TIDMSPR
RNS Number : 5261M
Springfield Properties PLC
17 September 2019
17 September 2019
Springfield Properties plc
("Springfield", the "Company" or the "Group")
Full Year Results
Strong growth with delivery on all targets
Significant expansion in scale and geographic presence
Springfield Properties (AIM: SPR), a leading housebuilder in
Scotland delivering private and affordable housing, announces its
full year results for the year ended 31 May 2019.
Financial Highlights
2018/19 2017/18 Change
GBPm GBPm
Revenue 190.8 140.7 +36%
Gross margin 18.0% 15.7% +230bps
Adj. operating profit* 17.6 10.7 +65%
Adj. profit before
tax* 16.5 9.8 +69%
Net debt 29.6 15.3 +93%
EPS* (p) 13.92 10.78 +29%
* Adjusted to exclude exceptional expenses of GBP0.6m in 2018/19
and 2017/18 respectively
The Directors of Springfield are pleased to propose a final
dividend of 3.2p per share (2017/18: 2.7p), bringing the total
dividend for the year to 4.4p, representing an 18.9% increase over
the previous year (2017/18: 3.7p).
Operational Highlights
-- Strong revenue and gross margin growth across private and affordable housing
-- Completion of new homes increased by 23.6% to 952 (2017/18: 770)
-- Expanded 16-year land bank to 15,938 plots (31 May 2018:
12,476), 28.4% of which have planning permission, and Gross
Development Value ("GDV") of land bank at 31 May 2019 increased to
GBP3.2bn (31 May 2018: GBP2.4bn)
-- Significantly strengthened geographic presence in Edinburgh
commuter belt with the acquisition of Walker Group, a
Livingston-based housebuilder focussed on private housing, and by
securing land for a new Village at Gavieside, Livingston
-- First full-year contribution from Dawn Homes, which performed
strongly, in line with management's expectations
Private Housing Delivery
-- Revenue increased by 40.6% to GBP143.3m (2017/18: GBP101.9m)
-- Completions grew by 37.0% to 630 homes (2017/18: 460)
-- Average selling price increased by 2.7% to GBP227k (2017/18: GBP222k)
-- Added 805 consented plots, including 533 from Walker Group acquisition
-- Land bank grew to 11,511 plots (31 May 2018: 8,757)
-- Expanded geographical presence in Edinburgh commuter belt
with Walker Group acquisition and securing land at Gavieside, and
in the Highland region, including, post period, a strategic land
acquisition in Inverness
-- Excellent progress on Village developments:
o Total of 212 homes occupied at year end across Dykes of Gray
and Bertha Park
o Development of Village centres and infrastructure at Dykes of
Gray and Bertha Park, including a major new road link, with work
led by the Local Authority, connecting Bertha Park to Perth
o Villages increasingly becoming sufficiently established to
support new businesses, with advanced construction on commercial
units during the year and, post period, the opening of a sports
centre at Linkwood, Elgin and Bertha Park Secondary School, the
first entirely new secondary school to be established in Scotland
for more than 15 years and the first Microsoft Flagship School in
the UK
o Commenced construction at Linkwood, Elgin; advanced planning
on Durieshill, Stirling; and secured land for 2,500-home
development at Gavieside and submitted detailed planning
application for first phase
Affordable Housing Delivery
-- Revenue increased by 15.1% to GBP42.9m (2017/18: GBP37.3m)
-- Completions grew by 3.9% to 322 homes (2017/18: 310)
-- Average selling price increased by 10.8% to GBP133k (2017/18: GBP120k)
-- Planning consent secured for 189 affordable plots
-- Land bank grew to 4,427 plots (31 May 2018: 3,719)
-- Strong progress under local authority framework agreement for
10 developments, including completion of first development post
period
-- Planning consent for 237 affordable homes at Dalmarnock, in
Glasgow, advanced during the year and approved post period
-- Progressed construction of 54 affordable homes and six
adjoining commercial units at Bertha Park - the first affordable
housing at a Village development
-- Pipeline expanded with acquisition of Walker Group land bank
that will require 346 affordable homes
Sandy Adam, Executive Chairman of Springfield Properties, said:
"I am pleased to report another year of strong growth for
Springfield. We increased our revenue from both private and
affordable housing, and achieved significant improvement in gross
margin. We expanded our geographic presence and scale and made
great progress with our Village developments, with the most
advanced strengthening in appeal as they become increasingly
established new communities.
"Throughout our history, Springfield's strategies have been
designed to secure growth and future-proof the business. We have
been successful in achieving this in the past and this continues to
be our focus for the future. With our strong land bank of nearly
16,000 plots, the progress that we're making with our Village
developments and sustained market drivers, we are well-positioned
for continued growth. On behalf of the Board, I thank our
shareholders for their support and look forward to providing
further updates on our achievements."
Innes Smith, Chief Executive Officer of Springfield Properties,
commented: "This was another great year for Springfield as we
delivered on all of our targets and strengthened our ability to
deliver sustained growth. In particular, our investments in the
acquisition of Dawn Homes, Walker Group and our four high calibre
managing directors have greatly enhanced our business. None of this
would have been possible without the skill and hard work of our
employees, for which we thank them. With a great product, an
excellent team and sustained demand for housing in Scotland, we
have established a solid pipeline and remain on track to deliver
continued growth in line with market expectations."
Enquiries
Springfield Properties
Sandy Adam, Executive Chairman
Innes Smith, Chief Executive Officer +44 1343 552550
-----------------
N+1 Singer
-----------------
Shaun Dobson, James Moat (Corporate
Finance)
Rachel Hayes (Corporate Broking) +44 20 7496 3000
-----------------
Luther Pendragon
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Harry Chathli, Claire Norbury, Alexis
Gore, Joe Quinlan +44 20 7618 9100
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Analyst Presentation
Sandy Adam, Executive Chairman, Innes Smith, Chief Executive
Officer, and Michelle Motion, Chief Financial Officer, will be
hosting a presentation for analysts at 9.00am BST today at the
office of Luther Pendragon, 48 Gracechurch Street, London, EC3V
0EJ.
Operational Review
Springfield achieved another year of strong growth with sales
increasing in both private and affordable housing, with total
completions 23.6% higher at 952 new homes (2017/18: 770). This
included excellent progress at the Group's Village developments,
the most advanced of which now have extensive infrastructure and
amenities in place and are strengthening in appeal as they become
increasingly established. During the year, Springfield expanded its
geographic presence in the Edinburgh commuter belt with the
acquisition of Walker Group and by securing land for a fifth
Village development at Gavieside, and into the Highlands,
including, post period, making a strategic land acquisition in
Inverness. Dawn Homes, which made its first full-year contribution,
performed strongly, in line with management's expectations. With
the increased scale of the business, the Group strengthened its
operating structure, including the appointment of four managing
directors.
Land Bank
Springfield significantly increased the size and expanded the
geographic reach of its land bank, securing 4,719 plots in 21
locations (including the Walker Group acquisition). At year end,
the Group was active on 43 developments (31 May 2018: 41 active
developments) and during the year:
-- 22 new active developments were added while 20 developments were completed;
-- the land bank was increased by 27.7% to 15,938 plots (31 May 2018: 12,476 plots);
-- 994 consented plots over 13 developments were added to the
land bank, including 533 plots on seven developments from the
Walker Group acquisition; and
-- as of 31 May 2019, 28.4% of the Group's land bank had planning consent (31 May 2018: 39.5%).
The expansion in the land bank was primarily through the
acquisition of Walker Group during the year, which added 10
developments in a single transaction and significantly strengthened
the Group's visibility over projections for the next three years,
as well as through securing land for a new Village at Gavieside,
Livingston.
The addition of the Walker Group land bank expanded the Group's
geographic presence and established a strong foothold in the
Edinburgh commuter belt. During the year, the Group also continued
to expand its reach into the Highlands region, including, post
period, securing land in Inverness.
The change in the proportion of plots with planning primarily
reflects the expansion in the size of the total land bank with the
addition of new plots at an earlier stage of development.
Private Housing
The Group delivers private housing on developments of various
size across Central, West and the North of Scotland under its
Springfield, Dawn Homes and Walker Group brands. This includes the
standalone Village developments, each with up to 3,000 plots and
the requisite infrastructure and amenities for a village community
to become established. Springfield homes are differentiated by
their high-quality specification and a wide variety of personalised
finishes.
The Group's delivery of private housing continued to be
supported by strong market drivers. For the first half of calendar
year 2019, house prices in Scotland increased by 1.3% annually -
compared with 0.9% for the UK as a whole. In addition, sales
volumes in Scotland for 2019 to the end of April increased over the
same period in 2018, compared with a decline for the UK as a whole,
further reflecting the buoyant market.
During the year, the Group completed 630 private homes,
representing an increase of 37.0% over the previous year (2017/18:
460). The average selling price was GBP227k compared with GBP222k
for 2017/18. The increase in average selling price was primarily
due to the addition of Walker Group, which operates in locations
where there are higher average property prices, and rising property
prices.
The Group's active private housing developments grew to 29 (31
May 2018: 23), with 14 active developments added during the year
while eight developments were completed. In total, the private
housing land bank was expanded to 11,511 plots on 62 developments
(31 May 2018: 8,757 plots on 50 developments).
The Group added 805 consented plots for private housing to the
land bank, including 533 from the Walker Group acquisition, and
5,020 plots were the subject of planning applications; as at 31 May
2019, 29.6% of private plots had planning consent (31 May 2018:
41.7%), with 43.6% of plots going through the planning process and
26.7% at the pre-planning stage.
Village developments
Springfield made excellent progress in the development of its
Villages, with their appeal strengthening as they become
increasingly established.
At Dykes of Gray near Dundee, 178 homes were occupied as at 31
May 2019 (31 May 2018: 108). The Group continued to progress the
development of community infrastructure, including extensive
planting throughout the Village, particularly in central areas, and
the opening of a grass sports pitch and cycling and walking routes.
A third party began construction of a children's nursery post
period and a convenience store is expected to open in the first
half of the current financial year, which reflects Dykes of Gray
becoming sufficiently established to support new businesses. During
the year, planning approval was received to remix an area, which
will broaden the offering at the Village, and a planning
application was submitted for the next phase comprising 218 homes
with community infrastructure, including a primary school. The
planning decision on this application is expected in the first half
of the current financial year.
At Bertha Park near Perth, the first owners moved in during the
year and 34 homes were occupied by 31 May 2019. Development of the
central landscape features progressed and works, led by the Local
Authority, on a new major road that connects the Village directly
to Perth were completed and have facilitated a public transport
link. The first six business units also reached an advanced stage
of construction with occupation expected to begin from October
2019. Post period, during August, Bertha Park Secondary School was
opened to its first pupils. The school is the first entirely new
secondary school to be established in Scotland for more than 15
years and is the first Microsoft Flagship School in the UK.
Springfield commenced on-site construction at Linkwood, Elgin,
where the first phase will comprise 870 homes and community
facilities, provided by third parties, including a primary school,
which is under construction, and a sports centre, which opened post
period. At Durieshill, Stirling, a 3,042-home Village development,
proposals are at an advanced stage, with planning consent expected
towards the end of 2019.
During the year, Springfield secured approximately 400 acres of
zoned land at Gavieside, Livingston, which is in the Edinburgh
commuter belt, for the Group's fifth Village development. The Group
designed the masterplan, which generated an increase in the
anticipated number of plots to 2,500. Post period, a detailed
planning application was submitted for the first phase of 502
homes, play areas and up to eight business units, which will
provide employment and services for local people.
Other private housing highlights
The Group progressed sales on 25 private housing developments
during the year (excluding Villages and the Walker Group
acquisition), which have a total of 506 homes. Private housing
excluding the contribution from Villages made up 81% of total
private housing revenue (2017/18: 84%).
In the North of Scotland, highlights included receiving planning
and launching sales for further homes at Meadow Lea, Nairn, with
buyers camping out overnight to secure a home at the sales launch.
The Group extended its geographical reach in the Highlands with the
launch of sales at Dornoch and by securing a development in Beauly.
Post period, Springfield achieved a key milestone with a strategic
land acquisition in Inverness.
At The Wisp, a large development area for 200 homes in South
East Edinburgh, the Group received planning permission in principle
for the next phase of new homes and submitted a planning
application for 139 apartments, comprising 104 private and 35
affordable homes.
Advances were made on the Dawn Homes and Walker Group
developments. This included the submission of a detailed planning
application for 147 homes at Neilston, located on the outskirts of
Glasgow, and, immediately post period, receiving planning approval
for 240 private homes at Dalhousie South and planning permission in
principle for 561 homes at Tranent, near Edinburgh.
Affordable Housing
Springfield develops affordable housing in partnership with
Local Authorities, Housing Associations or other public bodies.
This can be alongside private housing under Section 75 Agreements
with Local Authorities (whereby private developers agree to make a
contribution of housing, money or infrastructure as a condition of
planning permission) or on standalone developments that consist
entirely of affordable homes.
During the year, the number of affordable home completions grew
to 322 (2017/18: 310) and the average selling price increased by
10.8% to GBP133k (2017/18: GBP120k) due to changes in sales mix. At
31 May 2019, the Group was operating on 14 active affordable
housing developments (31 May 2018: 18), of which six were
affordable-only developments (31 May 2018: 13) with the reduction
due to the timing of the release of planning consents. During the
year, the total affordable housing land bank increased to 4,427
plots on 41 developments (31 May 2018: 3,719 plots on 43
developments).
Springfield secured planning consent for 189 affordable housing
plots and 2,133 plots were the subject of planning applications. At
31 May 2019, 25.3% of affordable housing plots had planning (31 May
2018: 34.4%), with 48.2% of plots going through the planning
process and 26.5% at the pre-planning stage.
During the year, the Group made good progress under its Local
Authority framework agreement for 10 affordable-only developments.
The Group commenced construction on three of the developments, with
one progressing to completion of handovers post period. The Group
also secured build contracts for another two of the developments
during the year, with work commencing on site, post period, in
early July.
Plans for 237 affordable homes in Dalmarnock, in Glasgow, were
approved post period. The development is part of the Clyde Valley
Regeneration project and will include retail space and urban
apartments, with construction due to start on site in the coming
months.
During the year, Springfield progressed the construction of 54
affordable homes and six adjoining commercial units at Bertha Park.
The handover of these homes and buildings is expected to take place
in the first half of this current financial year. This is the first
affordable housing to be delivered at any of the Group's Village
developments and is the initial phase of an expected 750 affordable
homes to be built at Bertha Park over the next 30 years.
The Group's affordable housing pipeline was also expanded with
the acquisition of Walker Group, which did not build affordable
housing; development of its current land bank will require 346
affordable homes to be built. Since the acquisition, the Group has
progressed three Walker Group affordable developments: a planning
application for 70 affordable homes in Dalhousie, Midlothian was
submitted in August 2019; plans are scheduled to be submitted in
the first half of this financial year for 69 homes in West Calder,
West Lothian; and Springfield is in early-stage discussions with
Midlothian Council for a development at Windygoul, Bonnyrigg.
Strengthened Organisation & Operations
During the year, the Group significantly expanded and
strengthened its operations - above all, with the acquisition of
Walker Group. This greatly enhanced the Group's sales presence in
the east of Central Scotland, within the Edinburgh commuter belt.
The Walker Group premises in Livingston and all of the company's 53
staff were also retained. The integration of the business has
progressed positively and Walker Group continued to trade as
expected.
Following the acquisition of Dawn Homes at the end of the
2017/18 financial year, Springfield focussed on embedding that
acquisition during 2018/19, which provided the Group with a
presence in a new region, west of Central Scotland, and an
established supply chain. Dawn Homes has continued to perform
strongly, in line with management's expectations.
At the beginning of the year, Springfield established a new
group operating structure, including a Group Operating Board
comprising four managing directors for North Scotland (private
housing), Central Scotland (private housing), Dawn Homes and
Partnerships (affordable housing) respectively; and the directors
of the respective corporate functions. Subsequently, the managing
director for Central Scotland (private housing) also became
responsible for running Walker Group following the acquisition of
that business. This structure has enhanced operational efficiency
across the Group and supported the increase in the scale of the
business.
The Group is benefitting from the addition of further strong
sales, land and planning, and commercial teams from Dawn Homes and
Walker Group, and is leveraging the significant experience and
capabilities gained from the combination of the three businesses.
Springfield intends to effect Group-wide supply chain efficiencies
over the coming year. Movement of staff around the Group is
broadening opportunities for employees, and individual corporate
functions are beginning to offer their services Group-wide, which
is expected to further increase efficiencies and improve
performance.
Springfield continued to progress in making its developments
more environmentally sustainable and energy efficient. During the
year, the Group pioneered the use of an eco-friendlier asphalt mix
for road surfacing, incorporating plastic waste in a section of
road at one of the Group's Elgin developments. This reduces the
amount of bitumen used, while increasing the durability and
longevity of the road surface. The initiative complements
Springfield's ongoing commitment to increasing the environmental
credentials of its homes, with a key aspect of the design process
being an assessment of options for improving energy efficiency.
The eco-friendly asphalt mix was also used to resurface the yard
at the Group's timber kit factory, which was among a number of
improvement measures implemented to increase production capacity
and efficiency. This contributed to the number of kits produced in
2018/19 being 36.9% higher than the previous year.
In addition, the Group improved its customer surveying processes
to increase response times, thereby enabling action to be taken
more quickly if required. Over 90% of customers surveyed, who had
moved into a Springfield home between December 2018 and May 2019,
responded that they would recommend Springfield to a friend or
relative.
Financial Review
This was another year of strong growth for Springfield, with
increases in completions, sales and profit before tax.
Revenue for the year to 31 May 2019 was 35.6% higher than the
previous year at GBP190.8m (2017/18: GBP140.7m). Growth was
primarily driven by the 40.6% increase in revenue from private
housing, which remained the largest contributor to Group revenue,
accounting for 75.1% of total sales. There was growth in revenue
from affordable housing of 15.1% as well as an increase in other
income, largely relating to the recognition of revenue from the
sale of land under a land swap with a major housebuilder, to
exchange 62 plots at Dykes of Gray for land in Kinross.
Revenue 2018/19 2017/18 Change
GBP'000 GBP'000
Private housing 143,260 101,867 +40.6%
--------- --------- --------
Affordable housing 42,906 37,272 +15.1%
--------- --------- --------
Other* 4,638 1,584 +192.8%
--------- --------- --------
TOTAL 190,804 140,723 +35.6%
--------- --------- --------
*Principally the recognition of revenue under the land swap as
well as construction-only projects, typically on land not owned or
controlled by Springfield where the Group receives fees for design
and construction work.
Gross profit for 2018/19 increased by 55.1% to GBP34.3m
(2017/18: GBP22.1m), with a consolidated gross margin improvement
of 230 basis points to 18.0% (2017/18: 15.7%). The increase in
gross margin primarily reflects margin improvement in private
housing delivery due to the Group having completed in the previous
year all but one of its lower margin legacy developments, as well
as the positive impact in 2018/19 of the Dawn Homes and Walker
Group properties, which generate a slightly higher margin.
Total administrative expenses for 2018/19 were GBP18.2m compared
with GBP12.2m for the previous year. The increase reflects the
larger scale of the business, including the addition of Dawn Homes
and Walker Group and the appointment of new managing directors to
enhance the Group's operating structure.
Profit before tax increased by 73.3% to GBP16.0m (2017/18:
GBP9.2m). On an adjusted basis, excluding GBP0.6m of exceptional
items in both 2018/19 and 2017/18 respectively, profit before tax
increased by 69.2% to GBP16.5m (2017/18: GBP9.8m).
Basic EPS (excluding exceptional items) increased by 29.1% to
13.92p for 2018/19 compared with 10.78p for 2017/18 and return on
capital employed ("ROCE") for the year ended 31 May 2019 increased
to 14.6% compared with 11.3% for the prior year.
Net debt at 31 May 2019 was GBP29.6m compared with GBP25.3m at
30 November 2018 and GBP15.3m at 31 May 2018 due to the acquisition
of Walker Group.
Dividend
The Board is pleased to recommend a final dividend of 3.2p per
share (2017/18: 2.7p), subject to shareholder approval at the next
AGM, with an ex-dividend date of 31 October 2019, a record date of
1 November 2019 and a payment date of 18 November 2019. This brings
the total dividend for the year, including the interim dividend
already paid, to 4.4p per share (2017/18: 3.7p), an 18.9% increase
over the previous year.
Outlook
Springfield entered the 2019/20 financial year in a stronger
position than ever before, with a presence in almost all of the key
geographies within Scotland and an enhanced operational structure.
The Group's land bank provides activity for at least the next 16
years at current sales rates and its focus is on progressing its
active sites and developing future sites. Springfield is also
continuing to embed the acquisitions of Walker Group and Dawn
Homes, and is realising benefits increasingly across the Group.
Springfield continues to see good growth across the business. In
particular, the Village developments are progressing well and their
appeal is strengthening as they become increasingly established,
adding further amenities for residents with the opening of other
businesses.
The delivery of both private and affordable housing is supported
by strong market drivers. The demand for housing in Scotland
continues to outstrip supply at a time when interest rates are low
and mortgage availability is good. House price growth in Scotland
is ahead of that in the rest of the UK and the Scottish Government
continues to focus on bolstering levels of affordable housing as it
seeks to hit its target of building 50,000 new affordable homes by
2021.
As a result, the Board of Directors remains confident of
continuing to deliver sustained growth, in line with market
expectations, and delivering shareholder value.
COnsolidated PROFIT AND LOSS ACCOUNT
FOR THE YEARED 31 May 2019
2019 2019 2018
Pre - Exceptional Exceptional Post - Post
Items Items Exceptional - Exceptional
Items Items
Notes GBP000 GBP000 GBP000 GBP000
Revenue 2 190,804 - 190,804 140,723
Cost of sales (156,470) - (156,470) (118,580)
------------------ ------------ ------------- ---------------
Gross profit 34,334 - 34,334 22,143
Administrative expenses 4 (17,673) (565) (18,238) (12,183)
Share of profit before
interest and taxation 584 - 584 21
Other operating income 384 - 384 126
------------------ ------------ ------------- ---------------
Operating profit/(loss) 17,629 (565) 17,064 10,107
Interest receivable
and similar income 416 - 416 147
Finance costs (1,511) - (1,511) (1,039)
------------------ ------------ ------------- ---------------
Profit/(loss) before
tax 16,534 (565) 15,969 9,215
Tax 3 (3,111) - (3,111) (1,854)
------------------ ------------ ------------- ---------------
Profit for the year
and total comprehensive
income 13,423 (565) 12,858 7,361
================== ============ ============= ===============
Profit for the year
and total comprehensive
income is attributable
to:
-Owners of the parent
company 13,413 (565) 12,848 7,353
-Non-controlling interests 10 - 10 8
------------------ ------------ ------------- ---------------
13,423 (565) 12,858 7,361
================== ============ ============= ===============
Earnings per share
Basic earnings, on
profit for the year
(pence per share) 6 13.92p (0.58)p 13.34p 10.02p
Diluted earnings,
on profit for the
year (pence per share) 6 13.79p (0.58)p 13.21p 9.99p
The Group has no items of other comprehensive income.
These financial statements were approved by the Board of
Directors on 16 September 2019.
Signed on behalf of the Board by:
Sandy Adam
Executive Chairman Company number: SC031286
COnsolidated BALANCE SHEET
FOR THE YEARED 31 May 2019
2019 2018
GBP000 GBP000
Non-current assets
Property, plant and equipment 4,977 4,492
Intangible assets 1,649 600
Investments 1,481 1,018
Accounts receivable 903 870
--------
9,010 6,980
-------- --------
Current assets
Inventories and work in progress 148,649 105,630
Accounts receivable 20,144 19,104
Cash and cash equivalents 3,062 12,015
-------- --------
171,855 136,749
-------- --------
Total assets 180,685 143,729
Current liabilities
Accounts payable 43,697 33,910
Short-term obligations under
finance lease 1,012 1,020
Corporation tax 2,018 1,139
-------- --------
46,727 36,069
-------- --------
Non-current liabilities
Long-term borrowings 31,000 25,000
Long-term obligations under
finance lease 624 1,254
Provisions 13,954 2,394
-------- --------
45,578 28,648
-------- --------
Total liabilities 92,305 64,717
-------- --------
Net assets 88,560 79,012
======== ========
Equity
Share capital 120 120
Share premium 50,118 50,105
Retained earnings 38,292 28,767
-------- --------
Equity attributable to owners
of the parent company 88,530 78,992
Non-controlling interest 30 20
-------- --------
Total equity 88,560 79,012
======== ========
consolidated Statement of Changes in Equity
FOR THE YEARED 31 MAY 2019
Share capital Share premium Retained Non-controlling Total
earnings interest
Notes GBP000 GBP000 GBP000 GBP000 GBP000
1 June 2017 73 10,285 22,017 12 32,387
Share issue 47 39,820 - - 39,867
Total comprehensive
income for the
year - - 7,353 8 7,361
Share option reserves - - 218 - 218
Dividends 5 - - (821) - (821)
-------------- -------------- ---------- ---------------- --------
31 May 2018 120 50,105 28,767 20 79,012
Share issue - 13 - - 13
Total comprehensive
income for the
year - - 12,848 10 12,858
Share option reserves - - 434 - 434
Dividends 5 - - (3,757) - (3,757)
-------------- -------------- ---------- ---------------- --------
31 May 2019 120 50,118 38,292 30 88,560
============== ============== ========== ================ ========
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.
Retained earnings represents accumulated profits less losses,
and distributions. Retained earnings also includes share option
reserves.
Consolidated Statement of Cash Flows
year to 31 May 2019
2019 2018
Operating activities Notes GBP000 GBP000
Profit for the year after taxation
(excluding exceptional items) 13,423 7,919
Adjusted for:
Taxation charged 3,111 1,854
Finance costs 1,511 1,039
Interest receivable and similar income (416) (147)
Exceptional items 4 (565) (558)
Gain on disposal of tangible fixed
assets (270) (45)
Share option employment costs 434 218
Share of joint venture profit (420) (21)
Depreciation and impairment of tangible
fixed assets 1,591 1,088
---------
Operating cash flows before movements
in working capital 18,399 11,347
Decrease in inventory 948 6,230
Decrease/(Increase) in accounts and
other receivables 653 (7,314)
(Decrease)/Increase in accounts and
other payables (3,978) 4,166
---------
Net cash generated from operations 16,022 14,430
Income taxes paid (2,868) (1,714)
---------
Net cash inflow from operating activities 13,154 12,716
--------- ---------
Investing activities
Payments to acquire intangible assets - (600)
Purchase of property, plant and equipment (1,549) (752)
Proceeds on disposal of property, plant
and equipment 368 62
Net purchase of subsidiary company
undertakings (20,891) (14,719)
Interest received and similar income 98 19
---------
Net cash used in investing activities (21,974) (15,990)
--------- ---------
Financing activities
Proceeds from issue of shares 13 42,180
Cost from issue of shares - (2,312)
Proceeds from bank loans 68,000 -
Repayment of bank loans (62,000) (22,500)
Proceeds paid to related parties - (4,647)
Repayment of other borrowings - (2,929)
Payment of finance leases obligations (1,065) (849)
Dividends paid 5 (3,757) (821)
Interest paid (1,324) (1,168)
---------
Net cash (outflow)/inflow from financing
activities (133) 6,954
--------- ---------
Net (decrease)/increase in cash and
cash equivalents (8,953) 3,680
Cash and cash equivalents at beginning
of year 12,015 8,335
---------
Cash and cash equivalents at end of
year 3,062 12,015
========= =========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2019
1. 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.
1.1 Basis of accounting
The financial statements of Springfield Properties PLC have been
prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted for use in the European Union ("EU")
applied in accordance with the provisions 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 2018. The Group has not early adopted any other
standard, interpretation or amendment that has been issued but is
not yet effective.
At 31 May 2019 the following new and revised IFRSs relevant to
the Group are issued but are not yet effective:
Effective
date
IFRS 16 Leases 1 January
2019
Amendments to IFRS 9 Prepayment Features with Negative 1 January
Compensation 2019
IFRIC 23 Uncertainty over Income Tax Treatments 1 January
2019
IFRS 16 Leases will be effective for the Group from 1 June 2019.
The key effect of this standard will be to require the Group to
create a long term depreciating "right of use" asset and
corresponding lease liability for leases currently classified as
operating leases and charged over the lease term in accordance with
the current standard IAS 17 Leases. The Group operate a number of
such operating leases, principally in relation to office properties
and vehicles. If IFRS 16 was applied from 1 June 2018, both fixed
assets and other payables would have been increased by GBP3,277,410
at 31 May 2019. There would be no material impact to the reported
profit from operations.
Of the other IFRSs and IFRICs, none are expected to have a
material effect on the financial statements.
Following the implementation of IFRS 15, Revenue from Contracts
with Customers, revenue has been reviewed to ensure that it is
reported in line with IFRS 15. There is no material impact to the
financial statements for the current and prior year.
IFRS 9 Financial Instruments came into effect on 1 January 2018
replacing IAS 39 Financial Instruments: Recognition and Measurement
and requires changes to the classification and measurement of
certain financial instruments from that under IAS 39. The new
standard has been applied fully retrospectively and on review the
majority of the Group's and Parent Company financial assets and
liabilities will continue to be accounted for on an identical basis
under IFRS 9 as they were under IAS 39. There is no material effect
from applying IFRS 9 for expected credit losses.
The financial statements have been prepared under the historical
cost convention.
1.2 Basis of consolidation
The consolidated financial statements incorporate those of
Springfield Properties PLC and its subsidiaries (i.e. entities that
the group controls through its power to govern the financial and
operating policies so as to obtain economic benefits) and jointly
controlled entities.
All financial statements are made up to 31 May 2019.
The jointly owned entity is accounted for using the equity
method.
All intra-group transactions, balances and unrealised gains on
transactions between group companies are eliminated on
consolidation.
1.3. 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).
1.4. Going concern
Any consideration of the foreseeable future involves making a
judgement, at a particular point in time, about future events which
are inherently uncertain.
At the time of approving the financial statements, the directors
have a reasonable expectation 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.
1.5. Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable net of VAT and trade discounts.
Revenue is recognised at the fair value of the consideration
received or receivable on legal completion.
Private house sales
Revenue on private house sales is recognised when control has
been transferred to the purchaser which will normally occur at
handover / legal completion.
Construction contracts
Revenue from construction contracts is generated from affordable
housing contracts and is recognised based on the measured value of
work completed as construction progresses. The measured value of
work is based on certified valuations which consider the stage of
completion of contracts.
Contract expenses are recognised as incurred unless they create
an asset related to future contract activity. An expected loss on a
contract is recognised immediately in the profit and loss
account.
Revenues derived from variations on contracts are recognised
only when they have been accepted by the customer.
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.
1.6. 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.
1.7. Retirement benefits
Payments to defined contribution retirement benefit schemes are
charged as an expense as they fall due.
1.8. Borrowing costs
Borrowing costs relating to qualifying assets are capitalised.
All other borrowing costs are recognised as an expense in the
profit and loss account as they are incurred.
1.9. 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
end 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 balance sheet date.
The carrying amount of deferred tax assets is reviewed at each
reporting end 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.
1.10. 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.
1.11. 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 - 2-5 years straight line
Fixtures, fittings & equipment - 2-5 years straight line
Motor vehicles - 4-5 years straight line
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.
1.12. 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 infinite 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 or reversals of impairment losses are
recognised immediately in the profit and loss account.
Goodwill on associated companies is included in the carrying
amount of the investments.
1.13. Fixed asset investments
Interests in subsidiaries and jointly owned entities 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 or
reversals of impairment losses are recognised immediately in the
profit and loss account. Costs associated with the acquisition of
subsidiaries and jointly owned entities are recognised in the
profit and loss account as an exceptional item.
Jointly owned entities are accounted using the equity method of
accounting. The Group's investment includes the share of
profit/losses.
A subsidiary is an entity controlled by the company. Control is
the power to govern the financial and operating policies of the
entity so as to obtain benefits from its activities.
Entities in which the group has a long term interest and shared
control under a contractual arrangement are classified as jointly
controlled entities.
1.14. 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.
1.15. 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 income 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.
1.16. Construction contracts
Where the outcome of a construction contract can be estimated
reliably, revenue and costs are recognised by reference to the
measured valuation of work of the contract activity at the
reporting end date. Variations in contract work, claims and
incentive payments are included to the extent that the amount can
be measured reliably and its receipt is considered probable.
When it is probable that total contract costs will exceed
contract turnover, the expected loss is recognised as an expense
immediately.
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 the contract costs incurred where it is probable that
they will be recovered.
The "percentage of completion method" is used to determine the
appropriate amount to recognise in a given period. The stage of
completion is measured by the proportion of contract costs incurred
for work performed to date compared to the estimated total contract
costs.
1.17. 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.
Loans and receivables
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 amortised cost and
discounted at a market rate of interest. The discount is being
spread over the development the loan is financing.
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. 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 received, 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 other than trade
payables which are measured at historic cost fall into the other
financial liabilities category.
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.
1.18. Provisions
Deferred consideration payments are valued based on the
probability-weighted average of the economic outflow of payment. An
annual review will be performed on the deferred consideration.
1.19. 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.
1.20. 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.
1.21. Leases
A lease is classified at the inception date as a finance lease
or an operating lease.
Leases are classified as finance leases whenever the terms of
the lease transfer substantially all the risks and rewards of
ownership to the lessees. All other leases are classified as
operating leases.
Finance leases are capitalised at the commencement of the lease
at the inception date fair value of the leased property or, if
lower, at the present value of the minimum lease payments.
Lease payments are apportioned between the finance charges and
the reduction of the lease liability so as to achieve a constant
rate of interest on the remaining balance of the liability.
Finance charges are charged to the profit and loss account.
Operating lease payments, including any lease incentives
received, are recognised in the profit and loss account on a
straight-line basis over the term of the lease except where another
more systematic basis is more representative of the time pattern in
which economic benefits from the lease asset are consumed.
1.22. 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.
1.23. 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.
2. 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.
2019 2018
Revenue GBP000 GBP000
Private residential properties 143,260 101,867
Affordable housing 42,906 37,272
Land sales 3,100 -
--------- ---------
Other 1,538 1,584
--------- ---------
Total Revenue 190,804 140,723
Gross Profit 34,334 22,143
Administrative expenses (17,673) (11,625)
Operating Income 384 126
Profit before interest and tax from JV 584 21
Finance income 416 147
Finance expenses (1,511) (1,039)
Exceptional items (565) (558)
--------- ---------
Profit before tax 15,969 9,215
Taxation (3,111) (1,854)
--------- ---------
Profit for the period 12,858 7,361
========= =========
3. Taxation
2019 2018
GBP000 GBP000
Current tax
UK corporation tax on profits for the current
period 3,117 1,872
Adjustments in respect of prior periods (7) (27)
------- -------
3,110 1,845
------- -------
Deferred tax
Origination and reversal of timing differences 16 23
Adjustments in respect of prior periods (15) (14)
1 9
------- -------
3,111 1,854
======= =======
The charge for the year can be reconciled to the profit per the
income statement as follows:
2019 2018
GBP000 GBP000
Profit before tax 15,969 9,215
======= =======
Tax at the UK corporation tax rate of 19% (2018-
19%) 3,034 1,751
Effects of:
Tax effect of expenses that are not deductible
in determining taxable profit (12) 31
Exceptional items - no deductions 107 106
Adjustments in respect of prior years (7) (27)
Depreciation on assets not qualifying for tax
allowances 4 4
Deferred tax adjustments in respect of prior
years (15) (14)
Land remediation relief (4) (6)
Adjust deferred tax to closing average rate 4 9
------- -------
Tax charge for period 3,111 1,854
======= =======
4. Exceptional Items
2019 2018
GBP000 GBP000
------- -------
Acquisition and other transaction related costs
(1) 565 255
------- -------
Existing share capital conversion to AIM (2) - 303
------- -------
565 558
======= =======
(1) Acquisition and other transactions related costs relate to
the costs incurred relating to the work undertake for the
acquisition of Walker Holdings (Scotland) Limited and its
subsidiaries and jointly owned companies (2018 - DHomes 2014
Holdings Limited and its subsidiaries and jointly owned
companies).
(2) Existing share capital conversion to AIM relates to costs
incurred relating to the work undertaken for the Initial Public
Ordering (IPO) for existing ordinary shares.
5. Dividends
2019 2018
GBP000 GBP000
Total dividend payment 3,757 821
Weighted average number of ordinary shares
in issue 96,333,642 82,083,642
----------- -----------
Dividend per share (pence per share) 3.90 1.00
=========== ===========
6. 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 2019 assumes that all shares have been included
in the computation based on the weighted average number of days
since issue.
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).
2019 2018
GBP000 GBP000
Profit for the year attributable to owners
of the Company 12,848 7,353
Adjusted for the impact of exceptional costs
in the year 565 558
----------- -----------
Normalised earnings 13,413 7,911
=========== ===========
Weighted average number of ordinary shares
for the purpose of basic earnings per share 96,336,885 73,412,651
Effect of dilutive potential shares: share
options 953,235 201,061
----------- -----------
Weighted average number of ordinary shares
for the purpose of diluted earnings per
share 97,290,120 73,613,712
=========== ===========
Earnings per ordinary shares
Basic earnings per share (pence per share) 13.34 10.02
Diluted earnings per share (pence per share) 13.21 9.99
Underlying earnings per ordinary shares
(1)
Basic earnings per share (pence per share) 13.92 10.78
Diluted earnings per share (pence per share) 13.79 10.75
(1) Underlying earnings is presented as an additional
performance measure and is stated before exceptional items.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR FQLLFKKFXBBF
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September 17, 2019 02:01 ET (06:01 GMT)
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