Crest Nicholson Holdings Annual Report (2009)

REPORT
& ACCOUNTS
For the period 23rd January 2009
to 31st October 2009
CREST NICHOLSON HOLDINGS LIMITED
FROM LEFT
Avante, Coxheath
ICON, Street
CONTENTS
02
Directors report
13
Consolidated balance sheet
09
Statement of Directors responsibilities
in respect of the Directors report
and the financial statements
14
Consolidated cash flow statement
10
Independent Auditors Report to the
members of Crest Nicholson
Holdings Limited
11
Consolidated income statement
Consolidated statement of
recognised income and expense
15
Notes to the consolidated
financial statements
35
Company balance sheet
36
Notes to the company
DIRECTORS REPORT 2009 | 02
FROM LEFT
Harbourside, Bristol
DIRECTORS REPORT
Crest Nicholson is a leading

developer of sustainable
communities whose mission
is to be the market leader
in the design and delivery
of sustainable housing and
mixed use communities.
The Directors present their annual report

with the consolidated accounts of the
company and its subsidiaries for the period
to 31st October 2009. The company was
incorporated on 23rd January 2009.
PRINCIPAL ACTIVITY
During the period to 31st October 2009,
the principal activity of the group was the
design and delivery of sustainable housing
and mixed use communities.
ACQUISITION OF
CASTLE BIDCO LIMITED
On 24th March 2009, Castle Bidco Ltd,
the immediate parent company of Crest
Nicholson PLC, was acquired by the
company, as part of a financial restructure
of the Crest Nicholson business. The
company became the ultimate parent
company of Crest Nicholson PLC (Crest),
which in turn owns the trading operations
of the group.
RESULTS AND DIVIDEND1

Results for the financial period ended
31st October 2009 reflect ongoing difficult
conditions in the housing market.
Although the rate of sales price decline
experienced by the industry during the
preceding year has abated in 2009,
a number of challenges remain. The
availability of mortgage finance has
continued to be constrained, property
valuations have remained subdued and
consumer confidence remains fragile.
Against this back-drop, the business
has performed well. Group profits before
interest, tax and exceptional items were
15.0m. The exceptional item represents
18.7m of the goodwill arising on CNHLs
acquisition of Castle Bidco Limited, which
was immediately impaired as it was not
supported by expected future cash flows.
Inclusive of the exceptional item, the group
recorded a loss after taxation for the year
of 50.5m.
Crest Nicholson holds the Queens Award for

Sustainable Development in honour of its continuous
achievement in the delivery of sustainable homes
and community regeneration.
The Directors do not propose a dividend.
The consolidated accounts of the group include the results of the Castle Bidco Limited group from the acquisition date of 24th March 2009 to 31st October 2009. Year-on-year
comparatives for Crest refer to the ongoing trading operations of the group.
Elements, Epsom
DIRECTORS REPORT
The financial restructuring

effected through the acquisition
of Castle Bidco Limited placed
the continuing Crest Nicholson
group in a much stronger position
to deal with current economic
conditions and to take advantage
of commercially attractive
opportunities when they arise.
Liabilities to lenders were reduced
by 630m and the restructured
debt facilities were extended to the
end of March 2012.
FINANCIAL POSITION
Crest Nicholson Holdings Limited
is dependent for its working capital
requirements on funds provided to it
through senior bank facilities totalling
500 million and a working capital facility
of 40 million. As part of the financial
restructuring of the group, the Directors
prepared cash flow projections for the
period to maturity of the senior facilities.
These projections have been updated
subsequently and show that the group
is capable of operating within the bank
facilities currently available and meeting
the financial covenant tests. However, the
nature of the groups business is such that
there can be unpredictable variations in the
timing of cash inflows and performance.
The Directors recognise that in the

current economic environment, risks exist
regarding the amount and timing of cash
flows from future sales and future building
costs and have considered the effect of
reasonably possible variations.
The Directors have concluded, after making
enquiries and considering the uncertainties
described above, that there is a reasonable
expectation that the group has adequate
resources to continue in operational
existence for the foreseeable future.
For these reasons, the Directors consider
it appropriate to prepare the financial
statements of the group on a going concern
basis. These financial statements do not
include any adjustments that would result
from the going concern basis of preparation
being inappropriate.
Registered no. 6800600
DIRECTORS REPORT
HOUSING
Total Crest housing completions in

2009 were 1,878 units, down 34%
on the 2,825 completions achieved
in 2008. Open market completions
of 1,365 (2008 2,005) were down
32%, whilst completions of
affordable units were down 37%
to 513 (2008 820).
The average sale price was 165k, down
7.8% on the 179k recorded in 2008.
Forward sales for 2010 and later years
amounted to 165.7m (2008 164.2m),
which includes c.37% of 2010 open market
housing sales (2008 24%).
MIXED USE COMMERCIAL

Commercial property sales from Crests
mixed use schemes were 9.5m, down 78%
on the 43.8m achieved in 2008. Revenues
in 2008 were underpinned by the sale of the
lease on 100,000sq ft of office space at our
Bristol Harbourside development; there
were no comparable transactions in 2009.
Conditions in the commercial property
market remain subdued, with both sales
and lettings proving increasingly difficult
to achieve against the backdrop of a
slowing economy.
MARGINS
Group gross profit margin for the period
was 13.9%, after sales and marketing costs.
The fair valuation of stock and work-inprogress at the acquisition date included
an assessment of required margins, which
restores the profitability of the land-bank to
more normal, commercial levels.
In addition, the business has maintained
a dialogue with suppliers and subcontractors, seeking to mitigate sales
price degradation through cost savings
and efficiencies.
Crest has continued to rationalise its
operations, to reflect the scale of downturn
that the business in common with the rest
of the industry has suffered. In January
2009, three of the six regional business
units were closed, generating further
overhead savings.
LAND BANK
The short term housing land bank declined

by 2,622 plots in the year, as the business
adopted a policy of restricting land buying
to conserve cash. There were also modest
impacts from re-planning certain sites,
to adopt a product mix more suited to the
current sales environment and offer greater
flexibility on timing of production.
At the 2009 level of Crest turnover, the short
term housing portfolio represents over
6 years supply. The business also monitors
the number of selling outlets and selective
land acquisitions at the right price and on
the right terms are planned, to ensure that
the business has an appropriate number of
sites open for sales at any one time.
Our strategic land bank has continued
to grow, offering a source of longer-term
development value as sites are converted
to short term portfolio at the prevailing
market price.
The groups contracted land bank is

summarised in terms of units and gross
development value as shown below:
2009
2008
UNITS
GDV m
UNITS
GDV m
12,823
2,375
15,445
2,728
335
207
Total short term
12,823
2,710
15,445
2,935
Strategic land
18,330
3,449
17,759
3,322
Total under contract
31,153
6,159
33,204
6,257
Short term housing

Short term commercial
FROM LEFT
Kings Warren, Suffolk
DIRECTORS REPORT
Despite the impact that the

current business downturn is
having on the industry generally,
Crest remains firmly committed
to the core values of good design
and sustainability for which it
is renowned
BUSINESS SUSTAINABILITY
It remains the case that reductions in
mortgage availability and declining sales
values raise challenges to current models
of housing provision. The significant gap
between the levels of production that
the industry is willing and able to provide
and the Governments forecast for new
household formations, points to a serious
and growing housing shortage.
Crest is working with the public sector to
secure means of restoring viability to parts
of its land portfolio, including participating
in the government sponsored Kickstart
schemes, whilst retaining a commitment to
high quality and sustainable developments.
Crest continues to be committed to

the progressive reduction of its carbon
footprint both operationally and in its
own administration and recognises
the importance of understanding and
addressing the immediate and longer
term challenges posed by climate change.
Climate change is particularly important
for UK house building because Greenhouse
Gas (GHG) emissions from homes
contribute approximately 24% of UK
GHG emissions.
The group has carried out a climate change
impact assessment to provide a baseline for
our management operations, to enable the
setting of targets for emissions reductions
and identify the specific measures by which
these reductions can be achieved. The
group also has a Climate Change Policy and
published its first Climate Change review
last year.
We were pleased to see our sustainability
credentials recognised in the year by once
again achieving 2nd place in the Next
generation ranking of the environmental
performance of major UK developers. In a

year in which a number of other accolades
were received, Crest was pleased to achieve
two further Building for Life gold awards
from the Commission for Architecture and
the Built Environment (CABE). Schemes
are judged against criteria which embody
CABEs vision of functional, attractive and
sustainable housing.
EMPLOYEES
Crests employees have performed very
well in what has been another difficult year
across the industry.
It has regrettably been necessary to engage
in further headcount reductions in order to
secure the future viability of the business.
Employees have been consulted during
these processes and, where positions have
been identified as redundant, every effort
has been made to re-deploy individuals in
suitable, alternative roles.
Where this has not been possible, Crest
has offered support in seeking alternative
employment.
FROM LEFT
The Pier at Ingress Park Greenhithe
Dockside at Port Marine, Portishead
DIRECTORS REPORT
RISKS AND UNCERTAINTIES

The principal risks facing Crest in 2010
are that:
existing difficulties in the UK housing
market will be compounded by a rise in
unemployment and/or pessimism about
employment prospects
lenders will continue to limit the
percentage loan-to-values that they are
prepared to lend to first-time buyers and
maintain downward pressure
on valuations
consumers adopt a wait and see
approach in the face of uncertainty arising
from the forthcoming general election
and potential fiscal and/or monetary
tightening to address the national debt
The reduction in land buying that has been

a feature of both 2008 and 2009, coupled
with delayed operational commencements
designed to match production with demand,
will mean that 2010 volumes are likely to be
lower than 2009.
The financing of Crests operations has
been restructured to reduce the interest
burden on the business and ensure that
there is sufficient working capital to sustain
trading. Latest forecasts, which take
account of current conditions, project that
there will be sufficient headroom within the
revised facilities to enable the business to
continue trading and that the business will
meet its covenants.
In the longer term, the risks facing Crest

relate to the ability to restore an appropriate
capital structure when or before existing
facilities expire, the ability to recruit and
retain staff with the requisite skills to secure
and deliver sustainable developments
which generate appropriate returns and
that increasing regulation, cost and delay
will render schemes unviable.
FROM LEFT
Admiralty Quarter, Portsmouth
DIRECTORS REPORT
In the short term, the business

will continue to face challenges
with subdued prices and lower
volumes. Over the longer
term, the fundamentals of the
housing market remain strong,
underpinned by a structural
imbalance between supply
and demand.
OUTLOOK
The steps that have been taken to
restructure the operations and the finances
of the business, along with our continued
commitment to excel in the area of
sustainable development, provide a solid
platform for future profitability.
Share capital
Details of shares issued during the year are
set out in Note 19 to the accounts.
Donations
During the period the Group made
donations to charities of 2,000. Employees
have continued to support the groups
nominated charity, The Variety Club and two
further Sunshine coaches were donated
in 2009, bringing to 11 the total number of
coaches donated. There were no political
donations made.
Employment policies
Arrangements exist to keep all employees
informed on matters of concern to them
through a variety of media including
conferences, newsletters and meetings.
It is the policy of the Group that disabled
persons shall be considered for
employment, training, career development
and promotion on the basis of their
aptitudes and abilities, in common with
all employees. The services of any existing
employee who becomes disabled are
retained wherever possible.
Training
The Group recognises that its reputation is
very dependent on the quality, effectiveness
and skill base of its employees. There is
a commitment at Board level to ensure
that its employees and management are
properly inducted into the Company and
given necessary training to fulfil their roles.
With ever increasing customer demands,
particular emphasis is placed on customer
service and build quality skills training.
FROM LEFT
Mr S Stone
Cromwell Park, Tetbury
DIRECTORS REPORT
Directors
Enviromental policy
Auditors
The Directors during the period were:-
It is the Companys policy to assess

environmental issues which may be
applicable to its business, customers
and the general public and to take
such measures consistent with being a
responsible property development group.
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.
Mr S Stone
(Appointed 23rd January 2009)
Mr D P Darby
Mr N C Tinker

Mr P Callcutt
(Appointed 23rd January 2009;
resigned 31st March 2009)
Mr A I Goldman
(Appointed 23rd March 2009)
Mr A M Coppel
(Appointed 6th April 2009)
Mr M G McCaig
(Appointed 6th April 2009)
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.
By Order of the Board

K M Maguire
Secretary
29th January 2010

09
FROM LEFT
The Academy, Kilburn
The Beacon, Hindhead
STATEMENT OF DIRECTORS
RESPONSIBILITIES
IN RESPECT OF THE DIRECTORS REPORT AND THE FINANCIAL STATEMENTS
The directors are responsible

for preparing the Directors
Report and the group and parent
company financial statements in
accordance with applicable law
and regulations.
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 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 judgments and estimates that are
reasonable and prudent;
for the group financial statements, state
whether they have been prepared in
accordance with IFRSs as adopted by
the EU;
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.
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.
ACCOUNTS 2009 | 10
INDEPENDENT AUDITORS REPORT

TO THE MEMBERS OF CREST NICHOLSON HOLDINGS LIMITED
We have audited the financial

statements of Crest Nicholson
Holdings Limited for the period
ended 31st October 2009 set out
on pages 11 to 37.
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).
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
9, 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 the
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

A description of the scope of an audit of
financial statements is provided on the
APBs web-site at www.frc.org.uk/apb/
scope/UKNP.
Opinion on financial
statements
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 31
October 2009 and of the groups loss for
the period then ended;
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
we have not received all the information
and explanations we require for our audit.
W E J Holland (Senior Statutory Auditor)

for and on behalf of KPMG Audit Plc,
Statutory Auditor
Chartered Accountants
London
29 January 2010
ACCOUNTS 2009 | 11
CONSOLIDATED INCOME
STATEMENT
For period ended 31st October 2009
NOTE
Revenue continuing activities
Cost of sales
Gross profit
Administrative expenses
PERIOD ENDED
31 OCT 2009
m
PERIOD ENDED
31 OCT 2009
m
PERIOD ENDED
31 OCT 2009
m
BEFORE
EXCEPTIONAL
ITEMS
EXCEPTIONAL
ITEM
(NOTE 3)
TOTAL
238.2
238.2
(205.2)
(205.2)
33.0
33.0
(19.1)
(18.7)
(37.8)
Share of post tax profits from jointly controlled entities
0.8
0.8
Other operating income
0.3
0.3
15.0
(18.7)
(3.7)
Profit/(loss) from operations
Finance income
4.7
Bank finance costs:

Nominal bank interest charges
(10.5)
Amortisation of bank debt fair value discount

Other finance costs
(35.7)
6
(46.2)
(5.5)
Loss before taxation

Income tax credit
Loss for the period attributable to
equity shareholders
(50.7)
7
0.2
(50.5)
ACCOUNTS 2009 | 12
CONSOLIDATED STATEMENT
OF RECOGNISED INCOME
AND EXPENSE
NOTE
2009
m
Cash flow hedges: effective portion of changes in fair value
19
0.2
Actuarial losses on defined benefit pension schemes
19
(27.3)
Net expense recognised directly in equity
(27.1)
Loss for the period
(50.5)
Total recognised expense attributable to equity shareholders
(77.6)
ACCOUNTS 2009 | 13
CONSOLIDATED
BALANCE SHEET
At 31st October 2009
ASSETS
NOTE
2009
m
Intangible assets
29.0
Property, plant and equipment
10
4.8
Investments
11
11.2
Available for sale assets
12
14.6
Non-current assets
59.6
Current assets
Inventories
13
386.0
Trade and other receivables
14
41.5
101.9
Cash and cash equivalents
529.4
Total assets
589.0
LIABILITIES
Non-current liabilities
Interest bearing loans and borrowings
15
(367.5)
Trade and other payables
16
(36.6)
Retirement benefit obligations
22
(46.1)
Provisions
18
(17.9)
(468.1)
Current liabilities
Trade and other payables
16
(195.1)
Provisions
18
(3.4)
(198.5)
Total liabilities
(666.6)
Net liabilities
(77.6)
SHAREHOLDERS EQUITY
-
Share capital
(77.6)
Retained earnings
Total deficit attributable to equity shareholders
These financial statements were approved by the board of directors on 29th January 2010 and were signed on its behalf by:
S Stone
D P Darby
Directors
19
(77.6)
ACCOUNTS 2009 | 14
CONSOLIDATED
CASH FLOW STATEMENT
2009
m
Cash flows from operating activities
Loss for the period
(50.5)
Adjustments for:
Depreciation charge
0.7
Loss on disposal of fixed assets
0.1
Impairment of goodwill
18.7
Net finance charges
47.0
Share of profit of joint ventures
(0.8)
Taxation
(0.2)
Operating profit before changes in working capital and provisions
15.0
Increase in trade and other receivables
(4.7)
Decrease in inventories
81.4
Increase in trade and other payables
9.4
Cash generated from operations
101.1
Interest paid
(6.2)
Net cash from operating activities
94.9
Cash flows from investing activities

Acquisition of subsidiary, net of cash acquired
15.4
Proceeds from sales of property, plant and equipment
0.1
Purchases of property, plant and equipment
(0.2)
Loans to joint ventures
(0.9)
Increase in available for sale assets
(5.9)
Net cash from investing activities
8.5
Cash flows from financing activities

Net proceeds from the issue of share capital
Debt arrangement & facility fees
(1.5)
Net cash flow from financing activities
(1.5)
Net increase in cash and cash equivalents

Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at end of the period
101.9
101.9
1. ACCOUNTING POLICIES
Crest Nicholson Holdings Limited (the
company) is a company incorporated
in the UK. The company was incorporated
on 23rd January 2009 and has
prepared accounts for the period
ended 31st October 2009.
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.
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
UK GAAP; these are presented on pages
35 to 37.
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 26.
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
is dependent for its working capital
requirements on funds provided to it
through senior bank facilities totalling
500 million and a working capital facility
of 40 million. As part of the financial
restructuring of the group, the Directors
prepared cash flow projections for the
period to maturity of the senior facilities
in March 2012. These projections have
been updated subsequently and show that
the group is capable of operating within
the bank facilities currently available and
meeting the financial covenant tests.
However, the nature of the groups business
is such that there can be unpredictable
variations in the timing of cash inflows and
performance. The Directors recognise that
in the current economic environment, risks
exist regarding the amount and timing of
cash flows from future sales and future
building costs and have considered the
effect of reasonably possible variations.
The Directors have concluded, after making
enquiries and considering the uncertainties
described above, that there is a reasonable
expectation that the group has adequate
resources to continue in operational
existence for the foreseeable future.
For these reasons, the Directors consider

it appropriate to prepare the financial
statements of the group on a going concern
basis. These financial statements do not
include any adjustments that would result
from the going concern basis of preparation
being inappropriate.
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 recognised income and expense.
ACCOUNTS 2009 | 15
NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS
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.
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 which 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 recognition
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.
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.
Exceptional items
Exceptional items are those significant
items which 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.
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.
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.
Dividends
Dividends are recorded in the groups
financial statements in the period in which
they are paid.
ACCOUNTS 2009 | 16

Property, plant and equipment

Property, plant and equipment is initially
recognised at cost. Freehold land is
not depreciated.
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.
Available for sale assets
These 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.
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.
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.
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 also makes payments into a defined
contribution scheme for employees.
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.
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.
ACCOUNTS 2009 | 17

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 at
their fair value.
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.
Impact of Standards and Interpretations in

issue but not yet effective
A number of relevant new standards,
amendment to standards and
interpretations are not yet effective for
the period ended 31 October 2009 and
have not been applied in preparing these
consolidated financial statements:
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.
Revised IAS 23 Borrowing Costs removes

the option to expense borrowing costs and
requires that an entity capitalise borrowing
costs directly attributable to the acquisition,
construction or production of a qualifying
asset as part of the cost of that asset. The
revised IAS 23 will become mandatory for
the Groups 2010 financial statements and
may constitute a change in accounting
policy for the Group.
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.
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.
IFRIC 15 - Real Estate Sales requires real

estate sale agreements to be accounted
for under IAS 11 only if it is a contract to
provide construction services to the buyers
specifications. Alternatively, if it is an
agreement for the sale of goods (completed
real estate units) then it would be accounted
for under IAS 18. The Group will review the
implications of IFRIC 15 in preparing its
2010 financial statements.
Amendments to IAS 1 Presentation of
financial statements require companies
to present both a SOCIE and either a
statement of comprehensive income or
an income statement accompanied by a
statement of other comprehensive income
as financial statements (formerly referred
to as primary statements).
ACCOUNTS 2009 | 18

ACCOUNTS 2009 | 19
The amendments will become mandatory

for the Groups 2010 financial statements.
Amendments to IFRS7 Financial
Instruments: Disclosure requires certain
fair value disclosures relating to fair
value measurements using a three level
hierarchy. The Group will review the
implications of these amendments in
preparing its 2010 financial statements.
With the exception of revised IAS 23, the
Directors expect that the adoption of these
standards and interpretations in future
periods will not have any significant impact
on the financial statements of the Group.
Revised IAS 23 Borrowing Costs may
represent a change in accounting policy but
is likely to have only a modest impact on the
Groups 2010 financial statements.
2. REVENUE
3. EXCEPTIONAL ITEM
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.
Following the acquisition of Castle Bidco

Limited by Crest Nicholson Holdings
Limited on 24th March 2009, the goodwill
arising on acquisition was assessed for
impairment. An exceptional impairment
charge of 18.7m was made in the period.
Profit/(loss) from operations is stated after charging/(crediting) the items set out below:
2009
m
Staff costs (Note 5)
15.8
Net loss on disposal of property, plant & equipment
0.1
Depreciation
0.7
Operating lease rentals:

Hire of plant and machinery
0.1
Other including land and buildings
2.5
Auditors remuneration:
000
Audit of these financial statements
61
Audit of financial statements of subsidiaries pursuant to legislation
114
Other services relating to taxation
21
In addition to the Auditors remuneration disclosed above, fees of 7k 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
5. STAFF NUMBERS & COSTS

2009
Average number of persons employed by the Group
number
Development
456
Head office
11
467
Staff costs
Wages and salaries
13.4
Social security costs
1.4
Other pension costs
1.0
15.8
Key Management comprises the Main Board, as the Directors 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:
2009
Directors' remuneration
000
Aggregate emoluments
871
Retirement benefits are accruing to three directors under the Crest Nicholson defined benefit scheme. The aggregate value of company
contributions paid for directors was 79,000.
2009
Highest paid Director
Emoluments
000
341
Defined benefit scheme

Accrued pension at end of year
99
ACCOUNTS 2009 | 20
4. PROFIT/(LOSS) FROM OPERATIONS
2009
m
Interest income
0.6
Imputed interest on available for sale assets
0.6
Expected return on defined benefit pension plan assets
3.5
Finance income
4.7
Nominal bank
interest charges
Amortisation of
bank debt fair
value discount
Total
Bank term loan Facility B
5.2
6.6
11.8
Bank term loan Facility E
3.7
29.1
32.8
Other interest
1.6
1.6
10.5
35.7
46.2
Imputed interest on deferred land creditors
1.5
1.5
Interest on defined benefit pension plan obligations
4.0
4.0
5.5
5.5
Finance costs
16.0
35.7
51.7
7. TAXATION
2009
m
Current tax income
UK Corporation tax on profits for the period
(0.2)
Deferred tax expense

Origination and reversal of temporary differences (note 17)
Total tax in income statement
(0.2)
The total tax charge for the period is higher than the standard rate of UK corporation tax of 28%. The differences are explained below:
2009
m
Loss before tax
(50.7)
Tax on Loss at 28%
(14.2)
Effects of:
Expenses not deductible for tax purposes
0.6
Deductible temporary differences not recognised
(0.4)
Land remediation tax credit
(0.2)
Unrecognised tax losses
14.0
Total tax in income statement
(0.2)
ACCOUNTS 2009 | 21
6. FINANCE INCOME & COSTS
There were no distributions to equity shareholders in the period. No dividend has been proposed by the directors after the balance
sheet date.
9. INTANGIBLE ASSETS
Total Goodwill
2009
m
Cost
At start of period
Acquired through business combination
47.7
47.7
Impairment
At start of period
Impairment charge
(18.7)
(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 9.73%, 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 & EQUIPMENT

Total Plant, Vehicles &
Equipment
2009
m
Cost
At start of period
8.6
Additions
0.2
Disposals
(0.5)
8.3
Accumulated depreciation
At start of period
3.1
Charged in the period
0.7
Disposals
(0.3)
3.5
Net book value

4.8
ACCOUNTS 2009 | 22
8. DIVIDENDS
Cost of
Investment
Loans
Share of Post
Acquisition
Reserves
Total
At start of period
Joint ventures
4.4
(15.2)
(10.8)
Share of profit for the period
0.7
0.7
Additions
6.8
6.8
At 31 October 2009
11.2
(14.5)
(3.3)
st
Analysed on the balance sheet between:

Investments
11.2
Current liabilities provisions (note 18)
(2.2)
Non-current liabilities provisions (note 18)
(12.3)
At 31 October 2009
(3.3)
st
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 2009, 3m was due from Crest Nicholson Operations Limited to Brentford Lock Limited, pending declaration of a final dividend.
The Group has a 50% interest in Crest Nicholson Bioregional Quintain LLP, a Limited Liability partnership set up to develop a site in
Brighton. At 31st October 2009, Crest Nicholson Bioregional Quintain LLP had Capital Employed of 15m.
The Group has a 50% interest in Crest/Galliford Try (Epsom) LLP, a Limited Liability partnership set up to develop three sites in Epsom. At
31st October 2009, Crest/Galliford Try (Epsom) LLP had Capital Employed of 78m.
Subsidiary undertakings
The subsidiary undertakings which are significant to the Group and traded during the period are set out below. The Groups interest is in
respect of ordinary issued share capital which 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
Holding company
Crest Nicholson PLC
Holding company
Crest Nicholson Operations Limited
Residential and commercial property development
Crest Nicholson Residential (London) Limited
Holding company
ACCOUNTS 2009 | 23
11. INVESTMENTS
2009
m
At start of period
8.3
Additions
6.0
Disposals
(0.1)
Change in fair value
0.4
At 31 October 2009
14.6
st
Crest Nicholson 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 10 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.
Crest Nicholson has also participated in the governments Homebuy scheme, under which up to 30% of the purchase price of selected
properties was 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
are repayable at the relevant percentage of the market value of the property 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
2009
m
Work in progress: land, building and development
Completed buildings including show houses
338.2
47.8
386.0
Included within inventories is 235.7m expected to be recovered in more than 12 months.

Inventories to the value of 185.3m were recognised as expenses in the period.
ACCOUNTS 2009 | 24
12. AVAILABLE FOR SALE ASSETS
2009
m
Current
Trade receivables
10.1
Recoverable on contracts
23.3
Due from associate
0.1
Other receivables
5.3
Interest rate cap
1.5
Prepayments and accrued income
1.2
41.5
15. INTEREST BEARING LOANS AND BORROWINGS

2009
m
Non-current
Term loans
349.3
Other loans
12.6
Loan notes
5.6
367.5
16. TRADE AND OTHER PAYABLES

2009
m
Non-current
Land payables on contractual terms
Accruals
32.1
4.5
36.6
Current
Land payables on contractual terms
40.7
Other trade payables
19.6
Payments on account
22.7
Due to associates
0.2
Other taxes and social security costs
1.0
Other payables
33.9
Accruals
77.0
195.1
ACCOUNTS 2009 | 25
14. TRADE AND OTHER RECEIVABLES
Deferred tax assets are recognised to the extent that the realisation of the related tax benefit through future taxable profits is probable.
The company did not recognise deferred tax assets of 74.1m in respect of losses amounting to 264.5m that can be carried forward
against future taxable income. The company did not recognise other deferred tax assets of 15.1m, in relation to retirement benefit
obligations 12.9m, and 2.2m other timing differences
18. PROVISIONS
Rental and other

obligations in respect of
vacant properties
Future losses
on joint venture
(note 11)
Total
2009
m
3.2
12.3
15.5
Non-current
At start of period
Charged to the income statement
2.4
2.4
5.6
12.3
17.9
2.1
2.9
5.0
(0.9)
(0.7)
(1.6)
1.2
2.2
3.4
Current
At start of period
Credit to the income statement
At 31 October 2009
st
ACCOUNTS 2009 | 26
17. DEFERRED TAX ASSETS
Retained
earnings
Total
Cash flow
hedging
reserve
m
Loss for the period
(50.5)
(50.5)
Shares issued (100)
Actuarial loss on pension scheme
(27.3)
(27.3)
Share capital
Cash flow hedges: effective portion of changes in fair value
0.2
0.2
Balance at 31st October 2009
0.2
(77.8)
(77.6)
Share Capital
2009
Authorised
10,000 shares of one penny each
100
Allotted and fully paid

10,000 shares of one penny each
100
At 31st October 2009 there were no options outstanding to subscribe for ordinary shares.
Cash flow hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related
to hedged transactions that have not yet occurred.
20. ACQUISITION OF SUBSIDIARY

On 24th March 2009, the Group acquired all of the ordinary shares in Castle Bidco Limited for a total consideration of 1, as part of a
financial restructure of the Crest Nicholson property development business. The transaction has been accounted for using the purchase
method of accounting.
Acquirees net assets at the acquisition date
Book value
m
Fair value
m
109.6
Property plant and equipment
5.5
5.5
Investment in jointly controlled entities
4.7
(10.8)
Available for sale financial assets
8.3
8.3
669.4
467.4
Goodwill
Inventories
Cash
Bank borrowings and other loans
Other receivables, payables and provisions
Retirement benefit obligations
Net identifiable assets/(liabilities)
Goodwill on acquisition
Consideration paid (including costs) - 1, satisfied in cash
15.4
15.4
(1,166.5)
(334.0)
(158.9)
(178.6)
(20.9)
(20.9)
(533.4)
(47.7)
47.7
-
Net cash and cash equivalents acquired
(15.4)
Net cash inflow in the period
(15.4)
ACCOUNTS 2009 | 27
19. CAPITAL AND RESERVES
The fair valuation of bank loans comprised two elements. As part of the financial restructuring of the Crest Nicholson group, 648m of
bank borrowings and interest accruals were written off or converted into equity. The remaining, restructured debt of 518.5m included
350m of performing debt upon which interest would be paid in cash and 150m of non-performing debt upon which interest would
accrue, to be paid at the facility termination date.
The 350m of performing debt was fair valued at 315.5m, having regard to the below-market coupon on this restructured borrowing
for a group in Crest Nicholsons position. Market sector evidence at the time of acquisition indicated that lenders would require a margin
over cost of funds of 4% and the fair valuation of this debt was calculated assuming this required level of return. The fair value of the
non-performing debt was established by considering the debt-free enterprise value of the group at the acquisition date and deducting
debt repayments that would rank ahead of this debt. As a consequence, the non-performing debt was fair valued at nil. 18.5m of other
loans were fair valued at their face value.
Goodwill arising on the acquisition is attributable to the intrinsic value within acquired strategic land holdings, which is realised upon
the receipt of satisfactory planning permission being obtained and the development or sale of the land.
Castle Bidco Limited contributed 238.2m of revenue, 33.0m of gross profit and (50.5)m loss after taxation for the period between the
date of acquisition and the balance sheet date. Had the acquisition taken place on the first day of the financial period, the contribution to
revenue would have been 315.6m, 43.7m of gross profit and (87.1)m loss after taxation.
21. FINANCIAL INSTRUMENTS & RISK MANAGEMENT

Group operations are financed through net borrowings, comprising bank and loan facilities which are secured by fixed charges over land
and work-in-progress. The Group has hedged a substantial portion (260 m) of its floating rate interest exposure by the use of a financial
instrument (cap), which caps the LIBOR rate paid by the business to 3%.
Fair values
Financial assets
The carrying amount of financial assets equates to their fair value. Financial assets of the Group at 31st October 2009 consisted of sterling
cash deposits of 101.9m, with solicitors and on current account and 14.6m of available for sale assets.
Financial liabilities
The fair value of the facilities and their related hedging instruments is determined by discounting risk-adjusted expected future cash flows
with application of current market interest rates.
The fair values of the facilities determined on this basis are:
Nominal
interest rate
Face
value
2009
m
Carrying
value
2009
m
Fair
value
2009
m
Year of
maturity
Facility B Term loan
12 mth LIBOR + 0.50%
343.5
315.6
317.6
2012
Facility C Term loan
12 mth LIBOR + 0.50%
0.9
0.9
0.9
2012
Facility E Term loan
6 mth LIBOR + 2.50%
153.7
32.8
25.9
2012
Loan notes
3 mth LIBOR - 0.50%
5.6
5.6
5.6
2012
Other loans
6.75%
12.6
12.6
12.6
2012-13
516.3
367.5
362.6
Total non-current and current

interest bearing loans
The difference between the face value and the carrying value of the term loans of 27.9m and 120.9m respectively (148.8m in total) is
being charged as interest over the life of the facilities.
The carrying amount of the financial liabilities equates to their fair value, with the exception of the Term loans. The Facility B term loan
has a fair value of 317.6m, valued on a discounted cash flow basis, taking into account the margin over cost of funds that would ordinarily
be payable by companies in the groups market sector. The Facility E term loan has a fair value of 25.9m. This has been calculated by
assessing the debt-free enterprise value of the group at the balance sheet date and deducting from this value debt repayments that would
rank ahead of this debt.
ACCOUNTS 2009 | 28
Inventories were valued by comparing forecast revenues with estimated costs to complete, after making appropriate allowance for an
appropriate profit margin. Inventories held in joint ventures were fair valued in the same way and where the group was under a legal
or constructive obligation to continue with construction, provision was made for future losses. Following the fair valuation of inventory,
provision was made for the onerous element of future land purchase commitments from which the group was not able to exit.
Undrawn borrowing facilities

The Group had undrawn committed borrowing facilities of 40m at 31st October 2009. The repayment terms of the facilities are set out
below. In addition there were undrawn guarantee facilities of 6.7m.
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 group 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 2009 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
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.
The following are the contractual maturities including estimated cash flows of the financial liabilities of the group at 31st October 2009:
Carrying
value
Contractual
cash flows
Within 1 year
1-2 years
2-3 years
More than
3 years
Facility B Term loan
315.6
362.6
5.4
9.7
347.5
Facility C Term loan
0.9
0.9
0.9
Facility E Term loan
32.8
166.4
166.4
Loan notes
5.6
5.8
1.0
1.0
3.8
Other loans
12.6
16.4
16.4
367.5
552.1
6.4
10.7
518.6
16.4
At 31 October 2009
st
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
The group is exposed to interest rate risk due to borrowing funds at floating interest rates. Interest rate caps are used to manage this
volatility. At the balance sheet date, the Group has hedged a substantial portion (260 million) of its floating rate interest exposure by the
use of a financial instrument (cap), which caps the LIBOR rate paid by the business to 3%. The remaining borrowing requirement is funded
principally through term loans which are subject to variable interest rates which remain unhedged.
The cap was deemed an effective cash flow hedge at the balance sheet date and was recognised at fair value of 1.5m. The fair value was
the estimated amount that the Group would receive if the instrument were sold at the balance sheet date. The movement in the fair value
during the period of 0.2m gain has been recognised directly in equity.
ACCOUNTS 2009 | 29
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.
Carrying amount
Sterling
Bank borrowings, loan notes and

long term creditors
Floating rate
financial liabilities
m
Fixed rate
financial liabilities
m
Financial liabilities
carrying no interest
m
Total
m
367.5
149.0
516.5
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 which have no interest payable but for which imputed interest is charged, consisting of land creditors, the weighted
average period to maturity is 39 months.
The maturity of the financial liabilities is:
2009
m
Repayable within one year
116.9
Repayable between one and two years
12.2
Repayable between two and five years
378.8
Repayable after five years
8.6
516.5
Sensitivity analysis
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.
This analysis assumes that all other variables remain constant and considers the pre-tax effect of financial instruments
with variable interest rates.
2009
Equity
m
2009
Income statement
m
Increase in rates
(5.0)
(5.0)
Decrease in rates
5.0
5.0
Capital management
New operating policies and procedures were approved by the board as part of the financial restructuring agreed in March 2009. The group
has also agreed new covenants with the lenders as part of the terms of the restructure.
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.
ACCOUNTS 2009 | 30
Interest rate risk

At 31st October 2009, the interest rate profile of the financial liabilities of the Group was:
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 period was 0.3m.
At the balance sheet date there were no outstanding or prepaid contributions.

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 schemes are held separately from those of the Group, being invested in managed funds. The most recent funding
valuation of the scheme was carried out as at 1st February 2007 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:
24th March
2009
%pa
31st October
2009
%pa
Discount rate
6.6%
5.5%
Salary escalation
3.5%
4.4%
Price inflation
2.5%
3.4%
Pension increases on benefit increasing in line with 5% or RPI if lower
2.5%
3.0%
Expected return on invested assets
6.2%
6.1%
Expected return on insurance annuity contracts
6.6%
5.5%
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:
2009
%
Equities
50.8%
Bonds
28.4%
Property
2.1%
Cash
4.9%
Secured annuities
Total
13.8%
100.0%
The amounts recognised post 24th March 2009 are as follows:

2009
m
Current service cost recognised in administrative expenses
Interest cost recognised in finance costs
Expected return on scheme assets recognised in finance income
Total
0.5
4.0
(3.5)
1.0
Actuarial loss
27.3
Total defined benefit scheme costs recognised in the period
28.3
ACCOUNTS 2009 | 31
22. EMPLOYEE BENEFITS
The actual return on plan assets is:

2009
m
Expected return on scheme assets
3.5
Actuarial loss on scheme assets
(27.3)
Actual return on scheme assets
(23.8)
The amounts included in the balance sheet arising from the Groups obligation in respect of its defined benefit scheme are as follows:
2009
m
Present value of defined benefit obligations
136.4
Fair value of scheme assets
(90.3)
Defined benefit liability recognised in the balance sheet
46.1
No deferred tax asset has been recognised on the balance sheet in relation to the net pension obligation as realisation of the related tax
benefit through future taxable profits is not considered probable in the foreseeable future.
Movements in the liability recognised on the balance sheet were as follows:
2009
m
At 24th March 2009
20.9
Total expense (as shown above)
28.3
Company contributions paid in the period
(3.1)
46.1
Changes in the present value of the defined benefit obligation were as follows:
2009
m
At 24th March 2009
99.7
Current service cost
0.5
Interest cost
4.0
Employee contributions
0.2
Actuarial losses
36.1
Benefits and expenses paid
(4.1)
At 31 October 2009
st
136.4
Changes in the present value of the defined benefit obligation were as follows:
2009
m
At 24th March 2009
78.8
Expected return on scheme assets
3.5
Actuarial gain on scheme assets
8.8
Employer contributions
3.1
Employee contributions
0.2
Benefits and expenses paid
(4.1)
At 31 October 2009
90.3
st
ACCOUNTS 2009 | 32
The cumulative debit to the SORIE since the adoption of IAS 19 (Revised) is 27.3m post 24th March 2009.
ACCOUNTS 2009 | 33
A history of experience adjustments is as follows:

2009
m
Present value of defined benefit obligation
136.4
Fair value of scheme assets
90.3
Deficit in the scheme
46.1
Experience adjustments on scheme liabilities
35.7
Percentage of scheme liabilities

Experience adjustments on scheme assets
Percentage of scheme assets
26.2%
8.5
9.4%
The expected employer contributions to the defined benefit scheme during 2010 are 4.9m.
23. 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.
24. OPERATING LEASES

At 31 October 2009 total outstanding commitments for future minimum lease payments under non-cancellable operating leases were:
2009
m
Land and buildings
Within one year
3.8
Less: minimum sub-lease income
(1.6)
Between two and five years
13.8
(2.7)
After five years
13.4
(0.7)
26.0
Other
Within one year
0.6
Between two and five years
1.0
1.6
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) On 24th March 2009, the company acquired Castle Bidco Limited, the parent company of Crest Nicholson PLC, pursuant to a financial
restructuring of the Crest Nicholson group. 90% of the shares in Crest Nicholson Holdings Limited are owned by the syndicate of lenders
who have made Term loans to the business.
At 31st October 2009, the interests of the syndicate lenders in the financial instruments of the Group were as follows:
m
Term loans (500m face value)
349.3
In addition, the syndicate lenders provide a 66.3m bank guarantee facility. Guarantees of 59.6m had been given by the lenders at 31st
October 2009.
Borrowings of the Group are secured against the value of stock and work in progress.
(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.
26. ACCOUNTING ESTIMATES & JUDGEMENTS

Management considers the key estimates and judgments made in the accounts to be related to the valuation of Goodwill, WIP
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.
Carrying value of land and work in progress
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.
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.
Pensions
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.
ACCOUNTS 2009 | 34
25. RELATED PARTY TRANSACTIONS
ACCOUNTS 2009 | 35
COMPANY
BALANCE SHEET
As at 31st October 2009
Note
2009
Fixed assets
Investments
Current assets
Cash at bank and in hand
99
Net current assets
99
Total assets less current liabilities
Net assets
99
Capital and reserves

Called up share capital
100
Profit and loss account
(1)
Equity shareholders funds
99
Approved by the Board of Directors on 29th January 2010 and signed on its behalf by:
S Stone
D P Darby
Directors
There are no recognised gains and losses other than the loss for the period.
1. ACCOUNTING POLICIES
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the
financial statements.
Basis of preparation
The Company financial statements have been prepared under the historical cost accounting rules and in accordance with applicable UK
Accounting Standards.
Under section 408 of the Companies Act 2006 the company is exempt from the requirement to present its own profit and loss account.
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.
Taxation
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.
Dividends
Dividends are recorded in the Companys financial statements in the period in which they are paid.
2. staff numbers and costs

The Company has no employees.
3. 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.
DIRECTORS2009
ACCOUNTS
REPORT
| 362009 | 00
NOTES TO THE COMPANY FINANCIAL

STATEMENTS FOR THE PERIOD TO
31st OCTOBER 2009
Shares in and loans to subsidiary undertakings
At start of period
Additions
1
397,615,000
Capital contribution to subsidiary undertaking
(397,615,001)
Impairment
The subsidiary undertakings which are significant to the Group and traded during the period are shown in Note 11 of the Consolidated
financial statements.
5. SHARE CAPITAL
Authorised
100
10,000 Ordinary shares of 1p each

Allotted, called up and fully paid
100
10,000 Ordinary shares of 1p each
6. RECONCILIATION OF SHAREHOLDERS FUNDS

Share Capital
Total
Profit and loss

account
100
100
Loss for the period
(397,615,001)
(397,615,001)
Gain on equitisation of debt
397,615,000
397,615,000
100
(1)
99
At start of the period

Issue of shares
At 31 October 2009
st
The loss dealt with in the books of the company was 397,615,001. On acquisition of Castle Bidco Limited, the company became a
guarantor to the senior facilities agreement and the mezzanine facilities agreement of the Castle Bidco group. Lenders under these
facilities made a partial demand under this guarantee amounting to 397,615,000. This was treated as a capital contribution to Castle Bidco
Limited, with the corresponding receivable from Castle Bidco being subsequently waived. The initial investment of 1 was impaired to nil.
The lenders also agreed to exchange their debt of 397,615,000 for equity in the company, resulting in a gain on equitisation.
7. 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.
8. RELATED PARTIES
As 100% of the Companys voting rights are controlled within the Crest Nicholson group, the Company has taken advantage of the
exemption contained in FRS 8 and has therefore not disclosed transactions or balances with entities which form part of the group
(or investees of the group qualifying as related parties).
ACCOUNTS 2009 | 37
4. FIXED ASSET INVESTMENTS

Crest House
Pyrcroft Road
Chertsey
Surrey
KT16 9GN
Tel: 01932 580555
Fax: 0870 336 3990
www.crestnicholson.com

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REPORT

CREST NICHOLSON HOLDINGS LIMITED

DIRECTORS REPORT 2009 | 02

Crest Nicholson is a leading

The Directors present their annual report

RESULTS AND DIVIDEND1

Crest Nicholson holds the Queens Award for

The Directors do not propose a dividend.

DIRECTORS REPORT 2009 | 03

The financial restructuring

The Directors recognise that in the

Registered no. 6800600

DIRECTORS REPORT 2009 | 04

Total Crest housing completions in

MIXED USE COMMERCIAL

The short term housing land bank declined

The groups contracted land bank is

Total short term

Total under contract

Short term housing

DIRECTORS REPORT 2009 | 05

Despite the impact that the

Crest continues to be committed to

performance of major UK developers. In a

DIRECTORS REPORT 2009 | 06

RISKS AND UNCERTAINTIES

The reduction in land buying that has been

In the longer term, the risks facing Crest

DIRECTORS REPORT 2009 | 07

In the short term, the business

DIRECTORS REPORT 2009 | 08

The Directors during the period were:-

It is the Companys policy to assess

Pursuant to section 487 of the Companies

By Order of the Board

DIRECTORS REPORT 2009 | 00

The directors are responsible

In preparing each of the group and parent

The directors are responsible for keeping

INDEPENDENT AUDITORS REPORT

We have audited the financial

Scope of the audit of the

Opinion on other matter

W E J Holland (Senior Statutory Auditor)

Revenue continuing activities

Share of post tax profits from jointly controlled entities

Other operating income

Profit/(loss) from operations

Bank finance costs:

Amortisation of bank debt fair value discount

Loss before taxation

Cash flow hedges: effective portion of changes in fair value

Actuarial losses on defined benefit pension schemes

Net expense recognised directly in equity

Loss for the period

Total recognised expense attributable to equity shareholders

Property, plant and equipment

Available for sale assets

Trade and other receivables