CAIRN HOMES PLC ANNUAL REPORT 2021

Our investment

in sustainable

homes

Our investment in sustainable homes.

Cairn has been leading the way in the Irish

housing market since 2015. In that time the

business has scaled and today we are active

on 21 residential development sites with the

resources to deliver a broad choice of new

homes, to a broad and widening buyer pool

in great locations where people want to live

now and into the future.

Strategic Report 02-73

02 2021 Highlights

04 At a Glance

06 Chairman’s Statement

12 Chief Executive Officer’s Statement

18 Market Overview

26 Business Model

28 Our Strategy

30 Stategy in Action

50 Stakeholder Engagement

52 Sustainability

60 Chief Financial Officer’s Report

62 Risk Report

IN THIS REPORT

You can also read our Annual Report

online at cairnhomes.com/investors

AT A GLANCE

An analysis of our historic low-cost

c. 17,700 unit landbank by individual

site, location, planning status and

average plot cost.



Read more about our portfolio

on pages 4 and 5.

MARKET OVERVIEW

A focus on the fundamentals of the

Irish economy, the Irish homebuilding

sector and Cairn’s positioning within

the Irish new homes market.



Learn more about how the property

market is developing on pages 18 to 25.

OUR STRATEGY AND

STRATEGY IN ACTION

Our end to end business model and

the five strategic pillars under which

we run our business: customers,

homes, places, people and

operational excellence.



Find out more about our strategy and

what we are doing on pages 28 to 49.

ABOUT CAIRN

01CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Corporate Governance 74-110

74 Board of Directors

76 Senior Leadership Team

78 Corporate Governance Report

87 Audit & Risk Committee Report

91 Nomination Committee Report

94 Directors’ Remuneration Report

108 Directors’ Report

Financial Statements 111-161

112 Statement of Directors’

Responsibilities in respect

of the Annual Report and

the Financial Statements

113 Independent Auditor’s Report

119 Consolidated Statement

of Profit or Loss and Other

Comprehensive Income

120 Consolidated Statement

of Financial Position

121 Consolidated Statement

of Changes in Equity

123 Consolidated Statement

of Cash Flows

124 Notes to the Consolidated

Financial Statements

151 Company Statement

of Financial Position

152 Company Statement

of Changes in Equity

154 Company Statement

of Cash Flows

155 Notes to the Company

Financial Statements

Additional Information 162

162 Company Information

Cover image: Archer’s Wood, Delgany

OUR SUSTAINABILITY

COMMITMENTS

We are building on the enthusiasm,

commitment and culture for

sustainability that already exists

in Cairn and have disclosed our

sustainability metrics against

which our Sustainability Agenda

can be measured.



Read more about our risk

management on pages 62 to 73.

€424.0m

€261.9m

2020 2021

-€109.5m-€168.3m

2020

2021

€132.3m

-€5.9m

2020 2021

19.8 %

16.3%

2020 2021

€58.4m

€24.4m

2020 2021

13.8%

9.3%

2020 2021

OPERATING CASHFLOW*

+€138.2m

REVENUE

+62%

NET DEBT**

-€58.8m

OPERATING PROFIT

+139%

GROSS MARGIN

+350 bps

OPERATING MARGIN

+450 bps

2021 HIGHLIGHTS

FINANCIAL HIGHLIGHTS

* Before any capital allocation considerations,

including reductions of debt, dividends or accretive

strategic acquisitions, JVs or investments.

Calculated as €88.5 million net cash from operating

activities plus €43.8 million invested in accretive

strategic land acquisitions (2020: operating cash

outflow of €5.9 million, defined as €40.6 million net

cash used in operating activities plus €34.7 million

invested in accretive strategic land acquisitions).

** See Chief Financial Officer’s Report on

pages 60 and 61 for details of net debt.

*** Defined as Profit after Tax divided by Total Equity

at Year End. Calculated as €43.2m/€778.8m

(2020 ROE: €12.7m/€750.6m).

2021 was another year

of building asustainable,

long-term, profitable

business which will

contribute greatly to

Irish society.

03CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

€83.9m

€42.7m

2020 2021

5.6%

1.7%

2020 2021

5.8 cent

1.7 cent

2020 2021

EPS

+4.1 cent

GROSS PROFIT

+€41.2m

ROE***

+390 bps

OPERATIONAL HIGHLIGHTS

Building a long-term competitive and market advantage.

OUR CONTINUED INVESTMENT

In people, our operating platform and

supply chain providing our business with

a unique and compelling long-term

competitive and market advantage.

OUR INVESTMENT IN INNOVATION

Continued use of innovative off-site

manufacturing and new construction

methodologies, in addition to programme

management tools and standardisation

of construction programme delivery.

CONTINUING TO SCALE

Currently active on 21 sites, including eight

new site commencements since May 2021.

In 2022, Cairn will be supporting over 3,000

full-time positions on an average of

22 active sites building high quality,

sustainable new homes on well-located

developments with full planning permission.

RECORD SALES LEVELS

Agreed the sale of over 1,400 new homes

in 2021, including our 5,000

since our IPO

in 2015, with this strong sales momentum

continuing in the early months of 2022,

particularly from starter home and

trade-up/down schemes with private,

mortgage-backed customers. 1,218 closed

and forward sales as at 2 March 2022, with

a net sales value of €463m, underpins 2021

guidance of 1,500 sales completions.



Read more in our Chief Financial Officer’s

review on pages 60 to 61.

Donnybrook Gardens, Dublin 4

Mariavilla, Maynooth

High capacity public

transport routes

Coastal commuter train

Rapid city train red line

Rapid city train green lin

Commuter rail

Active at year-end

Future

N11

N81

M50

MEATH

KILDARE

WICKLOW

DUBLIN

450

500

400

350

300

250

200

150

100

10,000

12,000

8,000

18,000

16,000

14,000

6,000

2,000

4,000

2015 202120202018 201920172016

Cumulative Units AcquiredAcquisitions in Period (€’m)

c. 17,700

Units within our landbank across

37 separate sites

Active sites today, with up to 6 new site

commencements scheduled over the

coming months

€970m

Invested in our landbank through

site acquisitions since June 2015

We have the land and operating platform to deliver our growth

agenda and create shareholder value into the long-term.

70%

of total capital deployed

in 2015 and 2016

65%

of existing landbank units

acquired within one year of IPO

10,000

units granted planning

permission since 2015,

including c. 1,100 units in 2021

c.17,700 UNIT LANDBANK - BALANCE SHEET CARRYING VALUE €672 MILLION

AT A GLANCE

Our investment

in growth

Source: Cairn Management data

05CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

28%

26%

16%

■

Strategic Development Zone ■ Full Planning Permission ■ In Planning

■

Residentially Zoned ■ Unzoned

applications

grants

site

commencements

• As at 2 March 2022, Cairn had received planning permission

for 5,734 new homes under the Strategic Housing Development

(“SHD”) process from 17 successful grants of planning.

• This equates to 7.7% of all new homes granted planning

permission through this fast-track process.

• Cairn also accounts for over 15% of all new homes

commenced under this process.

sites with limited planning risk, enhanced by our unrivalled

planning track record

LANDBANK PLANNING STATUS SUCCESS THROUGH THE SHD PLANNING PROCESS

HOUSES

APARTMENTS

c. 13,000

houses within our landbank

€29,000

average house site cost

c. 4,700

apartments within our landbank

€53,000

average apartment site cost

WE OFFER A DIVERSE RANGE OF HIGH QUALITY NEW HOMES ACROSS ALL PRICE POINTS FROMENTRY

LEVEL STARTER HOMES TO PREMIUM APARTMENTS

27 sites:

housing sites

(average c. 570 units)

housing and apartment sites

(average c. 300 units)

14 sites:

apartment sites

(average c. 350 units)

housing and apartment sites

(average c. 300 units)

CHAIRMAN’S STATEMENT

Our investment

in Quality &

Sustainability

is at the heart

of everything

we do

“At Cairn, our sustainability approach

is considered and responsible:

building high-quality, sustainable

homes; crafting communities and

striving to improve the built

environment in Ireland.”

John Reynolds

Chairman of the Board

07CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

This ensures that we remain an ambitious,

committed and growing business; one

which is both an attractive place to work

for our growing team and the people within

our supply chain, and which can deliver

strong long-term returns for shareholders.

High-quality, competitively priced and

energy efficient new homes, an inclusive

work environment, sustainable business

practices and strong returns are not

mutually exclusive. We believe we are

delivering against each of these objectives.

They sustained our business throughout

2020 and 2021 and ensure we are

positioned to deliver for all stakeholders

in 2022 and beyond as our business

continues to grow.

2021 Review

As the year started, the pandemic

continued to impact our business. Strict

government restrictions remained in place

and directly affected our ability to operate

with effectively full residential development

site closures until 12 April 2021, albeit we

could continue to build and deliver

contracted social houses and onsite utility

connections. While there was an impact

on performance in the first half, we

demonstrated the strength of our operating

platform in the second half as restrictions

eased, delivering the strongest ever

half-year performance in the history of the

company. This is a performance of which

the Board is very proud and a reflection of

the strength of our Senior Leadership Team

and the dedication of our entire team.

Throughout the pandemic, our absolute

number one priority has been to protect the

health, safety and wellbeing of all of our

people, customers and the communities in

which we operate. While many of us have

adjusted to virtual working – several of our

board meetings continued to be held

virtually during the year – much of the work

we do as a homebuilder cannot be done

remotely. The safety of our people on our

construction sites, while it has always been

a priority, took on new meaning during 2020

and 2021. A key priority during the year was

to include the full leadership team in site

tours to enable them to get a clear

understanding of the issues on the ground.

While these visits were not possible at the

start of the year, the leadership team was

still able to complete more than 30 visits

across our active sites. We will continue

these visits in 2022 ensuring that we have

first-hand insight into the challenges that

our teams face each and every day.

Strong Financial Performance

Our financial and operational results were

characterised by a disruptive first half. The

second half represented Cairn’s strongest

ever performance in terms of new homes

sold, margin progression, profitability and

cash generation. The market demand for

high quality, competitively priced and

energy efficient new homes in great

locations remains strong.

Despite a shutdown of our sites in the first

half and the general challenging external

conditions that prevailed, we closed 1,120 new

home sales, delivered a gross margin of 19.8%

and reported an operating profit of €58 million

for the full year. Notwithstanding build cost

inflation of c. €15,000 per new home in 2021

(or c. 6%), we achieved strong margin growth

through improved mix with more apartments

sold, embedded supply chain efficiencies and

improved pricing in middle and upper end

apartments and houses. The affordability of

our starter homes remains a key objective -

our 2021 average selling price was €350,000,

including VAT, compared to €348,000 in 2020,

in prime, sought-after suburban locations. In

the context of the impact which the pandemic

restrictions had on our business last year, the

performance of our leadership team and

wider workforce, under the stewardship of our

Chief Executive Officer, Michael Stanley, is

fully acknowledged by your Board who have

observed the exceptional agile and effective

response to the multidimensional issues

confronting our business during this time.

Their hard work and commitment delivered

our strong operating and financial

performance in 2021, with an outstanding

second half in particular. The number of new

homes where we handed over keys to new

customers and our profitability in 2021, allied

with our large forward order book which stood

at 1,218 new homes as at 2 March 2022, are

testament to both our business model and the

hard work and ambition of the Cairn team,

ably led by Michael.

Delivering Returns

The uncertain and unpredictable impact

of COVID-19 led the Board to make the

difficult, but prudent decision in late March

2020 to withdraw the final 2019 dividend

and suspend our share buyback

programme. As we enter a more stable

period, supported by strong operating

cashflow generation, we have proposed a

final 2021 dividend of 2.8 cent per ordinary

share subject to shareholder approval at

our 2022 AGM. This follows a 2.66 cent

interim ordinary dividend per share paid in

October 2021. Given the significant levels of

Our focus at Cairn is not

simply building houses.

Our purpose is to build

places and homes where

people love to live

and creating thriving,

sustainable communities.

A focus on quality and

sustainability has brought

us to the forefront of the

Irish new homes market.

BOARD GENDER DIVERSITY

30%

TOTAL DIVIDEND PER SHARE FOR 2021

5.5c

CHAIRMAN’S STATEMENT CONTINUED

attract and retain the best people Ireland has

to offer. As a Board and a senior leadership

team, we place a relentless focus on ensuring

our people are excited to be a part of our

journey and constant feedback loops are a

central part of that. I was particularly pleased

that our external Board evaluation found that

the Board demonstrates a strong tone from

the top and promotes the desired culture

within the organisation.

Board Refreshment & Evaluation

There have been a number of changes on

the Board during the year. Jayne McGivern

stepped down from the Board due to her

executive commitments, and Andrew

Bernhardt retired from his role at the end

of 2021, having served on the Board as

a non-executive Director for six years.

We are grateful to Jayne and Andrew for

their contribution to Cairn.

Following a search led by the Nomination

Committee, we were delighted to welcome

Julie Sinnamon and Orla O’Gorman as

independent Directors and who bring deep

and valuable experience to Cairn in addition

to bringing important gender diversity to

the Board. Both Julie and Orla have joined

the Audit & Risk, and the Nomination

Committee, ensuring gender balance

at a committee level also.

In addition to the Board changes that

occurred during the year, Mr. David

O’Beirne has signalled his intention to step

down from the Board of Directors at this

year’s Annual General Meeting. He will

accordingly also be stepping down from

the Nomination and Remuneration

Committees. David joined the Board in 2019

and brought a wealth of experience and

insight into our deliberations, and the Board

would like to thank him for his contribution

to Cairn during this period.

operating cashflow which is being

generated, after funding the future growth

of our business, and the value inherent in

our share price, we also commenced a

€75 million share buyback programme

on 13 January 2022. This programme

augments our dividend payment, is

accretive to earnings per share and

supports a stronger long-term valuation

for our business. It is also a strong

statement of intent from the Board on our

ambitious future outlook and prospects.

Against this improved overall operating

environment and as we reinstate dividends

and return value to our shareholders, we also

seek to recognise the impressive work carried

out by our Executive Directors and Senior

Leadership Team in steering the Company

over the past two years.

Health and Safety

The Board and Senior Leadership Team

are committed to the highest standards of

health and safety on our sites. The health

and wellbeing of all our employees,

subcontractors, customers and the

communities in which we build is of

paramount importance to everyone in Cairn.

Over the past two years we invested heavily

in additional safety measures at our sites

including new work protocols, procedures

and practices in full compliance with all

social distancing, hygiene and cleaning

requirements. Site compounds, including

welfare facilities, have been reconfigured

to facilitate these new requirements and

we have invested in appropriate personal

protective equipment. Additional resources

have also been deployed to all of our sites

to undertake compliance supervision.

From a construction perspective and as a

homebuilder with ambitious growth targets,

increased construction activity levels can

increase the risk of accidents on active sites

and the Company continually promotes the

importance of a safe working environment

and ensures the highest industry health and

safety standards are set. Specific and

measurable KPIs within health and safety

inform and guide our health and safety

strategy. Each active site has a dedicated

health and safety officer, ensuring that our

health and safety policies are implemented.

Health and safety is a standing agenda item

at all Board and Audit & Risk Committee

meetings ensuring the regular review,

oversight, assessment and monitoring of

health and safety practices. The Company

undertakes regular internal audits of

health and safety practices which are

supplemented by targeted external audits.

During 2021, Cairn obtained a Grade A

Safe-T rating for the first time, a

demonstration of the importance, effort

and continued focus everyone in Cairn

places on our health and safety agenda.

Cairn also undertakes periodic reviews

of our Safety Management System to

ensure that this is updated for any

changing regulations and legislation

and supports our continued growth.

I would also like to acknowledge the

ongoing engagement with our office-based

staff working from home during the

pandemic to ensure their health and

wellbeing was and continues to be

supported. This engagement focuses on

resources for individuals, continuous

education and learning, virtual social

events, delivery of care packages to

employees’ homes and regular

communication and messaging.

People

Beyond issues of Health and Safety, we

continued to engage with our workforce

during 2021. We have a nominated workforce

Director to ensure the Board is apprised of the

views of the workforce, as well as conducting

semi-annual engagement surveys with

employees to hear their views. We are pleased

that the feedback from these surveys was

positive. Despite the difficult backdrop at times

over the past two years, 150 new people have

joined the Cairn team. However, we remain

aware that competition for talent has grown

since the onset of the pandemic, as individuals

seek more from their relationship with

employers. As a business, we have always

sought to be an employer of choice and

consider our culture and values, in addition

to competitive remuneration, benefits and

flexibility as a cornerstone of our efforts to

“During 2021, Cairn obtained a

Grade A Safe-T rating for the first

time, highlighting the importance

placed on health and safety.”

09CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Rostrevor Place, Dublin 6

Following his departure, Orla will take

on the important role of Workforce

Engagement Director, which has been

carried out by David to date. Since joining the

Nomination Committee, Orla has been part

of the discussions around our workforce

engagement efforts and stands in a good

position to successfully carry out this role.

During the past year, the Institute of Directors

conducted our triennial external Board

evaluation. As Chair, I was pleased that the

results indicated that the Board continues to

operate at a high standard in almost all areas.

While full details of the outcomes are

provided on page 84, one area identified for

improvement was the consistent availability

of training and education for Board members.

We will be implementing changes in this

regard during 2022 and will report on the

outcome in next year’s Annual Report.

Diversity

The importance of diversity continues to

be highlighted by the Board, investors and

other stakeholders. In 2019, the Board

adopted a formal Diversity Policy applicable

to the Company as a whole. We continued to

develop on our practices to elevate diversity

and inclusion throughout the organisation in

2021. At the end of 2021, female employees

made up 27% of our total workforce and

29% of our leadership team. At Board level,

gender diversity is 30% and as we come to

alignment with market best practice in this

regard, we will seek to continue to improve

gender representation on our Board.

Furthermore, our female Board

representation will be 33.33% following

David’s retirement in May 2022, which

represents a pleasing step on our journey to

appropriate gender diversity on our Board.

We recognise, however, that diversity is

far wider than just gender and have

actively reviewed the guidance of the

Parker Review in the UK. Despite the

different demographics in Ireland, it is

something the Nomination Committee is

aware of and continues to seek ways to

promote greater ethnic diversity in the

organisation and recruitment practices.

Another important diversity consideration is

in the skillset, thinking and background of

our Directors. Our most recent additions to

the Board, Julie and Orla, not only bring

gender diversity but also valuable and

diverse career expertise: leading the Irish

government organisation focused on the

development of Irish business; and in the

capital markets respectively. We will

continue to evaluate the needs of the

business and diversity across a range of

measures as we add further Directors to the

Board in the period ahead.

Oversight & Stakeholder Engagement

We recognise the importance of

engagement with our many stakeholders.

This is an important process of ensuring

effective oversight of the business. As

we engage with, and understand, the

perspective of our stakeholders, we have a

more holistic understanding of the business

which can inform our decision making.

As we have done in the past, I met with many

of our shareholders on strategy, governance

and remuneration matters. Throughout the

course of 2021 and in the first part of this

year, I have met with shareholders

representing over 60% of our shareholder

these meetings as a forum to discuss a

range of issues relating to strategy,

remuneration and environmental,

social and other governance issues.

Acknowledging that the resolution on the

Directors’ Remuneration Report received

opposition of approximately 25%

at the 2021 AGM, we have set out our

response through the voting results

disclosure, a six-month update and

through the 2021 Remuneration Report.

In addition to shareholders, the Board

receives regular updates and reports on the

workforce through our nominated Director,

David O’Beirne (who will be replaced by Orla

O’Gorman following our 2022 AGM) and

directly during site visits; and also conducted

a survey among subcontractors to ensure

that we are apprised of the perspective of

an important supplier to our business.

Engagement builds understanding and

through understanding we can ensure

we protect and enhance our business

performance in all market conditions.

Engagement and communication are key

to ensuring the Board understands the

stakeholder perspective and enables us

balance stakeholder interests in all decisions.

It also allows us to assess perceptions of our

corporate culture and whether the Board’s

ambitions for the business are aligned with

those of our stakeholders.

Sustainability & Reporting

Since our establishment as a homebuilding

company with ambitions to shape the future

of the sector in Ireland, we have been

acutely conscious of the short and

long-term impact our developments

have on our communities and environment.

A fundamental aspect of our approach to

acting responsibly and sustainably is

incorporating these considerations into

our everyday decisions and, thereafter,

reporting clearly on them to our

stakeholders through a defined set of

measurable non-financial disclosures.

While the Board has always been

responsive to these important matters, we

recognise the need to consistently enhance

our efforts in communicating our approach

to stakeholders. Building on last year’s

sustainability disclosures in our Annual

Report, this year we have published our

inaugural standalone Sustainability Report.

2021 was a year of considerable progress

at a global scale, the year of COP 26 with

the role of the financial sector further

highlighted, the year the EU Taxonomy

entered into law, but also a year marked

by a significant focus on employees, and

the challenges of economic progress on

society at large. Last year, we placed a

formal governance structure around

our sustainability journey with the

establishment of a Sustainability Steering

Group which reported directly to the Board

who held ultimate responsibility to oversee

the rollout of our ESG strategy. This

structure has evolved again with the

establishment of a formal Executive

Committee with overall accountability

to deliver on the ambitious strategy we

have set ourselves from 2022 and beyond.

The Board continues to support the

development of this strategy, from our first

standalone Sustainability Report which sets

out our progress and targets in relation to

our environment, social and governance

responsibilities to the incorporation of ESG

related metrics and targets within our

remuneration framework. Further details of

the priorities and objectives of the business

are detailed extensively in our Sustainability

Report and further details on the positive

changes we have within our remuneration

frameworks can be found in the Directors’

Remuneration Report.

As environmental and social concerns took

centre stage across the world over the

past year, we welcomed the increased

focus of stakeholders on ESG. In every

region, the need to act to address climate

change is growing by the day, while

the broader impact of COVID-19 has

heightened the awareness of the

interdependencies between business,

the community and wider society. As a

homebuilder, we believe sustainability is

central to everything we do. It needs to be

embedded into every new home we deliver

from initial design through to build and

use. Our approach to sustainability is

detailed in our inaugural standalone

Sustainability Report which we will

continue to expand on in the years ahead.

CHAIRMAN’S STATEMENT CONTINUED

11CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Outlook

2021 was an outstanding year for the Cairn

business and most particularly its people.

We are proud of the performance delivered

and the outlook for 2022. Reflecting on the

challenges of 2020 and the first half of 2021,

it is gratifying to say we are now poised to

deliver a record year across all financial

measures in 2022. While acutely focused on

delivering a strong financial performance

and shareholder returns, we also recognise

our responsibility to the communities and

society in which we operate. As mentioned

at the outset, delivering a sustainable

product, respecting our environment and

generating strong returns are not mutually

exclusive. Cairn has established itself as

the homebuilder of choice in Ireland. That is

a reputation we have invested in and we will

work to ensure we maintain that reputation

in the eyes of our employees, customers,

shareholders and other stakeholders.

Your Board, the Leadership Team and wider

employee base are profoundly saddened by

the continuing escalation and gravity of the

ongoing conflict in Ukraine and first and

foremost, our thoughts are with the people

of Ukraine at this intensely distressing time.

We will continue to monitor the situation

and the impact which this will have both

domestically and on the broader global

landscape. Notwithstanding this, our

outlook for 2022 remains encouraging.

I would like to record my appreciation for

the industry and collegiality of my fellow

Board members and to Michael and all

of the Cairn team. It is their hard work

which delivers for Cairn every day.

John Reynolds

Chairman

WHY INVEST IN US?

Cairn expects to deliver between 5,000 and 5,500

new homes in the three years to the end of 2024.

Our ambitious growth will be underpinned by an

efficient, sustainable self-delivery model across all new

home and building types and our ability to provide

competitively priced new homes for all segments of

our market. Here are the main reasons to invest in us:

TRACK RECORD

€970m invested in a c. 17,700 unit

low-cost landbank. Brought 10,000

homes successfully through planning

and sold over 5,500 new homes since

2015 in award winning developments.

CAIRN DIFFERENTIATORS

Strong asset-backed balance sheet,

delivering new homes to all buyer

types across housing and self-build

apartments. A brand synonymous

with quality, value for money and

customer service. An industry leading

reputation with strong customer and

stakeholder recognition.

MARKET OPPORTUNITY

8,000 private units in our landbank

priced under €400,000 for first time

buyers. With regional expansion

underway, we are a counterparty

of choice for multifamily investors.

The Irish Government demonstrated

its commitment to increasing supply

through the “Housing for All” strategy

launched in 2021 and supported

by €4bn in committed capital each

year to 2025.

SCALE AND PROCUREMENT

ADVANTAGES

Industry leading procurer of labour

and materials with €1.15bn procured

from loyal and established supply

chain since IPO. Plc platform of

scale across housing and apartment

delivery. Innovation agenda and

procurement initiatives driving

value through supply chain.

GREAT PEOPLE

Growing our team of experienced

homebuilders aligned to our growth

strategy. Committed to driving

employee engagement to continue to

deliver a high-performance culture,

in a rewarding working environment

where we harness insights and

knowledge from our talented team.

CAPITAL DISCIPLINE AND ALLOCATION

A commitment to deliver shareholder

value now and into the long-term. We

now expect to generate in excess of

€500 million in operating cashflow to

invest in further growth and increase

capital returns to shareholders in the

three year period to the end of 2024.

We expect ROE to be c. 11% in 2022

growing to 15% by the end of 2024, with

shareholder returns of €115m in 2022.



Read our full investment case at cairnhomes.com/investors/reasons-to-invest

CHIEF EXECUTIVE OFFICER’S STATEMENT

Investing in

better homes

“We sold our 5,000th home during 2021 in our

seventh year in business and we expect to build

at least the same number again in the coming

three years. Our financial performance enables

us to reinvest strongly in our business to drive

this significant growth in delivery and to

underpin our contribution to addressing

the housing needs of our society.”

Michael Stanley

Chief Executive Officer

13CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Before I reflect on Cairn’s 2021 results

and our 2022 outlook, I would like to

acknowledge the distressing events we

have witnessed following Russia’s invasion

of Ukraine. Our thoughts are very much

with the people of Ukraine at this dreadful

time. As we report today, the impact that

this will have on our business pales into

insignificance when we consider the plight

and suffering of our European neighbours.

Turning to Cairn, 2021 was our most

positive and successful trading period in

our seven-year history, even allowing for a

13 week construction lockdown at the start

of the period. The strategic decisions we

made in 2020 to continue to invest heavily in

our construction activities and importantly,

new site commencements, after the

outbreak of the pandemic ensured we were

in a position throughout 2021 to bring new

product to the market, at all price points,

and meet the significant demand which

we are witnessing for new Cairn homes.

We recorded our highest ever new home

completion volumes in the period and

started 2022 with over 1,000 new homes

forward sales which provides us with a

very strong platform for the year ahead.

All of these sales and completions were

delivered by leveraging our digital sales

platform given the varying level of

restrictions which were in operation

for the entire year, including our new

customer website which we launched

earlier in 2021. I was particularly pleased

that our customers recognised both our

commitment and performance with an

NPS (net promoter score) of 55 achieved,

which is equivalent to 5 stars in the Home

Building Federation model.

Our business has and will continue to

benefit from the significant investments

we have made in our people by growing our

team to 300 full time employees today, our

integrated delivery platform across low

and high density developments and our IT

platforms to underpin our digital strategy.

2021 was another year of significant

growth and development for our people

and the rewarding opportunities which

our business offers our talented team.

We pride ourselves on our employee

engagement initiatives and this has never

been more important for us than during

the events of the past two years. Our

employee engagement scores reflect this

commitment and the leadership shown,

with 90% of our employees believing their

voice is heard and they can impact change

in their role. We were delighted to be

recognised as a Great Place to Work for

2022 which demonstrates that we are

putting our talented team at the heart

of our strategy.

We continued to partner with our

subcontractor and supply chain partners,

predominantly through nearly €270 million

of labour and materials procured, but

also through strategic and supportive

operational and financial initiatives. Our

growing scaled platform and our supply

chain strategy continues to be very

attractive, and we added 70 new supply

chain partners during 2021.

All of this led to the second half of 2021

representing our strongest ever financial

performance with 717 sales completions,

total revenue of €293.4 million, a gross

margin of 20.3% and €108.7 million

operating cashflow generated (before

we invested €43.6 million in strategic

land acquisitions).

We also progressed a number of new sites

through the planning process and have

commenced construction on eight new

sites since last May which will deliver

over 1,800 new homes. Our land strategy

remains opportunistic in the context of

portfolio managing our long-term c. 17,700

unit historic low-cost landbank. We

acquired three sites towards the end of

2021, with the capacity for c. 1,800 new

homes with full and partial planning, at a

cost of €43.6 million. We are already active

on two of these sites and will commence

the third over the coming months. These

acquisitions are quick capital turn sites

which will deliver an internal rate of return

in excess of our 15% hurdle rate.

As ever, we have been very grateful for the

continued support from our shareholders

during 2021 and it was important for our

business to be in a position to reinstate

shareholder returns during 2021 in the

context of our strong cash generation.

It is our intention to provide a long-term,

progressive ordinary dividend stream

to our shareholders, supplemented by

additional returns through either share

buybacks or special dividends.

We have taken the opportunities presented

over the last two years to emerge as a

stronger business, ready for significant

growth over the coming years. The main

objective of our actions throughout the

pandemic has been to protect the business

in the short-term while ensuring we

position ourselves to take advantage of

opportunities that will strengthen the

business for the future and increase

shareholder returns.

Cairn has an unrivalled

track record in delivering

much-needed new homes

for customers in both the

Irish sales and rental market.

We build a full suite of new

home types, right from our

core starter homes through

to being the largest self-build

apartment developer in the

Irish market.

With our continued focus

on innovation through all

of our construction activities,

we deliver new homes

which appeal to a broad

and widening customer base.

This starts at pre-construction

stage and continues all the

way through to customer

after-care.

Our future growth will be

underpinned by our core

customer base as well as

partnerships with Approved

Housing Bodies (“AHB”) for

social and affordable homes.

2021 STARTER HOME ASP (INCL. VAT)

€350,000

FORECAST SALES COMPLETIONS IN 2022

1,500

CHIEF EXECUTIVE OFFICER’S STATEMENT CONTINUED

Leading Sustainably

At Cairn, we strive to build homes that will

stand the test of time, being mindful of the

changes in our climate that those homes

and the communities living in them will

face in the future and to build in a way that

respects both people and planet. We cannot

achieve all of our ambitions overnight but

we can target the most important areas,

defining what we will achieve, how we will

get there and when. To that end, we have

put in place a sustainability strategy that

will help us to make meaningful

improvements each year.

Health and safety is our number one

priority and we will maintain the very

high standards we have set so far –

including achieving an A rating from

Safe-T certificate during 2021.

We will build on our expertise in ecology

and biodiversity, investing more so that

we achieve biodiversity net gain across

40% of our commencements by 2024.

We will go beyond our stakeholders’

expectations to deliver innovative and

biodiverse new schemes.

Our Growth Strategy

We are investing in the capacity and

capability of our business to support our

growth strategy, set us up for scale and

optimise our product delivery, all of which

will be delivered through a combination of:

• Business Expansion and Strategy:

Cairn has built a strong reputation for

delivering high quality homes in Dublin

and surrounding counties over the last

number of years. As we expand our

business, we will bring our skills and

efficient homebuilding model to other

regions in Ireland. We have commenced

a large site in Cork and this year we will

be starting new schemes in Limerick

and Galway. The three largest cities in

Ireland outside of Dublin are

significantly undersupplied from a new

homes perspective and we look forward

to delivering high quality, energy

efficient homes in these areas. Cairn

strongly believes that our extremely

efficient business model and capability

should be used to support the

development of affordable and social

houses. We will look to further increase

our partnerships with the State and

AHB’s and leverage our scale to deliver

homes for people in Ireland who

otherwise would find it very difficult to

purchase their own home or indeed get

access to mortgage finance.

• The Strength of our Team: we are

investing in our people and increased

employment within our business with

150 new people joining the Cairn team

over the last 2 years across all areas of

our business, including key

management appointments.

• “Better Ways to Build”: an initiative

established to ensure our competitive

and market advantage continues into the

future, focused on: lean and efficient

processes and ways of working; uptake

of new technologies, products and

systems; and improved productivity,

including onsite logistics; and Increasing

Annual Volumes: with a target of 1,500

closed sales in 2022 (a 34% increase on

2021 closed sales and on sites which are

all active with full planning permission)

and between 5,000 and 5,500 closed

sales in the three years to 2024. We are

currently active on 21 sites with a

number of new site commencements

scheduled over the coming months.

The Company’s strategic objectives are

fully aligned to the Government’s “Housing

For All” strategy, launched in September

2021 with a target of delivering 300,000 new

homes in Ireland by 2030, including 54,000

affordable homes. The plan recognises the

important role the private sector will play in

the delivery of this much needed social and

affordable housing for the 375,000

households in Ireland earning between

€50,000 and €80,000 who cannot access

social housing and have limited access

to mortgage finance.

Our innovative approach to customer-

focused product evolution is now more

important than ever as many people will

view the family home as a place to both live

and work in close proximity to recreational

and other amenity facilities which is

informing our approach to design. With our

approach to sustainability and this focus on

innovation informing both our construction

activities and our design-led approach, the

foundations are now well-established for

Cairn to be a leading homebuilder in Ireland

into the long-term.

15CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

We will introduce new initiatives and

continue to pilot new technologies to

reduce our carbon footprint in line with

our commitment to the SBTi (Science

Based Targets Initiative). This builds on

our achievements to date including

pioneering rapid impact compaction in

Ireland, reducing waste and haulage

through better soil management, and for

our customers, providing air source heat

pumps meaning our homes no longer

rely on gas central heating.

We have always said our business is not

simply about building homes – we are

creating places and communities that

will last long after our work is done.

Delivering To Our Customers

Cairn delivered 1,120 closed sales in 2021

across 16 developments at an average

selling price, including VAT (“ASP”) of

€428,000 (2020: 743 closed sales across

15 developments at an ASP of €377,000).

Competitive starter home prices remain

a key objective for our business and our

2021 average selling price was €350,000

including VAT (2020: €348,000), in prime,

sought-after suburban locations.

Cairn agreed the sale of over 1,400 new

homes in 2021. The demand we are

witnessing from private purchasers, across

all price points from entry level starter

homes to trade-up/down, remains

exceptionally strong and has continued into

the early months of 2022. Enquiry lists

across all our active selling sites remain

at historic highs, with particularly strong

interest in our starter home and trade-up/

down commuter locations. As at 2 March

2022 we had 1,218 new homes in our closed

and forward sales pipeline with a net sales

value of €463 million.

The Company completed a number of

contracted multifamily sales during 2021,

including The Quarter at Citywest,

Shackleton Park and Gandon Park (both

Lucan) and Rostrevor Place. Cairn has two

other multifamily transactions contracted

at Griffith Wood and Shackleton Park with

phased delivery dates during 2022.

“As a business, our future success

will also be defined by the quality

of the homes we build and the

long-term impact of our actions on

our customers and the communities

in which we operate.”

Cairn’s track record as a self-build

apartment developer is unrivalled in

the Irish market with eleven apartment

developments complete or under

construction, comprising 2,000 units. With

a long-term landbank containing c. 4,700

apartment units, Cairn is the counterparty

of choice for institutional investors. With the

location and price points of our apartment

developments in established residential

areas, demand for this product from the

more traditional trade-down market has

also picked up considerably.

Expanding Our Production Capacity

Following the second construction

lockdown (8 January 2021 – 12 April 2021),

we were able to get back to near full

production capacity within a short

space of time. Including recent new site

commencement activity, Cairn is now

averaging 3,000 people (including direct

employees, subcontractors and other

sector professionals) working across

our active sites.

Since the start of 2022, we have

commenced a number of new sites

including starter home developments

at Leixlip Gate (Kildare) and Navan

(Co. Meath), a trade-up/down development

at Dunboyne Road (Maynooth) and a new

apartment development at Citywest (Dublin

24). Our pre-construction development

team continues to progress design team

appointments, construction programmes

and phasing plans across our future

sites, with enabling works commencing

on a number of these ahead of 2022

site commencements.

The Company again demonstrated our

commitment and partnership approach to

our subcontractor and supply chain during

2021. The depth, capacity and capability of

our supply chain is of vital importance to

Cairn and through the different and

innovative manner in which we interact with

our supply chain partners, we are further

strengthening the breadth and resilience

of these relationships and partnerships

through continual engagement, supportive

financial and strategic initiatives and

visibility over a pipeline of committed future

work. We have invested heavily in our

supply chain strategy which is framed

around three pillars: securing our current

supply chain (utilising multiple

procurement strategies); supplementing

suppliers by expanding our supply chain;

and substituting delivery methods (through

innovation, more efficient and secure

delivery methodologies). These pillars are

underpinned by our proactive approach to

supplier relationship management and

category management activity (informing

future spend and indicative resource

levels). Our collaborative approach and the

value which our business model offers has

strengthened our capacity and flexibility

during 2021 to support future growth.

We are operating in a challenging build cost

environment in Ireland today. There is more

uncertainty around build cost inflation now

as a lot of commodities relating to building

materials are sourced from Eastern

Europe. The region is a significant producer

and exporter of timber, plastics, steel and

copper. It is likely that energy intensive

manufacturing will also be impacted. Cairn

is responding to this in a numbers of ways,

including a central procurement function

which will leverage a €1.3 billion spend

across the next 3 years, detailed category

management, working closely with the

strategic and preferred partners with

whom we collaborate through our

supply chain tiering and engaging with

our suppliers at the earliest possible

stage in our process during design

and pre-construction.

We absorbed c. €15,000 build cost inflation

in 2021 per new home, equating to c. 6%

build cost inflation and we expect there to

be an additional c. €10,000 increase, or

c. 4%, in 2022. This will continue to be a key

watchout area for us, particularly with the

ongoing situation in Ukraine.

Enabling Successful Delivery

Having successfully incorporated the Cairn

Integrated Delivery Platform in 2021 across

our low and high density development

activities, we have enhanced both our

pre-construction and construction

programming capability through our

dedicated Innovation Team. We are focused

on enabling successful product delivery

which is informed by a blended approach to

three key areas, each of which are central

to our ongoing Innovation Agenda:

1. Ways of Working: Lean and efficient

processes and ways of working,

programme management and

standardisation;

2. Technology: New alternative systems,

products and technologies, adopting a

digital approach and leveraging both

off-site manufactured (“OSM”)

methodologies and modern methods

of construction (“MMC”); and

3. Productivity: improvements using lean

principles, enhanced onsite logistics

and an emphasis on manufacturing

and assembly methods.

As a business, our future success will

also be defined by the quality of the homes

we build and the long-term impact of

our actions on our customers and the

communities in which we operate. Two

material areas from a construction

perspective are climate change and

biodiversity, and a number of innovative

construction methods have been

implemented to specifically address our

carbon footprint and habitat creation

under our biodiversity strategy. Cairn has

a detailed and time lined “Innovation and

Ways of Working” implementation strategy

over the coming years which will enhance

our delivery platform and complement our

Sustainability Agenda.

With hybrid working models in both the

workplace and remotely likely to become

more of a feature of the labour market,

our customers are looking for homes

where they can both live and work. This

informs our approach to customer-focused

product innovation with a greater emphasis

on the importance of delivering high quality

residential accommodation with

playgrounds, parks, greenways and

other amenities in our developments.

Residential Property Market

Annual housing demand of 33,000 new

homes is forecast to 2040 in a high

international migration scenario that would

see our population growing to 6 million by

2040 from 5.01 million today (source: ESRI

- Regional Demographics and Structural

Housing Demand, December 2020). There

were 20,433 new homes built in Ireland

in 2021 (-0.5% YoY). We estimate that less

than 35% of these homes were purchased

by owner occupiers. The three year average

delivery stands at just 20,669 new homes,

notwithstanding the pandemic (source all:

CSO). New home commencements

increased considerably by 48% in 2021

to 30,724 housing starts which is likely

to increase completions in 2022, however

it remains to be seen what the impact of

challenges to the Irish planning system,

particularly through judicial reviews, will

have on supply levels post 2022 (source:

Department of Housing).

House price inflation is running at 5.1% for

new homes and 16.7% for second-hand

homes in the year to December 2021

(source all: CSO). The lack of liquidity in the

Irish second-hand home market remains a

feature. The stock of homes listed for sale

on MyHome.ie, Ireland’s largest property

portal, was at a record low of just 11,300

homes on 1 January 2022, down 21% on

the prior year. This equates to c. 0.1% of the

total housing stock in Ireland. On average,

a residential property in England is traded

once every 19.6 years. This increases to 23

years in the USA and compares to 37 years

in Ireland.

The stock of homes available to rent in

Ireland was at a historic 15-year low of just

1,397 homes on 1 February 2022, some

85% below the 15-year average of 9,300

homes and national rental inflation in the

full year 2021 was 10.3%. This is reflective

of the acute shortage of homes across all

tenures in Ireland. Rents increased 10.4%

in 2021 (source all: Daft.ie Q4 2020 Rental

Price Report) and the difference in the cost

of owning a Cairn starter home in Dublin

compared to the cost of renting the same

home remains stark – it is 80% or €1,041

more expensive to rent than own.

Mortgage Market

Mortgage-backed demand, underpinned

by a pandemic-related increase in

household savings of €23 billion between

April 2020 and December 2021, has driven

an increase in both mortgage approvals

and drawdowns.

2021 saw the highest number of mortgage

drawdowns since 2009 with 43,494

mortgages (value €10.5 billion) drawn

down, an increase of 22% over 2020

volumes. Our core first time buyer market

drove this growth accounting for 22,901

(52.7%) of mortgage drawdowns, of which

7,289 were for new homes (+14.8% on 2020).

First time buyer mortgage approvals also

increased by 25% to 28,954 approvals in

2021 (source: all BPFI).

Both Ulster Bank and KBC announced their

departure from the Irish mortgage market

during 2021. This is a very disappointing

outcome for Irish consumers, and while we

expect a number of new entrants into the

Irish mortgage market during 2022 and

beyond, it is essential that new entrants

are encouraged to move into our market to

increase competition in what is a critical

sector underpin for the new homes market.

CHIEF EXECUTIVE OFFICER’S STATEMENT CONTINUED

“On average, a residential property

in England is traded once every

19.6 years. This increases to 23

years in the USA and compares

to 37 years in Ireland.”

17CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Government Initiatives

The Government launched its flagship

housing strategy “Housing for All” on

2 September 2021, which we welcomed,

a 10 year plan to increase new housing

supply, support home ownership and

improve affordability. Total capital funding

of €20 billion (€4 billion a year) is

committed until 2025 to finance the

implementation of this plan.

The First Homes Shared Equity scheme is

one of a number of key initiatives within the

plan and is scheduled to commence during

2022, specifically for our core first time

buyer market for new homes only. An equity

stake of up to 20% plus an additional 10%

Help-to-Buy rebate will be available to

eligible purchasers who will then require a

70% loan to value mortgage. This scheme’s

target is to finance an average of 2,000 new

home purchases every year until 2025.

The Help to Buy income tax rebate scheme

is continuing for the remainder of 2022

at its current enhanced level (maximum

rebate of €30,000 or 10% of the purchase

price, whichever is lower) after which it

is expected to revert back to its original

€20,000 cap or 5% of the purchase price,

whichever is lower.

The Cairn Team

I share my Chairman’s sentiments in

thanking each of my colleagues for their

hard work, contribution and commitment

to our business throughout 2021 as we

reached our milestone 5,000th new home

sale and I am excited that we have the team

in place to deliver on our next growth phase

to 2024. I would also like to thank our

subcontractor partners, our broader

mature and integrated supply chain and the

other property sector professionals with

whom we collaborate in delivering our high

quality, competitively priced new homes.

Outlook

As we look into 2022 and beyond, our

economy is stronger than it was pre-

pandemic and we are continuing to

operate in a market which remains

significantly undersupplied.

We expect to deliver 1,500 completions,

in excess of €600 million revenue,

a €100 million operating profit and an

operating margin of c. 16.5% in the year

ahead. We also expect to generate

€175 million operating cashflow (before

any capital allocation considerations,

including reductions of debt, dividends

or accretive strategic acquisitions) and

return €115 million to our shareholders.

As we look into the medium term with

regional expansion supporting our growth,

our ROE is forecast to grow to 15% in 2024

and we expect to generate €500 million

in operating cashflow in the three-year

period from 2022 to 2024.

Overall, we remain very positive and

ambitious for our future growth prospects.

Michael Stanley

Chief Executive Officer

MARKET OVERVIEW

Our investment

in the markets

we serve

Cairn remains uniquely positioned

to meet the growing demand for

new homes across a broad and

widening customer base and

deliver on our growth agenda.

19CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

The Irish economy was

oneof the fastest growing

economies in the EU in

2021 and this strong

expansionary momentum

has continued into the

early months of 2022.

With record exchequer

returns in 2021, consumer

spending has rebounded

and is leading this

economic growth.

As a business, we recognise the significant

impact which the ongoing events in Eastern

Europe are having on the global economy.

Notwithstanding these geo-political risks,

the housing crisis in Ireland persists. New

homes supply averaged 20,714 in the three

years to 2021, or more than 40% below

annual demand for c. 35,000 new homes.

Market Backdrop

The supply of new homes in Ireland has

averaged 15,945 per annum since 2015 at

a time when the Central Bank of Ireland

forecasts annual demand at 35,000 new

homes. While this average annual supply

increased to 20,714 in the three years to

2021, supply decreased by 561 units

between 2019 and 2021.

The demand for new homes is driven by a

number of factors, including nearly 10

years of under-supply and a population

which continues to grow at 3 times the

EU 27 average. The population of Ireland

now stands at 5.01m, its highest level since

1851. Our population increased by 9.6% in

the 10 years to 2021, yet we only built 25

new homes for every 100 person increase

in our population compared to 215 in the

1980’s and 111 in the 1990’s.

Home ownership rates in Ireland continue

to decline, particularly amongst the

younger cohort of our population. We

estimate that only 12% of all homes in

Ireland today are owned by people aged

under 39, compared to 22% in 2011.

The Government launched its new housing

strategy, “Housing For All” on 2 September

2021. This is a detailed 10-year plan focused

on increasing new housing supply and

supporting home ownership. It is a strategy

which is highly geared towards stimulating

housebuilding. While the strategy has an

appropriate bias towards social housing, we

are now seeing measures that will benefit

Cairn’s prospective customers, particularly

middle-income families. The strategy has

set a target of delivering 300,000 new

homes by 2030 with significant involvement

of the private sector to meet this target.

Funding for the first five years of the

strategy is fully committed with €4bn

annual capital funding allocated for a

total of €20bn.

The multifamily sector continues to

dominate the Irish investment sector with

the Irish market offering favourable yields,

steady, stable rental streams and strong

occupancy levels for institutional investors

seeking long-term exposure to the Irish

residential market.

The Irish Economy

Ireland’s economic performance in 2021

was exceptionally strong. With GDP growth

of 13.5%, Ireland was amongst the best

performing economies in the EU 27

(average 5.7%). Government tax receipts

surged to a record €68.4 billion in 2021

as consumer spending and employment

rebounded from the pandemic at a

sharper-than-expected rate, with

income tax (+17.4%) and VAT (+24.3%)

receipts particularly strong.

The unemployment rate fell to 5.1% in

December 2021 from 6.2% in December

2020, having peaked at 7.8% in March 2021

during the second national lockdown.

A strengthening labour market is being

driven by a workforce which grew to 2.51m

in Q4 2021, an increase of over 190,000.

The labour force participation rate in

Q4 2021 stood at 65.1%, up from 60.6%

a year earlier.

Mortgage Market

Competition in the Irish mortgage market

continues to benefit homeowners with

mortgage interest rates continuing to

gradually fall, albeit at a slow rate and

Irish mortgage interest rates remain more

than double the EU 27 average. Mortgage

lenders are competing for new customers

through fixed rate offerings. The

introduction of longer-tenor fixed rates

of up to 20 years from a number of

mortgage providers was a welcome

feature of the market in 2021.

Mortgage drawdowns grew to €10.5bn in

2021 which is forecast to grow to up to

€12bn in 2022, driven by increased housing

supply and more transactional activity.

While the departure of Ulster Bank and

KBC is an unwelcome development, there

are more non-bank lenders scaling up and

up to two new entrants are expected to

enter the Irish mortgage market in 2022.

The new equity loan scheme will

commence during H1 2022. The scheme

will provide first-time buyers of newly built

homes with a 20% “equity loan” on top of

the existing 3.5x regulatory threshold on

loan-to-income ratios. With a Help to Buy

contribution of up to €30,000, first-time

buyers will only require a mortgage for

70% of the purchase price of new homes

priced at €300,000 or less.

HOUSEHOLD SAVINGS AT THE END OF 2021

€136bn

INCOME TAX 2021

+17.4%

YOY GDP GROWTH 2021

14%

Ireland EU UK USA

EXCHEQUER TAX RECEIPTS 2021 (€BN)

5.1

5.8

15.3

15.4

26.7

68.4

4.7

5.4

11.8

12.4

22.7

57.2

Excise

Duty

Corporation

Tax

Value

Added Tax

Income Tax

Total

Other

2021 2020

1,200

Age

Thousands

1,000

800

600

400

200

0-14 15-24 25-39 40-49 50-64 65-79

80+

QoQ Change

14%

12%

10%

Ireland

Turkey

India

China

France

Italy

USA

OECD

EU27

Mexico

Australia

Canada

Korea

Indonesia

Saudi Arabia

Germany

Japan

4.6

4.7

4.8

4.9

5.0

5.1

2016 2017 2018 2019 2020 2021

15,000

20,000

25,000

30,000

35,000

40,000

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

High

Baseline

Low

MARKET OVERVIEWMARKET OVERVIEW CONTINUED

Demand drivers

IRISH POPULATION AGE PROFILE (‘000)

2021 GDP GROWTH HIGHEST IN EU 27

ESRI HOUSING DEMAND FORECASTANNUAL POPULATION INCREASE %

The housing market in Ireland has been chronically undersupplied for

the past decade with strong demand underpinned by a number of factors.

2.5m

Number of people in employment at

December 2021, representing Ireland’s

highest ever labour market participation.

STRONG EMPLOYMENT RECOVERY CONSUMERS DRIVING ECONOMIC GROWTH RECORD EXCHEQUER RECEIPTS IN 2021

ECONOMIC BACKDROP

DEMOGRAPHICS SUPPORT DEMAND

With the youngest population and the highest birth rate in Europe, demographic factors underpin long-run demand for housing in Ireland.

€68.4bn

collected by the exchequer in 2021.

€23bn

Household savings between April 2020

and December 2021.

21CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

2016 2017 2018 2019 2020

3.13 %

2.59%

2016 2017 2018 2019 2020

MORTGAGE MARKET FUNDING DEMAND

AVERAGE MORTGAGE INTEREST RATESMORTGAGE DRAWDOWNS MORTGAGE APPROVALS

2.72%

EU average mortgage interest rate on new

mortgages is 1.29%.

€10.5bn

value in 2021.

€13.4bn

value in 2021.

Variable 3+ years fixed

OWNING VERSUS RENTING

CAIRN 3 BED STARTER HOME

PRIVATE SALES IN 2021

€378,000

Average selling price (including VAT)

across Cairn developments in Dublin

for first time buyers (“FTB”):

• Shackleton Park (Lucan);

• Gandon Park (Lucan);

• Graydon (Newcastle); and

• Parkside (Malahide Road).

FTB MONTHLY MORTGAGE COST

Purchase price

€378,000

Mortgage –

90% LTV

€340,200

Mortgage

interest rate

2.30%

Monthly

Mortgage

Repayment

(30 year C&I)

€1,309

Cheaper

to Own

€1,041

MONTHLY RENTAL COST

Lucan

€2,400

Lucan

€2,400

Newcastle

€2,200

Malahide Road

€2,400

Average

€2,350

More Expensive

to Rent than Own

+80%

OWNING VERSUS RENTING BY PEOPLE AGED < 39

Home ownership in Ireland

has fallen to 68%, below the

EU average of 69.8%.

12%

of all houses owned are

by people aged under 39.

58%

of all houses rented are by

people aged under 39.

First time buyers Trade up / Mover Premium Social

10%

14%

19%

57%

MARKET OVERVIEWMARKET OVERVIEW CONTINUED

OUR BUYERS PROFILE

Housing for All

Government’s “Housing

for All” strategy to deliver

300,000new homes by 2030.

The Minister for Housing, Darragh O’Brien

TD, launched the Government’s signature

housing policy, “Housing for All” in

September 2021. The plan commits to a

€4 billion annual investment in housing and

sets yearly targets across social, affordable

and cost rental housing. The Government

is aiming to deliver 300,000 new homes

by 2030 and an average of 33,000 homes

per year, split 90,000 social (30%), 36,000

affordable (12%), 18,000 cost rental (6%) and

156,000 private rental and purchase (52%).

The private sector will play a significant

role in this delivery, and other important

features of the plan include the equity loan

scheme which has an annual target of 2,000

new homes to fund 10,000 new homes by

2025 and €4.5bn funding for Irish Water

infrastructure to support accelerated and

increased housing delivery. The equity loan

will be subject to regional price caps set at

€450,000 in parts of Dublin, €400,000 in

Cork, Wicklow and Galway and €350,000

in Meath and Kildare.

Affordable housing is not currently available

to a large segment of the Irish population:

there are over 575,000 people in Ireland in

households with incomes between €50,000

and €80,000 who cannot access social

housing. This cohort of our population has

limited access to mortgages and are the

‘squeezed middle’ stuck in the rental trap.

Enhanced Help to Buy remains

until the end of 2022

• Income tax rebate to first time buyers

of new homes priced up to €500,000.

• 10% of the purchase price of a new

home up to €30,000.

• Positive initiative accelerating first time

buyers ability to purchase new homes.

The Quarter at Citywest, Dublin 24

23CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

90%

of our First Time Buyers

are couples or families.

FIRST TIME BUYERS

4.2x

Per active starter home

sales outlet in 2021.

AVERAGE WEEKLY STARTER HOME SALES RATE

IMPACT OF 20% SHARED EQUITY ON A €350K STARTER HOME

Reduced salary of €74k required. 231,000 households in Ireland earn between

€60k and €90k. The scaled shared equity scheme is essential for those earning

less than €90k.

New home price €350,000 New home price €350,000

Help to Buy

(lower of €30k or 10%)

€30,000

Help to Buy

(lower of €30k or 10%)

€30,000

Deposit (own funds) €5,000 Shared equity (20%) €60,000

Mortgage (A) €315,000 Mortgage (A) €260,000

Salary required (A/3.5x) €90,000 Salary required (A/3.5x) €74,286

Monthly mortgage

repayment (B)

€1,212

Monthly mortgage

repayment (B)

€1,000

Net monthly income (C) €5,705 Net monthly income (C) €5,031

DSR (B/C) 21.2% DSR (B/C) 19.9%

MARKET OVERVIEWMARKET OVERVIEW CONTINUED

The Central Bank of Ireland (“CBI”) is undertaking a detailed

framework review of the mortgage measures framework to ensure

the continued appropriateness of the borrower-based macro-

prudential rules (“MPRs”). Cairn believes that low and middle

income families have become totally disenfranchised with their

inability to access the mortgage market as they are stuck in more

expensive rental accommodation and the MPRs have become much

more binding over this time period due to the blunt Loan to Income

(“LTI”) measure. The LTI limits a borrower to securing a maximum

mortgage equivalent to 3.5 times their single or joint income.

In their current form, Ireland’s MPRs are amongst the strictest in

the developed world and restrict access to mortgages resulting in

insufficient mortgage-backed demand to drive increased supply.

Cairn strongly advocates a shift to a 30% Debt Servicing Ratio

(“DSR”) approach to assessing affordability. Importantly, with the

Central Bank’s now successful implementation of the Consumer

Credit Register, a pivot to a DSR approach would mean that

mortgage lenders could adhere to the underlying objectives of

the MPRs and could do so in a resilient and prudent manner.

In 2015, a potential homebuyer earning €75,000 could purchase

a new home costing €292,000 at a DSR of 25.3%. In 2021, the

same potential homebuyer can still only buy a new home costing

€292,000, however the DSR for this purchaser has reduced to

21.3%. Applying the 2015 DSR today would enable this purchaser to

access a family home up to €347,000 (equivalent to a 4.2 times LTI).



Find out more about the Mortgage Measures Framework Review

at cairnhomes.com/investors/market-overview/

2015 2021

25.3% DSR

in 2021

LTI ratio 3.5 3.5 4.2

Gross income (A) €75,000 €75,000 €75,000

Maximum mortgage (A x 3.5 = 90% LTV = B) €262,500 €262,500 €312,407

Maximum house price (B/90%) €291,667 €291,667 €347,119

Net annual income €58,587 €60,740 €60,740

Net monthly income (C) €4,882 €5,062 €5,062

Average mortgage interest rate 3.89% 2.79% 2.79%

Monthly mortgage repayment (D) €1,237 €1,077 €1,282

DSR (D/C) 25.3% 21.3% 25.3%

The following table highlights the difference between a 3.5x LTI, a 25% DSR and a 30% DSR approach to affordability for consumers:

3.5x LTI 25% DSR 30% DSR

House price (including VAT) €350,000 €350,000 €350,000

90% LTV mortgage €315,000 €315,000 €315,000

Monthly mortgage repayment €1,293 €1,293 €1,293

Household monthly income required €5,705 €5,172 €4,310

Gross annual household income required €90,000 €77,500 €61,000

Mortgage cost/net income = DSR 22.7% 25.0% 30.0%

Market rent €2,100

Owning cheaper than renting by €807

Households earning between €60,000 and €90,000 175,000

In both DSR scenarios, the consumers demonstrate clear affordability and critically this would allow those on lower incomes to access

mortgages. While these consumers are taking on higher value mortgages, they would do so in the knowledge that they can afford to.

The consumers are still subject to the same rigorous underwriting rules of mortgage lenders through a more flexible and equitable

approach to affordability. The framework review will conclude in H2 2022.

Central Bank of Ireland –

Mortgage Measures Framework Review

25CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

2.5

€’bn Yield %

2.0

1.5

1.0

0.5

4.6

4.4

4.2

4.0

3.8

3.6

3.4

3.2

2017

2018 2019 2020 2021

STRONG 2021 MULTIFAMILY TRANSACTIONAL ACTIVITY

c. 3.75%

prime residential yields in 2021.

€2.1bn

transactional value in 2021 accounting for

nearly 40% of the Irish investment market.

c. 4,700

apartment units in our landbank at an average

site cost of €53k.

c. 6%

multifamily share of the Irish rental sector.

Investment Amount

Dublin Prime Yield

The Multifamily Market

With eleven apartment developments completed

or under construction comprising 2,000 units,Cairn

is the self-build developer counterparty ofchoice

forinstitutional investors.

We bring our experience and learnings to each new

apartment scheme, including off-site manufacturing

and modern methods of construction, and will continue

to leveragethese efficiencies on future projects.

BUSINESS MODEL

OUR PURPOSE

Building homes and creating

places where people love to live.

What makes us different

Our values drive our business,

PLANNING & DESIGN

• An agile and proactive approach to innovation

and standardisation across our construction

activities, integrating off-site manufactured (“OSM”)

methodologies, modern methods of construction

(“MMC”) and our own construction intellectual property.

• Placemaking and design driven by creating vibrant,

sustainable communities and taking customer centric

design to our products to ensure innovative and best in

class new home delivery.

• Nearly 10,000 new homes granted planning permission

since IPO, including 1,065 new homes during 2021.

• Over 4,500 incremental units granted planning

permission or expected to be gained on existing

sites through increased densities.

CUSTOMER EXPERIENCE

• Launched a new customer website during 2021,

increased our digital marketing capability and

launched the “Home Together” initiative.

• Eight new brand launches in 2021.

• Mapped the customer experience to deliver a

supportive, engaged and collaborative home buying

process from start to end.

• Fully integrated Customer Relationship Management

system streamlined across sales and customer

legal management process.

Our resources

HISTORIC LOW COST LANDBANK

With c. 17,700 landbank units, we will continue to increase

our annual contribution of new homes to the market into the

long-term across all tenures and all price points to a broad

and widening customer base.

65%

of landbank units acquired

within one year of IPO.

57%

of our private new homes are

expected to be priced below

€400,000 (incl. VAT).

PEOPLE

Our building teams take great pride in delivering our quality, energy

efficient, A-rated new homes. The proven Cairn methodology

combined with our approach to training builds on the experience of

our staff, from apprentices to engineers to site foremen, surveyors

and site managers, ensuring that best-in-class standards are

maintained. This is ably supported by our central support functions

in pre-planning, design, sales and marketing, finance, HR and

IT in a fit for purpose organisational platform.

27%

increase in employees.

3,000

full-time jobs supported

across our 21 active sites.

SUPPLY CHAIN

We have forged sustainable partnerships with key

subcontractors and our supply chain over the last six years,

aligned to our long-term growth strategy. We financially and

operationally support these partnerships, enabling successful

delivery of new homes through ways of working, technology

and productivity from an integrated delivery platform,

supplemented by our focus on our ongoing innovation agenda.

€1.15bn

labour and materials

procured since 2015.

63%

of all procurement from our

top 20 subcontractors.

AGILE & INNOVATIVE HONEST & STRAIGHT

TALKING

27CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

THE HOMES WE BUILD

• Standardised starter home and apartment product

across multiple sites, using innovative OSM and MMC,

through the Cairn Integrated Delivery Platform.

• Developer-Contractor – site management teams

supported by central support functions and largest

self-build apartment developer in the market.

• Strategic procurement and supply chain initiatives

aligned to our plan for longevity and sustainability

in delivery.

• Sustainable, energy efficient new homes with

minimum A2 energy ratings following the adoption

of nZEB standards.

CULTURE

• Focus on developing our diverse talent pool and

building long-term careers through our continuous

learning and innovation agenda.

• Developing a strong culture as a source of

competitive advantage.

• Fully embedded sustainability within our day to day

operations and how we build and deliver our homes.

Creating value for stakeholders

OUR COMMUNITIES

We create sustainable, vibrant communities centred around

well designed and high quality landscaped environments with

all associated amenities.

POLICYMAKERS

We engage with key policy

makers leveraging the learnings

from our relevant, market

leading and on-the-ground

experience.

OUR SUPPLY CHAIN

We manage strong,

established and growing

subcontractor and

supplier partnerships.

OUR PEOPLE

We attract and retain the best talent with 150 new people

joining in the last two years. Cairn received best in class scores

and “Great Place to Work

certification for 2021, validating the

initiatives and work implemented on our culture and employee

benefits and offerings.

91%

of employees rated Cairn as

a highly inclusive employer.

84%

eNPS score

(employee net promoter score).

OUR CUSTOMERS

Creating new sales opportunities outside of our traditional

social, private and institutional customer base.

€463m

net sales value of

forward sales.

1,218

forward sales as

at 2 March 2022.

OUR SHAREHOLDERS

We outlined our capital allocation policy during 2021.

We are committed to delivering shareholder value now

and into the long-term with ordinary dividends reinstated,

and we recommenced a sizeable €75m share buyback

programme in January 2022.

€115m

shareholder returns

committed for 2022 from a

minimum €40m ordinary

dividend and a €75m share

buyback programme.

5.8 cent

earnings per share in 2021.

COLLABORATIVE COMMITTED &

ENGAGED

COMMERCIALLY

MINDED

underpinning everything we do



Read more in our Strategy in Action on

pages 30 to 49.

OUR VISION

To lead the future of homebuilding in Ireland by valuing people,

building responsibly and creating vibrant, sustainable communities.

OUR STRATEGY

Cairn is a leading Irish homebuilder

committed to building homes and

creating places where people

love to live.

Leveraging our scalable operating

platform, established supply chain

partnerships and a historic low-cost

c. 17,700 unit landbank, Cairn will

continue to play a leading role in

providing greater access to new homes

in Ireland across all tenures and price

points through increasing our annual

volumes into the medium to long-term.

Our strategy links back to our purpose,

with each pillar aligning to one of the

three key component parts – homes,

people and places.

OUR STRATEGY IS INTRINSICALLY

LINKED TO OUR THREE

SUSTAINABILITY PRIORITIES WHICH

ARE ENABLING US TO ACHIEVE OUR

PURPOSE IN A TANGIBLE WAY.



Read our full

Sustainability Report at

www.cairnhomes.com/

sustainability

Building

homes and

creating

places where

people love

to live.

STRATEGIC PILLAR #1

People

We are committed to driving employee engagement to deliver a

high-performance culture in a rewarding working environment.

2021 progress

• Drove our Organisation and Talent Development agenda.

• Increased our capability and capacity across all functions.

• Expanded our Health & Welfare programme partnerships.

2022 targets

• Deploy a clear external employer brand in external recruitment.

• Sponsorship of apprentices and trainees within our supply chain.

• Develop In-house career management capability with clear

progression pathways.



Read more on pages 40 and 41.

STRATEGIC PILLAR #5

Places

We create places for communities to prosper.

2021 progress

• Our Six Hanover Quay project was the winner of the Irish

Green Cities Award 2021.

• Biodiversity was the key area of focus for “Places” and was

further embedded into our design and innovation agenda.

• Our Biodiversity Policy was fully incorporated within our

internal gateway system.

• Construction of three new children’s play areas in our Graydon,

Citywest Quarter and Archers Wood developments and the

refurbishment of a play area in Parkside.

• Construction of an all-weather sports court in Parkside Square.

• Nearly 8 acres of parks and green spaces delivered.

29CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

PEOPLE

Health and Safety

We are committed to providing a safe working

environment but beyond that we have developed

mental health initiatives to expand our support

for employees.

Employees

We strive to attract and retain the best talent to

support our growing business. We are successfully

embedding an equality, diversity and inclusion

strategy, which saw the introduction of a new

employee forum, as well as taking part in the

Great Place To Work program.

Customer

Our Customer Satisfaction Commitment features a

dedicated Customer Care team who look after the

needs of our customers during all stages of the

buying process and most importantly, after our

customer has moved into their new home.

HOMES

Supplying Energy-Efficient Homes

The largest proportion of our emissions is

associated with the use of our homes. In order to

mitigate this, we ensure that every new home

brought to the market is BER (building energy

rating) A rated. This allows our customers to

contribute to a more sustainable future in Ireland.

Reducing GHG Emissions

We formally committed to setting emissions

reductions targets in line with the Science

Based Targets initiative. We are currently in

the process of setting these targets. To date,

we have measured our Scope 1 and 2 emissions.

We are in the process of completing a Life Cycle

Analysis of our house types to complete

measuring our Scope 3 emissions.

PLACES

Climate Action

We value the places we create with a focus on

placemaking that makes a positive contribution

to the environment. We believe successful

developments contribute positively to their

residents and the broader communities in

which they are located.

Biodiversity

We recognise the negative impacts that

construction can have on local ecosystems.

Our approach is to mitigate any negative impacts

our activities may have and seek out ways to

support the creation of new habitats. In support

of this objective, we formally adopted a Biodiversity

Policy centered on an ambition to achieve

Biodiversity Net Gain.

STRATEGIC PILLAR #2

Customers

We ensure we deliver an optimal customer experience.

2021 progress

• Prioritised the delivery of an exceptional

customer experience at each stage of the journey.

• Safety as a priority throughout the closing process.

• Use of customer surveys to inform and improve

our service.

2022 targets

• Full rollout of our new customer care portal.

• Refine our customer satisfaction framework.

• Expand and enhance our “Home Together” initiative.



Read more on pages 46 to 49.

OUR SUSTAINABILITY PRIORITIES:

STRATEGY IN ACTION

STRATEGIC PILLAR #1

People

We are committed to driving employee

engagement to continue to deliver a high-

performance culture, in a rewarding working

environment where we harness insights and

knowledge from our talented team.

31CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

What we did in 2021

• Embedded our HR partner model

supporting an increasing number

of delivery sites.

• Established a workforce planning

capability which drove an improvement

of the forecasting process to provide

one view of pre-construction

and construction.

• Continued to drive the Organisation and

Talent Development agenda increasing

capability and capacity across all

functions, ensuring our people are

supported to do their best work.

• Increased our talent pipeline with

agency partnerships and an expanded

graduate program.

• Continued to focus on developing our

people at all levels with specific focuses

on onboarding, management capability

and enterprise leadership.

• Expanded our Health & Wellbeing

(“H&W”) programme partnerships with

Spectrum Life and the Wellness Crew.

• Established an Equality, Diversity &

Inclusion (“ED&I”) agenda and forum

to better understand our diverse

workforce’s needs.

• Employee engagement sentiment

remains high, with 52% of employees

intending to stay at Cairn for over 5 years

and 91% of our staff rating us as a highly

inclusive employer.

What we’ll do in 2022

• Digitise processes and integrate

systems to deliver a scalable and best in

class HR platform and support model.

• Market a clear external employer brand

that we are consistently deploying in

external recruitment for all talent pools.

• Sponsorship of apprentices and trainees

within subcontractor chain.

• Enhance our robust in-house career

management capability with clear

progression pathways.

• Targeted mentoring, coaching and

development cascaded through the

organisation and underpinning

succession planning activities.

• Further embed our well-established

ED&I agenda, underpinning our

HR strategy.

• Promote a reporting capability

that supports decision making by

understanding HR metrics and

return on investment.

Employee engagement will remain a key

priority for the People Team and our

established Cairn Culture Committee,

CairnLive engagement platform, and

various employee forums such as the H&W

and ED&I forum, will continue to drive

social, health, wellbeing and fun initiatives

for our staff, which has proven to be

a critical component to our increased

engagement scores.

KEY PERFORMANCE

INDICATORS

• Recruitment, attrition and

retention targets met to keep

pace with our growing number

of active sites.

• Accreditations achieved from

Irish Centre for Diversity

(“ICD”) and Great Places to

Work (“GPTW”) supporting

an increased employer

brand presence.

• Tailored talent development

programmes complementing

employee career pathways

enabling building from within.

• Continued positive

engagement scores across

our team and broader

supply chain.

EMPLOYEES WHO CONSIDER US

AS A HIGHLY INCLUSIVE EMPLOYER

91%

EMPLOYEES WHO FEEL THAT CAIRN

SUPPORTS THEIR CAREER ADVANCEMENT

85%

EMPLOYEES WHO BELIEVE THEIR VOICE IS

HEARD AND THEY CAN IMPACT CHANGE

90%

2021 employee feedback

“ The culture is unrivalled to any other company

that I have experienced. Everyone gets along

really well but has a high achieving ambitious

mindset. Allin a really collaborative and

empowering environment.”

A COMPELLING VALUE PROPOSITION

TO ATTRACT ANDRETAIN TALENT

COVID-19 has exacerbated the war for talent which is impacting companies’

strategies for retention and talent acquisition. The same employers are competing

within a limited talent pool and only those companies with a strong employer

brand proposition that speaks to the needs of today’s employees will win that

war. Through our extensive research, candidates and employees are looking

for organisations that mirror their values, a place where they feel they belong

and where they can bring all their identities to work (ED&I), and a place that

authentically delivers upon their philanthropic aspirations (charities, giving

back to the community).

In response, we invested heavily in Cairn’s employer brand to solidify our

value proposition, increase awareness of our culture and values, and

market our employment opportunities through innovative and

multi-pronged recruitment campaigns.

Our investment in our people

2021 has been a year of growth and

development for our people and our

capabilities within Cairn.

• Grew our team in 2021 with 101 new

hires resulting in additional strength

across all business functions.

• Invested in building talent from within

with 10% of our staff progressing into

new roles.

• Expanded our Project Manager

Development Program with diagnostics,

group development workshops and

detailed coaching and development

plans to equip our people within

the biggest growth areas of

our business.

• Delivered our mentoring programme

to rising stars to provide exposure to

senior management and identify

personal development opportunities.

• Implemented a leadership development

programme supporting our executive

team in their roles as enterprise leaders.

• Facilitated our first women in leadership

programme supporting high-potential

women to thrive at Cairn with support

from executive level mentors.

• Invested in our ED&I agenda facilitating

unconscious bias and inclusive

interviewing training to all people

managers to deliver an inclusive and

positive candidate experience.

We expanded industry partnerships such as

CIOB, Engineers Ireland, Korn Ferry and

IBEC. These partnerships support us to

develop critical skills in our workforce and

support our teams career development as

they prepare to move into senior or more

complex roles in the future.

We continue to engage heavily with our

supply chain through our relationship

management model. Our annual

subcontractor survey on our partnerships

continues to drive many internal initiatives

and changes to the way in which we work

and engage with our partners to remain

their “partner of choice”. Additionally we

have supported our supply chain in their

workforce planning to access the

necessary skilled labour to support our

pipeline, understanding their needs and

facilitating agency support to access

international labour.

Cairn is a Great Place to Work

In November 2021, Cairn took part in the

Great Place to Work

employee survey to

continue to understand our workforce’s

needs and to support us on our journey to

sustain and grow our culture. With an 85%

participation rate and an eNPS (employee

net promoter score) of 84%, we are

delighted to be recognised as a Great Place

to Work for 2022. This accreditation

validates our culture and values and the

work we are doing at putting our employees

at the heart of our strategy. Employees

scored Cairn the highest for ED&I (91%),

Empowerment & Accountability (87%),

Career & Development (82%) and

Engagement (83%).

With this accreditation we have an opportunity

to attract top talent as we grow and provide

a sense of pride to our existing teams that

they are a part of a Great Place to Work.

STRATEGY IN ACTION CONTINUED

2021 employee feedback

“ I feel valued and trusted

in my role and that

I am contributing to

something great. It really

is a team effort and we

allrespect each other.”

The valuable feedback employees

have provided, alongside GPTW

recommendations, will feed into our HR

strategy, alongside organisational and

functional action plans to address focus

areas and further enhance existing

processes and ways of working.

33CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

JOURNEY TO DEVELOP

OUR EMPLOYER BRAND

We conducted an employee survey and

focus group to find out what makes Cairn

an attractive place to work. With a 75%

participation rate, our employees have

worked with us to craft a value proposition

that reflects the unique culture, values

and ways of working at Cairn.

• 90% of employees feel connected to

the company vision, goals and the

part they play (connect).

• 85% of employees feel that Cairn

supports their career advancement

and progression (develop).

• 90% of employees believe their voice

is heard and they can impact change

in their role (inspire).

These employee insights, along with

extensive management and leadership

consultation, led to the creation of Cairn’s

employee experience journey. This

promotes a continued focus on employee

engagement, from attraction through to

onboarding and development and beyond,

helping us to understand how employees

needs change as their careers evolve.

From this we crafted a framework for

Cairn’s employer value proposition (“EVP”),

encapsulating our employee’s sentiment –

Connect, Develop, Inspire.

“Join Cairn, Together we Connect,

Develop and Inspire Ireland’s Future”:

• Connect with likeminded people

and turn colleagues into friends.

• Develop your career and work on

innovative local Irish projects.

• Inspire you to get involved in building

Ireland’s future.

With our EVP developed, we worked with

our marketing colleagues to create a video

showcasing the “connect develop inspire”

message, shared it externally on our social

channels and website and internally to all

teams through our CairnLive

communication platform.

As the EVP’s main purpose is to enhance

our ability to attract candidates, we

launched the “connect develop inspire”

branding through all local and international

recruitment campaigns, and invested in print

publications to target specific talent pools:

• Graduate and career fairs at TUD and

Graduate Ireland in Q3 2021.

• Cairn Website, CairnLive comms

platform, LinkedIn page and a Social

Media Campaign.

• December 2021 Women in STEM

article in the Irish Independent.

• CIF magazine full page ad in January 2022.

• Full page ads in the Irish Times, Sunday

Times and SBP in December 2021.

• “New Year, New Career” full page ad in

the Irish Independent in January 2022.

• Digital recruitment campaign targeting

Quantity Surveyors and Engineers in

Q4 2021.

• December 2021 recruitment campaign

at Dublin Airport on Aerpods.

Our 2022 Employer Brand strategy builds

upon this foundation and will see Cairn

invest in innovative local and international

recruitment campaigns and marketing

strategies, that showcase our authentic

value proposition and brings to life our

commitment to connect, develop and

inspire our current and future employees.

2021 employee feedback

“ Cairn shows a positive interest in employees’

wellbeing and shows an energy into having

a ‘family’ rather than justemployees.”

STRATEGY IN ACTION CONTINUED

PEOPLE

Investing

in the

right people

PEOPLE

35CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

CAIRN IS A GREAT

PLACE TO WORK

In November 2021, Cairn participated in the

Great Place to Work

employee survey to

continue to understand our workforce’s

needs and support us on our journey to

sustain and grow our culture.

With an 85% participation rate and an

eNPS score of 84%, we are delighted to be

recognised as a Great Place to Work for

2022. This accreditation validates our

culture and values and the work we are

doing at putting our employees at the

heart of our strategy.

CAIRN RATED AS A HIGHLY

INCLUSIVEEMPLOYER

91%

eNPS

84%

to ensure

they are

motivated

to be part of

Cairn’s future



Read the full case study on page 32.

STRATEGIC PILLAR #2

Customers

Ensure we deliver an optimal customer

experience and gain the trust of all

Cairnhomeowners.

STRATEGY IN ACTION CONTINUED

37CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

CUSTOMER CARE TEAM CASES

RESOLVEDWITHIN 30 DAYS

90%

CUSTOMERS WHO MET NEW NEIGHBOURS

THROUGH HOME TOGETHER EVENTS

97%

RESIDENTS WHO FEEL HOME TOGETHER

MAKES THE COMMUNITY MORE FRIENDLY

89%

What we did in 2021

• We continued to prioritise the delivery of

an exceptional customer experience at

each stage of the journey with every

touchpoint optimised including:

– a redesigned and more user-friendly

and intuitive website;

– timely and informative emails

triggered at each stage of the

buying process;

– an enhanced customer care case

process; and

– the digitisation of homeowner

manuals with all appliance,

system manuals and warranties

available digitally.

• Our Customer Care Team added three

new operatives, two maintenance

coordinators and appointed a dedicated

aftercare manager, helping to reduce

our case resolution time.

• Over 90% of Customer Care cases were

resolved within 30 days and post case

surveys show a satisfaction rate of 86%.

• Successfully moved 1,120 new

customers and families into their

new homes.

• Agreed the sale of over 1,400 new

homes across multiple developments.

• Continued focus on safety as a priority

with improved viewing, snagging,

valuation and closing procedures through

our sales and customer care team, all

overseen by a health and safety adviser.

• With over 13,000 people now living in a

Cairn home, our customers have a

substantial voice in our business. Our

customer surveys provide us with a

source of in-depth feedback and

invaluable insights which enable us to

continuously improve on our services

and product offering.

• Our “Home Together” partnership with

Neighbourhood Network was

successfully launched with a series of

community building exercises to help

create happy, healthy places for people

to live, where neighbours feel connected

and supported by each other. Key to the

success of this initiative was our

engagement with residents to help

establish their community themselves,

supporting local leaders to build

inclusive, resilient groups.

What we’ll do in 2022

• Full rollout of our new customer care

portal to allow for more streamlined

24-hour online self-service channels to

manage customer aftercare through

ticketing systems, online resources

and video tutorials.

• Refine customer satisfaction

framework across three pillars –

customer delivery, customer experience

and customer aftercare.

• Expansion of our Home Together

initiative to additional developments,

with all customer surveys and

interviews informing our approach.

KEY PERFORMANCE

INDICATORS

• 99% of new homes delivered

across 16 separate

developments on time and in line

with customer expectations.

• Net Promoter Score of 55

achieved in the period

(equivalent to 5 stars on the UK’s

Home Building Federation

model).

• Consistently positive feedback

from direct engagement with

our private and institutional

customer base.

• 95% of customers responded to

within a 24 hour window and a

96% case closure rate within the

30 day service level agreement.

INNOVATION

Full integration of customer data, feedback and surveys into our systems allows us

to effectively serve as the voice of the customer, providing real world insights to our

planning and design teams – ensuring an ever improving approach to how we create

places where people love to live.

STRATEGY IN ACTION

A measure of the success of Home Together are the community driven initiatives that

have grown organically from our activations, including groups with an interest in

gardening, crafts, tidy towns, woodworking, mothers and toddlers, yoga, women in

STEM groups, fitness and Tai Chi classes to name a few.

Our ongoing community surveys serve as a great testimonial to the success of

the initiative, with 97% of those surveyed telling us they had met new neighbours

through Home Together events and 89% of residents said that their community feels

more friendly since the programme kicked off.

Our intention of a light-touch facilitation of these groups has been key to its success

and we look forward to expanding the programme over the coming years across

our developments.

STRATEGY IN ACTION CONTINUED

CUSTOMERS

PEOPLE

Our

investment

in customer

experience

39CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

LAUNCH OF OUR NEW WEBSITE

Our redesigned website provides a

seamless experience at each point in

the customer journey, at every digital

touchpoint and across all devices.

We achieved this through features like

custom brand-specific micro-sites for

new development launches, enhanced

digital brochures specifically designed

for screen and download, increased video

and feature-rich interactive virtual 3D

tours and fully digitised homeowner

manuals with guides and appliance

documentation at their fingertips.

The success of the site lies in its versatile

design and deep integration with our CRM

system, and our use of analytics, feedback

and surveys to allow us to tailor and deliver

content to the customer wherever they

are – both physically and along the

customers journey.

INCREASE IN WEBSITE TRAFFIC ON 2020

35%

INCREASE IN DIGITAL BROCHURE

DOWNLOADS ON 2020

26%



Read more about this on page 37.

makes it

seamless and

exceptional

STRATEGY IN ACTION CONTINUED

STRATEGIC PILLAR #3

Homes

Designing and building high quality,

well located, energy efficient, A-rated

new homes that our customers will love

living in now and into the future.

41CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

What we did in 2021

• Delivered 1,120 new homes to

new customers.

• Built quality homes reinforced with an

attitude led by placemaking and design.

• Successful product evolution including

new design for Archers Wood and new

suite of house types for Clonburris.

• Successful implementation of Light

Gauge Steel Apartments and Duplexes

to take advantage of modern methods

of construction.

• Further developed our standardised

homes, while also strategically

designing flexibility so each home can

be adapted to suit the customer needs

and local site requirements.

• Refined design and implementation of

work from home initiatives and designs.

• Implemented the Cairn Integrated

Delivery Platform which enhanced our

collective agility by actively managing

our pipeline more accurately.

• Focused on broadening our product

range with strategic design

specifications developed for specific

customer pools and institutions, so all of

our customer types can acquire a new

home that matches their needs.

• Supported our integrated delivery

platform with a common Document

Management System across our sites

and central office.

• Commenced construction on two new

quality schemes at Mercers Vale (South

Dublin) and Castletreasure (Cork).

• Completed the well-received schemes

of Mariavilla (Maynooth) and Glenheron

(Greystones).

• Focused on our core starter home

market and delivering competitively

priced housing at price points where

first-time buyers can access

mortgage finance.

• The affordability of our starter homes

remains a key objective - our 2021

average selling price was €350,000,

including VAT, compared to €348,000

in 2020, in prime, sought-after

suburban locations.

• Carried out strategic research

improving the energy efficiency of

our homes, further developing and

enhancing our Mechanical and

Electrical Design.

• Enhanced PreCon and Construction

Programming Capability with integrated

detailed project programs developed for

each project.

Operational improvements around our

homes during 2021

• Developed our technology and

innovation capability.

• Introduced a series of Operational

Dashboards Innovations and a working

group Engineers’ Forum.

• Further innovated Cairn’s Way of

Working by introducing Productivity

Planning, Offsite Manufacturing and

BIM (building information modelling)

Strategies.

• Implemented a working Programme

Management Office to reinforce

business processes and functions

as we scale.

What we’ll do in 2022

• Deliver 1,500 new homes across

all tenures.

• Commence up to 10 new developments

and be on an average of 22 sites during

the year.

• Expand regionally and extend our

development and sales footprint

beyond the Greater Dublin Area.

• Continue work already underway in

Cork and also start preconstruction

design in Galway, Limerick and Kilkenny

in the first quarter of 2022.

• Bring a number of new schemes to the

market across all price points from

starter homes to premium apartments.

• Continue to enhance the standard of new

homes that we build through our

in-house design development

processes, with a best value approach.

• Grow our brand and separate ourselves

from the market through quality

thoughtful design.

• Evolve our designs technically so they

can meet our ambitious sustainability

and environmental targets with Modern

Methods of Construction (MMC) and Off

Site Manufacturing (OSM). Refine our

Cairn Standard Designs with our

Integrated supply chain in mind.

HOMES & INNOVATION

Our approach to customer-focused

product has been cemented with

innovation and sustainability in

mind, married with further

developing our extensive

specification range with a number

of customer types in mind.

We continued to explore more

innovative and efficient ways to

deliver our new homes during

2021, implementing new technical

build innovations and maintaining

quality levels.

KEY PERFORMANCE

INDICATORS

• Maintained the

competitiveness of our core

starter home offering with

an average selling price of

€350,000, including VAT.

• Focus on innovation and

sustainability of new homes

built, including introducing

light gauge steel systems for

duplexes and apartments.

• 67% of our new homes were

rated A2 and 33% were

rated A3.

• Further innovated by

introducing productivity

planning, offsite

manufacturing and BIM

(building information

modelling) strategies.

NEW HOMES DELIVERED

TO THE MARKET IN 2021

1,120

AVERAGE FIRST TIME BUYER

SALES PRICE IN 2021

€350,000

STRATEGY IN ACTION CONTINUED

STRATEGIC PILLAR #4

Operational

Excellence

Create a commercial and profitable

operating platform to turn landinto

great places to live.

Griffith Wood, Griffith Avenue, Dublin 9

43CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

What we did in 2021

• Continued to expand our internal teams

in addition to growing our subcontractor

base with 70 new subcontractor and

supplier relationships created.

• Leveraged nearly €270 million

procurement and buying power despite

the continuing challenges a second year

of COVID-19 has brought.

• This has also served to hedge against

growing build cost inflation in a year with

substantial commodity and product

increases with build cost inflation of

c. €15,000, or c. 6%, per new home built.

• Continued to focus on category

management within our supply chain

to inform future spend and indicative

resource levels.

• Maintained subcontractor performance

tracking across projects and completed

our second supplier engagement survey,

retaining a strong and positive score.

• Supported our supply chain to address

the current labour skill shortages.

• Secured planning consent for 1,065

new homes.

• Commenced delivery of five new

schemes, continuing partnerships with

key suppliers and customers.

• Completed seven schemes (The Quarter

at Citywest, Shackleton Phases 3B and

C, Gandon Park, Rostrevor Place, Oak

Park, Mariavilla and Parkside).

• Continued to introduce modern methods

of construction (MMC) within our

schemes in order to drive product

standardisation, create efficiencies and

reduce construction programmes.

• Utilised project dashboards to monitor

progress and productivity.

• Achieved a Safe T Cert rating of A, an

increase from previous years reflecting

the high standard of health and safety

across our construction sites.

What we’ll do in 2022

• Mobilise for and commence up to ten

new schemes, including a number of

new locations outside of the Greater

Dublin Area.

• Focus on lean project planning and

execution methods.

• Implement 4D planning on all projects

to maximise delivery efficiencies.

• Improve productivity and onsite logistics.

• Expand our use of predictive analysis in

category management to assist our

supply chain in understanding multiple

project commitments and informing

supply chain expansion requirements.

• Proactively engage with our supply chain

in providing pipeline commitment to

secure future capacity aligned to our

growth ambitions. This will strengthen

supplier relationships and enable supply

chain growth and development.

• Continue to use modern methods of

construction (MMC) to improve

efficiency and remove constraint risks

within the supply chain.

• Develop sustainability as a critical

metric of our supply chain.

KEY PERFORMANCE

INDICATORS

• Expanded the depth and capacity

of our supply chain with 70 new

subcontractor and supplier

relationships established.

• Advanced our digital strategy

through productivity trackers

and dashboards and utilising

IT systems in programme

delivery and template

standardisation.

• Further integration of modern

methods of construction into our

standard designs while

maintaining best in class quality

standards for new homes

delivered.

• Delivered greater construction

programme and cost efficiencies

as evidenced by improved 2021

gross and operating margins.

MAXIMISING OPERATIONAL EFFICIENCY

Our use of modern methods of

construction (MMC) has consciously

evolved over the last year and we

have introduced light gauge steel

(LGS) and offsite balcony fabrication

to our schemes.

These construction methods improve

site efficiency and programme, along

with product standardisation.

In addition to expanding our use

of new construction methods, we

are also growing our supply base

of providers of these services, including

at a local level.

Category management has continued to

be a key focus, and we are now able to

utilise our order and spend data to

predict future category spend over

specified periods of time. This will be

delivered in tandem with expanding our

current supply chain pool, allowing new

and existing subcontractors to grow

their businesses with Cairn as

we deliver on our growth agenda.

Our Supplier Relationship Management

strategy continues to work well, with

subcontractors invited to regular

meetings and kept abreast of our

pipeline plans, performance items in

addition to development and innovation

opportunities. We will continue to

engage to ensure our supply chain

maintain sustainability as a key

deliverable which we will seek

to align to our Sustainability Agenda.

LABOUR AND MATERIALS

PROCURED IN 2021

€270 million

NEW SUBCONTRACTOR AND SUPPLIER

RELATIONSHIPS CREATED

SAFE T CERT RATING ACHIEVED IN 2021

A rating

STRATEGY IN ACTION CONTINUED

Ground Stabilisation, Cut and Fill

Design and the Circular Economy

Cairn has embarked on further specialised

use of both Ground Stabilisation and Cut

and Fill exercises to introduce a working

circular economy into our projects.

What is Soil Stabilisation

Soil stabilising is an accepted global

practice for treatment of materials that may

otherwise be classified as unacceptable.

Through remediation techniques such as

treatment with lime or cement, the material

may be rendered as structurally

appropriate.

The process for stabilising soil begins with

classification and sampling of the material

intended for re-use. This process will

identify the material type and produce a

treatment plan for the stablising process.

For example, materials of a clay type may

require lime for the stablising process,

while sandy soils may require a cement

stabilising additive.

Cairn has identified strategic schemes

using specifically procured Site

Investigation Material to rollout this

innovative and sustainable process on a

bigger scale across our c. 17,700 unit

landbank. Cairn now has a standard suite

of Site Investigation packages that are

procured early in the process. This allows

us to make advanced business decisions

about our landbank to provide a best value

approach and achieve a substantial

reduction in our carbon footprint.

Being more efficient in how we measure,

control and use our soil is a key target for

Cairn as we seek to find value in how we

approach our groundworks. A better use of

soil and a reduction in material to land fill

has the added benefit of being significantly

better for the environment.

Cut and Fill

Cairn has embarked on carrying out

specialised Cut and Fill exercises on pilot

sites to ensure we are managing our soil

bank effectively. This further peer review

challenges efficiencies in our site plan

design and also ensures sensible design

decisions are being made.

Placing new homes at optimum levels on

our sites mitigates unnecessary expense

and soil cut, which would otherwise result

in soil being moved off site.

The goal of the strategy is to make better

use of our landbank and ultimately to send

less soil to land fill, the outcome of which is

more economically viable and fully aligned

to our overall environmental strategy.

We are fully focused on this strategy

and are leveraging this experience to

design sites with a net zero soil import

and export where this is feasible from

a construction perspective.

Where cut and fill is not possible, we ensure

that additional soil generated from sites

is used for fill on other sites, with the end

goal of sending as little soil to land fill

as possible.

Testing for a wider range of soil types in

our pre-design stage allows contaminates

to be identified early and this ensures the

soil can be better managed. Areas with

contaminates can be identified and the

construction program can be designed

around their removal.

These innovations reduce our exposure to

the increased cost of stone and introduces a

practical and more sustainable alternative

as quarry reserves reduce.

Light Gauge Steel

Light Gauge Steel is a construction

methodology we have been researching

in depth for the last two years having set

up a working group in 2020 to develop

two blocks of apartments using this

methodology.

Suitability Assessment

To embed and integrate a new construction

methodology onto a project, we need to

ensure it meets the requirements of our

technical, commercial and construction

departments.

Our working group reviewed and liaised

with a series of Light Gauge Steel

companies and interrogated the product.

After working through the designs and

requesting a number of changes to the

system, we settled on a final design

fully aligned to our standardised final

product requirements.

We developed the onsite installation

prototypes to de-risk this new construction

method and to use it as an educational tool

for our team and subcontractor base.

Delivering Significant Efficiencies

Benefits of Light Gauge Steel include:

• Significant reduction in the structural

frame programme and the overall

building loads on foundations. These

combine to deliver a building requiring

significantly less concrete, which is

carbon intensive to produce.

• Utilising factory made, precision

components delivers a better

quality product.

• Steel is more recyclable than timber

or concrete.

• Similar process to timber frame in

terms of how it is constructed and the

efficiencies this delivers through a

panelised offsite system.

• Reduction in personnel onsite which

is better for health and safety.

• Majority of internal walls become load

bearing and structural.

“ This transition towards further

use of offsite manufacturing is

another step in Cairn’s journey

in becoming a modern methods

of construction leader.”

45CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

SOIL STABILISATION

LOWER CARBON

FOOTPRINT

COMPLY WITH THE

REQUIREMENTS OF

CIRCULAR ECONOMY

INCREASED

REUSABILITY OF

MATERIAL ONSITE

REDUCTION IN

POTENTIAL IMPACTS

ON THE PUBLIC

SIGNIFICANT

REDUCTION OF

MATERIALS SENT

TO LANDFILL

REDUCTION IN WASTE

DISPOSAL TO LANDFILL

Note that 8,000m

is hypothetical but typical. The calculation below is based on a typical removal and

the related savings of carbon arising from the transport of the soil.

Amount of soil onsite

8,000m

Total reduction

140,000

kg CO

Distance to

travel for each

100km

Diesel required

per trip

27 litres

Carbon produced

per trip

70 kg

Number of

trucks needed

1,000

All carbon calculations

made using the Vehicle

Energy Consumption

Calculation Tool (VECTO).

One litre of standard

diesel fuel creates about

2.6 kg carbon dioxide.

CIRCULAR ECONOMY - INNOVATIVE SOIL MANAGEMENT

Light Gauge Steel is a quick and efficient

method of construction. It also allows us

to free up and reduce our reliance on

certain trades.

This transition towards further use of

offsite manufacturing is another step in

Cairn’s journey in becoming a modern

methods of construction leader.

Evolving this construction

methodology in 2022

Having proven this new form of

construction, we are extending its use to

apartment blocks of 3-4 storeys in height.

This innovative construction methodology is

scalable and will be used across multiple

Cairn developments in 2022 and beyond.

STRATEGIC PILLAR #5

Places

Creating places for

communities to prosper.

STRATEGY IN ACTION CONTINUED

Marianella, Dublin 6

47CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

DEVELOPMENTS WHERE WE DELIVERED

NEW HOMES DURING 2021

WINNER OF THE IRISH GREEN

CITIES AWARD IN 2021

Six Hanover

Quay

CLONBURRIS WILL BE IRELAND’S FIRST

LARGE TOWN WHERE WE ARE TARGETING

Biodiversity

Net Gain

What we did in 2021

• Biodiversity was the key area of focus for

our ‘Places’ pillar in 2021. Despite the

challenges presented by the COVID-19

pandemic, we continued to maintain a

high standard of design and innovation,

informed at all times by Biodiversity.

• In delivering 1,120 new homes across

16 developments in 2021, we focused

on ensuring vibrant, prosperous places

for communities to live.

• With a greater global focus on

environmental management and

sustainability, we moved biodiversity

to the forefront of our innovation and

places conversations.

• This supported us in continuing to make

a positive contribution to the

communities in which we operate and

participating in better serving the needs

of society.

• Our customers want to live in

sustainable developments where

biodiversity is paramount and are

looking for homes and companies

that support this message.

In addition, we also delivered the following

during 2021:

• Nearly 8 acres of parks and green

spaces completed.

• Formal adoption of Cairn Biodiversity

Policy which was fully incorporated

within our internal gateway system

(project pre-planning and design

process).

• Construction of three new children’s

play areas in our Graydon, The Quarter

at Citywest and Archers Wood

developments and the refurbishment

of a play area in Parkside.

• Construction of an all-weather sports

court in Parkside Square.

• Our Six Hanover Quay project was

the winner of the Irish Green Cities

Award 2021.

• We lodged our first planning application

for 570 new homes at Clonburris, a new

town which will house 30,000 new

residents just 13km from Dublin City

Centre. Cairn will deliver 5,500 new

homes in Clonburris into the long-term

and this will be Ireland’s first new major

town where we are targeting a

biodiversity net gain.

What we’ll do in 2022

• Create sustainable communities

around the 1,500 new homes which

we will deliver.

• Continue to deliver major infrastructure

and public realm for the benefit of new

and existing communities.

• Adopt our Biodiversity Strategy as a

headline item at all major internal

project gateways.

• Complete our largest piece of

infrastructure to date, a road bridge in

Cork to our new Bayly development,

which will also service a new school

being built for the local area.

• Deliver on a series of greenways as

part of our developments including

Bayly in Cork and Three Trouts Way

in Greystones.

• Deliver more planning applications

focused on placemaking and design.

KEY PERFORMANCE

INDICATORS

• 1,120 new homes delivered

across 16 separate

developments.

• Community engagement

programme impact evidenced

through 89% of customers

saying their community feels

more friendly following the

“Home Together” initiative.

• 100% of Cairn sites had a

Biodiversity Impact

Assessment completed,

aligned to our Biodiversity

Strategy.

• €105m invested to date in

infrastructure benefitting

local communities.

STRATEGY IN ACTION CONTINUED

Biodiversity Actions 2021

Cairn formally adopted a Biodiversity

Policy which states:

“Cairn will mitigate the direct impact

on local biodiversity of each of our

developments, regardless of type, size

or location. This will be achieved through

a development-specific biodiversity

programme that replaces or improves

the local biodiversity of each new Cairn

development, or otherwise contributes to

the improvement of Ireland’s biodiversity.”

Our Biodiversity Policy will influence all

stages of product delivery from site

planning, detailed design and operations

through to customer aftercare. Starting in

2022, all Cairn developments are now

subject to indepth Biodiversity Impact

Assessments with Biodiversity Plans

developed to minimise the impact and

optimise the opportunities for habitat

creation within what will be ultimately

completed residential developments.

Cairn continues to support the All Ireland

Pollinator Plan with our Pollinator Friendly

planting and landscape works across all

of our developments. We have been

acknowledged by the National Biodiversity

Data Centre as a pollinator Friendly

Business since 2018.

We have also become business supporters

of Birdwatch Ireland, an independent

conservation organisation, and in 2022 we

will sponsor the Irish Garden Bird Survey.

We have collaborated with Birdwatch

Ireland in implementing a nesting box

project as part of our Archers Wood

development in Delgany, Co. Wicklow,

including the installation of barn owl,

woodpecker and dipper nesting boxes.

Cairn has commissioned a Wildlife-Friendly

Show Garden for our Hawkins Wood

development in Greystones, Co. Wicklow. It

is hoped the Wildlife-Friendly Show Garden

will be impactful in showcasing to our

customers the potential for supporting

Biodiversity in small urban spaces.

For our future Clonburris development in

West Dublin, and in collaboration with a

local nursery, we collected seeds from

native Hawthorn trees on the site. From

these seeds we will propagate Clonburris

Hawthorns that will be replanted when we

commence this exciting new development

and gifted to our customers when we

deliver our first new homes.

Biodiversity Agenda

A series of further site-specific Biodiversity

actions are described below:

Graydon

In our Graydon development in Newcastle,

Co. Dublin, we commenced additional

understorey planting to regenerate a

hedgerow which is 200 metres in length.

We also planted a 50 square metre micro

woodland and completed a new park centred

on a burgage plot hedgerow of medieval

origins with new native tree planting and

wildflower meadows.

We also donated pollinator friendly plants

to the Newcastle Tidy Towns to add to the

planting beds in their village.

Archers Wood

Within our Archers Wood development we

have constructed 230 metres of Green Wall,

a more sustainable alternative to concrete

retaining walls. The Green Walls have been

seeded with a bespoke mix of grasses and

native wildflowers. We also completed the

planting of over 4,000 native trees in

perimeter woodlands and hedgerow

alignments, and the installation of 70 bird

boxes, including boxes specifically for

barn owls, woodpeckers and dippers.

Griffith Wood

We have planted a new tree belt of native

Pines, Oaks, Hazel, Holly and Birch along

our site boundary at Griffith Avenue,

Dublin 9, with an existing school using

specially grown semi-mature stock for

immediate impact.

The Quarter at Citywest

We completed the installation of 200 square

metres of wildflower meadow within the

apartment courtyard gardens in Citywest,

Dublin 24, and 270 square metres of green

roof over the bike stores.

Hawkins Wood

We have sown 1,500 square metres of

wildflower meadow in the adjoining and

existing Seabourne apartment complex as

part of the reinstatement works associated

with a new storm drain.

These site-specific projects are bolstered

further by our pollinator-friendly strategies

across all Cairn schemes, including:

• Pollinator-friendly mixes of

perennials and flowering shrubs

in all front gardens.

• Native tree planting in open spaces and

private gardens (6 trees per completed

dwelling to date).

• Mixed bulb drifts of pollinator-

friendly plants.

• The provision of a packet of pollinator-

friendly bulbs and information to every

new homeowner.

7.5 trees planted per

unit sold in 2021

80%

of trees planted

are native species

100%

of sites have had

a biodiversity

assessment

49CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Harvesting native seeds

Harvesting the Haws of the Whitethorn trees on our Clonburris site.

The Haws contain seeds and these will be used to grow new plants

which in 2 years time will ready for planting in the green spaces and

shared with our home owners.

Custom made bird boxes

With the assistance and direction of Birdwatch Ireland we installed

70 bird boxes in the Woodland and Hedgerows of our Archers Wood

development. The boxes were designed and supplied by Birdwatch

Ireland and all have been handmade in Ireland. The boxes will

support the bird life along the Three Trouts River valley.

CUSTOMERS

How and why we engage

Our customer team not only strive to deliver

an exceptional experience to our customers

throughout the buying process and beyond,

we also act as the voice of the customer

within Cairn. We listen to what they tell us

in person, via surveys, through analytics

and data to find actionable insights that we

can use to improve our service and refine

our product design. We work across

functions to ensure that the customer

needs are addressed, be they private or

institutional buyers. We also partner with

organisations like Network Neighbourhood

to help our customers to form cohesive and

resilient communities. Following our

successful Home Together initiative, we

have committed to increasing funding,

scope and timescale of the project. Over the

coming years this authentic community-

driven model will allow community activity

to become self-sustaining and effective

over the long-term.

EMPLOYEES

How and why we engage

Our employee engagement strategy

ensures an ongoing rhythm is in place for

collating, analysing and reporting on

feedback received through employee

surveys, polls and check-ins. From inviting

our employees to help us develop Cairn’s

employer brand proposition, to asking

employees how we can better support their

health and wellbeing, we aim to survey our

employees every six months so that they

have the opportunity to share their views.

The insights we gain from these direct our

focus for future initiatives. Examples

include identifying and training mental

health first aiders on all active sites, to the

establishment of a Health and Wellbeing

forum that supports and promotes all

aspects of employee physical, mental

and emotional wellbeing.

SUPPLY CHAIN

How and why we engage

We employ an active Supplier Relationship

programme that creates a regular rhythm

of engagement with our supply chain, led by

dedicated Supplier Relationship Managers

and supported by our customer, operational

and commercial teams. Through this active

engagement we are ensuring the needs of

the business and the needs of the supply

chain are continuously aligned. Forward

planning of workloads is critical to this

engagement to ensure the expectations

of our homebuyers are met. This also

ensures that each supply chain member

can strategically plan their own business

growth by having visibility on their own

resource requirements to meet the

demands of their future workload with

Cairn. We continue to measure our

performance through the lens of the supply

chain to ensure we also pursue a process of

continuous improvement.

STAKEHOLDER ENGAGEMENT

Investing in

our partnerships

HOW THIS HELPS OUR SUSTAINABILITY AGENDA

Our community-centred approach

empowers our customers to build social

cohesion, community resilience and a

better quality of life for all. Regular

communication with our customers helps

us to include sustainability matters which

are most important to them in our agenda

from the future spec of our homes to the

biodiversity and placemaking initiatives

we roll out across each site.

Our employees are a vital part of our value

chain. They are the people who work the

closest to our primary activity. Organic

conversation amongst employees helps to

shape the direction we take in Sustainability.

It is through constant engagement with our

employees that these thoughts and ideas

are developed and deepened. We also

believe that involvement in our Sustainability

Agenda lends itself to part of our employee

value proposition and covers everything

from wellbeing initiatives to equality,

diversity and inclusion workstreams.

Strengthening partnerships with our supply

chain is critical to understanding and

achieving our Sustainability targets in

respect of our commitment to the Science

Based Targets Initiative and delivering our

low carbon pledge. Engagement with the

supply chain ensures that it remains

transparent and does not incorporate many

of the issues faced by our industry such

as Modern Slavery.

51CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

SHAREHOLDERS

How and why we engage

Executive Directors and the Head of

Investor Relations proactively engage in

regular dialogue with shareholders after

the announcement of interim and

preliminary results through detailed

presentations and roadshows, and also

through capital markets days, regular

attendance at sell-side investor

conferences and ad-hoc one to one

meetings, including site visits. The majority

of these interactions have been virtual

since the start of the pandemic. Regular

engagement ensures we update

shareholders on all areas of our progress,

our growth plans and strategic initiatives.

The Company also maintains an ongoing

programme of shareholder engagement on

our corporate governance framework and

policies to understand evolving shareholder

expectations. We have engaged extensively

with shareholders in refining our

Sustainability Agenda and strategy.

COMMUNITIES

How and why we engage

Our approach to placemaking factors in the

need of communities to grow and develop

safely in outdoor public spaces. We design

our shared spaces, cycle paths, play areas,

green ways, parks and public realm to

allow people to interact in a positive and

relaxing environment. In addition to our

partnership with Network Neighbourhood

we also sponsor multiple local youth sports

clubs, local amenities and artists through

our sponsorship and arts programmes.

By engaging with communities of interest,

such as sports or the arts in the locations

in which we build, we create bonds with

the existing wider community around our

developments and help them integrate in

meaningful ways.

POLICYMAKERS

How and why we engage

We regularly engage with key policy

makers at local and national government

level through proactive and open

communication on matters of common

interest in the residential construction

industry. With our track record, Cairn is

in a unique position to provide valuable

and relevant insights into all aspects of

the industry, including planning, design

and construction, and how this feeds

into housing policies. We engage with

Government departments, state agencies

and local authorities both directly

and through membership of industry

lobbying groups.

We have set Sustainability targets, against

which our shareholders can measure our

performance, which will be reported in

line with SASB and GRI frameworks.

Engagement with shareholders from

the materiality assessment stage to the

execution stage of many sustainability

actions ensures we have incorporated their

expectations into our Sustainability Agenda.

Placemaking plays an important role in the

social strand of our Sustainability Agenda.

To ensure that we continue to foster a sense

of community and belonging in the areas

were we build, we must engage with both

the communities we create and the existing

communities where we develop.

Collaboration with these existing

communities continues to foster

meaningful outputs which is incorporated

into our decision making around future

community and placemaking initiatives.

Sustainability in a broad sense is constantly

changing. There are many frameworks,

regulations and legislations coming into

force which requires constant horizon

scanning. Leveraging this platform ensures

our Sustainability Agenda is aligned to any

legal requirements relating to our industry.

The focus on climate change and the

impending legislative changes in this space

is something Cairn continues to monitor

and prepare for.



Read our full Sustainability Report at

www.cairnhomes.com/sustainability

SUSTAINABILITY

Leading

sustainably

Our sustainability strategy supports us to meet our purpose and ensure our material

Environmental and Social impacts and opportunities are managed. The strategy is

centred around three pillars: People, Homes and Places and aligned with the UN

Sustainable Development Goals for business.

Social impacts are incorporated in our People pillar and Environmental in our Homes

and Places pillars covering climate action, protecting biodiversity, the shift to a circular

economy, green procurement and responsible sourcing in our supply chains.

PEOPLE

Health and Safety

We are committed to providing a

safe working environment but beyond

that we have developed mental health

initiatives to expand our support

for employees.

Employee Welfare

Workforce pipeline and protection is

our priority. Without happy and healthy

teams, we cannot achieve our vision.

We provide a range of wellness

supports to our people as well as

pursuing ED&I accreditations to

ensure we continue to create a

workplace that provides a sense

of belonging for everyone.

Customer

Our focus is on providing an excellent

customer experience with on-time

delivery, end-to-end support through

the buying process and beyond,

showing consistent care for our

customers and their neighbourhoods.

PLACES

Placemaking

We are dedicated to developing lasting

and sustainable communities. We plan

our new developments carefully to

ensure that each is well served by

amenities and transport options

that allow residents to thrive.

Communities

We work with expert partners to

initiate community participation

and identify leaders who will

strengthen connections between

neighbours. We go beyond the basic

needs of our communities and add a

bespoke arts, heritage or design

project to each development.

Protecting Biodiversity

This is an area of increasing focus

for Cairn. Our developments have

a material environmental impact

on local biodiversity – we strive

to mitigate these impacts

wherever possible.

HOMES

Climate Action

We are taking action to reduce our

carbon footprint though a variety

of initiatives that tackle the areas

where our activities create the most

substantial carbon impacts. This

includes soil and waste management,

modern methods of construction, the

energy efficiency of our homes, and

working with our supply chain to

identify better ways of working.

Supplying Energy-Efficient Homes

We have a unique opportunity to

supply sustainable homes. We deliver

A-rated homes that contribute to a

more sustainable built environment

in Ireland and offer comfort and

long-term savings for our customers

at competitive prices.

We are aligning our strategy to the following United Nations Sustainable Development Goals (SDGs):



Read our full Sustainability Report at www.cairnhomes.com/sustainability

53CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

LEADING SUSTAINABLY ACROSS ESG VERTICALS

Environmental

CATEGORY HIGHLIGHTS

Climate change • In 2022, we formally committed to setting Greenhouse Gas (‘GHG’) emissions reduction targets in line with

the Science Based Targets Initiative (‘SBTi’);

• We are in the process of setting Scope 1 & 2 targets, measuring our Scope 3 baseline and conducting

Lifecycle Assessments (‘LCA’) on our homes to understand their embodied carbon footprint;

• Energy and carbon initiatives that we have implemented include: FSC certified timber frames, light gauge

steel construction and air source heat pumps, contributing to the certified minimum A rating for each of

our homes; and

• Awarded a B for our first full submission to the Carbon Disclosure Project (‘CDP’).

Circular economy,

waste and responsible

sourcing

• Waste and carbon savings and diversion from landfill through soil management techniques including soil

stabilisation; and

• 100% of the timber we procure is FSC certified.

Biodiversity • In 2022, we incorporated sustainability into our remuneration framework including biodiversity metrics

within our Long-Term Incentive Plan (‘LTIP’);

• Numerous site biodiversity actions across developments including hedgerows, planting native trees,

pollinator friendly planting, nesting boxes, green walls, native trees, wildflower meadows, provision

of packets of pollinator friendly bulbs and information packs to each new homeowner; and

• Building on our support of Birdwatch Ireland and the All-Ireland Pollinator Plan.

Social

CATEGORY HIGHLIGHTS

Placemaking • In 2021 ‘Home Together’ was launched, an initiative with Neighbourhood Network to create strong,

well-connected communities; and

• Following this successful pilot, we are working to roll the initiative out across additional developments

in 2022 and beyond.

Charity • Cairn wants to do more to support families with children facing life-threatening medical conditions,

and as part of our commitment to communities, we announced a partnership with Make-A-Wish Ireland

in early 2022.

Employee welfare

- health, safety

and wellbeing

• Upgraded Safe-T certification score from B to A;

• Launched new health and wellbeing offering with Spectrum Life;

• 123 wellbeing events completed with our partners;

• 20 mental health first aiders have been trained, representing all sites and teams; and

• Since 2021, we are certified as a Great Place to Work.

Equality, Diversity and

Inclusion (‘ED&I’)

• We have attained the Bronze standard from the Irish Centre for Diversity (‘ICD’);

• With the guidance of the ICD, we will improve continuously on our journey to achieving the Gold standard; and

• In 2021 we launched our Employee Forum on ED&I to ensure employees’ lived experiences inform our policies

and procedures.

Governance

CATEGORY HIGHLIGHTS

Governance • Top-down and bottom-up approach from Board to day–to-day site operations with the ESG Reporting

and Research Team facilitating collaboration across the business while embedding the culture of

sustainable thinking;

• From 2022, remuneration frameworks linked to environmental and social KPIs;

• Rolled out a suite of new ESG related policies to be published alongside our Sustainability Report; and

• Achieved London Stock Exchange Green Economy Mark.

SUSTAINABILITY CONTINUED

TASK FORCE ON CLIMATE RELATED FINANCIAL DISCLOSURES (“TCFD”) INDEX

Area Recommended

Disclosures

Performance

& Disclosures

GOVERNANCE

Disclose the

organisation’s

governance around

climate-related

risks and

opportunities

a) Describe the

Board’s oversight of

climate-related risks

and opportunities

The Board comprises 10 members, of which two (the Chief Executive, Michael Stanley and

the Chief Financial Officer, Shane Doherty) are executive members. The Board is led by the

Non-Executive Chairman, John Reynolds. Reporting to the Board, the Executive Directors

maintains full strategic and operational oversight of the Company’s sustainability agenda,

which incorporates our response to the transition risks associated with the shift to a

lower-carbon economy, and the physical risks it faces in respect of climate change.

The Board is informed of and has oversight of climate-related issues through

two channels:

Strategy channel

At each Board meeting (of which there are approximately eight each year), the Executive

Directors present a comprehensive overview of progress towards our strategic objectives,

together with factors that are affecting or may affect those objectives, and factors that may

influence future strategy. Climate-related issues are identified as a key lever in our

strategic focus areas and, consequently, form an integral part not only of the strategic

reporting cycle, but also the annual strategic review.

Risk management channel

The Audit & Risk Committee of the Board monitors and reviews the effectiveness of

the Company’s risk management system, and advises the Board on principal risks and

uncertainties, as well as the risk aspects of its strategy, specifically climate-related risk

as a principal risk, and core element of strategy. As part of this activity, the Audit & Risk

Committee maintains oversight of the risk register and monitors our response to risk.

We have identified that a failure to anticipate and address the strategic, market, regulatory

and operational impacts of climate change as a principal risk. The appetite for this risk

reflects that identifying and proactively responding to the challenges of climate change

is core to our purpose and strategy. Consequently, the risk management framework

supports and promotes the identification and management of climate-related issues

on a business wide basis, managed through our embedded risk management process.

The Board actively considers both strategic climate-related influences and risks (as

identified through the channels described above) when guiding the Company’s strategy,

considering its response to risk, and overseeing the development, implementation and

outcome of associated goals, objectives and budgets. This culminated in the inclusion of

sustainability within our LTIP, which in turn is underpinned by sustainability metrics

incorporated into our remuneration frameworks (approved by Board), ensuring that

targets and objectives of employees, including Executive Directors, and the business,

are aligned.

b) Describe

management’s role

in assessing and

managing climate

related risks and

opportunities

The Executive Directors and Senior Leadership Team, supported by Cairn’s ESG Reporting

and Research Team and ESG Innovation Forum, direct the management of climate-related

issues, in the context of their impact on the Company’s strategic intent, as well as the

risks posed to the business (including as identified by the Company’s risk management

framework). Where necessary, these teams are advised by third party experts, ensuring

advice is objective and current.

The Chief Executive Officer retains responsibility for defining the strategic direction of

the business and Cairn’s climate-related performance and does so with the benefit of

guidance from specialist teams within the business including the Technical and ESG

Research and Reporting Team. Separately, the Chief Financial Officer is responsible

for ensuring the financial impacts of climate-related issues are fully understood and

reflected in company budgets.

All employees in Cairn, regardless of seniority, are responsible for supporting the

delivery of goals and objectives, identifying and managing risks, and generally promoting

company values. Through our People Strategy, the Chief People Officer ensures that

climate-related issues, and our response to them, is both communicated and incorporated

into employees’ annual objectives and associated incentives. The Chief People Officer

is also responsible for ensuring the Company’s resources and capabilities match its

climate-related responses.

55CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Area Recommended

Disclosures

Performance

& Disclosures

STRATEGY

Disclose the actual

and potential

impacts of climate-

related risks and

opportunities on

the organisation’s

businesses,

strategy, and

financial planning

where such

information

is material

a) Describe the

climate-related risks

and opportunities the

organisation has

identified over the

short, medium,

and long-term

Our risk management framework, which identifies climate-related issues as a principal

risk and uncertainty, considers all risks on the basis of three horizons:

• “Here and now”, being risks to the immediate term (one year or less) goals and

objectives of the business;

• “medium-term”, being risks with a horizon of between 1 year and 3 years; and

• “long-term”, being risks with a horizon of more than 3 years.

These horizons have been adopted bearing in mind the development cycle, as well as

overall strategic timeframes, and have been reviewed by the Audit & Risk Committee

of the Board.

The risk management framework supports the assessment of climate-related risks and

opportunities, requiring engagement at all levels of the business to ensure comprehensive

identification and evaluation. The Senior Leadership Team actively engages in this process

and regularly meets throughout the year to review risks and opportunities identified by

functional management, augment those with risks identified by the Senior Leadership

Team, and ensure new and emerging risks and opportunities are identified and managed.

The assessment of risks requires that we consider the likelihood of the risk occurring,

and then the impact of the risk should it occur (having regard to controls we have already

effectively implemented). This assessment supports decisions on how we apply Cairn’s

risk appetite to each risk and informs the materiality of the risk (or associated opportunity).

Here and now

Cairn is actively addressing current transition risks and physical risks. In the context of

development planning, we are already responding to greater planning constraints and

associated conditions that reflect both a policy shift toward developments that have a

lower carbon impact, and a need to respond to the physical impacts of climate change.

These conditions can have an impact on the fundamental design of developments, the

specification of individual units, and the density of housing that can be provided. Equally,

the conditions can impact on the construction methodologies adopted, as well as the

timeframe for development. All of these factors impact both the underlying cost of

developments, and the development capacity of the Company.

During the construction phase of developments, the adverse impact of climate driven

events such as prolonged periods of intense rainfall, an increase in the severity of winter

storms, or extremes of temperature, are factors that are monitored, evaluated and

managed by the Company.

Our Technical, Construction and Environmental teams develop responses and

remediations on a development-by-development basis with a view to mitigating

the financial and other impacts.

Medium to long-term

Whilst also a “here and now” climate-related issue, the carbon-intensity associated with

our construction activities has a medium and long-term horizon. The failure of Cairn to

address this could adversely impact our ability to develop sites that meet climate-led

demands or conditions, or which are affordable to our target market.

We have also identified climate-related issues as being generally a risk and an opportunity

for our business. This means ensuring our environmental, climate change and

sustainability responses meet the needs of our home buyers, whilst also following

rapidly changing national housing and climate strategies.

SUSTAINABILITY CONTINUED

TASK FORCE ON CLIMATE RELATED FINANCIAL DISCLOSURES (“TCFD”) INDEX CONTINUED

Area Recommended

Disclosures

Performance

& Disclosures

STRATEGY (CONTINUED)

Disclose the actual

and potential

impacts of climate-

related risks and

opportunities on

the organisation’s

businesses,

strategy, and

financial planning

where such

information

is material

(continued)

b) Describe the

impact of climate-

related risks and

opportunities on the

organisation’s

businesses, strategy,

and financial planning

Cairn recognises that climate change represents a principal risk and uncertainty to its

strategic intent. As a consequence, our process for identifying and reviewing that strategic

intent incorporates a comprehensive analysis and understanding of the climate-related

risks and opportunities presented by Our Purpose and Our Vision.

This understanding, defined by our risk appetite in this respect, then informs our strategy,

its underlying goals and objectives, and the outcomes we plan.

This creates a positive feedback process in which climate-related risks and opportunities

play a fundamental role in defining strategy, with associated goals and objectives to

mitigate or capitalise on opportunities having budgeted cost and margin impacts.

c) Describe the

resilience of the

organisation’s

strategy, taking into

consideration

different climate

related scenarios,

including a 2°C or

lower scenario

Both our Sustainability and Climate Action policies outline our intentions with regards to

business strategy and climate change. The business is aware that our changing climate is

exceedingly putting pressure on current business models. The risks associated with the

changes that will be incurred over time are incorporated into our sustainability strategy.

Our science based target setting is underway and with this process we have decided to

model various reduction targets on current and future developments. This allows us to

understand the potential changes that will be required operationally from the business and

the outcomes they will cause. The next step in our strategy workstream is to incorporate

climate scenario analysis into our planning. This will be completed in 2022 and will result

in the alignment of possible action plans to each scenario.

57CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Area Recommended

Disclosures

Performance

& Disclosures

RISK MANAGEMENT

Disclose how the

organisation

identifies,

assesses, and

manages climate-

related risks

a) Describe the

organisation’s

processes for

identifying and

assessing climate-

related risks

Identification

The identification and assessment of climate-related risks and opportunities is supported

by Cairn’s risk management process (as described in the Risk Report). Risk management is

an important business driver and its value as a process means we take a business-wide

approach, allowing us to consider the potential impact and opportunity presented by all

types of risk affecting our business, including climate-related risks.

When considering climate-related risks, the Company seeks to identify and consider all

material existing and emerging factors relevant to our core activities:

• policy risks (how Government policy in respect of climate may impact on our business

model, for example through planning policies or economic policies);

• brand risks (how our brand is impacted by our response to climate-related risk,

for example because our developments do not meet customer requirements);

• economic risks (how climate-led factors impact economic conditions, such as increases

in supply chain costs);

• development risks (how climate-related issues impact on our ability to deliver

developments, including through local development plans); and

• compliance risks (such as how the Company complies with regulatory constraints

on what and how we build).

Within our risk register, specific climate-related risks include the risk that the cost of

appropriately dealing with extracted waste exceeds expectations, that environmental

demands require development design or other changes and risks to the resilience of

our supply chain.

b) Describe the

organisation’s

processes for

managing climate-

related risks

Managing climate-related risk

Identifying and proactively responding to the challenges of climate change is core to our

purpose and strategy. This means that all risks (other than “low” risks), are managed and

mitigated unless they are accepted by the business, with high risks being tolerable only

with the approval of the Board, and extreme risks not being tolerated in any circumstances.

In line with our risk management framework, decisions on how risks are to be managed

are determined on a case-by-case basis, informed by a range of factors that are

considered in the context of the specific risk and its wider business impact. These decisions

are reviewed by functional management and the Senior Leadership Team, and is subject

to oversight by the Audit & Risk Committee. This ensures that risk responses align with

and inform our strategy and purpose and that appropriate materiality assessments have

been made.

c) Describe how

processes for

identifying,

assessing, and

managing climate-

related risks are

integrated into the

organisation’s overall

risk management

Integration

The risk management process has been designed to:

• help define strategies, including controls, to mitigate risks, or capitalise on the

opportunities they may present;

• establish a process to consider risks and opportunities in the context of Cairn’s risk

appetite; and

• ensure risks, mitigating controls and responsibilities for managing risk and

opportunities are recorded and monitored.

Our approach to the assessment of risk is consistently applied by reference to the

probability of the risk arising, and the consequences of the risk (which includes a

materiality assessment based on a range of financial and non-financial factors).

Our response to the risk is then dependent on:

• the overall risk rating (low, medium, high, or extreme); and

• the Company’s appetite for the risk.

In respect of climate-related risk, identifying and proactively responding to the challenges

of climate change is core to our purpose and strategy. This means that as part of our

overall risk management process, we proactively identify and manage risks associated

with climate change in a way that ensures we can continue to deliver on our vision.

SUSTAINABILITY CONTINUED

TASK FORCE ON CLIMATE RELATED FINANCIAL DISCLOSURES (“TCFD”) INDEX CONTINUED

Area Recommended

Disclosures

Performance

& Disclosures

METRICS AND TARGETS

Disclose the

metrics and targets

used to assess and

manage relevant

climate-related

risks and

opportunities

where such

information

is material

a) Disclose the

metrics used by the

organisation to

assess climate

related risks and

opportunities in line

with its strategy and

risk management

process

For the 2021 reporting period we will be disclosing the following metrics to assess and

manage climate related risks and opportunities as set out within the “Disclosures and

Performance” section of our 2021 Sustainability Report.

• Building Energy Intensity Ratio;

• Gross direct (Scope 1) GHG emissions;

• Gross location and market-based energy indirect (Scope 2) GHG emissions;

• GHG emissions (S1&S2) intensity ratio for the organisation (per home built);

• Total energy consumption within the organisation; and

• Total weight of general waste generated, including breakdown by disposal route.

In 2022, we are taking our commitments further by incorporating sustainability into our

remuneration frameworks. This demonstrates the importance we place on accountability

for our sustainability commitments. We are:

• Incorporating environmental metrics on biodiversity net gain into our long-term

incentive plan; and

• Incorporating social metrics, including our customer and people framework with

a health and safety underpin, into our short-term incentive plan.

All metrics and targets are reported in line with appropriate standards including SASB,

GRI, EPRA and DEFRA.

b) Disclose Scope 1,

Scope 2, and, if

appropriate, Scope 3

greenhouse gas

(GHG) emissions, and

the related risks

Our Scope 1 and 2 emissions are reported under GRI-405-1 and GRI-405-2. We are in the

process of measuring our Scope 3 baseline and expect to disclose that information over

the coming year. These will be measured in line with the GHG protocol.

As a homebuilder, we operate in an energy intensive industry. Emissions are the key driver

of global temperature rise and result in many of the regulatory changes we are now faced

with. Measuring our carbon emissions allows us to gain a full and thorough understanding

of the emissions we produce directly and indirectly. This allows us to inform the choices we

make in our activities and procurement processes. A business-as-usual trajectory could

impose the following non-exhaustive sample of risks to our stakeholders:

Customer: A home that is not efficient or resilient to potential climate scenarios.

Shareholder: An investment that would not be adaptable in the face of climate change

and lose value.

Operations: A method of construction that is outdated, energy and carbon intensive

and behind the curve within the industry.

c) Describe the

targets used by the

organisation to

manage climate-

related risks and

opportunities and

performance

against targets

As a homebuilder operating in an energy intensive industry, we have a responsibility

to ensure we set meaningful targets to abate and mitigate GHG emissions.

In response to this we have:

• Committed to setting science-based targets with the SBTi for scope 1, 2, and 3.

We expect to make that submission within the next 12 months;

• Committed to ensuring 40% of our unit commencements are on verified biodiversity

net gain developments by 2024;

• We are signatories of Business in the Community Ireland’s Low Carbon Pledge.

59CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Graydon, Newcastle, Co. Dublin

CHIEF FINANCIAL OFFICER’S REPORT

Shane Doherty

Chief Financial Officer

Revenue

Despite the impact of public health restrictions early in the year,

where the majority of our development activity and production

capacity was curtailed for a 13-week period, our revenues grew by

62% to €424.0 million (2020: €261.9 million). Our closed sales grew

by 51% to 1,120 new homes (2020: 743 new homes), with an average

selling price (“ASP”) of €428,000, including VAT (2020: €377,000). The

increase in ASP is primarily mix driven as a result of multifamily new

homes completions at Griffith Wood and Rostrevor Place, in addition

to completing the sale of a greater volume of higher ASP trade-up/

down homes in the year (197 compared to 122 in 2020). Most

importantly, the pricing of our first time buyer homes remained very

competitive. Our 2021 average selling price for starter homes was

€350,000 including VAT (2020: €348,000), notwithstanding c. €15,000

build cost inflation which we absorbed per new home built.

Gross Profit and Operating Profit

Gross profit of €83.9 million (2020: €42.7 million) was 96% ahead

of 2020 which delivered a gross margin of 19.8% (2020: 16.3%), having

trended higher in the second half of the year at 20.3%. Margin

progression was driven by a number of factors, including increased

supply chain efficiencies and improved pricing in middle and upper

end apartments and houses, partially offset by the impact of build

cost inflation.

Operating profit of €58.4 million (2020: €24.4 million) was 139%

ahead of 2020, with a return to top-line growth driving operating

leverage expansion. This included operating expenses of €25.5

million (2020: €18.3 million) and resulted in an operating margin

of 13.8% (2020: 9.3%). Within that figure, we incurred €0.3 million

of unproductive labour costs in 2021, owing to the 13-week site

closures early in the year.

Profit after Tax and Earnings per Share

Finance costs for the year were €8.1 million (2020: €9.7 million)

reflecting both a lower average cost of funds and lower average

drawings on committed debt facilities compared to 2020.

Profit after tax of €43.2 million compared to €12.7 million in 2020,

which resulted in earnings per share of 5.8 cent (2020: 1.7 cent).

Financial Position

We had total assets of €1,013.0 million at 31 December 2020 (2020:

€1,018.8 million), with net assets of €778.8 million at that date

(2020: €750.6 million).

Our balance sheet continues to be very well capitalised, with

inventories at year-end of €940.0 million (2020: €968.2 million),

comprising land held for development of €671.7 million (2020:

€690.3 million) and construction work in progress (“WIP”) of

€268.3 million (2020: €277.8 million).

At 31 December 2021, our net debt had reduced to €109.5 million

(2020: €168.3 million), comprising drawn debt of €149.5 million

(net of unamortised arrangement fees and issue costs) (2020:

€202.8 million) and available cash of €40.0 million (2020:

€34.5 million). Available liquidity (cash and undrawn facilities) of

€234.0 million (2020: €174.5 million) affords us significant flexibility

and strategic optionality as we focus on the continued growth of our

business. Net debt to inventories (at cost) was just 11.7% (2020:

17.4%), reflective of our lowly leveraged balance sheet.

Cash Flow

We generated €88.5 million of cash from operations in 2021

(2020: net cash used in operating activities of €40.6 million), owing

to improved profitability and a reduction in both land and WIP held

at year end. €65.1 million of that operating cash was generated in

the second half of the year as a result of significantly higher new

home completions in that period. This operating cash generation

was after we invested €43.6 million in strategic land acquisitions

in the second half of the year. We also returned €19.9 million to

shareholders through our ordinary dividend programme during

the year.

“Our strong balance sheet

position, significant available

liquidity and substantial

expected operating cashflow

generation leaves us well

placed to continue on our

scaling journey, whilst being

able to make capital returns

to our shareholders.”

61CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Outlook

We look forward to both the near and medium-term with

confidence. Our closed and forward order book of 1,218 units at

2 March 2022, with a net sales value of €463.0 million, includes

completions forecast for both 2022 and 2023 and already underpins

over 70% of our delivery target of 1,500 new homes for 2022. Our

strong balance sheet position, significant available liquidity and

substantial expected operating cashflow generation leaves us well

placed to continue on our scaling journey, whilst being able to make

capital returns to our shareholders. Our talented team of people

and our supply chain partners continue to drive us towards our

strategic objectives as well as our ambitious Sustainability targets

which we also announced today with the publication of our inaugural

Sustainability Report.

In line with our commitment to shareholder returns, our Board

outlined our capital allocation policy and reimplemented our

long-term annual dividend programme during 2021. The Board

proposed a final dividend of 2.8 cent per ordinary share which, when

combined with the interim dividend of 2.66 cent per ordinary share,

will represent a total dividend for the year of 5.46 cent per ordinary

share. Additionally, we announced a €75 million share buyback

programme on 12 January 2022 supported by the significant levels

of cash being generated and what the Board believe to be an

undervalued share price. As at 22 March 2022, the €75 million

share buyback programme was 51.7% complete with 31,336,127

shares repurchased at an average purchase price of €1.24.

All repurchased shares have been cancelled.

Everybody in Cairn and those associated with our business

recognise the gravity of the evolving and upsetting events in

Ukraine. Whilst we are fully cognisant of the geopolitical

uncertainty which this situation presents, we remain confident

of the opportunities which lie ahead for our business in the Irish

new homes market into the long-term. We will continue to play a

leading role in the delivery of much needed new homes, across

all customer and buyer types. We sold our 5,000th new home

during 2021 and we expect to deliver over 5,000 additional new

homes by the end of 2024.

Shane Doherty

Chief Financial Officer

REVENUE

€424.0m

GROSS MARGIN

19.8%

OPERATING PROFIT

€58.4m

EARNINGS PER SHARE

5.8 cents

DIVIDENDS PER SHARE

5.46 cents

TOTAL EQUITY

€778.8m

LAND & WIP

€940.0m

NET DEBT

(€109.5m)

RISK REPORT

Building risk

management into

our way of working

Identifying, understanding and managing risk is fundamental

to the delivery of our strategy, our financial performance, and

the effectiveness of our business operations. We continue to

improve and refine our risk management controls, ensuring

they are fully integrated into our activities, from the Board

and Executive to site development, whilst informing business

improvement plans and our ongoing strategy.

AUDIT & RISK COMMITTEE

Risk process effectiveness | Advise on principal risks

BOARD OF DIRECTORS

Risk overview | Risk appetite

EXECUTIVE

Identify principal risks | Approve mitigation plans

MANAGEMENT

Identify risks | Define mitigation plans

PROCESS DELIVERY TEAMS

Identify risks | Implement mitigation plans

Risk Strategy

Risk Framework

63CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

The Board has overall responsibility for ensuring the Group’s level of risk is appropriate to its objectives and risk profile, and that the process

of identifying, assessing and managing risk is effective. Led by our Senior Management Team, our risk management framework drives and

facilitates a persistent, dynamic and fully integrated risk management process. This process involves all Group and operational functions,

and ensures all levels of the business identify, assess and respond to risk in a way that provides assurance to our stakeholders that risk is

being managed effectively. The risk management framework is periodically reviewed to ensure it remains effective as our business grows,

and the nature of the risks we face develop or change.

Role of the Audit & Risk Committee (“ARC”)

The ARC supports the Board by monitoring the effectiveness of the risk management framework and its implementation, and maintains

oversight of the Group’s risk register. This includes ensuring the Group’s principal risks and uncertainties are identified, assessed and

controlled, as well as the impact of risks on the Group’s strategy. The Group’s risk register is reviewed regularly by the ARC in the context

of the principal risks and uncertainties.

Risk Landscape

COVID-19

The Group’s risk profile has been influenced by COVID-19. However, the impacts of COVID-19 were effectively mitigated by the business and

are now diminishing.

Climate

Risks associated with climate change have become increasingly critical to our strategy. As a consequence, climate risks are now considered

a principal risk to the Group and its operations. During 2021 the Group started a process of ensuring its current and prospective climate

related risks are identified and managed, particularly in the context of risks associated with a transition to a net-zero carbon economy and

physical risks associated with climate change. This work is reflected in the future risks and opportunities we have identified for the Group

(as discussed below) and our Sustainability agenda. Given the importance of effectively responding to climate risks, these are identified

separately in our principal risks and uncertainties, even where the impact of those risks may have broader implications on areas such as

financial or development risk.

The Group will continue to closely examine climate risks and responses through 2022.

Ukraine

The Group has reviewed its principal risks and uncertainties in light of recent events in Ukraine and the imposition of sanctions against the

Russian Federation. It is anticipated that the most immediate impact of those sanctions will be to further increase inflationary pressures on

the macro-economy (economic risk), and potentially disrupt some supply chains (development risk). The cyber-security threat level has also

been heightened (financial risk).

The Group will continue to actively monitor and manage these risks, as described below. However, the situation in Ukraine means that the

trends for these specific risks are now considered to be worsening.

Future Risks & Opportunities

To help ensure our strategic plans respond to changes in the risk landscape, our risk management process formally identifies future risks

and opportunities.

POLICY

Housing policy changes, driven by factors outside our control, impact on our strategy.

ECONOMIC

Macro-economic factors, such as interest rate increases, reduce future demand for the homes we build.

CLIMATE

Ensuring our environmental, climate change and sustainability responses adequately meet the

challenges of climate change and the need for a net-zero carbon economy.

PEOPLE

Changes in working practices and increasing demands for talent create challenges for our people

strategy and ability to scale.

The main risks and opportunities that will inform future plans will be driven by policy, economic, climate and people factors:

RISK REPORT CONTINUED

No data

THE RISK PROCESS

Identification

of risks

We engage with our people at all levels in the business, ensuring comprehensive and insightful risk

identification and evaluation. Functional management teams in particular are facilitated by professional

risk advisers to ensure the persistent identification of risks that could impact strategic goals and

operational activities.

When a risk is identified, it is aligned to a principal risk area to validate the risk and help identify

emerging principal risks and uncertainties.

We also align our risks to macro-risk factors, such as interest rate changes. These are risks we cannot

control, but which give rise to a range of specific consequences that we can anticipate in the context of

the macro-risk and so specifically manage.

The Senior Leadership Team actively engages in this process and meets formally on a regular

basis throughout the year to review risks identified by functional management, augment those with

risks identified by the senior management team, and ensure new and emerging risks are identified

and managed.

Assessment

of risks

Our approach to the assessment of risk remains consistent. For all risks we firstly consider the likelihood

of the risk occurring, and then the impact of the risk should it occur (having regard to controls we have

already effectively implemented). This assessment supports decisions on how we apply our risk appetite

to each risk.

Mitigating

and managing risk

Our risk management framework requires our risks to be actively managed in line with our risk appetite.

All risks are assigned to risk owners, who are responsible for ensuring the risk is appropriately managed.

Plans for managing risks are documented and are monitored for implementation and progress by the

Senior Leadership Team. The management of Cairn’s principal risks is overseen by the Audit & Risk

Committee on behalf of the Board.

The management of risk is supported by a comprehensive risk register presenting a consolidated view of

our risks and how they are being addressed. The risk register is an important point of record for both the

Board’s and the Audit & Risk Committee’s evaluation and oversight of the risks to the business and our

response to them.

65CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

PRINCIPAL RISKS AND UNCERTAINTIES

The risk management process described above has supported the identification of eight principal risks that, should they arise, could have a

material impact on the Group’s ability to meet its strategic and financial objectives. These risks are described in further detail on pages 65 to

72. As described on page 63, these principal risks now include a developing climate risk and have been considered and reviewed by the Board.

Risk Trend

Risk increased Risk decreased Risk unchanged

Principal risk: Policy

Local and National policy or regulation in respect of residential property development adversely impacts the Group.

APPETITE Cairn will always adhere to policy and regulation, but as a national homebuilder it will seek to positively address, as well as

ensure it is always prepared for, policy and regulatory change.

RISK FACTORS RESPONSE RISK TREND AND STATUS

Planning applications,

including Strategic

Housing Developments

(‘SHD’) and Large-

Scale Residential

Developments (‘LRD’)

can be adversely

affected by planning

objections, appeals or

judicial reviews. This

can lead to delayed

starts and the potential

for increased cost of

development.

The Group maintains the necessary skills and experience

to design and promote developments that maximise

planning potential whilst responding effectively to

potential planning and community concerns.

As well as engaging with planning authorities through

formal procedures, the Group actively engages with

Local Councils and other stakeholders to identify

concerns and issues at the earliest possible stage so

decision making is fully informed - reducing the risk of

refusals and/or significant conditions.

Monitoring of planning and policy decisions informs the

Group’s design and development strategy.

The SHD planning

process is expiring in

2022 and will be replaced

with the LRD. The impact

of the LRD process on this

risk is not yet known.

Likelihood

Impact

Changes to zoning

and planning policy as

part of revised local

development plans

reduce or eliminate

the opportunities

to develop Cairn’s

land bank.

Developments at risk of zoning change have been identified

and prioritised for development specific response plans.

In priority cases, the Group has accelerated the submission

of planning applications for prospective developments, and

brought forward development start dates.

The Group is actively engaging with local authorities as

part of the consultation process.

Draft Local Development

Plans for 2022-2028 were

made available from

mid-2021 onwards.

Housing policy

changes impact

Cairn’s fundamental

business model.

The Group’s core target market is first time buyers.

Given the size of its landbank, the Group engages with

a broad and widening buyer pool, including customers

in the trade-up/down and premium market, and

institutional buyers of multifamily homes. It also actively

engages with the state, Local Authorities and AHBs

(Approved Housing Bodies) in respect of social and

affordable homes.

“Housing for All” has

been published with

positive reaction from all

political parties. There is

now greater stability in

housing policy, which

does not adversely affect

the Group’s product mix.

Principal Risks

Policy

Brand

Economic

Financial

Development

Compliance

People

Climate

RISK HEAT MAP

Likelihood

Impact

Risk Trend

Risk increased Risk decreased Risk unchanged

Principal risk: Brand

Brand reputation is damaged through Cairn’s failures or the failures of its supply chain.

APPETITE Cairn has a limited appetite for risks that may adversely affect its brand and the ability to market and sell its

homes effectively.

RISK FACTORS RESPONSE RISK TREND AND STATUS

A failure in the

quality of designs,

materials, supplies

and construction

can have an adverse

impact on the Cairn

brand and the strength

of its position in

the market.

The Group maintains systems that ensure developments

and individual homes consistently meet expectations, as

well as regulatory and quality standards. These systems

have been further improved through 2021 and ensure

quality issues are detected and resolved before sale,

and that recurring issues are identified and managed.

A new quality process/implementation lead has been

appointed. This appointment is responsible for setting

quality benchmarks and having oversight of quality

in the context of the Group’s technical guides, building

regulations and quality plan/deliverables.

An after care team has been established to manage any

defects arising post-sale once they have been raised with

the customer care team. The customer care and after

care teams ensure post-sale issues are managed

promptly and effectively.

Ensuring the Group’s

systems for preventing

and managing issues

that affect its brand is a

continued focus across

the entire business.

Likelihood

Impact

Failures in the supply

chain lead to Cairn not

meeting its

environmental, social

and governance

commitments, such

as those relating to

respect for human

rights and labour

standards.

As part of its environmental, social and governance

commitments, the Group has adopted policies,

procedures and/or practices designed to identify risk in

the supply chain and ensure those risks are managed.

This includes an Anti-Slavery Policy which imposes a

procurement process that allows the Group to evaluate

slavery risks associated with individual contractors and

ensure only those contractors who can meet Cairn’s

standards are met. The policy also facilitates training in

identifying the risk, and confidential reporting to highlight

failing practices.

Regular meetings with, and surveys of, key suppliers will

support the identification of potential risks to standards

and commitments.

NEW

As the Group’s

environmental, social and

governance commitments

increase, the risks

associated with failing

to mitigate those risks

also increases.

RISK REPORT CONTINUED

67CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Risk Trend

Risk increased Risk decreased Risk unchanged

Principal risk: Economic

Economic conditions, including mortgage availability and affordability, may adversely affect house prices

and sales rates.

APPETITE Economic conditions and other macro factors that affect house prices and sales rates are monitored and Cairn will make

adjustments to its plans to ensure the adverse impact of changing economic conditions are minimised.

RISK FACTORS RESPONSE RISK TREND AND STATUS

Economic/policy

factors adversely

impact the demand for

the Group’s multifamily

schemes. This could

impact the saleability

of current or planned

schemes and/or limit

the scope for future

schemes.

The Group actively engages with the multifamily

schemes market and its participants. It monitors for

prospective challenges to the market in Ireland, as

well as other emerging risks so their impacts can be

assessed and managed.

The demand for housing in Ireland continues to exceed

supply, allowing the Group to rapidly address alternative

markets for the sale of multifamily schemes.

There remains limited

risk of economic or policy

factors adversely

impacting multifamily

schemes or the

foreseeable demand

for housing in Ireland.

Likelihood

Impact

Economic factors,

including inflation,

rising interest rates,

adverse mortgage

conditions, or falling

employment, create

uncertainty in the

demand for residential

housing.

The Group persistently monitors, reviews, and analyses

all aspects of Irish housing market conditions to

ensure its development activities match anticipated

market demand.

Monitoring includes mortgage availability, impact from

Central Bank of Ireland (‘CBI’) mortgage rules and

regulations, mortgage lending, mortgage market

participants and mortgage interest rates, and is a

standing agenda item at the Board.

The Group maintains strong liquidity to enable the

business to withstand any short-medium term changes

in market fundamentals.

The Group also engages with key policy-makers in

the areas of social and affordable housing, general

affordability and new homes supply.

Cairn’s target market

continues to drive demand

for new homes. This

demand is expected to

continue, even if interest

rates rise. However, there

is a risk the Ukraine crisis

may have material

adverse affects on

the global economy.

Land value reductions

adversely impact the

Group’s balance sheet

and its current land

cost advantage in

respect of planned

developments.

The Group actively manages its landbank and associated

carrying value to ensure that at all times the landbank

does not exceed the requirements of its development

strategy, and the value does not expose the Group to

carrying value risks.

The market for

development land

continues to support

development land values,

and under current and

anticipated conditions,

a collapse in land values

is considered unlikely.

Risk Trend

Risk increased Risk decreased Risk unchanged

Principal risk: Financial

Cairn substantively fails to meet financial targets or obligations, suffers unexpected financial loss,

or misstates its financial position.

APPETITE Cairn has no appetite for a failure of this nature and implements controls to ensure financial risk is identified and controlled.

RISK FACTORS RESPONSE RISK TREND AND STATUS

The credit and funding

arrangements of the

Group do not meet

Cairn’s strategic or

operating needs or

prevailing trading

conditions.

The Group persistently monitors its facilities against

actual and projected needs and financial position, as well

as against emerging financial factors and risks. Its

existing facilities also afford sufficient flexibility to meet

likely future needs and Cairn’s projected performance.

The Group’s credit

facilities match its

requirements and

projected performance.

Likelihood

Impact

A failure of internal

financial controls

could lead to potential

financial

misstatement,

impairment,

undetected fraud,

or financial loss.

A robust financial controls framework is maintained by

the Group. The framework is overseen by the Audit &

Risk Committee of the Board and is subject to audit,

which supports an ongoing programme of feedback,

review and improvement.

The Group continues to

review and refine its

financial controls.

The Group’s systems

and processes for

delivering house sales

are unable to meet

future growth plans.

Through 2021 the Group has designed and implemented

additional methodologies, systems and processes to

ensure it can continue to meet its current plans and is

in a position to deliver on its future plans.

These are underpinned by key systems and processes

that ensure persistent alignment of the construction

and sales programmes, and high visibility of all

underlying performance, including construction

costs and sales prices.

The Group continues to

refine and improve its

methodologies for

meeting its current

and future plans.

A significant failure in

key Information

Security or IT systems

(including by way of

cyber-security

breaches) impacts

the Group’s ability to

conduct its business or

manage its finances.

Information security and IT risks are identified and

managed through the Group’s information security

frameworks, which include controls for detecting,

preventing, and recovering from, system failures.

Information security risks

persistently evolve, and in

response to the Ukraine

crisis, national cyber-

security response

centres have raised

the threat level.

To counter this, the Group

has enhanced its controls

in addition to its

continuous review and

improvement of

information security

frameworks and controls.

RISK REPORT CONTINUED

69CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Risk Trend

Risk increased Risk decreased Risk unchanged

Principal risk: Development

Developments fail to meet the operational or financial targets set for them.

APPETITE There is inherent risk associated with the planning, delivery, and sale of any development. Cairn is willing to accept levels

of financial or operational risk that are consistent with the planned outcomes of its developments but will always seek to minimise

those risks accordingly.

RISK FACTORS RESPONSE RISK TREND AND STATUS

Failure to meet

development

milestones and

schedules, and/or

release developments

to the market in line

with the Group’s

commitments, can

adversely affect

development costs,

the ability to meet

development targets,

and the maintenance

of appropriate levels

of cashflow.

The Group has developed and implemented a robust and

systematic, integrated methodology for development

launches, construction scheduling and supply chain

capacity management, delivery, and sales.

A common approach to construction design, planning

and management is adopted across the development

portfolio to increase efficiency and reduce risk. This is

supported by the appointment of a Head of Construction

to oversee and manage all construction activity.

Construction planning and activity is measured and

assessed on a number of critical factors. This is

supported by a variety of complementary technology

platforms and systems to support planning,

programming, reporting and programme remediation.

Cairn’s construction planning and management

processes ensure that construction activity progresses

in accordance with the requirements of the Group’s

methodologies.

During 2021 the Group

has evaluated its

methodology in the

context of its scaling

plans and development

activity. Improvements in

the methodology have

been identified and

implemented.

Likelihood

Impact

Availability of

materials and

supplies, or supply

chain disruption,

causes development

delays or an

unexpected increase in

development costs.

Maintaining availability of materials and supplies in line

with development milestones and schedules is a core

function of the Group’s commercial function.

Supply chain risks are managed on a strategic and

tactical basis. This includes expanding the supplier base,

identifying and managing specific category risks, forward

planning and purchasing, and developing alternatives for

existing materials and supplies.

To support this, a Supply Risk Monitoring team has been

put in place who meet on a monthly basis. This team

persistently review the supply categories, the risk

categories attributable to them, and the discrete action

plans developed to reduce the risks.

The Group monitors risks

on a category-by-

category basis. Macro

factors means supply

chains risks (labour

supply, materials, and

transport capacity)

persist, but are actively

managed as part of the

Group’s core activities.

Build cost inflation

(including materials,

supplies and labour

cost) adversely impact

the Group’s margin

and profitability.

The Group commercial function closely monitor and

analyse costs to establish trends and support

forecasting. This is supplemented by rigorous cost

management and the deployment of best in class

procurement strategies.

Baseline costs on a category-by-category basis were

established at the beginning of 2021 and since then are

reassessed on a quarterly basis to monitor change and

establish trends. The monitoring and assessment of

costs changes is supported by a quantity surveyor team

who participate in procurement decisions.

Operating efficiencies are actively identified to reduce

unforeseen costs in product utilisation, logistics and

construction activity.

Build Cost Inflation is

impacting materials,

supplies and labour costs,

with these costs rising,

and is expected to

continue to be a feature.

These costs are offset by

an improved mix with

more apartments sold,

embedded supply chain

efficiencies and improved

pricing in middle and

upper-end apartments

and houses.

Principal risk: Development continued

Developments fail to meet the operational or financial targets set for them.

APPETITE There is inherent risk associated with the planning, delivery, and sale of any development. Cairn is willing to accept levels of

financial or operational risk that are consistent with the planned outcomes of its developments but will always seek to minimise those

risks accordingly.

RISK FACTORS RESPONSE RISK TREND AND STATUS

Delivering an

increasing number of

developments to a

consistent quality and

costs standard,

requires greater

standardisation of

product and delivery.

The Group’s design and development standards have

been designed specifically to facilitate the ambitions of

the Group and ensure consistency and deliverability at

scale.

As part of the development of these standards, building

design has been challenged and more efficient

construction modes incorporated into design briefs.

The Group’s design and

development standards

are tested, reviewed

and modified on a

persistent basis.

Likelihood

Impact

Utility companies

(water, drainage,

electricity) are unable

to provide sufficient

connections, supply, or

capacity for proposed

developments.

The Group proactively engages with utility providers

through regular meetings at which current and future

requirements are communicated and subsequently

managed. Potential supply risks for a development are

managed through development level risk processes with

specific mitigating strategies developed.

Infrastructure and

capacity constraints

means it is becoming

more difficult for

utility providers to

keep pace with existing

and prospective

demand and there is

no current indication

these constraints will

improve in the short to

medium term.

Principal risk: Compliance

Cairn fails to meet its legal and regulatory obligations (such as health & safety or data protection).

APPETITE Cairn has no appetite for failures that give rise to injury or loss or life. Cairn will manage legal and regulatory risks in a

manner that is consistent with good practice.

RISK FACTORS RESPONSE RISK TREND AND STATUS

A failure by the Group

to meet the

requirements of health

& safety legislation or

best practice, giving

rise to death or

personal injury in the

workplace for which

Cairn is responsible.

The Group has implemented a health & safety system

and supporting framework that exceeds legislative

standards. This framework is intended to ensure safe

systems of work throughout all Cairn’s activities.

The Health & Safety function is led by a senior manager

reporting to executive management. This is

supplemented by independent, periodic reviews of the

health & safety systems and their effectiveness.

Maintaining, delivering

and constantly improving

the Group’s health &

safety system continues

to be central to its

response to health &

safety risks.

Likelihood

Impact

A failure of the

business to meet its

data protection

obligations arising

under Irish and EU

data protection laws.

An accountability framework managed by the Company

Secretary supported by an independent Data Protection

Officer supports the processing of personal data in

accordance with data protection laws. The framework is

periodically assessed against established standards.

Data protection regulation

remains a business risk.

The accountability

framework is actively

managed and

improvements

persistently targeted.

RISK REPORT CONTINUED

Risk Trend

Risk increased Risk decreased Risk unchanged

71CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Risk Trend

Risk increased Risk decreased Risk unchanged

Principal risk: People

Cairn fails to recruit, engage, and retain the right employees, in the right positions, to deliver its strategy.

APPETITE Cairn’s appetite for people risk is limited with a view to ensuring that the overall strategy can be delivered by the wider

Cairn team.

RISK FACTORS RESPONSE RISK TREND AND STATUS

A lack of skilled and/or

professionally

qualified entrants to

the construction

industry creates a

shortage of skills

available in the supply

chain which are

required to facilitate

Cairn’s development

plans, scaling goals

and succession

planning strategies.

Cairn actively engages with and supports its supply chain

to attract, develop and retain talent. This includes

apprenticeship and traineeship support, supporting

contractors with talent management, and securing

labour from overseas markets.

The construction industry

continues to experience

skills shortages, which

the Group addresses

through its people

strategy.

Likelihood

Impact

The Group fails to

retain top talent and

build from within, and/

or acquire top talent,

reducing its ability to

meet its goals and

objectives, and/or

maintain a pool of

talent to meet its

succession plans.

Cairn positions itself as an employer of choice to acquire

top talent by expanding its employer brand awareness,

investing in innovative talent attraction strategies and

utilising alternative resourcing models.

Building and retaining talent is supported through

effective employee engagement and industry leading

remuneration and benefits.

NEW

Skills and talent

shortages in the

industry create a

significant people

retention and

development risk.

The Group’s people

strategy targets this risk.

The Group’s people

engagement strategy

fails to engender or

facilitate the optimal

performance of its

employees, so that

people performance

does not match its

potential.

People performance is optimised through extensive

employee wellbeing and development programmes and

clear progression pathways based on performance,

merit and ability.

NEW

The current employee-led

employment market

creates perfomance and

engagement challenges

that are addressed by the

Group’s people strategy.

Risk Trend

Risk increased Risk decreased Risk unchanged

Principal risk: Climate

Cairn fails to anticipate and address the strategic, market, regulatory, and operational impacts

of climate change.

APPETITE Identifying and proactively responding to the challenges of climate change is core to Cairn’s purpose and strategy.

Cairn will proactively identify and manage risks associated with climate change in a way that ensures it can continue to deliver

on its vision.

RISK FACTORS RESPONSE RISK TREND AND STATUS

The Group fails

to change its

development designs

to respond

appropriately

to climate or

environmental

related demands.

The Group assesses and monitors its impact on the

climate, as well as the demands associated with

responding to climate change. It aims to continue to

meaningfully address its impact and these demands

with innovative and sustainable solutions.

New

Changes to policy,

regulation and

stakeholder expectation

in response to climate

change are persistent and

continue to evolve rapidly.

Likelihood

Impact

Planning approvals

for developments are

subject to a greater

number of

environmental-related

planning conditions,

increasing development

costs and development

times.

The Group actively engages with all stakeholders to

identify environmental concerns and issues relating to

proposed developments, so decision making is fully

informed and likely environmental conditions identified

at the earliest possible stages of a development’s

evaluation.

A dedicated environmental manager engages with

planning authorities to ensure environmental adherence

and monitoring plans are developed and implemented so

environmental conditions are met in a manner that

meets planning conditions, but with the least impact on

development costs and timing.

New

Environmental related

planning conditions are

increasingly a key aspect

of planning approvals

granted by planning

authorities. This is a

trend that is expected

to continue.

Construction activity

and costs are

adversely affected by

climate-driven events,

such as prolonged

periods of intense

rainfall, an increase in

the severity of winter

storms, or extremes

of cold or heat.

The impacts of severe weather events and extreme

conditions are actively monitored and evaluated by the

Group’s Technical, Construction and Environmental

teams on a site-by-site basis with remediations

(such as site drainage methods) developed to respond

to site-specific risk and mitigate the cost impact.

New

Ireland is experiencing

more extreme weather

driven events and the

frequency of such events

is not anticipated to abate.

The carbon costs

associated with the

Group’s construction

activity adversely

impacts its ability to

develop sites that meet

climate change

conditions, or which

are affordable to its

target market.

The Group is active in identifying materials and products

that have a carbon impact, as well as other activities that

have a carbon cost or incur carbon charges.

The Group’s technical and construction teams

persistently seek alternative materials and

methodologies to reduce these impacts and costs.

New

The direct and indirect

costs of carbon impact

activities is increasing and

is subject to greater

scrutiny by all

stakeholders.

RISK REPORT CONTINUED

73CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Going Concern

The COVID-19 pandemic has had an impact

on the Group during the year ended

31 December 2021, resulting in an

interruption in development activity in the

earlier part of the year. The Group entered

the COVID-19 pandemic from a position of

strength and continues to operate from that

position with a long-term strategy that

focuses on minimising financial risk and

maintaining financial flexibility. The

business has strong liquidity, a robust

balance sheet and sustainable, lowly

leveraged debt facilities.

To mitigate any risk the Group applies a

prudent cash management policy ensuring

the production activities in the near term

are focused towards forward sold

inventories, inventories which will continue

to be attractive to buyers, and directing

housing production pipeline towards new

family homes which are at the lower end

of the price band. The Group has also

expanded its regional footprint during 2021

with further expansion planned in 2022 and

continues to have a broad and widening

customer base.

The Group did not avail of any wage subsidy

support from the Irish Government during

2021 or 2020.

The Group held €40.0 million of cash at

31 December 2021 (31 December 2020:

€34.5 million) and has strong liquidity with

the Group’s loan facilities being repayable

between 31 December 2022 and 31 July

2026. While some of the Group’s loan

facilities are repayable on 31 December

2022, a refinancing project is underway.

This is considered to be a routine matter

with no foreseeable issues given the

Group’s financial position and strong

outlook. The Group had undrawn revolving

credit facilities of €194 million as at

31 December 2021 (€140 million as

at 31 December 2020).

During the thirteen-week shutdown period

at the beginning of the year during which

the majority of the Group’s construction

sites were closed or operating at

significantly reduced capacity (some

construction activity continued on new

homes contracted to close by 31 January

2021, social homes contracted to close by

31 March 2021 and utility connections

during this period), the Group successfully

maintained operational momentum,

making detailed preparations for a safe

return to work, which allowed build

programmes to restart efficiently on a

phased basis from 12 April 2021. All

residential sites were successfully

reopened, under strict compliance with

operating procedures adhering to social

distancing requirements. The Group also

commenced construction on two new

sites in the second half of the year and five

new sites since the start of 2022. While

COVID-19 has had an impact on gross and

operating margins, the business has

recovered well and has seen an

improvement in gross margins, a strong

recovery in sales and an increase in

profitability when compared the prior year.

The Group is also encouraged by the level

of underlying demand and the forward

sales pipeline with strong demand

continuing into the early months of 2022

with our enquiry lists across all our active

selling sites remaining at historic highs

and particularly strong interest in our

starter home and trade-up/down

commuter locations.

The Directors have carried out a robust

assessment of the principal risks facing

the Group and have considered the impact

of these risks on the going concern of the

business. In making this assessment,

consideration has been given to the

uncertainty inherent in financial forecasting

including future market conditions for

construction costs and sales prices.

Where appropriate, severe but plausible

downside-sensitivities have been applied to

the key factors affecting the future financial

performance of the Group.

Having considered the Group’s forecasts

and significant liquidity, the Directors have

a reasonable expectation that the Group

has adequate resources to continue in

operational existence for the foreseeable

future. Accordingly, they are satisfied that

it is appropriate to continue to adopt the

going concern basis in preparing the

consolidated financial statements and there

are no material uncertainties in that regard

which are required to be disclosed.

Viability Statement

In accordance with the UK Corporate

Governance Code Provision 31, the

Directors have assessed the prospects

of the business and its ability to meet its

liabilities as they fall due over the medium

term. The Directors have concluded that

three years is an appropriate period for

assessment as this constitutes the

Group’s rolling strategic planning horizon.

The Group has developed a financial model

as part of our three-year plan, which is

updated at least annually and is regularly

tested and assessed by the Board.

Progress against the three-year plan is

regularly reviewed by the Board through

presentations from senior management

on the performance of the business.

The Group’s Principal Risks and

Uncertainties aggregate the risks identified,

as well as the mitigation plans implemented

as part of this process, and they include the

risks that may have short-term impacts as

well as those which may threaten the long

term viability of the Group. The Directors

have made a robust assessment of the

potential impact that these risks may have

on the Group’s business model, future

performance, solvency and liquidity.

The three-year plan has been tested for

a range of scenarios which assess the

potential impact of severe but plausible

downside-sensitivities to the long-term

viability of the Group. These scenarios

included the stress testing of the Group’s

business model and assumes that a

combination of events result in a continued

reduction in sales over the three-year

period from 2022 to 2024, with a

deterioration in employment levels and

consumer confidence, coupled with a

reduced bank risk appetite, leading to a

material reduction in credit availability in

the mortgage market. In assessing these

severe downside scenarios, it was assumed

that there was an inability to undertake

construction or sales activities for an

extended period of time, and a sudden

decline in demand compared to the Group’s

forecast, leading to reduced sales volumes,

a reduction in sales prices, increased cost

for materials and labour and increased

finance costs, followed by a gradual

recovery. In these scenarios, the Directors

assumed they would take appropriate

actions to ensure that the overall financial

risk was minimised through this cycle,

including:

• suspending capital returns

to shareholders;

• disposing of non-core sites;

• deferring certain planned site

commencements;

• short term rental of unsold new units;

and

• implementing cost-cutting initiatives.

Having reviewed the three-year plan

and considered the above stress testing,

the Directors confirm that they have a

reasonable expectation that the Group will

continue to operate and meet its liabilities

as they fall due over the aforementioned

three-year period.

GOING CONCERN AND VIABILITY STATEMENT

BOARD OF DIRECTORS

JOHN REYNOLDS (63)

Chairman

Appointed: 28 April 2015

Skills and experience:

John Reynolds was previously Chief Executive

Officer of KBC Bank Ireland plc (2009 to 2013)

and President of the Irish Banking Federation

(2012 to 2013), during which time he was also

a board member of the European Banking

Federation. John is a Chartered Director, an

Economics graduate of Trinity College Dublin,

and holds a Masters degree in Banking and

Finance from UCD.

Other current appointments:

Non-Executive Director of Computershare

Investor Services (Ireland) Limited, Business in

the Community Limited, Institute of Directors

Ireland and the National Concert Hall. Senior

Advisor in Alantra Credit Portfolio Advisors,

Ireland and Patron of Chapter Zero Ireland,

an entity established to build a community

of Non-Executive Directors equipping them

to lead crucial boardroom discussions on

the impacts of climate change.

ALAN MCINTOSH (54)

Non-Executive Director

Appointed: 12 November 2014

Skills and experience:

Alan McIntosh has been a principal investor and

part of successful investor groups for over

20 years. During this time, he has had

operational management roles and been part

of management teams that have successfully

grown a number of different businesses,

including Topps Tiles plc, PizzaExpress and

Centre Parcs. Alan was a co-founder of each of

Pearl Group (now listed as Phoenix Group plc),

Punch Taverns plc, Spirit Group plc and

Wellington Pub Company Ltd. Alan’s private

investment vehicle, Emerald Investment

Partners, has interests in real estate,

healthcare, biotech and technology.

Other current appointments:

None.

JULIE SINNAMON (63)

Non-Executive Director

Appointed: 15 September 2021

Skills and experience:

Julie Sinnamon brings deep experience in

assisting Irish businesses to grow and scale

having had a highly successful career at

Enterprise Ireland where she held a number of

senior roles including the position of CEO from

2013 until her retirement in 2021. Julie is a

business graduate of the University of Ulster,

holds a Master’s in International Business from

Fordham University, USA and is a graduate of

the Stanford Executive Programme, USA.

Other current appointments:

Chair of European Movement Ireland, Co-Chair

of Balance for Better Business, Director of PwC

Ireland Public Interest Body, The Agricultural

Trust, Social Entrepreneurs Ireland and The

Young Scientist & Technology Exhibition. Member

of the Investment Committee of the Irish Strategic

Investment Fund and a member of the Irish

Government’s Climate Change Advisory Council.

MICHAEL STANLEY (56)

Chief Executive Officer (CEO)

Appointed: 12 November 2014

Skills and experience:

Michael Stanley co-founded Cairn Homes plc and

was appointed CEO prior to the IPO in June 2015.

Michael has a strong pedigree in residential

development and the broader property industry.

He was previously CEO of Stanley Holdings,

a large Irish homebuilder and real estate

investment company. Michael also has extensive

experience in the packaging, energy, agritech

and healthcare sectors.

Other current appointments:

None.

SHANE DOHERTY (47)

Chief Financial Officer (CFO)

Appointed: 13 April 2020

Skills and experience:

Shane Doherty was previously Group CFO

at Morgan McKinley Ltd, an international

professional staffing and resourcing solutions

business, since March 2018. Prior to that, he was

Group CFO at green energy developer, Gaelectric

Holdings Ltd, European Finance Director at

Paddy Power Group plc and Head of PaddyPower.

com. Prior to his time at Paddy Power, he worked

in various senior finance leadership roles in

Eircom Group plc.

Other current appointments:

None.

COMMITTEES

Audit & Risk

Remuneration

Nomination

Chair

Denotes Independence

75CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

LINDA HICKEY (60)

Non-Executive Director

Appointed: 12 April 2019

Skills and experience:

Linda Hickey was previously Head of Corporate

Broking at Goodbody Stockbrokers, where she

worked for fifteen years, and where she advised

clients on a range of capital markets and

corporate governance matters. Prior to this,

Linda worked at both NCB Stockbrokers in

Dublin and Merrill Lynch in New York. Linda

also has a degree in Business Studies from

Trinity College Dublin.

Other current appointments:

Non-Executive Director at Kingspan Group plc

and Greencore Group plc; Chair of the Board of

The Irish Blood Transfusion Service and member

of Quanta Capital Advisory Board.

ORLA O’GORMAN (49)

Non-Executive Director

Appointed: 10 November 2021

Skills and experience:

Orla O’Gorman spent seven years at the Irish

Stock Exchange (“ISE”), where she was Head of

Equity. She was centrally involved in the sale of

the ISE to Euronext in 2018 and, following that

transaction, was appointed as Head of Listing

for UK and Ireland. Prior to joining the ISE,

Orla founded OR Associates, and previously

held senior management positions at Eurologic

Systems, ABN AMRO and PwC. Orla is a qualified

accountant, holds a Bachelor of Commerce

from University College Dublin and a Master

of Accounting from UCD Smurfit School.

Other current appointments:

Member of the European Commission’s SME

Technical Expert Group and the Chartered

Accountants Ireland Sustainability Expert

Working Group. Advisory Board member of

Elkstone Ventures and Non-Executive Director

of Elite SpA.

DAVID O’BEIRNE (64)

Non-Executive Director

Appointed: 1 March 2019

Skills and experience:

David O’Beirne is a former Managing Partner of

the international law firm Eversheds Sutherland,

Dublin, is a former Head of the firm’s Corporate

& Commercial Department and is currently

a Partner in its Corporate & Commercial

Department. David’s primary practice areas are

mergers, acquisitions, disposals, private equity

investments, corporate restructurings and

corporate reorganisations, and he has advised

clients, both domestic and international, for

almost 40 years.

Other current appointments:

None.

GARY BRITTON (67)

Non-Executive Director

Appointed: 28 April 2015

Skills and experience:

Gary Britton was previously a partner in KPMG

where he served in a number of senior positions,

including the firm’s Board, the Remuneration

and Risk Committees and as head of its Audit

Practice. Gary was formerly a non-executive

director of the Irish Stock Exchange plc and KBC

Bank Ireland plc. Gary is a fellow of Chartered

Accountants Ireland and a member of the

Institute of Directors in Ireland.

Other current appointments:

Non-Executive Director of Origin Enterprises plc.

GILES DAVIES (53)

Non-Executive Director

Appointed: 28 April 2015

Skills and experience:

Giles Davies qualified as a chartered accountant

with PwC in London and spent five years in

management consultancy in London and New

York. He went on to found Conservation Capital,

a leading international practice in the emerging

field of conservation enterprise, ESG and related

investment financing. He previously served

as Non-Executive Chairman of Wilderness

Scotland, Non-Executive Chairman of

Capital Management & Investment plc,

and as a Non-Executive Director of

Algeco Scotsman Group.

Other current appointments:

None.

SENIOR LEADERSHIP TEAM

GAVIN WHELAN

Head of Construction and Operations

Gavin joined Cairn in January 2021. Previously

Managing Director and founder of Bailey

Brothers Construction Management Services.

Gavin also held senior roles in Skanska and

Laing O’Rourke. Most notably Gavin acted as

Construction Delivery Lead on the £1.7bn mixed

use Battersea Power Station redevelopment.

SARAH MURRAY

Director of Customer (B2C)

Sarah joined Cairn in April 2019. Formerly

Director of Sherry FitzGerald New Homes with

specialist experience in the sales and marketing

of large-scale residential developments with

some of Ireland leading developers.

MAURA WINSTON

Chief People Officer

Maura joined Cairn in June 2019. Formerly

Director of Innovation and Change at

Federal Court of Australia, Maura spent

10 years with Accenture specialising in

Organisational Development.

MICHAEL STANLEY

Chief Executive Officer (CEO)

SHANE DOHERTY

Chief Financial Officer (CFO)

77CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

FERGUS MCMAHON

Commercial Director

Fergus joined Cairn in April 2016. Previously

Cairn Group Managing Surveyor responsible

for our team of quantity surveyors. Formerly

an Associate Director of McInerney Homes Ltd.

GERALD HOARE

Head of Corporate Development (B2B)

Ger joined Cairn in June 2017. Previously

Group Pre-Construction Manager and also

Student Accommodation portfolio Delivery

Lead. Formerly worked with leading Main

Contractors in the UK specialising in

residential developments.

TARA GRIMLEY

Company Secretary and

Head of Sustainability

Tara joined Cairn in March 2018. Previously

Deputy Company Secretary & Head of Group

Integration at UDG Healthcare plc. Member of

the Chartered Governance Institute.

DECLAN MURRAY

Head of Investor Relations and

Corporate Affairs

Declan joined Cairn in February 2016. Previously

Director, Structured Solutions at Royal Bank of

Scotland plc. Formerly held management

positions in two domestic banks.

Michael Stanley

Chief Executive Officer

“We continued to invest in our people in

2021 increasing our headcount to 270 at

year-end. Our team has grown further in

2022 to c. 300 full time employees today,

with a target of 400 by the end of the year

to meet our ambitious growth agenda.”

CORPORATE GOVERNANCE REPORT

On behalf of the Board, I am pleased to present the corporate

governance report for the year ended 31 December 2021. The report

explains how the Board operates and how reporting and oversight

functions in Cairn.

In the year under review, Cairn was subject to the UK Corporate

Governance Code published in July 2018 by the Financial Reporting

Council and the Irish Corporate Governance Annex (together “the

Code”) and this report sets out how we have applied the principles

and provisions of the Code. I am pleased to confirm that the

Company has complied with the provisions of the Code, save for

Provision 38 of the UK Corporate Governance Code, which states

that the pension contribution rates for Executive Directors, or

payments in lieu, should be aligned with those available to the

workforce. As detailed in the 2019 Annual Report, the pension

contribution rate for the Chief Financial Officer on appointment was

set at 15% of base salary, the same rate of pension contribution that

applied with effect from 2021 for the Chief Executive Officer who

voluntarily agreed to reduce his contractual pension contribution

entitlement over a two year period from 25% of base salary in 2019

to 15% in 2021. In addition, a commitment was made that all future

Executive Directors will receive a pension contribution rate in line

with the workforce.

Purpose, Vision, Values And Culture

The Board recognises its role in establishing the purpose and

values of our Company and embedding these throughout the

organisation. Our Purpose, Vision, Values and Culture define us and

drive us to create places where people love to live. They drive us to

build our homes better and more sustainably, to build a skilled and

diverse team and to make a positive impact in communities where

we live and work. During the year, discussions were held with a wide

range of employees from across the business in order to assess any

changes in our colleagues’ engagement with our purpose and

values over the last two years driving further understanding of how

our culture needs to evolve to best support our purpose and values.

The key themes arising from the review were considered by the

Board and action plans developed for driving further understanding

of our culture. The changes to the Code designed to ensure greater

engagement between employees and Board members have been

welcomed by the Board as providing a more rounded picture of

our operations for consideration during discussions on strategy

and outlook.

Document and Reporting Framework

During 2021, led by the Company Secretary, we reviewed and

refreshed the key documents governing the Company, including

Terms of Reference for each key Committee, the Schedule of

Matters Reserved for the Board and policies on Diversity and

Inclusion. As our business matures, and the expectations of the

business evolve, we consider it important that our practices are

consistently reviewed and, if needed, altered. The finalised

documents are available on our website, www.cairnhomes.com.

Workforce Engagement

In recognition of the requirement under the Code for the Board to

establish a mechanism for engaging directly with our employees,

David O’Beirne is designated as the non-executive director with

responsibility for employee engagement on behalf of the Board.

David held a number of meetings with employees at all levels of

the organisation during the year, at which he shared with employees

a perspective on the Board’s priorities and provided an opportunity

for them to ask questions. Further details are provided later in the

report. Feedback from these meetings has continued to be very

positive, with employees welcoming the opportunity to meet with a

non-executive member of the Board, and the insights from these

interactions continue to provide valuable input to the Board’s

deliberations. We fully recognise our obligation to engage with

and consider the impact of the Board’s decisions on all of our

stakeholders. Further details on our approach can be found in the

Nomination Committee Report.

Board Effectiveness and Refreshment

With the easing of COVID-19 restrictions during the year, the Board

was able to resume in-person meetings on a more frequent basis,

as well as recommencing site visits. In addition to the gradual return

of in-person meetings, we continued to interact with the

management of the business and other employees remotely,

helping the Board’s understanding of both the challenges and

opportunities within our business.

There were also significant changes to the Board’s composition

during the past year, which has deepened the diversity and

experiences of us as a collective. Jayne McGivern stepped down

from the Board due to her executive commitments, and Andrew

Bernhardt also retired from his role at the end of 2021, having

served on the Board as a Non-Executive Director for six years.

“Consistently enhancing our

governance framework”

John Reynolds

Chairman of the Board

79CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

BOARD MEMBERS BY GENDER

We are grateful to Jayne and Andrew for their contribution to Cairn.

Following a search led by the Nomination Committee, we were

delighted to welcome Julie Sinnamon and Orla O’Gorman as

independent Directors who bring deep and valuable experience to

Cairn in addition to increasing the gender diversity of the Board.

Both Julie and Orla have joined the Audit & Risk Committee, and the

Nomination Committee, ensuring gender balance at a committee

level also. One of my key focuses during 2022 is to ensure our new

Directors continue to develop a deep understanding of Cairn’s

business and operations.

Since the end of the fiscal year, David O’Beirne announced his

intention to step down from the Board following the conclusion of

the 2022 AGM. We thank David for his service and insight during his

tenure and, in particular, for leading the development of the role of

Director responsible for workforce engagement. He will be

succeeded in that role by Orla O’Gorman.

Board Evaluation

During 2021, through the Institute of Directors (‘IOD’), we conducted

our triennial external Board evaluation. As a process, external

evaluations are extremely insightful, allowing my fellow Board

members and I to reflect on what works well or could be improved.

The expertise, oversight and independence of the external evaluator

is a core part of us getting the most from the exercise.

I was pleased that the evaluation found that the Board continues

to operate to a high standard, and our scoring increased in each

category from our last external evaluation, also conducted by the

IOD. We are, however, always looking to function even more

effectively. There were two areas that will form the basis of an

action plan over the coming 12 months, relating to how we measure

culture and training programmes for Directors. On culture, we

are increasing interaction with key employees, supported by our

Chief People Officer, as well as refining alignment of reward and

performance throughout the organisation. Together with external

support, we are also developing a further comprehensive training

programme for Directors to refresh their knowledge and skills.

Further details on the Board Evaluation process and findings can

be found on page 84.

John Reynolds

Chairman

NUMBER OF SCHEDULED BOARD MEETINGS

NUMBER OF NEW DIRECTORS

BOARD MEMBERS BY TENURE

30%70%

Male Female

7-9 years3-6 years<2 years

30% 50%20%

CORPORATE GOVERNANCE REPORT CONTINUED

Board Leadership And Company Purpose

Role of the Board

The Board is collectively responsible for promoting the long-term sustainable success of the Group, generating value for shareholders as a

whole and contributing to wider society by fulfilling its purpose. In exercising this responsibility, the Board takes into account all relevant

stakeholders including customers, employees, suppliers, shareholders, regulators and governments and the effect of the activities of

the Group on the environment. The Board provides effective leadership by setting the strategic priorities of the Group and overseeing

management’s execution of the strategy in a way that enables sustainable long-term growth, while maintaining a balanced approach

to risk within a framework of prudent and effective controls.

Our Purpose

Our purpose is building homes and creating places where people love to live and our sustainability priorities help us to achieve this purpose

in a tangible way. Developing a business based on strong, sustainable foundations, and where our employees have the opportunity to achieve

their full potential, provides the platform for our continued success. We recognise that this success is dependent upon strong engagement

with, and delivery for, all our stakeholders.

Our Values

Agile & Innovative

We are creative and open

to new ideas, ready to

implement change when

required. We are

prepared and able to

adapt to changing market

conditions and customer

requirements.

Honest & Straight

Talking

Maintaining an open and

transparent dialogue.

Saying what needs to be

said and not just what

people want to hear.

Being open and

transparent, means that

we can get to a better

solution quicker.

Collaborative

Collaboration is at the

core of our homebuilding.

Projects involve hundreds

of people from varied

disciplines and

professions working

together to achieve a clear

common goal – to build

great homes.

Commercially Minded

Being sector aware.

Knowing the customer.

Seeking value and making

savings. As well as

building great and

competitively priced new

homes, we are building

sustainable long-term

value for our

stakeholders.

Committed & Engaged

We are all in. We will be

there to deliver on

stakeholder needs

throughout their journey

with us, sharing our

knowledge, our insights

and our expertise

to guide, support

and reassure.

The Board and management aim to ensure that these values are lived within the business and integrated into decision making at all levels.

Where behaviour is not aligned with these values, the Board and management seek to ensure that appropriate action is taken.

81CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Division Of Responsibilities

Roles and Responsibilities

The Board has a formal schedule of matters reserved for its

decision which includes the approval of significant acquisitions or

disposals, significant capital expenditures, financial statements and

budgets, risk management processes and the Principal Risks &

Uncertainties, and, the approval of the Terms of Reference for each

of the Committees of the Board. Certain governance responsibilities

have been delegated by the Board to Board Committees, to ensure

that there is independent oversight of internal control and risk

management and to assist the Board with carrying out its

responsibilities. Three Committees have been established which

are the Audit & Risk Committee, the Nomination Committee and

the Remuneration Committee. Each of the Board Committees are

comprised of independent Non-Executive Directors. Each individual

Committee’s Chair reports to the Board on matters discussed at

Committee meetings and highlights any significant issue that

requires Board attention. The roles of Chairman and Chief Executive

Officer are set out in writing, clearly defined and approved by the

Board. Day-to-day management responsibility rests with the

Senior Leadership Team, the members of which are listed on

pages 76 and 77.

Chairman

JOHN REYNOLDS

Responsible for leadership of the Board

and ensuring effectiveness in all aspects

of its role.

He is responsible for setting the Board’s

agenda and ensuring adequate time is

available for discussion of all agenda items,

including strategic issues. He is responsible

for encouraging and facilitating active

engagement by and between all Directors,

drawing on their skills, knowledge and

experience. He was independent when

appointed to the role in 2015.

GILES DAVIES

Giles is the Senior Independent Non-

Executive Director. He acts as a sounding

board for the Chairman and acts as

an intermediary for the other Directors

when necessary.

He is also available to address

shareholders’ concerns that have not

been resolved through the normal channels

of communication with the Chairman,

Chief Executive Officer or Chief Financial

Officer. He is responsible for evaluating

the performance of the Chairman

in consultation with the other

Non-Executive Directors.

The Non-Executive Directors provide an

external perspective, sound judgement and

objectivity to the Board’s deliberations and

decision making. With their diverse range of

skills and expertise, they support and

constructively challenge the Executive

Directors and monitor and scrutinise the

Group’s performance against agreed goals

and objectives. The Non-Executive Directors

are also responsible for determining

appropriate levels of executive

remuneration, appointing and removing

Executive Directors, and succession

planning through their membership of the

Remuneration and Nomination Committees.

The Non-Executive Directors together with

the Chairman meet regularly without any

Executive Directors being present.

MICHAEL STANLEY

Specific responsibility for recommending

the Group’s strategy to the Board and for

delivering the strategy once approved.

In undertaking such responsibilities, the

Chief Executive Officer takes advice from,

and is provided with support by, his Senior

Leadership Team and all Board colleagues.

Together with the Chief Financial Officer,

the Chief Executive Officer monitors the

Group’s operating and financial results and

directs the day-to-day business of the

Group. The Chief Executive Officer is also

responsible for recruitment, leadership

and development of the Group’s senior

management team below Board level.

TARA GRIMLEY

Supports and works closely with the

Chairman, the Chief Executive Officer and

the Chairs of the Board Committees in

setting agendas for meetings of the Board

and its Committees.

She supports accurate, timely and clear

information flows to and from the Board

and the Board Committees, and between

Directors and senior management. In

addition, she supports the Chairman in

designing and delivering Directors’

induction programmes and the Board

and Committee performance evaluations.

She also advises the Board on corporate

governance matters and Board procedures,

and is responsible for administering the

Share Dealing Code and the AGM.

Chief Executive Officer Senior Independent Director

Non-Executive Directors Company Secretary

CORPORATE GOVERNANCE REPORT CONTINUED

Conflicts of Interest

The Board reviews potential conflicts of interest as a standing agenda item at each Board meeting. Directors have continuing obligations to

update the Board on any changes to these conflicts.

Induction and Training

An induction procedure for new Board members was established in early 2019 which was further enhanced in 2021 as we inducted two new

members to the Board. Board members engage with senior management on a regular basis to assist and enhance their understanding of the

business. The Board considers on an ongoing basis the need for additional training in respect of any matters relevant to the development and

operation of the Board or any of its Committees. In addition, as part of our action plan emanating from the external evaluation, there will be

an increase in the availability of training for Directors in 2022.

D&O Insurance

The Company maintains appropriate Directors’ and Officers’ liability insurance cover in respect of legal action against Directors, the level

of which is reviewed annually. Subject to the provisions of, and so far as may be permitted by the Companies Act 2014 and the Company’s

Constitution, every Director, Secretary or other officer of the Company is entitled to be indemnified by the Company against all costs,

charges, losses, expenses and liabilities incurred by them in the execution and discharge of their duties.

Board Meetings in 2021

The Board meets regularly and would typically hold seven scheduled meetings during the year, including a strategy day. The Board met eight

times for Board meetings during 2021. Generally each formal Board meeting follows a carefully tailored agenda agreed in advance by the

Chairman, Chief Executive Officer, Chief Financial Officer and Company Secretary. A typical meeting will comprise reports on current trading

and financial performance from the Chief Executive Officer and Chief Financial Officer, sustainability, risk, governance, health & safety and

investor relations updates and ‘deep dives’ into areas of particular strategic importance.

Attendance Table

Director No. of Meetings Held/Attended Board Tenure

John Reynolds (Chairman) 8/8 7 years

Andrew Bernhardt* 8/8 7 years

Gary Britton 8/8 7 years

Giles Davies 8/8 7 years

Shane Doherty 8/8 2 years

Linda Hickey 8/8 3 years

Jayne McGivern* 5/5 3 years

Alan McIntosh 8/8 7 years

David O’Beirne 8/8 3 years

Orla O’Gorman* 1/1 < 1 year

Julie Sinnamon* 2/2 < 1 year

Michael Stanley 8/8 7 years

* Andrew Bernhardt and Jayne McGivern stepped down from the Board on 31 December 2021 and 3 September 2021 respectively. Orla O’Gorman and Julie Sinnamon joined the

Board on 10 November 2021 and 17 September 2021 respectively.

Commitment and External Appointments

As part of the Board evaluation process, the Board has considered the individual Directors’ attendance, their contribution, and their external

appointments, and is satisfied that each of the Directors is able to allocate sufficient time to the Group to discharge his or her responsibilities

effectively. As evidenced by the attendance table above, the Directors have maintained the ability to devote sufficient time to their roles and

the Company. Contracts and letters of appointment with Directors are made available at the AGM or upon request.

Executive Directors are permitted to take up non-executive positions on the boards of other listed companies so long as this is not deemed to

interfere with the business of the Group. Executive Directors’ appointments to such positions are subject to the approval of the Board which

considers, amongst other things, the time commitment required. In line with the Code, Non-Executive Directors are also encouraged to seek

Board approval prior to taking on any additional external appointments.

83CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Directors’ Terms of Appointment

The Executive Directors have service agreements with the Company

which have notice periods of 12 months or less. The Non-Executive

Directors have Letters of Appointment which set out their terms of

appointment. The initial period of appointment is three years and

any term renewal is subject to the approval of the Board and

appointments are terminable on one month’s notice. Under the

Company’s Constitution, one third of all Directors must retire by

rotation at each Annual General Meeting and may seek re-election.

However, in keeping with best corporate governance practice, the

Board has decided that all Directors will seek re-election annually.

Accordingly, all Directors will retire at the Annual General Meeting

currently scheduled for 12 May 2022 and, being eligible, each will

offer themselves for re-election with the exception of David

O’Beirne. The Board is satisfied that the Company benefits greatly

from the services of all Directors and accordingly, the Board

recommends the re-election of all of the Directors.

Information and Support

All members of the Board are supplied with appropriate, clear and

accurate information in a timely manner covering matters which are

to be considered at forthcoming Board or Committee meetings. The

papers for each meeting are made available via an electronic Board

portal along with a wealth of supporting and reference material.

Should Directors judge it necessary to seek independent legal

advice about the performance of their duties with the Group, they

are entitled to do so at the Group’s expense. Directors also have

access to the advice and services of the Company Secretary, who

is responsible for advising the Board on all governance matters

and ensuring that Board procedures are complied with. The

appointment and removal of the Company Secretary is a matter

requiring Board approval.

Independence

As is done annually, the independence of the Non-Executive

Directors was reviewed during 2021. In doing so, the Board

considered factors such as length of tenure and relationships or

circumstances that are likely to affect, or appear to affect, the

Directors’ judgement, in determining whether they remain

independent. Following this year’s review, the Board concluded

that, excluding Alan McIntosh who is deemed non-independent

given his prior role as an Executive and a Founder, all of the other

Non-Executive Directors remain independent in character and

judgement and are free from any business or other relationships

that could materially affect the exercise of their judgement. The

Chairman of the Board was deemed independent on appointment.

In assessing the independence of Linda Hickey, the Committee had

due regard for her former position as a senior executive at

Goodbody Stockbrokers (“Goodbody”), one of the Company’s

corporate brokers, as well as on the Board of Kingspan Group plc

(“Kingspan”), one of the Company’s suppliers. The Committee

concluded that Ms Hickey was fully independent, taking into account

the following material factors:

• Ms Hickey retired from her role at Goodbody in April 2019,

prior to her joining the Board

• Kingspan is the largest supplier of timber frame housing in

Ireland. The availability of alternative suppliers at such scale

simply does not exist in the Irish market and procurement

of these products was subject to the Company’s strict

procurement procedures

• Non-Executive Directors are not involved in the procurement

process; and, the total purchases from Kingspan in 2021 were

€19.4 million (2020: €10.95 million), which is not material for a

business of Kingspan’s size.

Ms Hickey has deep experience in capital markets and particularly

with Irish public companies, which is very valuable to the Company

and our shareholders. In addition, we consider experience gained

through her role as a non-executive director of a global building

materials company to be an asset to the Company. Ms Hickey has

met with many of our major shareholders and was re-elected to

the Board with over 99% shareholder support in both years since

her appointment.

Board Appointment Process

During the past year, there were significant changes made to

the Board’s composition. When making Board appointments,

the Nomination Committee reviews and approves an outline brief

and role specification and appoints an external search consultancy

for the assignment.

The Chairman of the Board (except in relation to his own succession)

alongside representation from the Nomination Committee and the

Chief People Officer, meets with the external search consultancy to

discuss the specification and search as well as the Group’s need for

enhancing diversity. The external search consultancy prepares an

initial long list of candidates from which the Nomination Committee

assembles a shortlist. Interviews are held with the Chairman, Chief

Executive Officer and a selection of Non-Executive Directors.

The Nomination Committee then makes a recommendation to

the Board for its consideration. Following Board approval, the

appointment is announced in line with requirements of the rules

applying to public companies.

Board Policy on Diversity

In 2019, the Board adopted a formal Diversity and Equality Policy

applicable to the Company as a whole. The Board and management

continues to be cognisant of the benefits of diversity and the

recommendations of the Hampton-Alexander and Parker reviews,

and recognise the clear benefits of increasing diversity at all levels

of the organisation.

Cairn made good progress in this area during 2021. At 31 December

2021, our female employees made up 27% of our total workforce,

while 33% of the Chief Executive Officer’s direct reports were

female. Many of the Company’s employee base are also from

varying backgrounds of nationality, ethnicity, and religion. In

response to the embedding of the Parker Review in market practice,

the Board is reviewing succession planning and recruitment policies

to ensure an appropriate focus on ethnicity. Further details on

diversity within the Company can be found within our 2021

Sustainability Report.

CORPORATE GOVERNANCE REPORT CONTINUED

Board Evaluation

During 2021, the Board and each of its Committees completed an external evaluation questionnaire to assess their performance and

effectiveness. Overall, the feedback from the external evaluation was very positive with the Board recognising management’s efforts to drive

the business through the ongoing challenges presented by the COVID-19 pandemic, from strong health and safety procedures, clearly defined

back-to-work protocols, and the quality and frequency of Board engagement and information flow over the course of 2021. In terms of actions,

the Board will place a particular focus on continuing to drive enhancements in Director training and the monitoring of culture within the

organisation. During 2022, the Board will also focus on the continued integration of ESG factors into strategy development and Director training.

Preparation

• Institute of Directors appointed by the Nomination Committee

• Institute of Directors assigned Independent Assessor

• Assessor meets with Chairman and Company Secretary to determine scope of engagement,

key objectives, focus areas and the overall structure of the evaluation

Data Gathering

& Analysis

• Comprehensive online questionnaire completed by each Board and Committee member, tailored to

meet the objectives of the evaluation

Interviews

• Following completion of questionnaires and analysis of responses, the Independent Assessor held

one-to-one interviews with each Board member to give them an opportunity to discuss their

questionnaire responses, to expand upon them, and to raise any other issues which are not directly

covered by the questionnaire. The interviews also incorporated review of Committee work as relevant

by membership

Reporting

& Action Plan

• Draft report of findings and key recommendations shared with the Chairman and Company

Secretary for review to ensure the process and output met the initial evaluation objectives,

without compromising the integrity of the process or the recommendations made

• The final report was circulated to the full Board and the Independent Assessor attended the

following Board meeting to present findings and key recommendations to the Board

• Discussion held during Board meeting to consider the outcomes and agree recommended actions

85CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Audit, Risk and Internal Controls

Internal Control

The Board has overall responsibility for the Company’s system of

internal control, for reviewing its effectiveness and for confirming

that there is an ongoing process in place for identifying, evaluating

and managing the significant risks facing the Company. The process

was in place throughout the year under review and up to the date of

approval of the Annual Report and Financial Statements. The Board

has reviewed the effectiveness of the Company’s risk management

and internal control systems, with the assistance of the Audit & Risk

Committee. Effective risk management is critical to the achievement

of the Company’s strategic objectives. Risk management controls are

in place across the business. The Company’s risk framework

continues to evolve, and the Company will continue to monitor and

improve its risk management framework. Further details are

available in the Risk Report on pages 62 to 73.

The Company has documented its financial policies, processes and

controls which will be reviewed and updated on an ongoing basis. The

key elements of the system of internal control include the following:

Clearly defined organisation structure and lines of authority;

• Company policies for financial reporting, treasury management,

information technology and security and project appraisal;

• Annual budgets and business plans; and

• Monitoring performance against budget.

The preparation and issuance of financial reports is managed by

the finance function. The financial reporting process is controlled

using the Company’s accounting policies and reporting system. The

financial information is reviewed by the Chief Financial Officer and

the Chief Executive Officer. The interim and preliminary results and

the Annual Report and Financial Statements are reviewed by the

Audit & Risk Committee who recommend their approval to the Board.

Risk Management

The Company considers risk management to be of paramount

importance. The Board, together with Senior Leadership Team,

deals with risk management on behalf of the Company as part of

its regular monitoring of the business. The Board and the Audit &

Risk Committee have put in place procedures designed to ensure

that all applicable risks pertaining to the Company can be identified,

monitored and managed at all times. Further information on the

principal risks applicable to the Company is given in the Risk Report

on pages 62 to 73.

Financial Risk Management

The financial risk management objectives and policies of

the Company are set out in note 29 to the consolidated

financial statements.

Health and Safety Policy

It is the policy of the Company and its subsidiaries to comply with the

following legislation as a minimum standard for all work activities:

• Safety, Health and Welfare at Work Act, 2005

• the Safety, Health and Welfare at Work (General Application)

Regulations, 2007 - 2016

• the Safety Health and Welfare at Work (Construction)

Regulations, 2013 and all amendments to date

• All codes of practice applicable to the work undertaken

by the Company or its subsidiaries.

In complying with the statutory requirements and implementing

our safety management system the Company ensures, so far as

reasonably practicable, the safety, health and welfare of all

employees whilst at work and provides such information, training

and supervision as is required for this purpose. It is the policy of the

Company to protect, so far as is reasonably practicable, persons not

employed by the Group who may be affected by our activities.

It is the policy of the Company to ensure that adequate consultation

takes place between management, employees, contractors and

others on all health and safety related matters and employees are

encouraged to notify management of identified hazards in the

workplace. All employees have the responsibility to co-operate

with supervisors and management to achieve a healthy and safe

work place and to take reasonable care of themselves and others.

The Health and Safety Policy is available at all work locations for

consultation and review by all employees. The Policy is kept up-to-

date and amended as necessary to meet changes in the nature and

size of the business. The Policy is communicated to employees at

the commencement of their employment and on an annual basis

thereafter as the safety statement review is carried out.

The Company will strive to work for the ongoing integration of health

and safety into all of its activities, with the objective of retaining high

standards of health and safety performance. The Company seeks

the full co-operation of all concerned in the carrying through of its

commitment. Health and safety has also been integrated into the

remuneration arrangements for the Executive Directors, with

pay opportunity reduced in the event of unsatisfactory Health and

Safety performance

General Meetings

The Company holds a general meeting each year as its Annual

General Meeting in addition to any other meeting in that year. Not

more than 15 months shall elapse between the date of one Annual

General Meeting and that of the next. The Board is responsible for

the convening of general meetings.

The 2022 Annual General Meeting of the Company is scheduled to

be held at The Merrion Hotel, Merrion Street Upper, Dublin 2, D02

KF79 at 11.00 a.m. on 12 May 2022. The 2021 Annual Report and

2022 Notice of the Annual General Meeting will be circulated at

least 20 working days prior to the meeting and will be available

to download from the Company’s website. The Notice contains a

description of the business to be transacted at the Annual General

Meeting. The Chairman, Chief Executive Officer, Chief Financial

Officer and Non-Executive Directors will be available at the

Annual General Meeting to answer shareholder questions.

Every shareholder has the right to attend and vote at the Annual

General Meeting and to ask questions related to the items on the

agenda of the Annual General Meeting.

Voting Rights

(a) Votes of Members: Votes may be given either personally or by

proxy. Subject to any rights or restrictions for the time being

attached to any class or classes of shares, on a show of hands

every member present in person and every proxy shall have one

vote, so, however, that no individual shall have more than one

vote, and on a poll every member shall have one vote for every

share carrying voting rights of which he/she/it is the holder.

The Chairman shall be entitled to a casting vote where there

is an equality of votes.

(b) Resolutions: Resolutions are categorised as either ordinary

or special resolutions. The essential difference between an

ordinary resolution and a special resolution is that a bare

majority of more than 50% of the votes cast by members voting

on the relevant resolution is required for the passing of an

ordinary resolution, whereas a qualified majority of 75% or more

of the votes cast by members voting on the relevant resolution is

required in order to pass a special resolution. Matters requiring

a special resolution include for example:

• altering the Objects of the Company;

• altering the Constitution of the Company; and

• approving a change of the Company’s name.

Communication with Shareholders

The Company attaches considerable importance to shareholder

communication. There is regular dialogue with institutional

shareholders, including detailed presentations and roadshows

after the announcement of interim and preliminary results.

The Executive Directors meet with institutional investors

during the year and participate in broker/investor conferences.

The Chairman has overall responsibility for ensuring that the views

of our shareholders are communicated to the Board. Contact with

major shareholders is principally maintained by the Executive

Directors. During 2021, meetings between the Chairman and in

the majority of cases, the Chair of the Remuneration Committee,

were held with c. 60% of our shareholders on a broad range of

governance and strategic areas. The Executive Directors also

report regularly to the Board on their engagement with

shareholders. The Board also regularly receives analysts’ reports

on the Company. The Company’s website www.cairnhomes.com

provides the full text of all announcements including the

interim and preliminary results and investor presentations.

Other

The Company discloses information to the market as required by the

Listing Rules of Euronext Dublin and the Listing Rules of the London

Stock Exchange and Financial Conduct Authority, including inter alia:

• Periodic financial information such as interim and preliminary

results;

• Price-sensitive information, which for example, might be a

significant change in the Company’s financial position or outlook,

unless there is a reason not to disclose such information

(e.g. prejudicing commercial negotiations);

• Information regarding major developments in the

Company’s activities;

• Information regarding dividend decisions;

• Any changes to the Board once a decision has been made, and

• Information in relation to any significant changes notified to the

Company of shares held by a substantial shareholder.

The Company will make an announcement if it has reason to believe

that a leak may have occurred about any ongoing negotiations of a

price-sensitive nature. Any decisions by the Board which might

influence the share price must be announced as soon as possible

and in any event before the start of trading the next day. Information

relayed at a shareholders’ meeting, which could be price-sensitive,

must be announced no later than the time the information is

delivered at the meeting. In relation to any uncertainty regarding

the communication of a particular matter, advice will be sought

from the Company’s sponsors and/or legal advisor(s).

Remuneration

Details on the Company’s compliance with the provisions of the UK

Corporate Governance Code in relation to remuneration are set out

in the Directors’ Remuneration Report.

CORPORATE GOVERNANCE REPORT CONTINUED

87CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

AUDIT & RISK COMMITTEE REPORT

Dear Shareholder,

This report describes how the Audit & Risk Committee (the

“Committee”) has fulfilled its responsibilities during the year under

its Terms of Reference and under the relevant requirements of the

UK Corporate Governance Code and Irish Corporate Governance

Annex (together “the Code”).

The Committee is satisfied that its role and authority include those

matters envisaged by the UK Corporate Governance Code that

should fall within its remit and that the Board has delegated

authority to the Committee to address those tasks for which

it has responsibility.

Committee Membership

The Committee currently comprises four Non-Executive Directors

having had several changes to the composition throughout the

year. I’m delighted to welcome both Julie Sinnamon and Orla

O’Gorman to the Committee and wish to express my thanks to

each of Jayne McGivern, Andrew Bernhardt and Giles Davies

for their individual contributions to Committee deliberations

during their respective tenures.

All members of the Committee are determined by the Board to be

independent Non-Executive Directors in accordance with provision

24 of the UK Corporate Governance Code. In accordance with the

requirements of provision 24 of the UK Corporate Governance Code,

several members of the Committee are deemed to have recent and

relevant financial experience. The biographical details on pages 74

and 75 demonstrate that members of the Committee have a wide

range of financial, capital markets, commercial and business

experience relevant to the sector in which the Group operates.

The Committee met six times during the year and the attendance of

each member is laid out in the table above. Meetings are attended

by members of the Committee and others being principally the

Chairman, the Company Secretary, the Chief Financial Officer,

representatives from the finance function, the Health & Safety

Manager, and representatives of the External Auditor as well as the

outsourced Internal Audit function who also attend by invitation.

Other members of management may be invited to attend to provide

insight or expertise in relation to specific matters.

The Committee also met privately with the External Auditor and

representatives of the outsourced Internal Audit function without

management present at least once during the year.

The Chair of the Committee reports to the Board following

each meeting, on the work of the Committee and on its findings

and recommendations.

The below table sets out the Committee membership including their attendance and tenure:

Committee Member

Meeting

Attendance

Committee

Tenure

Gary Britton (Chair) 6/6 7 years

Andrew Bernhardt* 6/6 7 years

Giles Davies* 5/5 7 years

Linda Hickey 6/6 3 years

Jayne McGivern* 4/5 3 years

Orla O’Gorman* 1/1 < 1 year

Julie Sinnamon* 1/1 < 1 year

*Andrew Bernhardt and Jayne McGivern stepped down from the Board and Committee on 31 December 2021 and 3 September 2021 respectively. Giles Davies stepped down from the

Committee on 10 November 2021. Julie Sinnamon and Orla O’Gorman were appointed to the Committee on 10 November 2021.

“The Committee continues to

ensure the maintenance of

effective risk management

and internal control

frameworks”

Gary Britton

Chair of the Audit & Risk Committee

AUDIT & RISK COMMITTEE REPORT CONTINUED

KEY DUTIES

• Monitoring the integrity of the Group’s financial statements

and announcements relating to the Group’s performance;

• Advising the Board on whether the Annual Report and

Financial Statements, taken as a whole, is fair, balanced and

understandable, and whether it provides the information

necessary for shareholders to assess the Group’s

performance, business model and strategy;

• Monitoring the effectiveness of the external audit process

and making recommendations to the Board in relation to the

appointment, re-appointment and remuneration of the

External Auditor;

• Overseeing the relationship between the Group and the

External Auditor including the terms of engagement and

the scope of audit;

• Reviewing the scope, resourcing, findings and effectiveness

of the Internal Audit function;

• Monitoring and reviewing the overall effectiveness of the

Group’s risk management systems, and overseeing its

strategic response to risk, in particular, the principal and

emerging risks to its strategic objectives;

• Reviewing the adequacy and effectiveness of the Group’s

systems and controls for risks associated with health &

safety, bribery and fraud, and the use of personal data; and

• Reporting to the Board on how the Committee has

discharged its responsibilities.

KEY AREAS OF ACTIVITY DURING 2021

A summary of the key activities of the Committee during the year

is set out below:

Financial Reporting

The Committee reviewed the draft trading updates, draft

preliminary results, draft annual report and draft interim results

before recommending their approval to the Board. The Committee

considered the appropriateness of the relevant accounting policies

and significant judgements and key estimates adopted in the

preparation of the financial statements. The Committee also

considered the views of the External Auditors in making these

assessments. The significant issues in relation to the financial

statements considered by the Committee and how these were

addressed are set out on pages 89 and 90. The Committee also

reviewed the observations on internal control prepared by the

External Auditor as part of the audit process.

In accordance with the reporting requirements of the Code, the

Committee confirms to the Board that, in our view, the Annual

Report, taken as a whole is fair, balanced and understandable, and

provides the information necessary for shareholders to assess the

Group’s position and performance, business model and strategy.

Risk Management and Internal Control

Responsibility for monitoring the effectiveness of the Group’s

system of risk management and internal control is delegated to the

Committee by the Board. Following the comprehensive review of

the Group’s risk management process in 2020, the Committee in

2021 embedded the effectiveness of the process through its

oversight of risk and associated controls. The Committee is satisfied

with the procedures established for identifying, assessing and

managing key risks, and will continue to evaluate those procedures

against best practice for the industry. Further information on the

Group’s risk management process is outlined in the Risk Report

on pages 62 to 73.

Health & Safety and Data Protection

The Committee met with the Group’s Health & Safety Manager

and Commercial Director on three occasions during the year.

These meetings included reviewing key health and safety statistics,

monitoring resourcing requirements for the function and

overseeing the achievement of key objectives during 2021 which

were set at the beginning of the year. The Chairman of the

Committee also frequently engaged with the Health & Safety

Manager outside of meetings.

The Committee has engaged with the Company Secretary who has

overall responsibility for the Group’s lawful use of personal data in

accordance with Irish and European data protection laws, including

Regulation (EU) 2016/679 (the General Data Protection Regulation

“GDPR”). The Group has designated an independent Data Protection

Officer who has access to the Committee, advises the Company

Secretary and carries out the tasks mandated by the GDPR.

Throughout 2021, the Committee continued to monitor the progress

and effectiveness of the Group’s data protection programme,

consistent with the data protection risks faced by the Group.

Going Concern, Viability and Directors’ Compliance Statements

The Committee reviewed the draft Going Concern Statement,

Viability Statement and Directors’ Compliance Statement prior to

recommending them to the Board for its review and approval. The

Going Concern Statement and the Viability Statement are contained

in the Risk Report on page 73. The Directors’ Compliance Statement

is included in the Directors’ Report on page 110.

89CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Internal Audit

The Group’s Internal Audit function is outsourced, however the

Committee continues to maintain oversight of and responsibility for

the function’s effectiveness on an annual basis. The Internal Audit

function completed four Internal Audit reviews during the year;

(1) Review of Procurement; (2) Review of Cyber Security; (3) Review

of Delegated Authorities; and (4) Review of Funding & Liquidity.

The Committee considered reports and updates from the Internal

Audit function for each of these reviews which summarised the

work undertaken, findings, recommendations and management

responses to audits conducted during the year. A register is

maintained internally which monitors progress against any

recommended process and control enhancements to ensure

that they are implemented appropriately and in a timely and

controlled manner.

The Committee considered and approved the programme of work to

be undertaken by the Internal Audit function in 2021 and the planned

programme of work for 2022. The Committee also met with the

members of the Internal Audit function privately without

management present.

External Auditor

Our External Auditor, KPMG, was appointed in 2015. The Group

currently has no plans to tender for audit services, although is

cognisant of the EU Audit Regulation requirements on auditor

rotation. The Committee reviewed the External Auditor’s overall

audit plan for the 2021 audit and approved the remuneration

and terms of engagement of the External Auditor. The Committee

also considered the quality and effectiveness of the external

audit process and the independence and objectivity of the

External Auditor.

In order to ensure the independence of the External Auditor, the

Committee received confirmation from the External Auditors

that they are independent of the Group under the requirements of

the Irish Auditing & Accounting Supervisory Authority (“IAASA”)

Ethical Standard for Auditors (Ireland). The External Auditors

also confirmed that they were not aware of any relationships

between the firm and the Group or between the firm and persons in

financial reporting oversight roles in the Group that may affect its

independence. The Committee considered and was satisfied that the

relationships between the External Auditor and the Group including

those relating to the provision of non-audit services did not impair

the External Auditor’s judgement or independence.

Non-Audit Services

The Committee reviews the engagement of the External Auditor to

provide non-audit services on an ongoing basis. In considering any

proposal for the provision of non-audit services by the External

Auditor, the Committee considered several matters including:

• Threats to independence and objectivity resulting from the

provision of such services and any safeguards in place to

eliminate or reduce these threats to a level where they would

not compromise the External Auditor’s integrity and objectivity;

• The nature of the non-audit services;

• Whether the skills and experience of the external audit firm

make it the most suitable supplier of the non-audit services;

• The fees incurred, or to be incurred, for non-audit services both

for individual services and in aggregate, relative to the audit fee;

and

• Any relevant legislation.

The External Auditor will not be engaged for any non-audit services

without the approval of the Committee. The External Auditor is

precluded from providing certain services under Regulation (EU)

No 537/2014 or from providing any non-audit services that have

the potential to compromise its independence or judgement.

Details of the audit and non-audit services provided by the External

Auditor for 2021 and their related fees are disclosed in Note 9 to the

consolidated financial statements. The Committee has undertaken

a review of non-audit services provided during 2021 and is satisfied

that these services were efficiently provided by the External Auditor

with the benefit of their knowledge of the business and did not

prejudice their independence or objectivity.

In line with EU audit regulations, the Group’s non-audit fees for 2021

were less than 70% of the average of the audit fees over the

previous three-year period.

Confidential Reporting and Anti-Bribery & Corruption

The Group’s Confidential Reporting and Anti-Bribery & Corruption

Policies were reviewed and updated during 2021 and were formally

adopted by the Committee and rolled out within the business in

early 2022. The policies are published on the Group’s website and

intranet, and employees are required to confirm they have read

them. The Committee continues to monitor and review any breaches

to these policies.

Estimates and Judgements

The Committee reviewed in detail the areas of significant

judgement, complexity and estimation in connection with the

financial statements for 2021. The Committee considered a report

from the External Auditors on the audit work undertaken and

conclusions reached as set out in their audit report on pages 113

to 118. The Committee also had an in-depth discussion on these

matters with the External Auditors. These significant areas were

the carrying value of inventories and profit recognition.

Carrying Value of Inventories and Profit Recognition

The Group continued to invest capital in developing its landbank

and construction work in progress as the business continues to

scale its construction activities. Consequently, the carrying value

of inventories is a critical area in terms of judgement from a

management and audit perspective. The Group engaged in a

detailed annual impairment test during 2021 to ensure that the

investment in such development land and the related construction

work in progress is not impaired. The impairment exercise was

conducted with input from the relevant stakeholders across the

business and external input, where appropriate. The annual

impairment test looks at all aspects of site performance on an

individual site by site basis, in order to determine the net realisable

value of the individual site. This involves assessing the number of

units that can be achieved on each individual site, together with a

full assessment of the likely sales prices of those individual units,

which are then compared to actual sales prices achieved to date.

All costs associated with the individual sites are assessed and

updated on a regular basis as new information becomes available,

based on actual experience. In the event that the net realisable

value is lower than the cost of any particular site, the individual site

would be considered impaired and it would be written down to its

net realisable value. This process is reviewed by management and

is also tested extensively as part of the annual audit process.

The annual impairment test did not show any evidence of

impairment on a site by site basis.

The Group recognises its gross profit on each sale, based on the

particular unit sold and the total cost attaching to that unit. As the

build cost on a site can take place over a number of reporting

periods the determination of the cost of sale to release on each

individual unit sale is dependent on up-to-date cost forecasting and

expected profit margins across the scheme. There is a risk that one

or all of the assumptions could be inaccurate, with a resulting

impact on the carrying value of inventories or the amount of profit

recognised. This risk is managed through ongoing site profitability

reforecasting, with any necessary adjustments being accounted for

in the relevant reporting period.

The Committee considered the evidence from impairment reviews

and profit forecasting models across the various sites and

discussed the results with management and is satisfied with the

carrying values of inventories (development land and construction

work in progress) and with the methodology for the release of costs

on the sale of individual units.

As Chair of the Committee, I engaged with the Company Secretary,

the Chief Financial Officer, and representatives from the finance

function and health and safety function, the Internal Audit function

and the External Auditor in preparation for each Committee

meeting. I also attend the Annual General Meeting and am

available to respond to any questions that shareholders

may have concerning the activities of the Committee.

Gary Britton

Chair of the Audit & Risk Committee

AUDIT & RISK COMMITTEE REPORT CONTINUED

91CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Dear Shareholder,

I am pleased to present the Nomination Committee (the

‘Committee’) report on the progress made during 2021. The main

purpose of the Committee is to ensure plans are in place for

orderly succession of Board and senior management positions

whilst maintaining an appropriate balance of skills, experience,

independence and diversity. The Committee regularly reviews

the structure, size and composition of the Board and makes

recommendations to the Board with regard to any changes.

Following a search led by the Nomination Committee, we oversaw

the appointment process which resulted in the appointment of

Julie Sinnamon on 17 September, followed by the appointment

of Orla O’Gorman on 10 November. We were delighted to

recommend the appointment of these Directors to the Board,

who bring different but equally important skills to the Board and

the key Committees they sit on. Both Jayne McGivern and Andrew

Bernhardt stepped down from the Board during the past year,

and we thank them for their input over the years. Gary Britton

and Alan McIntosh also stepped down from the Nomination

Committee during the year and we thank them for their

contributions during their respective tenures. Following the end

of the financial year, David O’Beirne announced his intention to

step down from the Board at the conclusion of the 2022 AGM.

The Committee will continue to lead the refreshment process

to appoint further Non-Executive Directors in the period ahead.

All members of the Committee are Independent Non-Executive

Directors and their biographies can be found on pages 74 and 75.

Members of the Leadership Team, primarily the Chief People

Office Maura Winston, and the Board Chairman John Reynolds,

are invited to attend meetings. The Company Secretary Tara

Grimley also acts as Secretary to the Committee.

The Committee met four times during the year and after each

Committee meeting, the Board was apprised of key issues

discussed during our meetings.

Meeting attendance can be found in the table below:

Committee Member

Meeting

Attendance

Committee

Tenure

Giles Davies (Chair) 4/4 7 years

Gary Britton* 4/4 7 years

Alan McIntosh* 3/3 2 years

David O’Beirne 4/4 3 years

Orla O’Gorman 1/1 < 1 year

Julie Sinnamon 1/1 < 1 year

* Gary Britton and Alan McIntosh stepped down from the Committee on

10 November 2021.

With new Board members and two departures during the year,

there have been a number of changes to the Board’s key

Committees as part of our consistent focus on Board refreshment

and diversification of the Board’s skillset. Gary Britton and Alan

McIntosh stepped down from the Nomination Committee and both

Orla O’Gorman and Julie Sinnamon were appointed. I stepped down

from the Audit & Risk Committee and both Orla O’Gorman and Julie

Sinnamon were appointed. All changes were effective from

10 November 2021.

Audit & Risk

Committee

Remuneration

Committee

Nomination

Committee

Gary Britton (Chair) Linda Hickey (Chair) Giles Davies (Chair)

Linda Hickey Gary Britton Julie Sinnamon

Julie Sinnamon Giles Davies Orla O’Gorman

Orla O’Gorman David O’Beirne David O’Beirne

Role of the Committee

The Committee is responsible for Board recruitment and will

conduct regular assessments of the Board’s composition against

the Company’s strategic priorities and the main trends and

factors affecting the long-term success and future viability

of the Company. The Committee’s key objective is to ensure

that the Board comprises individuals with the necessary

skills, knowledge, experience and diversity (including gender

diversity) to ensure that the Board is effective in discharging

its responsibilities.

NOMINATION COMMITTEE REPORT

“2021 was a busy year for the

Nomination Committee,

with a focus on improving

diversity at Board level”

Giles Davies

Chair of the Nomination Committee

NOMINATION COMMITTEE REPORT CONTINUED

The Committee strongly believes that diversity and developing an

inclusive culture is a key driver of business success and the

Committee is committed to having a diverse and inclusive

management team which provides a range of perspectives, insights

and critical challenge needed to support good decision-making,

helping with risk management and strategic planning.

Committee Responsibilities and Key Activities

Details of the key areas of responsibility of the Committee and the

time spent on each area during 2021 are set out below:

Board Composition

The Committee has sought to balance the composition of the Board

and its Committees and to refresh them progressively over time.

In discharging its responsibilities, the Committee regularly reviews

the structure, size and composition of the Board and its

Committees, including skills, knowledge, independence and

diversity, to ensure they are aligned with the Group’s strategy.

Our Non-Executive Directors are drawn from a wide range of

industries and backgrounds, including capital markets, legal,

investment banking, entrepreneurial, environmental and financial

industry experience and have a wealth of experience in complex

organisations with global reach.

The Committee recognises the importance of the Board’s

awareness of and preparations for the future, and ensuring that

the skills, experience and knowledge of individuals reflect the

changing demands of the business, all while upholding the culture

and values of the Group. Building on the work done in 2020 that set

out clear skills against the evolution of our strategy, during the

year, a Non-Executive Director succession plan was developed

from this. This provides a structured and systematic approach

to refreshing the Board.

Board Diversity

The Committee and Board are committed to ensuring that together

the Directors possess the requisite diversity of skills, experience,

knowledge and perspectives to support the long-term success of

the Company. In this regard, the role of diversity in promoting

balanced and considered decision making which aligns with the

Group’s purpose, values and strategy is fully recognised. All Board

appointments are made on an objective and shared understanding

of merit, in line with required competencies relevant to the

Company as identified by the Committee, and consistent with

the Board’s Diversity Policy.

The Committee will identify suitable candidates based on merit

against objective criteria and with due regard for the benefits of

diversity on the Board including social and ethnic background,

cognitive and personal strengths as well as diversity of gender.

Where there is a known requirement to improve the diversity of

the Board, the Committee will ask to see a higher proportion of

candidates fitting the diversity criteria. However, the final selection

will, as stated, always be on merit.

The Committee will once again review the composition of the Board in

the coming year, taking into account the recommendations set out in

the Hampton Alexander Review (which recommends that at least 33%

of Board and Executive Committee members of FTSE 350 companies

should be female), and from an Irish perspective, Balance for Better

Business, which sets a target for 33% and 25% representation on

Irish Boards and Executive Committees, respectively, by 2023. We are

pleased to report that, following the changes to the Board during

2021, at the year end the female representation was 30% (three out

of ten). Following David O’Beirne stepping down at the 2022 AGM,

33% of the Board will be female.

The Committee also oversees the development of a diverse

pipeline for future succession to Board and senior management

appointments, including reviewing the gender balance of senior

management and its direct reports. As at 31 December 2021, the

Senior Leadership Team had 33% female representation, and

27% of our total workforce were female. Further details on our

Equality, Diversity and Inclusion agenda can be found in our 2021

Sustainability Report.

Non-Executive Directors and Planning for the Future

To support strategic succession planning for Non-Executive

Directors, led by the Company Secretary, during 2020, a skills

matrix was developed to ensure the Board and its Committees

have and maintain the necessary skills to deliver the Group’s

strategic priorities. During 2021, we found the matrix extremely

useful as we announced significant changes to Board and

Committee composition. Further details on our diverse Board and

the skillsets of our Non-Executive Directors are detailed on page 93.

Workforce Engagement

The changes instigated by the revisions to the UK Code in 2018

have spurred greater engagement between Board members and

the views of workers. While, at Cairn, we believe the employee

voice has always played a role in Board decisions and

deliberations, it has challenged us to go further.

Through our director responsible for workforce engagement,

David O’Beirne, and our Chief People Officer, Maura Winston, the

Committee received regular updates on the welfare of employees,

employee initiatives including learning and development

programmes and the detailed results of the employee engagement

survey conducted during the year. One of the key elements of

engagement with the workforce was our employee engagement

survey. While we are fully aware that these surveys do not represent

a full engagement strategy, they provide key insight into employee

satisfaction and are part of the Committee and the Board’s tools in

monitoring culture.

In addition, as restrictions allowed, David attended two sites in

November and met directly with employees without management

present. The areas covered were culture generally, life in Cairn and

the challenges and success stories. David in particular noted that

the discussions were informal, open, honest, informative and

overall very positive. One area where certain issues were raised

related to the pace and increasing workload which had the ability to

add to day-to-day stresses. It was also recognised by employees

that they felt supported and were happy with the levels of

communications from management, particularly throughout the

COVID-19 lockdowns when there had been a lot of job market

uncertainty. The fact that career prospects and opportunities for

progression were evident throughout the business was highlighted

as a particular positive from the employee base.

As a Committee, we will continue to review direct workforce

engagement practices as a means of understanding how successful

our strategy is, what are people are thinking and, ultimately, as a

means of understanding whether our culture and values are

effectively being brought to light throughout the organisation.

93CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

A DIVERSE AND EFFECTIVE BOARD

The Chairman was independent on appointment and is not

included in the overall assessment of independence.

67%33%70%30% 80%20% 50%20%30%

GENDER ROLE TENURE INDEPENDENCE

Non-independent

Independent

Female

Male

Executive

Non-Executive

< 2 years

3-6 years

7-9 years

Non-Executive Director Skills Matrix

Key Skills Identified for Calm

John

Reynolds

Gary

Britton

Giles

Davies

Linda

Hickey

Alan

McIntosh

David

O’Beirne

Orla

O’Gorman

Julie

Sinnamon

Leadership, Strategy & Commercial

• • • • • • • •

Industry Relevant Background

• • •

Policy & Government Engagement

• • • • • •

Sustainability

• • • • •

Capital Markets

• • • •

Financial & Risk Management

• • • • • • •

Giles Davies

Chair of the Nomination Committee

Dear Shareholder

Performance Overview

As detailed throughout the Annual Report, performance across the

Group this year has been exceptional, with growth across all our key

indicators, including new homes sales, gross margin and cash flow.

While we would be pleased with such performance in any year, it is

testament to the resilience of our business and the strength of our

people to be able to achieve such results following the impact of the

pandemic. In addition to the strong financial performance achieved,

the Committee also noted the strength of personal contributions from

the Executive Directors. During 2021, the business continued to be

highly cash generative, resulting in the reinstatement of dividend

payments, increasing our headcount and recommencing our share

buyback programme.

Implementation of Policy - 2021

Both executive directors are being awarded a maximum bonus, at

150% and 115% of salary for the CEO and CFO, respectively, which

is reflective of the delivery of strong performance. The increased

bonus potential for the CEO and CFO had been deferred during 2020

in light of the onset of the COVID-19 pandemic. Having gained a

clearer line of sight over future performance expectations, and

as the impact of the pandemic on business started to subside,

the Committee determined it was appropriate to put in the place

the revised limits, which remain reasonable versus direct and

market peers.

The maximum financial EBIT target of €45m was exceeded

resulting in a full payout for the 50% of the bonus based on financial

performance, in line with the wider financial performance detailed

above. Over the past two years, we have also looked to be a leader in

integrating ESG and stakeholder measures throughout our reward

structure. Specifically, during FY 2021, 20% of bonuses were based

on a customer metric, which was also subject to a health & safety

underpin, two clear priorities in our aims of creating and protecting

value. This portion of the bonus also paid out in full, reflecting the

largest volume of unit closings by management and the customer

team in a single year, despite restrictions on viewings for a portion

of the year. Health and safety performance remained strong,

resulting in no changes being made to the customer performance

outturn. Further details on the 30% personal and strategic

performance measures are set out on pages 98 and 99. Under this

portion of the bonuses, both Executive Directors received full

pay-outs for a range of contributions during the year which set

the foundation for record financial results and future growth.

There were no LTIP awards eligible to vest in 2021, as the first

award under the plan was granted to the CFO in 2020 and the

CEO commenced participation in 2021.

Shareholder Engagement

The Board believes regular engagement with shareholders is a

cornerstone of good governance, ensuring there are established

channels of communication and providing an opportunity to gauge

views on the Company’s strategy, remuneration and governance.

Throughout the first half of 2021, and on occasion since then,

I engaged with a significant number of our major shareholders

to detail our proposal to include the CEO in the LTIP for the first

time. At the 2021 AGM, the Directors’ Remuneration Report received

the support of 75% of shareholders. While pleased that the majority

of shareholders supported the resolution, based on our

engagement with shareholders before and after the AGM, certain

shareholders did not support the proposal based on concerns

related to the timing of the CEO’s inclusion in the LTIP. Throughout

the entire process, as a Committee, we were responsive to

shareholder feedback, which led to material changes to our final

decisions, including a reduction in award level. The Committee

and the Board are fully satisfied that the decision was in the best

interests of the Company and its shareholders and hope the

performance in 2021 was evidence of that.

Outside of the discussion around the CEO’s revised incentive

arrangements, certain shareholders also noted the absence of any

market-based performance measure (i.e. TSR) under the current

LTIP. The absence of a relevant listed peer-set renders the use of

Relative TSR unsuitable as an appropriate metric, and the

Committee was mindful that an Absolute TSR metric, which it has

used in the past, could result in windfall gains in the current

environment. Since the AGM, we have continued to engage with

shareholders on a range of issues, and will continue to ensure

targets set under the LTIP will be stretching as the business

continues to grow and scale. One of the key aspects of our approach

DIRECTORS’ REMUNERATION REPORT

“2021 was a year of continued

integration of ESG metrics

into our remuneration

framework, further aligning

reward and strategy”

Linda Hickey

Chair of the Remuneration Committee

95CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

to pay is to keep raising the bar, which we will continue to do.

As detailed below, we have responded to certain aspects of

shareholder feedback and have included a new Return on

Equity (‘ROE’) measure in the LTIP, which is designed to further

align with shareholder experience and drive the delivery of

long-term performance.

As a Board and a business, we will continue to engage with

shareholders as regularly as possible, to ensure there is

consistent fostering of mutual understanding of our expectations.

We will be reaching out to shareholders again in 2022 as part

of our consultation on a new remuneration policy, to be put to

shareholders at the 2023 AGM.

Future Implementation

There are no significant changes to the remuneration policy

approved by shareholders at the 2020 AGM. Instead, the Committee

has implemented certain changes to the incentive plans for 2022,

with an evolution of measures in line with the growing maturity of

the business and our refined approach to sustainability and ESG.

With a view to rebalancing the financial and non-financial metrics in

the annual bonus, we have reduced the weighting of the personal

goals metric from 30% to 20% of the total opportunity, with the

weighting of the financial metric, EBIT, increased to 60%. The

weighting of the stakeholder measure will remain unchanged at

20%; however, a people component will also be included to reflect

the importance of culture and talent in the delivery of Cairn’s

long-term strategy. Against a backdrop of COVID-19, our focus on

attracting and retaining the best talent has only increased, with a

growing recognition that a robust and sustainable people strategy is

necessary to support our efforts to scale. The stakeholder metric

for 2022 will be based on an even mix between people and customer

measures and will continue to include a Health and Safety underpin.

Under the LTIP, we are making two changes to the incentive

measures. On the financial side, ROE (defined as profit after tax

divided by total equity at year end) will be included as a metric for

2022 awards, in line with shareholder feedback received over the

past number of years, as well as to reflect the growing maturity of

the business. As we integrate it into the remuneration policy, it will

represent 20% of the overall award for 2022. ROE has been a very

important KPI for the business, as it reflects the importance of

returns on the provision of long-term capital, which enables our

business to grow and scale.

In line with our commitment to sustainability, we are also refining

our focus on ESG measures under the LTIP. As homebuilders, what

we do can have a profound and permanent impact on the land we

develop, which has led to our inclusion of biodiversity as a measure

in the 2022 LTIP, weighted at 20% of the overall award. Biodiversity

is a key tenet of our sustainability strategy and is an area our

stakeholders increasingly understand and value. As we focus on the

creation of environmentally sustainable and ecologically friendly

developments, we have decided to incorporate these considerations

into our remuneration policy, demonstrating a level of

responsiveness not just to shareholder feedback, but also our

attempts to be a leader as we develop our approach to sustainability.

Within our annual bonus plan, awards for 2022 will also have

ESG measures under the strategic focus areas of our customer

experience and our people agenda weighted at 10% each, totalling

20% of the award. Payout under the annual bonus plan for ESG

measures will be contingent on the achievement of a strong and

sustained performance under our health and safety strategy.

In terms of wider workforce remuneration, the Save as You Earn

(‘SAYE’) plan is expected to be withdrawn from Irish markets and

as such, is not currently open to new registrations. Since its

approval in 2019, the SAYE has proven very popular at all levels of

the organisation. While there are currently no service providers

in the market offering that type of plan, as a Company, we consider

it important to ensure all employees continue to receive an

opportunity to share in the success of the business, a key facet of

our people strategy. As such, it is intended that during 2022, an

Approved Profit-Sharing Scheme (‘APSS’) will be established and

offered to employees from 2023. The APSS will allow employees

to invest part of their annual bonus, plus salary, in Company shares

in a tax-efficient manner.

Separate to the SAYE, each year the Committee oversees the award

of LTIP to all eligible employees, not just Executive Directors. In

doing so, a town hall is called with all LTIP grant recipients to

explain the target-setting process and advising that the targets set

apply to all recipients, including Executive Directors in each grant

year. The objectives for the coming three year performance period,

and how they as employees can impact on the achievement of the

targets set is also discussed. During 2022, the Committee will be

involved in refining the reward principles that apply to all levels of

the organisation.

Conclusion

We thank each of our shareholders for their continued confidence in,

and support for, our business. We trust you will agree that reward

for 2021 is appropriate and reflective of the record performance of

the business in the year.

Linda Hickey

Chair of the Remuneration Committee

DIRECTORS’ REMUNERATION REPORT CONTINUED

REMUNERATION AT A GLANCE

The purpose of this section is to provide an overview of the Group’s performance in 2021 as well as the remuneration received by

our Executive Directors. This section also highlights the proposed approach to the implementation of our 2020 Remuneration Policy

(the ‘2020 Remuneration Policy’) in 2022.

FIXED PAY AND SHAREHOLDING

Base Salary

€425,000

(CEO)

€375,000

(CFO)

Pension

15% of base salary

Benefits

Health insurance and car allowance

ANNUAL BONUS

2021 Annual Bonus Earned

€637,500

(CEO)

€431,250

(CFO)

2021 Annual Bonus Outcome

Measure Weighting Outcome

EBIT 50% 100%

Stakeholder 20% 100%

Personal/Strategic 30% 100%

2021 Bonus Delivery

CEO CFO

150% 115%

Total Total

125% 115%

Delivered in cash Delivered in cash

25%

Delivered in shares

LONG TERM INCENTIVE PLAN

2021 LTIP Grant

€637,500

(CEO)

€562,500

(CFO)

Performance Conditions

Measures Weighting Threshold Target

EPS 80% 14.2c 23.7c

Stakeholder 20% Customer Experience with

Health & Safety underpin

FIXED PAY AND SHAREHOLDING

Base Salary

€425,000 0% movement

(CEO)

€375,000 0% movement

(CFO)

Pension

15% of base salary

Benefits

Health insurance and car allowance

ANNUAL BONUS

Target % of base salary

150% 115%

(CEO) (CFO)

2022 Annual Bonus Framework

Measure Weighting

EBIT 60%

ESG Measures 20%

Personal/Strategic 20%

CEO (Maximum Performance)

72%

28%

Fixed Variable

LONG TERM INCENTIVE PLAN

Target awards % of base salary

150% 150%

(CEO) (CFO)

Performance Conditions

Metric Weighting

EBIT 60%

ROE 20%

ESG Measures 20%

CFO (Maximum Performance)

69%

31%

Fixed Variable

2021

2022

97CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

IMPLEMENTATION OF THE 2020 REMUNERATION POLICY DURING 2021

Single Total Figure of Remuneration

Remuneration Outcomes for Executive Directors for the Year Ended 31 December 2021

The table below sets out the details of the remuneration paid to the Executive Directors for the year ended 31 December 2021,

with comparatives for the prior year ended 31 December 2020.

Salary

Retirement

Benefit

Allowances

Recruitment

Bonus

Total Fixed

Annual

Incentive

Total

Variable

Total

Remuneration

Ratio of Fixed

to Variable

Executive

Director 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020

Michael

Stanley 425 425 64 85 10 10 – – 499 520 638 – 638 – 1,137 520 44:56 100:0

Shane

Doherty

(1)

375 273 56 41 15 11 – 185 446 510 431 – 431 – 877 510 51:49 100:0

(1) Mr Doherty was appointed to the Board on 13 April 2020.

Pension

The maximum pension contribution for incumbent Executive Directors was reduced from 25% to 15% of salary in 2019, bringing it further in

line with the broader employee population; this reduction applied to the current Chief Executive Officer equally over the two years from 2019

to 2021, with his contribution now at 15% of salary. The current Chief Financial Officer joined the Company on a 15% contribution. For all new

appointments, pension contributions will be aligned with levels available to the majority of the employee base.

2021 Annual Bonus

The maximum bonus opportunity for 2021 was 150% of salary for the Chief Executive Officer and 115% of salary for the Chief Financial Officer.

Annual incentives were based on a mix of financial, stakeholder and personal objectives. The financial and non-financial measures employed

were a mix of EBIT (50% of maximum), customer satisfaction with a health and safety underpin, and personal objectives relating to strategy,

land bank, risk, brand, talent development and technology and innovation.

There were full pay-outs under each component of the bonus, which the Committee considers aligned with financial performance, strategic

developments, the personal contribution of Executives and the stakeholder experience. Further details are set out below:

Measure Weighting

Threshold

(20%) Target (50%) Max (100%)

2021

Performance Payout

Financial EBIT 50% €35.0m €41.9m €45.0m €58.4m 100%

Non-Financial

Customer

(Health &

Safety

underpin) 20% N/A N/A N/A See below 100%

Personal &

Strategic 30% N/A N/A N/A See below 100%

The overall macroeconomic environment and the uncertainty brought about by lockdowns presented difficulties for the setting of targets in

2021, particularly toward the start of the year and this was reflected in the guidance issued to the market in March 2021. With the frequent

changes to the potential date for the reopening of our construction sites, and in order to avoid any cliff-edge events at the year end with

respect to target setting, our guidance reflected our two-year ambition of selling 2,500 units over 2021 and 2022. The 2021 target of 950-1,050

units to be built and 1,450-1,550 units in 2022, were the base figures upon which our EBIT targets were derived. In 2021, we recorded the

construction of 1,120 units, leading us to exceed our EBIT target, and a full pay-out under the financial elements of the bonus.

DIRECTORS’ REMUNERATION REPORT CONTINUED

Led by the Executive Directors, the Customer team agreed the sale of over 1,400 new homes in 2021 and successfully facilitated the closing

of 1,120 homes to new customers, the largest volume of unit closings in a single year by the Company, despite the challenges of the pandemic.

The three pillars employed under the customer segment of the bonus scheme were Delivery, Experience and Aftercare, and performance

under each pillar is set out below:

Pillar Objective Target Performance

Delivery Measure delivery of product

on time and in line with

customer expectations

75% of homes

on target

99% of homes on target

Experience Capture experience &

insights from 10% of

customer base to influence

future performance

Positive feedback from

direct engagement with

10% of customer base

Net Promoter

Score: 40

Consistently positive feedback from new customers

Net Promoter Score: 55

(equivalent to 5 stars on the UK’s Home Building

Federation (‘HBF’) model)

Positive feedback received from all institutional

customers

Aftercare Measure after care

performance against

agreed criteria

Strong performance

in wider categories,

including case review

80% of cases reviewed, triaged, and assigned to

aftercare within 1 – 5 days

95% of customers responded to within a 24hr window and a 96% case

closure rate within the 30-day SLA (Service Level Agreement)

As we finish another challenging year, and also a year of strong results, the performance of both the Chief Executive Officer and Chief

Financial Officer has been a key driver in restoring significant growth to our business. As we come to the second anniversary of the pandemic,

the protection of our business and workforce throughout this period, as well as the continuous efforts towards further developing and

communicating our strategy through continuous stakeholder engagement, have been core elements of their contributions. Their

performance against their specific objectives is set out below:

Chief Executive Officer - Michael Stanley

Area Aims and Measures Performance Review

Strategy &

Leadership

Define and lead strategy to

continue to grow and scale

the business

Defined the refreshed Corporate Strategy as presented to the Board in November 2021,

which detailed ambitious growth targets and is based on an evolving and considered

approach to Cairn’s expansion nationally which will be delivered through a regional

model. Execution of this strategy is underpinned by an integrated and scalable operating

platform and delivering on an innovation agenda across Cairn and its mature and growing

supply chain. The CEO’s personal contribution to this task demonstrated keen leadership

skills and commercial and strategic acumen, in line with the ask set by the Committee.

Landbank &

Portfolio

Identify & influence market

opportunities to capture

addressable opportunity across

all customer segments

Strategic management of existing

landbank to balance market

demand, maximise revenue and

deliver unit targets

The CEO led, identified and executed on significant market opportunities to a broad and

widening customer pool. Over 1,400 new homes agreed for sale in the year across social

(the State and Approved Housing Bodies), private and multi-family buyers. The CEO’s

management of the Company’s landbank was driven by agile decision-making with

regard to existing land use and product mix in line with planning changes to deliver

Cairn’s strongest ever performance on new home completions and strong operating

cashflow generation. In addition, strategic land acquisitions were executed as part of

Cairn’s long-term portfolio management strategy.

Risk Risk balanced approach and best

in class risk governance

The CEO has driven the management of the public health crisis across the extended Cairn

team to include the subcontractor base and our supply chain, including critical financial and

operational support initiatives to underpin the long-term viability of critical partners whilst

securing stronger relationships and loyalty as a result of these efforts over the period.

Brand Exceptional leadership to

support corporate reputation,

brand and position within the

external market

Instrumental in efforts to influence solutions on Ireland’s housing crisis and utilised

Cairn’s scaled platform and leading market position to engage with a broad pool of key

stakeholders and policy-makers, thereby enhancing Cairn’s reputation both as a critical

enabler in delivering new homes at scale and pace across all tenures, and its relevance

to all of its key stakeholders and policy-makers.

Talent

Management

Embed new leadership team to

support delivery of targets and

strengthen future succession

Continue to engage and support

staff, partners and customers

through continued uncertainties

and COVID impacts.

Focussed significantly on the ongoing development of the Leadership Team including the

delivery of an Executive Leadership Programme covering individual and team coaching,

succession planning and career mapping, underpinned by an improved business

reporting and engagement rhythm.

During the year, under the CEO’s leadership, Cairn achieved the highest staff engagement

annual scores despite the difficult backdrop and secured the Great Place to Work

certification in the first year of application.

99CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Chief Financial Officer - Shane Doherty

Area Aims and Measures Performance Review

Strategy &

Leadership

Support the CEO in the definition

and leadership of strategy to grow

and scale the business

In supporting the CEO’s refreshed Corporate Strategy, the CFO led the development

of key themes specifically on the financial components, focussing on value creation,

capital allocation and long-term shareholder value, underpinned by benchmarking

around value creation trends.

Financial

Frameworks

Provide the financial frameworks

and roadmap to enable all

business leaders to drive towards

profit and cash maximisation

Drive commercial decision

making across all functions to

align outcomes/performance with

company targets

The CFO led, and detailed to the Board, a proactive all-encompassing and risk aware

modelling of key initiatives to ascertain the impact on the Company’s returns profile

as measured by growth in NAV (Net Asset Value), IRR (Internal Rate of Return) and

NPV (Net Present Value). This discipline and heightened focus on returns-based

modelling was an important prelude to the Group introducing ROE (Return on Equity)

as a key short and medium-term target into both its remuneration framework and

market guidance.

In addition, the CFO developed an IRR tool around strategic investments and

acquisitions which included realtime P&Ls on pricing and cost changes.

Risk,

Governance

& Reporting

Ensure excellence in all matters

pertaining to the Board,

specifically around reporting,

governance and strategy in a

PLC environment

In reviewing the contribution of the CFO, feedback was extremely positive. In particular,

ensuring best in class governance and risk oversight has resulted in significant

improvements to the risk management framework, governance and reporting.

Relationship

Management

Cultivate and develop key

relationships with existing

shareholders, banks and the

wider Investor community

The CFO has continued to strengthen and deepen trust and relationships with all of our

key investors, through ongoing structured and individual engagements.

In addition, we successfully completed the onboarding of a second corporate broker,

which was further evidence of his capability to build lasting and critical relationships

that benefit the business and shareholders.

Technology

& Innovation

Create a robust core IT function

and support innovation agenda

During a year characterised by work from home, cyber security threats and macro

disruption, the core IT function demonstrated robustness to all challenges. As a

means of ensuring continued success, the CFO led the expansion of the team through

investment in key senior people. This investment further consolidated the function

whilst both protecting and underpinning the integrity of the business.

Bonus Deferral

As part of the revisions to the bonus framework announced in 2020, and implemented during 2021, any portion of bonus paid out over

125% of salary for the CEO would be deferred into shares. The following was the resulting breakdown of the pay-out for 2021:

Name

Maximum Bonus

(% of salary)

Payout

(% of salary) Actual Bonus Awarded

Value of Bonus

Deferred into Shares

Michael Stanley (CEO) 150% 150% €637,500 €106,250

Vesting of Awards in 2021

No share awards vested to any Executive Director or prior Director in 2021.

Awards Granted During the Past Year

On 19 May 2021, the following conditional share awards were granted under the LTIP to Michael Stanley, CEO and Shane Doherty, CFO:

Name

Number of Shares

Granted

Share Price at Date

of Grant

Face Value at Date

of Grant

Michael Stanley (CEO) 612,981 €1.04 €637,500

Shane Doherty (CFO) 540,865 €1.04 €562,500

100

DIRECTORS’ REMUNERATION REPORT CONTINUED

Following the conclusion of the 2021 AGM, the Committee confirmed the grants to the two Executive Directors. The 2021 LTIP targets were:

Metric Weighting Threshold Target (25% vesting) Maximum Target (100% vesting)

Cumulative EPS 80% 14.2c 23.7c

Stakeholder Measures:

• Customer Satisfaction

• Health and Safety

20% Stakeholders measures will pay out based on customer satisfaction performance. In order

for the stakeholder measure to begin to pay out, a Health & Safety gateway must be

achieved. The gateway will require a sustained and strong level of Health & Safety

performance over the performance period which will be assessed by the Audit & Risk

Committee which will then make a recommendation to the Remuneration Committee.

As detailed in previous Annual Reports, upon joining the Company, the Chief Financial Officer received an LTIP award of €700,000, within the

exceptional limit permitted by the Policy. The award was formally granted in September 2020 and is eligible to vest following the completion

of the performance period at the conclusion of the year ended 31 December 2022 based on the following performance measures and targets:

Metric Weighting Threshold Target (25% vesting) Maximum Target (100% vesting)

Cumulative EPS 80% 9.0c 15.0c

Stakeholder Measures:

• Customer Satisfaction

• Health and Safety

20% Stakeholders measures will pay out based on customer satisfaction performance. In order

for the stakeholder measure to begin to pay out, a Health & Safety gateway must be

achieved. The gateway will require a sustained and strong level of Health & Safety

performance over the performance period which will be assessed by the Audit & Risk

Committee which will then make a recommendation to the Remuneration Committee.

The primary measure for these awards, cumulative EPS over the three year performance periods was designed to provide an easily

understandable and transparent framework for all stakeholders during a period of significant disruption and will motivate participants to

deliver our strategy over the performance period. Vesting between threshold and maximum targets will be calculated on a straight-line

basis. The targets for the financial measures were set after a rigorous review of internal forecasts and took into account external

expectations of future performance.

In the context of the effect on markets of COVID-19, the Committee will continue to monitor the risk of ‘windfall gains’ and will take this into

account when determining the final vesting outcome for the 2020 and 2021 awards. The overall shareholder experience over the performance

period will also play a role in the Committee’s determination of final vesting levels.

Non-Executive Directors’ Remuneration Details

No changes were proposed or made to Non-Executive Director fees during 2021. The fees paid to Non-Executive Directors in respect of

the year ended 31 December 2021 with comparatives for the prior year ended 31 December 2020 are set out below. All remuneration for

Non-Executive Directors is fixed with no variable elements.

Base Fee Committee Chair Fee SID Fee Total

Non-Executive Director

2021

€’000

2020

€’000

2021

€’000

2020

€’000

2021

€’000

2020

€’000

2021

€’000

2020

€’000

John Reynolds 150 150 – – – – 150 150

Andrew Bernhardt 60 60 – – – – 60 60

Gary Britton 60 60 15 15 – – 75 75

Giles Davies 60 60 12 12 10 10 82 82

Linda Hickey 60 60 12 12 – – 72 72

Jayne McGivern

(1)

41 60 – – – – 41 60

Alan McIntosh 60 60 – – – – 60 60

David O’Beirne 60 60 – – – – 60 60

Orla O’Gorman

(2)

8 – – – – – 8 –

Julie Sinnamon

(3)

17 – – – – – 17 –

(1) Jayne McGivern stepped down from the Board in September 2021 and the fees paid are reflective of her time spent in the role.

(2) Orla O’Gorman joined the Board in November 2021 and the fees paid are reflective of time spent in the role.

(3) Julie Sinnamon joined the Board in September 2021 and the fees paid are reflective of time spent in the role.

Payments for Loss of Office

There were no payments for loss of office paid during 2021.

Payments to Former Directors

There were no payments to former Directors during 2021.

101CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

IMPLEMENTATION OF THE 2020 REMUNERATION POLICY IN 2022

This section provides an overview of the how the Committee is proposing to implement the Policy in 2022.

As noted in the Committee Chair’s statement, Cairn’s approach to remuneration is evolving in line with strategy and our growth as a business,

while also taking into account external pressures and factors. In particular, there has been continued integration of ESG measures into

incentive plans. In addition, the inclusion of a return on equity measure reflects consistent feedback from a number of shareholders.

While it was not felt that the business had reached sufficient maturity in previous years, it was considered more appropriate to include

an ROE measure now, particularly in light of the strength of performance in 2021.

Base Salary

Over prior benchmarking exercises and reviews, it has become clear that base salaries at Cairn remain low relative to Irish listed and UK

sector comparable peers and are below median. Despite this fact, the Committee has not sought to adjust base salaries for 2022.

It should also be noted that the Chief Executive Officer has not had a base salary increase since the Company was founded in 2015,

reinforcing the commitment to restrained fixed salaries in preference for variable, performance based pay.

Executive Director Base Salary

Michael Stanley (Chief Executive Officer) €425,000

Shane Doherty (Chief Financial Officer) €375,000

Pension and Benefits

The Chief Executive Officer and Chief Financial Officer will receive a pension contribution worth 15% of salary. Any future Executive Director’s

pension contribution will be set at the level for the wider workforce.

Annual Bonus

Key features of the annual bonus plan for Executive Directors for 2022 remains as follows:

• The maximum annual bonus potential is 150% and 115% of base salary for the Chief Executive Officer and Chief Financial Officer

respectively.

• Any portion of bonus earned over 125% of salary will be deferred into shares for two years; and,

• Annual bonuses awarded in respect of performance in 2022 will be subject to potential withholding (malus) or recovery (clawback).

The annual bonus for 2022 for Executive Directors will be determined based on the following criteria:

Measure Percentage of Max Opportunity

Earnings Before Interest and Tax (‘EBIT’) 60%

Personal and Strategic Objectives 20%

ESG Measures 20%

The selection of measures and targets takes into account the Company’s strategic priorities. The personal and strategic measures will

continue to include areas of strategic importance that may not be linked to a financial measure but are central to the Company’s long-term

performance and provide additional insight into the unique contributions of our executives in driving our strategy. EBIT reflects a controllable

and understandable measure at all levels of the business, and the broad scope of insight it provides has led us to increase its weighting from

50% to 60% of the bonus, with a corresponding reduction of 10% on the personal and strategic objectives.

As we develop and integrate ESG and sustainability factors into remuneration policy, the stakeholder measure, which accounts for 20% of

the bonus opportunity will be focused on positive performance against quantitative people and customer satisfaction measures. To further

sharpen this approach, the Committee defined two metrics under the stakeholder metric, i) Customer satisfaction and ii) People, each

weighed equally at 10% of the bonus. With the underlying and overarching role of health and safety considerations across all our operations,

the stakeholder metric will continue to be subject to a health and safety underpin. The achievement of the underpin will only be confirmed

following a review by the Audit & Risk Committee based on all key health and safety priorities throughout the year.

While the focus of targets, in terms of time-horizon and level, remain distinctly separate, the Committee is aware that there is a level of

overlap between the stakeholder measures employed under the bonus scheme and that of the LTIP. This was commenced with the customer

metric, which is weighted at 10% in the bonus opportunity, and will also apply to the third year of the 2020 LTIP and the second year of the

2021 LTIP, accounting for 20% of these awards. From 2022, the customer metric will no longer be included in the LTIP.

When initially including an ESG and stakeholder measure, the Committee was of the view that the inclusion of a customer measure under

both the annual bonus and long-term incentive plans was appropriate as we drove further scaling of the business, reflecting the steps taken

across the value chain to put the customer at the heart of our product offering including investments and emphasis on quality checking and

product improvements.

102

DIRECTORS’ REMUNERATION REPORT CONTINUED

For 2022, as detailed below, a biodiversity measure will be included in the LTIP, with a weighting of 20% of the award. Over the second half

of 2021, significant effort was put in to ensuring that the biodiversity measure was quantitative and designed to impact the behaviour of

participants and the evolution of our biodiversity strategy. The Committee is satisfied that the measure for 2022 has achieved these initial

aims and as further measures are detailed in best practice guidelines, we will consistently review the continued appropriateness of its design

and the stretch ambitions therein in future year grant cycles.

Long-Term Incentives

In April 2022, awards will be made at 150% of base salary for both the CEO and CFO. Awards will vest subject to the criteria set out below over

a three-year performance period up to 31 December 2024. Awards will be subject to a two year holding period following any vesting. During

2021, following an extensive review of incentive measures and our sustainability strategy, we adopted a biodiversity metric into the LTIP

to replace the customer metric which will remain in the Annual Bonus plan. Furthermore, as part of the Committee’s review process

and shareholder feedback, we have incorporated a Return on Equity metric in the LTIP. These are reflected in the updated LTIP structure

going forward:

Measure Weighting

Earnings Per Share (‘EPS’) 60%

Return on Equity (‘ROE’) 20%

ESG: Biodiversity Measures 20%

The Committee is in the process of setting challenging three-year targets for the 2022 LTIP awards, taking into account growth objectives,

business plans and internal and external forecasts. Following the strong results in 2021, we intend to keep the stretch of this metric,

as the business continues to deliver superior and sustainable growth. As set out previously, return on equity is a key metric for the business,

as it is for shareholders’ ability to understand the Company’s financial performance and long-term prospects. While we have confirmed the

Biodiversity targets (detailed below) for the 2022 LTIP, the targets applying to the financial metrics will be disclosed in the RNS announcement

detailing their grant in early April 2022.

In order to ensure that our focus on biodiversity is reflected in management reward, we have incorporated a biodiversity measure (at 20% of

the overall award) in our long-term incentive plan, adding to the focus on customer, people and health and safety incorporated into the annual

bonus plan. Biodiversity is a key strategic priority for Cairn, in that it leverages our existing capabilities to achieve broader sustainability aims,

while also enhancing our brand in line with the evolving market expectations. Furthermore, as it is set to become part of future legislative

requirements, and given its inextricable role in addressing climate change, the Committee believes that the inclusion of a biodiversity metric

in the LTIP will provide additional support to drive the necessary change to achieve our ambitious targets. With the support of the

sustainability team and our external consultants, our approach, which is summarised below, will be based on the proportion of units

across our biodiversity net gain sites relative to all units commenced in 2022 and going forward:

Metric Weighting Threshold Target Maximum

Units Commencing on Biodiversity Net Gain sites as a Percentage of All Units Commencing 20% 25% 30% 40%

Projects will be assessed individually and by a consultant ecologist, with the input and assistance of our internal landscape architect as

part of the planning process. The biodiversity loss and gain of each site will be calculated based on the UK’s Department for Environment,

Food & Rural Affairs (DEFRA) metrics. DEFRA metrics are used to calculate how a development, or a change in land management,

will change the biodiversity value of a site, a strategic pillar for our aim of creating places where people love to live, and protecting the

environment everywhere the Company operates. Further details of this assessment are provided in our Sustainability Report and are

inclusive of items such as Baseline Habitat Assessments, habitats for retention, assessment of habitats being created, DEFRA metrics

used to calculate loss and/or gain, and, meeting any shortfall with potential offsite provision.

The Committee was very pleased to be able to confirm a quantitative target for biodiversity in 2022, aligning with a key strategic priority

for our business (as detailed in our Sustainability Report) and equally importantly, for society as a whole. In Ireland, we work primarily on

greenfield sites, which means our standards must be higher to keep those sites green, as opposed to enhancing brownfield sites. As we

continue to integrate this KPI throughout our business and reward framework, we will continue to raise our ambitions and stretch the

targets as appropriate. The target outlined above was confirmed after rigorous evaluations of our landbank and future planning aims,

a factor which will be integrated into any future target-setting.

A holding period for the LTIP awards granted for the financial year 2022 will apply for two years from the vesting date. No further

performance conditions attach to the LTIP awards during the holding period.

103CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Directors’ & Secretary’s Interests in the Long Term Incentive Plan (“LTIP”)

Details of outstanding share awards granted to the Directors’ and the Company Secretary under the LTIP are set out below:

Number of Shares Under Award

1 January

2021

Granted

During

the Year

Exercised

During

the Year

Lapsed

During

the Year

December

2021

Market

Price at

Date of

Award €

Exercise

Price €

Market

Price at

Date of

Vesting

Date of

Award

Vesting

Date

Expiry

Date

Michael Stanley (Chief Executive Officer)

– 612,981 – – 612,981 1.04 Nil N/A 18.05.21 18.05.24 17.05.28

612,981

Shane Doherty (Chief Financial Officer)

921,053 – – – 921,053 0.76 Nil N/A 22.09.20 22.04.23 21.09.27

– 540,865 – – 540,865 1.04 Nil N/A 18.05.21 18.05.24 17.05.28

1,461,918

Tara Grimley (Company Secretary)

96,507 – – 96,507 – 1.09 Nil N/A 19.12.18 19.04.21 18.12.25

63,348 – – – 63,348 1.326 Nil N/A 15.04.19 15.04.22 14.04.26

141,612 – – – 141,612 0.76 Nil N/A 22.09.20 22.04.23 21.09.27

103,486 – – 103,486 1.04 Nil N/A 18.05.21 18.05.24 17.05.28

308,446

Directors’ & Secretary’s Interests in Other Share Plans

The CFO held options at 31 December 2021 to acquire 21,951 shares through the Company’s Save as You Earn (‘SAYE’) scheme in April 2024.

The Company Secretary held options at 31 December 2021 to acquire 30,664 shares through the SAYE scheme in April 2023. The SAYE

scheme is a Revenue approved savings plan where participants are granted a right to acquire discounted shares in the Company following

a three year savings period. The Company Secretary also held a right at 31 December 2021 over 47,511 shares under the Restricted Share

Unit (‘RSU’) Plan. The RSU is a time vested award and these shares are due to vest in May 2022.

Directors’ & Secretary’s Interests in Ordinary Share Capital

The interests of the Directors’ and Company Secretary who held office at 31 December 2021 in the issued ordinary share capital of the

Company are set out in the table below. The interests disclosed below include both direct and indirect interests in shares.

Director

No. of Ordinary Shares at

31 December 2021

No. of Ordinary Shares at

31 December 2020

(or date of appointment if later)

John Reynolds (Chairman) 129,174 129,174

Michael Stanley (Chief Executive Officer) 21,557,409 21,557,409

Shane Doherty (Chief Financial Officer) – –

Andrew Bernhardt (Non-Executive Director) – –

Gary Britton (Non-Executive Director) 130,000 130,000

Giles Davies (Non-Executive Director) 50,000 50,000

Linda Hickey (Non-Executive Director) 75,000 75,000

Alan McIntosh (Non-Executive Director) 40,141,464 40,141,46 4

David O’Beirne (Non-Executive Director) – –

Orla O’Gorman (Non-Executive Director) – –

Julie Sinnamon (Non-Executive Director) – –

Tara Grimley (Company Secretary) 82,031 –

All of the interests noted above are beneficially owned. Aside from the interests disclosed above and the Founder Shares and Deferred

Shares held by the Founder Directors disclosed on page 107, the Directors and the Company Secretary had no interests in the share capital

of the Company or any other group undertaking at 31 December 2021.

There were no changes in the above Directors’ and Secretary’s interests between 31 December 2021 and 22 March 2022 with the exception

of Michael Stanley who purchased 87,101 shares on 4 March 2022 in satisfaction of bonus deferral obligations. The Company’s Register of

Directors Interests (which is open to inspection) contains full details of Directors’ shareholdings and other interests. The Company has a

policy on dealing in shares that applies to all Directors. Under this policy, Directors are required to obtain clearance from the Company

before dealing in Company shares. Directors are restricted from dealing during designated close periods and at any other time when

they are in possession of Inside Information (as defined by the Market Abuse Regulation).

104

DIRECTORS’ REMUNERATION REPORT CONTINUED

Change in Remuneration of the Directors Compared to the Average Employee

The table below shows the annual percentage change in remuneration paid to the Executive and Non-Executive Directors in comparison

to the average overall percentage change for employees (excluding Executive Directors) across the Group (on a full-time equivalent basis)

over the past five years.

Director

2017

v 2016

2018

v 2017

2019

v 2018

2020

v 2019

2021

v 2020

2021

€’000

John Reynolds (Chairman) 25% 20% 0% 0% 0% 150

Michael Stanley (Chief Executive Officer) -14% 15% 5% -46% 119% 1,137

Shane Doherty (Chief Financial Officer)

(1)

– – – N/A 72% 877

Andrew Bernhardt (Non-Executive Director) 18% 15% 0% 0% 0% 60

Gary Britton (Non-Executive Director) 8% 7% 0% 0% 0% 75

Giles Davies (Non-Executive Director) 18% 15% 0% 0% 0% 82

Linda Hickey (Non-Executive Director)

(2)

– – N/A 47% 0% 72

Jayne McGivern (Non-Executive Director)

(2)

– – N/A 20% -32% 41

Alan McIntosh (Non-Executive Director)

(3)

-13% -55% -75% 0% 0% 60

David O’Beirne (Non-Executive Director)

(2)

– – N/A 20% 0% 60

Orla O’Gorman (Non-Executive Director)

(4)

– – – – 100% 8

Julie Sinnamon (Non-Executive Director)

(4)

– – – – 100% 17

Tim Kenny

(5)

N/A 218% 5% -100% N/A –

Group Performance

Profit Before Tax 312% 530% 56% -75% 240% 50,235

Average Remuneration on a full-time equivalent basis of employees

Employees of the Group -5% -2% 15% 2% 2% 95

(1) Mr Doherty was appointed as an Executive Director on 13 April 2020.

(2) Ms Hickey, Ms McGivern and Mr O’Beirne were appointed as Non-Executive Directors on 12 April 2019, 1 March 2019 and 1 March 2019 respectively.

Ms McGivern resigned as a Director on 3 September 2021.

(3) Mr McIntosh stepped down as an Executive Director in August 2018 to become a Non-Executive Director.

(4) Ms O’Gorman and Ms SInnamon were appointed on 10 November 2021 and 17 September 2021 respectively.

(5) Mr Kenny was appointed as an Executive Director on 22 August 2017 and resigned effective 7 January 2020.

Relative Importance of Spend on Pay

The table below shows total employee remuneration (excluding LTIP awards) and distributions to shareholders, in respect of 2021 and 2020.

2021 2020

Total Employee Remuneration €25.2m €21.0m

Distributions to Shareholders* €19.9m €23.3m

* Dividends and purchase of own shares in 2020 and 2021

Directors’ Shareholding as Percentage of Salary

The table below sets out the percentage of base salary held in shares in the Company by the Executive Directors, as at 31 December 2021,

based on the closing share price of €1.13.

Name Base Salary

No. of Shares

Held

Percentage of

Salary Held

Michael Stanley (Chief Executive Officer) €425,000 21,557,409 5,732%

Shane Doherty (Chief Financial Officer)* €375,000 – –

*S Doherty has five years from date of appointment to meet the minimum shareholding requirements under the Remuneration Policy

105CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Statement of Shareholder Voting

The Company is committed to ongoing shareholder dialogue and takes shareholder views into consideration when formulating remuneration

policy and practice. As set out in the Chair’s statement, a significant minority of votes were registered against the Remuneration Report at

the 2021 AGM and the Board and the Committee has engaged extensively with shareholders as a means of understanding any continuing

concerns. The following table sets out the actual votes at the 2021 Annual General Meeting in respect of the Directors’ Remuneration Report

and at the 2020 AGM for the Remuneration Policy.

Directors’ Remuneration Report For Against Withheld*

Number of Votes 261,138,666 87,496,920 3,735,876

Percentage 74.90 25.10 –

Remuneration Policy For Against Withheld*

Number of Votes 593,745,820 548,848 16,799,417

Percentage 99.91 0.09 –

* A vote withheld is not a vote in law and is therefore excluded from the calculation of votes for and against the resolution.

Advisors

The Committee’s independent advisor during the year was Mercer Kepler, having been appointed in September 2016 following a competitive

tender process. Mercer Kepler attends Committee meetings on an ad hoc basis and provides advice on remuneration for Executive Directors,

benchmarking analysis, and updates on market developments and best practice. Mercer Kepler is a founding member of the Remuneration

Consultants Group and adheres to its code of conduct. The Committee reviews the performance of its advisors annually and remains satisfied

that Mercer Kepler provides independent and objective remuneration advice to the Committee and does not have any connections with Cairn

that may impair its independence. The fees paid to Mercer Kepler in respect of work carried out for the Committee in the year under review

amounted to €27,885.

In addition to Mercer Kepler, the Committee also sought periodic advice from FTI Consulting (“FTI”), engaged by the Company to provide

independent advisory corporate governance support to the Board, as well as both the Nomination and Remuneration Committees. The

Committee is satisfied that the advice from FTI was objective and independent and that FTI does not have any connections with Cairn that

may impair its independence.

106

COMMITTEE RESPONSIBILITIES

The Committee currently consists of four Non-Executive Directors whose collective role includes ensuring that the Group’s remuneration

arrangements are aligned with the Group’s strategic priorities. The Terms of Reference of the Committee include the determination of the

remuneration packages for Executive Directors, the Company Secretary and other members of the senior management team. The Chairman

and the Executive Directors determine the fees for the Non-Executive Directors. The Terms of Reference for the Committee are reviewed

annually and are updated as appropriate and are available on the Group’s website, www.cairnhomes.com

The below table sets out the Committee membership including their attendance and tenure:

Committee Member

Meeting

Attendance

Committee

Tenure

Linda Hickey (Chair) 6/6 3 years

Andrew Bernhardt* 6/6 7 years

Gary Britton 6/6 7 years

Giles Davies 6/6 7 years

David O’Beirne 6/6 3 years

* A Bernhardt stepped down from the Committee on 31 December 2021.

The Company Secretary acts as Secretary to the Committee. During the year, the Chief Executive Officer, Chief Financial Officer and the Chief

People Officer attended meetings on an ad hoc basis at the invitation of the Committee and provided information and support as requested.

However, no individual was present when their own remuneration was being discussed.

Our Role

The Committee’s role is to determine and agree the Remuneration Policy for Executive Directors and senior management and to monitor and

report on it. The Committee’s responsibilities, delegated by the Board as set out in its Terms of Reference, are to:

• Determine the remuneration packages of the Chairman, Chief Executive Officer, Chief Financial Officer and oversee the remuneration for

certain other senior managers, including salary, annual incentive, pension contributions and compensation payments;

• Oversee remuneration structures for senior management and to oversee any major changes in employee benefits structures throughout

the Company;

• Nominate Executive Directors and management for inclusion in the LTIP, to grant awards under the LTIP, to determine whether the criteria

for the vesting of awards have been met and to make any necessary amendments to the rules of the LTIP;

• Ensure that contractual terms on termination or redundancy, and any payments made, are fair to the individual and the Company;

• Be exclusively responsible for establishing the selection criteria, selecting, appointing and setting the Terms of Reference for any

consultants who advise the Committee; and

• Obtain up to date information about remuneration in other companies of comparable scale and complexity.

Key Responsibilities and Activities during 2021

An overview of the Committee’s activities during 2021 are laid out in the table below:

EXECUTIVE REMUNERATION

• Reviewed annual performance of the Executive Directors.

• Determined fixed and variable remuneration for Executive

Directors and senior management.

• Set 2021 LTIP targets.

• Ensured LTIP awards were linked to succession planning.

• Assessed efficacy and stretch of LTIP targets through

all cycles.

GOVERNANCE

• Reviewed and made progress against the remuneration

strategy agreed to execute the Remuneration Policy.

• Worked with the Committee’s consultants during 2021 to

ensure rigour of Committee analysis and decisions as well

as reviewing remuneration trends and market practice.

• Considered and approved the Directors’ Remuneration

Report and remuneration disclosure requirements.

• Reviewed and approved its annual agenda and Terms

of Reference.

DIRECTORS’ REMUNERATION REPORT CONTINUED

107CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Additional Interests of Founder Shareholders who are Founder Directors

In addition to the shareholdings noted on page 103, the Founder Directors have the following additional interests. Following changes made

during 2021, the CEO relinquished all entitlements to his Founder Shares.

No. of Deferred Shares at

31 December 2021

No. of Founder Shares at

31 December 2021

No. of Deferred Shares at

31 December 2020

No. of Founder Shares at

31 December 2020

Founder Directors

Michael Stanley 9,990,000 Nil 9,990,000 6,713,752

Alan McIntosh 9,990,000 9,591,075 9,990,000 9,591,075

Total 19,980,000 9,591,075 19,980,000 16,304,827

The Founder Shares are convertible into Ordinary Shares subject to the performance condition, which is the achievement of a compound

annual rate of return of 12.5% in the Company’s share price.

The Founder Shares do not carry a right to a dividend or voting rights. The performance condition was tested initially over the first test period

in 2016 (the first test period was 1 March 2016 to 30 June 2016), and is tested again over the six subsequent test periods (from 1 March to

30 June).

The Performance Condition is that for a period of 15 or more consecutive business days during the relevant test period, the closing price

exceeds such price as is derived by increasing the adjusted issue price by 12.5% for each test period, starting with the first in 2016 and ending

with the last in 2022, such increase to be on a compound basis.

In calculating whether the performance condition is satisfied during any test period, any dividends, returns of capital or distributions declared

in the 12 months ending at the end of the relevant test period are added to the closing price.

If the performance condition is satisfied, the Company may elect within 20 business days of the date on which the satisfaction of the

performance condition was notified to the holders of Founder Shares, to convert Founder Shares into such number of Ordinary Shares which,

at the highest average closing price of an Ordinary Share during the test period, have an aggregate value equal to the Founder Share Value.

The ‘Founder Share Value’ shall be calculated as 20% of the TSR in the periods described below.

TSR is calculated as the sum of the increase in market capitalisation, plus dividends, returns of capital or other distributions in each case in

the relevant period, being:

i. the first time the performance condition is satisfied, the period from initial public offering to the test period in which the performance

condition is first satisfied; and

ii. (for subsequent test periods, the period from the end of the previous test period in respect of which Founder Shares were last converted

or redeemed to the test period in which the performance condition is next satisfied. In each test period, the increase in market

capitalisation is calculated by reference to the highest average closing price.

The effect of this is that the calculation of TSR rebases to a ‘high watermark’ equal to the market capitalisation used to calculate the most

recent conversion or redemption of Founder Shares, so that the holders of Founders Shares only receive 20% of the incremental increase

in TSR since the previous conversion or redemption.

The calculation of Founder Share Value is made without reference to the 12.5% per annum hurdle so that once the performance condition is

satisfied, the holders of Founder Shares are entitled to share in 20% of the TSR, not just that element of TSR above the hurdle contained in

the performance condition.

Subject to satisfying the performance condition there is no limitation on the amount to be converted into ordinary shares (or otherwise issued

as ordinary shares at nominal value to fulfil the Founder Share Value) or paid out in cash, other than the seven year limit.

Rather than convert the Founder Shares into Ordinary Shares, the Board may elect (subject to compliance with the Companies Act 2014 and

provided the Company has sufficient distributable reserves) to redeem such Founder Shares for payment of a cash equivalent to that holder

of Founder Shares.

All New Ordinary Shares issued in respect of the conversion of Founder Shares are subject to a one year lock-up period, with 50%

of the New Ordinary Shares remaining subject to a further one year lock-up period thereafter.

The holders of Deferred Shares do not have any voting rights and are not entitled to receive dividends other than the right to receive

€1 in aggregate for every €100,000,000,000 paid to the holders of ordinary shares.

108

The Directors present their report to the shareholders together with the audited financial statements for the year ended 31 December 2021.

Principal Activities, Business Review and Future Developments

Cairn Homes plc is one of Ireland’s leading homebuilders, constructing high quality new homes with an emphasis on design, innovation and

customer service. At 31 December 2021, the Group consisted of the Company, Cairn Homes plc, and a number of subsidiaries, which are

detailed in note 26 to the consolidated financial statements. Shareholders are referred to the Chairman’s Statement, Chief Executive Officer’s

Statement and the Chief Financial Officer’s Report which contain a review of operations and the financial performance of the Group for 2021,

the outlook for 2022 and the key performance indicators used to assess the performance of the Group. These are deemed to be incorporated

in the Directors’ Report.

Results for the Year

The Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2021 and the Consolidated

Statement of Financial Position at that date are set out on pages 119 and 120 respectively. The Group’s profit for the year ended 31 December

2021 was €43.2 million (2020: €12.7 million).

Dividends

The Company paid an interim dividend of 2.66 cent per ordinary share on 8 October 2021 to shareholders on the record date of 17 September

2021. The Board have also proposed a final dividend of 2.80 cent per ordinary share for the year ended 31 December 2021. Subject to

shareholder approval at the Company’s Annual General Meeting on 12 May 2022, the proposed final dividend of 2.80 cent per ordinary share

will be paid on 17 May 2022 to ordinary shareholders on the Company’s register at 5.00 p.m. on 22 April 2022.

Directors

The names of the Directors and a biographical note on each appear on pages 74 and 75. In accordance with the provisions contained in the UK

Corporate Governance Code (the “Code”), all Directors at that time retired at the Annual General Meeting of the Company on 18 May 2021 and,

being eligible, offered themselves for re-election, and all were re-elected to the Board on the same day.

Ms Jayne McGivern and Mr Andrew Bernhardt resigned as Directors on 3 September 2021 and 31 December 2021 respectively. Ms Julie

Sinnamon was appointed as a Director on 17 September 2021 and Ms Orla O’Gorman was appointed as a Director on 10 November 2021.

On 3 March 2022, the Company announced that Mr David O’Beirne would not be seeking re-election at the upcoming Annual General Meeting

and as such, will step down from the Board on 12 May 2022.

Any Director appointed to the Board by the Directors will be subject to election by the shareholders at the first Annual General Meeting held

following his/her appointment. Furthermore, under the Company’s Constitution, one third of all Directors must retire by rotation at each

Annual General Meeting and may seek re-election. However, in accordance with the provisions of the Code, the Board has decided that all

Directors should retire at the 2022 Annual General Meeting and offer themselves for re-election.

Directors’ and Company Secretary’s Interests

Details of the Directors’ and Company Secretary’s share interests and interests in unvested share awards of the Company are set out in the

Directors’ Remuneration Report on pages 103 and 107.

Share Dealing

The Company has in place a share dealing code which gives guidance to the Directors and certain employees of the Company to be followed

when dealing in the shares of the Company or any other type of securities issued by or related to the Company. It is designed to ensure that

these individuals neither abuse, nor set themselves under suspicion of abusing, information about the Company which is not in the public

domain. It is also designed to ensure compliance with the EU Market Abuse Regulation (596/2014) which came into effect on 3 July 2016.

A copy of the Share Dealing Code is available on the Company’s website at www.cairnhomes.com.

Share Capital

The Company has four authorised classes of shares: Ordinary Shares; A Ordinary Shares; Founder Shares and Deferred Shares. As at

31 December 2021 and 22 March 2022, the latest practicable date prior to printing this report, the Company had 749,932,223 and 718,596,096

Ordinary Shares in issue respectively, each with a nominal value of €0.001, all of which are of the same class and carry the same rights and

obligations. The Company also had 19,182,149 Founder Shares and 19,980,000 Deferred Shares in issue at the same dates.

The percentage of the total issued share capital represented by each class of shares on the above dates was:

% of Total Issued

Share Capital

Share Class

31 December

2021

22 March

2022

Ordinary Shares 95.04 94.83

Founder Shares 2.43 2.53

Deferred Shares 2.53 2.64

DIRECTORS’ REPORT

109CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Further information on the Company’s share capital, including the rights attached to different classes of shares, is set out in note 17 to

the consolidated financial statements.

The Company has a Long Term Incentive Plan in place, the details of which are set out in the Directors’ Remuneration Report and in note 18

to the consolidated financial statements.

Substantial Shareholdings

As at 31 December 2021 and 22 March 2022, the Company had been notified of the following details of interests of over 3% in the ordinary

share capital of the Company.

Except as disclosed below, the Company has not been notified as at 22 March 2022, the latest practicable date prior to printing this report,

of any interest of 3% or more in its ordinary share capital, nor is it aware of any person who directly or indirectly, jointly or severally,

exercises or could exercise control over the Company.

Shareholder

Notified Holding

22 March 2022 %

Notified Holding

31 December 2021 %

Lansdowne Partners International Ltd 73,383,907 10.21% 68,095,173 9.08%

Fidelity Investments Limited 70,972,927 9.88% 65,465,178 8.73%

Fidelity Management & Research Company 56,759,581 7.90% 56,759,581 7.57%

Ameriprise Financial 54,625,693 7.60% 54,625,693 7.28%

Mr. Alan & Mrs. Deirdre McIntosh

(1)

40,141,46 4 5.59% 40,141,464 5.35%

T. Rowe Price Associates, Inc 36,730,886 5.11% 37,399,952 4.99%

The Capital Group Companies, Inc. 28,685,000 3.99% 50,799,200 6.77%

PM Capital Limited 22,847,283 3.18% 22,847,283 3.05%

Norges Bank 22,446,031 3.12% Below 3% Below 3%

Mr. Michael Stanley 21,644,510 3.01% Below 3% Below 3%

Total Shares in Issuance 718,596,096 749,932,223

(1) Alan McIntosh (Non-Executive Director of Cairn), his spouse Deirdre McIntosh and Emerald Everleigh Limited Partnership (the “LP”), are the beneficial owners of the interests

described above. 500,000 shares are owned by Alan McIntosh directly, 32,897,957 shares are owned by Deirdre McIntosh directly and 6,743,507 shares are owned by the LP.

The LP is ultimately owned by a discretionary trust (constituted under English and Welsh law) and Alan McIntosh and Deirdre McIntosh are the beneficiaries of that trust.

Principal Risks and Uncertainties

Under Irish company law, the Group is required to give a description of the Principal Risks and Uncertainties which it faces. These Principal

Risks and Uncertainties are set out in the Risk Report on pages 62 to 73 and are deemed to be incorporated in the Directors’ Report.

Accounting Records

The Directors are responsible for ensuring that adequate accounting records are maintained by the Group as required by Sections 281-285 of

the Companies Act, 2014. The Directors believe that they have complied with this requirement through the employment of suitably qualified

accounting personnel and the maintenance of appropriate accounting systems. The accounting records of the Company are maintained at the

registered office: 7 Grand Canal, Grand Canal Street Lower, Dublin 2, D02 KW81.

Takeover Regulations 2006

For the purposes of Regulation 21 of Statutory Instrument 255/2006 “European Communities (Takeover Bids (Directive 2004/25/EC))

Regulations 2006”, the details provided on share capital in note 17 to the consolidated financial statements, substantial shareholdings above,

and the disclosures on Directors’ remuneration and interests in the Directors’ Remuneration Report on pages 94 to 107 are deemed to be

incorporated in this section of the Directors’ Report.

Transparency Regulations 2007

For the purposes of information required by Statutory Instrument 277/2007 “Transparency (Directive 2004/109/EC) Regulations 2007”

concerning the development and performance of the Group, the following sections of this Annual Report shall be treated as forming part

of this Directors’ Report:

1. The Chairman’s Statement on pages 06 to 11, the Chief Executive Officer’s Statement on pages 12 to 17 and the Chief Financial Officer’s

Report on pages 60 and 61.

2. The Corporate Governance Report on pages 78 to 86.

3. The Principal Risks and Uncertainties on pages 65 to 72.

4. Details of Earnings Per Share on pages 144 and 145.

5. Details of the Capital Structure of the Company on pages 136 to 138.

Corporate Governance Regulations

As required by company law, the Directors have prepared a Corporate Governance Report which is set out on pages 78 to 86 and which, for

the purposes of Section 1373 of the Companies Act 2014, is deemed to be incorporated in this part of the Directors’ Report. Details of the

capital structure and employee share schemes are included in notes 17 and 18 to the consolidated financial statements respectively.

110

Non-Financial Information Statement

The Group aims to comply with the requirements of the Non-Financial Reporting Directive (SI 360/2017) and these requirements are

addressed throughout the Strategic Report and Corporate Governance Report.

The following non-financial information constitutes our Non-Financial Information Statement, pursuant to the EU Directive 2014/95/EU and covers the

requirements in respect of the environment, people, social and community issues, human rights, anti-bribery & corruption, and is intended to help

stakeholders understand our position on these non-financial matters.

Certain of the non-financial information required pursuant to the EU Directive 2014/95/EU is also provided by reference to the following location:

Non-financial Information Section Pages

Description of our Business Model Business Model 26 and 27

Environmental, Social & Employee Matters Sustainability Report See our website for further information

Human Rights, Bribery & Corruption Sustainability Report See our website for further information

Our Policies Sustainability Report See our website for further information

Principal Risks Risk Report 62 to 73

Non-Financial Key Performance Indicators Our Strategy and Sustainability Report 28 to 49 and within our Sustainability Report

available on our website

Our Annual Report and Sustainability Report collectively contains a range of non-financial information. We have a variety of policies and guidance that

support our key outcomes for all our stakeholders. Policies, guidance and statements of intent are in place to ensure consistent governance and are

available to view within our inaugural Sustainability Report and on our website at www.cairnhomes.com.

DIRECTORS’ REPORT CONTINUED

Directors’ Compliance Statement

The Directors, in accordance with Section 225(2) of the Companies

Act 2014, acknowledge that they are responsible for securing

the Company’s compliance with certain obligations specified in

that section arising from the Companies Act 2014, the Market

Abuse (Directive 2003/6/EC) Regulations 2005, the Prospectus

(Directive 2003/71/EC) Regulations 2005, the Transparency

(Directive 2004/109/EC) Regulations 2007, and Tax laws

(“relevant obligations”).

The Directors confirm that:

• A compliance policy statement has been drawn up setting out the

Group’s policies that in their opinion are appropriate with regard

to such compliance;

• Appropriate arrangements and structures have been put in place

that, in their opinion, are designed to provide reasonable

assurance of compliance in all material respects with those

relevant obligations; and

• A review has been conducted, during the financial year, of those

arrangements and structures.

Going Concern and Longer Term Viability

The Directors’ statements on going concern and longer term

viability are included in the Risk Report on page 73.

Subsidiaries

Information on the Company’s subsidiaries is set out in note 26

to the consolidated financial statements.

Political Contributions

No political contributions were made by the Group during the year

that require disclosure in accordance with the Electoral Acts 1997

to 2002 and the Electoral Political Funding Act 2012.

Post Balance Sheet Events

Information in respect of events since the year end is contained

in note 32 to the consolidated financial statements.

Audit & Risk Committee

The Group has an established Audit & Risk Committee comprising

of four independent Non-Executive Directors. Details of the

Committee and its activities are set out on pages 87 to 90.

External Auditor

KPMG, Chartered Accountants, were appointed statutory auditor on

10 June 2015 and pursuant to Section 383(2) of the Companies Act

2014 will continue in office. A resolution authorising the Directors to

fix their remuneration will be proposed at the forthcoming 2022

Annual General Meeting.

Disclosure of Information to the External Auditor

Each of the Directors who held office at the date of approval of the

Directors’ Report confirms that:

• So far as they are aware, there is no relevant audit information

of which the External Auditor is unaware; and

• That they have taken all steps that they ought to have taken as

a Director to make themselves aware of any relevant audit

information and to establish that the External Auditor is aware

of such information.

Approval of Financial Statements

The Financial Statements were approved by the Board on

25 March 2022.

Signed on behalf of the Board

Michael Stanley

Director

Shane Doherty

Director

111CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

Statement of Directors’ Responsibilities 112

Independent Auditor’s Report 113

Consolidated Statement of Profit or Loss and Other Comprehensive Income 119

Consolidated Statement of Financial Position 120

Consolidated Statement of Changes in Equity 121

Consolidated Statement of Cash Flows 123

Notes to the Consolidated Financial Statements 124

112

The Directors are responsible for preparing the Annual Report and the consolidated and company financial statements, in accordance with

applicable law and regulations.

Company law requires the Directors to prepare consolidated and company financial statements for each financial year. Under that law,

the Directors are required to prepare the consolidated financial statements in accordance with IFRS as adopted by the European Union

and applicable law including Article 4 of the IAS Regulation. The Directors have elected to prepare the company financial statements in

accordance with IFRS as adopted by the European Union, as applied in accordance with the provisions of the Companies Act 2014.

Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the

assets, liabilities and financial position of the Group and Company and of the profit or loss of the Group for that year. In preparing each of the

consolidated and company financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the

financial statements;

• assess the Group’s and Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and

• use the going concern basis of accounting unless they either intend to liquidate the Group or Company or to cease operations, or have no

realistic alternative but to do so.

The Directors are also required by the Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Central

Bank of Ireland to include a management report containing a fair review of the business and a description of the principal risks and

uncertainties facing the Group.

The Directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy at any time the assets,

liabilities, financial position and profit or loss of the Company, and which enable them to ensure that the financial statements of the Company

comply with the provisions of the Companies Acts 2014. The Directors are also responsible for taking all reasonable steps to ensure such

records are kept by the Company’s subsidiaries which enable them to ensure that the financial statements of the Group comply with the

provisions of the Companies Act 2014 and Article 4 of the IAS Regulation. They are also responsible for such internal control as they

determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or

error, and have general responsibility for safeguarding the assets of the Company and the Group, and hence for taking reasonable steps for

the prevention and detection of fraud and other irregularities. The Directors are also responsible for preparing a Directors’ Report that

complies with the requirements of the Companies Act 2014.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group’s and

Company’s website www.cairnhomes.com. Legislation in the Republic of Ireland concerning the preparation and dissemination of financial

statements may differ from legislation in other jurisdictions.

Responsibility Statement as required by the Transparency Directive and UK Corporate Governance Code

Each of the Directors, whose names and functions are listed on pages 74 and 75 of this Annual Report, confirm that, to the best of each

person’s knowledge and belief:

• the consolidated financial statements, prepared in accordance with IFRS as adopted by the European Union, and the company financial

statements, prepared in accordance with IFRS as adopted by the European Union as applied in accordance with the provisions of the

Companies Act 2014, give a true and fair view of the assets, liabilities and financial position of the Group and Company at 31 December

2021 and of the profit of the Group for the year then ended;

• the Directors’ Report contained in the Annual Report includes a fair review of the development and performance of the business

and the position of the Group and Company, together with a description of the principal risks and uncertainties that they face; and

• the Annual Report and Financial Statements, taken as a whole, provides the information necessary to assess the Group’s position

and performance, business model and strategy and is fair, balanced and understandable and provides the information necessary

for shareholders to assess the Company’s position and performance, business model and strategy.

On behalf of the Board

Michael Stanley Shane Doherty

Director Director

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

IN RESPECT OF THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS

113CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Report on the audit of the financial statements

Opinion

We have audited the financial statements of Cairn Homes plc (‘the Company’) and its consolidated undertakings (‘the Group’) for the year

ended 31 December 2021 contained within the reporting package 635400DPX6WP2KKDOA83-2021-12-31-en.zip, which comprise the

consolidated statement of profit or loss and other comprehensive income, the consolidated and company statements of financial position,

the consolidated and company statements of changes in equity, the consolidated and company statements of cash flows and related notes,

including the summary of significant accounting policies set out in note 3 for the Group and note 1 for the Company. The financial reporting

framework that has been applied in their preparation is Irish Law, including the Commission Delegated Regulation 2019/815 regarding the

single electronic reporting format (ESEF), and International Financial Reporting Standards (IFRS) as adopted by the European Union and,

as regards the company financial statements, as applied in accordance with the provisions of the Companies Act 2014.

In our opinion:

• the financial statements give a true and fair view of the assets, liabilities and financial position of the Group and Company as at

31 December 2021 and of the Group’s profit for the year then ended;

• the consolidated financial statements have been properly prepared in accordance with IFRS as adopted by the European Union;

• the company financial statements have been properly prepared in accordance with IFRS as adopted by the European Union,

as applied in accordance with the provisions of the Companies Act 2014; and

• the consolidated financial statements and company financial statements have been properly prepared in accordance with the

requirements of the Companies Act 2014 and, as regards the consolidated financial statements, Article 4 of the IAS Regulation.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland)) and applicable law. Our

responsibilities under those standards are further described in the Auditor’s Responsibilities section of our report. We believe that the

audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is consistent with our report to the

Audit and Risk Committee.

We were appointed as auditor by the Directors on 10 June 2015. The period of total uninterrupted engagement is the six years ended

31 December 2020. We have fulfilled our ethical responsibilities under, and we remained independent of the Group in accordance with, ethical

requirements applicable in Ireland, including the Ethical Standard issued by the Irish Auditing and Accounting Supervisory Authority (IAASA)

as applied to public interest entities. No non-audit services prohibited by that standard were provided.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of

the financial statements is appropriate. In our evaluation of the directors’ assessment of the Group’s and Company’s ability to continue to

adopt the going concern basis of accounting we considered the inherent risks to the Group’s and Company’s business model and analysed

how those risks might affect the Group’s and Company’s financial resources or ability to continue operations over the going concern period.

The risks that we considered most likely to adversely affect the Group’s and Company’s available financial resources over this period were

currently unforeseen factors leading to one or a combination of the following: inability to undertake construction or sales activities for an

extended period of time; material reductions in sales arising from a deterioration in employment levels and consumer confidence; material

reduction in credit availability in the mortgage market; increased materials, labour and finance costs.

We evaluated the going concern assessment by carrying out the following procedures among others:

• considering the cash and undrawn bank loan facilities available to the Group, the related covenants in the facility agreement which are

currently applicable in the going concern period, and the expected ability of the Group to refinance existing bank facilities which are

scheduled to expire on 31 December 2022;

• analysing the base-case scenario cashflow projections prepared by management showing forecast available liquidity and considering

the reasonableness of the underlying assumptions; and

• analysing downside scenario cashflow projections prepared by management illustrating the impact of materially reduced sales compared

to the base-case scenario and examining the reasonableness of management’s conclusion that liquidity would be maintained throughout

the going concern period in this scenario.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually

or collectively, may cast significant doubt on the Group or the Company’s ability to continue as a going concern for a period of at least twelve

months from the date when the financial statements are authorised for issue.

In relation to the Group’s and the Company’s reporting on how they have applied the UK Corporate Governance Code and the Irish Corporate

Governance Annex, we have nothing material to add or draw attention to in relation to the directors’ statement in the financial statements

about whether the directors considered it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections

of this report.

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF CAIRN HOMES PLC

114

Key audit matters: our assessment of risks of material misstatement

Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial statements and

include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had

the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team.

These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we

do not provide a separate opinion on these matters.

The key audit matters are unchanged relative to the prior year. In arriving at our audit opinion above, the key audit matters, in decreasing

order of audit significance, were as follows:

Group: Carrying values of inventories €940.0 million (2020: €968.2 million) and profit recognition

Refer to pages 89 and 90 (Audit and Risk Committee Report), page 128 (accounting policy for inventories) and Note 14 to the consolidated

financial statements (financial disclosures – inventories)

Description of the key audit matter

Inventories consist of the costs of land, materials, design and related production and site development costs to date, less amounts

recognised as cost of sales on properties which have been sold. The carrying value of development land and work in progress depends

on key assumptions relating to forecast selling prices for houses or apartments, site planning (including planning consent), build costs

and other direct cost recoveries, all of which contain an element of uncertainty.

The Group recognises profit on each sale, based on the particular unit sold, by reference to the overall expected site margin. As site

development and the resulting sale of residential units can take place over a number of reporting periods the determination of profit is

dependent on the accuracy of the assumptions used in the forecasts about future selling prices, build costs and other direct costs.

There is a risk that one or all of the assumptions may be inaccurate with a resulting impact on the carrying value of inventories or

the amount of profit recognised.

How the matter was addressed in our audit

Our audit procedures included, among others:

a) We documented our understanding of the processes, and tested the design and implementation of relevant controls, over the accuracy

and completeness of the input data and assumptions made in the Group’s financial models which support the carrying value of

development land and work in progress, and the allocation of costs to individual residential units.

b) We inspected management’s detailed year-end assessments of the net realisable value of development sites. These calculations were

primarily based on residual value calculations whereby the estimated total costs of the development were deducted from total forecast

sales proceeds. We challenged the key data inputs and assumptions in the following ways, among others:

• inspecting forecast residential unit sales prices for consistency with sales prices achieved for similar properties;

• agreeing a sample of forecast costs to supplier agreements or other relevant documentation from third parties and, for sites not yet

in development, considering the consistency of estimates for the major cost categories with the estimates for sites in development;

• evaluating the assumptions in relation to forecast numbers of units to be constructed based on appropriate documentary support;

• enquiring of management as to whether there were any site-specific factors which may indicate that an individual site could be

impaired; and

• considering wider market evidence relating to the demand for housing in Ireland.

c) For sites in development, we compared actual revenues and costs to estimates to assess whether net realisable values were updated and

that the overall expected sales margins were adjusted accordingly. We evaluated the sensitivity of margins on these sites to changes in

sales prices and costs and considered whether this indicated a risk of impairment of the inventories balance.

d) For completed sales in the year, we tested the accuracy of the release from inventories to cost of sales recorded in the general ledger for

consistency with the financial cost models for the relevant sites.

e) For new development land acquisitions in the year, we inspected purchase contracts and other supporting documentation to agree the

costs of acquisition, including related direct purchase costs and we agreed amounts paid to corroborating documentary evidence.

f) We agreed a sample of additions to construction work in progress during the period to invoices/payment certificates and examined

whether these additions were construction related and had been appropriately recorded as part of the costs of the relevant site.

g) We considered the adequacy of the Group’s disclosures regarding the carrying value of development land and work in progress.

We found that the Group had appropriate processes in place to regularly update forecasts of development site profitability to take account of

costs incurred, updated forecast costs to complete and estimated sales prices. We found that the profit margins recognised on sales during

the year appropriately reflected the costs attributable to units sold based on the Group’s financial models.

INDEPENDENT AUDITOR’S REPORT CONTINUED

TO THE MEMBERS OF CAIRN HOMES PLC

115CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

We found that, for sites not yet in development, the assumptions for numbers and mix of units to be built were supported by appropriate

documentation, and the estimates of sales prices and costs used in the assessment of the net realisable value of these sites were reasonable

compared to similar sites in development.

Our audit procedures on the key assumptions underpinning the year-end assessments of the net realisable value of development sites, and

the related sensitivity analysis, did not identify any misstatements in relation to the Group’s conclusion that inventories are stated at the lower

of cost and net realisable value and therefore are not impaired.

We found that the costs of new development site acquisitions during the year, and of the sample of additions to construction work in progress

inspected, were appropriately recorded. We also found that the disclosures in the financial statements relating to inventories are adequate to

provide an understanding of the accounting policy and key assumptions relating to the Group’s inventories and profit recognition.

Group: Revenue recognition €424.0 million (2020: €261.9 million)

Refer to page 128 (accounting policy for revenue) and Note 6 to the consolidated financial statements (financial disclosures – revenue)

Description of the key audit matter

A relatively high proportion of total revenue was recorded in the latter part of the year, which required particular emphasis on the recognition

of revenue in the correct accounting period. Also, as well as traditional sales of residential units to private individuals, the Group has other

types of contractual arrangements with certain customers for the sale of multiple units, which require particular consideration in relation

to the application of the relevant accounting standard.

How the matter was addressed in our audit

Our audit procedures included, among others:

a) We documented our understanding of the processes in relation to revenue recognition. We tested the design and implementation of

relevant controls over the existence of revenue for individual and multiple-unit sales, and the completeness and accuracy of multiple-unit

sales.

b) We agreed a sample of sales of residential units and residential sites to signed contracts and cash proceeds and examined whether there

was appropriate evidence that control over those properties had transferred to customers prior to the year-end, and hence that revenue

had been recognised in the correct accounting period.

c) We evaluated the approach adopted by management in relation to the timing and amount of revenue to be recognised in accordance with

the relevant accounting standard from material contracts with customers for the sale of multiple units. In this regard, we independently

inspected the related contract documentation and considered the appropriate application of the revenue recognition model in the relevant

accounting standard, including whether revenue should be recognised (i) at a point in time or (ii) over time.

We found that the Group had appropriate processes in place in relation to the recording of revenue.

Appropriate documentary evidence was available for all of the sample of sales of residential units and residential sites that we tested and

as a result we found that revenue had been accurately recorded for those sales in the year.

We found that the approach taken in the financial statements by the Group for the recognition of revenue from contracts for the sale of

multiple units, whereby the revenue in the year was recognised at a point in time on legal completion of those particular sales, was consistent

with the requirements of the relevant accounting standard.

Company: Amounts due from subsidiary undertakings €621.6 million (2020: €635.3 million)

Refer to Note 6 to the Company financial statements (financial disclosures – Amounts due from Subsidiary Undertakings).

Description of the key audit matter

The Company financial statements include material amounts due from subsidiary undertakings. Due to the financial position of the Group,

this was not considered to give rise to a significant risk of material misstatement. However, due to the materiality of the amounts due from

subsidiary undertakings in the context of the Company financial statements, this is considered to be the area that had the greatest focus of

our overall audit of the Company financial statements.

How the matter was addressed in our audit

Our audit procedures included among others:

a) We agreed the amounts due from each subsidiary to the counterparty balance as included in the matrix of intercompany balances which

eliminate on consolidation.

b) We reviewed the financial position of each subsidiary undertaking.

c) We considered the results of management’s assessment of the recoverability of intercompany balances and the rationale for their

conclusion that no expected credit loss provision was required.

We found management’s assessment of the carrying value of the amounts due from subsidiary undertakings to be appropriate.

116

Our application of materiality and an overview of the scope of our audit

The materiality for the consolidated financial statements as a whole was set at €2.4 million (2020: €2.4 million). This has been calculated for

the year ended 31 December 2021 with reference to a benchmark of profit before taxation, which is a benchmark typically applied for listed

groups which have reached a mature stage. Materiality represents approximately 4.8% of this benchmark, which we consider to be one of the

principal considerations for members of the Company in assessing the financial performance of the Group.

In the prior year, in our view profit before taxation was not the most appropriate benchmark on which to base materiality because the impact

of Covid-19 significantly reduced the level of profit in 2020. The use of a profit before taxation benchmark for 2020 would have led to a low

level of materiality that was not commensurate with the scale of the Group. We calculated materiality for 2020 with reference to a benchmark

of revenue and it represented approximately 0.9% of that benchmark. In assessing materiality in absolute terms for 2020 we also had regard

to the level of total assets and net assets.

We report to the Audit and Risk Committee any corrected and uncorrected misstatements we identified through our audit with a value in

excess of €0.12 million (2020: €0.12 million), in addition to other audit misstatements below that threshold that we believe warrant reporting

on qualitative grounds.

We subjected all of the Group’s reporting components to audits for group reporting purposes. The work on all components was performed

by the Group audit team.

Materiality for the Company financial statements as a whole was set at €1.6 million (2020: €1.6 million), determined with reference to a

benchmark of total assets, of which it represents 0.24% (2020: 0.24%).

We used materiality to assist us to determine what risks were significant risks and to determine the audit procedures to be performed

including those discussed above.

Other information

The Directors are responsible for the preparation of the other information presented in the Annual Report together with the financial

statements. The other information comprises the information included in the Directors’ Report, 2021 Highlights, At a Glance section,

Chairman’s Statement, Chief Executive Officer’s Statement, Market Overview, Business Model, Our Strategy section, Strategy in Action,

Stakeholder Engagement, Sustainability section, Chief Financial Officer’s Report, Risk Report, Board of Directors section, Senior Leadership

Team section, Corporate Governance Report, Audit & Risk Committee Report, Nomination Committee Report, Directors’ Remuneration

Report and Company Information section.

The financial statements and our auditor’s report thereon do not comprise part of the other information. Our opinion on the financial

statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below,

any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the

information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work

we have not identified material misstatements in the other information.

Based solely on our work on the other information undertaken during the course of the audit, we report that:

• we have not identified material misstatements in the Directors’ Report;

• in our opinion, the information given in the Directors’ Report is consistent with the financial statements; and

• in our opinion, the Directors’ Report has been prepared in accordance with the Companies Act 2014.

Disclosures of principal risks and longer-term viability

Based on the knowledge we acquired during our financial statements audit, we have nothing material to add or draw attention to in relation to:

• the Principal Risks disclosures describing these risks and explaining how they are being managed and mitigated;

• the directors’ confirmation within the Viability Statement on page 73 that they have carried out a robust assessment of the principal

risks facing the Group, including those that would threaten its business model, future performance, solvency and liquidity; and

• the directors’ explanation in the Viability Statement of how they have assessed the prospects of the Group, over what period they have

done so and why they considered that period to be appropriate, and their statement as to whether they have a reasonable expectation that

the Group will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any

related disclosures drawing attention to any necessary qualifications or assumptions.

INDEPENDENT AUDITOR’S REPORT CONTINUED

TO THE MEMBERS OF CAIRN HOMES PLC

117CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Other corporate governance disclosures

We are required to address the following items and report to you in the following circumstances:

• Fair, balanced and understandable: if we have identified material inconsistencies between the knowledge we acquired during our financial

statements audit and the directors’ statement that they consider that the annual report and financial statements taken as a whole is fair,

balanced and understandable and provides the information necessary for shareholders to assess the Group’s position and performance,

business model and strategy;

• Audit and Risk Committee Report: if the section of the Annual Report describing the work of the Audit and Risk Committee does not

appropriately address matters communicated by us to the Audit and Risk Committee;

• Statement of compliance with UK Corporate Governance Code: if the directors’ statement does not properly disclose a departure from

provisions of the UK Corporate Governance Code specified by the Listing Rules of Euronext Dublin and the UK Listing Authority for our

review;

• if the directors’ statement relating to Going Concern required under the Listing Rules of Euronext Dublin and the UK Listing Authority

set out on page 73 is materially inconsistent with our audit knowledge

We have nothing to report in these respects.

In addition as required by the Companies Act 2014, we report, in relation to information given in the Corporate Governance Report on pages

78 to 86 and the Directors’ Report, that:

• based on the work undertaken for our audit, in our opinion, the description of the main features of internal control and risk management

systems in relation to the financial reporting process, and information relating to voting rights and other matters required by the European

Communities (Takeover Bids (Directive 2004/EC) Regulations 2006 and specified for our consideration, is consistent with the financial

statements and has been prepared in accordance with the Act;

• based on our knowledge and understanding of the company and its environment obtained in the course of our audit, we have not identified

any material misstatements in that information; and

• the Directors’ Report contains the information required by the European Union (Disclosure of Non-Financial and Diversity Information

by certain large undertakings and groups) Regulations 2017.

We also report that, based on work undertaken for our audit, the information required by the Act is contained in the Corporate Governance

Report.

Our opinions on other matters prescribed by the Companies Act 2014 are unmodified

We have obtained all the information and explanations which we consider necessary for the purpose of our audit.

In our opinion, the accounting records of the Company were sufficient to permit the financial statements to be readily and properly audited

and the financial statements are in agreement with the accounting records.

We have nothing to report on other matters on which we are required to report by exception

The Companies Act 2014 requires us to report to you if, in our opinion:

• the disclosures of directors’ remuneration and transactions required by Sections 305 to 312 of the Act are not made;

• the Company has not provided the information required by Section 1110N in relation to its remuneration report for the financial year

ended 31 December 2020.

We have nothing to report in this regard.

The Listing Rules of Euronext Dublin and the UK Listing Authority require us to review:

• the Directors’ Statements, set out on page 73 in relation to going concern and longer-term viability;

• the part of the Corporate Governance Report on pages 78 to 86 relating to the Company’s compliance with the provisions

of the UK Corporate Governance Code and the Irish Corporate Governance Annex specified for our review; and

• certain elements of disclosures in the report to shareholders by the Remuneration Committee of the Board of Directors.

We have nothing to report in this regard.

Respective responsibilities and restrictions on use

Directors’ responsibilities

As explained more fully in their statement set out on page 112, the directors are responsible for: the preparation of the financial statements

including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of

financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group’s and Company’s ability

to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting

unless they either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

118

Auditor’s responsibilities

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,

whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not

guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a material misstatement when it exists. Misstatements

can arise from fraud, other irregularities or error and are considered material if, individually or in aggregate, they could reasonably be

expected to influence the economic decisions of users taken on the basis of the financial statements. The risk of not detecting a material

misstatement resulting from fraud or other irregularities is higher than for one resulting from error, as they may involve collusion, forgery,

intentional omissions, misrepresentations, or the override of internal control and may involve any area of law and regulation and not just

those directly affecting the financial statements.

A fuller description of our responsibilities is provided on IAASA’s website at http://www.iaasa.ie/Publications/Auditing-standards/

International-Standards-on-Auditing-for-use-in-Ire/Description-of-the-auditor-s-responsibilities-for

The purpose of our audit work and to whom we owe our responsibilities

Our report is made solely to the Company’s members, as a body, in accordance with Section 391 of the Companies Act 2014. Our audit work

has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report

and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company

and the Company’s members, as a body, for our audit work, for our report, or for the opinions we have formed.

Ryan McCarthy

for and on behalf of

KPMG

Chartered Accountants, Statutory Audit Firm

1 Stokes Place

St. Stephen’s Green

Dublin 2

25 March 2022

INDEPENDENT AUDITOR’S REPORT CONTINUED

TO THE MEMBERS OF CAIRN HOMES PLC

119CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Note

2021

€’000

2020

€’000

Continuing operations

Revenue

6 423, 983

261,883

Cost of sales (3 4 0 ,112) (2 19,1 8 0)

Gross profit 83,871 4 2 ,7 0 3

Administrative expenses

7 (25, 4 8 9) (18 , 2 5 7)

Operating profit 58,382 24,44 6

Finance costs

8 (8 ,1 4 7) (9 ,660)

Profit before taxation 5 0,235 14 ,7 8 6

Tax charge

10 (6 ,9 94) (2,07 7)

Profit for the year attributable to owners of the Company 4 3 , 2 41 12 , 7 0 9

Other comprehensive income – –

Total comprehensive income for the year attributable to owners of the Company 4 3 , 2 41 12 ,7 0 9

Basic earnings per share

27 5.8 cent 1.7 cent

Diluted earnings per share

27 5.8 cent 1.7 cent

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2021

120

Note

2021

€’000

2020

€’000

Assets

Non-current assets

Property, plant and equipment

11 1 ,1 6 5 1, 4 47

Right of use assets

12 49 0 722

Intangible assets

13 1 ,434 552

3,089 2 ,7 21

Current assets

Inventories

14 9 40,000 9 6 8 ,1 8 4

Trade and other receivables

15 28, 482 11, 3 8 8

Current taxation 1, 3 7 9 2,028

Cash and cash equivalents

16 40,02 8 3 4,526

1 ,009 ,8 89 1, 0 16 , 12 6

Total assets 1, 0 12 ,9 7 8 1, 0 18 , 8 47

Equity

Share capital

17 789 788

Share premium

17 1 9 9, 616 1 9 9, 61 6

Other undenominated capital

17 40 40

Share-based payment reserve

18 11 , 7 9 5 7, 5 7 2

Retained earnings 566,5 37 5 42,5 56

Total equity 778, 777 75 0,572

Liabilities

Non-current liabilities

Loans and borrowings

19 72,46 1 2 0 2 ,7 9 3

Lease liabilities

20 74 49 0

Deferred taxation

22 3,808 4,562

76 , 3 4 3 2 0 7, 8 4 5

Current liabilities

Loans and borrowings

19 7 7, 0 9 4 –

Lease liabilities

20 558 334

Trade and other payables

23 80,20 6 60,09 6

15 7, 8 5 8 60,430

Total liabilities 234,20 1 268,2 75

Total equity and liabilities 1, 0 12 ,9 7 8 1, 0 18 , 8 47

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 31 DECEMBER 2021

121CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Attributable to owners of the Company

Share Capital

premium

€’000

Other

undenom-

inated

capital

€’000

Share-

based

payment

reserve

€’000

Retained

earnings

€’000

Total

€’000

Ordinary

€’000

Deferred

€’000

Founder

€’000

As at 1 January 2021 749 20 19 1 9 9 , 61 6 40 7, 5 7 2 54 2,556 750,5 72

Total comprehensive income for the year

Profit for the year – – – – – – 4 3 , 2 41 4 3 , 2 41

– – – – – – 4 3 , 2 41 4 3 , 2 41

Transactions with owners of the Company

Equity-settled share-based payments

(Note 18) – – – – – 4 , 9 11 – 4 ,9 11

Shares issued on vesting of share awards 1 – – – – – – 1

Transfer from share-based payment reserve

to retained earnings re vesting or lapsing of

share awards – – – – – (68 8) 688 –

Dividends paid to shareholders (Note 24) – – – – – – (19,9 4 8) (19,9 4 8)

1 – – – – 4 ,223 (19, 2 6 0) (1 5,036)

As at 31 December 2021 750 20 19 1 9 9, 616 40 11 , 7 9 5 5 66,537 778, 777

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2021

122

Attributable to owners of the Company

Share Capital

premium

€’000

Other

undenom-

inated

capital

€’000

Share-

based

payment

reserve

€’000

Retained

earnings

€’000

Total

€’000

Non-

controlling

interests

€’000

Total

equity

€’000

Ordinary

€’000

Deferred

€’000

Founder

€’000

As at 1 January 2020 771 20 19 19 9, 61 6 18 8,00 2 5 52 ,7 96 7 61 , 2 4 2 2 , 496 76 3 ,7 3 8

Total comprehensive

income for the year

Profit for the year – – – – – – 1 2 , 709 1 2, 709 – 1 2,709

– – – – – – 1 2 , 709 1 2, 709 – 1 2 , 709

Transactions with

owners of the

Company

Purchase of own shares

(Note 17) (22) – – – 22 – (2 3,3 4 6) (23, 346) – (23 ,346)

Equity-settled share-

based payments

(Note 18) – – – – – (3 3) – (3 3) – (33)

Transfer from share-

based payment

reserve to retained

earnings re vesting or

lapsing of share

awards – – – – – (397) 397 – – –

Acquisition of shares in

subsidiary from

non-controlling

shareholder (Note 28) – – – – – – – – (2 ,496) (2 , 496)

(22) – – – 22 (4 30) (2 2 ,94 9) (2 3, 3 79) (2 , 496) (25, 875)

As at 31 December 2020 749 20 19 1 9 9 , 61 6 40 7, 5 7 2 542 ,556 750,572 – 750,572

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2020

123CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

2021

€’000

2020

€’000

Cash flows from operating activities

Profit for the year 4 3 , 2 41 12 , 7 0 9

Adjustments for:

Share-based payments expense/(credit) 3 , 499 (277)

Finance costs 8 ,1 4 7 9 ,660

Depreciation of property, plant and equipment 205 203

Depreciation of right of use assets 404 3 61

Amortisation of intangible assets 200 13 5

Taxation 6 ,9 94 2,077

62 , 69 0 24 ,868

Decrease/(increase) in inventories 30 ,0 81 (7 0 ,1 76)

(Increase)/decrease in trade and other receivables (1 7, 0 9 4) 313

Increase in trade and other payables 1 9,9 3 8 8 , 410

Tax paid (7, 0 9 8) (3 ,9 7 3)

Net cash from/(used in) operating activities 8 8 , 517 (40,558)

Cash flows from investing activities

Purchases of property, plant and equipment (41 0) (18 2)

Purchases of intangible assets (1,0 8 2) (14)

Net cash used in investing activities (1, 49 2) (196)

Cash flows from financing activities

Purchase of own shares – (2 3 ,7 51)

Proceeds from loans and borrowings 1 70, 000 1 9 4,000

Repayment of loans and borrowings (224, 000) (1 40,000)

Acquisition of shares in subsidiary from non-controlling shareholder – (2, 496)

Dividends paid (19, 94 8) –

Repayment of lease liabilities (36 4) (314)

Interest and other finance costs paid (7, 2 11) (8 ,969)

Net cash (used in)/from financing activities (8 1,5 2 3) 18 , 47 0

Net increase/(decrease) in cash and cash equivalents in the year 5,502 (22 ,284)

Cash and cash equivalents at beginning of the year 34,526 5 6 , 810

Cash and cash equivalents at end of the year 40,02 8 34,5 26

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2021

124

1. Basis of Preparation 125

2. Key Judgements and Estimates 126

3. Significant Accounting Policies 126

4. Measurement of Fair Values 131

5. Segmental Information 131

6. Revenue 131

7. Administrative Expenses 131

8. Finance Costs 132

9. Statutory and Other Information 132

10. Taxation 133

11. Property, Plant and Equipment 133

12. Right of Use Assets 134

13. Intangible Assets 135

14. Inventories 135

15. Trade and Other Receivables 136

16. Cash and Cash Equivalents 136

17. Share Capital and Share Premium 136

18. Share-Based Payments 138

19. Loans and Borrowings 140

20. Lease Liabilities 140

21. Reconciliation of Movement of Liabilities to Cash Flows Arising from Financing Activities 141

22. Deferred Taxation 142

23. Trade and Other Payables 143

24. Dividends 143

25. Related Party Transactions 143

26. Group Entities 144

27. Earnings Per Share 144

28. Non-Controlling Interests 145

29. Financial Instruments and Risk Management 145

30. Other Commitments and Contingent Liabilities 149

31. Profit or Loss of the Parent Company 149

32. Events After the Reporting Period 149

33. Approval of Financial Statements 149

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

125CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

1. Basis of Preparation

(a) Reporting entity

Cairn Homes plc (“the Company”) is a company domiciled in Ireland. The Company’s registered office is 7 Grand Canal, Grand Canal Street

Lower, Dublin 2, D02 KW81. These consolidated financial statements cover the year ended 31 December 2021 for the Company and its

subsidiaries (together referred to as “the Group”). The Group is predominantly involved in the development of residential property for sale.

(b) Statement of compliance

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and their

interpretations approved by the International Accounting Standards Board (IASB), as adopted by the European Union (EU), and those parts of

the Companies Act 2014 applicable to companies reporting under IFRS and Article 4 of the IAS Regulation.

The following standards and interpretations were effective for the Group for the first time from 1 January 2021. They did not have a material

effect on the consolidated results of the Group:

• Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16

Interest Rate Benchmark Reform

– Phase 2;

• Amendments to IFRS 16, COVID-19

Related Rent Concessions beyond 30 June 2021

;

• Amendments to IFRS 4 Insurance Contracts – deferral of effective date of IFRS 9;

The following standards and interpretations are not yet endorsed by the EU. The potential impact of these standards on the Group is

under review:

• Amendments to IAS 1

Classification of Liabilities as Current or Non-current

;

• Amendments to IFRS 17,

Insurance contracts

: Initial application of IFRS 17 and IFRS 9;

• Amendments to IAS 1 and IFRS Practice Statement 2,

Disclosure of Accounting Policies

;

• Amendments to IAS 8,

Definition of Accounting Estimates

;

• Amendments to IAS 12,

Deferred Tax related to Assets and Liabilities arising from a single transaction

;

• Amendments to IFRS 10 and IAS 28,

Sale of contribution of Assets between an investor and its Associate or Joint Venture

;

The following amendments to standards have been endorsed by the EU, and are effective from 1 January 2022. The Group has not adopted

these amendments early. The potential impact of these amendments on the Group is under review:

• A number of narrow-scope amendments to IFRS 3, IAS 16 and some annual improvements on IFRS 1, IFRS 9, IAS 41 and IFRS 16;

• Amendments to IAS 37 Onerous contracts, clarification on cost of fulfilling contracts.

(d) Functional and presentation currency

These consolidated financial statements are presented in Euro, which is the functional currency of the Company and presentation currency

of the Group, rounded to the nearest thousand.

(e) Going concern basis of accounting

The COVID-19 pandemic has had an impact on the Group during the year ended 31 December 2021, resulting in an interruption in

development activity in the earlier part of the year. The Group entered the COVID-19 pandemic from a position of strength and continues

to operate from that position with a long-term strategy that focuses on minimising financial risk and maintaining financial flexibility.

The business has strong liquidity, a robust balance sheet and sustainable, lowly leveraged debt facilities.

To mitigate any risk the Group applies a prudent cash management policy ensuring the production activities in the near term are focused

towards forward sold inventories, inventories which will continue to be attractive to buyers, and directing housing production pipeline

towards new family homes which are at the lower end of the price band. The Group has also expanded its regional footprint during 2021

with further expansion planned in 2022 and continues to have a broad and widening customer base.

The Group did not avail of any wage subsidy support from the Irish Government during 2021 or 2020.

The Group held €40 million of cash at 31 December 2021 (31 December 2020: €34.5 million) and has strong liquidity with the Group’s

loan facilities being repayable between 31 December 2022 and 31 July 2026. While some of the Group’s loan facilities are repayable on

31 December 2022, a refinancing process is underway. This is considered to be a routine matter with no foreseeable issues given the

Group’s financial position and strong outlook. The Group had undrawn revolving credit facilities of €194 million as at 31 December 2021

(€140 million as at 31 December 2020).

126

1. Basis of Preparation continued

(e) Going concern basis of accounting continued

During the thirteen-week shutdown period at the beginning of the year during which the majority of the Group’s construction sites were

closed or operating at significantly reduced capacity (some construction activity continued on new homes contracted to close by 31 January

2021, social homes contracted to close by 31 March 2021 and utility connections during this period), the Group successfully maintained

operational momentum, making detailed preparations for a safe return to work, which allowed build programmes to restart efficiently on

a phased basis from 12 April 2021. All residential sites were successfully reopened, under strict compliance with operating procedures

adhering to social distancing requirements. The Group also commenced construction on two new sites in the second half of the year and five

new sites since the start of 2022. While COVID-19 has had an impact on gross and operating margins, the business has recovered well and

has seen an improvement in gross margins, a strong recovery in sales and an increase in profitability when compared the prior year.

The Group is also encouraged by the level of underlying demand in the market as evidenced by the strength of our forward sales pipeline.

This level of demand continued into the early months of 2022 with our enquiry lists across all our active selling sites remaining at historic

highs and particularly strong interest in our starter home and trade-up/down commuter locations.

The Directors have carried out a robust assessment of the principal risks facing the Group and have considered the impact of these risks on

the going concern of the business. In making this assessment, consideration has been given to the uncertainty inherent in financial

forecasting including future market conditions for construction costs and sales prices. Where appropriate, severe but plausible

downside-sensitivities have been applied to the key factors affecting the future financial performance of the Group.

Having considered the Group’s forecasts and significant liquidity, the Directors have a reasonable expectation that the Group has adequate

resources to continue in operational existence for the foreseeable future. Accordingly, they are satisfied that it is appropriate to continue to

adopt the going concern basis in preparing these consolidated financial statements and there are no material uncertainties in that regard

which are required to be disclosed.

The significant accounting policies applied in the preparation of these financial statements are set out in Note 3.

2. Key Judgements and Estimates

The preparation of consolidated financial statements requires management to make judgements, estimates and assumptions that affect the

application of policies and reported amounts of assets, liabilities, income and expenses. Actual results could differ materially from these

estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.

The significant accounting judgement impacting these financial statements is:

• scale and mix of each development and the achievement of associated planning permissions.

This may involve assumptions on new or amended planning permission applications. This judgement then feeds into the process of

forecasting expected profitability by development which is used to determine the profit that the Group is able to recognise on its

developments in each reporting period and the net realisable value of inventories.

The key sources of estimation uncertainty impacting these financial statements are:

• forecast selling prices; and

• carrying value of inventories and allocations from inventories to cost of sales (see notes 3 (f) and 14).

Due to the nature of the Group’s activities and, in particular the scale of its development costs and the length of the development cycle,

the Group has to allocate site-wide development costs between units completed in the current year and those in future years. It also has

to forecast the costs to complete on such developments and make estimates relating to future sales prices. Forecast selling prices are

inherently uncertain due to changes in market conditions. These estimates impact management’s assessment of the net realisable value

of the Group’s inventories and also determine the extent of profit or loss that should be recognised in respect of each development in each

reporting period. Note 14 includes disclosures on the impact of COVID-19 on judgements and estimates in relation to profit margins and

carrying values of inventories.

In making such assessments and allocations, there is a degree of inherent estimation uncertainty. The Group has developed internal

controls designed to effectively assess and review profit recognition and carrying values of inventories including the appropriateness

of estimates made.

3. Significant Accounting Policies

The accounting policies set out below have been applied in these financial statements.

(a) Basis of consolidation

The consolidated financial statements include the results of Cairn Homes plc and all its subsidiary undertakings for the year ended

31 December 2021.

Business combinations

The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration

transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Goodwill arising on consolidation

represents the excess of the fair value of the consideration over the fair value of the separately identifiable net assets and liabilities acquired.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2021

127CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

3. Significant Accounting Policies continued

(a) Basis of consolidation continued

Business combinations continued

Any goodwill that arises is capitalised and tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss

immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally

recognised in profit or loss.

Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration is classified

as equity, then it is not remeasured, and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of

contingent consideration that meets the definition of a financial instrument are recognised in profit or loss.

Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns

from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements

of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which

control ceases. Changes in the ownership interest in a subsidiary that do not result in loss of control are recognised in equity.

Non-controlling interests, as stated in the statement of financial position, represents the portion of the equity of subsidiaries which is not

attributable to the owners of the Company.

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated.

(b) Property, plant and equipment

Property, plant and equipment are initially recognised at cost. Depreciation is provided using the straight-line method to write off the cost

less any residual value over the estimated useful life of the asset on the following basis:

• Leasehold improvements 7 years;

• Motor vehicles 4 years; and

• Computers & equipment 3-7 years

The assets’ useful economic lives and residual values are reviewed and adjusted, if appropriate, at each financial reporting date.

An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.

All assets held by the Group under lease agreements which are greater than twelve months in duration are recognised as right-of-use assets

within the statement of financial position representing its rights to use the underlying asset. The present value of future payments to be made

under those lease agreements is recognised as a liability representing its obligation to make lease payments.

The Group recognises a right-of-use asset and a lease liability at the lease commencement date or date of application of IFRS 16 if later. The

lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using

the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. The lease liability is

subsequently increased by the interest costs on the lease liability and decreased by the lease payments made. The right-of-use asset is initially

measured at cost, which comprises the initial amount of the lease liability plus any initial direct costs, and subsequently at cost less accumulated

depreciation. Depreciation is charged on a straight-line basis over the lease term from the lease commencement date.

The right-of-use asset and lease liability recognised under IFRS 16 represents the Group’s lease on the central support office and leased

vehicles. The right-of-use assets and related lease liabilities have been determined by discounting the lease payments over the expected

term of the leases at discount rates reflecting the Group’s incremental borrowing rate at inception.

(d) Intangible assets

Computer software

Acquired computer software is capitalised as intangible assets on the basis of the costs incurred to acquire and bring to use the

specific software.

Costs that are directly attributable to the production of identifiable and unique software products controlled by the Group, and that will

probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets.

Computer software costs are amortised over their estimated useful lives from seven to ten years for specialised software which is expected

to provide benefits over those periods. Other costs in respect of computer software are recognised as an expense or capitalised as part of

inventory costs as incurred.

128

3. Significant Accounting Policies continued

(d) Intangible assets continued

Computer software continued

The assets’ useful lives and residual values are reviewed and adjusted, if appropriate, at each financial reporting date. An impairment loss is

recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.

(e) Revenue

Revenue represents the fair value of consideration received or receivable, net of value-added tax. Revenue is recognised at the point in time

when control over the property has been transferred to the customer, which occurs at legal completion. Revenue is measured at the

transaction price agreed under the contract.

Booking and contract deposits on units sold by the Group are held by the Group’s legal advisors, externally to the Group, until legal

completion of the sale, at which point all such deposits and the final payment are paid to the Group and recognised as revenue. Where a

contract, on which a contract deposit has been paid, is not completed, the Group will recognise the forfeited deposit (arising in accordance

with the contract’s terms) as revenue. Where a multiple unit contract involves a number of phases being delivered over phased delivery

dates, the Group recognises revenue on legal completion of each phase when control passes to the customer, with each phase having its

own pre-agreed pricing for a defined number of units and a pre-determined handover date. Rental income is recognised on a straight-line

basis over the life of the operating lease. This income principally arises from properties let on a short-term basis.

(f) Inventories

Units in the course of development and completed units are valued at the lower of cost and net realisable value. Cost includes the cost of land,

raw materials, stamp duty, direct labour, direct wages and salaries and development costs, but excludes indirect overheads. Land purchased

for development, including land in the course of development, is initially recorded at cost. For development property acquired through

business combinations, cost is the sum of the fair value at acquisition plus subsequent direct costs. The Group’s developments can take place

over several reporting periods and the Group has to allocate site-wide development costs between units built in the current year and in future

years. It also has to estimate the costs to completion of such developments. In making these assessments, which impact on estimating the

appropriate amounts from inventories to be recognised as cost of sales on units sold, there is a degree of inherent uncertainty.

The Group is predominantly involved in the development of residential property units for sale. Because the nature of such individual units is

that they are produced in large quantities on a repetitive basis over a relatively short period of time, the Group’s inventories are not

considered to be qualifying assets for the purposes of capitalisation of borrowing costs.

Inventories are carried at the lower of cost and net realisable value, such that provision is made, where appropriate, to reduce the value of

inventories to their net realisable value.

Where a site has commenced selling units, the Group compares the margin recognised on a site in the year to the forecast margin on a site

over the life of the development, taking account of updated sales prices and cost estimates. Where a site has not yet commenced selling,

the Group compares the most recent forecast to prior forecasts for that site. The Group assesses whether any such updated margin

forecasts indicate that the inventory balance needs to be adjusted to reflect the net realisable value.

Where a site purchased for redevelopment includes existing rental properties which will be demolished or vacated as part of the planned

redevelopment of the site, the full cost of the site is classified within inventories.

Contract deposits for purchases of development property are recognised as deposits when paid and are transferred to inventories on legal

completion of the contract when the remainder of the contract price is paid.

(g) Share-based payments

The Group has issued equity-settled share-based payments to certain employees (long-term incentive awards, restricted share unit awards

and share options) and founders (Founder Shares).

The grant-date fair value of equity-settled share-based payment awards granted to employees is generally recognised as an expense, with

a corresponding increase in equity over the vesting period of the awards. The amounts recognised as an expense are adjusted to reflect the

number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount

ultimately recognised is based on the number of awards that meet the related service and non-market performance conditions, where

applicable at the vesting date.

The amount recognised as an expense is not adjusted for market conditions not being met. For share-based payment awards with

non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there is no

true-up for differences between expected and actual outcomes.

(h) Taxation

Tax expense comprises current tax and deferred tax. Tax expense is recognised in profit or loss except to the extent that it relates to a

business combination or items recognised in other comprehensive income or equity.

Current tax is the expected tax payable on taxable profit or loss for the period and any adjustment to tax payable in respect of previous years.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2021

129CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

3. Significant Accounting Policies continued

(h) Taxation continued

It is measured using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting

purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:

• temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects

neither accounting nor taxable profit or loss;

• temporary differences relating to investments in subsidiaries to the extent that the Group is able to control the timing of the reversal of

the temporary differences and it is probable that they will not reverse in the foreseeable future; and

• taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is

probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date

and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the

probability of future taxable profits improves. Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the

extent that it has become probable that future taxable profits will be available against which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted

or substantively enacted at the reporting date. The measurement of deferred tax reflects the tax consequences that would follow from the

manner in which the Group expects, at the reporting date, to recover or settle the carrying amounts of its assets and liabilities.

The measurement of uncertain tax positions within tax assets and liabilities requires judgement in interpreting tax legislation and current

case law in order to estimate the amount to be recognised. In line with accounting standards, the Group reflects the effect of an uncertainty

using either the ‘most likely amount’ method or the ‘expected value’ method, as appropriate for the particular uncertainty.

(i) Pensions

The Group operates defined contribution schemes for employees. The Group’s contributions to the schemes are charged to profit or loss in

the year in which the contributions fall due.

(j) Construction bonds receivables

Construction bonds are development bonds that are put in place with local authorities or utilities providers until sites are fully completed and

conditions of planning have been met. All construction bonds are considered current assets as they will be realised in the Group’s normal

operating cycle, which is such that a proportion of construction bonds will not be recovered within 12 months. Construction bonds not

recoverable in 12 months are disclosed in note 15.

(k) Cash and cash equivalents

Cash and cash equivalents include cash and bank balances in bank accounts with no notice or on short-term deposits which are subject to

insignificant risk of changes in value.

Any cash and bank balances that are not available for use by the Group are presented as restricted cash. Amounts of restricted cash which

are restricted from being exchanged or used to settle a liability for at least 12 months after the end of the reporting year are classified as

non-current assets.

(l) Provisions

Provisions are recognised in the statement of financial position when the Group has a present legal or constructive obligation as a result

of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount can be

reliably estimated.

(m) Ordinary shares

Incremental costs directly attributable to the issue of ordinary shares, net of any tax effects, are recognised as a deduction from equity

through retained earnings.

(n) Exceptional items

Items that are material in size and unusual or infrequent are presented as exceptional items in the statement of profit or loss and other

comprehensive income. The Directors are of the opinion that the separate presentation of exceptional items, where applicable, provides

helpful information about the Group’s underlying business performance.

(o) Segmental reporting

Operating segments are reported in a manner consistent with the internal organisational and management structure and the internal

reporting information provided to the Chief Operating Decision Maker (“CODM”) (designated as the Board of Directors), which is responsible

for allocating resources and assessing performance of operating segments.

130

3. Significant Accounting Policies continued

(p) Finance income and costs

Interest income and expense is recognised using the effective interest method. The effective interest method is a method of calculating the

amortised cost of a financial asset or financial liability (or group of financial assets or financial liabilities) and of allocating the interest income,

interest expense and fees paid and received over the relevant period. Commitment fees in relation to undrawn loan facilities are accounted

for on the accruals basis, within finance costs.

The Group is required to capitalise borrowing costs directly attributable to the acquisition, construction and production of a qualifying asset,

as part of the costs of that asset. Inventories which are produced in large quantities on a repetitive basis over a short period of time are not

qualifying assets. The Group does not generally produce qualifying assets.

(q) Financial instruments

(i) Financial assets and financial liabilities

Under IFRS 9, financial assets and financial liabilities are initially recognised at fair value and are subsequently measured based on their

classification as described below. Their classification depends on the purpose for which the financial instruments were acquired or issued,

their characteristics and the Group’s designation of such instruments. IFRS 9 requires that all financial assets and financial liabilities be

classified as fair value through profit or loss (“FVTPL”), amortised cost or fair value through other comprehensive income (“FVOCI”).

(ii) Classification of financial instruments

The following summarises the classification and measurement the Group has elected to apply to each of its significant categories of

financial instruments:

Type IFRS 9 classification

Financial assets

Cash and cash equivalents Amortised cost

Trade and other receivables Amortised cost

Financial liabilities

Loans and borrowings Amortised cost

Trade payables and accruals, including deferred consideration Amortised cost

Amounts owed to related parties Amortised cost

(iii) Trade and other receivables

Trade and other receivables are initially recognised at fair value when they are originated and are subsequently measured at amortised cost

using the effective interest method. The amortised cost is reduced by impairment losses, which are measured using an expected credit loss

model. Any interest income and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

(iv) Financial liabilities

Financial liabilities are initially recognised at fair value and are subsequently measured at amortised cost using the effective interest method.

(v) Derecognition and modification of financial liabilities

The Group derecognises a financial liability when it is extinguished (when its contractual obligations are discharged or cancelled, or expire).

The Group also derecognises a financial liability when there is a substantial modification of the liability. A substantial modification is deemed

to have occurred when the present value of the cash flows under the modified terms, discounted using the original effective interest rate, is at

least 10% different from the discounted present value of the remaining cash flows under the original terms. If the financial liability is deemed

to have been substantially modified, a new financial liability is recognised at fair value. The difference between this fair value and the previous

carrying amount of the financial liability prior to its derecognition is recognised in profit or loss.

A non-substantial modification of a financial liability is deemed to have occurred when the present value of the cash flows under the modified

terms, discounted using the original effective interest rate, is less than 10% different from the discounted present value of the remaining

cash flows under the original terms, and there are no other qualitative factors which indicate that a substantial modification has occurred.

For non-substantial modifications, the amortised cost of the liability is recalculated by discounting the modified cash flows at the original

effective interest rate and any resulting gain or loss is recognised in profit or loss. For non-substantial modifications where the impact is that

the interest on floating rate liabilities has been repriced at current market terms, the original effective interest rate is adjusted to reflect the

current market terms at the time of the modification. Any costs and fees directly attributable to the modification of the financial liability are

recognised as an adjustment to the carrying amount of the modified financial liability and amortised over its remaining term under the

effective interest method. Any unamortised costs attributable to the original financial liability, with the exception of unamortised

arrangement fees, are recognised as an adjustment to the carrying amount of the modified financial liability and amortised over the

remaining term of the modified liability under the effective interest method. Unamortised arrangement fees relating to the original

financial liability are recognised in profit or loss on modification.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2021

131CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

4. Measurement of Fair Values

Certain of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets

and liabilities. Fair value is defined in IFRS 13,

Fair Value Measurement

, as the price that would be received to sell an asset or paid to transfer

a liability in an orderly transaction between market participants at the measurement date. When measuring the fair value of an asset or a

liability, the Group uses observable market data as far as possible.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques, as follows:

•

Level 1:

quoted prices, (unadjusted) in active markets for identical assets or liabilities;

•

Level 2:

inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices)

or indirectly (i.e. derived from prices); and

•

Level 3:

inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value

measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the

entire measurement.

The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting year during which the change

has occurred.

Further disclosures about the assumptions made in measuring fair values are included in Note 29 Financial Instruments and

Risk Management.

5. Segmental Information

Segmental information is presented on the same basis as that used for internal reporting purposes.

Operating segments

are reported in a

manner consistent with the internal reporting provided to the CODM. The CODM has been identified as the Board of Directors of the Company.

Having considered the criteria in IFRS 8 Operating Segments and considering how the Group manages its business and allocates resources,

the Group has determined that it has one reportable segment. The Group is managed as a single business unit, building and property

development. As the Group operates in a single geographic market, Ireland, no geographical segmentation is provided.

6. Revenue

2021

€’000

2020

€’000

Residential property sales 419,406 246,881

Residential site and other sales 4,217 14,651

Revenue from contracts with customers 423,623 261,532

Other revenue

Income from property rental 360 351

423,983 261,88 3

2021

€’000

2020

€’000

Residential property sales

Houses 220,306 211,522

Apartments 199,100 35,359

419,406 246,881

7. Administrative Expenses

2021

€’000

2020

€’000

Employee benefits expense (Note 9) 16,911 10,170

Other expenses 8,578 8,087

25,489 18,257

132

8. Finance Costs

2021

Total

€’000

2020

Total

€’000

Interest expense on financial liabilities measured at amortised cost 6,671 9,061

Other finance costs 1,451 569

Interest on lease liabilities 25 30

8,147 9,660

Interest expense includes interest and amortised arrangement fees and issue costs on the drawn term loans, revolving credit facility and

loan notes. Other finance costs include commitment fees on the undrawn element of the revolving credit facility.

9. Statutory and Other Information

(i) Employees

The average number of persons employed by the Group (including Executive Directors) during the year was:

2021 2020

Number of employees 239 209

The aggregate payroll costs of these employees were:

2021

€’000

2020

€’000

Wages and salaries 24,251 20,158

Social welfare costs 2,713 2,115

Pension costs – defined contribution schemes 906 853

Share-based payments charge/(credit) 4,911 (33)

32,781 23,093

Amounts capitalised into inventories (15,703) (12,923)

Amounts capitalised into intangibles (167) –

Employee benefits expense 16,911 10,170

(ii) Other information

2021

€’000

2020

€’000

Net foreign currency loss/(gains) recognised in profit or loss 47 (3)

Auditor’s remuneration

Audit of Group, Company and subsidiary financial statements 308 295

Other assurance services 20 20

Tax advisory services 68 30

Other non-audit services 98 48

494 393

Auditor’s remuneration for the audit of the Company financial statements was €15,000 (2020: €15,000).

Directors’ remuneration

Salaries, fees and other emoluments 2,519 1,523

Pension contributions – defined contribution schemes 120 126

2,639 1,649

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2021

133CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

10. Taxation

2021

€’000

2020

€’000

Current tax charge for the year

Corporation tax – current year 7,664 2,281

Adjustment in respect of prior year 84 318

7,748 2,599

Deferred tax credit for the year (Note 22) (754) (522)

Total tax charge 6,994 2,077

The tax assessed for the year differs from the standard rate of tax in Ireland. The differences are explained below.

2021

€’000

2020

€’000

Profit before tax 50,235 14,786

Tax charge at standard Irish income tax rate of 12.5% 6,279 1,848

Effects of:

Amounts deductible for tax purposes at higher rate of tax – (39)

Income not subject to tax – (79)

Expenses not deductible for tax purposes 631 29

Adjustment in respect of prior year 84 318

Total tax charge 6,994 2,077

11. Property, Plant and Equipment

Leasehold

improvements

€’000

Motor

vehicles

€’000

Computers &

equipment

€’000

2021

Total

€’000

Cost

At 1 January 2021 483 77 3,156 3,716

Additions – – 410 410

At 31 December 2021 483 77 3,566 4,126

Accumulated depreciation

At 1 January 2021 (325) (30) (1,914) (2,269)

Depreciation (69) (19) (604) (692)

At 31 December 2021 (394) (49) (2,518) (2,961)

Net book value

At 31 December 2021 89 28 1,048 1,165

134

11. Property, Plant and Equipment continued

Depreciation of €0.487 million (2020: €0.51 million) in relation to construction related assets was included in construction work in progress

in inventories. All property, plant and equipment is pledged as security against the Group’s borrowings (Note 19).

Leasehold

improvements

€’000

Motor

vehicles

€’000

Computers &

equipment

€’000

2020

Total

€’000

Cost

At 1 January 2020 483 77 2,974 3,534

Additions – – 182 182

At 31 December 2020 483 77 3,156 3,716

Accumulated depreciation

At 1 January 2020 (256) (11) (1,291) (1,558)

Depreciation (69) (19) (623) (711)

At 31 December 2020 (325) (30) (1,914) (2,269)

Net book value

At 31 December 2020 158 47 1,242 1,447

12. Right of Use Assets

2021

€’000

2020

€’000

Cost

At 1 January 1,443 1,443

Additions 172 –

At 31 December 1,615 1,443

Accumulated depreciation

At 1 January (721) (360)

Depreciation (404) (361)

At 31 December (1,125) (721)

Net book value

At 31 December 490 722

Following the adoption of IFRS 16 in 2019, the Group recognised a right-of-use asset in respect of the lease of its central support office

property. On initial application of IFRS 16, the asset and related lease liability (Note 20) were determined by discounting the lease payments

over the expected remaining term of the lease at a discount rate of 2.6% reflecting the Group’s incremental borrowing rate at 1 January 2019.

The additions during the year ended 31 December 2021 related to vehicle leases and were determined by discounting the lease payments

over the expected remaining term of the leases at a discount rate of 2.6% reflecting the Group’s incremental borrowing rate during the year.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2021

135CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

13. Intangible Assets

2021

€’000

2020

€’000

Software

Cost

At 1 January 1,117 1,103

Additions 1,082 14

At 31 December 2,199 1,117

Accumulated amortisation

At 1 January (565) (430)

Amortisation (200) (135)

At 31 December (765) (565)

Net book value

At 31 December 1,434 552

14. Inventories

2021

€’000

2020

€’000

Land held for development 671,652 690,347

Construction work in progress 268,348 277,837

940,000 968,184

The Directors consider that all inventories are essentially current in nature although the Group’s operational cycle is such that a considerable

proportion of inventories will not be realised within 12 months. It is not possible to determine with accuracy when specific inventories will be

realised as this will be subject to a number of factors such as consumer demand and the timing of planning permissions.

The cost of inventories includes direct labour costs and other direct wages and salaries as well as the cost of land, raw materials, and other

direct costs. In the thirteen-week shutdown period during which sites were closed in 2021 due to the pandemic, the Group continued to

capitalise direct labour costs in inventories in relation to direct labour costs which continued on permitted works on social and affordable

housing, other units with sales contracted to close by 31 January 2021 and utility connections. During the year ended 31 December 2021

€0.3 million (31 December 2020: €nil) of other direct wages and salaries for employees in construction related roles were estimated to

be non-productive and were expensed and included in administrative expenses. All other direct wages and salaries for employees in

construction related roles incurred during this period were included in the cost of inventories, as the Group’s operational activities did

continue in the areas of site planning, scheduling, and design activities.

As the build costs on each site can take place over a number of reporting periods the determination of the cost of sales to release on each

sale is dependent on up to date cost forecasting and expected profit margins across the various developments. The directors review

forecasting and profit margins on a regular basis and have incorporated any additional forecasted costs arising from the extension of

development timetables and changes to work practices arising from the ongoing COVID-19 pandemic. Nearer term costs are largely

fixed as they are in most cases fully procured, and others are variable and particular focus has been given to these items to ensure

they are accurately reflected in forecasts and profit margins.

There is a risk that one or all of the assumptions may require revision as more information becomes available, with a resulting impact on the

carrying value of inventories or the amount of profit recognised. The risk is managed through ongoing site profitability reforecasting with any

necessary adjustments being accounted for in the relevant reporting period. The Directors considered the evidence from impairment reviews

and profit forecasting models across the various active and not yet in development sites. These sites costs and profit margins have been

reviewed at year end and judgments and estimates carefully considered to ensure they have incorporated any anticipated impact of the

ongoing COVID-19 pandemic. Based on the review performed there were no indications that any sites were impaired.

Under IFRS, instances where market capitalisation (quoted share price multiplied by the number of ordinary shares in issue) is below net

assets are considered to be a potential indicator that assets may be impaired. The Group’s principal assets are represented by inventories.

Such assets are stated at the lower of cost and net realisable value and are therefore, in any event, assessed for impairment (i.e. any evidence

that the net realisable value was less than the carrying amount) as at 31 December 2021. On 31 December 2021, the market capitalisation of

the Group was higher than the net assets of the Group.

All active sites on which construction has commenced are profitable and due to the forecasting process by which cost of sales is determined

as referred to above, the Directors therefore concluded that the net realisable value of active sites was greater than their carrying amount at

31 December 2021 and hence those sites were not impaired.

136

14. Inventories continued

All sites on which construction has not yet commenced were also assessed for impairment at 31 December 2021. This assessment was

based on the current development plan for the site, reflecting the number and mix of units expected to be built. For each of these sites,

the forecast revenue based on current market prices was greater than the sum of the site cost and the estimated construction costs.

The Directors therefore concluded that the net realisable value of sites on which construction has not yet commenced was greater

than their carrying amount at 31 December 2021 and hence those sites were not impaired.

There were no reasonably foreseeable changes in assumptions that would have resulted in an impairment of inventories at 31 December 2021.

As a result of the detailed reviews undertaken the directors are satisfied with the carrying values of inventories (development land and

work in progress), which are stated at the lower of cost and net realisable value, and with the methodology for the release of costs on

the sale of inventories.

The total amount charged to cost of sales from inventories during the year was €338.0 million (2020: €218.4 million).

15. Trade and Other Receivables

2021

€’000

2020

€’000

Trade receivables 15,269 1,265

Prepayments 845 860

Construction bonds 10,864 8,332

Other receivables 1,504 931

28,482 11,388

Trade receivables relate to remaining amounts due in relation to residential property sales to institutional investors.

The Directors consider that all construction bonds are current assets as they will be realised in the Group’s normal operating cycle, which

is such that a proportion of construction bonds will not be recovered within 12 months. It is estimated that €5.5 million (2020: €4.6 million)

of the construction bond balance at 31 December 2021 will be recovered after more than 12 months from that date.

The carrying value of all trade and other receivables is approximate to their fair value.

Trade receivables of €1.3 million and prepayments €0.9 million have been reclassified from other receivables for the year ended

31 December 2020 for consistency with the current year presentation.

16. Cash and Cash Equivalents

2021

€’000

2020

€’000

Cash and cash equivalents 40,028 34,526

Cash deposits are made for varying short-term periods depending on the immediate cash requirements of the Group. All deposits can be

withdrawn without significant changes in value and accordingly the fair value of cash and cash equivalents is identical to the carrying value.

17. Share Capital and Share Premium

Authorised Number

2021

€’000 Number

2020

€’000

Ordinary Shares of €0.001 each 1,000,000,000 1,000 1,000,000,000 1,000

Founder Shares of €0.001 each 100,000,000 100 100,000,000 100

Deferred Shares of €0.001 each 120,000,000 120 120,000,000 120

A Ordinary Shares of €1.00 each 20,000 20 20,000 20

Total authorised share capital 1,240 1,240

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2021

137CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

17. Share Capital and Share Premium continued

Issued and fully paid Number

capital

€’000

premium

€’000

Total

€’000

As at 31 December 2021

Ordinary Shares of €0.001 each 749,932,223 750 199,597 200,347

Founder Shares of €0.001 each 19,182,149 19 19 38

Deferred Shares of €0.001 each 19,980,000 20 – 20

Total issued and fully paid 789 199,616 200,405

Issued and fully paid Number

capital

€’000

premium

€’000

Total

€’000

As at 31 December 2020

Ordinary Shares of €0.001 each 749,450,129 749 199,597 200,346

Founder Shares of €0.001 each 19,182,149 19 19 38

Deferred Shares of €0.001 each 19,980,000 20 – 20

Total issued and fully paid 788 199,616 200,404

The Company has four authorised classes of shares: Ordinary Shares; A Ordinary Shares; Founder Shares; and Deferred Shares.

The holders of Ordinary Shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per Ordinary

Share at meetings of the Company.

The holders of Founder Shares are not entitled to receive dividends and do not have voting rights at meetings of the Company save in relation

to a resolution to wind up the Company or to authorise the Directors to issue further Founder Shares. Founder Shares entitle Prime

Developments Ltd (“PDL”) (the ultimate beneficiaries of PDL are Alan McIntosh, a Director, and his spouse) and Kevin Stanley to receive

20% of the Total Shareholder Return (which is the increase in the market capitalisation of the Company, plus dividends, returns of capital

or distributions in the relevant periods) (the Founder Share Value), over the seven years following the Initial Public Offering in 2015, subject

to the satisfaction of the Performance Condition, being the achievement of a compound rate of return of 12.5% per annum in the Company’s

share price, as adjusted for any dividends, returns of capital or distributions paid in the period. The Founder Shares will be converted into

Ordinary Shares or paid out in cash, at the option of the Company, in an amount equal to the Founder Share Value. Subject to satisfying the

Performance Condition there is no limitation on the amount to be converted into Ordinary Shares (or otherwise issued as Ordinary Shares

at nominal value to fulfil the value of 20% of Total Shareholder Return achieved) or paid out in cash, other than the seven year limit referred

to above.

The Chief Executive Officer Michael Stanley signed a Deed of Surrender on 17 May 2021 relinquishing any future entitlements from the

remaining 6,713,752 Founder Shares held by him at the time. All rights, title and interest in those 6,713,752 Founder Shares were

surrendered to the Company for nil consideration on 17 May 2021 but were in place up to this point.

The following restrictions apply to the transfer of Founder Shares before they are converted to Ordinary Shares: any Founder Shareholder

may at any time transfer some or all of the Founder Shares held by him to a family member or (one or more) trustees to be held under a

Family Trust and/or any other Founder Shareholder. None of the Founder Shares transferred to the above mentioned parties may

subsequently be transferred save to a person or a party to which the shares in question could have been transferred as defined above.

The following restrictions apply to the Ordinary Shares which are issued as a result of the Founder Shares conversions:

• during the period of 365 days from the date of conversion, none of the Founders will, without the prior written consent of the Board,

offer, sell or contract to sell, or otherwise dispose of such Ordinary Shares (or any interest therein or in respect thereof) or enter into

any transaction with the same economic effect as any of the foregoing; and

• for a second period of 365 days commencing one year following conversion of Founder Shares into Ordinary Shares, the Founders shall

be entitled to offer, sell, or contract to sell, or otherwise dispose of 50% of such Ordinary Shares (or any interest therein or in respect

thereof) or enter into any transaction with the same economic effect as any of the foregoing but the lock-up restriction described above

will continue to apply to the remaining 50% of such Ordinary Shares during that second period of 365 days.

The total number of Ordinary Shares impacted by these restrictions amounted to Nil at 31 December 2021 (2020: Nil).

The holders of Deferred Shares do not have voting rights at meetings and are not entitled to receive dividends except for the right to receive

€1 in aggregate for every €100,000,000,000 paid to the holders of Ordinary Shares.

The holders of A Ordinary Shares (Nil issued) are not entitled to receive dividends and do not have voting rights at meetings of the Company.

138

17. Share Capital and Share Premium continued

Share Issues

On 4 May 2021, the Company issued 482,094 (2020: 116,066) Ordinary Shares at a nominal value of €0.001 per share in respect of the vesting

of awards under the restricted share unit plan.

Share buyback programmes

Further to the authority granted at the Annual General Meeting on 22 May 2019, the Company commenced a €25 million share buyback

programme on 13 September 2019. As at 31 December 2019, the total cost of shares repurchased under the buyback programme was

€22,646,683. In accordance with the share buyback programme, all repurchased shares were subsequently cancelled. 18,128,083

repurchased shares were cancelled in the year ended 31 December 2019. This programme completed on 13 January 2020.

On 16 January 2020, the Company announced an extension of that €25 million share buyback programme to include up to a further €35

million, thereby increasing the size of the overall share buyback programme to €60 million. This programme was suspended on 24 March

2020, as a consequence of the emergence of the COVID-19 pandemic, when the total number of shares repurchased under the buyback

programme was 39,449,108 at a total cost of €46.0 million. The total number of shares repurchased under the buyback programme in

the period from 1 January 2020 to 24 March 2020 was 21,321,025 at a total cost of €23.3 million. All repurchased shares were cancelled.

On 13 January 2022, the Company commenced a new €75 million share buyback programme and all repurchased shares under this

programme are subsequently cancelled. In total, in the period from 13 January 2022 to 22 March 2022, the Company repurchased 31,336,127

shares at a total cost of €38.8 million.

Other Undenominated Capital

2021

€’000

2020

€’000

At 1 January 40 18

Nominal value of own shares purchased – 22

At 31 December 40 40

18. Share-Based Payments

Founder Shares

A valuation exercise was undertaken in 2015 to fair value the Founder Shares (the terms of which are outlined in Note 17), which resulted in

a non-cash charge in the period to 31 December 2015 of €29.1 million, with a corresponding increase in the share-based payment reserve

in equity such that there was no overall impact on total equity. This non-cash charge to profit or loss for the period ended 31 December 2015

was for the full fair value of the award relating to the Founder Shares, all of which was required to be recognised up front under the terms

and conditions of the Founder Share agreement. No charge has been or will be recognised in subsequent years.

The valuation exercise was completed using the “Monte Carlo” simulation methodology and the following key assumptions:

• Share price volatility of 25% per annum, based on a basket of comparative UK listed entities;

• Risk free rate of 0.1% per annum;

• Dividend yield of 3% per annum, effective from 2018; and

• 15% discount based on restrictions on sale once Founder Shares convert to Ordinary Shares

There were no conversions of Founder Shares to Ordinary Shares during the year ended 31 December 2021 or 31 December 2020.

Long-Term Incentive Plan

The Group operates an equity settled Long-Term Incentive Plan (“LTIP”), which was approved at the May 2017 Annual General Meeting, under

which conditional awards of 10,717,994 shares made to employees remain outstanding as at 31 December 2021 (2020: 7,659,629). The shares

will vest on satisfaction of service and performance conditions attaching to the LTIP, to include earnings per share performance and other

stakeholder metrics over a 3 year period.

The 2021 LTIP awards are subject to both financial and non-financial metrics. 80% of the award will vest subject to the achievement of

cumulative EPS targets over the three year performance period from 2021 to 2023. 20% of the award will vest subject to the achievement

of stakeholder metrics which includes customer satisfaction performance with a health and safety underpin.

Awards to Executive Directors and senior management are also subject to an additional two year holding period after vesting.

The EPS-related performance condition is a non-market performance condition and does not impact the fair value of the EPS-based awards

at the grant date, which is equivalent to the share price at grant date.

The Group recognised a charge related to the LTIP during the year ended 31 December 2021 of €3.296 million (2020: €0.561 million credit)

of which €2.407 million (2020: €0.598 million credit) was charged to administrative expenses in profit or loss and a charge of €0.889 million

(2020: €0.037 million) was included in construction work in progress within inventories. The net credit recognised during the year ended

31 December 2020 arose due to the charge in respect of the 2020 LTIP net of a credit in relation to the non-vesting of the 2018 LTIP EPS-

based awards and the expected non-vesting of the 2019 LTIP EPS-based awards.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2021

139CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

18. Share-Based Payments continued

Long-Term Incentive Plan continued

Cairn engaged extensively with shareholders during 2020 with respect to the Chief Executive Officer, Michael Stanley, participating in the

Company’s LTIP from 2021 onwards. One of the conditions of participation was an agreement that the Chief Executive Officer would surrender

any future entitlements, pursuant to the Founder Share Agreement, from the remaining 6,713,752 Founder Shares held by him at the time.

The Chief Executive Officer signed a Deed of Surrender on 17 May 2021 relinquishing any future entitlements from those Founder Shares.

All rights, title and interest in those 6,713,752 Founder Shares were surrendered to the Company for nil consideration.

The number of outstanding conditional share awards under the LTIP are as follows:

2021

’000

2020

’000

Outstanding at beginning of year 7,659,629 3,889,750

Forfeited during the year (227,429) (515,943)

Lapsed during the year (2,026,297) (1,347,512)

Granted during the year 5,312,091 5,633,334

Outstanding at end of year 10,717,994 7,659,629

Dividend Equivalents

The Group operates a dividend equivalent scheme linked to its equity settled LTIP. Under this scheme employees are entitled to shares or

cash (the choice of settlement is as determined by the Group) to the value of dividends declared over the LTIP’s vesting period based on the

number of shares that vest. The Group recognised a charge related to dividend equivalents during the year ended 31 December 2021 of

€0.285 million (2020: €nil) of which €0.206 million (2020: €nil) was charged to administrative expenses in profit or loss and a charge of

€0.079 million (2020: €nil) was included in construction work in progress within inventories.

Restricted share unit plan

The Group operates a restricted share unit plan, which was approved at the Annual General Meeting on 20 May 2020, under which conditional

awards of 1,175,267 (2020: 482,094) shares made to employees remain outstanding as at 31 December 2021. The fair value of the awards at

the grant date is equivalent to the share price at the grant date. The shares will vest on satisfaction of service over a 1 year period. The Group

recognised a charge related to these restricted share units during the year ended 31 December 2021 of €1.040 million (2020: €0.348 million)

of which €0.782 million (2020: €0.266 million) was charged to profit or loss and €0.258 million (2020: €0.082 million) was included in

construction work in progress within inventories. During the year, the Group issued 482,094 ordinary shares at a nominal value of

€0.001 per share due to the vesting of awards granted in May 2020 under the terms of the 2020 restricted share unit plan.

Save as you earn scheme

The Group operates a Revenue approved savings related share option scheme (“save as you earn scheme”), which was approved at the

May 2019 Annual General Meeting, under which the Group recognised a charge during the year ended 31 December 2021 of €0.290 million

(2020: €0.179 million) of which €0.104 million (2020: €0.055 million) was charged to profit or loss and €0.186 million (2020: €0.124 million)

was included in construction work in progress within inventories.

Share Options

500,000 ordinary share options were issued in the year ended 31 December 2015, to a Director at that time and none have been exercised as

at 31 December 2021. 250,000 of these options vested during 2018 and the remaining 250,000 vested during 2019. The exercise price of each

ordinary share option is €1.00. At grant date, the fair value of the options that vested during 2018 was calculated at €0.219 per share while the

fair value of options that vested during 2019 was calculated at €0.220 per share. The related charge to profit or loss during the year ended

31 December 2021 was €nil (2020: €nil).

140

19. Loans and Borrowings

2021

€’000

2020

€’000

Current liabilities

Bank and other loans

Repayable within one year 77,094 –

77,094 –

Non-current liabilities

Repayable as follows:

Between one and two years – 130,399

Between two and five years 72,461 29,956

Greater than five years – 42,438

72,461 202,793

Total borrowings 149,555 202,793

The Group has a €77.5 million term loan (fully drawn at 31 December 2021 and 31 December 2020) and €200 million revolving credit facility

with Allied Irish Banks plc, Ulster Bank Ireland DAC and Barclays Bank Ireland plc, which are repayable by 31 December 2022. €6 million of

the revolving credit facility is represented by a construction bond facility (these are development bonds that can be put in place with local

authorities until sites are fully completed and conditions of planning have been met). While these loan facilities are repayable on 31 December

2022, a refinancing process is underway. This is considered to be a routine matter with no foreseeable issues given the Group’s financial

position and strong outlook.

Additionally, the Group has €72.5 million of loan notes with Pricoa Private Capital Group, repayable on 31 July 2024 (€15 million), 31 July 2025

(€15 million) and 31 July 2026 (€42.5 million).

These debt facilities are secured by a debenture incorporating fixed and floating charges and assignments over all the assets of the Group.

The carrying value of inventories as at 31 December 2021 pledged as security is €940 million.

The Group had undrawn revolving credit facilities of €194 million at 31 December 2021 (€140 million as at 31 December 2020).

The amount presented in the financial statements is net of related unamortised arrangement fees and transaction costs of €0.4 million

(2020: €1.2 million).

20. Lease Liabilities

2021

€’000

2020

€’000

Current liabilities

Lease liabilities

Repayable within one year 558 334

558 334

Non-current liabilities

Lease liabilities

Repayable as follows:

Between one and two years 55 490

Between two and five years 19 –

74 490

Total lease liabilities 632 824

Following the adoption of IFRS 16 in 2019, the Group recognised a lease liability in respect of the lease of its central support office property.

On initial application of IFRS 16 the lease liability and related right-of-use asset (Note 12) were determined by discounting the lease payments

over the expected remaining term of the lease at a discount rate of 2.6% reflecting the Group’s incremental borrowing rate at 1 January 2019.

The additions during the year ended 31 December 2021 related to vehicle leases and were determined by discounting the lease payments

over the expected remaining term of the leases at a discount rate of 2.6% reflecting the Group’s incremental borrowing rate during the year.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2021

141CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

20. Lease Liabilities continued

The movements in total lease liabilities during 2021 and 2020 were as follows:

2021

€’000

2020

€’000

At 1 January 824 1,138

Additions 172 –

Interest on lease liabilities 25 30

Lease payments (389) (344)

At 31 December 632 824

The undiscounted remaining contractual cash flows at 31 December 2021 were as follows:

As at 31 December 2021

Contractual cash flows

Total

€’000

6 months

or less

€’000

6-12

months

€’000

1-2

years

€’000

2-5

years

€’000

Lease liability (652) (201) (373) (59) (19)

The undiscounted remaining contractual cash flows at 31 December 2020 were as follows:

As at 31 December 2020

Contractual cash flows

Total

€’000

6 months

or less

€’000

6-12

months

€’000

1-2

years

€’000

2-5

years

€’000

Lease liability (858) (172) (172) (514) –

21. Reconciliation of Movement of Liabilities to Cash Flows Arising from Financing Activities

Liabilities

Total

€’000

Loans and

borrowings

(Note 19)

€’000

Accrued

interest and

other finance

costs

€’000

Lease

liabilities

€’000

Balance at 1 January 2021 202,793 707 824 204,324

Cash flows from financing activities

Proceeds from borrowings 170,000 – – 170,000

Repayment of loans (224,000) – – (224,000)

Interest and other finance costs paid – (7,211) – (7,211)

Repayment of lease liabilities – – (364) (364)

Total changes from financing cash flows (54,000) (7,211) (364) (61,575)

Other changes

Amortisation of borrowing costs 762 – – 762

Interest and other finance costs for the year – 7,385 – 7,385

Recognition of lease liabilities for new leases – – 172 172

Total other changes 762 7,385 172 8,319

Balance at 31 December 2021 149,555 881 632 151,068

142

21. Reconciliation of Movement of Liabilities to Cash Flows Arising from Financing Activities continued

Liabilities

Total

€’000

Loans and

borrowings

(Note 19)

€’000

Accrued

interest and

other finance

costs

€’000

Lease

liabilities

€’000

Balance at 1 January 2020 148,041 768 1,138 149,947

Cash flows from financing activities

Proceeds from borrowings 194,000 – – 194,000

Repayment of loans (140,000) – – (140,000)

Interest and other finance costs paid – (8,969) – (8,969)

Repayment of lease liabilities – – (314) (314)

Total changes from financing cash flows 54,000 (8,969) (314) 44,717

Other changes

Amortisation of borrowing costs 752 – – 752

Interest and other finance costs for the year – 8,908 – 8,908

Total other changes 752 8,908 – 9,660

Balance at 31 December 2020 202,793 707 824 204,324

22. Deferred Taxation

Movement in net deferred tax liability:

2021

€’000

2020

€’000

Opening balance 4,562 5,084

Credit to profit or loss (754) (522)

As at year end 3,808 4,562

Deferred tax arises from temporary differences relating to tax losses (deferred tax asset of €0.07 million at 31 December 2021) and land

held for development (net deferred tax liabilities of €3.878 million at 31 December 2021). The movements in gross deferred tax assets and

liabilities are set out below.

2021

Deferred tax

assets

€’000

Deferred tax

liabilities

€’000

Net deferred

tax liability

€’000

Opening balance 744 (5,306) (4,562)

Credit/ (charge) to profit or loss (61) 815 754

Closing balance 683 (4,491) (3,808)

2020

Deferred tax

assets

€’000

Deferred tax

liabilities

€’000

Net deferred

tax liability

€’000

Opening balance 744 (5,828) (5,084)

Credit to profit or loss – 522 522

Closing balance 744 (5,306) (4,562)

There are unrecognised deferred tax assets of €0.129 million at 31 December 2021 (2020: €0.129 million).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2021

143CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

23. Trade and Other Payables

2021

€’000

2020

€’000

Trade payables 21,060 15,285

Amounts owed to related parties (Note 25) – 7,000

Deferred consideration 10,000 –

Accruals 28,277 22,166

VAT liability 19,726 14,522

Other creditors 1,143 1,123

80,206 60,096

Deferred consideration relates to development land purchased during the year.

Other creditors represents amounts due for payroll taxes and Relevant Contracts Tax.

The carrying value of all trade and other payables is approximate to their fair value.

24. Dividends

On 8 September 2021 the Board declared an interim dividend of 2.66 cent per ordinary share. This interim dividend was paid on 8 October

2021 to shareholders on the register on the record date of 17 September 2021. Based on the ordinary shares in issue, the amount of dividends

paid was €19.9 million (2020: €nil). Details of proposed dividends subsequent to the year end are set out in Note 32.

25. Related Party Transactions

On 27 October 2020, the Group acquired a 1.35 acre site in Stillorgan, Co. Dublin known as “the Esmonde Motors site” which adjoins its

existing Blakes development site for a total consideration of €14 million, €7 million of which was paid on completion in October 2020 with the

remaining €7 million paid in July 2021 (Note 23). The seller of the Esmonde Motors site was The Emerald Fund ICAV (acting on behalf of the

Emerald Opportunity Investment Fund) (“Emerald”). Alan McIntosh, co-founder and non-executive Director of Cairn, and his spouse are the

beneficiaries of a discretionary trust that is the ultimate owner of Emerald and as such Alan McIntosh is considered a related party.

A Circular was posted to shareholders on 11 September 2020 detailing the particulars of the transaction including details of the independent,

Red Book valuation from Hooke & McDonald, the property valuation advisors engaged by the Company, as well as advice provided to the

Company by Goodbody Stockbrokers UC and A&L Goodbody solicitors. Shareholders voted in favour of the transaction at an Extraordinary

General Meeting of the Company held on 12 October 2020.

Key management personnel compensation (which comprise the Board of Directors of the Company) was as follows:

2021

€’000

2020

€’000

Short-term employee benefits 2,519 1,523

Post-employment benefits (pension contributions – defined contribution schemes) 120 126

Share-based payment expense – LTIP 657 187

Total key management personnel compensation 3,296 1,836

144

26. Group Entities

The Company’s subsidiaries as at 31 December 2021 are set out below. All of the Company’s subsidiaries are resident in Ireland, with their

registered address at 7 Grand Canal, Grand Canal Street Lower, Dublin 2. All Group companies operate in Ireland only.

Group company Principal activity

Company’s holding

Direct Indirect

Cairn Homes Holdings Limited Holding company 100% –

Cairn Homes Properties Limited Holding of property – 100%

Cairn Homes Construction Limited Construction company – 100%

Cairn Homes Butterly Limited No activity in period 100% –

Cairn Homes Galway Limited Holding of property 100% –

Cairn Homes Killiney Limited Holding of property 100% –

Cairn Homes Navan Limited No activity in period 100% –

Cairn Homes Finance Designated Activity Company Financing activities 100% –

Cairn Homes Montrose Limited Holding of property 100% –

Balgriffin Investment No.2 HoldCo Designated Activity Company Holding company 100% –

Cairn Homes Property Holdco Limited Holding company – 100%

Cairn Homes Property Management Limited No activity in period – 100%

Cairn Homes Property Holding One Limited No activity in period – 100%

Cairn Homes Property Holding Two Limited No activity in period – 100%

Cairn Homes Property Holding Three Limited No activity in period – 100%

Cairn Homes Property Holding Four Limited No activity in period – 100%

Cairn Homes Property Holding Five Limited No activity in period – 100%

Cairn Homes Property Holding Six Limited No activity in period – 100%

Cairn Homes Property Holding Seven Limited No activity in period – 100%

Cairn Homes Property Holding Eight Limited No activity in period – 100%

Balgriffin Investment No.2 Designated Activity Company No activity in period – 100%

27. Earnings Per Share

The basic earnings per share for the year ended 31 December 2020 is based on the earnings attributable to ordinary shareholders of

€43.2 million (2020: €12.7 million) and the weighted average number of ordinary shares outstanding for the period.

2021

€’000

2020

€’000

Profit for the year attributable to the owners of the Company 43,241 12,709

Numerator for basic and diluted earnings per share 43,241 12,709

Number of

Weighted average number of ordinary shares for the year (basic) 749,771,525 752,029,760

Dilutive effect of restricted share unit awards and options 1,215,267 482,095

Denominator for diluted earnings per share 750,986,792 752,511,855

Earnings per share (cent)

– Basic 5.8 1.7

– Diluted 5.8 1.7

There is no dilution in respect of Founder Shares. It is assumed, as is required under IAS 33, that the test period for the Founder Share

conversion calculation is from 1 September 2021 to 31 December 2021, however the actual test period for determining the Founder Share

conversion in 2021 is 1 March 2022 to 30 June 2022. Based on the assumed test period, no ordinary shares would be issued through

conversion of Founder Shares as the relevant performance condition was not met.

Additional ordinary shares may be issued under the Founder Share scheme in 2022 if the performance condition under the rules of the

scheme is reached (Note 17).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2021

145CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

27. Earnings Per Share continued

There is no dilution in respect of the LTIP as the performance conditions are not met as at 31 December 2021. The diluted earnings per share

calculation reflects the dilutive impact of restricted share unit awards and share options (Note 18).

28. Non-Controlling Interests

The non-controlling interest at 31 December 2019 of €2.5 million related to the 25% share of the net assets of a subsidiary entity, Balgriffin

Investment No. 2 HoldCo DAC (Note 26), which was held by National Asset Management Agency (“NAMA”). Cairn Homes plc held the

remaining 75% of the equity share capital in this subsidiary which was involved in the development of residential property. On 3 July 2020,

Cairn Homes plc acquired NAMA’s 25% share for €2.5 million which increased its holding to 100% of the equity share capital of Balgriffin

Investment No. 2 HoldCo DAC from that date.

Name Principal activities Country of incorporation

Ownership interest held by

non-controlling interest %

2021 2020

Balgriffin Investment No. 2 HoldCo DAC

Holding company for property

development company Ireland 0% 0%

29. Financial Instruments and Risk Management

The Group has exposure to the following risks arising from financial instruments:

• credit risk;

• liquidity risk; and

• market risk.

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for

measuring and managing risk, and the Group’s management of capital.

(a) Risk management framework

The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.

The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits

and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect

changes in market conditions and the Group’s activities.

The Group Audit & Risk Committee keeps under review the adequacy and effectiveness of the Group’s internal financial controls and the

internal control and risk management systems.

(b) Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual

obligations, and arises principally from the Group’s trade and other receivables and cash and cash equivalents. The carrying amount of

financial assets represents the maximum credit exposure.

Exposure to credit risk

Group management, in conjunction with the Board, manages the risk associated with cash and cash equivalents by depositing funds with

a number of Irish financial institutions and AAA rated international institutions.

None of the trade and other receivables (excluding prepayments) of €27.6 million at 31 December 2021 were past due. These trade and

other receivables have been reviewed, and considering the nature of the counterparties which are real estate institutional investors and

public sector bodies no credit losses are expected. As a result, no expected credit loss provision has been recognised.

The maximum amount of credit exposure is therefore:

2021

€’000

2020

€’000

Trade and other receivables (excluding prepayments) 27,637 10,528

Cash and cash equivalents 40,028 34,526

67,665 45,054

Expected credit losses in relation to all financial assets are immaterial.

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are

settled by delivering cash or other financial assets. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will

always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable

losses or risking damage to the Group’s reputation.

146

29. Financial Instruments and Risk Management continued

The Group monitors the level of expected cash inflows on receivables together with expected cash outflows on trade and other payables and

commitments. All trade and other payables at 31 December 2021 are considered current with the expected cash outflow equivalent to their

carrying value.

Management monitors the adequacy of the Group’s liquidity reserves (comprising undrawn borrowing facilities as detailed in Note 19 and

cash and cash equivalents as detailed in Note 16 i.e. available funds) against rolling cash flow forecasts. In addition, the Group’s liquidity risk

management policy involves monitoring short-term and long-term cash flow forecasts. The Group had undrawn revolving credit facilities of

€194 million at 31 December 2021 (2020: €140 million).

2021

€’000

2020

€’000

Financial liabilities due in less than one year

Trade payables and accruals 49,337 37,451

Deferred consideration 10,000 –

Amounts owed to related parties – 7,000

Lease liabilities 558 334

Borrowings 77,094 –

136,989 44,785

Financial liabilities due after more than one year

Lease liabilities 74 490

Borrowings 72,461 202,793

72,535 203,283

Available funds:

Cash and cash equivalents 40,028 34,526

Revolving credit facilities undrawn 194,000 140,000

234,028 174,526

The Board has reviewed the Group financial forecasts and associated risks for the period beyond one year from the date of approval of the

financial statements. The forecasts reflect key assumptions, based on information available to the Directors at the time of the preparation

of the financial forecasts.

These forecasts are based on:

• detailed forecasting by site for the period 2022-2024, reflecting trends experienced up to the date of preparation of the financial forecasts;

and

• future revenues for 2022-2024 based on management’s assessment of trends across principal development sites.

While some of the Group’s loan facilities are repayable on 31 December 2022, a refinancing process is underway. This is considered to be a

routine matter with no foreseeable issues given the Group’s financial position and strong outlook (Note 1 (e)). The Directors expect that the

Group will meet all of its obligations as they fall due on the basis that there is expected to be sufficient liquidity available to the Group for the

period beyond one year from the date of approval of these financial statements.

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted

and include contractual interest payments.

31 December 2021

Contractual cash flows

Carrying

amount

€’000

Total

€’000

6 months

or less

€’000

6-12

months

€’000

1-2

years

€’000

2-5

years

€’000

years

€’000

Trade payables and accruals 49,337 (49,337) (49,337) – – – –

Deferred consideration 10,000 (10,000) – (10,000) – – –

Lease liabilities 632 (652) (201) (373) (59) (19) –

Loans and borrowings 149,555 (161,668) (2,225) (79,726) (2,436) (77,281) –

209,524 (221,657) (51,763) (90,099) (2,495) (77,300) –

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2021

147CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

29. Financial Instruments and Risk Management continued

31 December 2020

Contractual cash flows

Carrying

amount

€’000

Total

€’000

6 months

or less

€’000

6-12

months

€’000

1-2

years

€’000

2-5

years

€’000

years

€’000

Trade payables and accruals 37,451 (37,451) (37,451) – – – –

Amounts owed to related parties 7,000 (7,000) – (7,000) – – –

Lease liabilities 824 (858) (172) (172) (514) – –

Loans and borrowings 202,793 (222,529) (3,059) (3,059) (137,618) (35,460) (43,333)

248,068 (267,838) (40,682) (10,231) (138,475) (35,460) (43,333)

(d) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s

income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk

exposures within acceptable parameters, while optimising the return.

(i) Currency risk

The Group is not exposed to significant currency risk. The Group operates only in the Republic of Ireland.

(ii) Interest rate risk

At 31 December 2021, the Group had the following facilities:

(a) €277.5 million term loan and revolving credit facilities with Allied Irish Bank plc, Ulster Bank Ireland DAC and Barclays Bank Ireland plc

that had principal drawn balances of €77.5 million (term loan) (2020: €77.5 million) and €nil (revolving credit facility, excluding €6 million

construction bond facility) (2020: €54 million) at a variable interest rate of Euribor (with a 0% floor), plus a margin of 2.6% (2020: 2.8%).

The Group has an exposure to cash flow interest rate risk where there are changes in Euribor rates; and

(b) a €72.5 million (2020: €72.5 million) private placement of loan notes with Pricoa Capital which have a fixed coupon of 3.36% (2020: 3.36%).

Cash flow sensitivity analysis for variable-rate instruments

A reasonably possible change of 100 basis points in Euribor benchmark interest rates at the reporting date would have increased (decreased)

profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant and the rate change is only applied

to the loans that are exposed to movements in Euribor.

31 December 2021

Profit or loss Equity

100 bp

increase

€’000

100 bp

decrease

€’000

100 bp

increase

€’000

100 bp

decrease

€’000

Variable-rate instruments – borrowings (1,283) – (1,283) –

Cash flow sensitivity (net) (1,283) – (1,283) –

31 December 2020

Profit or loss Equity

100 bp

increase

€’000

100 bp

decrease

€’000

100 bp

increase

€’000

100 bp

decrease

€’000

Variable-rate instruments – borrowings (1,602) – (1,602) –

Cash flow sensitivity (net) (1,602) – (1,602) –

The Group is also exposed to interest rate risk on its cash and cash equivalents. These balances attract low interest rates and therefore a

relative increase or decrease in their interest rates would not have a material effect on profit or loss.

(e) Capital management

The Board’s policy is to maintain a strong capital base (defined as shareholders’ equity) so as to maintain investor, creditor and market

confidence and to sustain the future development of the business. The Group takes a conservative approach to bank financing and the net debt

to total asset value ratio was 10.8% at 31 December 2021 (2020: 16.5%). Net debt is defined as loans and borrowings (Note 19) less cash and

cash equivalents (Note 16). Net debt of €109.5 million as at 31 December 2021 (31 December 2020: €168.3 million) comprised of drawn debt of

€149.5 million (net of unamortised arrangement fees and issue costs) (31 December 2020: €202.8 million) and available cash of €40 million

(31 December 2020: €34.5 million). The €58.8 million decrease in net debt in 2021 versus 2020 was mainly as a result of higher sales volumes.

148

29. Financial Instruments and Risk Management continued

(e) Capital management continued

Further to the authority granted at the Annual General Meeting on 22 May 2019, the Company commenced a €25 million share buyback

programme on 13 September 2019. As at 31 December 2019, the total cost of shares repurchased under the buyback programme was

€22,646,683. In accordance with the share buyback programme, all repurchased shares were subsequently cancelled. 18,128,083

repurchased shares were cancelled in the year ended 31 December 2019. This programme completed on 13 January 2020.

On 16 January 2020, the Company announced an extension of that €25 million share buyback programme to include up to a further €35

million, thereby increasing the size of the overall share buyback programme to €60 million. This programme was suspended on 24 March

2020, as a consequence of the emergence of the COVID-19 pandemic, when the total number of shares repurchased under the buyback

programme was 39,449,108 at a total cost of €46.0 million. The total number of shares repurchased under the buyback programme in the

period from 1 January 2020 to 24 March 2020 was 21,321,025 at a total cost of €23.3 million.

On 13 January 2022, the Company commenced a €75 million share buyback programme. In total, in the period from 13 January 2022 to

22 March 2022, the Company repurchased 31,336,127 shares at a total cost of €38.8 million.

Dividends of €19.9 million were paid by the Company during the year ended 31 December 2021 (2020: €nil). Details of proposed dividends

subsequent to the year end are set out in Note 32.

(f) Fair value of financial assets and financial liabilities

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market

participants at the measurement date.

For financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which inputs to the fair

value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as

follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2: valuation techniques for which the lowest level of inputs which have a significant effect on the recorded fair value are observable,

either directly or indirectly; and

• Level 3: valuation techniques for which the lowest level of inputs that have a significant effect on the recorded fair value are not based on

observable market data.

The following table shows the Group’s financial assets and liabilities and the methods used to calculate fair value.

Asset/Liability Carrying value Level Method Assumptions

Borrowings Amortised cost 2 Discounted Cash Flow

Valuation based on future repayment and interest cashflows

discounted at a year-end market interest rate.

The following table shows the carrying values of financial assets and liabilities including their values in the fair value hierarchy. A fair value

disclosure for lease liabilities is not required. The table does not include fair value information for other financial assets and liabilities not

measured at fair value if the carrying amount is a reasonable approximation of fair value.

2021

Carrying

value

€’000

Fair value

Level 1

€’000

Level 2

€’000

Level 3

€’000

Financial assets measured at amortised cost

Trade and other receivables (excluding prepayments) 27,6 37

Cash and cash equivalents 40,028

67,665

Financial liabilities measured at amortised cost

Trade payables and accruals 49,337

Deferred consideration 10,000

Borrowings 149,555 149,555

208,892

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2021

149CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

29. Financial Instruments and Risk Management continued

(f) Fair value of financial assets and financial liabilities continued

2020

Carrying

value

€’000

Fair value

Level 1

€’000

Level 2

€’000

Level 3

€’000

Financial assets measured at amortised cost

Trade and other receivables (excluding prepayments) 10,528

Cash and cash equivalents 34,526

45,054

Financial liabilities measured at amortised cost

Trade payables and accruals 37,451

Amounts owed to related parties 7,000

Borrowings 202,793 202,793

247,244

30. Other Commitments and Contingent Liabilities

Pursuant to the provisions of Section 357, Companies Act 2014, the Company has guaranteed the liabilities and commitments of its subsidiary

undertakings for their financial years ending 31 December 2021 and as a result such subsidiary undertakings have been exempted from the

filing provisions of Companies Act 2014. Details of the Group’s subsidiaries are included in Note 26 and all subsidiaries listed there are

covered by the Section 357 exemption.

As at 31 December 2021 Cairn Homes Properties Limited had contracted as follows:

• To sell 150 apartments at Shackleton Park, Lucan, Co. Dublin to Carysfort Capital for €48.6 million (incl. VAT). These apartments are

currently under construction with a phased delivery across 2022.

• To sell 342 apartments at Griffith Wood, Griffith Avenue, Dublin 9 to Greystar for €176.5 million (incl. VAT). 88 of these units were

completed and sold in 2021 for €45.4 million (incl. VAT) with the remaining 254 apartments under construction with a phased delivery

in 2022 for €131.1 million (incl. VAT).

At 31 December 2021, the Group had a contingent liability in respect of construction bonds in the amount of €3.4 million.

On 23 December 2021 the Group entered into a 10 year lease agreement for a new office with a lease commencement date of 01 January 2022

with an initial annual rent of €0.8 million.

The Group is not aware of any other commitments or contingent liabilities that should be disclosed.

31. Profit or Loss of the Parent Company

The parent company of the Group is Cairn Homes plc. In accordance with Section 304 of the Companies Act 2014, the Company is availing of

the exemption from presenting its individual statement of profit or loss and other comprehensive income to the Annual General Meeting and

from filing it with the Registrar of Companies. The Company’s loss after tax for the year ended 31 December 2021, determined in accordance

with IFRS as adopted by the EU, is €8.4 million (2020: loss of €6.2 million).

32. Events After the Reporting Period

On 13 January 2022, the Company commenced a €75 million share buyback programme. In total, in the period from 13 January 2022 to

22 March 2022, the Company repurchased 31,336,127 shares at a total cost of €38.8 million.

On 03 March 2022, the Company proposed a final 2021 dividend of 2.8 cent per ordinary share. This final dividend will be paid on 17 May 2022

to shareholders on the record date of 22 April 2022. Based on the ordinary shares in issues at 22 March 2022, the amount of dividends

proposed is €20.1 million. However, in view of the ongoing share buyback programme it is not possible to precisely determine the total

amount at this stage.

33. Approval of Financial Statements

The financial statements were approved by the Board of Directors on 25 March 2022.

150

Company Statement of Financial Position 151

Company Statement of Changes in Equity 152

Company Statement of Cash Flows 154

Notes to the Company Financial Statements 155

COMPANY FINANCIAL STATEMENTS

151CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Note

2021

€’000

2020

€’000

Assets

Non-current assets

Property, plant and equipment

2 401 344

Right of use assets

3 361 722

Intangible assets

4 1,434 552

Investments in subsidiaries

5 36,809 36,809

39,005 38,427

Current assets

Amounts due from subsidiary undertakings

6 621,596 635,303

Trade and other receivables

7 540 576

Cash and cash equivalents 1,031 3,031

623,167 638,910

Total assets 662,172 677,337

Equity

Share capital

8 789 788

Share premium

8 199,616 199,616

Other undenominated capital 40 40

Share-based payment reserve

9 11,795 7,572

Retained earnings 406,321 433,983

Total equity 618,561 641,999

Liabilities

Non-current liabilities

Lease liabilities

10 – 490

– 490

Current liabilities

Trade and other payables

11 43,109 34,514

Lease liabilities

10 502 334

43,611 34,848

Total liabilities 43,611 35,338

Total equity and liabilities 662,172 677,337

On behalf of the Board

Michael Stanley Shane Doherty

Director Director

COMPANY STATEMENT OF FINANCIAL POSITION

AT 31 DECEMBER 2021

152

Share Capital

premium

€’000

Other

undenominated

capital

€’000

Share-

based

payment

reserve

€’000

Retained

earnings

€’000

Total

€’000

Ordinary

€’000

Deferred

€’000

Founder

€’000

As at 1 January 2021 749 20 19 199,616 40 7,572 433,983 641,999

Total comprehensive loss for the year

Loss for the year – – – – – – (8,402) (8,402)

– – – – – – (8,402) (8,402)

Transactions with owners of

the Company

Equity-settled share-based payments

(Note 9) – – – – – 4,911 – 4,911

Shares issued on vesting of share

awards 1 – – – – – – 1

Transfer from share-based payment

reserve to retained earnings re

vesting or lapsing of share awards – – – – – (688) 688 –

Dividends paid to shareholders (Note 8) – – – – – – (19,948) (19,948)

1 – – – – 4,223 (19,260) (15,036)

As at 31 December 2021 750 20 19 199,616 40 11,795 406,321 618,561

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2021

153CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

Share Capital

premium

€’000

Other

undenominated

capital

€’000

Share-

based

payment

reserve

€’000

Retained

earnings

€’000

Total

€’000

Ordinary

€’000

Deferred

€’000

Founder

€’000

As at 1 January 2020 771 20 19 199,616 18 8,002 463,109 671,555

Total comprehensive loss for the year

Loss for the year – – – – – – (6,177) (6,177)

– – – – – – (6,177) (6,177)

Transactions with owners of

the Company

Purchase of own shares (22) – – – 22 – (23,346) (23,346)

Equity-settled share-based payments – – – – – (33) – (33)

Transfer from share-based payment

reserve to retained earnings re

vesting or lapsing of share awards – – – – – (397) 397 –

(22) – – – 22 (430) (22,949) (23,379)

As at 31 December 2020 749 20 19 199,616 40 7,572 433,983 641,999

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2020

154

2021

€’000

2020

€’000

Cash flows from operating activities

Loss for the year (8,402) (6,177)

Adjustments for:

Share-based payments expense/(credit) 3,499 (277)

Finance costs 21 30

Interest income – (4,879)

Depreciation of property, plant and equipment 200 201

Depreciation of right of use assets 361 361

Amortisation of intangible assets 200 135

(4,121) (10,606)

Decrease/(increase) in amounts due from group undertakings 15,121 (80,710)

Decrease/(increase) in trade and other receivables 36 (187)

Increase in trade and other payables 8,595 12,575

Net cash from/(used in) operating activities 19,631 (78,928)

Cash flows from investing activities

Loan repayments from subsidiary undertakings – 102,548

Purchases of property, plant and equipment (257) (107)

Purchases of intangible assets (1,082) (14)

Net cash (used in)/from investing activities (1,339) 102,427

Cash flows from financing activities

Purchase of own shares – (23,751)

Dividends paid (19,948) –

Acquisition of shares in subsidiaries from non-controlling shareholder – (2,496)

Repayment of lease liabilities (322) (314)

Interest paid (22) (30)

Net cash used in financing activities (20,292) (26,591)

Net decrease in cash and cash equivalents in the year (2,000) (3,092)

Cash and cash equivalents at beginning of year 3,031 6,123

Cash and cash equivalents at end of year 1,031 3,031

COMPANY STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2021

155CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

1. Significant Accounting Policies 156

2. Property, Plant and Equipment 156

3. Right of Use Assets 157

4. Intangible Assets 157

5. Investments in Subsidiaries 157

6. Amounts due from Subsidiary Undertakings 157

7. Trade and Other Receivables 157

8. Share Capital and Share Premium 158

9. Share-Based Payments 158

10. Lease Liabilities 158

11. Trade and Other Payables 159

12. Financial Instruments 159

13. Related Party Transactions 160

14. Events after the Reporting Period 161

15. Approval of Financial Statements 161

NOTES TO THE COMPANY FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

156

1. Significant Accounting Policies

The individual financial statements of the Company have been prepared in accordance with IFRS as adopted by the EU and as applied in

accordance with the Companies Act 2014. As described in Note 31 of the consolidated financial statements, the Company has availed of

the exemption from presenting its individual statement of profit or loss and other comprehensive income. The Company’s loss after tax

for the year ended 31 December 20201 is €8.4 million (2020: loss of €6.2 million).

The significant accounting policies applicable to these individual company financial statements which are not reflected within the accounting

policies for the consolidated financial statements are detailed below.

(a) Investments in subsidiaries

Investments in subsidiaries are accounted for in these individual financial statements on the basis of the direct equity interest, rather than

on the basis of the reported results and net assets of investees. Investments in subsidiaries are carried at cost less any impairment.

(b) Intra-group guarantees

The Company has given guarantees in respect of borrowings and other liabilities arising in the ordinary course of business of the Company

and subsidiaries. The Company considers these guarantees to be insurance contracts and accounts for them as such. These guarantees

are treated as contingent liabilities until such time as it becomes probable that a payment will be required under such guarantees.

2. Property, Plant and Equipment

Leasehold

improvements

€’000

Computers &

equipment

€’000

2021

Total

€’000

Cost

At 1 January 2021 483 694 1,177

Additions – 257 257

At 31 December 2021 483 951 1,434

Accumulated depreciation

At 1 January 2021 (325) (508) (833)

Depreciation (69) (131) (200)

At 31 December 2021 (394) (639) (1,033)

Net book value

At 31 December 2021 89 312 401

Leasehold

improvements

€’000

Computers &

equipment

€’000

2020

Total

€’000

Cost

At 1 January 2020 483 587 1,070

Additions – 107 107

At 31 December 2020 483 694 1,177

Accumulated depreciation

At 1 January 2020 (256) (376) (632)

Depreciation (69) (132) (201)

At 31 December 2020 (325) (508) (833)

Net book value

At 31 December 2020 158 186 344

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2021

157CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

3. Right of Use Assets

2021

€’000

2020

€’000

Cost

At 1 January 1,443 1,443

Additions – –

At 31 December 1,443 1,443

Accumulated depreciation

At 1 January (721) (360)

Depreciation (361) (361)

At 31 December (1,082) (721)

Net book value

At 31 December 361 722

Following the adoption of IFRS 16 in 2019, the Company recognised a right-of-use asset in respect of the lease of its central support office

property. On initial application of IFRS 16, the asset and related lease liability were determined by discounting the lease payments over the

expected remaining term of the lease at a discount rate of 2.6% reflecting the Group’s incremental borrowing rate at 1 January 2019.

4. Intangible Assets

For further information on Intangible Assets refer to Note 13 of the consolidated financial statements.

5. Investments in Subsidiaries

Cost

2021

€’000

2020

€’000

At the beginning of the year 36,809 34,313

Additions during the year – 2,496

At the end of the year 36,809 36,809

Details of subsidiary undertakings are given in Note 26 of the consolidated financial statements.

Additions during 2020 relate to 25% of the equity share capital of Balgriffin Investment No. 2 HoldCo DAC. On 3 July 2020, Cairn Homes plc

acquired NAMA’s 25% shareholding in that company for €2.5 million which increased its holding to 100%.

6. Amounts due from Subsidiary Undertakings

2021

€’000

2020

€’000

Amounts due from subsidiary undertakings 621,596 635,303

621,596 635,303

All amounts due from subsidiary undertakings are repayable on demand.

The amounts owed by subsidiaries have been reviewed and no credit losses are expected based on the financial position of subsidiaries.

In circumstances where a subsidiary had a net liability position at year end management assessed the future economic benefits expected

to be generated by that subsidiary to ensure balances were recoverable. As a result, no expected credit loss provision has been recognised

(see Note 12).

7. Trade and Other Receivables

2021

€’000

2020

€’000

Prepayments 540 576

540 576

158

8. Share Capital and Share Premium

For further information on Share Capital and Share Premium refer to Note 17 of the consolidated financial statements.

For further information on dividends refer to Note 24 of the consolidated financial statements.

9. Share-Based Payments

For further information on Share-Based Payments refer to Note 18 of the consolidated financial statements.

10. Lease liabilities

2021

€’000

2020

€’000

Current liabilities

Lease liabilities

Repayable within one year 502 334

502 334

Non-current liabilities

Lease liabilities

Repayable as follows:

Between one and two years – 490

– 490

Total lease liabilities 502 824

The movements in total lease liabilities during 2021 and 2020 were as follows:

2021

€’000

2020

€’000

At 1 January 824 1,138

Interest on lease liabilities 22 30

Lease payments (344) (344)

At 31 December 502 824

Following the adoption of IFRS 16 in 2019, the Company has recognised a lease liability in respect of the lease of its central support office

property. On initial application of IFRS 16 the lease liability and related right-of-use asset were determined by discounting the lease payments

over the expected remaining term of the lease at a discount rate of 2.6% reflecting the Group’s incremental borrowing rate at 1 January 2019.

The undiscounted remaining contractual cash flows at 31 December 2021 were as follows:

As at 31 December 2021

Contractual cash flows

Total

€’000

6 months

or less

€’000

6-12

months

€’000

1-2

years

€’000

2-5

years

€’000

Lease liability (515) (172) (343) – –

The undiscounted remaining contractual cash flows at 31 December 2020 were as follows:

As at 31 December 2020

Contractual cash flows

Total

€’000

6 months

or less

€’000

6-12

months

€’000

1-2

years

€’000

2-5

years

€’000

Lease liability (858) (172) (172) (514) –

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2021

159CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

11. Trade and Other Payables

2021

€’000

2020

€’000

Trade payables 271 97

Accruals 6,346 2,937

Amounts due to subsidiary undertakings 16,290 16,290

VAT liability 19,726 14,552

Payroll taxes 476 638

43,109 34,514

12. Financial Instruments

The carrying value of the Company’s financial assets and liabilities, comprising amounts due from and to subsidiary undertakings,

other receivables, cash and cash equivalents, trade payables and accruals are a reasonable approximation of their fair value.

(a) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual

obligations, and arises principally from the Company’s amounts due from subsidiary undertakings and cash and cash equivalents.

The carrying amount of financial assets represents the maximum credit exposure.

Exposure to credit risk

Company management, in conjunction with the Board, manages the risk associated with cash and cash equivalents by depositing funds

with a number of Irish financial institutions and AAA rated international institutions.

The amounts owed by subsidiaries have been reviewed and no credit losses are expected based on the financial position of subsidiaries.

In circumstances where a subsidiary had a net liability position at year end management assessed the future economic benefits expected

to be generated by that subsidiary to ensure balances were recoverable. As a result, no expected credit loss provision has been recognised.

The maximum amount of credit exposure is therefore:

2021

€’000

2020

€’000

Amounts due from subsidiary undertakings 621,596 635,303

Cash and cash equivalents 1,031 3,031

622,627 638,334

Expected credit losses in relation to all financial assets are immaterial.

(b) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are

settled by delivering cash or other financial assets. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will

always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable

losses or risking damage to the Company’s reputation.

The Company monitors the level of expected cash inflows on receivables together with expected cash outflows on trade and other payables

and commitments. All trade and other payables at 31 December 2021 are considered current with the expected cash outflow equivalent to

their carrying value.

160

12 Financial Instruments continued

(b) Liquidity risk continued

2021

€’000

2020

€’000

Financial liabilities due in less than one year

Trade payables and accruals 6,617 3,034

Amounts due to subsidiary undertakings 16,290 16,290

Lease liabilities 502 334

23,409 19,658

Financial liabilities due after more than one year

Lease liabilities – 490

23,409 20,148

Available funds:

Cash and cash equivalents 1,031 3,031

Revolving credit facilities undrawn 194,000 140,000

195,031 143,031

The Company has access to the Group’s revolving credit facilities (see Note 29 of the consolidated financial statements). As a result the

Directors expect that the Company will meet all of its obligations as they fall due on the basis that there is expected to be sufficient liquidity

available to the Company for the period beyond one year from the date of approval of these financial statements.

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted

and include contractual interest payments.

31 December 2021

Contractual cash flows

Carrying

amount

€’000

Total

€’000

6 months

or less

€’000

6-12

months

€’000

1-2

years

€’000

2-5

years

€’000

years

€’000

Trade payables and accruals 6,617 (6,617) (6,617) – – – –

Amounts due to subsidiary undertakings 16,290 (16,290) (16,290) – – – –

Lease liabilities 502 (515) (172) (343) – – –

23,409 (23,422) (23,079) (343) – – –

31 December 2020

Contractual cash flows

Carrying

amount

€’000

Total

€’000

6 months

or less

€’000

6-12

months

€’000

1-2

years

€’000

2-5

years

€’000

years

€’000

Trade payables and accruals 3,034 (3,034) (3,034) – – – –

Amounts due to subsidiary undertakings 16,290 (16,290) (16,290) – – – –

Lease liabilities 824 (858) (172) (172) (514) – –

20,148 (20,182) (19,496) (172) (514) – –

The company is not exposed to significant currency risk or interest rate risk.

Relevant disclosures on Group financial instruments and risk management are given in Note 29 of the consolidated financial statements.

13. Related Party Transactions

Under IAS 24,

Related Party Disclosures

, the Company has related party relationships with key management and with its subsidiary

undertakings (see Note 26 of the consolidated financial statements). During the year the Company had the following transactions with

its subsidiary undertakings:

• Cairn Homes Construction Limited, management fee income €1.4 million (2020: €1.2 million).

• Cairn Homes Properties Limited, management fee income €14.6 million (2020: €5.8 million).

For amounts due from and to subsidiary undertakings please refer to Note 6 and Note 11.

Key management personnel compensation is set out in Note 25 of the consolidated financial statements.

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2021

161CAIRN HOMES PLC ANNUAL REPORT 2021

FINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT

14. Events after the Reporting Period

On 13 January 2022, the Company commenced a €75 million share buyback programme. In total, in the period from 13 January 2022

to 22 March 2022, the Company repurchased 31,336,127 shares at a total cost of €38.8 million.

On 03 March 2022, the Company proposed a final 2021 dividend of 2.8 cent per ordinary share. This final dividend will be paid on 17 May 2022

to shareholders on the record date of 22 April 2022. Based on the ordinary shares in issues at 22 March 2022, the amount of dividends

proposed is €20.1 million. However, in view of the ongoing share buyback programme it is not possible to precisely determine the total

amount at this stage.

15. Approval of Financial Statements

The financial statements were approved by the Board of Directors on 25 March 2022.

162

Directors

John Reynolds (Non-Executive Chairman)

Michael Stanley (Chief Executive Officer)

Shane Doherty (Chief Financial Officer)

Gary Britton (Non-Executive)

Giles Davies (Non-Executive)

Linda Hickey (Non-Executive)

Alan McIntosh (Non-Executive)

David O’Beirne (Non-Executive)

Orla O’ Gorman (Non-Executive)

Julie Sinnamon (Non-Executive)

Secretary and Registered Office

Tara Grimley

7 Grand Canal

Grand Canal Street Lower

Dublin 2

D02 KW81

Registrars

Computershare Investor Services (Ireland) Limited

3100 Lake Drive

Citywest Business Campus

Dublin 24

D24 AK82

Auditor

KPMG

Chartered Accountants

1 Stokes Place

St. Stephen’s Green

Dublin 2

Website

www.cairnhomes.com

Contact Information

7 Grand Canal

Grand Canal Street Lower

Dublin 2

D02 KW81

T: +353 1696 4600

E: info@cairnhomes.com

www.cairnhomes.com

Solicitors

A&L Goodbody

IFSC

25-28 North Wall Quay

Dublin 1

Eversheds Sutherland

One Earlsfort Centre

Earlsfort Terrace

Dublin 2

Pinsent Masons LLP

30 Crown Place

Earl Street London

EC2A 4ES

Beauchamps

Riverside Two

Sir John Rogerson’s Quay

Dublin 2

Principal Bankers/Lenders

Allied Irish Banks plc

10 Molesworth St

Dublin 2

Ulster Bank Ireland DAC

33 College Green

Dublin 2

Barclays Bank Ireland plc

One, 2 Molesworth Place

Dublin 2

Pricoa Private Capital

One London Bridge

8th Floor

London

SE1 9BG