
Floating rate
financial
liabilities
Fixed rate
financial
liabilities
Financial
liabilities
carrying no
interest
Total
164.7
115.8
280.5
2010
Carrying amount
Bank borrowings, loan notes and

long-term creditor
53
Fixed rate
financial
liabilities
Financial
liabilities
carrying no
interest
Total
433.7
117.8
551.5
FINANCIALS
Sterling
Floating rate
financial
liabilities
The floating rate financial liabilities are subject to interest rates referenced to LIBOR. These rates are for a period between one
and twelve months.
For financial liabilities that have no interest payable but for which imputed interest is charged, consisting of land creditors, the
weighted average period to maturity is 30 months (2010: 26 months).
2011
2010
Repayable within one year
94.5
96.3
Repayable between one and two years
12.3
430.8
Repayable between two and five years
157.9
12.3
15.8
12.1
280.5
551.5
BUSINESS REVIEW
The maturity of the financial liabilities is:
Repayable after five years
Sensitivity Analysis
This analysis assumes that all other variables remain constant and considers the pre-tax effect of financial instruments with
variable interest rates.
2011
GOVERNANCE
A change of 100 basis points in interest rates at the balance sheet date would have increased/(decreased) equity and profit or loss
by the amounts shown below. This calculation assumes that the change occurred at the balance sheet date and had been applied
to risk exposures existing at that date.
2010
Equity
Income
statement
Equity
Income
statement
Increase in rates
(1.5)
(1.5)
(5.0)
(5.0)
Decrease in rates
1.5
1.5
5.0
5.0
Capital Management
The Groups policies seek to match long-term assets with long-term finance and ensure that there is sufficient working capital to
meet the Groups commitments as they fall due, comply with the loan covenants and continue to sustain trading.
Management will continue to monitor actual cash flows against the approved cash flow forecast.
FINANCIALS
54
Retirement Benefit Obligations

Defined contribution scheme
The Group (through Crest Nicholson PLC) operates a defined contribution scheme for new employees. The assets of the scheme
are held separately from those of the Group in an independently administered fund. The service cost of this scheme for the year
was 1.1m (2010: 0.8m). At the balance sheet date there were no outstanding or prepaid contributions.
BUSINESS REVIEW
21 EMPLOYEE BENEFITS
Defined benefit scheme

The Group (through Crest Nicholson PLC) operates a contributory defined benefit pension scheme which is closed to new
entrants. The assets of the scheme are held separately from those of the Group, being invested in managed funds.
The most recent funding valuation of the main scheme was carried out as at 31st January 2010 by a professionally qualified
actuary using the projected unit method.
The assets of the defined benefit scheme have been calculated at fair value and the liabilities, at the balance sheet date under
IAS 19 (Revised), using the projected unit method and based on the following financial assumptions:
31st October 2010
%p.a.
%p.a.
Discount rate
5.0%
5.7%
Price inflation
3.1%
3.5%
Pension increases on benefit increasing in line with 5% or RPI if lower
3.0%
3.1%
Expected return on invested assets
5.0%
5.9%
Expected return on insurance annuity contracts
5.0%
5.7%
GOVERNANCE
31st October 2011
The expected return on assets reflects the weighted average return on the categories of scheme assets shown below.
Mortality assumptions are as follows:
Mortality before retirement: PNMA 00 medium cohort (year of birth) 1.5% minimum improvement p.a. and PNFA 00 medium
cohort (year of birth) 1.5% minimum improvement p.a.
Mortality after retirement: PNMA 00 medium cohort (year of birth) 1.5% minimum improvement p.a. and PNFA 00 medium
cohort (year of birth) 1.5% minimum improvement p.a.
The major categories of scheme assets as a percentage of the total fair value of scheme assets are as follows:
2010
Equities
52.4%
58.2%
Bonds
28.1%
29.3%
Property
2.1%
2.2%
Cash
9.4%
1.3%
Secured annuities
8.0%
9.0%
100.0%
100.0%
Total
55
FINANCIALS
2011
The amounts recognised in the year are as follows:

2011
2010
Current service cost recognised in administrative expenses
0.6
Gain on curtailment recognised in administrative expenses
(1.7)
Interest cost recognised in finance costs
7.3
7.3
Expected return on scheme assets recognised in finance income
(5.9)
(5.3)
Total
1.4
0.9
Actuarial loss/(gain)
10.2
(6.2)
Total defined benefit scheme costs/(gains) recognised in the year
11.6
(5.3)
BUSINESS REVIEW
21 EMPLOYEE BENEFITS (continued)
The cumulative debit to the SORIE since the adoption of IAS 19 (Revised) is 31.3m (2010: 21.1m).
The actual return on scheme assets is:
2010
Expected return on scheme assets
5.9
5.3
Actuarial (loss)/gain on scheme assets
(0.2)
1.8
Actual return on scheme assets
5.7
7.1
GOVERNANCE
2011
The amounts included in the balance sheet arising from the Groups obligation in respect of its defined benefit scheme are
as follows:
2011
2010
Present value of defined benefit obligations
144.2
131.0
Fair value of scheme assets
(109.7)
(94.9)
34.5
36.1
Defined benefit liability recognised in the balance sheet
A deferred tax asset of 8.7m (2010: no deferred tax asset recognised) has been recognised on the balance sheet.
FINANCIALS
56
Movements in the liability recognised on the balance sheet were as follows:

2011
2010
At beginning of year
36.1
46.1
Total expense/(gain) (as shown above)
11.6
(5.3)
Company contributions paid in the year
(13.2)
(4.7)
At end of year
34.5
36.1
2011
2010
131.0
136.4
BUSINESS REVIEW
Changes in the present value of the defined benefit obligation were as follows:
0.6
Gain on curtailment
(1.7)
7.3
7.3
Employee contributions
Interest cost
0.2
Actuarial losses/(gains)
9.9
(4.4)
Benefits and expenses paid
(4.0)
(7.4)
144.2
131.0
At end of year
GOVERNANCE
Current service cost
The gain on curtailment arose as a result of the decision to close the scheme to future accrual in the prior year.
Changes in the fair value of scheme assets were as follows:
2011
2010
94.9
90.3
Expected return on scheme assets
5.9
5.3
Actuarial gain on scheme assets
(0.2)
1.8
Employer contributions
13.2
4.7
Employee contributions
At end of year
57
0.2
(4.1)
(7.4)
109.7
94.9
FINANCIALS
Benefits and expenses paid
A history of experience adjustments is as follows:

2011
2010
Present value of defined benefit obligation
144.2
131.0
Fair value of scheme assets
109.7
94.9
Deficit in the scheme
34.5
36.1
Experience adjustments on scheme liabilities
(9.9)
4.4
Percentage of scheme liabilities
6.9%
3.4%
Experience adjustments on scheme assets
(0.2)
1.8
Percentage of scheme assets
0.2%
1.9%
BUSINESS REVIEW
The expected employer contributions to the defined benefit scheme during 2012 will be 8.6m (2011: 13.2m).
Share Based Payments

As part of the financial restructuring of the Group that took effect on 13th September 2011, a Management Incentive Plan (MIP)
was established for the benefit of key managers, providing for equity participation in Crest Nicholson Holdings Limited.
Shareholdings comprise the following classes of share:

A shares 70,000
B shares 6,100
D shares 30,000
GOVERNANCE
Management equity comprises Core Equity (based on the ordinary shares currently held by management) and Flowering Equity
(comprising a new class of share).
Management equity delivers value on the achievement of an Exit event. For the purposes of determining the appropriate
share-based payment charge, a four year period to vesting has been assumed.
Combinations of Monte Carlo simulation and Binomial Barrier Option valuation models have been deployed to determine the fair
value of these holdings.
A shares are held exclusively by managers who had interests in the ordinary shares of Crest Nicholson Holdings Limited prior to
the financial restructuring. No share based payment charge has been recognised in respect of these shares, as the fair value of
the awards did not exceed the existing value attributable to management holdings.
B and D shares were fair valued at amounts of 82p per share and 3.02 per share respectively, using the valuation
methodologies described above.
A share-based payment charge of 23,900 per annum arises in respect of the B and D shares.
22 CONTINGENT LIABILITIES
58
FINANCIALS
There are performance bonds and other engagements, including those in respect of joint venture partners, undertaken in the
ordinary course of business from which it is anticipated that no material liabilities will arise.
At 31st October 2011 total outstanding commitments for future minimum lease payments under non-cancellable operating
leases were:
2011
2010
Within one year
3.3
3.6
Less: minimum sub-lease income
(1.2)
(1.3)
BUSINESS REVIEW
23 OPERATING LEASES
LAND AND BUILDINGS
Between two and five years
10.6
12.4
(3.3)
(2.6)
After five years
7.2
9.2
(0.3)
16.6
21.0
Within one year
0.8
0.6
Between two and five years
1.2
0.9
2.0
1.5
OTHER
GOVERNANCE
24 RELATED PARTY TRANSACTIONS

The Group has entered into the following related party transactions:
(i) Transactions with joint ventures, which are disclosed in Note 11. The Group has provided book-keeping services to certain JVs
which have been recharged at cost.
(ii) All holders of the ordinary shares provide term loans to the Group in proportion to their shareholding at the balance
sheet date.
At 31st October 2011, the interests of the shareholders in the financial instruments of the Group were as follows:
Term loans
2011
2010
150.0
418.5
In addition, the shareholders provide a 50.0m bank guarantee facility. Guarantees of 44.1m (2010: 47.9m) were outstanding at
31st October 2011.
(iii) Compensation of key management personnel is disclosed within Note 5. Key management also hold 8% of the shares in the
Company, with a further 2% held by other senior Crest employees.
59
FINANCIALS
Borrowings of the Group are secured against the value of stock and work in progress.
Management considers the key estimates and judgements made in the accounts to be related to the valuation of Goodwill,
Available for Sale assets, Carrying Value of Land and Work in Progress and Profit Recognition, Deferred Tax and Pension Liabilities.
Goodwill
The carrying value of goodwill is substantially dependent on the ability of the Group to successfully progress its strategic land
holdings. Changes to the planning regime could undermine current assumptions about the sites which are expected to be
successfully developed.
BUSINESS REVIEW
25 ACCOUNTING ESTIMATES AND JUDGEMENTS
Available for Sale Assets

Available for sale assets are held at the present value of expected future cash flows taking into account the estimated market
value of the property at the estimated time of repayment. There are a number of uncertainties inherent in such estimates, which
would impact on the carrying value of such assets.
Carrying Value of Land and Work in Progress and Profit Recognition

Inventories of land, work in progress and completed units are stated in the balance sheet at the lower of cost and net realisable
value. Due to the nature of development activity and in particular, the length of the development cycle, the Group has to allocate
site-wide development costs such as infrastructure between units being built and/or completed in the current year and those
for future years. It also has to make estimates of the cost to complete such developments. These estimates are reflected in the
margin recognised on developments where unsold plots remain and the carrying value of land and work in progress.
There is a degree of inherent uncertainty in making such estimates. The Group has established internal controls that are
designed to ensure an effective assessment is made of inventory carrying values and the costs to complete developments.
In 2010, management elected not to recognise deferred tax assets arising in respect of losses that could be carried forward
against future taxable income, nor those in relation to retirement benefit obligations and other timing differences, on the grounds
that realisation of the related tax benefit through future taxable profits could not be stated as probable at the balance sheet date.
In 2011, management has now elected to recognise these assets on the grounds that the financial restructuring of the Group
makes realisation of the related tax benefit through future taxable profits probable.
GOVERNANCE
Deferred Tax
Pension Liabilities
Management has employed the services of an actuary in setting these estimates, however, they recognise the risk that both
expected investment returns and ultimate scheme payments may differ substantially from current forecasts.
26 ULTIMATE CONTROLLING PARTY

The ultimate controlling party of the Group is Varde Partners, Inc. by virtue of their control of 60% of the Ordinary share capital of
Crest Nicholson Holdings Limited.
FINANCIALS
60
COMPANY BALANCE SHEET

2010
000
000
254,144
280
Net current assets
254,424
Total assets less current liabilities
254,424
Net assets
254,424
Note
FIXED ASSETS
Investments
BUSINESS REVIEW
2011
CURRENT ASSETS
Debtors
Cash at bank and in hand
CAPITAL AND RESERVES

6
10,007
Share premium account
240,273
Profit and loss account
4,144
Equity shareholders funds
254,424
GOVERNANCE
Called up share capital (2010: 100)

Approved by the Board of Directors on 28th February 2012 and signed on its behalf by:
S Stone
There are no recognised gains and losses for the year (2010: nil).
61
FINANCIALS
PJ Bergin
Directors
NOTES TO THE COmpany

FINANCIAL STATEMENTS
1
ACCOUNTING POLICIES
The following accounting policies have been applied consistently in dealing with items that are considered material in relation to
the financial statements.
BUSINESS REVIEW
Basis of Preparation
The Company financial statements have been prepared under the historical cost accounting rules and in accordance with
applicable UK Accounting Standards.
The accounting policies have been applied consistently in dealing with items which are considered material.
Under section 408 of the Companies Act 2006 the company is exempt from the requirement to present its own profit and loss
account. The Company recorded a profit for the year of 4,144,000 (2010: nil).
Under FRS 1, the company is exempt from the requirement to prepare a cash flow statement on the grounds that its consolidated
financial statements, which include the Company, are publicly available.
The principal accounting policies adopted are set out below.
Investments
Investments in Group undertakings are included in the balance sheet at cost less any provision for impairment.
The charge for taxation is based on the result for the year and takes into account taxation deferred because of timing differences
between the treatment of certain items for taxation and accounting purposes.
Deferred tax is recognised, without discounting, in respect of all timing differences between the treatment of certain items for
taxation and accounting purposes which have arisen but not reversed by the balance sheet date, except as otherwise required
by FRS 19.
GOVERNANCE
Taxation
Dividends
Dividends are recorded in the Companys financial statements in the period in which they are paid.
STAFF NUMBERS AND COSTS
The Company has no employees.
DIVIDENDS
Details of the dividends recognised as distributions to equity shareholders in the period and those proposed after the balance
sheet date are as shown in Note 8 of the consolidated financial statements.
FINANCIALS
62
FIXED ASSET INVESTMENTS
2011
2010
000
000
Shares in and loans to subsidiary undertakings

-
At start and end of year
BUSINESS REVIEW
The subsidiary undertakings that are significant to the Group and traded during the period are shown in Note 11 of the
Consolidated financial statements.
DEBTORS
2011
2010
000
000
254,144
Amounts falling due within one year:

Amounts due from Group undertakings
SHARE CAPITAL
Shares
issued
Nominal
value
Share
capital
Share
premium
account
Number
Pence
10,000
100
(350)
(3)
50
Balance
9,700
97
Shares re-classified during the year
(9,700)
(97)
A shares (700 reclassified ordinary shares)
70,000
0.0001
Deferred shares (9,000 reclassified

ordinary shares)
18,000
0.005
90
1,300
0.0001
As at 31st October 2010

Shares cancelled in the year
Shares allotted in the year
B shares
6,957
100
6,957
243,043
D shares
25,000
0.0001
29,999
Ordinary shares
10,000,000
100
10,000,000
240,000,000
As at 31 October 2011
10,121,257
10,007,055
240,273,042
st
The C shares and D shares were issued during the year for aggregate cash consideration of 250,000 and 30,000 respectively.
The 10,000,000 ordinary shares issued during the year were issued in exchange for the cancellation of certain debt obligations of
the Group, as outlined in Note 1 to the consolidated accounts.
63
FINANCIALS
C shares
GOVERNANCE
SHARE CAPITAL (continued)
Shares purchased and cancelled in the year

During the year the Company purchased and cancelled a total of 350 of its own ordinary shares as a result of the shareholders
leaving the employment of the Group.
Date
Share
type
Number
of shares
Nominal
value
Purchase
price
% of total
capital
December 2010
Ordinary
50
0.50
0.50
0.5%
May 2011
Ordinary
200
2.00
2.00
2.0%
September 2011
Ordinary
100
1.00
2.00
1.0%
BUSINESS REVIEW
In March 2011, 50 ordinary shares were issued at par value to an employee of the Group.
The classes of share in issue at 31st October 2011 hold the following rights:
A Shares and D Shares
The shares do not confer voting rights and only confer limited dividend and capital distribution rights. They do not confer any
rights of redemption.
C Shares and Ordinary Shares

The shares confer voting, dividend and capital distribution (including on winding up) rights. They do not confer any rights
of redemption.
GOVERNANCE
Deferred and B Shares

The shares do not confer voting or dividend rights and only confer limited capital distribution rights. They do not confer any rights
of redemption.
RECONCILIATION OF SHAREHOLDERS FUNDS

Issue of shares
Profit for the year
Shares
Capital
Share
premium
Profit and
Loss account
Total
000
000
000
000
10,007
240,273
250,280
4,144
4,144
10,007
240,273
4,144
254,424
FINANCIALS
64
CONTINGENT LIABILITIES
There are performance bonds and other engagements, including those in respect of joint venture partners, undertaken in the
ordinary course of business from which it is anticipated that no material liabilities will arise.
In addition, the Company is required from time to time to act as surety for the performance by subsidiary undertakings of
contracts entered into in the normal course of their business.
Under the terms of the bank facilities, each company within the Group is a guarantor of the bank facilities of other Group
members that have acceded to the senior facilities agreement.
BUSINESS REVIEW
RELATED PARTIES
The Company is exempt from disclosing transactions with wholly owned subsidiaries in the Group. Other related party
transactions are included within those given in Note 24 of the Group financial statements.
10 ULTIMATE CONTROLLING PARTY

The ultimate controlling party of the Group is Varde Partners, Inc. by virtue of their control of 60% of the ordinary share capital of
Crest Nicholson Holdings Limited.
GOVERNANCE
FINANCIALS
65
OTHER COMMUNICATIONS
This and other financial and non-financial reports, including
our full Sustainability Report, can be downloaded from
www.crestnicholson.com/reports
Crest Nicholson
Crest House
Pyrcroft Road
Chertsey
Surrey
KT16 9GN
Tel: 01932 580 555
Fax: 0870 336 3990
www.crestnicholson.com

Crest Nicholson Holdings Annual Report (2011)

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Crest Nicholson Holdings Annual Report (2011)

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CREST NICHOLSON

KEY PERFORMANCE INDICATORS

Short-term land bank units

Strategic land bank units

Land bank gross development

Homes built on Brownfield land

Homes delivered to Code

Waste diverted from landfill

Reduction in Annual Injury

The Group selects KPIs

Chief Executives Review

Risks and Uncertainties

WHO WE ARE AND WHAT WE DO

Crest Nicholson is a leading developer of sustainable housing

CREST NICHOLSON HOLDINGS LIMITED DIRECTORS REPORT AND ACCOUNTS 2011

Consolidated Cash Flow

Notes to the Consolidated

Company Balance Sheet

Notes to the Company

Chief Executives Review

Risks and Uncertainties

CREST NICHOLSON HOLDINGS LIMITED DIRECTORS REPORT AND ACCOUNTS 2011

IMAGE: Port Marine, Portishead

Home-buyer confidence and mortgage availability are critically important factors in

Our continued focus on

Nevertheless, Crest Nicholsons commitment to constructive dialogue with all

I would like to thank my predecessor, Alan Goldman, and Non-Executive Director

CREST NICHOLSON HOLDINGS LIMITED DIRECTORS REPORT AND ACCOUNTS 2011

CHIEF EXECUTIVES REVIEW

We have a track record of

New London division created,

However we need to be alert in the face of a potentially fragile and uncertain

CREST NICHOLSON HOLDINGS LIMITED DIRECTORS REPORT AND ACCOUNTS 2011

IMAGE: Blenheim Square, North Weald

Our Business Strategy

Reaffirming Core Values

CREST NICHOLSON HOLDINGS LIMITED DIRECTORS REPORT AND ACCOUNTS 2011

Providing an outstanding customer

Gold Building for

We believe that outstanding design is essential to creating the legacy of a successful

of our purchasers would

CREST NICHOLSON HOLDINGS LIMITED DIRECTORS REPORT AND ACCOUNTS 2011

We remain committed to the fundamentals of environmental sustainability with

apprentices developing just

We are transforming the way we work to deliver a modern professional production

We are extremely proud to be developing 44 apprentices just under 10% of

CREST NICHOLSON HOLDINGS LIMITED DIRECTORS REPORT AND ACCOUNTS 2011

Our focus on high standards of governance, sustainable delivery and transparent

Consistent Top Performer

The successful restructuring of the business means that we have committed

CREST NICHOLSON HOLDINGS LIMITED DIRECTORS REPORT AND ACCOUNTS 2011

increase in sales revenues

Group profit after financing

CREST NICHOLSON HOLDINGS LIMITED DIRECTORS REPORT AND ACCOUNTS 2011

IMAGE: Centenary Quay, Southampton

of debt and accrued interest

average selling price for open

Group gross profit margin

CREST NICHOLSON HOLDINGS LIMITED DIRECTORS REPORT AND ACCOUNTS 2011

Total short term

Total under contract

CREST NICHOLSON HOLDINGS LIMITED DIRECTORS REPORT AND ACCOUNTS 2011

RISKS AND UNCERTAINTIES

Managing risk is a core element of executive management; a

Chief Executives Review

Risks and Uncertainties

Consolidated Cash Flow

Notes to the Consolidated

Company Balance Sheet

Notes to the Company