TIDMSPR
RNS Number : 6399L
Springfield Properties PLC
14 September 2021
14 September 2021
Springfield Properties plc
("Springfield", the "Company" or the "Group")
Final Results and Publication of Annual Report
Highest ever revenue and profit, substantial reduction in net
debt and strong outlook
Springfield Properties (AIM: SPR), a leading housebuilder in
Scotland delivering private and affordable housing, announces its
final results for the year ended 31 May 2021.
Financial Summary
2021 2020 Change
GBPm GBPm
Revenue 216.7 143.5 +51.0%
Gross margin 17.9% 19.1% -120bps
Operating profit* 19.8 11.3 +75.2%
Profit before tax* 18.5 10.2 +81.4%
Basic EPS* (p) 14.41 8.33 +73.0%
Total dividend per
share (p) 5.75 2.0 +187.5%
* Adjusted to exclude exceptional staff costs of GBP0.6m (2020:
GBP0.4m) (See the Financial Review for further detail)
Operational Summary
-- Strong build and sales activity throughout the year with high
demand experienced across the business resulting in significant
growth in revenue in private and affordable housing
-- Realisation of work in progress and strategic land sales
enabled substantial reduction in net debt to GBP20.8m at 31 May
2021 from GBP70.9m at 31 May 2020
-- Total completions increased to 973 homes (2020: 727)
-- Sustained progress in advancing land bank with planning
approval received for 609 homes during the year and the proportion
of land bank with planning permission increasing to 52.4% (31 May
2020: 49.4%)
-- Total land bank of 15,281 plots (31 May 2020: 15,882) with
Gross Development Value ("GDV") of GBP3.1bn (31 May 2020:
GBP3.3bn)
-- Strengthened operations with implementation of efficiency and
rationalisation measures that reduced costs by approximately GBP1m
on an annualised basis
-- Commenced work on site for first homes for the Private Rental
Sector ("PRS") with Sigma Capital Group plc at Bertha Park
Village
Private Housing Delivery
-- Revenue increased 46.2% to GBP144.6m (2020: GBP98.9m) with 593 completions (2020: 419)
-- Significant growth driven by:
o completion of homes originally scheduled to be delivered at
the end of the prior year but postponed due to COVID-19 lockdown;
and
o increased desirability of the type of larger housing with
plenty of greenspace that the Group offers
-- Continued progress on Village developments, with key highlights including:
o Advancing of community facilities, including the opening of
convenience stores at Bertha Park, Perth and Dykes of Gray,
Dundee
o Commenced construction on second phase of private homes at
Bertha Park
o Planning approval received for PRS homes at Bertha Park and
work commenced on site
Affordable Housing Delivery
-- Revenue increased by 29.7% to GBP55.1m (2020: GBP42.5m) with 380 completions (2020: 308)
-- Active in securing new contracts with an order book of
GBP91.5m as at 31 May 2021 - Springfield's largest ever contracted
order book for affordable housing
-- Construction commenced at The Wisp, Edinburgh - a 104-home
development - and on the first phase of 144 homes at Dalmarnock,
Glasgow under agreements worth GBP18.5m and GBP18.2m
respectively
-- Continued progress under the local authority framework
agreement with Moray Council for 10 affordable-only developments
with four developments now completed
-- Post period, completed handover of the second phase of
affordable housing at Bertha Park Village and signed a contract to
deliver the first Mid-Market Rent housing at the Village
-- Established new partnerships: contracts signed with
Berwickshire Housing Association and, post period, Aberdeenshire
Council
Innes Smith, Chief Executive Officer of Springfield Properties,
commented: "This has been an excellent year for Springfield. We
have achieved our highest ever annual revenue and profit -
exceeding GBP200m in revenue for the first time and by a
significant amount - based on record results in both our private
and affordable housing. We have substantially reduced our net debt
position, demonstrating our ability to generate cash, and our
strategic land sales towards the end of the year reflect our
capacity to realise value from our large, high-quality land bank. I
am also pleased that we have been able to maintain high levels of
customer satisfaction and we have continued to take steps to
improve our build quality, process and the sustainability of our
business.
"Looking ahead, we entered the new financial year delivering
against a significant order book, with excellent visibility over
full year revenue. We are receiving sustained demand across the
business supported by low interest rates, a competitive mortgage
market and a prevailing shortage of homes across all tenures. In
particular, this year we expect a significant increase in the
contribution to revenue from affordable housing where we are
delivering against a record order book. Our growth will also be
supported by our first revenue from PRS housing and continued
progress in private housing. As a result, on an underlying basis
(excluding the contribution from land sales) we expect to report
strong growth for the full year, in line with market expectations.
Consequently, the Board continues to look to the future with
confidence and to delivering sustainable value for all of our
stakeholders."
Enquiries
Springfield Properties
Sandy Adam, Chairman
Innes Smith, Chief Executive Officer +44 1343 552550
-----------------
Singer Capital Markets
-----------------
Shaun Dobson, James Moat, Rachel Hayes
(Investment Banking) +44 20 7496 3000
-----------------
Luther Pendragon
-----------------
Harry Chathli, Claire Norbury, Joe
Quinlan +44 20 7618 9100
-----------------
Analyst Presentation
Sandy Adam, Chairman, Innes Smith, Chief Executive Officer, and
Michelle Motion, Chief Financial Officer, will be hosting a webinar
for analysts at 11.00am BST today. To register to participate,
please contact tanweersiddique@luther.co.uk.
Operational Review
For the year to 31 May 2021, Springfield achieved its highest
ever annual revenue and profit - exceeding GBP200m in revenue for
the first time. This reflects significant growth in both private
and affordable housing, with total completions increasing to 973
homes (2020: 727).
Operations recommenced onsite from 15 June 2020 and all sales
offices reopened on 29 June 2020. From the end of June 2020, the
Group was able to begin handing over homes that had been nearing
completion prior to lockdown. Construction activity had resumed on
every site by mid-July and the Group quickly returned to normal
build rate while maintaining strict protocols to ensure the health
& safety of the workforce and customers.
During the year, Springfield continued to advance the execution
of its strategy. In particular, Springfield commenced work on site
for its first PRS housing, with Sigma Capital Group plc, which will
further diversify the Group's revenue streams. The Group also made
strategic land sales and a land purchase.
High global demand, COVID-19 and Brexit have resulted in
material and labour supply constraints across the industry.
However, the large proportion of fixed price contracts for
materials that the Group had in place during the year as well as
house price inflation served to mitigate the impact of increased
material and labour costs. Similarly, Springfield's strong,
established relationships with sub-contractors, together with its
large directly employed workforce, helped the Group maintain the
labour force needed.
Sustainability has always been a key element of Springfield's
culture. During the year, the Group took steps to formalise its
approach alongside continuing to improve its operations in this
respect. The Group also commenced reviewing its Group-wide
processes to identify areas to enhance efficiency as well as
increase the quality of its offering.
Land Bank
This year Springfield continued to focus on realising value from
its large, high-quality land bank and thereby strengthening the
balance sheet. This was achieved through prioritising the delivery
of homes nearing completion during the first half and with the
strategic sale of land towards the end of the year. These land
sales, which were material in nature, were across two of the
Group's large (non-Village) developments in the Central Belt (for
approximately 200 plots in total) to two national housebuilders.
The Group also commenced construction of its first PRS homes, which
targets a different customer base and therefore will accelerate the
build out of the Villages.
However, the Group also continued to strategically invest in its
land bank, purchasing 150 ha of land in Midlothian in the Edinburgh
commuter belt. With this purchase, the Group intends to submit a
planning application for a large development providing
approximately 1,000 new homes in an area of high demand.
At 31 May 2021, the Group had 45 active developments (31 May
2020: 44 active developments) and during the year:
-- 14 developments were completed;
-- 16 new active developments were added to the land bank;
-- planning gained on 609 plots over 11 developments;
-- the proportion of the land bank with planning consent
increased to 52.4% (31 May 2020: 49.4%); and
-- as at 31 May 2021, the land bank consisted of 15,281 plots (31 May 2020: 15,882).
Private Housing
During the year , the Group completed 593 private homes (2020:
419). The average selling price for private housing increased to
GBP244k compared with GBP236k for 2020 due to housing mix and house
price inflation.
The Group had 25 active private housing developments at 31 May
2021 (31 May 2020: 25), with 8 active developments added during the
period and 8 developments completed. In total, as at 31 May 2021,
the private housing land bank was 11,078 plots on 57 developments
(31 May 2020: 11,416 plots on 61 developments).
Planning consent was gained for 252 plots across 5 developments
for private housing. As at 31 May 2021, 51.7% (5,726 plots) of
private housing plots had planning consent (31 May 2020: 49.7%),
with 23.8% going through the planning process and 24.5% at the
pre-planning stage.
Village developments
Springfield Villages are standalone developments that include
infrastructure and neighbourhood amenities. Each Village is
designed to have up to approximately 3,000 homes, catering for
around 7,000 residents, with ample green space and community
facilities. They primarily offer private housing, but also include
affordable housing and, beginning with Bertha Park, will soon
include PRS housing. Springfield has three Villages that are
already home to growing communities and two Village developments
that are going through the planning process.
Private housing revenue from Springfield's Village developments
increased by 43.0% over the previous year, with 150 private
completions (2020: 112). This was based on strong growth in
completions at Linkwood in Elgin where sales had been launched in
the prior year. Sales also continued at the Group's most advanced
Villages - Dykes of Gray near Dundee and Bertha Park near Perth. At
present, 99% of the available homes at Springfield's Villages have
either been sold, missived or reserved, reflecting their
popularity. There was also an expansion of amenities and
strengthening of community engagement, such as with the opening of
convenience stores, appointment of community liaison officers and
launching quarterly newsletters.
A key milestone was achieved with the commencement of work on
site for PRS housing at Bertha Park with Sigma Capital Group plc
("Sigma"), a high-quality PRS provider specialising in suburban,
family homes. It follows the receipt earlier in the year of
planning approval for 75 homes to be built for PRS at Bertha Park
and, post period, construction commenced. This will be
Springfield's first PRS housing. The Group will deliver
purpose-built houses for families to rent, which, following
handover, will be owned, let and managed by Sigma. This is expected
to increase the build out rate for the Village and underscores
Springfield's commitment to develop mixed-tenure Villages that meet
everyone's housing needs.
Also at Bertha Park, the Group commenced construction on the
second phase of private housing, which consists of 25 homes, and,
subsequently, on a further phase of 82 homes.
Other private housing highlights
Outside of the Village developments, the Group completed 443
private homes during the year (2020: 307). Private housing revenue
excluding the contribution from Villages made up 76.5% of total
private housing revenue (2020: 76.0%). In particular, there was a
strong increase in completions in the North region and by the
Group's Walker Group and Dawn Homes brands driven by new site
launches.
Affordable Housing
The Group completed 380 affordable homes during the year (2020:
308). The average selling price was slightly higher at GBP145k
compared with GBP138k for 2020.
The number of active affordable housing developments was 20 at
31 May 2021 (31 May 2020: 19), of which 10 were affordable-only
developments (31 May 2020: nine). During the year, 8 active
affordable housing developments were added to the land bank and 6
were completed. As at 31 May 2021, the total affordable housing
land bank was 4,203 plots on 49 developments (31 May 2020: 4,466
plots on 47 developments).
The Group secured a number of new affordable housing contracts
during the year. This has supported the contracted order book for
affordable housing, which, as at 31 May 2021, was GBP91.5m for
delivery over the next two years. This represents the Group's
largest ever order book for affordable housing.
Key operational highlights in affordable housing during the year
include commencing construction, which is progressing well, at The
Wisp, Edinburgh under an GBP18.5m development agreement with PfP
Capital for 104 apartments and at Dalmarnock, Glasgow under an
GBP18.2m agreement with West of Scotland Housing Association for
144 affordable homes and two commercial units. This represents the
first phase of construction at these two large developments that
are for a total of 139 and 237 homes respectively.
Springfield continued to make progress under its local authority
framework agreement with Moray Council for 10 affordable-only
developments. The handover of two developments was completed during
the period and a further development was handed over post period.
This brings the total number of developments completed under this
agreement to four, with a fifth currently nearing handover.
Construction has also commenced on two new developments, one of
which began post period after the Group secured the contract in the
first half. Springfield is currently in contract negotiation for
the remaining three developments under this agreement.
At Bertha Park Village, the handover was completed, post period,
of the second phase of 58 affordable homes. Springfield furthered
its commitment to developing mixed-tenure Villages with signing a
contract with Kingdom Housing Association for the first Mid-Market
Rent ("MMR") housing to be offered at Bertha Park, with
construction commencing on the 28 apartments post period. MMR is a
form of affordable housing under Scottish law where tenants
generally pay a lower rent than their area's market rate, but more
than local social housing tenants. In addition, a number of
properties are currently being built at Bertha Park for Perth and
Kinross Council that are adapted to specific client needs, such as
being suited for a user of an electric wheelchair.
The Group continued to expand its partnership network.
Springfield completed handovers of the first phase at Duns in the
Scottish Borders to Berwickshire Housing Association, the Group's
first project with this housing association, and signed a contract
with them for the second phase. Springfield also signed, post
period, its first contract with Aberdeenshire Council, which is for
38 homes at Banff.
During the year, the Group secured planning consent for 357
affordable housing plots across 11 developments (one of which was
an affordable-only development). As at 31 May 2021, 54.3% (2,284
plots) of affordable housing plots had planning (31 May 2020:
48.7%), with 26.1% of plots going through the planning process and
19.6% at the pre-planning stage.
Financial Review
For the year ended 31 May 2021, revenue grew by 51.0% to
GBP216.7m (2020: GBP143.5m). The significant increase reflects
strong growth across private and affordable housing as well as
other revenue. Private housing remained the largest contributor to
Group revenue, accounting for 66.7% (2020: 68.9%) of total sales.
The significant growth in Private housing revenues was driven by a
large increase in completions in the North region and by the
Group's Walker and Dawn homes brands helped by new site launches.
Affordable housing revenue grew strongly with contracts signed and
work commencing on several new developments during the year. Two
strategic land sales accounted for the majority of the substantial
increase in other revenues.
Revenue 2021 2020 Change
GBP'000 GBP'000
Private housing 144,584 98,924 +46.2%
--------- --------- --------
Affordable housing 55,143 42,504 +29.7%
--------- --------- --------
Other* 16,965 2,088 +712.5%
--------- --------- --------
TOTAL 216,692 143,516 +51.0%
--------- --------- --------
*Primarily land sales
Gross profit increased to GBP38.8m (2020: GBP27.4m) due to the
significant increase in revenues noted above. Gross margin was
17.9% compared with 19.1% for the prior year, which primarily
reflects the impact of the two strategic land sales. Adjusted gross
margin (to exclude the contribution from land sales in both years)
was 18.5% (2020: 18.6%).
Administrative expenses were GBP19.4m (2020: GBP16.5m) with the
increase primarily reflecting staff costs as well as bank charges
resulting from non-utilisation fees due to the significant
reduction in bank debt. In 2021, administrative expenses included
accrued bonus, which was absent from 2020 due to the cancellation
of bonuses as part of the cost mitigation measures in response to
the pandemic. The Group also had approximately 11 months of salary
costs in 2021, compared with 10 months in the prior year, as 80% of
employees had been brought back from furlough by the end of July
2020. However, these increases in administrative expenses were
offset by cost mitigation measures implemented primarily in
response to COVID-19 - with the Group achieving its target of
realising GBP1m in cost savings on an annualised basis as part of
the Group's cost saving programme.
Exceptional items were GBP0.6m (2020: GBP0.4m). This relates to
the cost of furloughed employees of GBP2.3m (2020: GBP3.1m),
largely offset by grant income of GBP2.1m (2020: GBP2.7m) received
under the UK Government's Coronavirus Job Retention Scheme, and
redundancy costs from a rationalisation of the business.
The Group made an operating profit of GBP19.1m (2020: GBP10.8m).
Excluding exceptional items, operating profit was GBP19.8m (2020:
GBP11.3m). Adjusted profit before tax and exceptional items was
GBP18.5m (2020: GBP10.2m) and statutory profit before tax was
GBP17.9m (2020: GBP9.7m).
Basic earnings per share (excluding exceptional items) increased
to 14.41 pence (2020: 8.33 pence). Statutory basic earnings per
share were 13.79 pence (2020: 7.89 pence). Return on capital
employed (profit before interest and taxation divided by average
capital employed, which is calculated as the average of 2021 and
2020 total assets less current liabilities) was 14.3% (2020:
8.3%).
Net debt at 31 May 2021 was GBP20.8m compared to GBP70.9m at 31
May 2020. This primarily reflects the significant increase in
revenues, part of which was from homes where the majority of build
costs had been incurred in the prior year but which were not handed
over until the easing of lockdown in June 2020. The two significant
land sales completed at the end of the financial year also
contributed to the substantial reduction in net debt.
The Group's GBP18m 12-month term loan from Bank of Scotland
secured in April 2020 was repaid in full in April 2021, having been
fully drawn but never utilised. The revolving credit facility of
GBP64.5m, which was put in place for three years in January 2019
with an expiry date in January 2022, was extended, post period in
September 2021, for a further three years to January 2025 on
similar terms to the existing facility.
Customer Satisfaction
As a result of the pandemic, the Group was required to adapt to
new ways of engaging customers. This included making greater use of
digital solutions, such as 'virtual walk throughs' and developing a
facility to enable digital reservations with secure online
payments. It also involved adapting more traditional arrangements,
such as introducing 'drive in' reservations where customers remain
in their vehicle while liaising with sales personnel. Compliance
with Scottish Government guidance meant that for much of the year
the Group's after-sales service could only remain open for
emergencies. The Group is pleased to report that, despite the
challenges, the Group achieved a rating of 91.9% in this year's
In-House customer satisfaction survey and a Net Promoter Score of
52.
During the year, the Group also took steps to further improve
its customer service processes, which is expected to have an impact
from this current year. Springfield established a Customer Feedback
Group, with representation from different roles across the
business, to focus on the 'voice' of the customer and identifying
opportunities for improvement through qualitative feedback
contained in its In-House surveys. The Group also worked with an
independent consultant to increase the efficiency and quality of
the after-sales service, undertaking a review during the year and
introducing changes post period. The Group will be closely
monitoring customer experience in the coming months to ensure the
changes have the desired effect.
Build and Quality
The Group has continued to take action across the business to
improve product quality and the efficiency of the build process. In
particular, to strengthen the quality standard across the Group, a
minimum specification has been introduced that will be phased into
new sites. Each home will include, as standard, features that are
practical for customers such as a turfed back garden, outside tap,
six-foot boundary fencing and cabling for electric vehicle charging
in homes with driveways. This move further sets the Group apart
from many of its competitors in terms of what is included as
standard.
Post period, a review was commenced of the design, construction
and plotting efficiency of the standard house types across the
Springfield, Walker Group and Dawn Homes brands. The intention is
to seek opportunities for improvement and refinement of the
house-type range across the Group to enable its current large-scale
sites to become more efficient and to make future sites and
potential land bids more competitive.
Sustainability
Springfield has always had sustainability at its core. It is
part of the Group's culture to strive to do the right thing across
its operations: whether it be the design of developments,
engagement with stakeholders or in the way it looks after customers
and employees. As an employer, Springfield has always sought to
create a workplace where everyone can thrive, with a strong
commitment to apprenticeships and other formal training. At
present, over 15% of the Group's workforce is in apprenticeships or
formal training programmes.
The Group has undertaken several innovative environmental
initiatives, such as the use of waste plastic roads, the early
introduction of electric vehicle charging points within customers'
homes and the widespread use of Heat Pump technology. The Group
recently introduced its first electric van for the timber kit
factory, which marks the first step in the Group's plan to phase
out diesel vehicles in favour of a fully electric fleet, including
the option of zero emission electric vehicles for staff.
In 2021, 91% of the homes completed by Springfield were
constructed from timber kits. Springfield has had its own off-site
timber frame factory for several years and last year the factory
delivered 70% of the Group's timber kits. With housebuilding peers
striving to increase the number of the homes they deliver off-site
and from timber, this is a key differentiator for the Group. With
the exception of some bespoke apartment blocks delivered for
affordable housing partners, the Group is committed to constructing
all homes from timber. In addition, the timber used is sourced
responsibly and accredited by the Forest Stewardship Council or the
Programme for the Endorsement of Forest Certification.
The Group is already established on the route map to net zero
and well prepared for the next step changes in energy standards.
Springfield has now begun taking steps to formalise its approach to
sustainability and to set measurable targets and benchmarks for
improvement in the coming years. The Group values the importance of
input from its employees, partners and other stakeholders in
developing a strategic framework for ESG. Consultation has
commenced and to support these efforts, post period, a Group
Quality, Environment and Sustainability Manager was appointed and a
specialist consultant has been engaged to work with the Board and
senior management to ensure that the Group continues this journey
on the right track.
Markets
The Group continues to be supported by strong short- and
long-term market drivers across its private and affordable
housing.
Demand for housing in Scotland continues to outstrip supply,
which is supported by a competitive mortgage market with a good
range of products and low interest rates. As a result, house prices
remain buoyant, with an increase of 11.1% in the average house
price in Scotland in the year to May 2021.
A further key trend is the increasing desirability for the type
of housing Springfield offers. Customers are prioritising homes
that are more spacious, with gardens and greenspace and, as
particularly provided by the Group's Village developments, have
local amenities within walking distance.
Key differences in the Scottish legal system continue to provide
strong visibility. The Scottish missive system, which ensures that
customers are contracted into the purchase much earlier in the
build programme, gave added confidence that cancellations would be
minimal as the Group recommenced work early in the new year. In
addition, with all homes sold on freehold, where the buyer becomes
the sole owner of both the building and the land on which it
stands, the Group is not impacted by the ground rents
investigations seen elsewhere in the UK.
While the COVID-19 shutdown disrupted progress towards the
achievement of the Scottish Government's target to deliver 50,000
new affordable homes by May 2021, a clear commitment to the
delivery and funding of affordable housing remains. Following
re-election in May this year, the Scottish Government has
established a new longer-term target to deliver 110,000 energy
efficient affordable homes by 2032 with almost GBP3.5bn earmarked
for affordable housing funding through to March 2026. Springfield's
continued strong partnerships with local authorities and housing
associations mean that it is well-placed to deliver homes to help
achieve this target and meet the ongoing demand to help ensure
everyone in Scotland has a great place to live.
Dividend
The Board is pleased to recommend a final dividend of 4.45p per
share, subject to shareholder approval at the next Annual General
Meeting, with an ex-dividend date of 4 November 2021, a record date
of 5 November 2021 and a payment date of 9 December 2021 . This
brings the total dividend for the year, including the interim
dividend already paid, to 5.75 p per share (2020: 2.0p).
Outlook
Springfield entered the 2022 financial year delivering against a
strong order book, with excellent visibility over full year revenue
forecasts based on homes delivered, contracted (missived and
affordable contracts) and reserved. In particular, the Group
expects a significantly increased contribution to revenue from
affordable housing, reflecting substantial growth in that segment.
As at 31 May 2021, the Group's contracted order book in affordable
housing was worth GBP91.5m for delivery over the next two years.
This represents Springfield's highest ever order book for
affordable housing. The Group will also receive its first revenue
from PRS housing this year, which will further contribute to
growth. In private housing, the Group is delivering against a
significant order book and continues to receive strong demand.
Accordingly, the Group expects to achieve the same level of sales
for FY 2022 as for the year to 31 May 2021 (with FY 2021 having
benefited from the large number of homes nearing completion at the
end of the prior year that were rolled over due to the COVID-19
pandemic).
The Group continues to experience excellent demand across the
business, which is supported by strong market drivers in private
and affordable housing. There remains an undersupply of housing in
Scotland and the desirability of the type of housing Springfield
offers has increased. There is good mortgage availability and low
interest rates, and the Scottish Government has restated its
commitment to investing in the delivery of more affordable
homes.
The Group is well-positioned to manage the moderate inflationary
cost pressures, that are being experienced across the industry,
thanks to its robust supply chain, with a high proportion of
materials being procured directly. The Group also expects house
price increases to absorb any increased build costs this year.
As a result, on an underlying basis (excluding the land sales),
the Group expects to report strong growth for the year to 31 May
2022 over 2021, in line with market expectations. This is supported
by excellent visibility over forecast revenues and reflects
significantly increased sales of affordable housing, the first
contribution from PRS housing and sustained delivery in private
housing. Consequently, the Board continues to look to the future
with confidence.
Publication of Annual Report
The Company's annual report and accounts for the year ended 31
May 2021 are being sent to shareholders today and have been made
available on the 'Financial Results and Reports' page of the
Company's website:
https://www.springfield.co.uk/investor_relations/results_and_reports
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEARED 31 MAY 2021
2021 2020
As restated
(Note 2.1)
Note GBP000 GBP000
Revenue 3 216,692 143,516
Cost of sales (177,895) (116,165)
---------- -------------
Gross profit 38,797 27,351
Administrative expenses before
exceptional items (19,422) (16,520)
Exceptional items 5 (622) (422)
---------- -------------
Total administrative expenses (20,044) (16,942)
Other operating income 375 428
Operating profit 19,128 10,837
Finance income 367 320
Finance costs (1,607) (2,273)
Share of profits from joint
venture - 852
Profit before taxation 17,888 9,736
Taxation 4 (4,178) (2,093)
---------- -------------
Profit for the year and total
comprehensive income 13,710 7,643
========== =============
Profit for the year and total
comprehensive income is attributable
to:
-Owners of the parent company 13,710 7,646
-Non-controlling interests - (3)
---------- -------------
13,710 7,643
========== =============
Earnings per share (pence
per share)
Basic earnings on profit for
the year 7 13.79p 7.89p
Diluted earnings on profit
for the year 7 13.55p 7.81p
Adjusted earnings per share
(pence per share)
Basic earnings on profit for
the year 7 14.41p 8.33p
Diluted earnings on profit
for the year 7 14.16p 8.24p
The Group has no items of other comprehensive income.
These financial statements were approved and authorised for
issue by the Board of Directors on 13 September 2021. Signed on
behalf of the Board by:
Sandy Adam Company number: SC031286
Executive Chairman
COnsolidated BALANCE SHEET
FOR THE YEARED 31 May 2021
2021 2020
As restated
(Note
2.1)
Non-current assets Note GBP000 GBP000
Property, plant and equipment 4,539 6,342
Intangible assets 1,649 1,649
Investments - 202
Deferred taxation 539 203
Trade and other receivables 5,411 4,899
---------- -------------
12,138 13,295
---------- -------------
Current assets
Inventories 156,774 174,400
Trade and other receivables 23,683 8,968
Cash and cash equivalents 15,826 1,522
---------- -------------
196,283 184,890
---------- -------------
Total assets 208,421 198,185
Current liabilities
Trade and other payables 51,646 20,571
Short-term bank borrowings 34,000 18,000
Deferred consideration 8 - 2,107
Short-term obligations under
lease liabilities 760 1,188
Corporation tax 901 780
---------- -------------
87,307 42,646
---------- -------------
Non-current liabilities
Long-term bank borrowings - 51,000
Long-term obligations under
lease liabilities 1,854 2,255
Deferred taxation 2,920 2,413
Contingent consideration 9 3,900 3,797
Provisions 10 1,210 210
---------- -------------
9,884 59,675
---------- -------------
Total liabilities 97,191 102,321
---------- -------------
Net assets 111,230 95,864
========== =============
Equity
Share capital 11 128 122
Share premium 11 56,761 52,330
Retained earnings 54,341 43,412
---------- -------------
Equity attributable to owners
of the parent company 111,230 95,864
========== =============
consolidated Statement of Changes in Equity
FOR THE YEARED 31 MAY 2021
Share capital Share premium Retained Non-controlling Total
earnings interest
Note GBP000 GBP000 GBP000 GBP000 GBP000
1 June 2019 120 50,118 38,292 30 88,560
Share issue 2 2,212 - - 2,214
Total comprehensive
income for the year - - 7,646 (3) 7,643
Share based payments - - 557 - 557
Acquisition of minority
interest - - - (27) (27)
Dividends 6 - - (3,083) - (3,083)
-------------- -------------- ---------- ---------------- --------
31 May 2020 122 52,330 43,412 - 95,864
Share issue 6 4,431 - - 4,437
Total comprehensive
income for the year - - 13,710 - 13,710
Share based payments - - 493 - 493
Dividends 6 - - (3,274) - (3,274)
-------------- -------------- ---------- ---------------- --------
31 May 2021 128 56,761 54,341 - 111,230
============== ============== ========== ================ ========
The share capital account records the nominal value of shares
issued.
The share premium account records the amount above the nominal
value received for shares sold, less share issue costs.
Retained earnings represents accumulated profits less losses,
and distributions. Retained earnings also includes share based
payments.
Consolidated Statement of Cash Flows
year to 31 May 2021
2021 2020
Cash flows generated from operations Note GBP000 GBP000
Profit for the year 13,710 7,643
Adjusted for:
Exceptional items 622 422
Taxation charged 4,178 2,093
Finance costs 1,607 2,273
Finance income (367) (320)
--------- ---------
Adjusted operating profit before working
capital movement 19,750 12,111
Exceptional items - cash movement (622) (341)
Gain on disposal of tangible fixed assets (148) (71)
Share based payments 493 557
Non-cash movement 81 550
Share of joint venture profit - 319
Amortisation of intangible fixed assets 61 8
Depreciation and impairment of tangible
fixed assets 2,175 2,356
--------- ---------
Operating cash flows before movements
in working capital 21,790 15,489
Decrease/(increase) in inventory 17,498 (25,642)
(Increase)/decrease in accounts and
other receivables (14,321) 6,533
Increase/(decrease) in accounts and
other payables 32,037 (22,960)
--------- ---------
Net cash from/(used in) operations 57,004 (26,580)
Taxation paid (4,227) (3,125)
--------- ---------
Net cash inflow/(outflow) from operating
activities 52,777 (29,705)
--------- ---------
Investing activities
Purchase of property, plant and equipment (206) (553)
Proceeds on disposal of property, plant
and equipment 218 101
Deferred consideration paid on acquisition
of subsidiary - (4,000)
Net purchase of subsidiary undertakings 304 -
Interest received 13 38
Proceeds from joint venture loan - 828
--------- ---------
Net cash from/(used in) investing activities 329 (3,586)
--------- ---------
Financing activities
Proceeds from issue of shares 2,249 26
Proceeds from bank loans - 38,000
Repayment of bank loans (35,000) -
Payment of lease liabilities (1,480) (1,531)
Dividends paid 6 (3,274) (3,083)
Interest paid (1,297) (1,661)
--------- ---------
Net cash (outflow)/inflow from financing
activities (38,802) 31,751
--------- ---------
Net increase/(decrease) in cash and
cash equivalents 14,304 (1,540)
Cash and cash equivalents at beginning
of year 1,522 3,062
--------- ---------
Cash and cash equivalents at end of
year 15,826 1,522
========= =========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
1. Organisation and Trading Activities
Springfield Properties PLC is incorporated and domiciled in
Scotland as a public limited Company and operates from its
registered office in Alexander Fleming House, 8 Southfield Drive,
Elgin, Morayshire, IV30 6GR.
The Group consists of Springfield Properties PLC and its
subsidiaries Glassgreen Hire Limited, DHomes 2014 Holdings Limited,
Walker Holdings (Scotland) Limited and SP Sub 2018 Limited.
The Group also indirectly includes Dawn Homes Limited, DHPL
Limited and DHHG1 Limited which are subsidiaries of DHomes 2014
Limited.
The Group also indirectly includes Walker Group (Scotland)
Limited, Walker Contracts (Scotland) Limited and Craig Developments
Limited which are subsidiaries of Walker Holdings (Scotland)
Limited.
2. Summary of Significant Accounting Policies
The principal accounting policies adopted and applied in the
preparation of the financial statements are set out below.
These have been consistently applied to all the years presented
unless otherwise stated.
2.1 Basis of accounting
The financial information set out in this announcement does not
constitute statutory accounts as defined in Section 434(3) of the
Companies Act 2006. The consolidated balance sheet at 31 May 2021
and the consolidated profit and loss account, consolidated cash
flow statement, consolidated statement of changes in equity and
associated notes for the year then ended have been extracted from
the Group's financial statements which were approved by the Board
of Directors on 13 September 2021 and are audited with an
unqualified opinion. The comparative consolidated financial
information for the year ended 31 May 2020 is based on an abridged
version of the Group's published financial statements for that
year, which contained an unqualified audit report. A copy of the
2020 financial statements has been filed with the Registrar of
Companies.
The financial statements of Springfield Properties PLC have been
prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006.
The Group has adopted all the standards and amendments to
existing standards which are mandatory for accounting periods
beginning on 1 June 2020.
The financial statements have been prepared under the historical
cost convention except for contingent consideration.
Standards adopted for the first time
There are no new or revised standards effective for annual
periods beginning on or after 1 April 2020 that are relevant to the
Group.
Standards, amendments and interpretations to existing standards
that are not yet effective
There are no new standards, amendments to existing standards or
interpretations that are effective as at 31 May 2021 relevant to
the Group. After Brexit, the UK will continue to apply
International Accounting Standards in conformity with the
requirements of the Companies Act 2006.
Prior period restatement
On reviewing the Group's accounting policy for revenue
recognition on construction contracts for the year ended 31 May
2020, the Board concluded that the application of the policy
resulted in the Group accruing for costs that had not yet been
incurred, which is now understood to be non-compliant with IFRS15.
The Group has therefore moved to a policy based on stage of
completion being determined by the development cost incurred as a
proportion of the total expected development cost as this is
considered to be in line with the satisfaction of the underlying
performance obligations. The accounting policy note (Note 2.5) has
been updated to reflect this change. As a result, in May 2020 both
revenue and cost of sales have been reduced by GBP0.9m with no
impact on the profit for the year. An amount of GBP2.8m has also
been reclassified on the balance sheet from accruals to payments on
account with no impact on current liabilities or net assets.
The Directors have reviewed the liabilities included in the
provisions line in the prior year and have concluded, in line with
accounting standards, that deferred taxation of GBP2,413,000,
deferred consideration of GBP2,107,000 and contingent consideration
of GBP3,797,000 should have been presented separately. The prior
year has been restated to reflect that. These presentation changes
have no impact on net assets in either period.
2.2 Basis of consolidation
The consolidated financial statements incorporate those of
Springfield Properties PLC and its subsidiaries and jointly
controlled entities. Where the company has control over an
investee, it is classified as a subsidiary. The company controls an
investee if all three of the following elements are present: power
over the investee, exposure to variable returns from the investee,
and the ability of the investor to use its power to affect those
variable returns. Control is reassessed whenever facts and
circumstances indicate that there may be a change in any of these
elements of control. Contingent consideration is measured at its
fair value at the date of acquisition. If the contingent
consideration meets the definition of equity, it is not remeasured,
and settlement is accounted for within equity. Other contingent
consideration is remeasured at fair value at each reporting date
with subsequent changes in the fair value of the contingent
consideration recognised in the consolidated profit and loss
account.
All financial statements are made up to 31 May 2021.
All intra-Group transactions, balances and unrealised gains on
transactions between Group companies are eliminated on
consolidation.
2.3. Functional and presentation currencies
The financial statements are presented in Pound Sterling (GBP),
rounded to the nearest GBP000, which is also the currency of the
primary economic environment in which the Group operates (its
functional currency).
2.4. Going concern
The financial year ending 31 May 2021 was an exceptional one for
the Group with a strong rebound from COVID-19 seeing record sales
and profit levels. The GBP18m term loan which was secured in April
2020 to cover the Group in the event of an extended lockdown period
was repaid in full in April 2021.
The Group continues to have a strong relationship with Bank of
Scotland as principal bankers. In September 2021, the revolving
credit facility (GBP64.5m) was extended and is now repayable in
January 2025. As part of securing the extension of the revolving
credit facility the Group prepared a 3-year plan which incorporated
the Board approved budget to May 2022.
A range of sensitivities were run including reducing selling
prices, build costs increasing offset by land purchase delays and
any associated revenue impact.
The extended bank facility and detailed 3-year plan gives the
Directors comfort that the Group has adequate resources to continue
in operational existence for the foreseeable future. Thus, the
Directors continue to adopt the going concern basis of accounting
in preparing the financial statements.
2.5. Revenue and profit recognition
Sale of private homes
Revenue on private home sales is recognised at a point in time
and the performance obligation is the transfer of the completed
property to the customer on legal completion and receipt of cash.
Revenue is measured at the fair value of the consideration received
net of VAT and trade discounts.
The Group's site valuation process determines the forecast
profit margin for each site. The valuation process acts as a method
of allocating land costs and construction work in progress costs of
a development to each individual plot and drives the recognition of
costs in the profit and loss account as each plot is sold. Any
changes in the forecast profit margin of a site from changes in
sales prices or costs to complete is recognised across all homes
sold in both the current period and future periods.
Revenue on contracts recognised over time
Revenue from affordable housing contracts is recognised over
time as development progresses as the construction activity
enhances an asset controlled by the customer.
Where the outcome of a contract can be estimated reliably, the
amount of revenue recognised depends on the stage of completion.
This is based on the development costs incurred as a proportion of
the total expected development costs.
Contractual cashflows are determined by independent surveys of
work performed to date. These do not always align with the revenue
recognised on the underlying performance obligation and any
cashflows received that are in excess of the revenue recognised are
included as payments on account. Where the cashflows received are
less than revenue recognised the difference is included within
trade debtors.
Revenues derived from variations on contracts are recognised
only when they can be reliably measured. Where the outcome of a
construction contract cannot be estimated reliably, contract costs
are recognised as expenses in the period in which they are incurred
and contract revenue is recognised to the extent of contract costs
incurred where it is probable that they will be recoverable. When
it is probable that total contract costs will exceed contract
turnover, the expected loss is recognised as an expense
immediately.
Land Sales
Revenue from land sales is recognised on legal completion based
on fair value at transfer.
2.6. Grants
Grants are recognised when it is probable that the grants will
be received and that all related conditions will be met, usually on
submission of a valid claim for payment. Revenue grants are
credited to the profit and loss account as and when the relevant
expenditure is incurred.
2.7. Employee benefits
The costs of short-term employee benefits are recognised as a
liability and an expense in the period in which the services are
received, unless those costs are required to be recognised as part
of the cost of stock.
The cost of any unused holiday entitlement is recognised in the
period in which the employee's services are received.
Termination benefits are recognised immediately as an expense
when the Group is demonstrably committed to terminate the
employment of an employee or to provide termination benefits.
2.8. Retirement benefits
Payments to defined contribution retirement benefit schemes are
charged as an expense as they fall due.
2.9. Net finance costs
Finance costs comprise interest payable on bank loans and the
unwinding of the discount from nominal to present day value of
provisions and lease liabilities. Finance income comprises the
unwinding of the discount from nominal to present day value of
shared equity. Interest income and interest payable is recognised
in the income statement on an accruals basis.
2.10. Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
profit and loss account because it excludes items of income or
expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the reporting
date.
Deferred tax
Deferred tax is provided using the liability method on temporary
differences between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes at the
reporting date. Deferred tax is not recognised on temporary
differences arising from the initial recognition of goodwill or
other assets and liabilities in a transaction that affects neither
the tax profit nor the accounting profit. Deferred tax is measured
on a non-discounted basis using the tax rates and laws that have
then been enacted or substantively enacted by the reporting
date.
The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered. Deferred tax is
calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised.
Deferred tax is charged or credited in the profit and loss account,
except when it relates to items charged or credited directly to
equity, in which case the deferred tax is also dealt with in
equity. Deferred tax assets and liabilities are offset when the
Company has a legally enforceable right to offset current tax
assets and liabilities and the deferred tax assets and liabilities
relate to taxes levied by the same tax authority.
2.11. Exceptional items
Exceptional items are those material items which, by virtue of
their size or incidence, are presented separately in the profit and
loss account to enable a full understanding of the Group's
financial performance.
Transactions that may give rise to exceptional items include
transactions relating to acquisitions and costs relating to changes
in share capital structure as well as redundancy and restructuring
costs.
With respect to the impact of COVID-19, the furlough grant
income received from the government has been separately disclosed
within the consolidated profit and loss account as exceptional, due
to its incremental nature. The direct furlough payroll costs are
considered abnormal costs in the current year and consistent with
previous years, any direct payroll costs reflecting employee down
time (abnormal production) is expensed to the profit and loss
account. Due to the COVID-19 pandemic and sites being closed from
April until the end of June 2020, the quantum of direct employee
down time in the current year is significant. The administrative
furlough payroll costs disclosed as exceptional are considered to
be interdependent with the related government grant income and
while not being incremental or abnormal in nature, the government
support measures were key in protecting these jobs. See Note 5.
2.12. Property, plant and equipment
Tangible fixed assets are initially measured at cost and
subsequently measured at cost net of depreciation and any
impairment losses. Depreciation is recognised so as to write off
the cost of assets less their residual values over their useful
lives on the following bases:
Buildings - 2% and 5% straight line
Plant and machinery - 2-10 years straight line
Fixtures, fittings & equipment - 2-5 years straight line
Motor vehicles - 4-5 years straight line
Right of use leased assets - over the lease term, straight line with no residual value
Land is not depreciated.
The gain or loss arising on the disposal of an asset is
determined as the difference between the sale proceeds and the
carrying value of the asset and is credited or charged to the
profit and loss account.
2.13. Intangible fixed assets
Intangible assets comprise of market related assets (e.g.
trademarks, imprints & brands) and goodwill on acquisition.
Market related assets
Market-related assets are expected to have an indefinite useful
life; however, impairment reviews are performed annually. Any
impairment losses or reversals of impairment losses are recognised
immediately in the profit and loss account.
Goodwill on acquisition
Goodwill on acquisitions of subsidiaries represents the excess
of the consideration transferred, the amount of any non-controlling
interest in the acquiree and the acquisition-date fair value of any
previous equity interest in the acquiree over the fair value of the
net identifiable assets acquired.
Any impairment losses are recognised immediately in the profit
and loss account.
2.14. Fixed asset investments
Interests in subsidiaries are initially measured at cost and
subsequently measured at cost less any accumulated impairment
losses. The investments are assessed for impairment at each
reporting date and any impairment losses are recognised immediately
in the profit and loss account. Costs associated with the
acquisition of subsidiaries are recognised in the profit and loss
account as an exceptional item.
2.15. Impairment of fixed assets
At each reporting end date, the Group reviews the carrying
amounts of its tangible fixed assets to determine whether there is
any indication that those assets have suffered an impairment loss.
If any such indication exists, the recoverable amount of the asset
is estimated in order to determine the extent of the impairment
loss (if any). Where it is not possible to estimate the recoverable
amount of an individual asset, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to
sell and value-in-use. Any impairment loss and reversal of losses
are recognised in the profit and loss account.
2.16. Inventories and work in progress
Property, including land held under development, acquired or
being constructed for sale in the ordinary course of business,
rather than to be held for rental or capital appreciation, is held
as stock and is measured at the lower of cost and net realisable
value.
Cost comprises of the invoiced value of the goods purchased and
includes attributable direct costs, labour and production
overheads.
Net realisable value is the estimated selling price in the
ordinary course of the business, based on market prices at the
reporting date and discounted for the time value of money if
material, less estimated costs of completion and the estimated
costs necessary to make the sale. Any excess of the carrying amount
of stocks over its net realisable value is recognised as an
impairment loss in the profit and loss account.
At each reporting date, an assessment is made for impairment.
Any excess of the carrying amount of stocks over its estimated
selling price less costs to complete and sell is recognised as an
impairment loss in the profit and loss account.
Where sites are 'secured' via option agreements, these sites are
only included as stock when the agreement becomes
unconditional.
Options included as part of stock are stated at the lower of
cost and net realisable value.
2.17. Financial instruments
Financial instruments are recognised in the balance sheet when
the Group becomes party to the contractual provisions of the
instrument.
Financial assets and liabilities are offset, with the net
amounts presented in the financial statements, when there is a
legally enforceable right to set off the recognised amounts and
there is an intention to settle on a net basis or to realise the
asset and settle the liability simultaneously.
Financial assets at amortised cost
The Group's financial assets fall into loans and receivables
category.
Loans and receivables are financial assets with fixed or
determinable payments that are not quoted in an active market.
Financial assets included in loans and receivables are recognised
initially at cost. Subsequent to initial recognition they are
measured at amortised cost using the effective interest rate
method, less any impairment losses.
Loans outside the Group are valued at the recoverable amount and
a market rate of interest is charged.
Impairment of financial assets
The Group recognises an allowance for expected credit losses for
all debt instruments not held at fair value through profit and loss
account. Expected credit losses are based on the difference between
the contracted cash flows due in accordance with the contract and
all the cash flows that the Group expects to receive, discounted at
an approximation of the original effective interest rate.
For trade receivables and, in the Parent Company, intercompany
receivables, the Group applies a simplified approach in calculating
expected credit losses. The Group does not track changes in credit
risk, but instead recognises a loss allowance based on lifetime
expected credit losses at each reporting date.
Derecognition of financial assets
Financial assets are derecognised only when the contractual
rights to the cash flows from the asset expire or are settled, or
when the Group transfers the financial asset and substantially all
the risks and rewards of ownership to another entity, or if some
significant risks and rewards of ownership are retained but control
of the asset has transferred to another party that is able to sell
the asset in its entirety to an unrelated third party.
Financial liabilities
All of the Group's financial liabilities are measured at
amortised cost.
Other financial liabilities
Other non-derivative financial liabilities are initially
measured at historical cost less any directly attributable
transaction costs. Subsequent to initial recognition, these
liabilities are measured at amortised cost using the effective
interest method.
The effective interest method is a method of calculating the
amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash payments
through the expected life of the financial liability to the net
carrying amount on initial recognition.
Derecognition of other financial liabilities
Financial liabilities are derecognised when the Group's
contractual obligations expire or are discharged or cancelled.
2.18. Deferred consideration
Deferred consideration payments are initially recognised at fair
value at the date of acquisition which is based on the timing of
the cash outflows and an appropriate discount rate. It is
subsequently measured at amortised cost.
2.19. Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at
call with banks and bank overdrafts. Bank overdrafts are shown
within borrowings in current liabilities.
2.20. Dividends
Dividends are recognised as liabilities in the period in which
the dividends are approved and once they are no longer at the
discretion of the Company.
2.21. Leases
All leases are accounted for by recognising a right-of-use asset
and a lease liability except for leases of low value assets and
leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the
contractual payments due to the lessor over the lease term, with
the discount rate determined by reference to the Group's
incremental borrowing rate at commencement of the lease.
Right of use assets are initially measured at the amount of the
lease liability, reduced for any lease incentives received.
Subsequent to initial measurement lease liabilities increase as
a result of interest charged at a constant rate on the balance
outstanding and are reduced for lease payments made. Right-of-use
assets are amortised on a straight-line basis over the remaining
term of the lease.
Right of use assets comprise the Group's existing premises in
Elgin, Larbert, Livingston and Glasgow along with certain items of
office equipment and motor vehicles.
2.22. Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of a Group after deducting all of its
liabilities. Equity instruments issued by the Group are recorded at
the proceeds received net of direct issue costs.
Share capital represents the amount subscribed for shares at
nominal value.
The share premium account represents premiums received on the
initial issuing of the share capital. Any transaction costs
associated with the issuing of shares are deducted from share
premium, net of any related income tax benefits. Any bonus issues
are also deducted from share premium.
Retained earnings include all current and prior period results
as disclosed in the profit and loss account.
2.23. Share-based payments
Equity-settled share-based payments are measured at fair value
at the date of grant and recognised as an expense over the vesting
period. The amount recognised as an expense is adjusted for leavers
to the scheme. Fair value is measured by use of a relevant pricing
model.
3. Segmental Reporting
A segment is a distinguishable component of the Group's
activities from which it may earn revenues and incur expenses,
whose operating results are regularly reviewed by the Group's chief
operational decision makers to make decisions about the allocation
of resources and assessment of performance and about which discrete
financial information is available. In identifying its operating
segments, management generally follows the Group's service line
which represent the main products and services provided by the
Group. The Directors believe that the Group operates in one
segment:
-- Housing building activity
As the Group operates solely in the United Kingdom segment
reporting by geographical region is not required.
2021 2020
As restated
Revenue GBP000 GBP000
Private residential properties 144,584 98,924
Affordable housing 55,143 42,504
Other 16,965 2,088
--------- ------------
Total revenue 216,692 143,516
Gross profit 38,797 27,351
Administrative expenses (19,422) (16,520)
Exceptional items (622) (422)
Other operating income 375 428
Finance income 367 320
Finance costs (1,607) (2,273)
Share of profits from joint venture - 852
--------- ------------
Profit before tax 17,888 9,736
Taxation (4,178) (2,093)
--------- ------------
Profit for the year 13,710 7,643
========= ============
4. Taxation
2021 2020
GBP000 GBP000
Current tax
UK corporation tax on profits for the current
period 4,016 1,929
Adjustments in respect of prior periods (10) 101
------- -------
4,006 2,030
------- -------
Deferred tax
Origination and reversal of timing differences 158 61
Adjustments in respect of prior periods 14 2
172 63
------- -------
4,178 2,093
======= =======
The charge for the year can be reconciled to the standard rate
of tax as follows:
2021 2020
GBP000 GBP000
Profit before tax 17,888 9,736
======= =======
Tax at the UK corporation tax rate of 19% (2020:
19%) 3,399 1,850
Effects of:
Tax effect of expenses that are not deductible
in determining taxable profit 19 30
Exceptional items - no deductions - 15
Adjustments in respect of prior years (10) 101
Depreciation on assets not qualifying for tax
allowances 17 5
Deferred tax adjustments in respect of prior
years 14 2
Land remediation relief - (1)
Other timing differences (105) 102
Adjust deferred tax to closing average rate 844 (11)
------- -------
Tax charge for period 4,178 2,093
======= =======
5. Exceptional Items
2021 2020
GBP000 GBP000
Redundancy costs 389 -
Acquisition and other transaction related costs(1) - 81
Wages costs for furloughed employees(2) 2,318 3,064
-------- --------
2,707 3,145
Grant furlough income (2) (2,085) (2,723)
-------- --------
622 422
======== ========
(1) 2020 Acquisition and other transactions related costs relate
to the planning being achieved at Carlaverock which had previously
been assessed as 98% likely
(2) The GBP2,318k (2020: GBP3,064k) is the Company cost of all
employees who were on furlough during the year. The GBP2,085k
(2020: GBP2,723k) is the furlough grant income received from the UK
government in relation to the furloughed employees for the
year.
6. Dividends
On 30 October 2020, a final dividend of 2.0p (2020: 3.2p) per
share was paid to shareholders, amounting to GBP1,957,644 (2020:
GBP3,083,186). In respect of the current year, on 23 February 2021,
an interim dividend of 1.3p (2020: nil) per share was paid to
shareholders, amounting to GBP1,316,186 (2020: GBPnil). The
Directors propose that a dividend of 4.45p per share will be paid
to shareholders on 9 December 2021. This dividend is subject to
approval by shareholders at the Annual General Meeting and has not
been included as a liability in these financial statements. The
proposed final dividend for 2021 is payable to all shareholders on
the Company's Register of Members on the record date of 5 November
2021.
7. Earnings per share
The basic earnings per share is based on the profit for the year
divided by the weighted average number of shares in issue during
the year. The weighted average number of ordinary shares for the
year ended 31 May 2021 assumes that all shares have been included
in the computation based on the weighted average number of days
since issue.
In respect of diluted earnings per share the weighted average is
calculated by adjusting for all outstanding share options that are
potentially dilutive (i.e. where the exercise price is less than
the average market price of the shares during the year).
2021 2020
GBP000 GBP000
Profit for the year attributable to owners
of the Company 13,710 7,646
Adjusted for the impact of exceptional costs
in the year 622 422
------------ -----------
Normalised earnings 14,332 8,068
============ ===========
Weighted average number of ordinary shares
for the purpose of basic earnings per share 99,436,929 96,850,807
Effect of dilutive potential shares: share
options 1,767,609 1,080,721
------------ -----------
Weighted average number of ordinary shares
for the purpose of diluted earnings per
share 101,204,538 97,931,528
============ ===========
Earnings per ordinary shares (pence per
share)
Basic earnings per share on profit for the
year 13.79 7.89
Diluted earnings per share on profit for
the year 13.55 7.81
Underlying earnings per ordinary shares
(price per share) (1)
Basic earnings per share on profit for the
year 14.41 8.33
Diluted earnings per share on profit for
the year 14.16 8.24
(1) Underlying earnings is presented as an additional
performance measure and is stated before exceptional items.
8. Deferred Consideration
As part of the purchase agreement of Walker Holdings (Scotland)
Limited, there was a further GBP4,375,000 of Deferred consideration
payable. This can be broken down into: (i) GBP2,187,500 payable on
the first anniversary of the acquisition date (31 January 2020);
(ii) GBP2,187,500 payable on the second anniversary of the
acquisition date (31 January 2021). The outstanding discounted
amount payable at the period end is GBPnil (2020:
GBP2,107,289).
2021 2020
GBP000 GBP000
Deferred consideration - 2,107
--------- -------
- 2,107
========= =======
9. Contingent consideration
As part of the purchase agreement of Walker Holdings (Scotland)
Limited, there was a further GBP6,000,000 payable which is included
within Provisions. GBP4,000,000 is payable when outline planning is
granted at Carlaverock and GBP2,000,000 payable when detailed
planning is granted at Carlaverock with probability was assessed at
98% and 95% respectively. The outstanding discounted amount payable
at the period end is GBP1,900,000 (2020: GBP1,796,486). The
remaining GBP100,000 (5% on the GBP2,000,000 still to be paid) has
been treated as a contingent liability due to the uncertainty over
the future payment.
As part of the purchase agreement of DHomes 2014 Limited there
was a further GBP2,500,000 payable for an area of land if (i) we
make a planning application when we reasonably believe the council
will recommend approval; or (ii) it is zoned by the council. The
directors have assessed the likelihood of the land being zoned and
have included provision of GBP2,000,000 based on 80% probability.
The outstanding amount payable at the period end included within
Provisions is GBP2,000,000 (2020: GBP2,000,000). The remaining
GBP500,000 (20% on the GBP2,500,000 still to be paid) has been
treated as a contingent liability due to the uncertainty over the
future payment.
2021 2020
GBP000 GBP000
Acquisition of DHomes 2014 Holdings Limited
("Dawn") 2,000 2,000
Acquisition of Walker Holdings (Scotland)
Limited ("Walker") 1,900 1,797
3,900 3,797
======= =======
10. Provisions
Dilapidation provisions are included for all rented buildings
within the Group. An onerous lease provision has been created due
to the closure of the Walker office in Livingston. Maintenance
provisions relate to costs to come on developments where the final
homes have been handed over.
2021 2020
GBP000 GBP000
Dilapidation provision 185 -
Onerous lease provision 200 -
Maintenance provision 825 210
------- -------
1,210 210
======= =======
11. Share capital
The Company has one class of ordinary share which carry full
voting rights but no right to fixed income or repayment of
capital.
The share capital account records the nominal value of shares
issued.
The share premium account records the amount above the nominal
value received for shares sold, less transaction costs.
Ordinary shares of 0.125p Number of Share capital Share premium
- a llotted, called up and shares GBP000 GBP000
fully paid
At 1 June 2020 97,860,963 122 52,330
Share issue 4,216,563 6 4,431
At 31 May 2021 102,077,526 128 56,761
============ ============== ==============
During the year 2,539,270 shares (2020: 30,660) were issued in
satisfaction of share options exercised.
On 31 January 2021, 1,677,293 shares (2020: 1,480,742) were
issued to satisfy the second anniversary (2020: first anniversary)
payment for Walker Holdings (Scotland) Limited.
12. Transactions with related parties
Other related parties include transactions with a retirement
schemes in which Directors and close family members of key
management personnel are beneficiaries.
During the year dividends totalling GBP1,415k (2020: GBP1,446k)
were paid to key management personnel (Board of Directors and the
members of the Operational Board).
The remuneration of the key management personnel (PLC Directors
and Group Directors) of Springfield Properties PLC is set out below
in aggregate for each of the categories specified in IAS 24 -
Related Party Disclosures:
2021 2020
GBP000 GBP000
Short-term employee benefits 3,539 2,314
Share-based payments 356 186
Post-employment benefits 181 175
4,076 2,675
======== ========
During the year the Group entered into the following
transactions with related parties:
Sale of goods Purchase of
goods
2021 2020 2021 2020
GBP000 GBP000 GBP000 GBP000
Bertha Park Limited (1) 8,989 14,911 - -
DHHG 1 Limited (2) - 2,519 - -
Other entities which key management
personnel have control, significant
influence or hold a material
interest in 118 1,249 33 232
Key management personnel 44 32 - -
Other related parties 121 5 313 -
------- ------- ------- -------
9,272 18,716 346 232
======= ======= ======= =======
Sales to related parties represent those undertaken in the
ordinary course of business.
Rent paid
2021 2020
GBP000 GBP000
Entities which key management personnel
have control,
significant influence or hold a
material interest in 176 153
Key management personnel 11 3
Other related parties 128 104
------- -------
315 260
======= =======
2021 2020
GBP000 GBP000
Interest received:
Entities which key management personnel have
control,
significant influence or hold a material interest
in 355 260
------- -------
355 260
======= =======
The following amounts were outstanding at the reporting end
date:
2021 2020
GBP000 GBP000
Amounts receivable:
Bertha Park Limited (1) 6,772 6,755
DHHG 1 Limited (2) - 26
Other entities which key management personnel
have control, significant influence or hold
a material interest in (short-term) 3 3
Key management personnel 3 -
Other related parties 3 -
------- -------
6,781 6,784
======= =======
2021 2020
GBP000 GBP000
Accounts payable:
Entities which key management personnel have
control,
significant influence or hold a material interest
in 8 15
James Adam - 283
Other related parties 58 -
------- -------
66 298
======= =======
Amounts owed to/from related parties are included within
creditors and debtors respectively at the year-end. No security has
been provided on any balances.
Transactions between Group companies have been eliminated on
consolidation and are not disclosed in this note.
(1) Bertha Park Limited is a Company in which Sandy Adam and
Innes Smith are Directors. During the year the Group made sales to
Bertha Park Limited of GBP8,989k (2020: GBP14,911k) in relation to
a build contract. At the year-end GBP1,772k (2020: GBP2,411k) is
included in trade debtors and included within other debtors is a
loan of GBP5,000k (2020: GBP4,344k) at the year-end.
(2) During the year, DGGH 1 Limited became a wholly owned
subsidiary therefore the transactions during the year are
eliminated on consolidation. For the year ended 31 May 2021, DHHG 1
Limited was a jointly owned entity of Dawn Homes Limited, which
Michelle Motion is a Director. Comparative figures show that the
Group made sales to DHHG 1 Limited totalling GBP2,519k in relation
to a build contract and management fees. At 31 May 2020 GBP26k was
due from DHHG 1 Limited.
13. Analysis of net debt
The analysis of net debt is as follows:
2021 2020
GBP000 GBP000
Cash in hand and bank 15,826 1,522
Bank borrowings (34,000) (69,000)
--------- ---------
(18,174) (67,478)
Lease liability (2,613) (3,443)
Net debt (20,787) (70,921)
========= =========
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END
FR FFFFLAEIVLIL
(END) Dow Jones Newswires
September 14, 2021 02:00 ET (06:00 GMT)
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