Company Registration No. SC031286 (Scotland)
Company
£
SPRINGFIELD PROPERTIES PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2018
SPRINGFIELD PROPERTIES PLC
CONTENTS
Page
Company Information ........................................................................................................................ 2
Financial Highlights ........................................................................................................................... 3
Chairman’s Statement ....................................................................................................................... 4
Chief Executive’s Statement .............................................................................................................. 7
Chief Financial Officer’s Review ...................................................................................................... 10
Strategic Report ............................................................................................................................... 11
Governance
Board of Directors ............................................................................................................................ 14
QCA Code Compliance ................................................................................................................... 15
Remuneration Committee Report .................................................................................................... 20
Audit Committee Report .................................................................................................................. 24
Directors’ Report .............................................................................................................................. 25
Statement of Directors’ Responsibilities .......................................................................................... 28
Independent Auditor’s Report .......................................................................................................... 29
Consolidated Profit and Loss Account ............................................................................................. 35
Consolidated Balance Sheet ........................................................................................................... 36
Company Balance Sheet ................................................................................................................. 36
Consolidated Statement of Changes in Equity ................................................................................ 37
Company Statement of Changes in Equity ...................................................................................... 38
Consolidated Statement of Cash Flows .......................................................................................... 40
Company Statement of Cash Flows ................................................................................................ 41
Notes to the Financial Statements ................................................................................................... 42
1
SPRINGFIELD PROPERTIES PLC
COMPANY INFORMATION
DIRECTORS:
Mr Sandy Adam
Mr Innes Smith
Ms Michelle Motion
Mr Roger Eddie (non-executive)
Mr Matthew Benson (non-executive)
Mr Nick Cooper (non-executive) (appointed 1 June
2018)
SECRETARY:
Mr Andrew Todd
REGISTERED OFFICE:
Alexander Fleming House
8 Southfield Drive
ELGIN
IV30 6GR
COMPANY REGISTRATION NUMBER:
SC031286 (Scotland)
SOLICITORS:
INDEPENDENT AUDITOR:
NOMINATED ADVISER AND BROKER
Kerr Stirling LLP
10 Albert Place
STIRLING
FK8 2QL
Burness Paull LLP
50 Lothian Road
Festival Square
EDINBURGH
EH3 9WJ
Pinsent Masons LLP
141 Bothwell Street
GLASGOW
G2 7EQ
Johnston Carmichael LLP
Commerce House
South Street
ELGIN
IV30 1JE
Nplus1 Singer LLP
1 Bartholomew Lane
London
EC2N 2AX
2
SPRINGFIELD PROPERTIES PLC
FINANCIAL HIGHLIGHTS
FOR THE YEAR ENDED 31 MAY 2018
Group
Revenue
Group
Completions
+27%
2018: £141m
2017: £111m
+24%
2018: 770 homes
2017: 620 homes
Group
Adjusted
PBT*
+46%
2018: £9.8m
2017: £6.7m
Private
Homes
Revenue
+18%
2018: £102m
2017: £86m
Affordable
Homes
Revenue
+60%
2018: £37m
2017: £23m
Group
Revenue
Gross profit
Adjusted Operating profit*
Adjusted profit before tax*
Net debt
2017/18
£m
140.7
22.1
10.7
9.8
15.3
2016/17
£m
110.6
16.7
7.8
6.7
33.2
Change
%
+27.2
+32.3
+37.2
+46.3
-53.9
*Adjusted excludes exceptional items. Exceptional items are costs relating to acquisition of Dawn Homes and IPO costs relating to existing ordinary shares.
STRATEGIC AND OPERATIONAL HIGHLIGHTS
Achieved growth across the business
Successful IPO
Total active sites increased by 64%
Sales start at Bertha Park Village, 3,000 homes
£20m acquisition of Dawn Homes
Increased land bank by 3,281 plots to 12,476 plots
3
SPRINGFIELD PROPERTIES PLC
CHAIRMAN’S STATEMENT
FOR THE YEAR ENDED 31 MAY 2018
Overview
In our first full year results since floating on AIM, I am pleased to report another year of strong growth across
the business, significantly beating our initial market forecasts, with profit before tax up 46% to £9.8 million
(before exceptional items) and revenue increasing 27% to £141 million driven by a 24% increase in
completions. Springfield group of companies (the Group) has continued to invest significantly in its strong
land bank to secure future growth. Our land bank now stands (including secured sites subject to planning) at
12,476 plots (2017- 9,195). As a result of the IPO, net debt has decreased from £33.2m to £15.3m, a
reduction of £17.9m.
Two significant events during the period underpin future growth. Firstly, we admitted to trading on AIM in
October 2017, raising £25m from the placing of 23,584,906 shares priced at 106 pence, giving Springfield a
market capitalisation of £87m. This was followed in May 2018 by the acquisition of Dawn Homes, for a
consideration of up to £20m, supported by raising a further £15m from the placing of 12,500,000 shares at
120 pence on AIM from new and existing investors. Dawn Homes presented a good opportunity to acquire a
well-run business with an excellent reputation and to accelerate growth with live sites in new areas and with
a healthy land bank pipeline.
Springfield operates through two market sectors, Private Housing and Affordable Housing. These two sectors
deliver two distinct revenue streams spreading our market reach. Private Housing division is the largest
division providing 72% of total revenue with the Affordable Housing division providing income and cash flow
visibility from Government backed contracts. We believe the combination of these divisions is key to
sustained long term growth.
Private Housing
Demand continues to outstrip supply for private housing with continuing upward pressure on prices across
the Scottish regions in which we operate.
Springfield’s private housing business has a strong reputation of delivering value for customers. Our
“Choices” and “It’s Included” customer initiatives mean Springfield’s high-quality homes include more in the
list price, and offer more opportunities for customers to style their new home. Customers receive a
personalised after sales service from a dedicated in house team and developments are in good locations.
Revenue in the Private Homes division rose 18% to £102m, (2017- £86m). Average sales price rose 12% to
£221k, with 460 private house completions.
Strategically we have focused on two areas.
Firstly, we focus on seeking opportunities to immediately expand our sales presence and to strengthen our
land bank. The £20m acquisition of Dawn Homes, in the final month of our financial year, extended our
geographic reach bringing six live sites in new areas and adding 1,366 plots to our private land bank. With
the live sites in full production we will see a strong positive impact on private house sales in 2018/19
demonstrating the merit of our strategy of geographic expansion. Looking to the future Dawn Homes has two
new sites in the pipeline starting this year and with the support of the Group is positioned to grow.
Dawn Homes is based in Glasgow, operates in the West of Scotland and sells approximately 100 private
homes each year. The business is a ‘good fit’ for Springfield, employees are rightly proud of their product
and the company shares Springfield’s core values of looking after customers and building high quality homes.
The company is performing well and uniting Dawn with Springfield has been straightforward.
4
SPRINGFIELD PROPERTIES PLC
CHAIRMAN’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
Of equal focus has been progressing Springfield Villages. These villages are standalone developments of
1,000 to 3,500 homes designed for greenfield sites by Springfield. Designs include all the infrastructure a
community needs to thrive. We already build high quality, high specification homes. Now, with these
extensive standalone zonings, we are designing high quality, high amenity new villages which are attractive
to home buyers who want to be part of a community. We have a current pipeline of four villages secured in
strong locations near fast-growing cities and towns. These four villages will deliver 10,000 homes and provide
us with a firm base for the future. By designing an entire settlement 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.
To date two village developments are fully operational. One has full planning consent with construction due
to start in late 2018 and one is awaiting planning consent, expected March 2019. Post year-end, land for a
fifth village has been secured at Gavieside, Livingston. This 1,900 home site is near Glasgow and Edinburgh,
and has very high demand for residential property.
Affordable Housing
Springfield has built a solid track record since we entered the affordable housing market building over 1,500
houses in the last five years. This part of the Group’s business has contracted revenues and requires low
capital.
The Scottish Government has allocated £3.2 billion to build 50,000 affordable homes over the course of this
parliament. This is a large increase from the 30,000 target of the previous five-year period, 2011 - 2016. To
meet the target another c25,000 homes must be built in Scotland by 2021.
With Government policy underpinning the market it is our aim to increase the size of our affordable housing
business. Revenue in the Affordable Homes division rose 60% to £37m, (2017- £23m). The average sales
price is £120k, with affordable house completions of 310 homes.
Over the years we have become a trusted partner of local authorities. We have sustained the trend for growth
in the Affordable Housing division this year with 310 homes built, up from 183 in 2017/18, a 69% increase.
Affordable Housing now forms 26% of our business (2017- 21%), in terms of total revenue.
Dividend
In line with the Group’s strong performance and our confidence in the outlook, I am pleased to inform
shareholders that the Board is proposing a financial dividend of 2.7p per share subject to shareholder
approval at the Annual General Meeting to be held on 25 October 2018. Taking into account the interim
dividend of 1.00p per share already declared and paid, this equates to a total dividend of 3.70p per share.
Outlook
As we look to the future, I would like to thank those who have enabled us to reach this point. In particular, we
would like to thank all of our 593 current staff for their hard work and dedication. We would like to welcome
the Dawn Homes team, a strong addition who will ably develop our business in the West of Scotland.
With further strengthening of Springfield’s foundations and the long-term growth drivers showing no sign of
abating, we look forward to delivering further growth in 2018/19.
In 2018/19 we will focus on: progressing the exciting work on our five villages; growing our affordable housing
division; identifying the right opportunities to expand our sales presence and land bank; and maintaining
customer satisfaction while maximising margins.
We take very seriously the responsibility of developing new places for people to live and the opportunities
this gives us as a business. We are motivated by the idea that we can contribute to making Scotland a better
place to live. And the better job we make of designing and building these villages to be great places to live,
the more demand there will be for the homes in them.
5
SPRINGFIELD PROPERTIES PLC
CHAIRMAN’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
Growth brings challenge and change and we approach both with enthusiasm. The things that make
Springfield successful - our focus on customers and quality - dominate our culture. They will go on making
Springfield successful whatever the challenges.
With all this in mind it’s an exciting future for Springfield and the Board is confident that Springfield is in a
strong position to continue to grow revenue and profit.
Sandy Adam
Chairman
26 September 2018
6
SPRINGFIELD PROPERTIES PLC
CHIEF EXECUTIVE’S STATEMENT
FOR THE YEAR ENDED 31 MAY 2018
With another robust performance in 2017/18 Springfield continues to grow consistently at a rate which has
seen the business double in size approximately every five years.
KPIs
We have achieved growth across our KPIs, revenue is up 27% to £141m driven by a strong sales
performance, with completions up 24% to 770 homes, and a higher ASP in the year of £182.8k from £178.4k
in 2016/17. Gross profit has increased by 32% (2017- 21%) and as a result of careful cash management, net
debt has been reduced by 54% to £15.3m.
The number of active sites has increased to 41 (31 May 2017 - 25 active sites) whilst 25 new sites were
added to the pipeline during the period and 9 sites were completed. Overall, we have expanded, our land
bank by 36% to 12,476 plots; the equivalent of 15 years at current sales rates. (31 May 2017 - 9,195 plots,
14 years).
Private Housing
The Group's Private Housing division offers homes, on sites of various size, across Central and Northern
Scotland. Following the successful IPO, Springfield is increasingly focused on developing larger, standalone
Village sites each with 1,000-3,500 plots and that include local amenities. Springfield homes are differentiated
by their high quality specification and a wide variety of personalised finishes as part of Springfield’s "It's
Included" and "Choices" initiatives.
Private Housing has had a very strong year with higher than expected sales at a number of key sites, as a
result revenue grew 18% to £102m (2017- £86m). Revenue growth has been underpinned by strong sales,
completions have increased to 460 (2017- 437), and ASP of £221k, an increase of 12% (2016/17: £198k).
Following the IPO Springfield has made good progress with the planning and development of the Villages.
Dykes of Gray village near Dundee is becoming established with 108 homes occupied at 31 May 2018
including 52 completions during this year. With the potential for 1,500 homes, the village has become its own
shop window with attractive village streetscapes and public areas. This type of development is attractive to
other developers and post year-end we finalised a land swap of 62 plots at Dykes of Gray with another major
housebuilder. The swap has delivered a development of 59 homes at Kinross, extending our geographic
presence.
Bertha Park, near Perth is, on a larger scale with around 3,000 homes and major community facilities
planned. The infrastructure which makes Bertha Park a great place to buy a new home includes a high school
opening in August 2019, primary schools, commercial and community buildings and extensive, attractive
outdoor public and community spaces. With sales launched in late 2017 we expect the first homes to be
occupied, and show homes to be operational, by 2018.
During the year all the necessary approvals and legal agreements have been secured to allow construction
to start in late 2018 on the first 870 of 2,500 homes at Linkwood Village, Elgin. During this year a planning
application has been submitted for 3,002 homes at Durieshill near Stirling. We are working closely with
Stirling Council and expect to receive consent by March 2019.
Since the period end Springfield announced that land had been secured for a fifth village of 1,900 homes at
Gavieside, near Livingston, where there is a very high demand for residential property and work has
commenced on designing the masterplan.
The Group commenced sales at The Wisp, a large development area in South East Edinburgh. During the
year the group agreed to purchase a second tranche of land for 120 homes as part of its ongoing development
at The Wisp, expanding its existing 80-home development to 200 homes.
In the addition to progress at the villages, we have had strong sales completing a further 392 homes on 24
other private sites each at varying stages of completion.
7
SPRINGFIELD PROPERTIES PLC
CHIEF EXECUTIVE’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
Springfield grew its active Private Housing sites to 23 (31 May 2017 - 17 active sites) and 10 new sites were
added to the pipeline while four sites were completed. The total Private Housing land bank was expanded to
8,757 plots on 50 sites (31 May 2017 - 6,372 plots and 33 sites). During the year, Springfield secured planning
consent for 812 private plots and submitted planning applications for 2,439 plots. As at 31 May 2018, 42%
of the Group’s private plots had planning (31 May 2017 - 39%), with 28% of plots going through the planning
process and 30% at the pre-planning stage.
Affordable Housing
Affordable home completions increased 69% to 310 from 183 in line with our aim to accelerate growth while
there is strong government support for building affordable housing. Revenue from affordable homes
increased by 60% from £23m in 2016/17 to £37m in 2017/18.
During the period the affordable housing division completed sites, including a 202 homes development at
Muirhouse Edinburgh and a 30 home specialist dementia unit in Elgin, with several other partial phased
handovers through its 24 active sites in the year.
Affordable Housing is a growing part of our business, 26% of revenue for 2017/18, up from 21% in 2016/17.
With a growing reputation as a reliable partner for local authorities and housing associations across Scotland,
a successful framework bid secured with the Local Authority for 10 developments over three years, 18 active
sites and over 22 sites at the planning / pre-contract stage we expect this growth to continue.
During 2017/18 we have secured land for 12 new affordable only developments, planning consent for 981
more affordable homes and contracts to build 257 affordable homes. We are focused on being prepared with
land and planning consents as Scottish Government pushes to meet its targets and opportunities increase
for local authorities to develop homes.
Springfield completed the Linkwood View facility in Elgin that was specifically designed for the elderly. The
development, created in partnership with Hanover Housing Association, is comprised of 30 wheelchair
accessible apartments, with six of the self-contained flats being tailored to meet the needs of residents with
dementia. Following the success of this development, Springfield is now in negotiations to build similar
facilities in Central Scotland. At Springfield’s Affordable Housing development in Muirhouse, Edinburgh,
located on the site of a former BT Training Centre, the Company handed over the final 28 homes of the 202-
home development. This development has generated a total of £23.0m of revenue for Springfield over the 3
year duration of the project.
Land and Planning
One of our advantages lies in our dynamic management team always being on hand to make informed
decisions quickly. This and the wealth of experience of our land and planning teams expedites the securing
of good sites. The relationships our expert teams continue to develop with local authorities enable more
effective navigation of the planning process and more efficient delivery of the valuable planning consents
which enable us to extract maximum value from our land bank. Using these advantages, we have built a core
competency in developing difficult sites; and we are becoming expert in securing large standalone land
zonings which are steered capably through the planning system to bring homes to market as quickly as
possible. During the year our land and planning teams secured 2,181 plots in 22 locations and received
planning approval on 1,793 plots over 10 different developments
Employees and Structure
Our strong performance is made possible by the hard work of our 593 current dedicated employees and I
extend my thanks and congratulations to each one of them. Future growth relies on a well skilled and growing
workforce. We grow talent from within with formal and informal training and mentoring programmes, and we
attract new talent with good working conditions and opportunities for career progression. As such 21% of our
employees are apprentices or are undertaking formal training or further education.
8
SPRINGFIELD PROPERTIES PLC
CHIEF EXECUTIVE’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
To enable employees to sustain growth we are implementing change within the management structure and
post period have appointed two high calibre Managing Directors. One now heads up private housing in the
North of Scotland and the other heads up private housing in Central Scotland. They have joined our newly
formed Group Operating Board along with the Managing Director of our affordable homes business, the
Managing Director of Dawn Homes and the Directors heading up corporate functions across the business.
We believe this new structure will support sales growth and operational efficiencies as the business expands.
Outlook
We have started the new financial year with geographic expansion as our acquisition of Dawn Homes, which
has provided Springfield with a significant foothold in Glasgow, begins contributing to our bottom line with 6
live sites and a healthy pipeline of land. As a group we expect to start work on 8 new sites across Scotland
during the year.
With our new management structure in place, demand continuing to outstrip supply, and ongoing support
from Scottish Government for developing affordable housing, we are in a strong position to deliver our growth
targets.
Innes Smith
CEO
26 September 2018
9
SPRINGFIELD PROPERTIES PLC
CHIEF FINANCIAL OFFICER’S REVIEW
FOR THE YEAR ENDED 31 MAY 2018
Group revenue for the year to 31 May 2018 was 27.2% higher than the previous year at £140.7m (2017 -
£110.6m). This was based on increased revenue in both the Private Housing and Affordable Housing
divisions, with an increase in completions as well as overall ASP to £182.8k (2017 - £178.4k) driven by
improvements to sales mix and by market pressures. The Private Housing division continued to be the largest
contributor to revenue, accounting for 72.4% of total revenue (2017 - 78.1%).
Revenue
Private Housing
Affordable
Other*
TOTAL
2017/18
£’000
101,867
37,272
1,584
140,723
2016/17
£’000
86,367
23,250
972
110,589
Change
+17.9%
+60.3%
+63.0%
+27.2%
*Principally construction-only projects, typically on land not owned or controlled by Springfield where
the Company receives fees for its design and construction work.
Gross profit for 2017/18 increased by 32.7% to £22.1m (2017- £16.7m), which reflects a consolidated gross
margin improvement of 6 basis points to 15.7% (2017 - 15.1%). This was due to increased gross margin in
the Affordable Housing division, which was 17.2% compared with 14.6% for 2016/17, while the gross margin
in the Private Housing division was 15.2% (2017 - 15.4%). The strong improvement in the margin in the
Affordable division was due to more efficient build processes and the start of new sites with higher margins.
The slight softening in the margin in the Private Housing division was due to the accelerated completion of
the sites that Springfield had acquired from Redrow in 2011 which had a lower margin than other sites.
However, the Private Housing division continued to account for the majority of the gross profit at £15.5m with
the Affordable Housing division generating £6.4m (2017 - £13.3m and £3.4m respectively).
Total administrative expenses for 2017/18 were £12.2m compared with £8.9m for the prior year. This includes
exceptional costs of £0.6m comprising £0.3m in IPO-related expenses and £0.3m in costs related to the
acquisition of Dawn Homes. On an adjusted basis, to exclude these exceptional items, administrative
expenses were £11.6m. The increase compared with the prior year reflects the Group’s investment in its
future growth with the majority of the increase consisting of employee wages relating to the growth of the
Group as well as reflecting the transition to becoming a public company.
Profit before tax increased by 37.7% to £9.2m (2017 - £6.7m). On an adjusted basis, to exclude the £0.6m
of exceptional items as described above, profit before tax increased by 46.1% to £9.8m. This increase in
profit before tax was primarily due to the higher revenue and improvement in gross margin. There was also
a slight reduction in finance costs relating to bank interest payments and a slight increase in interest
receivable.
The basic EPS for the year (excluding the exceptional items) increased by 17.4% to 10.78p compared with
9.18p for the prior year. The lower percentage increase compared with the increase in profit is due to the
larger share capital of the Group in the later period as a result of the admission of shares pursuant to the
Group’s IPO and subsequent fundraising conducted during the year.
The return on capital employed (“ROCE”) for the year ended 31 May 2018 was 11.3% compared with 11.9%
for the prior year. The reduction was due to the Dawn Homes acquisition in May 2018 reflecting only one
month of earnings.
Net debt at 31 May 2018 was £15.3m, which is a reduction of £17.9m compared with £33.2m at 31 May
2017. The reduction is primarily due to the reduction of bank loans through the receipt of the IPO proceeds
of £25.0m and from the placing to raise £15.0m which was partly offset by the £15.5m cash payment for the
acquisition of Dawn Homes.
Michelle Motion
CFO
26 September 2018
10
SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MAY 2018
The Directors’ present their strategic report for the Group for the year ended 31 May 2018.
REVIEW OF THE BUSINESS
The principal business of the Group continued to be that of property development. The Chairman’s Statement
on page 4 and the CEO’s Statement on page 7 detail activities and development of the business over the
year.
FINANCIAL AND BUSINESS HIGHLIGHTS
Springfield achieved growth across all areas of the business. Financial and business highlights are detailed
in the introduction to this report at page 3.
KEY PERFORMANCE INDICATORS
2018 vs 2017
Financial
Homes
Revenue
Gross profit margin
Adjusted profit before tax*
2017/18
2016/17
Change
770
620
£140.7m
£110.6m
15.7%
£9.8m
15.1%
£6.7m
+24%
+27%
+6 bps
+46%
-54%
Net debt
£15.3m
£33.2m
+36%
12,476 plots
Land Bank
*Adjusted excludes exceptional items. Exceptional items are costs relating to acquisition of Dawn Homes and IPO costs relating to existing ordinary shares.
9,195 plots
Personnel
Average number of employees up to 568 in May 2018 from 479 in May 2017
124 employees, 21% of the workforce in training / apprenticeships in May 2018, which is consistent
with last year
Environmental
All homes are designed to perform above 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 also built to an environmental standard higher than the regulatory requirement reducing
the environmental impact of our homes overall.
11
SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
Quality Management
The Group is accredited to ISO 19011-2011 standard. During 2018 improvements actioned as a result of
quality management was similar to 2017 at 266.
KEY RISKS AND UNCERTAINTIES
The principle risks and uncertainties 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 in Note 26 of the financial statements.
Price / Sales Risk
The risk of facing reduced demand in an area is mitigated by the following factors:
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, including by Innes Smith as an executive board
member of homes for Scotland, allows forward planning to mitigate risks identified as result of
changes in policy; and
any reduction in mortgage availability or affordability in the private market is mitigated by growth of
the affordable housing side of the business.
Cash Flow Risk
Detailed budgeting and regular review of forecasts allows efficient management of future cash flows.
Resources Risk
The labour market is competitive and there is some upward pressure on building material prices.
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; and
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 to add to buying power; and
negotiating deals directly with manufacturers.
Legal and Regulatory Risk
The Group has an in house legal department which advises and supports the group with legal compliance.
Health and Safety Risk
There are health and safety risks inherent to construction. Health and safety is the first 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; and
introducing or updating applicable policies or procedures
12
SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
Land Supply Risk
The risk of securing sufficient land is mitigated by a healthy and growing supply of land owned or secured by
contract (15 years) 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 Group 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, securing funding until 2020 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 are set out in Note 26 to these financial
statements.
FUTURE DEVELOPMENTS
The future development of the Group is dealt with in the Chairman’s Statement.
CHARITABLE DONATIONS AND COMMUNITY SUPPORT
During the year the Group made payments of £17,793 (2017- £18,086) to local charities and £1,440 (2017-
£2,572) to national charities.
Springfield looks for opportunities to engage with the community in towns where we are building. We aim to
help young people achieve more and to help those who are disadvantaged. Staff visit schools to support a
variety of initiatives including careers information, mentoring, and charitable programmes. Mentoring
programmes also see young people join us for work placements. We sponsor youth sports teams and some
individual young athletes and we support the Duke of Edinburgh’s Award in Moray.
On a wider scale, we support events that bring the community together. For the last six years, Springfield
have been the headline sponsor of the European Pipe Band Championships which brings bands from across
Europe to an event organised largely by the local community in Forres and attracts over 20,000 people.
On behalf of the Board
Sandy Adam
Chairman
26 September 2018
13
SPRINGFIELD PROPERTIES PLC
GOVERNANCE
FOR THE YEAR ENDED 31 MAY 2018
BOARD OF DIRECTORS
Sandy Adam, Chairman
(Sits on Nomination Committee)
Sandy is the grandson of the founder of Springfield and has worked for the Company since the 1980s. Sandy
led the Company during its change from a market garden business into a housebuilder in 1988. Sandy has
been Chairman of the Company since 2004 and has been the driver behind many of the Group’s key
commercial decisions including the focus on affordable housing, the geographic expansion out of Elgin in
2010 and the acquisition of Redrow’s Scottish assets/operations in 2011. Sandy has over 25 years of
experience in the Scottish housing and property markets, including his role as Chairman of Homes for
Scotland between 2014 and 2015, and leads the Group’s land buying team.
Innes Smith, Chief Executive Officer
After graduating from Heriot Watt University in 1991, Innes qualified as a Chartered Accountant with KPMG
before moving into industry as financial controller at SGL Technic, a subsidiary of RK Carbon Fibres (now
called SGL Carbon Fibres Limited), a NASDAQ and Deutsche Börse listed company. Subsequently Innes
was promoted to Finance Director at SGL Technic and after five years moved to Gael Force. Innes joined
Springfield in 2005 as Finance Director and was appointed Chief Executive Officer at Springfield in October
2012 after seven years with the Company. In his role as Chief Executive Officer, Innes has grown the scale
of the Group with annual revenue increasing from £53 million to £141 million and completions increasing
from approximately 300 to over 700 per year. Innes was appointed to the Board of Homes for Scotland in
2016.
Michelle Motion, Finance Director
Michelle joined Springfield as a Finance Director in 2013. Michelle has over 20 years of experience within
the property and construction industry, previously working for Morrison Developments Limited, a subsidiary
of AWG plc, a FTSE 250 company, and the house building company Avant Group, previously known as
Gladedale Group. Michelle graduated with a BA in Accounting and an MBA and is a qualified accountant
from the Chartered Institute of Management Accountants.
Roger Eddie, Non-executive Director
(Chair of Remuneration and Nomination Committees, sits on Audit Committee,)
Roger worked for the Bank of Scotland for 32 years, most recently as Director of the North of Scotland Real
Estate Team. Roger sits on the Board of the Port of Cromarty Firth and of their Cruise Highland subsidiary.
Roger joined Springfield as a non-executive Director on 13 November 2008.
Matthew Benson, Non-executive Director
(Chair of Audit Committee, sits on Remuneration and Nomination Committees)
Matthew graduated from Oxford University and began his career with Morgan Stanley, working in
international finance in London. Matthew then established his own consultancy business focused on the
structuring and planning of high quality residential and leisure projects. Matthew joined Rettie & Co as a
Director in 2002 with responsibility for land and development, new homes and rural projects. Matthew was
appointed to the Board as a non-executive Director in 2011. Matthew has a number of other responsibilities
including Member of the Advisory Board of Kleinwort Hambros private bank, Trustee of Project Scotland and
Director of Edinburgh Arts Festival. Matthew was also the founding chair of bio-tech businesses EctoPharma
Limited and Ryboquin Limited.
Nick Cooper, Non-executive Director (Appointed 1 June 2018)
Nick is a qualified solicitor with over 20 years’ board experience with UK-listed and private companies. From
2010 to 2015, he was Corporate Services Director at Cable & Wireless Communications plc, which he joined
from Cable & Wireless plc, where from 2006 to 2010 he was General Counsel and Company Secretary. His
previous in-house legal and corporate experience includes roles at Energis Communications Limited, JD
Wetherspoon plc, The Sage Group plc and Asda Group plc. Nick is currently a Non-Executive Director of
AIM-listed CPP Group plc and a number of private start-up companies.
14
SPRINGFIELD PROPERTIES PLC
GOVERNANCE (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
QCA CODE COMPLIANCE
1.
Strategy and Business Model
Springfield Properties PLC is a housebuilder focused on developing a mix of private and affordable housing
in Scotland. The Group operates through two divisions: private housing and affordable.
The private housing division has historically developed small to medium-sized developments in Scotland, as
well as a small number of larger sites – and is now focused on developing a higher proportion of larger village
sites. The division’s model primarily focuses on sourcing land in areas with high growth potential and,
subsequently, to progress developments through the planning process.
The affordable division’s operations focus on the development of land into standalone sites that consist
entirely of affordable homes. In addition to standalone developments, the affordable division develops
affordable housing on the Group’s private developments under section 75 agreements, pursuant to which we
typically agree with a local authority to contribute housing, money and/or infrastructure as a condition of
planning permission.
We have the in house skills to allow us to in develop difficult sites (often involving several land owners) that
require considerable remediation works and/or significant investment in infrastructure prior to commencing
development.
Further details on our strategy and business model are discussed in the Chairman’s statement on pages 4-
6.
2.
Understanding Shareholder Needs and Expectations
The Board is committed to maintaining good relationships with shareholders. The Chairman is responsible
for ensuring that appropriate channels of communication are established between the Executive Directors
and Shareholders, ensuring shareholders’ views are shared with the board.
Along with the opportunity to ask questions by email or telephone throughout the year, we conduct bi-annual
investor presentations organised by our nominated advisor, N+1 Singer. The presentations provide us with
a regular opportunity to understand the needs and expectations of Springfield’s shareholders. These
roadshows are held in London and Edinburgh. Shareholder relations are also managed through regular
regulatory announcements.
We maintain a corporate website (https://www.springfield.co.uk/investor_relations). It contains a range of
information required by AIM Rule 26 including our annual and half year reports, trading statements and all
regulatory announcements. We also regularly distribute press releases to national and local press with news
and updates on
found at
https://www.springfield.co.uk/news.
the Group’s current projects. All press
releases can be
All shareholders are invited to attend Springfield’s annual general meeting (AGM). Details of the AGM are
available to download from our corporate website. Voting at the AGM will be conducted by a poll and the
results announced to the market and displayed on our website as soon as possible after the meeting. The
Board recognises the AGM as an important opportunity to meet shareholders. The Directors are available to
listen to the views of shareholders informally immediately following the AGM.
3.
Wider Stakeholder and Social responsibilities
Everyone in Scotland deserves a good house. Through our private and affordable divisions, we aim to fulfil
that promise. However, we cannot do that alone. We maintain strong relationships with all stakeholders
including employees, customers, national & local government and local communities.
15
SPRINGFIELD PROPERTIES PLC
GOVERNANCE (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
QCA CODE COMPLIANCE (CONTINUED)
Employees (current): The Chairman and CEO meet bi-annually with all employees in departmental groups
to hear employees’ needs, interests and expectations. During these discussions key achievements of the
groups are discussed as well as future goals. Employees have the opportunity to ask questions and provide
feedback. We are proud that many of our employees have chosen to remain with Springfield with the average
length of service being 4.4 years. This loyalty is also reflected in the number of employees who have invested
in our Save as You Earn Scheme (SAYE) to share in the success of our business. In November 2018 we
wanted to offer employees the opportunity to invest in the future of Springfield and share in the success of
our business through SAYE. Over 68% of employees joined the scheme.
Employees (training & education): At April 2018 we supported 113 staff in further education, training and
apprenticeships. This includes 96 apprenticeships. We have over 20% of our staff engaged with training or
education.
Employees (future): Springfield has a strong focus on education and training. We encourage student
placement programmes and we have placed 11 university students in a variety of work experience roles over
the past two years. As a direct result of these placements Springfield has offered full-time employment to 5
of the students who now work for us, or will do after completion of their degree.
Customers: Customer views are sought via customer feedback forms mailed to them when they have been
living in their new home for three months. Customers can provide feedback on the entire house purchase
process with Springfield.
National & local government: Our CEO is a Director of Homes for Scotland, the voice of the home building
industry in Scotland, representing some 200 companies and organisations which together deliver 95% of
new homes built for sale each year and a significant proportion of affordable housing. Through Homes for
Scotland we engage with the Scottish Government, local government and utility companies. Any direct
contact with the Scottish Government is also governed by the Lobbying (Scotland) Act 2016 and we comply
with all requirements of that Act.
Communities: For individual projects, we work with local communities as part of the planning process. Any
new development that has more than 50 units or covers two hectares requires us to hold a community
consultation. This event allows members of the local community to gather information on the proposed
development, ask questions and provide their feedback on the proposals. We take these comments on board
when taking the development forward.
Alongside the planning process, we support the communities in which we build. This can involve
sponsorships, running or sponsoring local events, fundraising for local charities and providing talks at local
schools.
More directly, our affordable division helps local authorities and housing associations provide much needed
new affordable homes to meet the current national shortfall. We provide housing of all tenures and are
particularly proud of the specialist care facilities we provide specifically for the elderly. For example, in
partnership with Hanover Housing Association, we built a 30-apartment care facility in just over a year.
Named Linkwood View by local nursery children, staff from Hanover welcomed the first residents in
September 2017. The development has been awarded Social Housing Development of the Year by Premier
Guarantee.
4.
Embedding Risk Management
Springfield operates processes to identify, measure, manage and monitor those risks which impact the
Group’s business. The focus of our risk management framework is to ensure we are managed in a
sustainable and controlled way within our risk tolerance. Material risks and control matters are reported to
the Board via regular reports from the Group’s senior executive team who in turn meet on a regular basis
with risk and control issues being discussed at those meetings.
16
SPRINGFIELD PROPERTIES PLC
GOVERNANCE (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
QCA CODE COMPLIANCE (CONTINUED)
Given the environment in which it operates the Board has focus and attention on Health and Safety issues.
It receives a personal report from the CEO on health and safety matters at each meeting and meets regularly
with the Group’s director for health & safety so that it can discuss any matters directly with him.
The Board also maintains a system of internal controls to safeguard shareholders’ investment and assets
and for reviewing its effectiveness. The Board reviews the effectiveness of the Group's system of internal
controls on an ongoing basis. Annual budgets are prepared and detailed management reports are presented
to the Board and used to monitor financial performance and compliance with the Group’s policies and
procedures. All controls are covered including financial and operational controls to manage risk. The board
meetings are also used to consider the Group’s major risks. All potential areas of financial risk are regularly
monitored and reviewed by directors and management. Any preventative or corrective measures are taken
as necessary.
5.
Maintaining a Well-Functioning Board
The skills and experience of the Board are set out in their biographical details on page 14. All directors receive
regular and timely information the Group’s operational and financial performance. Relevant information is circulated
to the directors in advance of meetings. As Springfield has developed, the composition of the board has been
under constant review to ensure that it remains appropriate to the managerial requirements of the Group. As
such the Board identified that an additional Non-Executive Director would be highly beneficial to the Board,
accordingly Nick Cooper was appointed to the Board on 1 June 2018 following a thorough assessment of
potential candidates’ skills and suitability for the role.
The board consider Nick Copper and Matthew Benson to be independent directors for the purpose of the
Corporate Governance Code. From 13 November 2018 Roger Eddie will have completed ten years' service
as a Director. Having considered his independence in the context of the Corporate Governance Code, the
Board is also satisfied that Mr Eddie will remain independent from 13 November 2018, notwithstanding his
length of service.
Andrew Todd, as Company Secretary, attends all board and committee meetings. Andrew is a solicitor
qualified in Scotland and ensures board meetings and committee are conducted in accordance with all
relevant legal and regulatory requirements.
One third of the directors retire annually in rotation in accordance with Springfield's articles of association.
This enables the shareholders to decide on the election of the Board.
6.
Director Skills and Capabilities
As mentioned under principle 5, all directors and their professional experiences, are set out on page 14. The
skills, experience and knowledge of each director gives them the ability to constructively challenge strategy
and decision making and scrutinise performance. All directors are offered appropriate coaching and training
to develop their knowledge and ensure they remain up to date in relevant matters for which they have
responsibility as a member of the Board. In 2017-18 the Board received training from Luther Pendragon, N+1
Singer and Pinsent Masons. It receives regular updates from its advisors.
All six members of the board bring relevant sector experience through their extensive and varied careers
throughout the housing, financial, consulting and legal sectors. The board believes that its members possess
the required qualities and skills necessary to effectively oversee and execute the Group’s strategy.
7.
Evaluation of Board Performance
The Board intends to conduct an evaluation of its own performance and that of its principal committees during
2018-19. The effectiveness of the Board and its committees will be kept under review in accordance with
corporate governance best practice. Springfield’s board currently does not have a formal review process,
rather its effectiveness is assessed in an informal manner by the Chairman on an on-going basis. During the
year 2018/19, the board will formalise a self-evaluation process, selecting criteria against which it will
consider the quality of its performance, as well as specifying the frequency of such evaluations. Further
information will be included on the next Annual Report, as well as published on the website.
17
SPRINGFIELD PROPERTIES PLC
GOVERNANCE (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
QCA CODE COMPLIANCE (CONTINUED)
8.
Corporate Culture
The Board believes that everyone deserves to live in a good house. This mean that there is a need for
housing for every member of every community in Scotland and Springfield aims to address this need by
providing high quality homes for private sale to first time buyers and those already on the housing ladder and
providing affordable homes through its partnership arm which works with housing associations and local
authorities. Where possible we also address the requirements of the elderly and those with special needs.
An example of this is a flatted development specifically for the elderly in Elgin in partnership with Hanover
Housing Association. The facility consists of 30 wheelchair accessible apartments six of which are tailored
for residents with dementia.
Dedication to customers is at the heart of the Springfield culture. We offer our customers wide choice of
options on design, fixtures and fittings through our online “Choices” initiative and we build trust through our
“It’s Included” promise and our after sales service. Customer satisfaction statistics are an integral part of how
we manage our business and incentivise our key people. Our CEO presents our customer satisfaction
statistics at each board meeting. Springfield has received a number of awards for its customer services and
for the sites it produces, including:
2017 PREMIER GUARANTEE AWARDS
Social Housing Development of the Year - Linkwood View, Elgin
2016 PREMIER GUARANTEE AWARDS
Large Development of the Year - Duncansfield, Elgin
Site Manager of the Year - Victor Grant
2016 HOMES FOR SCOTLAND AWARDS
Private Development of the Year - Medium - Middleton of Canmore, Braemar
2015 HOMES FOR SCOTLAND AWARDS
HOME BUILDER OF THE YEAR 2015
Employee of the Year - Heather Henderson; Best Customer Service Initiative 2nd year in a row - It's Included;
Best Small Development - Powderhall Gate
The Board believes that high levels of customer service are only deliverable by talented and engaged
employees. With strong local roots in the North of Scotland many of our employees joined the business in its
early stages of development and have remained with us as we’ve grown and most recently become a public
group listed on AIM. Ten of the original fourteen Springfield employees are still with the Group today - eight
in promoted positions. As a result we benefit from the loyalty and commitment of employees who have played
a major part in building the business and in many cases have taken the opportunity to share in its success
via our SAYE Scheme. The Board works hard to promote the same levels of loyalty and engagement in its
new recruits throughout Scotland.
Now that Springfield is listed on AIM there is a need to recruit professionals in key areas across the business.
To support our objectives and to maintain a high level of professionalism and customer service the Board’s
policy is that ‘the best person for the job’ is recruited to support the existing professionals in its in house
teams of planning, engineering, marketing, design, finance, legal and governance and health and safety.
Taken together the Board are committed to the development of Springfield whilst at the same time preserving
the culture and ethos which has resulted in the Group's growth to date.
18
SPRINGFIELD PROPERTIES PLC
GOVERNANCE (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
QCA CODE COMPLIANCE (CONTINUED)
9.
Maintaining Good Governance
As an AIM listed group, the Board recognises the importance of applying sound governance principles in the
successful running of the Group. We embrace the principles contained in the QCA Corporate Governance
Code (QCA Code) for Small and Mid-Size Quoted Companies where appropriate. We are also mindful of the
changes to the governance requirements for AIM listed companies. Given the size and nature of Springfield
and composition of the Board we, in so far as is practical and appropriate, formally adopt and adhere to the
QCA Code and will report accordingly in our next annual report from 28 September 2018.
Springfield operates processes to identify, measure, manage and monitor risks within acceptable limits
identified by the Board which impact the Group’s business. Further details on our approach to risk are set
out in response to principle 4 above.
Springfield reviews its governance structures regularly. In June 2018, Springfield appointed a third Non-
Executive Director which provides a balance between executive and non-executive directors on the
Corporate Board. We have also taken the decision to appoint two Managing Directors – one for the North of
Scotland projects and one for the central belt of Scotland projects.
The Board as a whole takes responsibility for ensuring the Company maintains appropriate corporate
governance practices, in addition the Chairman and CEO take responsibility for obtaining feedback from key
stakeholders.
10.
Communicating Governance and Performance
We have set out how communication with investors and key stakeholders is maintained in relation to
principles 2 and 3 above and shared via our website (more details of which are set out under principle 2).
Please see the reports produced by the remuneration committee and audit committee.
Andrew Todd
Company Secretary
26 September 2018
19
SPRINGFIELD PROPERTIES PLC
REMUNERATION COMMITTEE REPORT
Introduction
This report outlines the Group’s remuneration policy for its directors and shows how that policy was applied
during the financial year ending on 31 May 2018. Springfield is not required to comply with Schedule 8 to
the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008. This report
has been prepared on a voluntary basis and in order to fulfil the relevant requirements of AIM Rule 19.
Committee Members and Meetings
In the period following the Group’s admission to trading on AIM on 16 October 2017, the Remuneration
Committee comprised:
Roger Eddie (Chairman); and
Matthew Benson.
Both the above individuals are independent non-executive directors who have no personal financial interest
(other than as shareholders) in the matters decided.
its
terms of
Under
the Group’s website at
www.springfield.co.uk/investor_relations), the Remuneration Committee is required to meet at least three
times a year.
(a copy of which
is available on
reference
Committee Responsibilities
The main responsibilities of the Remuneration Committee are: -
set the overall remuneration policy for the Group’s executive directors (and certain other senior
employees); and
within the terms of that policy, determine the terms and conditions of employment of those individuals
and the level of their remuneration (including short-term and long-term incentives).
The remuneration of the non-executive directors is determined by the Board as a whole within limits set out
in Springfield’s articles of association. The non-executive directors do not participate in performance related
bonus or share based incentive arrangements.
Remuneration Policy for Executive Directors
The overarching aim of the Group’s remuneration policy is to attract and retain the highest calibre individuals
as executive directors and ensure they are appropriately and fairly rewarded for performance in a manner
that is both as straightforward as possible and appropriate for Springfield’s size and stage of development.
During the financial year to 31 May 2018, the overall remuneration package for executive directors consisted
of the following elements: -
Basic Salary;
Annual Bonus;
Pension Contributions;
Opportunity to participate in an “all employee” SAYE share option scheme; and
Other standard benefits.
Long Term Incentive Plan;
Further disclosures in relation to each of the above elements are provided below.
20
SPRINGFIELD PROPERTIES PLC
REMUNERATION COMMITTEE REPORT (CONTINUED)
Basic Salaries
Each executive director receives a base salary, the level of which reflects the particular individual’s
experience and performance, the nature and complexity of their work and the market in which the Group
operates.
As at 31 May 2018, the annual rates of base salaries for the executive directors were:-
Sandy Adam - £75,000
Innes Smith - £167,000 and
Michelle Motion - £120,000
The Committee reviews the executive directors’ salaries annually, with any increases taking effect on 1 June
each year. Whilst normally the Committee would expect any such salary rises to be broadly in line with those
applied to the wider workforce, it is anticipated that, in the initial period following admission to AIM, the
executive directors’ salaries will be increased at a slightly higher rate to ensure that they ultimately reach a
level that is competitive when compared to other similarly sized organisations in the Group’s sector. It is
expected that this process will be completed during the course of the next two financial years.
Annual Bonus
Under the Group’s annual bonus scheme for executive directors, individuals have the opportunity to receive
a cash award that is linked to the achievement of specified targets that are aligned to the Group’s corporate
plan for the period in question. For each year of the scheme’s operation, the Committee specifies a maximum
opportunity (as a percentage of salary) for each participant.
For the financial year to 31 May 2018, the maximum bonus opportunity for Innes Smith and Michelle Motion
was 75% of salary and the measures used to determine the amount of their individual awards included a
mixture of targets relating to profit before tax, return on capital employed and (in the case of Innes Smith)
customer care and health and safety. Each measure was ascribed its own weighting, with a sliding scale of
achievement (between threshold and maximum) then being used to determine the level of award actually
paid. Where performance was below threshold for any particular measure, no bonus was payable in respect
of that element.
Sandy Adam did not participate in the annual bonus scheme for the financial year to 31 May 2018.
Pensions
During the year, the Group made contributions to pension plans for the executive directors. These
contributions were at a rate of 5% of basic salary in respect of Sandy Adam, and at the rate of 10% of basic
salary in respect of both Innes Smith and Michelle Motion.
Long Term Incentive Plan
Discretionary long term incentives are provided through the operation of the following arrangements that
were first introduced in October 2017 as part of the process surrounding the Group’s admission to AIM:
The Springfield Properties PLC Company Share Option Plan (the “CSOP”), which allows tax
advantaged options to be granted over the Company’s shares to selected employees of the Group
(including executive directors); and
The Springfield Properties PLC Employee Share Option Plan (the “ESOP”) which enables non-tax
advantaged options to be granted to the same category of individuals.
Options granted under the CSOP and ESOP generally vest after three years. The price per share payable
on their exercise will normally be equal to the market value of a share on the date they were originally granted.
Details of the grants made to Innes Smith and Michelle Motion under the CSOP and ESOP during the
financial year to 31 May 2018 are set out on page 23. Given the size of his existing shareholding in the
Group, Sandy Adam does not currently participate in either of these arrangements.
21
SPRINGFIELD PROPERTIES PLC
REMUNERATION COMMITTEE REPORT (CONTINUED)
Save As You Earn (“SAYE”)
At the same time as establishing the CSOP and ESOP, the Group also adopted the Springfield Properties
PLC SAYE Option Scheme (the “SAYE Scheme”). Under this tax advantaged arrangement, all employees
(including executive directors) can be invited to apply for the grant of options over the Group’s shares that
are linked to a three-year savings contract. The price per share payable on the exercise of these options is
set by the Board at the date invitations are issued, but cannot be less than 80% of the market value of a
share on that date.
Details of the grants made under the SAYE Scheme to Innes Smith and Michelle Motion during the financial
year to 31 May 2018 are set out on page 23. For the same reason stated above in relation to the CSOP and
ESOP, Sandy Adam does not currently participate in the SAYE Scheme.
Remuneration in the Year
During the year to 31 May 2018, the directors received the following remuneration:
Basic
salary/fees
Annual
Bonus
Taxable
benefits
Pension
contributions
2018
Total
2017
Total
£000
£000
£000
£000
£000
£000
Executive Directors
Sandy Adam
Innes Smith
Michelle Motion
Non-Executive Directors
Matthew Benson
Roger Eddie
51
157
111
24
21
-
94
119
-
-
364
213
8
8
8
-
-
24
2
16
11
-
-
61
275
249
24
21
19
146
125
15
6
29
630
311
The annual bonus for Michelle Motion includes £66,449 that relates to pre-float bonus. The taxable benefits
figure in the above table for each of the executive directors relates to a range of benefits provided by the
Group including a car allowance and life and health assurance. The bonus figure includes accrued bonus
for the year to 31 May 2018 payable in September 2018 and March 2019.
Nick Cooper was appointed 1 June 2018.
The above table does not include the value of share options held by the Directors, details of which are set
out below.
22
SPRINGFIELD PROPERTIES PLC
REMUNERATION COMMITTEE REPORT (CONTINUED)
Share Options
Details of options over the Group’s shares granted to executive directors under the CSOP, ESOP and SAYE
Scheme during the year to 31 May 2018 are as follows:
Director
Earliest exercise
date and date of
Scheme
Date of grant
vesting Exercise price
Number
of
shares
Innes Smith
CSOP
16 October 2017
16 October 2020
106p
28,301
ESOP
16 October 2017
16 October 2020
106p
208,019
SAYE
8 November 2017
1 December 2020
84.8p
21,226
Michelle Motion
CSOP
16 October 2017
16 October 2020
106p
28,301
ESOP
16 October 2017
16 October 2020
106p
84,906
SAYE
8 November 2017
1 December 2020
84.8p
21,226
None of the above options are subject to performance conditions. During the year to 31 May 2018, no share
options held by executive directors lapsed or were exercised.
Directors’ Interests in the Group’s Shares
Directors’ interests in the Group’s shares are disclosed in the Directors’ Report (page 25).
23
SPRINGFIELD PROPERTIES PLC
AUDIT COMMITTEE REPORT
The Audit Committee comprises Matthew Benson (Chairman) and Roger Eddie. The Audit Committee meets
at least twice a year.
The Committee
monitors the integrity of the financial statements;
reviews the internal controls and risk management systems; and
oversees the relationship with the external Auditor
Since 1 June 2017, the Audit Committee has met twice to consider the planning of the statutory audit and to
review the Group’s draft half year and full year results prior to Board approval and to consider the external
auditor’s detailed reports.
24
SPRINGFIELD PROPERTIES PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 MAY 2018
The directors present their annual report and the audited financial statements of the Group for the year ended
31 May 2018.
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 Sandy Adam
Mr Innes Smith
Ms Michelle Motion
Mr Roger Eddie
Mr Matthew Benson
Mr Nick Cooper
Mrs Anne Adam
Mr James Adam
Mr Robert MacLeod
Mr Ewan MacLeod
Mr Thomas Leggeat
Chairman
Chief Executive Officer
Chief Financial Officer
Non-Executive Director
Non-Executive Director
Non-Executive Director – Appointed (1 June 2018)
Director – Resigned (15 September 2017)
Director – Resigned (15 September 2017)
Civils Director – Resigned (15 September 2017)
Commercial Director – Resigned (15 September 2017)
Partnerships Director – Resigned (15 September 2017)
RESULTS AND DIVIDENDS
The results for the year are set out on page 35.
Interim ordinary dividends were paid amounting to £821k (2017 - £2.3m) equating to 1.00p (2017 – 4.00p)
per share.
The Board is proposing a final dividend of 2.70p per share subject to shareholder approval at the next Annual
General Meeting to be held on 26 October 2018. Taking into account the interim dividend of 1.00p (2017 –
4.00p) per share already declared and paid, this equates to a total dividend of 3.70p (2017 - 4.00p) per share.
During the year, the nominal value of shares was split from 1p to 0.125p. The weighted average number of
ordinary shares in issue for 2017 has been recalculated based on this split. This has resulted in the dividend
per share decreasing from 32.00p to 4.00p.
EMPLOYEE CONSULTATION
The Group’s policy is to consult and discuss with employees’ representatives matters likely to affect their
interests.
On entering AIM, employees were given the opportunity to enter a Save as Your Earn share option scheme.
The scheme allows employees to save up £500 per month over a period of 3 years at the end of which they
can use their savings to purchase shares in the Group.
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.
25
SPRINGFIELD PROPERTIES PLC
DIRECTORS’ REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
DISABLED PERSONS
The Group’s policy is to recruit disabled workers for those vacancies 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
This is achieved through formal and informal meetings. Equal opportunities are given to all employees
regardless of their gender, marital status, sexual orientation, disability, age, race, and religion or belief.
POST YEAR END EVENTS
There are no post year end events to report.
GOING CONCERN
The Directors have a reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future and the Directors are satisfied that the Group will generate
sufficient cash to meet its liabilities as and when they fall due for a period of 12 months from signing these
financial statements. The Directors therefore consider it appropriate 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 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 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 that information.
This information is given and should be interpreted in accordance with the provisions of Section 418 of the
Companies Act 2006.
BOARD OF DIRECTORS
The Group supports the concept of an effective Board of Directors leading and controlling the Group. The
Board of directors is responsible for approving 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. Biographical details are set out on page 14.
INTERNAL CONTROL
The Directors acknowledge that they are responsible for the 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.
26
SPRINGFIELD PROPERTIES PLC
DIRECTORS’ REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
AUDITOR
The Board as a whole considers the appointment of the external auditor and their independence, specifically
including the nature and scope of non-audit services provided.
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 the
Remuneration Report on page 20.
DIRECTORS’ INTERESTS IN SHARES
Name of director
Sandy Adam
- Direct
-
Indirect
Innes Smith
- Direct
-
Indirect
Roger Eddie
Michelle Motion
Matthew Benson
Number of
ordinary
shares
% of ordinary share
capital and voting
rights
24,900,000
18,880,872
1,158,009
33,019
47,170
43,849
28,302
45,091,221
25.8%
19.6%
1.2%
0.0%
0.1%
0.1%
0.0%
46.8%
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Details of the Group’s financial risk management objectives and policies are set out in Note 26 to these
financial statements.
STRATEGIC REPORT
The Group has chosen in accordance with the Companies Act 2006, s.414C(11) to set out in the Group’s
Strategic Report information required by Large and Medium-Sized Companies and Groups (Accounts and
Reports) Regulations 2008, Sch. 7 to be contained in the Directors’ Report. It has done so in respect of
future developments.
On behalf of the Board
Sandy Adam
Chairman
26 September 2018
27
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 parent 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. Company law requires that 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 group 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; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the group and parent group 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 Group'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
Sandy Adam
Chairman
26 September 2018
28
SPRINGFIELD PROPERTIES PLC
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF
SPRINGFIELD PROPERTIES PLC
Opinion
We have audited the financial statements of Springfield Properties PLC (the ‘parent company’) and its
subsidiaries (the ‘Group’) for the year ended 31 May 2018 which comprise the Consolidated Profit and Loss
Account, the Consolidated Balance Sheet, the Company Balance Sheet, the Consolidated Statement of
Changes in Equity, the Company Statement of Changes in Equity, the Consolidated Statement of Cash
Flows, the Company Statement of Cash Flows and the related notes to the financial statements, including a
summary of significant accounting policies. The financial reporting framework that has been applied in their
preparation is 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.
In our opinion:
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s
affairs as at 31 May 2018, and of the Group’s profit for the year then ended;
the Group financial statements have been properly prepared in accordance with IFRSs as adopted by
the European Union;
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 Companies Act
2006; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Basis of opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of
the Financial Statements section of our report. We are independent of the Group in accordance with the
ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s
Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Conclusion relating to Going Concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to
report to you where:
the Directors’ use of the going concern basis of accounting in the preparation of the financial statements
is not appropriate; or
the Directors’ have not disclosed in the financial statements any identified material uncertainties that may
cast significant doubt about the Group’s or the parent company’s ability to continue to adopt the going
concern basis of accounting for a period of at least twelve months from the date when the financial
statements are authorised for issue.
29
SPRINGFIELD PROPERTIES PLC
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF
SPRINGFIELD PROPERTIES PLC (CONTINUED)
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial statements of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) we identified, including those which had the greatest
effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of the financial statements as
a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Risk of incorrect recognition of revenue
The Group has recorded revenue in the
year of £140.7m and is a key metric of
business performance.
to estimates of
Recognition of revenue on affordable
housebuilding construction contracts is
linked
contractual
performance as activity progresses which
is
judgemental, albeit such
estimates of performance are certified by
or agreed with the housing association
customer.
inherently
the
Private housebuilding sales involve less
inherent judgements as any recognition of
any income is deferred until contract
completion although
timing of
recognition of property sales around the
require management
year-end
judgements
the
significant risks and rewards of ownership
had
the customer and
therefore in which period revenue should
be recognised.
in determining when
transferred
can
to
For a sample of affordable housing contracts, we agreed
that the sales value recognised to date was in line with
surveyor reports as certified by or agreed with the housing
association customer, and that these had been correctly
recognised in the reported revenue figure.
For private house sales we were able to agree, for a sample
of plots that had incurred costs in the year that the house
was either sold and included in reported revenue or was still
under construction and included within work-in-progress.
Where the house was included in reported revenue, we
obtained copies of the sales pack and confirmed the date
the missives were settled and the amount of consideration
for the sale was accurately recognised in the sales ledger.
Substantive testing regarding sales in the final week of the
year and first week of the following accounting year was also
undertaken to confirm that all private house sales were
recognised in the appropriate accounting period.
No issues were noted in the above testing.
30
SPRINGFIELD PROPERTIES PLC
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF
SPRINGFIELD PROPERTIES PLC (CONTINUED)
Key audit matter
Construction
housebuilding sites profit recognition
contracts
and
private
The Group has reported a gross profit of £22.1m.
Gross profit is largely a function of margins
recognised on both construction contracts and
private housebuilding sites.
The company prepares Cost Valuation Reports
(“CVRs”) for each site which form estimated site
margins and which provide the basis for margin
recognition as activity progresses at each site.
The inherent estimates involved in this process
present a risk of incorrect profit recognition.
Management override of controls
in
the construction
Inherent
industry, which
requires some key judgements to be exercised, is
the need for a level of management oversight over
the systematic recording of transactions.
Ensuring that this judgement is applied to improve
the quality and accuracy of financial reporting is a
key audit risk as there is potential for undue
management bias to be exercised in this process.
How our audit addressed the key audit
matter
We undertook a review of previous year estimates
against current year actual (for completed sites) or
latest current year estimates for ongoing sites
based on the latest CVRs. In any cases where there
was a significant change in estimated margin we
obtained management’s supporting reasons and
corroborated that changes in estimated margins
in
were as a
circumstances, such as market selling prices, thus
leading to a difference in margin recognition over
the remainder of the site and were not indicative of
previous estimation errors.
result of specific changes
We also reviewed CVRs prepared after the financial
year-end for any significant differences in estimated
margin relative to the year-end position.
We reviewed latest CVR site forecasts to ensure
that all loss making contracts had been provided for
in full.
Upon completion of this testing we are satisfied that
margins have been recognised on a consistent and
appropriate basis.
Using data analytical tools, we undertook a review
of all journal entry activity during the period to
identify any activity that met certain risk-criteria pre-
determined by us as auditor.
Where such analysis highlighted activity outwith
initial expectation, this was reviewed and followed
up with management and supporting corroboration
was obtained.
In limited cases, journal activity review identified
management estimates which were subject to
separate audit verification and assessment based
on supporting management explanations and
subsequent corroboration.
No issues were noted with this testing.
31
SPRINGFIELD PROPERTIES PLC
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF
SPRINGFIELD PROPERTIES PLC (CONTINUED)
Our application of materiality
The scope of our audit was influenced by the application of materiality. We define materiality as the magnitude
of misstatement in the financial statements that makes it probable that the economic decisions of a
reasonably knowledgeable person would be changed or influenced. We set certain quantitative thresholds
for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit
and the nature, timing and extent of our audit procedures on the individual financial statement line items and
disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial
statements as a whole.
Materiality was determined as follows:
Group
£315,000
Parent company
£310,000
We determined that 5% of profit before
tax of the Group was an appropriate
measure
trading
for a profit-oriented
business. However we restricted our
materiality to a level commensurate with
the comparative period profit, as agreed
with
that
the Audit Committee, so
expected improvements in current year
profitability would not impact on the extent
of testing undertaken.
We determined that 5% of profit
before tax of the company was an
appropriate measure for a profit-
oriented trading business. However
we restricted our materiality to a level
commensurate with the comparative
period profit, as agreed with the Audit
expected
Committee,
improvements
year
in
profitability would not impact on the
extent of testing undertaken.
current
that
so
75% of financial statement materiality.
75% of financial statement materiality.
Materiality
Measure
Financial
statements as a
whole
(Overall materiality)
Performance
materiality used to
drive the extent of
testing
Communication of
to
misstatements
the Directors
£6,300 (2% of overall materiality) and any
misstatements below that threshold that,
in our view, warrant
reporting on
qualitative grounds.
£6,200 (2% of overall materiality) and
that
any misstatements
threshold that, in our view, warrant
reporting on qualitative grounds.
below
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed
above and in light of other relevant qualitative considerations in forming our opinion.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in
the financial statements. In particular, we looked at where the directors made subjective judgements, for
example in respect of significant accounting estimates that involved making assumptions and considering
future events that are inherently uncertain. As in all audits, we also considered the risk of management
override of internal controls, including evaluating whether there was evidence of bias by the directors that
represented a risk of material misstatement due to fraud.
32
SPRINGFIELD PROPERTIES PLC
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF
SPRINGFIELD PROPERTIES PLC (CONTINUED)
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion
on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine whether there is
a material misstatement in the financial statements or a material misstatement of the other information. If,
based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters 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; and
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 the light of our knowledge and understanding of the Group and the parent company and its environment
obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or
the Directors’ Report.
We have nothing to report in respect of the following matters in relation to which 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 and the part of the directors’ remuneration report to be audited
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.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 28, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and
fair view, and for such internal control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the parent
company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either intend to liquidate the Group or
the parent company or to cease operations, or have no realistic alternative but to do so.
33
SPRINGFIELD PROPERTIES PLC
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF
SPRINGFIELD PROPERTIES PLC (CONTINUED)
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at http://www.frc.org.uk/auditorsresponsibilities. This description forms part of
our auditor’s report.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
Use of our report
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 company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
company and the company’s members as a body, for our audit work, for this report, or for the opinions we
have formed.
David McBain (Senior Statutory Auditor)
For and on behalf of Johnston Carmichael LLP
Chartered Accountants
Statutory Auditor
26 September 2018
Commerce House
South Street
Elgin
IV30 1JE
34
SPRINGFIELD PROPERTIES PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MAY 2018
Notes
4
2018
Pre –
Exceptional
Items
£000
Exceptional
Items
£000
2018
Post –
Exceptional
Items
£000
2017
£000
140,723
(118,580)
22,143
-
-
-
140,723
110,589
(118,580)
(93,905)
22,143
16,684
10
(11,625)
(558)
(12,183)
(8,945)
5
8
9
21
126
10,665
147
(1,039)
9,773
(1,854)
-
-
21
126
-
93
(558)
10,107
7,832
-
-
(558)
-
147
4
(1,039)
(1,145)
9,215
6,691
(1,854)
(1,278)
7,919
(558)
7,361
5,413
Revenue
Cost of sales
Gross profit
Administrative expenses
Share of post-tax profit of joint
venture
Other operating income
Operating profit/(loss)
Interest receivable and similar
income
Finance costs
Profit before tax/(loss)
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
7,911
8
7,919
(558)
7,353
5,359
-
8
54
(558)
7,361
5,413
10.78p
(0.76)p
10.02p
9.18p
10.75p
(0.76)p
9.99p
9.18p
Earnings per share
Basic earnings, on profit for the
year (pence per share)
Diluted earnings, on profit for the
year (pence per share)
10
12
The Group has no items of other comprehensive income.
35
SPRINGFIELD PROPERTIES PLC
The accompanying notes on pages 42 to 75 form an integral part of these financial statements.
CONSOLIDATED BALANCE SHEET
AS AT 31 MAY 2018
Non-current assets
Property, plant and equipment
Intangible assets
Investments
Accounts receivable
Current assets
Inventories and work in progress
Accounts receivable
Cash and cash equivalents
Total assets
Current liabilities
Accounts payable
Short-term obligations under finance lease
Corporation tax
Non-current liabilities
Long-term borrowings
Long-term obligations under finance lease
Provisions
Total liabilities
Net assets
Equity
Share capital
Share premium
Retained earnings
Equity attributable to owners of the parent
company
Non-controlling interests
Note
13
14
15
17
16
17
24
18
21
20
21
22
23
23
2018
£000
4,492
600
1,018
870
6,980
105,630
19,104
12,015
136,749
2017
£000
2,803
-
-
488
3,291
81,800
6,447
8,335
96,582
143,729
99,873
33,910
1,020
1,139
36,069
25,000
1,254
2,394
28,648
64,717
25,050
500
874
26,424
40,429
588
45
41,062
67,486
79,012
32,387
120
50,105
28,767
78,992
20
79,012
73
10,285
22,017
32,375
12
32,387
These financial statements were approved by the Board of Directors on 26 September 2018
Mr Sandy Adam
Chairman
Company number: SC031286
The accompanying notes on pages 42 to 75 form an integral part of these financial statements.
36
SPRINGFIELD PROPERTIES PLC
COMPANY BALANCE SHEET
AS AT 31 MAY 2018
Non-current assets
Property, plant and equipment
Intangible assets
Investments
Accounts receivable
Current assets
Inventories and work in progress
Accounts receivable
Cash and cash equivalents
Total assets
Current liabilities
Accounts payable
Short-term obligations under finance lease
Corporation tax
Non-current liabilities
Long-term borrowings
Long-term obligations under finance lease
Provision
Total liabilities
Net assets
Equity
Share capital
Share premium
Retained earnings
Total equity
Note
13
14
15
17
16
17
24
18
21
20
21
22
23
23
2018
£000
2,892
600
19,627
135
23,254
76,212
17,835
8,505
102,552
125,806
28,360
555
866
29,781
15,000
676
2,054
17,730
47,511
2017
£000
1,717
-
42
488
2,247
81,800
6,585
8,324
96,709
98,956
25,040
222
767
26,029
40,429
336
38
40,803
66,832
78,295
32,124
120
50,105
28,070
73
10,285
21,766
78,295
32,124
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 £6,906,949 (2017 - £5,108,803).
These financial statements were approved by the Board of Directors on 26 September 2018
Mr Sandy Adam
Chairman
Company number: SC031286
The accompanying notes on pages 42 to 75 form an integral part of these financial statements.
37
SPRINGFIELD PROPERTIES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2018
Share
capital
Share
premium
Retained
earnings
Notes
£000
£000
£000
Non-
controlling
interest
£000
Total
£000
29,245
108
5,413
18,995
-
5,359
-
-
54
-
(42)
(42)
(2,337)
22,017
-
7,353
218
(821)
-
12
-
8
-
-
20
(2,337)
32,387
39,867
7,361
218
(821)
79,012
73
-
-
-
-
73
47
-
-
10,177
108
-
-
-
10,285
39,820
-
-
-
120
50,105
28,767
1 June 2016
Share issue
Total comprehensive
income for the year
Acquisition of minority
interest
Dividends
31 May 2017
Share issue
Total comprehensive
income for the year
Share option reserves
Dividends
31 May 2018
23
11
23
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.
The accompanying notes on pages 42 to 75 form an integral part of these financial statements.
38
SPRINGFIELD PROPERTIES PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2018
Share
capital
£000
Share
premium
£000
Retained
earnings
£000
Notes
1 June 2016
Issue of share capital
Total comprehensive income
for the year
Dividends
31 May 2017
Issue of share capital
Total comprehensive income
for the year
Share options reserves
Dividends
31 May 2018
23
11
23
73
-
-
-
73
47
-
-
-
10,177
108
-
-
10,285
39,820
-
-
-
18,995
-
5,108
(2,337)
21,766
-
6,907
218
(821)
120
50,105
28,070
78,295
Total
£000
29,245
108
5,108
(2,337)
32,124
39,867
6,907
218
(821)
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.
The accompanying notes on pages 42 to 75 form an integral part of these financial statements.
39
SPRINGFIELD PROPERTIES PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
Note
10
14
15
YEAR TO 31 MAY 2018
Operating activities
Profit for the year after taxation
Adjusted for:
Taxation charged
Finance costs
Interest receivable and similar income
Exceptional items
Gain on disposal of tangible fixed assets
Share option employment costs
Share of joint venture profit
Depreciation and impairment of tangible fixed assets
Operating cash flows before movements in working
capital
Decrease/(Increase) in inventory
Increase in accounts and other receivables
Increase in accounts and other payables
Net cash generated from operations
Income taxes paid
Net cash inflow from operating activities
Investing activities
Payments to acquire intangible assets
Purchase of property, plant and equipment
Proceeds on disposal of property, plant and equipment
Net purchase of subsidiary company
Interest received and similar income
Net cash used in investing activities
Financing activities
Proceeds from issue of shares
Cost from issue of shares
Proceeds from bank loans
Repayment of bank loans
Proceeds paid to related parties
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
Cash and cash equivalents at end of year
24
2018
£000
7,919
1,854
1,039
(147)
(558)
(45)
218
(21)
1,088
11,347
6,230
(7,314)
4,166
14,430
(1,714)
12,716
(600)
(752)
62
(14,719)
19
(15,990)
42,180
(2,312)
-
(22,500)
(4,647)
-
(2,929)
(849)
(821)
(1,168)
6,954
3,680
8,335
12,015
The accompanying notes on pages 42 to 75 form an integral part of these financial statements.
2017
£000
5,413
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)
8,335
40
SPRINGFIELD PROPERTIES PLC
COMPANY STATEMENT OF CASH FLOWS
YEAR TO 31 MAY 2018
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
Exceptional items
10
Depreciation and impairment of tangible fixed assets
Share option employment costs
Operating cash flows before movements in working
capital
Decrease /(increase) in inventory
Increase in accounts and other receivables
Increase in accounts and other payables
Net cash generated from operations
Income taxes paid
Net cash inflow from operating activities
Investing activities
Payments to acquire intangible assets
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
14
15
Financing activities
Proceeds from issue of shares
Cost from issue of shares
Proceeds from bank loans
Repayment of bank loans
Proceeds from other borrowings
Repayment of other borrowings
Proceeds paid to related parties
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
Cash and cash equivalents at end of year
24
2018
£000
2017
£000
7,465
5,108
1,727
973
(147)
-
(558)
544
218
10,222
5,999
(6,636)
3,516
13,101
(1,612)
11,489
(600)
(659)
1
(17,585)
19
(18,824)
42,180
(2,312)
-
(22,500)
-
(2,929)
(4,647)
(388)
(821)
(1,067)
7,516
181
8,324
8,505
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)
8,324
41
The accompanying notes on pages 42 to 75 form an integral part of these financial statements.
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2018
1. Organisation and trading activities
Springfield Properties PLC is incorporated and domiciled in Scotland as a public limited company and
operates from its registered office in Alexander Fleming House, 8 Southfield Drive, Elgin, IV30 6GR.
The Group consists of Springfield Properties PLC and its subsidiaries Glassgreen Hire Limited and
DHomes 2014 Holdings Limited. The Group also includes Dawn Homes Limited, Dawn (Robroyston)
Limited, DHPL Limited and Dawn Homes (Johnstone) Limited who are subsidiaries of DHomes 2014
Limited and its jointly owned entity DHHG 1 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.
The Group has adopted all the standards and amendments to existing standards which are mandatory for
accounting periods beginning on 1 June 2017. The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet effective.
At 31 May 2018 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
Effective date
1 January 2018
1 January 2018
1 January 2019
IFRS 9 will impact both the measurement and disclosures of financial instruments. The Group
have assessed the impact of the revisions on the group’s and company’s results and financial
position and have concluded there will not be a material impact to the financial statements.
IFRS 15 ‘Revenue from Contracts with Customers’. It is expected that this standard will result in
some changes for construction companies, however, our preliminary assessment is that there will
not be a material impact to the financial statements.
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 June 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.
42
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
2. Summary of significant accounting policies (continued)
2.2. Basis of consolidation
The consolidated financial statements incorporate those of Springfield Properties PLC and its subsidiaries
(ie 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.
Springfield Properties PLC and Glassgreen Hire Limited’s financial statements are made up to 31 May
2018. All other subsidiaries and jointly associated entity’s financial statements are made up to 31 January
2018.
The consolidated accounts for the Group include the assets, liabilities and result of the Company and
subsidiaries in which Springfield Properties PLC have controlling interest, using accounts drawn up to 31
May except where entities do not have coterminous year ends. In such cases, the information is based on
the accounting period of these entities and is adjusted for material changes up to 31 May. Accordingly, the
information consolidated is deemed to cover the same period for all entities throughout the Group.
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.
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.
43
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
2. Summary of significant accounting policies (continued)
2.6. Revenue recognition (continued)
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.
2.7. Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense in the period in
which the services are received, unless those costs are required to be recognised as part of the cost of
stock.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services
are received.
Termination benefits are recognised immediately as an expense when the group is demonstrably
committed to terminate the employment of an employee or to provide termination benefits.
2.8. Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
2.9. 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.
2.10. Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as
reported in the profit and loss account because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable or deductible. The group’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the
reporting end date.
44
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
2. Summary of significant accounting policies (continued)
2.11. Taxation (continued)
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. Deferred tax has been recognised on the fair value adjustment
of the investment in Dawn Homes.
2.12. 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 Company’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.
2.13. 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
- 20% and 25% straight line
Fixtures, fittings & equipment
- 20% and 25% straight line
Motor vehicles
- 20% and 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.
2.14. Intangible Fixed Assets
Intangible assets comprise of market related assets (e.g. trademarks, imprints & brands). 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.
45
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
2. Summary of significant accounting policies (continued)
2.15. 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
2.16. 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.
2.17. 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.
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.
46
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
2. Summary of significant accounting policies (continued)
2.18. 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.
2.19. 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 6%. The discount is being spread
over the development the loan is financing.
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.
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.
47
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
2. Summary of significant accounting policies (continued)
2.19. Financial instruments (continued)
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.
2.20. Provision
Deferred consideration payment is valued based on the probability-weighted average of the economic
outflow of payment. An annual review will be performed on the deferred consideration.
2.21. 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.
2.22. Dividends
Dividends are recognised as liabilities in the period in which the dividends are approved and once they are
no longer at the discretion of the company.
2.23. 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.
48
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
2. Summary of significant accounting policies (continued)
2.24. Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of a group after
deducting all of its liabilities. Equity instruments issued by the group are recorded at the proceeds received
net of direct issue costs.
Share capital represents the amount subscribed for shares at nominal value.
The share premium account represents premiums received on the initial issuing of the share capital. Any
transaction costs associated with the issuing of shares are deducted from share premium, net of any related
income tax benefits. Any bonus issues are also deducted from share premium.
Retained earnings include all current and prior period results as disclosed in the profit and loss account.
2.25. Share-based payments
Equity-settled share-based payments are measured at fair value at the date of grant and recognised as an
expense over the vesting period. The amount recognised as an expense is adjusted for leavers to the
scheme. Fair value is measured by use of a relevant pricing model.
3. 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
£105,629,820 (2017 - £81,799,683) 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 £105,629,820 (2017 - £81,799,683). The group regularly reviews these estimates to ensure
they reflect the latest known position.
49
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
4. 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 2 segments:
Private
Affordable
As the Group operates solely in the United Kingdom segment reporting by geographical region is not
required.
Revenue
Private residential properties
Affordable housing
Other
Total Revenue
Private residential properties
Affordable housing
Other
Gross Profit
Administrative expenses
Operating Income
Profit after tax from JV
Finance income
Finance expenses
Exceptional items
Profit before tax
Taxation
Profit for the period
2018
£000
101,867
37,272
1,584
140,723
15,508
6,403
232
22,143
(11,625)
126
21
147
(1,039)
(558)
9,215
(1,854)
7,361
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
Exceptional items
Operating lease charges
Notes
10
2018
£000
470
618
(45)
118,580
558
284
2017
£000
86,367
23,250
972
110,589
13,301
3,385
(2)
16,684
(8,945)
93
-
4
(1,145)
-
6,691
(1,278)
5,413
2017
£000
300
472
(146)
93,905
-
274
50
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
6. Auditor’s remuneration
Fees payable to the group’s auditor for the audit of the group and
company annual accounts
Fees payable to the group’s auditor for the audit of the company’s
subsidiaries
Fees payable to the group auditor and their associates for other
services to the group and company:
- Other non-audit services
2018
£000
2017
£000
44
36
6
6
77
127
4
46
7. Staff costs
The average monthly number of employees (including executive directors) for the continuing operations
was:
Building staff
Administrative staff
Wages and salaries
Share based payments
Social security costs
Pension costs
Directors’ remuneration
2018
368
200
2017
336
143
568
479
2018
£000
18,126
218
1,701
574
2017
£000
15,887
-
1,496
417
20,619
17,800
Full details of the directors’ remuneration, for current directors, is provided in the audited part of the
Directors’ Remuneration Report on page 20.
Directors’ remuneration for all directors who resigned during the year were:
June to October 2017
Remuneration for qualifying services
Company pension contributions to defined contribution schemes
2018
£000
87
14
2017
£000
368
19
101
387
51
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
7. Staff costs (continued)
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 profit and loss in respect of defined contribution schemes was £574k (2017 - £417k).
Contributions totalling £109k (2017 - £74k) 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
2018
£000
908
95
36
1,039
2018
£000
1,872
(27)
1,845
23
(14)
-
9
1,854
2017
£000
915
53
177
1,145
2017
£000
1,337
(46)
1,291
(4)
-
(9)
(13)
1,278
52
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
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% (2017- 19.83%)
Effects of:
Tax effect of expenses that are not deductible in determining
taxable profit
Exceptional allowances – no deductions
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
10. Exceptional Items
Acquisition and other transaction related costs (1)
Existing share capital conversion to AIM (2)
2018
£000
9,215
1,751
31
106
(27)
4
(14)
(6)
9
2017
£000
6,691
1,327
19
-
(46)
(2)
-
(12)
(8)
1,854
1,278
2018
£000
255
303
558
2017
£000
-
-
-
(1)
(2)
Acquisition and other transactions related costs relate to the costs incurred relating to the work undertake for the acquisition of DHomes 2014 Holdings Limited
and its subsidiaries and jointly owned companies.
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.
11. Dividends
Total dividend payment
2018
£000
821
As restated
2017
£000
2,337
Weighted average number of ordinary shares in issue
82,083,642
58,423,264
Dividend per share (pence per share)
1.00
4.00
During the year, the nominal value of shares was split from 1p to 0.125p. The weighted average number
of ordinary shares in issue for 2017 has been recalculated based on this split. This has resulted in the
dividend per share decreasing from 32.02p to 4.00p.
53
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
12. 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 2018 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).
Profit for the year attributable to owners of the Company
Adjusted for the impact of exceptional costs in the year
Normalised earnings
2018
£000
7,353
558
7,911
As restated
2017
£000
5,359
-
5,359
Weighted average number of ordinary shares for the purpose of
basic earnings per share
Effect of dilutive potential shares: share option
Weighted average number of ordinary shares for the purpose of
diluted earnings per share
73,412,651
58,403,264
201,061
-
73,613,712
58,403,264
Earnings per ordinary shares
Basic earnings per share (pence per share)
Diluted earnings per share (pence per share)
Underlying earnings per ordinary shares (1)
Basic earnings per share (pence per share)
Diluted earnings per share (pence per share)
10.02
9.99
10.78
10.75
9.18
9.18
9.18
9.18
(1) Underlying earnings is presented as an additional performance measure and is stated before exceptional items.
During the year, the nominal value of shares was split from 1p to 0.125p. The weighted average number
of ordinary shares in issue for 2017 has been recalculated based on this split. This has resulted in the basic
and diluted earnings per share decreasing from 73.42p to 9.18p.
54
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
13. Property, plant and equipment
Group
Cost
At 1 June 2016
Additions
Disposals
At 31 May 2017
Acquisition of Subsidiary
Additions
Disposals
Land and
buildings
£000
Plant and
machinery
£000
Fixtures,
fittings &
equipment
£000
Motor
vehicle
£000
658
342
(325)
675
-
6
-
3,243
1,350
(340)
4,253
1
2,507
(175)
602
10
(19)
593
-
211
(4)
792
39
(81)
750
7
61
(116)
Total
£000
5,295
1,741
(765)
6,271
8
2,785
(295)
At 31 May 2018
681
6,586
800
702
8,769
Accumulated depreciation
At 1 June 2017
Depreciation charge
Disposal
At 31 May 2017
Depreciation charge
Disposals
At 31 May 2018
Net book value
At 31 May 2018
At 31 May 2017
At 31 May 2016
47
12
(26)
33
19
-
52
629
642
611
2,016
601
(290)
2,327
831
(166)
2,992
3,594
1,926
1,227
590
6
(19)
577
104
(3)
678
122
16
12
428
3,081
153
(50)
531
134
(110)
555
147
219
364
772
(385)
3,468
1,088
(279)
4,277
4,492
2,803
2,214
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
2018
£000
2,691
2017
£000
1,133
90
104
2,781
1,237
Total depreciation charge
618
472
Fixed assets with the carrying value of £2,781k (2017 - £1,237k) are pledged as security.
55
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
13. Property, plant and equipment (continued)
Company
Cost
At 1 June 2016
Additions
Disposals
At 31 May 2017
Additions
Disposals
At 31 May 2018
Accumulated depreciation
At 1 June 2016
Depreciation charge
Disposals
At 1 June 2017
Depreciation charge
Disposals
At 31 May 2018
Net book value
At 31 May 2018
At 31 May 2017
At 31 May 2016
Land and
buildings
£000
Plant and
machinery
£000
Fixtures,
fittings &
equipment
£000
Motor
vehicles
£000
Total
£000
658
342
(325)
675
6
-
681
47
12
(26)
33
19
-
52
629
642
611
3,243
739
(2,030)
1,952
1,503
-
3,455
2,016
277
(1,400)
893
421
-
1,314
2,141
1,059
1,227
602
10
(19)
593
211
(4)
800
590
6
(19)
577
104
(3)
678
122
16
12
792
5,295
-
1,091
(792)
-
(3,166)
3,220
-
-
-
1,720
(4)
4,936
428
3,081
-
295
(428)
-
(1,873)
1,503
-
-
-
-
-
544
(3)
2,044
2,892
1,717
364
2,214
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
Total depreciation charge
2018
£000
1,500
1,500
324
2017
£000
639
639
85
56
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
14. Intangible fixed assets
Group and Company
Marketing-related
assets
Cost
At 1 June 2017
Additions
Disposals
At 31 May 2018
Amortisation and impairment
At 1 June 2017
Impairment
Disposals
At 31 May 2018
Net book value
At 31 May 2018
At 31 May 2017
£000
-
600
-
600
-
-
-
-
600
-
Marketing-related assets comprises of brand name and licences which have been measured at cost.
Market-related assets are expected to have an infinite useful life.
15. Fixed assets investment
Cost
Loans to joint ventures
Investment in joint ventures (company:
joint ventures and subsidiaries)
Group
2018
Company
2017
£000
£000
£000
£000
764
254
1,018
-
-
-
-
19,627
19,627
-
42
42
On 2 May 2018, the company acquired the entire share capital of DHomes 2014 Limited and its subsidiaries
and joint ventures, Dawn Homes Limited, Dawn (Robroyston) Limited, DHPL Limited, Dawn Homes
(Johnstone) Limited and DHHG 1 Limited for an initial consideration of £17,585,000. The consideration
consisted of £15,485,000 in cash and £2,100,000 in the form of ordinary share capital. The purchase
agreement also includes a deferred consideration payment of £2,500,000, of which £2,000,000 has been
accounted for in the additions for the year. See note 22 Provisions contingent liabilities for further details.
The costs relating to the acquisition is included within the profit and loss accounts as an exceptional item
(note 10) which is in line with the accounting policy for fixed assets investments.
57
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
15. Fixed assets investment (continued)
Dawn Homes was purchased as it was a good opportunity to acquire a well-run business with an excellent
reputation and to accelerate growth with live sites in new areas and with a healthy land bank pipeline. Dawn
Homes has contributed revenue of £2.6m and profit before tax of £0.3m from the acquisition date of 2 May
2018 to 31 May 2018. If the acquisition of Dawn Homes has taken place at 1 June 2017 then the Group
would have produced a combined revenue of £161.0m and profit after exceptional items and before tax of
£11.0m.
Movement in fixed asset investment
Group
Cost
At 1 June 2017
Additions
Share of profit after tax
At 31 May 2018
Company
Cost
At 1 June 2016
Additions
At 1 June 2017
Additions
At 31 May 2018
Investment
in joint
venture
£000
Loans to joint
venture
Total
£000
£000
-
236
18
254
-
761
3
764
Share in
group
undertakings
£000
-
42
42
-
997
21
1,018
Total
£000
-
42
42
19,585
19,585
19,627
19,627
58
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
15. Fixed assets investment (continued)
Net assets at date of Acquisition
£000
£000
£000
Book value
Revaluation
adjustment
Fair Value
to Group
Fixed assets
Investment in joint venture
Stock and work in progress
Accounts receivable
Bank
Accounts payable
Corporation tax
Deferred tax
Bank loans
At 31 May 2018
Discharged by:
Consideration paid - Cash
Consideration paid - Shares
Deferred consideration
8
997
27,016
1,363
2,866
(4,824)
(135)
-
(10,000)
17,291
-
-
2,634
-
-
-
-
(340)
8
997
29,650
1,363
2,866
(4,824)
(135)
(340)
-
(10,000)
2,294
19,585
15,485
2,100
2,000
19,585
Details of the company’s subsidiaries and jointly owned entities at 31 May 2018 are as follows:
Name of Undertaking
Nature of Business
Class of Shares Held
% Held
Glassgreen Hire Limited
Hire of plant and
machinery
Ordinary
96%
DHomes 2014 Holdings
Limited
Dawn Homes Limited
Dawn (Robroyston)
Limited
DHPL Limited
Dawn Homes (Johnstone)
Limited
DHHG 1 Limited
Holding Company
Ordinary
100%
Housebuilder/
Construction
Housebuilder/
Construction
Buying and selling of own
real estate
Housebuilder/
Construction
Housebuilder/
Construction
Ordinary
100%
Ordinary
100%
Ordinary
100%
Ordinary
100%
Ordinary
50%
59
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
16. Inventories and work in progress
Group
Work in progress
Land under development is included in work in progress.
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
2018
£000
105,630
105,630
2017
£000
81,800
81,800
2018
£000
9,770
9,770
2018
£000
448
448
2018
£000
1,275
(448)
827
2017
£000
4,665
4,665
2017
£000
352
352
2017
£000
790
(352)
438
Included within inventories is £27,009k (2017 - £23,950k) pledged as security.
Company
Work in progress
Land under development is included in work in progress.
2018
£000
76,212
76,212
2017
£000
81,800
81,800
60
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
16. 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 £27,009k (2017 - £23,950k) pledged as security.
2018
£000
9,760
9,760
2018
£000
340
340
2018
£000
1,265
(340)
925
17. 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
2018
£000
9,916
8,484
704
19,104
2018
£000
8,809
8,474
104
448
17,835
The directors consider the carrying amount of the receivables approximates to their fair value.
2017
£000
4,665
4,665
2017
£000
352
352
2017
£000
790
(352)
438
2017
£000
4,104
2,108
235
6,447
2017
£000
4,103
2,108
144
230
6,585
61
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
17. Accounts receivable (continued)
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. Loans to related parties have also been
assessed as low credit risk based on the expected profitability of their future contracts. 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 2018 is represented by the carrying amount of each financial
asset.
Amounts falling due after one year
Group
Trade receivables
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
2018
£000
735
135
870
2018
£000
135
2018
£000
21,152
546
977
11,235
33,910
2018
£000
15,528
547
421
760
11,104
28,360
2017
£000
-
488
488
2017
£000
488
2017
£000
12,879
446
111
11,614
25,050
2017
£000
12,276
443
110
651
11,560
25,040
The directors consider the carrying amount of the accounts payable approximates to their fair value.
62
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
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
2018
£000
32,050
32,050
2018
£000
60,637
60,637
2018
£000
26,027
26,027
2018
£000
44,044
44,044
2017
£000
15,035
15,035
2017
£000
66,121
66,121
2017
£000
15,167
15,167
2017
£000
65,583
65,583
Included within loans and receivables is a loan to a related party which is valued at amortised cost.
£127,373 (2017 - £nil) has been recognised as interest received in the profit and loss account. Market rate
interest has been used. (Note 27).
The above amortised costs figures are deemed to be approximate to their fair values.
20. Borrowings
Group
Secured borrowings:
Bank loans
Unsecured borrowings:
Directors' loans
Less: payable within one year
Payable after one year
2018
£000
25,000
25,000
-
-
-
25,000
2017
£000
37,500
37,500
2,929
40,429
-
40,429
63
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
20. Borrowings (continued)
Company
Secured borrowings:
Bank loans
Unsecured borrowings:
Directors' loans
Less: payable within one year
Payable after one year
2018
£000
15,000
15,000
-
15,000
-
15,000
2017
£000
37,500
37,500
2,929
40,429
-
40,429
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 2020 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.
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
Within 1 year
Two to five years
Less: unearned
finance income
Company
Within 1 year
Two to five years
Less: unearned
finance income
Minimum lease payments
2018
£000
1,128
1,322
2,450
(176)
2,274
2017
£000
557
606
1,163
(75)
1,088
Present value of
minimum lease payments
2017
£000
2018
£000
1,020
1,254
500
588
2,274
1,088
Minimum lease payments
Present value of minimum
lease payments
2018
£000
617
708
1,325
(94)
1,231
2017
£000
242
367
609
(51)
558
2018
£000
555
676
2017
£000
222
336
1,231
558
64
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
22. Provisions
Group
Company
2018
£000
394
2,000
2,394
2017
£000
45
-
45
2018
£000
54
2,000
2,054
2017
£000
38
-
38
Deferred taxation
Deferred Consideration
Deferred consideration
As part of the purchase agreement of DHomes 2014 Limited there is a further £2,500,000 payable for an
area of land if (i) we make a planning application when we reasonably believe the council will recommend
approval; or (ii) it is zoned by the council. The directors have assessed the likelihood of the landed being
zoned and have included a deferred consideration of £2,000,000 based on 80% probability.
Deferred Taxation
Group
Fixed assets –
temporary
differences
Other – temporary
differences
Company
Fixed assets –
temporary
differences
Other – temporary
differences
2016
£000
58
Profit and
Loss
Account
£000
(15)
-
58
2
(13)
2017
£000
43
2
45
Profit and
Loss
Account
£000
18
(9)
9
On
Acquisition
£000
-
340
340
2016
£000
58
Profit
and Loss
Account
£000
(15)
2017
£000
43
Profit and
Loss
Account
£000
18
-
58
(5)
(20)
(5)
38
(2)
16
2018
£000
61
333
394
2018
£000
61
(7)
54
65
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
23. Share capital
The company has one class of ordinary share which carry full voting rights but no right to fixed income or
repayment of capital.
The share capital account records the nominal value of shares issued.
The share premium account records the amount above the nominal value received for shares sold, less
transaction costs.
Group and Company
Ordinary shares of £1 - allotted, called
up and fully paid
At 1 June 2017
Share reorganisation in the year
Share issue – Pre IPO
Share issue – IPO
IPO Costs
Number of
shares
7,302,908
51,120,356
75,472
23,584,906
Share issue – Additional Placing
12,500,000
Additional placing costs
Share issue – Post IPO
At 31 May 2018
1,750,000
96,333,642
Share
capital
£000
73
Share
premium
£000
10,285
29
16
2
120
80
24,971
(1,849)
14,984
(464)
2,098
50,105
During the period, the nominal value of shares was split from 1.00p to 0.125p.
Subsequently, 75,472 of 0.0125p ordinary shares were allotted and fully paid up for consideration of
£80,000. On 16 October 2017, the Company completed an Initial Public Offering by way of a placing of
23,584,906 Ordinary Shares at 106p for a consideration of £25,000,000. On 2 May 2018, 1,750,000
0.0125p ordinary shares were allotted and fully paid for a consideration of £2,100,000. This was part of the
DHomes 2014 Holdings acquisition agreement. On 22 May 2018, 12,500,000 0.0125p ordinary shares
were allotted and fully paid for a consideration of £15,000,000.
Share based payments
During the year the Group operated three share based schemes.
Share related share options scheme
The Group operates a Savings related Share Option Scheme which is open to all employees. Grant options
were made in December 2017 and become exercisable after 3 years, subject to employees remaining in
continuous employment. Employees enter into a savings contract with the Yorkshire Building Society who
administers the scheme. The options are granted at a 20% discount of the share price at the date of grant
and lapse if not exercised within six months of maturity. Special provisions apply to employees who leave
their employment for ill health, redundancy or retirement.
Long-Term Incentive Plan (LTIP)
The Company operates a LTIP for senior management to retain and align their interests with shareholders.
The LTIP is split into a CSOP and ESOP scheme.
66
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
23. Share capital (continued)
Fair Value of share options
Options are valued using the Black-Scholes option-pricing model. No performance conditions are included
in the fair value calculation.
Savings Related Share Option Scheme
2018
CSOP
16-Oct-17
2018
ESOP
2018
SAYE
16-Oct-17 01-Dec-17
115p
115p
112p
106p-134p 106p-134p
84.80p
5
7
3
29.00%
29.00%
29.00%
0.49%
0.49%
0.49%
-
-
-
34.00p
39.00p
37.00p
32.00p
37.00p
35.00p
2017
CSOP
2017
ESOP
2017
SAYE
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Date of grant
Share price at
date of grant
Exercise price
Estimated
vesting period
(years)
Expected
volatility
Risk free rate
Expected
dividends
Fair value of
options
Charge per
option
Volatility was calculated using historical share price information of the house-building sector.
No shares have vested in the year and none can be exercised at the year-end.
CSOP
ESOP
SAYE
Number
of shares
-
Weighted
average
exercise
price
(pence)
-
Number
of shares
-
Weighted
average
exercise
price
(pence)
-
Number
of shares
-
Weighted
average
exercise
price
(pence)
-
1,061,683
110.46p
597,048
110.29p
3,129,975
84.80p
(28,301)
106.00p
(524)
106.00p
(99,332)
84.80p
1,033,382
110.59p
596,524
110.29p
3,030,643
84.80p
Options at the
beginning of the
year
Granted during
the year
Lapsed during
the year
Options at the
year end
Charge for share based incentive schemes
The total charge for the year relating to employee share-based plans were £217,742 (2017 - £nil), all of
which related to equity-settled share-based payment transactions.
67
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
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:
Group
Cash at bank and in hand
2018
£000
12,015
12,015
2017
£000
8,335
8,335
At 31 May 2018, the group had available £37,000,000 (2017- £2,500,000) of undrawn committed borrowing
facilities.
Company
Cash at bank and in hand
2018
£000
8,505
8,505
2017
£000
8,324
8,324
At 31 May 2018, the company had available £25,000,000 (2017- £2,500,000) of undrawn committed
borrowing facilities.
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
2018
£000
2,274
25,000
33,363
60,637
2017
£000
2,157
39,360
24,604
66,121
68
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
26. Financial risk management (continued)
26.1. Market risk (continued)
Interest rate sensitivity analysis
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 2018
Interest rate
–0.5%
£000
Interest rate
+0.5%
£000
Bank of England base rate
31 May 2017
Interest rate
–0.5%
£000
Interest rate
+0.5%
£000
(Loss) / profit
(125)
125
(202)
202
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 2018.
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:
69
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
26. Financial risk management (continued)
26.2. Liquidity risk (continued)
Group
31 May 2018
Accounts
payable
Borrowings
Hire purchase
31 May 2017
Accounts
payable
Borrowings
Hire purchase
Company
31 May 2018
Accounts
payable
Borrowings
Hire purchase
31 May 2017
Accounts
payable
Borrowings
Hire purchase
Carrying
amount
£000
33,363
25,000
2,274
60,637
Carrying
amount
£000
24,604
40,429
1,088
66,121
Carrying
amount
£000
27,813
15,000
1,231
44,044
Carrying
amount
£000
24,596
40,429
558
65,583
33,363
25,000
2,274
60,637
Total
minimum
future
24,604
40,429
1,088
66,121
Total
minimum
future
27813
15,000
1,231
44,404
Total
minimum
future
Total
minimum
future
payment Within 1 year
£000
£000
Within 1-2
years
£000
Within 2-5
years
£000
33,363
-
1,020
34,383
-
25,000
871
25,871
-
-
383
383
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
payment Within 1 year
£000
£000
Within 1-2
years
£000
Within 2-5
years
£000
27,813
-
555
28,368
-
15,000
493
15,493
-
-
183
183
payment Within 1 year
£000
£000
Within 1-2
years
£000
Within 2-5
years
£000
24,596
40,429
558
65,583
24,596
-
222
24,818
-
37,500
211
37,711
-
2,929
125
3,054
70
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
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 2018
Allowance for
impairment
£000
Total book
value
£000
31 May 2017
Allowance for
impairment
£000
8,554
1,362
9,916
-
-
-
3,908
196
4,104
-
-
-
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 2018
Allowance for
impairment
£000
Total book
value
£000
31 May 2017
Allowance for
impairment
£000
8,484
-
8,484
-
-
-
2,108
-
2,108
-
-
-
During the year, the group had no allowance for impairment for other receivables.
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 £384k (2017 - £2,222k) were paid to key management personnel (Board
of Directors and the members of the Operational Board). Dividends were paid to Board of Directors as
follows:
71
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
27. Transactions with related parties (continued)
Name of director
Mr Sandy Adam
Mr Innes Smith
Ms Michelle Motion
Mr Matthew Benson
Mr Roger Eddie
Mr Nick Cooper
2018
£000
374
10
-
-
-
-
384
2017
£000
996
10
-
-
-
-
1,006
The remuneration of Key Management Personnel was £1,538k (2017 - £744k).
During the year the group entered into the following transactions with related parties:
Purchase of goods
Bertha Park Limited (1)
AW & JG Adam Limited (2)
DHHG 1 Limited (3)
Other entities which key management
personnel have control, significant
influence or hold a material interest in
Key management personnel
Other related parties
Sale of goods
2018
£000
5,471
2,741
577
266
44
35
2017
£000
565
5,129
-
454
352
37
2018
£000
-
-
-
363
650
200
2017
£000
-
-
-
312
447
-
759
9,134
6,537
1,213
Sales to related parties represent those undertaken in the ordinary course of business.
Included within purchases from key management personnel is £600k (2017 - £nil) from Sandy Adam,
director, to terminate annual licence fee in respect of the group’s use of a trademark. The licence was
terminated, Sandy Adam waived any claims against the group and the trademark was transferred to the
group.
Interest paid
2018
£000
2017
£000
Rent paid
2018
£000
2017
£000
Entities which key management
personnel have control, significant
influence or hold a material interest in
Key management personnel
Other related parties
-
12
15
27
-
163
-
163
162
-
134
296
162
-
161
323
72
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
27. Transactions with related parties (continued)
Interest received:
Entities which key management
personnel have control, significant influence or
hold a material interest in (short-term)
The following amounts were outstanding at the reporting end date:
Amounts receivable:
Bertha Park Limited (1)
AW & JG Adam Limited (2)
DHHG 1 Limited (3)
Other entities which key management personnel have control,
significant influence or hold a material interest in (short-term)
Key management personnel
Other related parties
Accounts payable:
Entities which key management personnel have control,
significant influence or hold a material interest in (short-term)
Sandy Adam
Anne Adam
James Adam
Other related parties
2018
£000
2017
£000
102
102
2018
£000
8,948
-
930
86
2
-
-
-
2017
£000
895
1,217
-
301
-
-
9,966
2,413
2018
£000
2017
£000
57
-
-
1,419
-
1,476
115
1,069
796
1,084
40
3,104
73
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
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.
(1) Bertha Park Limited, a company in which Sandy Adam and Innes Smith are directors. During the year
the group made sales to Bertha Park Limited of £5,471k (2017 - £565k) in relation to a build contract.
At the year-end £4,231k (2017 - £542k) was included in trade debtors. £4,647k (2017 - £4k) was
advanced in the year, at the year-end £4,717k (2017 - £354k) was included in other debtors.
(2) AW & JG Adam Limited, a company in which Sandy Adam is a director. During the year sales of
£2,741k (2017 - £5,129k) were made to AW & JG Adam Limited in relation to a build contract. £nil
(2017 - £1,217k) was included within debtors at the year end.
(3) DHHG 1 Limited is a jointly owned entity and Michelle Motion is a director. The group acquired 50% of
the share capital of DHHG 1 Limited on 2 May 2018 and during the period to 31 May 2018 made sales
to DHHG 1 Limited totalling £577k in relation to a build contract. At the year-end £930k was due from
DHHG 1 Limited.
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 (2017 - £206k).
28.1. Contingent liabilities
On 2 May 2018, the company acquired the entire share capital of DHomes 2014 Holdings Limited and its
subsidiaries and joint ventures, for a consideration of £20,085,000, which includes a deferred consideration
of £2,500,000. The deferred consideration is for land and paid if (i) we make a planning application when
we reasonably believe the council will recommend approval; or (ii) it is zoned by the council. The directors
have reviewed the probability of the land being zoned for planning and included £2,000,000 as a provision
(see note 24), the remaining £500,000 has been treated as a contingent liability due to the uncertainty over
the future payment.
28.2. Capital commitments
Acquisition of property, plant and equipment
Call and put options for the purchase of plots for development
2018
£000
700
4,919
2017
£000
462
9,736
74
SPRINGFIELD PROPERTIES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2018
28. Contingencies, commitments and guarantees (continued)
28.3. Operating lease commitments
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
2018
£000
348
1,131
1,231
2,710
2017
£000
278
1,023
1,159
2,460
75
171558