Spirit AeroSystems
Annual Report 2017

Plain-text annual report

Company Registration No. SC031286 (Scotland) Company year £ SPRINGFIELD PROPERTIES PLC ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MAY 2017 SPRINGFIELD PROPERTIES PLC CONTENTS Page Company Information ...................................................................................................................................... 2 Chairman’s Statement ..................................................................................................................................... 3 Strategic Report .............................................................................................................................................. 5 Directors’ Report ............................................................................................................................................. 8 Statement of Directors’ Responsibilities ........................................................................................................ 11 Independent Auditor’s Report ....................................................................................................................... 12 Consolidated Profit and Loss Account .......................................................................................................... 14 Consolidated Balance Sheet ......................................................................................................................... 15 Company Balance Sheet .............................................................................................................................. 16 Consolidated Statement of Changes in Equity .............................................................................................. 17 Company Statement of Changes in Equity ................................................................................................... 18 Consolidated Statement of Cash Flows ........................................................................................................ 19 Company Statement of Cash Flows .............................................................................................................. 20 Notes to the Financial Statements ................................................................................................................ 21 1 SPRINGFIELD PROPERTIES PLC COMPANY INFORMATION DIRECTORS: Mr A W Adam Mrs A F Adam Mr J G Adam Mr I Smith Mr R MacLeod Mr R Eddie (non-executive) Ms M H Motion Mr M Benson (non-executive) Mr E MacLeod Mr T Leggeat SECRETARY: Ms M H Motion REGISTERED OFFICE: Alexander Fleming House 8 Southfield Drive ELGIN IV30 6GR COMPANY REGISTRATION NUMBER: SC031286 (Scotland) SOLICITORS: INDEPENDENT AUDITOR: Kerr Stirling LLP 10 Albert Place STIRLING FK8 2QL Burness Paull 50 Lothian Road Festival Square EDINBURGH EH3 9WJ Johnston Carmichael LLP Commerce House South Street ELGIN IV30 1JE 2 SPRINGFIELD PROPERTIES PLC CHAIRMAN’S STATEMENT FOR THE YEAR ENDED 31 MAY 2017 I am pleased to report another year of strong growth with turnover increasing 22% to £111 million and profit before tax by 31% to £6.7 million. Reaching the milestone of £100 million revenue for the first time in our history has largely been due to the tremendous work carried out by each and every one of our 500 staff. Springfield Properties is a leading housebuilder focused on Scotland offering high-quality private and affordable housing. In the year ended 31 May 2017, Springfield saw growth in all parts of its business as completions increased with 620 new homes and the group adding significantly to the strong land bank that secures our future growth. At year end, our strong land bank (including secured sites subject to planning) stood at 9,195 plots. Private Housing Springfield’s private housing business has achieved a strong reputation in Scotland of delivering high-quality, high-specification housing with the widest range of choice offered to homeowners. We have also developed a core competency in developing difficult sites. Our advantage lies in the fact that our decision making process is flexible and quick as everything is done locally in Scotland. During the year, we built 437 private homes, representing a year-on-year growth of 10%. In the private housing business, our main focus for this year has been to progress the Springfield Villages. We have a current pipeline of five villages secured in strong locations near fast-growing cities and well connected to transport infrastructure. These five villages will deliver 10,000 homes and provide us with a firm base for the future. Our ‘Village’ concept involves developing larger sites of 800 to 3,000 homes and includes amenities such as schools, high street, medical centres etc. By building full villages we benefit from planning efficiencies as we control the full masterplan, from rising land values and from securing approximately 20 years of development with known land costs. The Dykes of Gray village near Dundee, which will have potentially 1,500 new homes, is already up and running and provided us with 48 sales this year, bringing the total number of completions to 56. The finished product – both the homes and the community areas – look superb and set the standard for our other villages. We have also made a start at the Wisp village near Edinburgh, where the first of potentially 800 homes are under construction and sales are strong. At Bertha Park village in Perth, which will be around 3,000 homes, the access road is under construction, and will see the start of construction and sales on site from autumn 2017. At Elgin village, we are still obtaining the necessary contracts and construction of the 2,500 homes is expected to start in 2018. Post-period, plans for the first 870 new homes, two new schools and the state-of- the-art Moray Sports Centre were approved by Moray Council Planning Committee. A fifth village has been added to our portfolio in the past year. Durieshill near Stirling will provide us with 2,500-3,000 homes. We have secured the land and are working on the planning application. Affordable Housing Springfield has achieved a solid track record since we entered the affordable housing market in 2002. This part of the group’s business has contracted revenues and low capital exposure. Over the years we have increasingly become a trusted partner of local authorities as we steadily increase the number of affordable homes built and handed over. One of our main aims over the past two years has been to increase the size of our affordable housing business. This year we have built 183 affordable homes, up 91% from 2015/2016. This brings the number of affordable homes built to date to over 1,500 homes, and gives us approximately 4% share of the affordable housing market in Scotland. The Scottish Government has allocated £3.2 billion to build 50,000 affordable homes over the course of this parliament. This is a massive increase from the 30,000 target of the last five years. Our land buying and planning team have been busy securing land to help meet this target and we expect to see positive results from this activity start to feed through into our accounts next year. We have strong relationships with 12 local authorities and housing associations and are negotiating with seven more. These relationships will be instrumental in reaching our target to double turnover in affordable housing over the next two years. 3 SPRINGFIELD PROPERTIES PLC CHAIRMAN’S STATEMENT FOR THE YEAR ENDED 31 MAY 2017 (CONTINUED) Outlook As we look to the future, I would like to express gratitude to those who have enabled us to reach this point. In particular, on behalf of the management team, I would like to thank all of our 500 staff for their on-going support. With the strengthening of Springfield’s foundations and the long-term growth drivers showing no sign of abating, we look forward to delivering further growth in 2017/18. In the 2017/2018 year, our focus will continue to be to progress our five villages and bring those most advanced towards completion. To be given the privilege to design and build a complete village is an awesome responsibility, one that everyone in Springfield relishes, particularly in the knowledge that our work will be a feature of the Scottish built environment for hundreds of years to come. In our affordable housing business, we expect to double our efforts and continue to grow. There is no doubt that there will be many changes to come and we will approach them with our usual enthusiasm. The things that make Springfield successful - our focus on customers and quality - will not change. They will go on making Springfield successful whatever the challenges. It’s an exciting future for Springfield! Mr A W Adam Chairman 21 August 2017 4 SPRINGFIELD PROPERTIES PLC STRATEGIC REPORT FOR THE YEAR ENDED 31 MAY 2017 REVIEW OF THE BUSINESS The principal business of the group continued to be that of property development. The Chairman’s Statement on page 3 details activities and development of the business over the year. FINANCIAL AND BUSINESS HIGHLIGHTS Highlights include:  Revenue increased by 22% to £111m  Profit before tax increased by 31% to £6.7m  The group built its 4,000th home  Completions increased by 25% with 620 new homes handed over    91% increase in affordable housing handovers 4 new villages are at various stages in planning and build for 800 to 3,000 homes Land for a 5th new village secured near Stirling with potential for 3,000 homes. Land for new villages already secured in Dundee – potentially 1,500 homes, Edinburgh – potentially 800 homes, Perth – potentially 3,000 homes, and Elgin – potentially 2,500 homes. KEY PERFORMANCE INDICATORS 2017 vs 2016 Financial Revenue Gross Profit Operating Profit Profit before Tax Work in Progress Working Capital Net Assets Completions Private Affordable Total Average Selling Price Private Affordable May-17 £000 110,589 16,684 7,832 6,691 81,800 70,158 32,387 May-16 £000 90,779 13,790 6,109 5,101 73,837 55,095 29,245 Homes Homes 437 183 620 £000 197.6 127.0 399 96 495 £000 195.7 125.6 5 SPRINGFIELD PROPERTIES PLC STRATEGIC REPORT FOR THE YEAR ENDED 31 MAY 2017 (CONTINUED) Personnel  Number of employees up to 491 in May 2017 from 456 in May 2016  104 employees, 21.2% of the workforce in training / apprenticeships in May 2017, up from 19.3% of the workforce in May 2016 Environmental All homes are designed to the latest environmental standards. Within the regulatory requirements when designing homes we work to optimise the following: improving profitability, reducing environmental impact and minimising energy bills for customers. Affordable housing is built to an environmental standard higher than regulatory requirement reducing the environmental impact of our homes overall. Quality Management The company is accredited to ISO 19011-2011 standard. During 2017 there was a rise of 32% in the number of improvements actioned as a result of quality management compared to 2016. KEY RISKS AND UNCERTAINTIES Area of risks identified and mitigated against include: market, credit, liquidity, price / sales, cash flow, resources, legal and regulatory, health and safety, land supply, planning and funding. Market, credit and liquidity risk are dealt with at note 26 of the financial statements. Price / Sales Risk The risk of facing reduced demand in an area is mitigated by  Regular reviews of market conditions, product range, pricing and geographic spread to make sure the right homes are delivered in the right places at a profitable price.  Customer service, quality of build and customer satisfaction are monitored to maintain reputation.  Monitoring of changes in government housing policy highlights opportunities and allows forward planning to mitigate risks identified as result of changes in policy.  Mortgage availability remained strong. Any reduction in mortgage availability in the private market is mitigated by growth of the affordable housing side of the business. Cash Flow Risk Detailed budgeting and regular forecasting allows efficient management of future cash flows. Resources Risk The labour market is competitive and there is some upward pressure on building materials. Strategies in place to maintain Springfield’s reputation as a good employer and ensure the appropriate supply of skills includes:    remuneration and reward review annual training review for every employee a board led culture of empowerment Upward pressure on materials prices is being mitigated by:    actively seeking alternative suppliers and materials standardising materials and products across construction to add to buying power negotiating deals at a national level directly with manufacturers Legal and Regulatory Risk The group has an in house legal department which advises and supports the group with legal compliance. 6 SPRINGFIELD PROPERTIES PLC STRATEGIC REPORT FOR THE YEAR ENDED 31 MAY 2017 (CONTINUED) Health and Safety Risk There are health and safety risks inherent to construction. Health and safety is an agenda item at every board meeting. The group has an in house health and safety department which ensures overall compliance by  monitoring health and safety standards across sites with regular visits    taking action where required initiating training introducing or updating applicable policies or procedures Land Supply Risk The risk of securing sufficient land is mitigated by a healthy and growing supply of land secured by contract (17 years plus) in a spread of geographic locations which will appeal to our range of customers. Land is brought forward, through the planning system, in tranches considered by the board to be sufficient to allow the company to achieve its plans for growth. Planning Risk Delays in receiving planning consents could interrupt business. Planning is dealt with internally by expert planners who have good relationships with local authorities. And who are supported by a full architectural and design team. The board reviews the balance of land held at the various stages of planning to ensure the appropriate flow of consented land. Funding Risk The group has bank facilities which have appropriate covenants and sufficient headroom in place. The group and funders communicate regularly. FINANCIAL RISK MANAGEMENT OBJECTIVES Details of the group’s financial risk management objectives and policies are set out in Note 26 to these financial statements. FUTURE DEVELOPMENTS Future development of the group is dealt with in the Chairman’s Statement. Mr A W Adam Chairman 21 August 2017 7 SPRINGFIELD PROPERTIES PLC DIRECTORS’ REPORT FOR THE YEAR ENDED 31 MAY 2017 The directors present their annual report and the audited financial statements of the group for the year ended 31 May 2017. PRINCIPAL ACTIVITY AND BUSINESS REVIEW The group is no longer required to include the Principal Activity and Review of the Business within the Directors’ Report. This information is now included within the Strategic Report above, as part of the ‘Review of the Business’ under the Amendment to the Companies Act 2006 of s.414c(2a). DIRECTORS The Board comprised the following directors who served throughout the year and up to the date of this report: Name Position Mr A W Adam Mrs A F Adam Mr J G Adam Mr I Smith Mr R MacLeod Mr R Eddie Ms M H Motion Mr M Benson Mr E MacLeod Mr T Leggeat Chairman Director Director Managing Director Civils Director Non-Executive Director Financial Director Non-Executive Director Commercial Director Partnerships Director DIRECTORS’ INTERESTS The directors’ interests in the share capital of the company at 31 May 2017, held either directly or through related parties, were as follows: Name of director Mr A W Adam - Direct - Indirect Mrs A F Adam Mr J G Adam Mr I Smith - Direct - Indirect Mr R MacLeod Mr R Eddie Ms M H Motion Mr M Benson Mr E MacLeod Mr T Leggeat Number of ordinary shares % of ordinary share capital and voting rights 3,112,500 1,464,746 926,200 1,274,000 32,400 77,092 51,900 - 1,000 - 414 1,230 6,941,482 42.6% 20.1% 12.7% 17.4% 0.4% 1.1% 0.7% 0.0% 0.0% 0.0% 0.0% 0.0% 95.0% 8 SPRINGFIELD PROPERTIES PLC DIRECTORS’ REPORT FOR THE YEAR ENDED 31 MAY 2017 (CONTINUED) RESULTS AND DIVIDENDS The results for the year are set out on page 14. Ordinary dividends were paid amounting to £2,336,930 (2016 - £2,132,910), equating to 32p (2016 – 30p) per share. There is no final dividend proposed. EMPLOYEE CONSULTATION The group’s policy is to consult and discuss with employees’ representatives matters likely to affect their interests. Once a year employees are given the opportunity to purchase shares in the company. DISABLED PERSONS The group’s policy is to recruit disabled workers for those vacancies that they are able to fill. All necessary assistance with initial training courses is given. Once employed, a career plan is developed so as to ensure suitable opportunities for each disabled person. Arrangements are made, wherever possible, for retraining employees who become disabled, to enable them to perform work identified as appropriate to their aptitude and abilities. EQUAL OPPORTUNITIES The group places considerable value on the involvement of its employees and has continued to keep them informed on matters affecting them as employees and on various factors affecting the performance of the group. This is achieved through formal and informal meetings. Equal opportunity is given to all employees regardless of their sex, age, colour, race, religion or ethnic origin. POST YEAR END EVENTS Details of post year end events are included in note 31 to the financial statements. GOING CONCERN The directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future and thus they continue to adopt the going concern basis in preparing the financial statements. Further details regarding the adoption of the going concern basis can be found in note 2.4 of the financial statements. DISCLOSURE OF INFORMATION TO THE AUDITOR In the case of each of the persons who are directors of the company and group at the date when this report is approved: • • So far as each director is aware, there is no relevant audit information of which the company and group’s auditor is unaware; and Each of the directors has taken all steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the auditor is aware of the information. This information is given and should be interpreted in accordance with the provisions of Section 418 of the Companies Act 2006. 9 SPRINGFIELD PROPERTIES PLC DIRECTORS’ REPORT FOR THE YEAR ENDED 31 MAY 2017 (CONTINUED) BOARD OF DIRECTORS The group supports the concept of an effective Board leading and controlling the group. The Board of Directors is responsible for approving company and group policy and strategy. It meets regularly and has a schedule of matters specifically reserved to it for decision. All directors have access to advice from independent professionals at the group's expense. Training is available for new and existing directors as necessary. COMMUNICATION WITH SHAREHOLDERS Communications with shareholders are given a high priority by the management. In addition to the publication of an annual report and an interim report, there is regular dialogue with shareholders and analysts. INTERNAL CONTROL The directors acknowledge they are responsible for the company and group’s system of internal control and for reviewing the effectiveness of these systems. The risk management process and systems of internal control are designed to manage rather than eliminate the risk of the group failing to achieve its strategic objectives. It should be recognised that such systems can only provide reasonable and not absolute assurance against material misstatement or loss. The group has well established procedures which are considered adequate given the size of the business. AUDITOR The Board as a whole considers the appointment of the external auditor, including their independence, specifically including the nature and scope of non-audit services provided. The auditor, Johnston Carmichael LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006. REMUNERATION The remuneration of the directors has been fixed by the Board as a whole. The Board seeks to provide appropriate reward for the skill and time commitment required so as to retain the right calibre of director at a cost to the group which reflects current market rates. Details of directors’ fees and of payments made for professional services rendered are set out in Note 7 to the financial statements. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES Details of the financial risk management objectives and policies are set out in Note 26 to these financial statements. On behalf of the board Mr A W Adam Chairman 21 August 2017 10 SPRINGFIELD PROPERTIES PLC STATEMENT OF DIRECTORS’ RESPONSIBILITIES The directors are responsible for preparing the Strategic Report, Directors’ Report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare group and company financial statements for each financial year. Under that law the directors have elected to prepare group financial statements in accordance with International Financial Reporting Standards (“IFRS” as adopted by the European Union (“EU”)) and have also elected to prepare the parent company financial statements in accordance with IFRS as adopted by the EU. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and the parent company and profit or loss of the group for that period. In preparing these financial statements, the directors are required to: • select suitable accounting policies and then apply them consistently • make judgments and accounting estimates that are reasonable and prudent • • state whether applicable IFRSs have been followed, subject to any material departures disclosed and explained in the financial statements prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and parent company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and parent company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and parent company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and parent company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. On behalf of the board Mr A W Adam Chairman 21 August 2017 11 SPRINGFIELD PROPERTIES PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPRINGFIELD PROPERTIES PLC We have audited the financial statements of Springfield Properties Plc for the year ended 31 May 2017, which comprise the Consolidated Profit and Loss Account, the Consolidated and Company Balance Sheets, the Consolidated and Company Statements of Cash Flows, the Consolidated and Company Statements of Changes in Equity and the related notes numbered 1 to 31. The financial reporting framework that has been applied in their preparation is the applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006. This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the group's members those matters we are required to state to them in an Auditor’s Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITOR As explained more fully in the Statement of Directors’ Responsibilities set out on page 11, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors. SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group's and the parent company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. OPINION ON FINANCIAL STATEMENTS In our opinion: • • • • the financial statements give a true and fair view of the state of the group’s and the parent company's affairs as at 31 May 2017 and of the group’s profit for the year then ended; the financial statements have been properly prepared in accordance with IFRS as adopted by the European Union; and the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. 12 SPRINGFIELD PROPERTIES PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPRINGFIELD PROPERTIES PLC (CONTINUED) OPINION ON OTHER MATTER PRESCRIBED BY THE COMPANIES ACT 2006 In our opinion, based on the work undertaken in the course of the audit;   the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements; the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements. MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION In light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified any material misstatements in the Strategic Report and the Directors’ Report. We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: • • • • adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or the parent company financial statements are not in agreement with the accounting records and returns; or certain disclosures of directors’ remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit. David McBain (Senior Statutory Auditor) for and on behalf Johnston Carmichael LLP Chartered Accountants Statutory Auditor 21 August 2017 Commerce House South Street Elgin IV30 1JE 13 SPRINGFIELD PROPERTIES PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MAY 2017 Revenue Cost of sales Gross profit Administrative expenses Other operating income Notes 2017 £000 4 110,589 (93,905) 16,684 (8,945) 93 2016 £000 90,779 (76,989) 13,790 (7,811) 130 Operating profit 5 7,832 6,109 Interest receivable and similar income Finance costs Profit before tax Tax Profit for the year and total comprehensive income Profit for the year and total comprehensive income is attributable to: -Owners of the parent company -Non-controlling interests 4 8 (1,145) 9 6,691 (1,278) 5,413 5,359 54 5,413 1 (1,009) 5,101 (1,036) 4,065 4,065 - 4,065 Earnings per share Basic earnings, on profit for the year (pence per share) 10 73.42p 57.08p The group has no items of other comprehensive income. The accompanying notes on pages 21 to 47 form an integral part of these financial statements. 14 SPRINGFIELD PROPERTIES PLC CONSOLIDATED BALANCE SHEET AS AT 31 MAY 2017 Note 12 17 15 16 18 20 21 20 21 22 23 23 Non-current assets Property, plant and equipment Accounts receivable Current assets Inventories and work in progress Accounts receivable Cash and cash equivalents Total assets Current liabilities Accounts payable Short-term borrowings Short-term obligations under finance lease Corporation tax Non-current liabilities Long-term borrowings Long-term obligations under finance lease Deferred tax Total liabilities Net assets Equity Share capital Share premium Retained earnings Equity attributable to owners of the parent company Non-controlling interests 2017 £000 2,803 488 3,291 81,800 6,447 8,335 96,582 2016 £000 2,214 485 2,699 73,837 4,105 2 77,944 As at 1 June 2015 £000 2,120 467 2,587 60,611 5,134 12 65,757 99,873 80,643 68,344 25,050 - 500 874 20,049 1,750 341 709 20,498 1,475 349 176 26,424 22,849 22,498 40,429 28,182 19,327 588 45 41,062 67,486 309 58 28,549 51,398 247 58 19,632 42,130 32,387 29,245 26,214 73 10,285 22,017 32,375 12 32,387 73 10,177 18,995 71 9,080 17,063 29,245 26,214 - - 29,245 26,214 These financial statements were approved by the Board of Directors on 21 August 2017 Signed on behalf of the Board by: Mr A W Adam Chairman Company number: SC031286 The accompanying notes on pages 21 to 47 form an integral part of these financial statements. 15 SPRINGFIELD PROPERTIES PLC COMPANY BALANCE SHEET AS AT 31 MAY 2017 Non-current assets Property, plant and equipment Investments Accounts receivable Current assets Inventories and work in progress Accounts receivable Cash and cash equivalents Total assets Current liabilities Accounts payable Short-term borrowings Short-term obligations under finance lease Corporation tax Non-current liabilities Long-term borrowings Long-term obligations under finance lease Deferred tax Total liabilities Net assets Equity Share capital Share premium Retained earnings Total equity Note 12 14 17 15 16 18 20 21 20 21 22 23 23 2017 £000 1,717 42 488 2,247 81,800 6,585 8,324 96,709 2016 £000 2,214 - 485 2,699 73,837 4,105 2 77,944 As at 1 June 2015 £000 2,120 - 467 2,587 60,611 5,134 12 65,757 98,956 80,643 68,344 25,040 - 222 767 20,049 1,750 341 709 20,498 1,475 349 176 26,029 22,849 22,498 40,429 28,182 19,327 336 38 40,803 66,832 309 58 28,549 51,398 247 58 19,632 42,130 32,124 29,245 26,214 73 10,285 21,766 73 10,177 18,995 71 9,080 17,063 32,124 29,245 26,214 As permitted s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £5,108,803 (2016 - £4,064,549). These financial statements were approved by the Board of Directors on 21 August 2017 Signed on behalf of the Board by: Mr A W Adam Chairman Company number: SC031286 The accompanying notes on pages 21 to 47 form an integral part of these financial statements. 16 SPRINGFIELD PROPERTIES PLC CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MAY 2017 Notes Share capital £000 Share premium £000 Retained earnings £000 Non- controlling interest £000 1 June 2015 Issue of share capital 23 Total comprehensive income for the year Dividends 31 May 2016 Issue of share capital 23 Total comprehensive income for the year Acquisition of minority interest Dividends 31 May 2017 71 2 - - 73 - - - 73 Total £000 26,214 1,099 4,065 (2,133) 29,245 108 9,080 17,063 1,097 - - - 10,177 4,065 (2,133) 18,995 108 - - - - - - - - - - 10,285 5,359 54 5,413 - (42) (42) (2,337) 22,017 - 12 (2,337) 32,387 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. The accompanying notes on pages 21 to 47 form an integral part of these financial statements. 17 SPRINGFIELD PROPERTIES PLC COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MAY 2017 Notes Share capital £000 Share premium £000 Retained earnings £000 Total £000 1 June 2015 Issue of share capital 23 Total comprehensive income for the year Dividends 31 May 2016 Issue of share capital 23 Total comprehensive income for the year Dividends 31 May 2017 71 2 - - 73 - - - 9,080 17,063 26,214 1,097 - 1,099 - - 10,177 108 - - 4,065 (2,133) 18,995 4,065 (2,133) 29,245 - 108 5,108 (2,337) 21,766 5,108 (2,337) 32,124 73 10,285 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. The accompanying notes on pages 21 to 47 form an integral part of these financial statements. 18 SPRINGFIELD PROPERTIES PLC CONSOLIDATED STATEMENT OF CASH FLOWS YEAR TO 31 MAY 2017 Operating activities Profit for the year after taxation Adjusted for: Taxation charged Finance costs Interest receivable and similar income Gain on disposal of tangible fixed assets Depreciation and impairment of tangible fixed assets Operating cash flows before movements in working capital Increase in inventory (Increase)/decrease in trade and other receivables Increase/(decrease) in trade and other payables Net cash generated from/(used in) operations Income taxes paid Net cash inflow/(outflow) from operating activities Investing activities Purchase of property, plant and equipment Proceeds on disposal of property, plant and equipment Purchase of subsidiary company Interest received and similar income Net cash used in investing activities Financing activities Proceeds from issue of shares Proceeds from bank loans Proceeds from other borrowings Repayment of other borrowings Payment of finance leases obligations Dividends paid Interest paid Net cash inflow from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Note 2017 £000 2016 £000 5,413 4,065 1,278 1,145 (4) (146) 772 8,458 (7,963) (2,345) 5,000 3,150 (1,126) 2,024 (843) 526 (42) 4 (355) 108 10,000 1,375 (453) (460) (2,337) (1,145) 7,088 8,757 (422) 1,036 1,009 (1) (10) 674 6,773 (13,226) 1,011 (454) (5,896) (502) (6,398) (293) 10 - 1 (282) 1,099 10,000 400 (365) (421) (2,133) (1,004) 7,576 896 (1,318) Cash and cash equivalents at end of year 24 8,335 (422) The accompanying notes on pages 21 to 47 form an integral part of these financial statements. 19 SPRINGFIELD PROPERTIES PLC COMPANY STATEMENT OF CASH FLOWS YEAR TO 31 MAY 2017 Operating activities Profit for the year after taxation Adjusted for: Taxation charged Finance costs Interest receivable and similar income Gain on disposal of tangible fixed assets Depreciation and impairment of tangible fixed assets Operating cash flows before movements in working capital Increase in inventory (Decrease)/increase in trade and other receivables Increase/(decrease) in trade and other payables Net cash generated from/(used in) operations Income taxes paid Net cash inflow/(outflow) from operating activities Investing activities Purchase of property, plant and equipment Proceeds on disposal of property, plant and equipment Purchase of subsidiary company Interest received and similar income Net cash used in investing activities Financing activities Proceeds from issue of shares Proceeds from bank loans Proceeds from other borrowings Repayment of other borrowings Payment of finance leases obligations Dividends paid Interest paid Net cash inflow from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year 2017 £000 2016 £000 5,108 4,065 1,164 1,101 (4) (20) 296 7,645 (7,963) (2,483) 5,546 2,745 (1,126) 1,619 (625) 323 (42) 4 (340) 108 10,000 1,375 (453) (106) (2,337) (1,120) 7,467 8,746 (422) 1,036 1,009 (1) (10) 674 6,773 (13,226) 1,011 (454) (5,896) (502) (6,398) (293) 10 - 1 (282) 1,099 10,000 400 (365) (421) (2,133) (1,004) 7,576 896 (1,318) Cash and cash equivalents at end of year 8,324 (422) The accompanying notes on pages 21 to 47 form an integral part of these financial statements. 20 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MAY 2017 1. Organisation and trading activities Springfield Properties PLC (“the company”) 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, IV30 6GR. The group consists of Springfield Properties PLC and its subsidiary, Glassgreen Hire 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 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. These are the first financial statements prepared under IFRS, see note 30 for the explanation of transition to IFRS. The group has adopted all the standards and amendments to existing standards which are mandatory for accounting periods beginning on 1 June 2015. The group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective. At 31 May 2017 the following new and revised IFRSs relevant to the group are issued but are not yet effective: IFRS 9 Financial Instruments IFRS 15 Revenue from Contracts with Customers IFRS 16 Leases IAS 7 (amendments) Disclosure of changes in liabilities arising from financing activities IAS 12 (amendments) Recognition of Deferred Tax Assets for Unrealised Losses Annual Improvements to IFRSs: 2014-2016 cycle Effective date 1 January 2018 1 January 2018 1 January 2019* 1 January 2017* 1 January 2017* 1 January 2017* *Not yet endorsed for use in the EU    IFRS 9 will impact both the measurement and disclosures of financial instruments. The group is currently assessing the impact of the revisions on the group’s and company’s results and financial position, a process we expect to be finalised during the year ending 31 May 2018. Until such assessment is completed it is not practical to provide an estimate of the full effect of IFRS 9. The group has not yet completed the assessment of the full effect of this standard. IFRS 15 ‘Revenue from Contracts with Customers’. It is expected that this standard will result in some changes for construction companies, however the group has not yet completed the assessment of the full effect of this standard. IFRS 16 'Leases'. IFRS 16 requires lessees to recognise a lease liability reflecting future lease payments and a 'right of use asset' for virtually all lease contracts. This is effective for the period beginning on 1 August 2019, with earlier adoption permitted if IFRS 15 'Revenue from contracts with customers' is also applied. The group has not yet assessed the full effect of this standard. Of the other IFRSs and IFRICs, none are expected to have a material effect on the financial statements. The financial statements have been prepared under the historical cost convention. 21 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 2. Summary of significant accounting policies (continued) 2.2. Basis of consolidation The consolidated financial statements incorporate those of Springfield Properties PLC and its subsidiary (ie entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits). All financial statements are made up to 31 May 2017. 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 (£), rounded to the nearest £000, which is also the currency of the primary economic environment in which the group operates (its functional currency). 2.4. 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. 2.5. Revenue recognition Revenue is measured at the fair value of the consideration received or receivable net of VAT and trade discounts. Private house sales Revenue on private house sales is recognised when the significant risks and rewards of ownership have been transferred to the purchaser which will normally occur at handover / legal completion. Revenue is recognised at the fair value of the consideration received or receivable on legal completion. Construction contracts Revenue from construction contracts 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. 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. 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. 22 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 2. Summary of significant accounting policies (continued) 2.6. 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. 2.7. Retirement benefits Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due. 2.8. Borrowing costs Borrowing costs relating to qualifying assets are capitalised. All other borrowing costs are recognised as an expense in the income statement as they are incurred. 2.9. 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 income statement 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. 23 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 2. Summary of significant accounting policies (continued) 2.10. 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% straight line Plant and machinery - 25% straight line Fixtures, fittings & equipment - 25% straight line Motor vehicles - 25% 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. 2.11. 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 or reversals or impairment losses are recognised immediately in the profit and loss account. 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. 2.12. 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. 2.13. Inventory 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. 24 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 2. Summary of significant accounting policies (continued) 2.13. Inventory (continued) 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 inventory when the agreement becomes unconditional. Options included as part of inventory are stated at the lower of cost and net realisable value. 2.14. 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. 2.15. Financial instruments Financial instruments are recognised in 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 All of 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. Impairment of financial assets Financial assets are assessed for indicators of impairment at each reporting date. A provision for impairment is made when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. Impaired debts are derecognised when they are assessed as uncollectible. 25 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 2. Summary of significant accounting policies (continued) 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 fall into other financial liabilities category. Other financial liabilities Other non-derivative financial liabilities are initially measured at fair value 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. 2.16. 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. 2.17. 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. 2.18. 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. 26 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 2. Summary of significant accounting policies (continued) 2.19. Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of a company 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 statement of comprehensive income. 3. Critical accounting estimates and judgements in applying accounting policies In the application of the group’s accounting policies the directors are required to make judgements, estimates and assumptions which affect reported income, expenses, assets, liabilities and disclosure of contingent assets and liabilities. The estimates and associated assumptions are based on historical experience, expectations of future events and other factors that are believed to be reasonable under the circumstances. Actual results in the future could differ from such estimates. The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next year are: 3.1. Work in progress measurement on construction contracts The group undertakes construction contracts which takes place over a period of time and revenues and profits are recognised as the group performs under these contracts. The total work in progress value of £81,799,683 (2016 - £73,836,693) is impacted by the estimates involved in the construction contracts in relation to costs to complete and therefore expected profit margin. 3.2. Work in progress measurement on private house sales The recognition of costs expensed against properties sold at sites remaining under construction requires estimation of costs to complete at these sites. These estimates impact the total work in progress value recognised of £81,799,683 (2016 - £73,836,693). The group regularly reviews these estimates to ensure they reflect the latest known position. 4. Revenue Revenue analysed by class of business Private residential properties Affordable housing Other Total 2017 £000 86,367 23,250 972 110,589 2016 £000 78,079 12,053 647 90,779 27 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 5. Operating profit Operating profit is stated after charging / (crediting): Depreciation of owned tangible fixed assets Depreciation of tangible fixed assets held under finance leases Gain on disposal of tangible fixed assets Cost of inventories recognised as an expense Operating lease charges 6. Auditor’s remuneration 2017 £000 300 472 (146) 93,905 274 2016 £000 429 245 (10) 76,989 270 2017 £000 2016 £000 Fees payable to the group’s auditor for the audit of the group and company annual accounts 36 Fees payable to the group’s auditor for the audit of the company’s subsidiaries 6 Fees payable to the group auditor and their associates for other services to the group and company: - Other non-audit services 4 46 28 - 1 29 7. Staff costs The average monthly number of employees (including executive directors) for the continuing operations was: Building staff Administrative staff Wages and salaries Social security costs Pension costs 2017 2016 336 327 143 479 2017 £000 15,887 1,496 417 17,800 122 449 2016 £000 13,980 1,355 323 15,658 28 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 7. Staff cost (continued) Directors’ emoluments were as follows: Remuneration for qualifying services Company pension contributions to defined contribution schemes 2017 £000 633 33 666 2016 £000 579 22 601 The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 7 (2016 - 6). Remuneration disclosed above include the following amounts paid to the highest paid director: Remuneration for qualifying services Company pension contributions to defined contribution schemes 2017 £000 137 9 146 2016 £000 127 6 133 The group operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund. The charge to the income statement in respect of defined contribution schemes was £417k (2016 - £323k). Contributions totalling £74k (2016 - £58k) were payable to the fund at the year-end and are included in creditors. 8. Finance costs Interest on bank overdrafts and loans Interest on hire purchase contracts Other interest 9. Taxation Current tax UK corporation tax on profits for the current period Adjustments in respect of prior periods Deferred tax Origination and reversal of timing differences Adjustments in respect of prior periods Effect of changes in tax rates 2017 £000 915 53 177 1,145 2017 £000 1,337 (46) 2016 £000 799 39 171 1,009 2016 £000 1,039 (4) 1,291 1,035 (4) - (9) (13) 1,278 2 (1) - 1 1,036 29 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 9. Taxation (continued) The charge for the year can be reconciled to the profit per the income statement as follows: Profit before tax Tax at the UK corporation tax rate of 19,83% (2016: 20%) Effects of: Tax effect of expenses that are not deductible in determining taxable profit Adjustments in respect of prior years Depreciation on assets not qualifying for tax allowances Deferred tax adjustments in respect of prior years Land remediation relief Adjust deferred tax to closing average rate Tax charge for period 2017 £000 6,691 1,327 19 (46) (2) (12) (8) 1,278 2016 £000 5,101 1,020 18 (4) 3 (1) - - 1,036 10. 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 2017 assumes that all shares have been included in the computation based on the weighted average number of days since issue. As there are no dilutive instruments outstanding, basic and diluted earnings per share are identical. Profit for the year attributable to owners of the group 5,359 2017 £000 2016 £000 4,065 Weighted average number of ordinary shares in issue for basic earnings Basic earnings per share (pence per share) 7,298,908 7,121,808 73.42p 57.08p 11. Dividends Total dividend payment 2017 £000 2,337 2016 £000 2,133 Weighted average number of ordinary shares in issue 7,298,908 7,121,808 Dividend per share (pence per share) 32.02 29.95 30 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 12. Property, plant and equipment Group Cost At 1 June 2015 Additions Disposals At 31 May 2016 Additions Disposals Land and buildings £000 Plant and machinery £000 Fixtures, fittings & equipment £000 Motor vehicle £000 658 - - 658 342 (325) 2,818 675 (250) 3,243 1,350 (340) 600 2 - 602 10 (19) 804 91 (103) 792 39 (81) Total £000 4,880 768 (353) 5,295 1,741 (765) At 31 May 2017 675 4,253 593 750 6,271 Accumulated depreciation At 1 June 2015 Depreciation charge Disposals At 31 May 2016 Depreciation charge Disposals At 31 May 2017 Net book value At 31 May 2017 At 31 May 2016 At 1 June 2015 34 13 - 47 12 (26) 33 1,759 507 (250) 2,016 601 (290) 2,327 583 7 - 590 6 (19) 577 642 1,926 16 611 624 1,227 1,059 12 17 384 2,760 147 (103) 428 674 (353) 3,081 153 772 (50) 531 219 364 (385) 3,468 2,803 2,214 420 2,120 The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts: Net book value: Plant and machinery Motor vehicles 2017 £000 1,133 104 2016 £000 503 333 2015 £000 462 416 1,237 836 878 Total depreciation charge 472 245 297 Fixed assets with the carrying value of £1,237k (2016 - £836k; 2015 - £878k) are pledged as security. 31 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 12. Property, plant and equipment (continued) Company Land and buildings £000 Plant and machinery £000 Fixtures, fittings & equipment £000 Motor vehicles £000 658 - - 658 342 (325) 675 34 13 - 47 12 (26) 33 642 611 624 2,818 675 (250) 3,243 739 (2,030) 1,952 1,759 507 (250) 2,016 277 (1,400) 893 1,059 1,227 1,059 600 2 - 602 10 (19) 593 583 7 - 590 6 (19) 577 16 12 17 804 91 (103) 792 - (792) - 384 147 (103) 428 - (428) - - 364 420 Total £000 4,880 768 (353) 5,295 1,091 (3,166) 3,220 2,760 674 (353) 3,081 295 (1,873) 1,503 1,717 2,214 2,120 Cost At 1 June 2015 Additions Disposals At 31 May 2016 Additions Disposals At 31 May 2017 Accumulated depreciation At 1 June 2015 Depreciation charge Disposals At 31 May 2016 Depreciation charge Disposals At 31 May 2017 Net book value At 31 May 2017 At 31 May 2016 At 1 June 2015 The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts: Net book value: Plant and machinery Motor vehicles Total depreciation charge 2017 £000 639 - 639 85 2016 £000 503 333 836 245 2015 £000 462 416 878 297 32 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 13. Subsidiaries Details of the company’s subsidiaries at 31 May 2017 are as follows: Name of Undertaking Nature of Business Class of Shares Held % Held Glassgreen Hire Limited Hire of plant and machinery Ordinary 96% During the prior year, the company acquired 80% of the share capital for Glassgreen Hire Limited at nominal value of £80. Glassgreen Hire Limited was incorporated on 21 January 2016 and commenced trading on 1 June 2016. On these grounds and under section 402 of the Companies Act 2006, the company did not prepare group accounts for the year to 31 May 2016 as the subsidiary was dormant and thus immaterial for the purpose of giving a true and fair view. During the year, the company acquired a further 16% of the share capital of Glassgreen Hire Limited for consideration of £42,141. 14. Investments Cost At 1 June 2015 Additions At 1 June 2016 Additions At 31 May 2017 Company Shares in group undertakings £000 - - - 42 42 Total £000 - - - 42 42 15. Inventories and work in progress Group Work in progress Land under development is included in work in progress. 2017 £000 81,800 81,800 2016 £000 73,837 73,837 2015 £000 60,611 60,611 33 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 15. Inventories and work in progress (continued) Accounts receivable in relation to construction contracts Accounts payable in relation to construction contracts Retentions held by customers for contract work Advances received from customers for contract work Included within inventories is £23,950k pledged as security. Company 2017 £000 4,665 4,665 2017 £000 352 352 2017 £000 790 (352) 438 Work in progress Land under development is included in work in progress. Accounts receivable in relation to construction contracts 2017 £000 81,800 81,800 2017 £000 4,665 4,665 2016 £000 1,855 1,855 2016 £000 401 401 2016 £000 667 (401) 266 2016 £000 73,837 73,837 2016 £000 1,855 1,855 2015 £000 2,692 2,692 2015 £000 387 387 2015 £000 720 (387) 333 2015 £000 60,611 60,611 2015 £000 2,692 2,692 34 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 15. Inventories and work in progress (continued) Accounts payable in relation to construction contracts Retentions held by customers for contract work Advances received from customers for contract work Included within inventories is £23,950k pledged as security. 16. Accounts receivable Amounts falling due within one year Group Trade receivables Other receivables Prepayments and accrued income Company Trade receivables Other receivables Amounts due from group undertakings Prepayments and accrued income 2017 £000 2016 £000 352 401 352 401 2017 £000 790 (352) 438 2017 £000 4,104 2,108 235 2016 £000 667 (401) 266 2016 £000 1,687 2,413 5 2015 £000 387 387 2015 £000 720 (387) 333 2015 £000 2,935 2,194 5 6,447 4,105 5,134 2017 £000 4,103 2,108 144 230 2016 £000 1,687 2,413 - 5 2015 £000 2,935 2,194 - 5 6,585 4,105 5,134 The directors consider the carrying amount of the receivables approximates to their fair value. The group’s exposure to credit risk is limited by the fact that the group generally receives cash at the point of legal completion of its sales. There are certain categories of revenue where this is not the case; for instance housing association revenues or land sales where management considers that the ratings of these various debtors are good and therefore credit risk is low. Any assets which expose the group to credit risk can be spread over a considerable number of properties. As such, the group has no significant concentration of credit risk, with exposure spread over a large number of customers. The maximum exposure to credit risk at 31 May 2017 is represented by the carrying amount of each financial asset. 35 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 17. Accounts receivable Amounts falling due after one year Group Other receivables Company Other receivables 18. Accounts payable Group Trade creditors Other taxation and social security Other creditors Accruals and deferred income Company Trade creditors Other taxation and social security Other creditors Amounts due to group undertakings Accruals and deferred income 2017 £000 488 2017 £000 488 2017 £000 12,879 446 111 11,614 2016 £000 485 2016 £000 485 2016 £000 10,814 548 99 8,588 25,050 20,049 2017 £000 12,276 443 110 651 11,560 2016 £000 10,814 548 99 - 8,588 25,040 20,049 2015 £000 467 2015 £000 467 2015 £000 12,083 416 185 7,814 20,498 2015 £000 12,083 416 185 - 7,814 20,498 The directors consider the carrying amount of the accounts payable approximates to their fair value. 36 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 19. Financial assets and liabilities Group Assets Loans and receivables Total Liabilities Measured at amortised cost Total Company Assets Loans and receivables Total Liabilities Measured at amortised cost Total 2017 £000 15,035 2016 £000 4,588 15,035 4,588 2017 £000 66,121 2016 £000 50,083 66,121 50,083 2017 £000 15,167 2016 £000 4,588 15,167 4,588 2017 £000 65,583 2016 £000 50,083 65,583 50,083 2015 £000 5,608 5,608 2015 £000 41,480 41,480 2015 £000 5,608 5,608 2015 £000 41,480 41,480 37 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 20. Borrowings Group Secured borrowings: Bank loans Bank overdrafts Unsecured borrowings: Directors' loans Less: payable within one year Payable after one year Company Secured borrowings: Bank loans Bank overdrafts Unsecured borrowings: Directors' loans Less: payable within one year Payable after one year 2017 £000 37,500 - 37,500 2,929 40,429 - 40,429 2017 £000 37,500 - 37,500 2,929 40,429 - 40,429 2016 £000 27,500 425 27,925 2,007 29,932 (1,750) 28,182 2016 £000 27,500 425 27,925 2,007 29,932 (1,750) 28,182 2015 £000 17,500 1,330 18,830 1,972 20,802 (1,475) 19,327 2015 £000 17,500 1,330 18,830 1,972 20,802 (1,475) 19,327 The bank overdraft is secured by fixed securities over certain of the group's properties, and is repayable on demand. The bank loan comprises of a revolving credit facility which is repayable by August 2018 and is secured over certain of the group's properties. The facility attracts an interest rate of 2.5% per annum above the Bank of England Base Rate. The directors' loans are unsecured and are repayable by 2022 or any earlier period agreed and attract interest at either 4.5% above the Bank of England base rate or a 6% fixed rate. The Directors consider the carrying amount of short term borrowings approximates to their fair value. 38 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 21. Obligations under hire purchase contracts Finance lease and hire purchase payments represent rentals payable by the group for certain items of plant and machinery and are secured by the assets under lease in question. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. Group Minimum lease payments 2017 £000 2016 £000 Within 1 year Two to five years 557 606 370 335 2015 £000 375 270 Present value of minimum lease payments 2016 £000 2017 £000 2015 £000 500 588 341 309 650 349 247 596 1,163 705 645 1,088 (75) 1,088 (55) 650 (49) 596 Less: unearned finance income Company Minimum lease payments 2017 £000 2016 £000 Within 1 year Two to five years 242 367 370 335 2015 £000 375 270 Present value of minimum lease payments 2016 £000 2017 £000 2015 £000 222 336 341 309 650 349 247 596 609 705 645 558 (51) 558 (55) 650 (49) 596 Less: unearned finance income 22. Deferred tax Group Fixed assets – temporary differences Company Fixed assets – temporary differences 2015 £000 58 58 2015 £000 58 58 Income Statement £000 - - Income Statement £000 - - 2016 £000 58 58 2016 £000 58 58 Income Statement £000 (13) (13) Income Statement £000 (20) (20) 2017 £000 45 45 2017 £000 38 38 39 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 23. Share capital Group Ordinary shares of £1 - allotted, called up and fully paid Number of shares Share capital £000 At 1 June 2015 Issued in the year At 31 May 2016 Share split in the year Issued in the year At 31 May 2017 Company 71,009 1,960 72,969 7,223,939 6,000 7,302,908 71 2 73 - - 73 Ordinary shares of £1 - allotted, called up and fully paid Number of shares Share capital £000 At 1 June 2015 Issued in the year At 31 May 2016 Share split in the year Issued in the year At 31 May 2017 71,009 1,960 72,969 7,223,939 6,000 7,302,908 71 2 73 - - 73 Share premium £000 9,080 1,097 10,177 - 108 10,285 Share premium £000 9,080 1,097 10,177 - 108 10,285 The parent company has one class of ordinary share which carry full voting rights but no right to fixed income or repayment of capital. Distributions are at the discretion of the company. 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. During the year, the nominal value of shares was split from £1 to £0.01. Subsequently, 6,000 £0.01 ordinary shares were allotted and fully paid up for consideration of £107,756. 24. Cash and cash equivalents For the purpose of the statement of cash flows, cash and cash equivalents comprise the following as at 31 May: Cash at bank and in hand 2017 £000 8,335 Bank overdrafts included in current liabilities - 8,335 2016 £000 3 (425) (422) At 1 June 2015 £000 12 (1,330) (1,318) At 31 May 2017, the group had available £2,500k (2016: £2,075k, 1 June 2015: £1,170k) of undrawn committed borrowing facilities. 40 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 25. Capital risk management The group manages its capital to ensure that the group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the group consists of equity attributable to equity holders of the parent company and its subsidiary, comprising issued capital, reserves and retained earnings, all as disclosed in the balance sheet. The group is not subject to externally imposed capital requirements other than those included, from time to time, in the financial covenants associated with bank borrowing 26. Financial risk management The group is exposed to a variety of financial risks which result from both its operating and investing activities. The group’s risk management is coordinated by the board of directors, and focuses on actively securing the group’s short to medium term cash flows by minimising the exposure to financial markets. 26.1. Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk. Interest rate risk Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The group’s exposure to the interest rate risk relates primarily to its floating rate borrowings. Financial liabilities at fixed rate Financial liabilities at floating rate Non-interest bearing financial liabilities Interest rate sensitivity analysis 2017 £000 2,157 39,360 24,604 66,121 2016 £000 1,150 29,432 19,501 50,083 The table below details the group’s sensitivity to increase or decrease of floating interest rates by 0.5%, which the directors consider to be a reasonable possible change. The analysis was applied to loans and borrowings (financial liabilities) based on the assumption that the amount of liability outstanding as at the balance sheet date was outstanding for the whole year. Bank of England base rate 31 May 2017 Interest rate –0.5% £000 Interest rate +0.5% £000 Bank of England base rate 31 May 2016 Interest rate –0.5% £000 Interest rate +0.5% £000 (Loss) / profit (202) 202 (150) 150 41 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 26.1 Market risk (continued) Limitations of sensitivity analysis The above tables demonstrate the effect of a change in a key assumption while other assumptions remain unchanged. In reality, there is a correlation between the assumptions and other factors. It should also be noted that these sensitivities are non-linear and larger or smaller impacts should not be interpolated or extrapolated from these results. The sensitivity analysis does not take into consideration that the group’s assets and liabilities are actively managed. Additionally, the financial position of the group may vary at the time that any actual market movement occurs. Other limitations in the above sensitivity analysis include the use of hypothetical market movements to demonstrate potential risk that only represent the group’s view of possible near-term market changes that cannot be predicted and the assumption that all interest rates move in an identical fashion. This analysis is for illustrative purposes only, as in practice market rates rarely change in isolation of other factors that also affect group’s financial position and results. Management believe that fair value of the loans, borrowings and finance lease obligations approximates their carrying amounts as the majority of obligations bear interest rates approximating market rates at 31 May 2017. 26.2. Liquidity risk Liquidity risk is the risk that the group will be unable to meet its liabilities as they fall due. The group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, medium to long term borrowings and hire purchase contracts. The maturity profile of the group and parent company’s financial liabilities based on contractual undiscounted payments (including interest payments) is as follows: Group 31 May 2017 Accounts payable Borrowings Hire purchase 31 May 2016 Accounts payable Borrowings Hire purchase Carrying amount £000 24,604 40,429 1,088 66,121 Carrying amount £000 19,501 29,932 650 50,083 Total minimum future payment Within 1 year £000 £000 Within 1-2 years £000 Within 2-5 years £000 24,604 - 500 - 37,500 - 2,929 406 182 25,104 37,906 3,111 24,604 40,429 1,088 66,121 Total minimum future payment Within 1 year £000 £000 Within 1-2 years £000 Within 2-5 years £000 19,501 29,932 650 50,083 19,501 1,750 341 21,592 - 28,182 222 28,404 - - 87 87 42 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 26.2 Liquidity risk (continued) 01 June 2015 Carrying amount £000 Total minimum future payment Within 1 year £000 £000 Within 1-2 years £000 Within 2-5 years £000 Accounts payable 20,082 20,082 Borrowings 20,802 20,802 Hire purchase 596 41,480 596 41,480 20,082 1,475 349 21,906 - 19,327 182 19,509 - - 65 65 Company 31 May 2017 Accounts payable Borrowings Hire purchase 31 May 2016 Accounts payable Borrowings Hire purchase 01 June 2015 Carrying amount £000 24,596 40,429 558 65,583 Carrying amount £000 19,501 29,932 650 50,083 Carrying amount £000 Total minimum future payment Within 1 year £000 £000 Within 1-2 years £000 Within 2-5 years £000 24,596 - 222 24,818 - 37,500 211 37,711 - 2,929 125 3,054 24,596 40,429 558 65,583 Total minimum future payment Within 1 year £000 £000 Within 1-2 years £000 Within 2-5 years £000 19,501 29,932 650 50,083 19,501 1,750 341 21,592 - 28,182 222 28,404 - - 87 87 Total minimum future payment Within 1 year £000 £000 Within 1-2 years £000 Within 2-5 years £000 Accounts payable 20,082 20,082 Borrowings 20,802 20,802 Hire purchase 596 41,480 596 41,480 20.082 1,475 349 21,906 - 19,327 182 19,509 - - 65 65 43 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 26.3. Credit risk Credit risk is the risk that a customer may default or not meet its obligations to the group on a timely basis, leading to financial losses to the group. The group’s maximum exposure to credit risk in relation to each class of recognised financial asset is the carrying amount of those assets as indicated in the balance sheet. At the balance sheet date, there was no significant concentration of credit risk to the group. The group manages credit risk actively monitoring their level of trade receivables and following up when they are overdue more than 3 months: The ageing profile of trade receivables was: Current Overdue 90 days Total book value £000 31 May 2017 Allowance for impairment £000 Total book value £000 31 May 2016 Allowance for impairment £000 3,908 196 4,104 - - - 1,663 24 1,687 - - - During the year, the group had no allowance for impairment for trade receivables. The ageing profile of other receivables was: Current Overdue 90 days Total book value £000 31 May 2017 Allowance for impairment £000 Total book value £000 31 May 2016 Allowance for impairment £000 2,108 - 2,108 - - - 2,413 - 2,413 - - - During the year, the group had no allowance for impairment for other receivables. 44 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 27. Transactions with related parties Other related parties include transactions with retirement scheme in which the directors are beneficiaries, and close family members of key management personnel. During the year dividends totalling £2,222k (2016 - £1,964k) were paid to key management personnel. The remuneration of Key Management Personnel was £744k (2016 - £671k). During the year the group entered into the following transactions with related parties: Entities which key management personnel have control, significant influence or hold a material interest in Key management personnel Other related parties Sale of goods 2017 £000 2016 £000 Purchase of goods 2017 £000 2016 £000 6,148 352 37 6,537 2,812 420 448 3,680 312 447 - 759 317 268 100 685 Sales to related parties represent those undertaken in the ordinary course of business. Entities which key management personnel have control, significant influence or hold a material interest in Key management personnel Other related parties Interest Paid to 2017 £000 - 163 - 2016 £000 - 91 7 Rent paid to 2017 £000 2016 £000 162 - 161 148 - 50 163 98 323 198 The following amounts were outstanding at the reporting end date: Amounts receivable: Entities which key management personnel have control, significant influence or hold a material interest in (short-term) Key management personnel Other related parties Amounts payable 2017 £000 2016 £000 2,413 1,101 - - - 1 2,413 1,102 Entities which key management personnel have control, significant influence or hold a material interest in (short-term) Key management personnel Other related parties 115 2,949 40 3,104 64 2,029 360 2,453 45 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 27. Transactions with related parties (continued) 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 the company and its subsidiary, which is a related party, have been eliminated on consolidation and are not disclosed in this note. 28. Contingencies, commitments and guarantees In the ordinary course of the group's business the group is required to enter into performance bond arrangements. The group's bankers have provided such guarantees in the ordinary course of business totalling £206k (2016 - £257k). 28.1. Capital commitments Acquisition of property, plant and equipment Call and put options for the purchase of plots for development 28.2. Operating lease commitments 2017 £000 462 9,736 2016 £000 103 14,380 Operating lease payments represent rentals payable by the group for certain of its assets. Leases are with an option to extend on completion. At 31 May the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows: Within one year Two to five years Over five years 29. Controlling party 2017 £000 278 1,023 1,159 2,460 2016 £000 271 1,047 1,499 2,817 The company is controlled by Mr A W Adam and Mrs A F Adam, who have a beneficial interest in 75.4% of the company's issued share capital. 46 SPRINGFIELD PROPERTIES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MAY 2017 30. First-time adoption of IFRS These financial statements are the first the parent company and group have prepared in accordance with IFRS. These financial statements comply with IFRS applicable as at 31 May 2017, together with the comparative period data for the year ended 31 May 2016. In preparing the financial statements, the consolidated and company’s opening statement of financial position was prepared as at 1 June 2015, the group and parent company’s date of transition to IFRS. The reported financial position and the financial performance for the previous period were not affected by the transition to IFRS. 31. Subsequent Events Included in note 20 are directors’ loans of £2,929,265 which, as at 31 May 2017 were repayable by 2022 or any earlier period agreed. Subsequent to the year-end by agreement the loans will now all be repaid by the end of August 2017. 47 

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