SPRINGFIELD PROPERTIES PLC
Company Registration No. SC031286 (Scotland)
SPRINGFIELD PROPERTIES PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2021
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SPRINGFIELD PROPERTIES PLC
CONTENTS
Company Information
Strategic Report
Financial Highlights
Executive Chairman’s Statement
Chief Executive’s Statement
Chief Financial Officer’s Review
Company Overview and Risks
Corporate Governance
Board of Directors
QCA Code Compliance and Section 172 Statement
Audit Committee Report
Remuneration Committee Report
Directors’ Report
Streamlined Energy and Carbon Reporting
Statement of Directors’ Responsibilities
Independent Auditor’s Report
Financial Statements
Consolidated Profit and loss Account
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Company Balance Sheet
Company Statement of Changes in Equity
Company Statement of Cash Flows
Notes to the Company Financial Statements
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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)
Mr Colin Rae (non-executive)
SECRETARY:
Mr Andrew Todd
REGISTERED OFFICE:
Alexander Fleming House
8 Southfield Drive
ELGIN
Morayshire
IV30 6GR
COMPANY REGISTRATION NUMBER:
SC031286 (Scotland)
INDEPENDENT AUDITOR:
NOMINATED ADVISER AND BROKER
SOLICITORS:
BDO LLP
City Point
65 Haymarket Terrace
Edinburgh
EH12 5HD
Singer Capital Markets Securities Limited
1 Bartholomew Lane
London
EC2N 2AX
Pinsent Masons LLP
141 Bothwell Street
GLASGOW
G2 7EQ
Kerr Stirling LLP
10 Albert Place
STIRLING
FK8 2QL
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SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
The Directors present their strategic report for Springfield Properties plc (the “Company”) and its Group of
companies (“Springfield” or the “Group”) for the year ended 31 May 2021.
FINANCIAL HIGHLIGHTS
FOR THE YEAR ENDED 31 MAY 2021
Group
Revenue
Group
Completions
Group
Adjusted PBT*
Private Homes
Revenue
Affordable Homes
Revenue
2021:
£216.7m
2020: £143.5m
2021:
973 homes
2020: 727 homes
2021:
£18.5m
2020: £10.2m
2021:
£144.6m
2020: £98.9m
2021:
£55.1m
2020: £42.5m
Group
Revenue
Gross profit
Gross margin
Adjusted profit before tax*
Statutory profit before tax
Earnings per share
Net debt
2020/21
£m
216.7
38.8
17.9%
18.5
17.9
13.79p
20.8
2019/20
£m
143.5
27.4
19.1%
10.2
9.7
7.89p
70.9
Change
%
+51.0%
+41.6%
-120bps
+81.4%
+84.5%
+74.8%
-70.7%
*Adjusted profit before tax excludes exceptional items detailed at Note 11
Strategic and Operational Highlights
£50.1m reduction in net debt (Note 32)
Land bank 15,281 plots – 52.4% with planning achieved
• Highest ever annual turnover and substantial increase in profit before tax
•
•
• Gross development value of land bank of £3.1bn
• Commenced work on site for first homes for the Private Rental Sector
• Board lead appointed for Environmental, Social and Governance (“ESG”)
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SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
EXECUTIVE CHAIRMAN’S STATEMENT
FOR THE YEAR ENDED 31 MAY 2021
This last year demonstrated just how important it is to value where we live and the communities we share –
two guiding principles behind everything we do at Springfield. I take immense pride in the way our company
rose to the challenges posed by the pandemic to live up to these values, providing quality homes with
excellent customer care across housing tenures, and delivering a year of outstanding growth.
Springfield specialises in building spacious, semi-rural homes offering ample green space and with amenities
nearby. With demand for this type of home underpinning a buoyant housing market, we experienced a strong
sales performance during the year across all areas of the business. This resulted in our highest ever annual
turnover as well as a substantial increase in profit before tax, both of which exceeded the market expectations
that had been set at the beginning of the year. Our strong cash generation enabled us to significantly reduce
net debt. This was supported by two strategic land sales towards the end of the year as we continued to
realise value from our large-high quality land bank.
We made good progress with our Village developments, with a particularly strong level of completions at our
Linkwood Village in Elgin and the advancing of community facilities with the opening of convenience stores
at Bertha Park and Dykes of Gray. Reflecting our commitment to ensuring sustained growth, we also
purchased land in Midlothian for a large development of approximately 1,000 homes. There is very high
housing demand in Midlothian, a county that borders Edinburgh, from families seeking a semi-rural lifestyle
within easy access to the city.
We also signed contracts for, and commenced work on, multiple new affordable developments due to be
delivered in the current year and launched our first Private Rented Sector project with Sigma Capital Group.
The delivery of this PRS housing at Bertha Park will enable us to increase the build-out rate for the Village
and underscores Springfield's commitment to develop mixed-tenure Villages that meet everyone's housing
needs.
People
The return to operations on site in June 2020 was a pivotal moment in the year. With such a large, directly
employed workforce based in varied settings, including offices, sales centres, construction sites and the kit
factory, it was important that we took the right steps to ensure our staff felt supported, prepared and protected
in the transition back to work. We have implemented new ways of engaging with our employees, including a
text alert system to regularly communicate with staff wherever they are working.
I am proud of how our workforce – whether directly employed or sub-contracted – has adjusted and the drive
they have shown. Those on site are working hard to deliver homes despite the challenging restrictions all
around them. Our office-based staff continue to work from home without any impact on productivity or
reduction in commitment. Our sales teams have managed the high interest from customers with confidence,
encouraging use of the virtual tools developed this year and making our customers feel safe through
dedicated appointments, online or drive-through reservations and exclusive access to our show homes. The
success of the Springfield Group is because of our employees and, on behalf of the Board, I would like to
thank everyone for their remarkable performance during the year and since then.
We also continued our commitment to supporting the personal development of our workforce. We now have
over 600 employees with over 15% in apprenticeships or formal training programmes. Testament to our
success in developing our workforce through graduate and apprenticeship schemes, we were delighted to
recently win the award for ‘Best Early Careers Employer (Apprentice/Graduate)’ at this year’s s1jobs
Recruitment Awards. s1jobs is the largest online recruiter in Scotland and so we were up against some stiff
competition!
Markets
The housing market is booming and supply simply cannot keep up with demand. We are seeing particularly
strong interest across the country for the type of lifestyles that Springfield homes can support – plenty of
space for families for entertaining and home working, private gardens for outdoor living and located in semi-
rural areas with attractive green space and local amenities to enjoy everything around them. In addition,
demand from home buyers is supported by a competitive mortgage market with a good range of products
and low interest rates.
Key differences in the Scottish legal system continues to provide strong visibility over the homes we deliver.
The Scottish missive system, which ensures that customers are contracted into the purchase much earlier in
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SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
EXECUTIVE CHAIRMAN’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2021
the build programme, gave us added confidence that cancellations would be minimal as we recommenced
work early in the new year. In addition, with all our homes sold on freehold, where the buyer becomes the
sole owner of both the building and the land on which it stands, we are not impacted by the ground rents
investigations seen elsewhere in the UK.
While the COVID-19 shutdown disrupted progress towards the achievement of the Scottish Government’s
target to deliver 50,000 new affordable homes by May 2021, a clear commitment to the delivery and funding
of affordable housing remains. Following re-election this year, the Scottish Government has established a
new longer-term target to deliver 110,000 energy efficient affordable homes by 2032 with almost £3.5bn
earmarked for affordable housing funding through to March 2026. Our continued strong partnerships with
local authorities and housing associations mean that we are well-placed to deliver homes to help achieve
this target and meet the ongoing demand to help ensure everyone in Scotland has a great place to live.
Supporting thriving communities
This year we continued to create attractive new places across Scotland and our Villages are really beginning
to flourish with extra amenities and a maturing landscape. We proudly hold our Villages up as real-life
examples of the types of places that the Scottish Government is aspiring to deliver through their emerging
policies to support ‘twenty-minute neighbourhoods’.
Our staff enjoyed engaging communities in new, safe ways this year, ensuring that community liaison
remained a core activity despite the restrictions. We adapted the way we consult with communities in the
planning process and demonstrated that virtual tools offer greater accessibility, which we hope, going
forward, will promote a new, diverse audience with the public being able to participate from home.
Similarly, we have remained committed to our engagement with schools, producing career videos to inspire
the younger generations to consider a career in housebuilding and offering mock interviews online for
students preparing to leave school. This engagement was particularly valuable at a time when schools were
closed and opportunities to progress much less obvious given the number of sectors that had slowed down.
We are honoured that our ‘Young Workforce’ campaign has been recognised by Homes for Scotland and
shortlisted for ‘Innovation of the Year’ at this year’s Homes for Scotland Awards, with the winners due to be
announced in November.
We also continued our charitable activities, donating £25,477 to local charities and community groups during
the year (2020: £18,077 total charitable donations).
Given all the positive feedback we have received, I expect many of the innovations that have emerged during
the last year and a half will continue going forward.
Our commitment to ESG
As one of Scotland’s largest housebuilders, we recognise the important part that we can play in supporting
system changes to combat climate change. Our potential for positive impact goes well beyond our business
operations and includes the choices that we make about our supply chain, the efficiency of the homes we
build and in the sustainability of the communities we create.
To this end, I am delighted that Colin Rae has agreed to be the Board lead for ESG. Upon accepting the
position, Colin successfully undertook an extensive Business Sustainability Management Course, hosted by
Cambridge University’s Institute for Sustainable Leadership. This reflects Colin’s dedication to ensuring we
formalise this function with rigour and expertise.
I have noted above our commitment to supporting our people and local communities. Alongside this, we
deeply value engagement with our shareholders – another key stakeholder group. Our annual general
meeting (“AGM”) is an important opportunity for dialogue with our shareholders and we were disappointed
that attendance had to be restricted this year due to the pandemic. However, we were delighted with the
support shown at our AGM – with each resolution receiving over 99% approval.
Post period, the Board unanimously agreed to the development of a new dedicated strategy for ESG, which
we consider a fantastic opportunity to showcase the type of company Springfield is – one which considers
‘people’ and the ‘planet’ as much as ‘profits’. We expect to publish our ESG Strategy later this financial year
and I look forward to reporting on our progress against it in the years to come.
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SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
EXECUTIVE CHAIRMAN’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2021
Dividends
During the year to 31 May 2021, we made £2.0m in dividend payments relating to the distribution for the prior
year. We were also pleased to pay an interim dividend of 1.3 pence and to now propose a final dividend for
2021 of 4.45p pence per ordinary share.
Looking to the future
The outlook for the housing market is positive with demand across all tenures continuing to outstrip supply.
We are well positioned to benefit from this trend as we deliver on our strong order book of private homes
under missive and multiple contracted affordable housing projects.
Last year highlighted the resilience of our business and the ability of our management and employees to
withstand the most challenging of circumstances. This is further supported by the strategic diversification of
our revenues streams, which next year will also include PRS for the first time, and our large, high-quality land
bank. I am proud that Bertha Park will be the first Village in Scotland to offer it all – homes of different sizes
for sale, affordable tenures for those in need and purpose built, quality family homes to rent privately. This
truly is a landmark moment for the delivery of new homes in Scotland. As a result, we emerge from the
pandemic with a clear purpose and in a strong position to deliver further growth for our shareholders.
I would like to reserve the last word to thank my fellow Board members for their guidance through these
unprecedented times as well as our management team, employees and subcontractors, our customers, our
suppliers and our shareholders. We look forward to continuing to generate value and to sustainably providing
great places for people to live.
Sandy Adam
Chairman
13 September 2021
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SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
CHIEF EXECUTIVE’S STATEMENT
FOR THE YEAR ENDED 31 MAY 2021
This has been an excellent year for Springfield. We have achieved our highest ever annual revenue and
profit – exceeding £200m in revenue for the first time and by a significant amount– with record results in both
our private and affordable housing. Revenue from private housing increased by 46.2% to £144.6m (2020:
£98.9m) and affordable housing revenue grew by 29.6% to £55.1m (2020: £42.5m). With the addition of
construction contracts and our strategic land sales, total revenue increased by 51.0% to £216.7m (2020:
£143.5m).
As a result, we were able to increase our profit before tax (excluding exceptional items) to £18.5m (2020:
£10.2m) and significantly reduce our net debt position to £20.8m as at 31 May 2021 (31 May 2020: £70.9m).
Operational Review
This year we completed 973 homes (2020: 727), which is a great achievement. Our operations recommenced
onsite from 15 June 2020 and all of our sales offices reopened on 29 June 2020. From the end of June 2020,
we were able to commence handing over homes that had been nearing completion prior to lockdown and
construction activity had resumed on every site by mid-July. I am proud of how quickly we were able to adapt
and return to our normal build rate while maintaining strict protocols to ensure the health & safety of our
workforce and customers.
This year we continued to advance the execution of strategy. In particular, we commenced work on site for
our first PRS housing, which is with Sigma Capital Group plc and which will further diversify our revenue
streams. As discussed below, we also made strategic land sales and a land purchase.
High global demand, COVID-19 and Brexit have resulted in material and labour supply constraints across
the industry. However, the large proportion of fixed price contracts for materials that we had in place during
the year as well as house price inflation served to mitigate the impact of increased material and labour costs.
Similarly, Springfield’s strong, established relationships with sub-contractors, together with our large directly
employed workforce, helped us maintain the labour force needed.
Land Bank
This year we continued to focus on realising value from our large, high-quality land bank and thereby
strengthening the balance sheet. This was achieved through prioritising the delivery of homes nearing
completion during the first half and with the strategic sale of land towards the end of the year. These land
sales, which were material in nature, were across two of our large (non-Village) developments in the Central
Belt (for approximately 200 plots in total) to two national housebuilders. We also commenced construction of
our first PRS homes, which targets a different customer base and therefore will accelerate the build out of
the Villages.
However, we also continued to strategically invest in our land bank, purchasing 150 ha of land in Midlothian
in the Edinburgh commuter belt. With this purchase, we intend to submit a planning application for a large
development providing approximately 1,000 new homes in an area of high demand.
At 31 May 2021, we had 45 active developments (31 May 2020: 44 active developments) and during the
year:
•
•
•
•
•
14 developments were completed;
16 new active developments were added to the land bank;
planning gained on 609 plots over 11 developments;
the proportion of the land bank with planning consent increased to 52.4% (31 May 2020: 49.4%);
and
as at 31 May 2021, the land bank consisted of 15,281 plots (31 May 2020: 15,882).
Private Housing
During the year, we completed 593 private homes (2020: 419). The average selling price for private housing
increased to £244k compared with £236k for 2020 due to housing mix and house price inflation.
The Group had 25 active private housing developments at 31 May 2021 (31 May 2020: 25), with 8 active
developments added during the period and 8 developments completed. In total, as at 31 May 2021, the private
housing land bank was 11,078 plots on 57 developments (31 May 2020: 11,416 plots on 61 developments).
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SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
CHIEF EXECUTIVE’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2021
Planning consent was gained for 252 plots across 5 developments for private housing. As at 31 May 2021,
51.7% (5,726 plots) of private housing plots had planning consent (31 May 2020: 49.7%), with 23.8% going
through the planning process and 24.5% at the pre-planning stage.
Village developments
Springfield Villages are standalone developments that include infrastructure and neighbourhood amenities.
Each Village is designed to have up to approximately 3,000 homes, catering for around 7,000 residents, with
ample green space and community facilities. They primarily offer private housing, but also include affordable
housing and, beginning with Bertha Park, will soon include PRS housing. We have three Villages that are
already home to growing communities and two Village developments that are going through the planning
process.
Private housing revenue from our Village developments increased by 43.0% over the previous year with 150
private completions (2020: 112). This was based on strong growth in completions at Linkwood in Elgin where
sales had been launched in the prior year. Sales also continued at our most advanced Villages – Dykes of
Gray near Dundee and Bertha Park near Perth. At present, 99% of the available homes at our Villages have
either been sold, missived or reserved, reflecting their popularity. There was also an expansion of amenities
and strengthening of community engagement, such as with the opening of convenience stores, appointment
of community liaison officers and launching quarterly newsletters.
A key milestone was achieved with the commencement of work on site for PRS housing at Bertha Park with
Sigma Capital Group plc (“Sigma”), a high-quality PRS provider specialising in suburban, family homes. It
follows the receipt earlier in the year of planning approval for 75 homes to be built for PRS at Bertha Park
and, post period, construction commenced. This will be Springfield’s first PRS housing. We will deliver
purpose-built houses for families to rent, which, following handover, will be owned, let and managed by
Sigma. This is expected to increase the build out rate for the Village and underscores our commitment to
develop mixed-tenure Villages that meet everyone’s housing needs.
Also at Bertha Park, we commenced construction on the second phase of private housing, which consists of
25 homes, and, subsequently, on a further phase of 82 homes.
Other private housing highlights
Outside of our Village developments, we completed 443 private homes during the year (2020: 307). Private
housing revenue excluding the contribution from Villages made up 76.5% of total private housing revenue
(2020: 76.0%). In particular, there was a strong increase in completions in the North region and by our Walker
Group and Dawn Homes brands driven by new site launches.
Affordable Housing
We completed 380 affordable homes during the year (2020: 308). The average selling price was slightly higher
at £145k compared with £138k for 2020.
The number of active affordable housing developments was 20 at 31 May 2021 (31 May 2020: 19), of which
10 were affordable-only developments (31 May 2020: nine). During the year, 8 active affordable housing
developments were added to the land bank and 6 were completed. As at 31 May 2021, the total affordable
housing land bank was 4,203 plots on 49 developments (31 May 2020: 4,466 plots on 47 developments).
We secured a number of new affordable housing contracts during the year. This has supported the contracted
order book for affordable housing, which as at 31 May 2021 stood at £91.5m for delivery over the next two
years. This represents our largest ever order book for affordable housing.
Key operational highlights in affordable housing during the year include commencing construction, which is
progressing well, at The Wisp, Edinburgh under an £18.5m development agreement with PfP Capital for 104
apartments and at Dalmarnock, Glasgow under an £18.2m agreement with West of Scotland Housing
Association for 144 affordable homes and two commercial units.
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SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
CHIEF EXECUTIVE’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2021
This represents the first phase of construction at these two large developments that are for a total of 139 and
237 homes respectively.
We continued to make progress under our local authority framework agreement with Moray Council for 10
affordable-only developments. We completed handover of two developments during the period and a further
development was handed over post period. This brings the total number of developments completed under
this agreement to four, with a fifth currently nearing handover. We have also commenced construction on
two new developments, one of which began post period after having secured the contract in the first half. We
are currently in contract negotiation for the remaining three developments under this agreement.
At Bertha Park Village, we completed, post period, the handover of the second phase of 58 affordable homes.
We furthered our commitment to developing mixed-tenure Villages with signing a contract with Kingdom
Housing Association for the first Mid-Market Rent (“MMR”) housing to be offered at Bertha Park, with
construction commencing on the 28 apartments post period. MMR is a form of affordable housing under
Scottish law where tenants generally pay a lower rent than their area’s market rate, but more than local social
housing tenants. In addition, we’re currently building a number of properties for Perth and Kinross Council
that are adapted to specific client needs, such as being suited for a user of an electric wheelchair.
We continued to expand our partnership network. We completed handovers of the first phase at Duns in the
Scottish Borders to Berwickshire Housing Association, our first project with this housing association, and
signed a contract with them for the second phase. We also signed, post period, our first contract with
Aberdeenshire Council, which is for 38 homes at Banff.
During the year, we secured planning consent for 357 affordable housing plots across 11 developments
(one of which was an affordable-only development). As at 31 May 2021, 54.3% (2,284 plots) of affordable
housing plots had planning (31 May 2020: 48.7%), with 26.1% of plots going through the planning process
and 19.6% at the pre-planning stage.
Customer Satisfaction
As a result of the pandemic, we were required to adapt to new ways of engaging customers. This included
making greater use of digital solutions, such as ‘virtual walk throughs’ and developing a facility to enable
digital reservations with secure online payments. It also involved adapting more traditional arrangements,
such as introducing ‘drive in’ reservations where customers remain in their vehicle while liaising with sales
personnel. Compliance with Scottish Government guidance meant that for much of the year our after-sales
service could only remain open for emergencies.
Nonetheless, we are pleased that, despite the challenges, the Group achieved a rating of 91.9% in this year’s
In-House customer satisfaction survey and a Net Promoter Score of 52. We have been grateful for the
understanding of our customers and the efforts of our employees during this period, and we very much look
forward to resuming normal operations and delivering our usual exceptional levels of service across the
Group as quickly as possible.
During the year, we also took steps to further improve our customer service processes, which we expect to
have an impact from this current year. We established a Customer Feedback Group, with representation
from different roles across the business, to focus on the ‘voice’ of the customer and identifying opportunities
for improvement through qualitative feedback contained in our In-House surveys. We also worked with an
independent consultant to increase the efficiency and quality of our after-sales service, undertaking a review
during the year and introducing changes post period. We will be closely monitoring customer experience in
the coming months to ensure the changes have the desired effect.
Build and Quality
We have continued to take action across the business to improve the quality of our product and the efficiency
of our build process. In particular, to strengthen the quality standard across our Group we have introduced a
minimum specification to be phased into new sites. Each home we build will include as standard features
that are practical for our customers such as a turfed back garden, outside tap, six-foot boundary fencing and
cabling for electric vehicle charging in homes with driveways. This move further sets Springfield apart from
many of our competitors in terms of what is included as standard.
Post period, we commenced a review of the design, construction and plotting efficiency of the standard house
types across our Springfield, Walker Group and Dawn Homes brands. The intention is to seek opportunities
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SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
CHIEF EXECUTIVE’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2021
for improvement and refinement of our house-type range across the Group to enable our current large-scale
sites to become more efficient and to make future sites and potential land bids more competitive.
Sustainability
Springfield has always had sustainability at its core. It is part of our culture to strive to do the right thing across
our operations: whether it be the design of our developments, our engagement with stakeholders or in the
way we look after our customers and employees. As an employer, we have always sought to create a
workplace where everyone can thrive and our commitment to apprenticeships and other formal training has
been exemplary.
We have led the way in innovative environmental initiatives, such as the use of waste plastic roads, the early
introduction of electric vehicle charging points within our customer’s homes and the widespread use of Heat
Pump technology. We recently introduced our first electric van for our timber kit factory, which marks the first
step in our plan to phase out diesel vehicles in favour of a fully electric fleet, including the option of zero
emission electric vehicles for staff.
In 2021, 91% of the homes we completed were constructed from timber kits. Springfield has had its own off-
site timber frame factory for several years and last year the factory delivered 70% of our timber kits. With
housebuilding peers striving to increase the number of the homes they deliver off-site and from timber, this
is a key differentiator. With the exception of some bespoke apartment blocks delivered for affordable housing
partners, we are committed to constructing all of our homes from timber. In addition, the timber used is
sourced responsibly and accredited by the Forest Stewardship Council or the Programme for the
Endorsement of Forest Certification.
We are already established on the route map to net zero and well prepared for the next step changes in
energy standards. We have now begun taking steps to formalise our approach to sustainability and to set
measurable targets and benchmarks for improvements in the coming years. We value the importance of input
from our employees, partners and other stakeholders in developing a strategic framework for ESG.
Consultation has commenced and to support these efforts, post period, we appointed a Group Quality,
Environment and Sustainability Manager and a specialist consultant has been engaged to work with the
Board and senior management to ensure we continue this journey on the right track.
Outlook
Springfield entered the 2022 financial year delivering against a strong order book, with excellent visibility over
full year revenue forecasts based on homes delivered, contracted (missived and affordable contracts) and
reserved. In particular, we expect a significantly increased contribution to Group revenue from affordable
housing, reflecting substantial growth in that segment. As at 31 May 2021, our contracted order book in
affordable housing was worth £91.5m for delivery over the next two years. This represents our highest ever
order book for affordable housing. We will also receive our first revenue from PRS housing this year, which
will further contribute to our growth. In private housing, we’re delivering against a significant order book and
continue to receive strong demand. Accordingly, we expect to achieve the same level of sales for FY 2022
as for the year to 31 May 2021 (with FY2021 having benefited from the large number of homes nearing
completion at the end of the prior year that were rolled over due to the COVID-19 pandemic).
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SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
CHIEF EXECUTIVE’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2021
The Group continues to experience excellent demand across the business, which is supported by strong
market drivers in private and affordable housing. There remains an undersupply of housing in Scotland and
the desirability of the type of housing Springfield offers has increased. There is good mortgage availability
and low interest rates, and the Scottish Government has restated its commitment to investing in the delivery
of more affordable homes.
We are well-positioned to manage the moderate inflationary cost pressures, that are being experienced
across the industry, thanks to our robust supply chain, with a high proportion of materials being procured
directly. We also expect house price increases to absorb any increased build costs this year.
As a result, on an underlying basis (excluding the land sales), we expect to report strong growth for the year
to 31 May 2022 over 2021, in line with market expectations. This is supported by excellent visibility over
forecast revenues and reflects significantly increased sales of affordable housing, the first contribution from
PRS housing and sustained delivery in private housing. Consequently, the Board continues to look to the
future with confidence.
Innes Smith
Chief Executive Officer
13 September 2021
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SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
CHIEF FINANCIAL OFFICER’S REVIEW
FOR THE YEAR ENDED 31 MAY 2021
The financial year ended 31 May 2021 was outstanding for Springfield with record sales and profit levels as
the Group rebounded strongly from the impact of the COVID-19 pandemic and cash generation of £50.1m
reducing net debt from £70.9m at 31 May 2020 to £20.8m at 31 May 2021.
For the year ended 31 May 2021, the Group reported revenue of £216.7m (2020: £143.5m), an adjusted
profit before taxation and exceptional items of £18.5m (2020: £10.2m) and a statutory profit before tax of
£17.9m (2020: £9.7m).
The Directors use alternative performance measures (for example adjusted profit before taxation which takes
statutory profit before taxation and adds back exceptional items) as this allows a better assessment of how
the Group is performing by excluding non-recurring items. KPIs are detailed on the financial highlights page
and are discussed throughout the annual report.
The significant increase in revenue reflected strong growth across private and affordable housing as well as
other revenue. Private housing remained the largest contributor to Group revenue, accounting for 66.7%
(2020: 68.9%) of total sales. The significant growth in Private housing revenues was driven by a large
increase in completions in the North region and by our Walker and Dawn homes brands helped by new site
launches. Affordable housing revenue grew strongly with contracts signed and work commencing on several
new developments during the year. Two strategic land sales accounted for the majority of the substantial
increase in other revenues.
Revenue
Private housing
Affordable housing
Other*
TOTAL
*Primarily land sales
2021
£’000
144,584
55,143
16,965
216,692
2020
£’000
98,924
42,504
2,088
143,516
Change
+46.2%
+29.7%
+712.5%
+51.0%
Gross profit increased to £38.8m (2020: £27.4m) due to the significant increase in revenues noted above.
Gross margin was 17.9% compared with 19.1% for the prior year, which primarily reflects the impact of the
two strategic land sales. Adjusted gross margin (to exclude the contribution from land sales in both years)
was 18.5% (2020: 18.6%).
Administrative expenses were £19.4m (2020: £16.5m) with the increase primarily reflecting staff costs as
well as bank charges resulting from non-utilisation fees due to the significant reduction in bank debt. In 2021,
administrative expenses included accrued bonus, which was absent from 2020 due to the cancellation of
bonuses as part of the cost mitigation measures in response to the pandemic. The Group also had
approximately 11 months of salary costs in 2021, compared with 10 months in the prior year, as 80% of
employees had been brought back from furlough by the end of July 2020. However, these increases in
administrative expenses were offset by cost mitigation measures implemented primarily in response to
COVID-19 – with the Group achieving its target of realising £1m in cost savings on an annualised basis as
part of our cost saving programme.
Exceptional items were £0.6m (2020: £0.4m). This relates to the cost of furloughed employees of £2.3m
(2020: £3.1m), largely offset by grant income of £2.1m (2020: £2.7m) received under the UK Government’s
Coronavirus Job Retention Scheme, and redundancy costs from a rationalisation of the business.
The Group made an operating profit of £19.1m (2020: £10.8m). Excluding exceptional items, operating profit
was £19.8m (2020: £11.3m). Adjusted Profit before tax and exceptional items was £18.5m (2020: £10.2m)
and statutory profit before tax was £17.9m (2020: £9.7m).
Basic earnings per share (excluding exceptional items) increased to 14.41 pence (2020: 8.33 pence).
Statutory basic earnings per share were 13.79 pence (2020: 7.89 pence). Return on capital employed (profit
before interest and taxation divided by average capital employed which is calculated as the average of 2021
and 2020 total assets less current liabilities) was 14.3% (2020: 8.3%).
13
SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
CHIEF FINANCIAL OFFICER’S REVIEW (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2021
Net debt at 31 May 2021 was £20.8m compared to £70.9m at 31 May 2020. This primarily reflects the
significant increase in revenues, part of which was from homes where the majority of build costs had been
incurred in the prior year but which were not handed over until the easing of lockdown in June 2020.
The two significant land sales completed at the end of the financial year also contributed to the substantial
reduction in net debt.
The Group’s £18m 12-month term loan from Bank of Scotland secured in April 2020 was repaid in full in April
2021, having been fully drawn but never utilised. The revolving credit facility of £64.5m, which was put in
place for three years in January 2019 with an expiry date in January 2022, was extended, post period in
September 2021, for a further three years to January 2025 on similar terms to the existing facility.
Michelle Motion
Chief Financial Officer
13 September 2021
14
SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
COMPANY OVERVIEW AND RISKS
FOR THE YEAR ENDED 31 MAY 2021
Environmental
Our homes are designed to be energy efficient. We adopt measures to make them more environmentally
sustainable, taking designs beyond the latest environmental standards to reduce the environmental impact
of our homes overall.
Within the regulatory requirements when designing homes, we work to optimise the following: improving
profitability, reducing environmental impact and minimising energy bills for customers. Regular audits and
inspections of our construction activities are carried out to ensure (i) statutory obligations are met; and (ii) we
continually reduce our environmental impact.
Quality Management
The Group is accredited to ISO 9001-2015 standard. During 2020/2021 improvements completed because
of quality management were 50.
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 29 of the consolidated financial statements.
Price / Sales Risk – Change in Demand
The risk of reducing prices or a reduced sale rates due to a reduction in demand 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 and representations in relation to changes in government housing policy, including by the
CEO 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.
•
Future Cash Flow Risk
Detailed budgeting and regular review of our forecasts allows efficient management of future cash flows as
part of managing any liquidity risk.
The Group has bank facilities, securing funding until January 2025 which have appropriate covenants and
sufficient headroom in place. The Group and funders communicate regularly.
Resources Risk
The Scottish labour market is competitive and there is also 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 include:
•
•
•
•
•
•
•
annual remuneration and reward review;
annual training review for every employee;
developing the workforce by maintaining the percentage of employees in training, further education or
apprenticeships at 10% or above;
a Board led culture of empowerment;
satellite television discount and gym membership;
consistent communication from CEO and senior managers throughout lockdown;
long standing local market recruitment has reduced the potential effect of labour market changes due
border changes.
15
SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
COMPANY OVERVIEW AND RISKS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 201
Upward pressure on materials prices is being managed by:
•
•
•
actively seeking alternative suppliers and materials;
standardising materials and products across the Group 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
to ensure the Group reduces it’s legal and regulatory risks (e.g. disruption to trade, fines or other penalties)
and helps ensure contracts are robust across the business.
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;
advising on safe practice at the outset of projects;
initiating training; and
introducing or updating applicable policies or procedures.
In addition to the risks we currently manage, we have also had the COVID-19 pandemic added to our risk
register which is applicable to all areas of our operations, and we have developed suitable control measures
to allow the business to continue, taking into consideration current Government guidance and legislative
requirements.
Land Supply Risk
The risk of securing sufficient land is reduced by a healthy and growing supply of land owned or secured by
contract in a growing spread of geographic locations which will appeal to our range of customers. This
ensures that the group can bring forward land even if market conditions are unfavourable for immediate
acquistions. Prospective sites are brought forward from the land bank, through the planning system, in
tranches considered by the Board to be sufficient to allow the Group to achieve its plans for growth.
Acquisitions offer further mitigation with the bulk addition of land spanning the planning pipeline in new
geographic locations.
Planning Risk
Delays in receiving planning consents could interrupt business. While COVID has resulted in changes to the
process for obtaining planning it has not resulted in any significant delays due to local and national authorities
adopting alternative methods to ensure planning requirements are met. 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 an appropriate flow of consented land.
Financial Risk Management Objectives
Details of the Group’s financial risk management objectives are set out in Note 29 to these consolidated
financial statements.
16
SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
COMPANY OVERVIEW AND RISKS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2021
Future Developments
The future development of the Group is dealt with in the Chairman’s Statement and the Chief Executive’s
Statement.
Charitable Donations and Community Support
During the year the Group made payments of £25,477 (2020: £18,077) to charities. These donations
included:
o New Elgin JFC – 300 building blocks to help build dugouts at stadium
o Christmas trees and Lights for Bertha Park and Dykes of Gray; and
o Sponsorship of Springfield Scottish Squash Open
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 and we support Developing the
Young Workforce and staff act as mentors for Career Ready students. We sponsor youth sports teams and
some individual young athletes and we support the Duke of Edinburgh’s Award in Moray.
Springfield are headline sponsors of Scottish Squash, which enabled the resurrection of the Scottish Squash
Open, now the Springfield Scottish Squash Open in 2019. The sponsorship is also enabling Scottish Squash
to develop the game in communities around Scotland and to support its elite players.
Brexit Risks
The Group has continued to monitor the potential challenges and opportunities resulting from the withdrawal
of the UK from the EU. Uncertainties regarding the potential increase in customs duties on supplies from the
EU have been eased with the announcement of the free trade agreement. The Group will continue to assess
and review the broader impact of these arrangements and the wider implications of Brexit.
Covid Risks
While it is difficult to predict the longstanding effects of the COVID-19 pandemic, the directors have
considered specific threats to the business and methods to mitigate those risks. During the first half, the
Group took a series of actions to mitigate the effects of COVID-19.
Section 172 Statement
The section 172 statement is detailed on page 20.
17
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
BOARD OF DIRECTORS
Sandy Adam, Executive Chairman
(Sits on Nomination Committee)
Sandy is the grandson of the founder of Springfield and has worked for the Company since the 1980s leading
its change from a market garden business into a housebuilder in 1988. Sandy has been Executive 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, geographic expansion and the acquisition of Redrow’s Scottish
assets, Dawn Homes and Walker Group. 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 trebling annual revenue and more than doubling the number of completions per year. Innes was
appointed to the Board of Homes for Scotland in 2016.
Michelle Motion, Chief Financial Officer
Michelle joined Springfield as 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, latterly as Director of the North of Scotland Real Estate
Team. Roger is Chairman of the Port of Cromarty Firth. Roger joined Springfield as a Non-Executive Director
in 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 and heads up the Investment and Development teams, with particular focus on build to rent
and affordable housing in Scotland. Matthew was a member of the Advisory Board of Kleinwort Hambros
private bank and was the founding chair of bio-tech businesses EctoPharma Limited and Ryboquin Limited.
Matthew was appointed to the Board as a Non-Executive Director in 2011.
18
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
BOARD OF DIRECTORS (CONTINUED)
Nick Cooper, Non-Executive Director
(Sits on Audit, Remuneration and Nomination Committees)
Nick is a qualified solicitor with over 20 years’ board experience with UK-listed and private companies. Nick
is currently General Counsel and Company Secretary of Johnson Matthey Plc. 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 Ltd, JD Wetherspoon plc, The Sage
Group plc and Asda Group plc. Nick joined Springfield as a Non-Executive Director in 2018.
Colin Rae, Non-Executive Director
(Sits on Audit, Remuneration and Nomination Committees)
Colin has over 35 years’ experience working in the construction and housebuilding industries, from chartered
quantity surveying through to development management. From 2002 to 2019 he held leadership positions at
Places for People, one of the largest development, regeneration, property management and leisure
companies in the UK. Most recently he was executive member of the Group board with direct responsibility
for a UK-wide mixed tenure development programme of c£200 million. He has a particular interest in high
quality design in placemaking and offsite construction. A Member of the Royal Institution of Chartered
Surveyors, Colin now acts as “critical friend” with organisations active in the residential sector through his
Development Solutions business. He is also an Academician of The Academy of Urbanism and Member of
the Chartered Institute of Housing. Colin was appointed to the Board as a Non-Executive Director in 2019.
19
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
QCA CODE COMPLIANCE AND SECTION 172 STATEMENT
FOR THE YEAR ENDED 31 MAY 2021
This report provides shareholders with an overview of the Group's corporate governance arrangements and
their operation during the year and how we comply with the Quoted Companies Alliance’s 2018 Corporate
Governance Code for Small and Mid-Size Quoted Companies (“the QCA Code”).
The QCA Code provides a robust framework for the Group to maintain high standards of corporate
governance. It sets out ten principles. Each principle and the Group's actions are set out below. Sandy Adam,
as Chairman, is responsible for ensuring the ten principles are followed across the Group.
Additionally, the Group complies with section 172 of the Companies Act 2006. This report along with pages
35 - 37 sets out how the Board has discharged its duties.
A copy of this statement will be available on our website through its inclusion in this annual report. A copy of
the
from
https://www.springfield.co.uk/investor_relations/results_and_reports.
statement
including
available
report
the
is
1.
Strategy and Business Model
The Group operates within two housing markets – private and affordable. The Group develops a mix of
private and affordable housing in Scotland in development of different sizes and locations. It believes this
combination is key to sustained long term growth.
Private:
The Group delivers private housing on developments of various size across Central, West and the North of
Scotland under its Springfield, Dawn Homes and Walker Group brands. This includes standalone Village
developments, each with up to 3,000 plots and the infrastructure and amenities a village community needs
to become established.
Sourcing land in areas with high growth potential is a priority for the Group with a view to then progress
developments through the planning process.
Generally the Group takes a long term view of developing land and directly employs a multidisciplinary team
expert in releasing planning consents. The team includes planners, architects, engineers and lawyers. The
Group has expertise in developing sites which involve the challenges of land in multiple ownership, the need
for full masterplanning and for several and varied engineering solutions.
Affordable:
Our affordable housing operation operates across Scotland and focuses on developing land into (i)
standalone sites that consist entirely of affordable homes; and (ii) developing affordable housing on the
Group’s private developments as a condition of receiving planning permission.
With over 158,000 applicants to local authority housing lists in March 2019 there is a substantial need for
affordable housing in Scotland. The Scottish Government has set a target of building 100,000 affordable
homes by 2031/32. We have built over 1,200 affordable houses in the last five years and we aim to further
increase the size of our affordable housing business.
Further details on our strategy and business model are discussed in the Chairman’s statement on pages 5-
7.
2.
Statement and Understanding Shareholder Needs and Expectations
Sandy Adam, as Chairman, is responsible for establishing and maintaining appropriate communication
channels between Executive Directors and shareholders. Maintaining positive relationships with
shareholders is important to the Board.
Shareholders communicate with the Board by email, telephone and meetings throughout the year including
bi-annual investor presentations organised by our nominated advisor, Singer Capital Markets. Before COVID-
19 restrictions were in place these roadshows were held in London and Edinburgh. During 2020/21
presentations were held virtually in line with market practice. The board will continue to listen to its nominated
advisor as to the format of future meetings and will follow market practice as it evolves throughout the year.
The Board believes the presentations provide it with vital information to understand the needs and
expectations of Springfield’s shareholders.
20
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
QCA CODE COMPLIANCE AND SECTION 172 STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2021
2.
Statement and Understanding Shareholder Needs and Expectations (continued)
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 regularly distribute press releases to national and local press with news and
at
updates
https://www.springfield.co.uk/news.
projects. All
the Group’s
releases
current
found
press
can
be
on
Due to COVID restrictions, we were unable to invite shareholders to attend Springfield’s AGM in October
2020. Instead, all shareholders were invited to ask questions in advance of a closed meeting, which was held
in a COVID safe manner. Details of this year’s AGM, and whether it will be held in person, will be available
to download from our corporate website. The Board recognises the AGM as an important opportunity for
shareholders to vote on resolutions; to meet the board and to ask questions.
3.
Wider Stakeholder and Social Responsibilities
The Group operates across Scotland and recognises that it must maintain strong relationships with all
stakeholders. These include employees; customers; suppliers; national & local government; and local
communities.
Employees (current):
The Group achieves high levels of customer satisfaction. This is monitored through surveys carried out by
an external company. Currently, of those customers responding, over 90% say they would recommend the
brand of their Springfield group home to friends or family. The Group would not be able to achieve such high
scores if it were not for the support of its employees.
The Group had 603 employees at 31 May 2021. We are proud that many of our employees have remained
with Springfield on a long-term basis with the average length of service being 5.5 years.
The Chairman and CEO meet employees’ departmental groups on a bi-annual basis. In 2020/21 these
meetings were held virtually. The meetings provide an opportunity for employees to hear of future plans, to
raise any concerns and to ask questions. Each office also has regular meetings where questions can be
raised, and issues discussed.
Working from home for office-based staff has meant that there has been less face to face contact during
2020/21. The Chief Executive ensured there was regular communication with all staff throughout the year
whether directly by email and text alerts weekly during lockdown periods and indirectly by tasking managers
to ensure they were communicating regularly with all staff eg. through one of one virtual calls and team
meetings.
Employees receive an annual pay review and at June 2020, current employees were paid at least 3% above
minimum wage.
Springfield recognises gender diversity and has been shortlisted this year by the S1 Recruitment Awards for
Best Diversity & Inclusion Initiative. We are confident that male and female employees are paid fairly and
appropriately for work of equal value. The construction industry has typically been dominated by men,
however we have seen proportionally more women joining us to begin a career in construction. You can read
more about our findings in the Gender Pay Gap Report on our website.
The Group has a series of data protection policies which have been updated, along with providing training
for staff, to ensure compliance with the General Data Protection Regulation (GDPR). The Board will also
undertake data protection training during October 2021 following on from previous training in 2019.
Employees (training & education): At May 2021 we supported 95 (15.8%) staff in further education,
training, and apprenticeships. This includes 75 apprenticeships.
21
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
QCA CODE COMPLIANCE AND SECTION 172 STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2021
3.
Wider Stakeholder and Social Responsibilities (continued)
Employees (future): The Group has a strong focus on education and training. We have been shortlisted at
the S1 Recruitment Awards for ‘Best Early Careers Employers (Apprentice/Graduate). We encourage
student placement programmes and we have placed 14 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 five of the students who now work for us, or will do after completion of their degree.
For our work on career day videos and our virtual engagement with schools, we have been shortlisted for the
Homes for Scotland ‘Innovation of the Year’ award. Through our work on this project, we have created
materials that show the industry in a positive light. We have highlighted the many careers on offer within
housebuilding regardless of age, gender or ethnicity, that can be viewed by thousands and will have an
impact not only on young people but their parents and family.
Customers: Customer views are sought via In-house Research Limited who contact our customers around
nine weeks after handover of their home and gather feedback. Each managing director actions any points
required because of this feedback. As discussed above, of those customers responding, over 90% say they
would recommend one of the Group’s homes to friends or family
Suppliers: The Group’s commercial and purchasing teams communicate closely with suppliers. This is vitally
important through 2021 as material supply issues were raised throughout our supply chain. We believe our
close relationship with supplier and strong communication has helped reduce the risk of significant disruption
to the Group’s construction programme.
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 legislation.
Communities: For individual projects, we work with local communities as part of the planning process. Any
new development that has more than 50 homes 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 can then reflect any comments
within our applications. During lockdown these events have been held virtually rather than in-person.
Environment: We continue to evolve our ESG framework. We have implemented several environmentally
friendly policies and initiatives this year including a waste reduction programme implemented in our sites in
the North. This programme has seen over 40% of waste recycled on our developments at Inchgower and
Knockomie Braes. We have also appointed Colin Rae, as a director with specific responsibility for
Environment, Sustainability and Governence (ESG). Both Colin and our corporate communication director
completed the University of Cambridge Business Sustainability Management course and further details of
ESG will be further embedded across the Group will be covered in 2021/22.
Our affordable housing operation has a variety of environmentally friendly approaches to their sites which
includes air source heat pumps, energy efficient boilers with gas saver units and the provision of water butts
in gardens which are connected to down pipes enabling the collection of rainwater which can then be used
for things such as watering the garden.
22
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
QCA CODE COMPLIANCE AND SECTION 172 STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2021
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.
Given the environment in which it operates the Board has a strong 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.
The Board is responsible 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. 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 and 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 pages 18-19. All Directors
receive regular and timely information on the Group’s operational and financial performance. Relevant
information is circulated to the Directors in advance of meetings. The Board meets at least bi-monthly. During
20/21 the board met virtually but has resumed in-person meetings in line with government guidance as
lockdown has eased. All directors attended all meetings as required except on one occasion when Nick
Cooper was unable to attend due to an unavoidable prior commitment. The non-executive directors time
commitment is approximately 20 days a year a month to attend to board matters.
The Board consider Colin Rae, Nick Cooper and Matthew Benson to be independent Directors for the
purpose of the QCA Code. From 13 November 2021 Roger Eddie will have completed thirteen years' service
as a Director. Having considered his independence in the context of the QCA Code, the Board is also satisfied
that Mr Roger Eddie will remain independent from 13 November 2020, 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 and committee meetings 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 experience, are set out on pages 18-19.
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 e.g. as mentioned above, Colin Rae completed the University of
Cambridge Business Sustainability Management course.
All seven 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.
23
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
QCA CODE COMPLIANCE AND SECTION 172 STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2021
7.
Evaluation of Board Performance
The Board implemented a formal review process in 2020/21. Springfield’s human resources department
prepared a self-evaluation criterion which was issued and approved by the Board. All Directors completed
self-evaluation reports in the first quarter of 2020/21 and the results of the exercise were reviewed by the
Chairman and actioned. Actions included updates to information received by directors and greater
opportunities to meet with operational directors.
8.
Corporate Culture
The Board believes that everyone deserves a decent place to live. In other words, there is a need for good
housing for every member of every community in Scotland. Where this need is not met, Springfield aims to
provide high quality homes for private sale to first time buyers and those already on the housing ladder and
provide affordable homes through its partnership arm which works with housing associations and local
authorities.
Dedication to customers is at the heart of the Springfield culture. We offer our customers a wide choice of
options on design, fixtures and fittings through our online “Choices” initiative and we build trust through our
after sales service. Across the Group, 78% of clients felt that they had been kept updated when buying their
home and 81% of our clients reported that they felt special and valued during this process. 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.
The Group has received numerous awards for customer service and for the sites we build. Our site in Elgin
at Linkwood Steadings was shortlisted for Large Development of the year at the Homes for Scotland awards.
More recently, Springfield and our subsidiary (Dawn Homes Limited) were each awarded the “In House Gold
Award for Customer Satisfaction” over the last year. This means that over 92% of our customers would
recommend us to their friends and family. Springfield and Dawn Homes Limited also received “Outstanding
Achievement” awards for the positivity of the word of mouth recommendations we receive from customers.
These awards are a testament to the ethos of the Group to provide our customers with a great house, a nice
place to live and excellent customer service.
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
Company listed on the AIM market operated by the London Stock Exchange plc (“AIM”). 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 a SAYE Scheme. A first scheme matured in
November 2020 and a second scheme was launched in April 2021.
9.
Maintaining Good Governance
The Board recognises the importance of applying sound governance principles in the successful running of
the Group. The Chairman and the Board as a whole takes responsibility for ensuring the Group maintains
appropriate corporate governance practices. In addition, the Chairman and CEO take responsibility for
obtaining feedback from key stakeholders.
Springfield operates processes to identify, measure, manage and monitor risks which impact the Group’s
business within acceptable limits identified by the Board. Further details on our approach to risk are set out
in response to principle 4 above.
24
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
QCA CODE COMPLIANCE AND SECTION 172 STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2021
9.
Maintaining Good Governance (continued)
The Board is supported by the Audit, Remuneration and Nomination Committees.
The Audit Committee is responsible for determining and reviewing matters relating to the financial affairs of
the Group. The Audit Committee examines reports received from management and the Group’s auditor in
relation to the financial statements, as well as the internal control systems utilised throughout the Group.
The Remuneration Committee reviews and sets the terms and conditions of the Directors’ appointment, along
with their remuneration and benefits package and makes recommendations to the Board in relation to the
allocation of share options to employees under our Share Plans. The Remuneration Committee meets at
least three times a year.
The Nomination Committee’s role is to consider the selection and re-appointment of Directors, and make
recommendations for the nominations of candidates to fill vacancies on the Board. The Nomination
Committee also regularly reviews
the Board, providing
recommendations for change where appropriate.
the structure, size and composition of
Further information can be found in the Audit and Remuneration Committees’ reports on pages 26-34.
10.
Communicating Governance and Performance
The Group recognises the importance of maintaining a good relationship with shareholders and stakeholders,
communicating to them through the Annual and Half-Year Reports, the Annual General Meeting (AGM), bi-
annual presentations and other trading updates.
We maintain an investor relations section of our website which provides a range of corporate information to
shareholders, investors and the public (www.springfield.co.uk/investor_relations), with all press releases
regarding news and updates on the Group’s current projects being posted in the news section of our website
(www.springfield.co.uk/news).
Results from the AGM are announced to the market and displayed on the Group’s website after the meeting.
Andrew Todd
Company Secretary
13 September 2021
25
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
AUDIT COMMITTEE REPORT
FOR THE YEAR ENDED 31 MAY 2021
Statement from the Chairman of the Audit Committee
On behalf of the Board, I am pleased to present the Committee Report for the year to 31 May 2021. This
report provides shareholders with an overview of the activities carried out by the Committee during the year.
The Committee ensures the financial performance of the Group is properly measured and reported.
Committee Members
The Committee is comprised solely of independent Non-Executive Directors, being myself as Chairman and
the other Non-Executive Directors: Nick Cooper, Roger Eddie and Colin Rae. Both myself and Roger Eddie
have worked within the financial industry and have recent and relevant financial experience. The Board is
satisfied that I have significant and relevant experience to chair the Committee.
Responsibilities
The responsibilities and activities of the Committee include determining and examining matters relating to
the financial affairs of the Group including the terms of engagement of the Group’s auditor and, in consultation
with the auditor, the scope of the annual audit. It receives and reviews reports from management and the
Group’s auditor relating to the half yearly and annual financial statements and the accounting and internal
control and risk management systems in use throughout the Group reviewing the Group’s overall risk appetite
and strategy and monitors, on behalf of the Board, current risk exposures. The Committee monitors the
integrity of the financial statements produced by the Group and makes recommendations to the Board on
accounting policies and their application. The Committee receives reports from compliance functions within
the Group and is responsible for reviewing and approving the means by which the Group seeks to comply
with its regulatory obligations. The Committee also ensures that the arrangements for employees and
contractors to raise concerns confidentially about possible wrongdoing in financial reporting (or other matters)
are proportionate and allow for independent investigation. The duties of the Committee are set out in its terms
of reference. These are regularly reviewed to ensure they remain applicable and up-to-date with legislation,
regulation and best practice.
Meetings
In the year to 31 May 2021, the Committee met three times and once since the year end. The meetings
cover the planning of the statutory audit and review of the Group’s full year results prior to Board approval
and to consider the external auditor’s detailed reports. Other members of the Board occasionally attend
Committee meetings when requested by invitation. In the year to 31 May 2021 the Chief Financial Officer
attended all three Committee meetings and the Chairman attended one meeting.
Internal Audit
The Group does not currently have an internal audit function. The Committee has considered the size and
nature of the Group and believes that existing management within the Group is able to derive assurance as
to the adequacy of internal control and risk management systems without the introduction of an internal audit
function. As the Group continues to grow the Committee will review on an annual basis the requirement for
implementing an internal audit process.
Risk Management and internal controls
The Group has a range of internal controls, policies and procedures in place, some of which are discussed
on pages 36-38 of the Governance Report. There is a framework of risk management within the Group for
risk management. The Committee works alongside the Board to review, and where necessary suggest
changes to, the current systems in place.
The Committee is satisfied that the current systems in place are operating effectively.
26
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
AUDIT COMMITTEE REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2021
Anti-bribery
The Group has a zero tolerance anti-bribery and corruption policy in place. The policy is contained within
employee handbooks and provides guidance on what constitutes bribery and corruption. Line managers are
responsible for ensuring employees comply with this policy and maintain the Group’s image and reputation.
The Board is ultimately responsible for ensuring this policy complies with the Group’s legal and ethical
obligations.
External Audit
Following the completion of a competitive tender process involving four participants BDO LLP (‘BDO’) were
formally appointed as external auditor at the AGM on 30th October 2020. The previous auditors Johnston
Carmichael LLP provided an audit disengagement letter in accordance with Section 491 of the Companies
Act 2006 confirming their term of office as auditors ceased at the end of the AGM held on 30 October 2020.
The Committee monitors the relationship with the external auditor to ensure independence and objectivity at
all times. The Committee also reports to the Board on the independence, objectivity and effectiveness of the
external auditor. Alastair Rae is the signing partner for the first time this year following the appointment of
BDO.
BDO have not carried out any non-audit work during the year. The Group policy is that, where possible,
advisors should be appointed other than the external auditor to perform non-audit work.
External Audit process
BDO LLP prepare an audit plan. This plan sets out the scope and timetable of the audit as well as the areas
to be specifically targeted. The plan is provided to the Committee for approval in advance of the audit. On
completion of the audit, the findings are presented to the Committee by the auditor for discussion. The matters
discussed in relation to this year’s audit are summarised on page 28.
The Chief Financial Officer has regular contact and communication with the auditor during the year. This
allows for any areas of concern or of significance to be raised with the auditor throughout the year.
27
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
AUDIT COMMITTEE REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2021
The table below highlights the issues discussed at the audit close meeting.
Issue
Revenue recognition - Private
Revenue from private housebuilding is recognised
when the house is handed over although the timing
may require management judgement in determining
when ownership has transferred.
from affordable housebuilding
Revenue recognition - Affordable
Revenue
is
recognised over time depending on the stage of
completion with cashflows received in excess of
revenue recognised included as payments on
account.
Profit recognition
The Group undertakes construction contracts
which take place over a period of time. There is a
significant element of judgement involved in
estimations of these construction contracts
surrounding costs to complete and the overall
expected profit margin.
Valuation of inventories and work in progress
The largest asset on the Group balance sheet is
inventory which includes land and work in progress.
The Group values inventory at the lower of cost and
is dependant of
net
judgement and estimates of total build and land
costs and future selling prices. The allocation of
inventory to cost of sales also involves estimates
which impact on the timing and amount of profit
margin recognised.
Going concern
It is the Directors’ responsibility to make an
assessment of the Group’s ability to continue as a
going concern to support the basis of preparation
for the financial statements.
realisable value which
Matthew Benson
Chairman of the Audit Committee
13 September 2021
How it was addressed by the Committee
With a large number of homes handed over in the
financial year, following restart of operations in June
2020 after the COVID-19 lockdown, the Committee
reviewed the revenue recognised throughout the
year and around the year end. The Committee
satisfies itself that there is no issue with revenue
recognition.
On reviewing the Group’s accounting policy for
revenue recognition on construction contracts for
the year ended 31 May 2020, the Board concluded
that the application of the policy resulted in the
Group accruing for costs that had not yet been
incurred, which is now understood to be non-
compliant with IFRS15. The Group has therefore
moved to a policy based on stage of completion
being determined by the development cost incurred
as a proportion of the total expected development
cost as this is considered to be in line with the
satisfaction of
the underlying performance
obligations. The accounting policy note (Note 2.5)
has been updated to reflect this change. As a result,
in May 2020 both revenue and cost of sales have
been reduced by £0.9m with no impact on the profit
for the year. An amount of £2.8m has also been
reclassified on the balance sheet from accruals to
payments on account with no impact on current
liabilities or net assets (see Note 19).
The Committee monitors the cost value report
process and the effectiveness of the internal
controls exercised over these processes.
The Committee reviews the work in progress
balances through monthly finance reports and the
cost value report process and is satisfied that the
carrying value of inventories and work in progress
remains appropriate.
The Committee is satisfied, based on the going
concern paper written and financial modelling
undertaken, that the Group has adequate resources
to continue in operation for the foreseeable future
and will be able to operate within the existing bank
facility limits which have recently been renewed for
a further three years to January 2025.
28
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
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 ended on 31 May 2021.
Springfield is not required to comply with Schedule 8 to the Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 and is under no obligation to prepare, or seek shareholder
approval of, a directors’ remuneration report. This section of the annual report has, therefore, been prepared
on a voluntary basis and in order to fulfil the relevant requirements of Rule 19 of the AIM Rules for companies.
Committee Members and Meetings
In the period of twelve months to 31 May 2021, the Committee comprised:
• Roger Eddie (Chairman);
• Matthew Benson;
• Nick Cooper; and
• Colin Rae
Each of the above individuals is an independent Non-Executive Director who has no personal financial
interest (other than as a shareholder) 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.
summarised on
(which are
reference
Committee Responsibilities
The main responsibilities of the Committee are:
•
to set the overall remuneration policy for the Group’s Executive Directors (and certain other senior
employees); and
• within the terms of that policy, to 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 2021, the overall remuneration package for Executive Directors consisted
of the following elements:
• Basic Salary;
• Annual Bonus;
• Pension Contributions;
•
• Participation 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.
Update on Committee’s response to the continuing impact of the COVID-19 crisis
As explained in last year’s report, a number of remuneration related actions were taken during the financial
year to 31 May 2020 in response to the COVID-19 crisis, including the following:
•
in the case of Innes Smith, Michelle Motion and the Non-Executive Directors, a 20% reduction was
applied to their salaries / fees with effect from April 2020, with the payment of a further 30% of their
salaries / fees being deferred;
29
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
REMUNERATION COMMITTEE REPORT (CONTINUED)
•
•
at the same time, a 100% reduction was applied to the salary of Sandy Adam; and
no bonuses were awarded for that year, notwithstanding the level of achievement delivered
against the applicable performance measures.
During the course of June 2020, Springfield’s onsite operations recommenced and the Company’s sales
offices reopened. From the end of that month, the business also began handing over homes that had been
nearing completion prior to lockdown.
In light of the above, the Committee decided that the temporary reductions that had been introduced in April
2020 should be removed early in the year to 31 May 2021.
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.
The Committee reviews the Executive Directors’ salaries annually, with the Committee’s current policy being
that any salary raises for Executive Directors will normally reflect those applied to the wider workforce. Any
increases typically take effect on 1 June each year.
With effect from 1 June 2020, the annual rates of base salaries for the Executive Directors were set at:
• Sandy Adam - £112,500
•
Innes Smith - £225,000 and
• Michelle Motion - £180,000
As explained in last year’s report, the above levels were unchanged from the annual salary rates for the
financial year to 31 May 2020 (although the actual amounts paid to the Executive Directors in the prior year
were impacted by the 20% temporary reduction in salaries that was applied in April and May 2020 as a result
of the Company’s response to the COVID-19 pandemic). The absence of any increase in Executive
Directors’ salaries during the year matched the broader approach taken by the Company across the Group’s
general employee population.
Annual Bonus
Under the Group’s annual bonus scheme for Executive Directors (other than Sandy Adam who does not
participate in this arrangement), 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 2021, the maximum bonus opportunities for Innes Smith and Michelle Motion
were 100% of salary and 75% of salary respectively and the following table identifies the measures used,
their respective weightings and the bonus award derived from the level of achievement over the year:
Measure
Weighting
(as a % of maximum opportunity)
Bonus earned as a result of
performance against specific
measure in the relevant year1
(as a % of maximum opportunity
Innes Smith
Michelle Motion
Innes Smith
Michelle Motion
Profit before tax
Return on capital employed
Gross margin
Customer satisfaction
50%
30%
10%
10%
50%
25%
25%
N/A
Total bonus (% of maximum opportunity) = (a)
Maximum opportunity (% of base salary) = (b)
Total bonus earned (% of base salary) = (a) x (b)
50%
30%
0%
8%
88%
100%
88%
50%
25%
0%
N/A
75%
75%
56%
30
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
REMUNERATION COMMITTEE REPORT (CONTINUED)
Notes:
1 For each measure, the Committee specified a sliding scale of achievement (between threshold and
maximum) which was used to determine the level of award actually paid in respect of that element. For each
of the financial measures, the threshold level required the Company to at least achieve the relevant budget
figure set by the Board for the year. In the case of “customer satisfaction”, the Company adopted its own long
standing measurement processes.
Under the terms of the Group’s annual bonus scheme for Executive Directors, the Committee has the
discretion to reduce or defer the awards that would otherwise be payable to the relevant individuals in
accordance with the above table where it is appropriate having regard to the health and safety performance
of the Company over the period in question. No such reduction or deferral was deemed necessary in respect
of the financial year to 31 May 2021.
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
As part of the process surrounding the Group’s admission to AIM in October 2017, the following plans were
adopted in order to allow share-based incentives to be provided to the Executive Directors and other senior
managers:
• The Springfield Properties PLC Company Share Option Plan (the “CSOP”); and
• The Springfield Properties PLC Employee Share Option Plan (the “ESOP”).
The CSOP and the ESOP are relatively straightforward arrangements under which options over the
Company’s shares can be granted to selected employees of the Group (including Executive Directors).
These options normally vest after three years and, on exercise, require participants to pay a price equal to
the market value of a share on the date they were originally granted. Following the introduction of the new
performance share plan in 2020 (see below) no further options have been granted to the Executive Directors
under the CSOP or ESOP and there is no current intention to grant awards under either of those
arrangements to Executive Directors in the future.
As explained in last year’s report, the Springfield Properties PLC Performance Share Plan (the “PSP”) was
adopted by the Board on 9 January 2020 and allows for the grant of conditional rights to acquire shares (in
the form of “nominal value” options). PSP awards will ordinarily vest on the third anniversary of grant, subject
to continued employment (although “good leaver” provisions can apply) and only to the extent that specified
performance measures are satisfied. Once vested, a PSP award will usually remain capable of being
exercised until the 10th anniversary of grant. Standard “malus” and “clawback” provisions also apply.
Details of the PSP grants made to Innes Smith and Michelle Motion during the financial year to 31 May 2021
are included in the table set out in page 33. The performance conditions applicable to these awards are
structured in a comparable manner to those set for the grants made last year; they will be assessed over a
total of three financial years commencing with the one in which the grant was made and will require the
achievement of stretching targets relating to earnings per share (75% weighting) and the Company’s net debt
/ EBITDA ratio (25% weighting). The precise terms of these targets are commercially sensitive but full details
will be disclosed following their final assessment by the Committee at the expiry of the applicable
performance period.
Given the size of his existing shareholding in the Group, Sandy Adam does not currently participate in any
of the above long-term incentive plans.
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.
31
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
REMUNERATION COMMITTEE REPORT (CONTINUED)
The initial grants made under the SAYE Scheme on 8 November 2017 matured and became exercisable on
1 December 2020. Thereafter, both Michelle Motion and Innes Smith exercised their respective options in
full over 21,226 shares on 2 December 2020 and 21 January 2021 respectively at an exercise price of 84.8p
per share. Both individuals elected to retain all the shares acquired as a result of their exercises. The closing
share prices on the dates of exercise were 116.0p (2 December 2020) and 133.5p (21 January 2021).
Following the maturity of the initial grants under the SAYE Scheme, the Remuneration Committee conducted
a review of the arrangement in order to determine whether it had achieved its original aim of providing a
broad section of the Group’s workforce with an incentive that was directly aligned to the Company’s share
price performance. The conclusion reached was that the SAYE Scheme had been a success and had been
extremely well received by the wider workforce. As a result, the Remuneration Committee decided to grant
a second tranche of options under the SAYE Scheme on 29 April 2021. Details of the options granted on
that date to Innes Smith and Michelle Motion are set out on page 33. For the same reason stated above in
relation to the Long Term Incentive Plans, Sandy Adam does not currently participate in the SAYE Scheme.
Remuneration in the Year
During the year to 31 May 2021, the directors received the following remuneration:
Basic
salary/fees1
Annual
Bonus
Taxable
benefits2
Pension
contributions3
2021
Total
2020
Total4
£000
£000
£000
£000
£000
£000
Executive Directors
Sandy Adam
Innes Smith
Michelle Motion
Non-Executive Directors
Matthew Benson
Roger Eddie
Nick Cooper
Colin Rae
Notes:
113
225
180
40
40
40
40
-
199
101
-
-
-
-
8
8
8
-
-
-
-
7
24
20
-
-
-
-
128
456
309
40
40
40
40
107
247
199
39
39
39
27
678
300
24
51
1,053
697
1The salary and fees for the financial year to 31 May 2020 that were deferred in response to the COVID-19 pandemic (see page
29 for details) were included in the remuneration table in last year’s report. As a result, these amounts are not reflected in the
above “Basic salary / fees” column notwithstanding the fact that they were actually paid in the period to 31 May 2021.
2 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.
3 The pension figure for 2021 includes an additional Company contribution that was paid in September 2020 but which related to
the individuals’ deferred May 2020 salaries.
4 The total remuneration figures for 2020 were impacted by the actions taken by the Company in response to the COVID-19
pandemic, namely (i) a temporary reduction of 20% to the salaries of Innes Smith and Michelle Motion; (ii) a temporary reduction
of 100% to the salary of Sandy Adam; and (ii) a temporary reduction of 20% to the fees payable to the Non-Executive Directors.
The above table does not include the value of share options held by the directors, details of which are set
out below.
32
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M
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
REMUNERATION COMMITTEE REPORT (CONTINUED)
Notes:
1 An overview of the performance conditions that must be satisfied before options granted under the PSP
vest and become exercisable is provided on page 31. Options granted under the CSOP, ESOP and SAYE
Scheme are not subject to performance conditions.
2 Awards granted under the PSP carry “dividend equivalent” rights that entitle the holder to receive the benefit
of any dividends declared on vested shares during the period from the date of grant to the date of vesting.
3 Further information in relation to the exercise of SAYE Scheme options by Innes Smith and Michelle Motion
during the financial year to 31 May 2021 are set out on page 32 above.
Directors’ Interests in the Group’s Shares
Directors’ interests in the Group’s shares are disclosed in the Directors’ Report (page 37).
Roger Eddie
Chairman of the Remuneration Committee
13 September 2021
34
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 MAY 2021
The Directors present their annual report and the audited financial statements of the Group for the year ended
31 May 2021.
Principal Activity and Business Review
This information is included within the Strategic Report above, 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
Mr Colin Rae
Results and Dividends
Executive Chairman
Chief Executive Officer
Chief Financial Officer
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
The results for the year are set out on page 50.
In its 2019/20 annual report the Company reported that an interim ordinary dividend previously announced
on 27 February 2020 amounting to 1.4p per share had been withdrawn. This decision was made by the
Group as a result of the level of uncertainty created by the COVID-19 pandemic and to preserve cash. The
Board believed this was an appropriate and prudent measure to preserve liquidity. The board is pleased to
confirm that it was in a position this year to restore an interim ordinary dividend. This dividend was paid
amounting to £1,316,186 (2020: zero) equating to 1.3p (2020: zero) per share.
The Board is proposing a final dividend of 4.45p per share subject to shareholder approval at the next Annual
General Meeting to be held on 27 October 2021.
Taking into account the interim dividend of 1.3p per share already declared and paid, this equates to a total
dividend of 5.75p (2020: 2p) per share.
Employee Consultation
The Group’s policy is to consult and discuss with employees’ representatives matters likely to affect their
interests.
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.
Further information on the employee consultation and changes required as a result of the continued COVID-
19 pandemic are set out in the QCA Code section.
35
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
DIRECTORS’ REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2021
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.
Going Concern
The Directors have a reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future and 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 consolidated
financial statements.
Disclosure of Information to the Auditor
In the case of each of the persons who are Directors of the Company 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 all Directors as necessary.
Biographical details are set out on pages 18-19.
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.
36
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
DIRECTORS’ REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2021
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 Executive Directors has been fixed by the Remuneration Committee 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 32.
Directors’ Interests in Shares
Name of Director
Sandy Adam
- Direct
-
Indirect
Innes Smith
- Direct
-
Indirect
Michelle Motion
- Direct
-
Indirect
Roger Eddie
- Direct
-
Indirect
Nick Cooper
Indirect
-
Matthew Benson
Colin Rae
Number of
ordinary
shares
% of ordinary share
capital and voting
rights
22,118,300
15,671,820
829,235
124,419
21,225
53,000
22,170
25,000
14,895
28,302
20,000
38,928,366
21.7%
15.4%
0.8%
0.1%
0.0%
0.1%
0.0%
0.0%
0.0%
0.0%
0.0%
38.1%
Financial Risk Management Objectives and Policies
Details of the Group’s financial risk management objectives and policies are set out in Note 29 to these
consolidated 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. This includes information on
future developments of the Group.
Section 172 Compliance
A general duty is imposed on every Director by Section 172 of the Companies Act 2006 to act in the way
they consider, in good faith, would be most likely to promote the success of the Company for the benefits of
its shareholders as a whole. In doing so, the Directors should have regard to several matters including:
• The likely consequences of any decision in the long term;
• The interests of the Company’s employees;
37
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
DIRECTORS’ REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2021
• The need to foster the Company’s business relationships with suppliers, customers and others;
• The impact of the Company’s operations on the community and the environment;
• The desirability of the Company maintaining a reputation of high standards of business conduct;
and
• The need to act fairly as between members of the Company.
The Board factors stakeholder interest into long term policies and objectives. The business of the Company
requires engagement with shareholders, customers, local authorities, housing associations, employees and
suppliers.
The Board, when considering stakeholder interest, is responsible for ensuring the long-term policies and
objectives implement allow the Group to continue to consistently produce high quality homes and
developments.
The Executive Directors are responsible for the operations of the business whilst the Non-Executive Directors
are independent and are well positioned to provide objective judgement and scrutiny to decisions made by
the Board.
Information about our stakeholders and how the Board has discharged its duties are included on page 21–
22.
The Group maintains directors’ and officers’ liability insurance cover for its directors and officers. The Group
has made available qualifying third party indemnity provisions (as defined in the Companies Act 2006) for
the benefit of its directors during the year.
38
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
DIRECTORS’ REPORT (CONTINUED)
STREAMLINED ENERGY AND CARBON REPORTING
FOR THE YEAR ENDED 31 MAY 2021
Since gaining the first Gold Active Building standards sustainability certificate for an environmentally friendly
new home back in 2012 to being one of the first house builders in the UK to make infrastructure for vehicle
charging a standard feature in all new-build homes, the reduction of environmental impact of our homes and
operations across the Springfield Properties Group remains an area of significant focus and innovation.
The environmental impact of our homes
New homes in Scotland are built to some of the highest technical standards in Europe. Within the UK itself,
U-Values set out in the Scottish Government Building Standards (Section 6) provide on average 25%
betterment compared the English equivalent standards (Part L). 95% of our homes are delivered to EPC
rating B, as compared to the current UK average of all existing homes as D.
Above and beyond these standards, as responsible house builders, we recognise the most important indirect
environmental impact of our development activities is the ongoing impact of our new homes. The Group
focuses on building homes to high sustainability standards that benefit from Eco-Friendly design, Green
Construction practices and enhancing the range of environmentally beneficial options for customers such as
the ability to order solar PV systems and the inclusion of electric car charging points.
100% of our homes are timber built using off-site manufacturing techniques. All timber used by the Springfield
Group within the building of our homes is from sustainable sources and is either Programme for the
Endorsement of Forest Certification (PEFC), or Forestry Stewardship Council (FSC) approved.
538 of the homes we delivered in the year were connected to air-source heat pumps offering customers a
saving in utility bills as well as a more sustainable heating source. This delivery experience stands us in good
stead to meet the Scottish Government target of eliminating fossil fuels in new build homes by 2024 (a year
ahead of the target in England).
The environmental impact of our operations
We recognise our responsibility to mitigate the impact of our operations on climate change and are taking
steps to reduce this wherever possible. As part of the development of our sustainability strategy each team
within the business has been challenged to consider environmental improvements in the role they play and
in the outputs that they are responsible for. Early wins include the shift to recycled paper for all marketing
materials and a ban on the use of any single use plastics for promotional gifts.
The purchase of our first electric van in May 2021 is initiating the roll out of Electric Vehicles within the Group’s
commercial fleet. Further, we have introduced a strategic shift away from ‘grey fleet’ to leased electric
vehicles for business mileage. Investment in new technology to ensure high quality virtual communication
can continue as offices re-open will avoid unnecessary business travel and this complements our approach
to employing trades and subcontractors local to where we build to reduce commutes.
We have widened the focus of our supply chain impact beyond identifying sustainable products to beginning
discissions with our suppliers to understand their own approach to sustainability.
39
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
DIRECTORS’ REPORT (CONTINUED)
STREAMLINED ENERGY AND CARBON REPORTING (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2021
Energy Use and Greenhouse Gas Emissions
For the financial year ended 31 May 2021
Scope 1 energy use & emissions from stationery
combustion gas, and generator construction site fuel
use
Scope 1 energy use & emissions from mobile
combustion, transport, and plant construction site
fuel use
Scope 2 energy use & emissions from electricity use
Scope 3 energy use & emissions from business
mileage from staff’s own vehicles
Total energy use & greenhouse gas emissions
Greenhouse gas emissions per home sold
Energy
Use kWh
2021
Tonnes
CO₂e
2021
Energy
Use kWh
2020
Tonnes
CO₂e
2020
2,683,951
646.65
2,191,625
533.15
6,341,069
1,710,678
1,598.22
398.83
5,074,271
1,229,131
1,287.95
314.17
1,324,412
12,060,110
329.11
2,972.81
3.06
356.82
1,469,463
9,964,490 2,492.09
3.42
Homes sold
Actual 2021
Actual 2020
Total
973
727
Private
593
419
Affordable
380
308
Methodology
Our Scope 1, Scope 2 and Scope 3 energy use and greenhouse gas emissions data for 2021 has been
independently produced from information provided by the Group to an external consultancy with expertise in
this area.
To calculate the footprint, data was collated from across the Group and from our suppliers to identify the
amount of energy used in our operations. The Group uses the most robust and accurate data source
available for each component of its energy use and carbon emission calculations. Assumptions and
estimations are only used when strictly necessary by means of the most robust data and assumptions
available.
Where actual emissions for the financial year are not available by the reporting date, then the Group applies
the use of estimates for the last one to two months of the period.
Where actual emissions data from energy consumption is not available for an individual site, the Group
calculates an average energy consumption for its show homes, plots and site cabins across the actual
population that full data is held for and this average is then used. We do not consider refrigerant losses on
our air conditioning units to be material and as such these are not reported in our emissions data.
For vehicle emissions, the Group analyses fuel card usage, mileage information, expense claims and fuel
invoices with the government conversion factor for the fuel type and engine size of vehicle applied.
For site diesel, usage is based on litres delivered to site within the financial period.
We do not consider train travel to be material and as such this is not reported in our emissions data.
Greenhouse gas (GHG) emissions are calculated in line with GHG Reporting Protocol – Corporate standard
and reported in line with the UK Government’s Guidance on Streamlined Energy and Carbon Reporting and
mandatory GHG reporting guidance. Conversion factors are taken from the UK Governments conversion
factors 2020.
The boundary has been set based upon operational control approach on our business activities and property
portfolio. There is 100% alignment with our financial reporting. 100% of our energy consumption and carbon
emissions are UK based.
On behalf of the Board
Sandy Adam
Executive Chairman
13 September 2021
40
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
FOR THE YEAR ENDED 31 MAY 2021
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. The financial statements of Springfield Properties PLC have been prepared in accordance
with international accounting standards in conformity with the requirements of the Companies Act 2006.
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 Company and profit or
loss of the Group for that period. In preparing these financial statements, the Directors are required to:
•
select suitable accounting policies and then apply them consistently;
• make judgments and accounting estimates that are reasonable and prudent;
•
•
state whether applicable IFRSs have been followed, subject to any material departures disclosed
and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume
that the Group and parent Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Group’s and parent Company’s transactions and disclose with reasonable accuracy at any time the
financial position of the Group and parent Company and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group
and parent Company and hence for taking reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the 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
Executive Chairman
13 September 2021
41
SPRINGFIELD PROPERTIES PLC
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF SPRINGFIELD
PROPERTIES PLC
Opinion on the financial statements
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 2021 and of the Group’s profit for the year then ended;
the Group financial statements have been properly prepared in accordance with international
accounting standards in conformity with the requirements of the Companies Act 2006;
the Parent Company financial statements have been properly prepared in accordance with
international accounting standards in conformity with the requirements of the Companies Act 2006
and as applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
We have audited the financial statements of Springfield Properties plc (the ‘Parent Company’) and its
subsidiaries (the ‘Group’) for the year ended 31 May 2021 which comprise the consolidated profit and loss
account, the consolidated and company balance sheets, the consolidated and company statements of
changes in equity, the consolidated and company statements of cash flow and 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 accounting standards in conformity
with the requirements of the Companies Act 2006 and, as regards the Parent Company financial statements,
as applied in accordance with the provisions of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. 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 believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remain independent of the Group and the Parent Company 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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors’
assessment of the Group and the Parent Company’s ability to continue to adopt the going concern basis of
accounting included:
-
-
-
-
-
-
-
understanding the processes relating to the assessment of the appropriateness of the going concern
assumptions;
analysing the current and forecast performance of the Group including working capital requirements, by
assessing Director’s assumptions against market data and the Group’s post year end performance;
re-performing the Directors sensitivity testing and performing reverse stress testing on Director’s
forecasts over the going concern period and assessing the likelihood of the scenario occurring and
mitigating actions available to the Board
assessing the financing options that are available to the Group, including the renewal of revolving credit
facility detailed in Note 21;
recalculating current loan covenants in order to assess compliance over the going concern period;
using various external data sources to identify indicators of potential risk at the entity and industry level;
and
assessing the going concern disclosures are appropriate and in conformity with the reporting standards
Based on the work we have performed, we have not identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast significant doubt on the Group and the Parent
42
SPRINGFIELD PROPERTIES PLC
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF SPRINGFIELD
PROPERTIES PLC (CONTINUED)
Company’s ability to continue as a going concern for a period of at least twelve months from when the
financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in
the relevant sections of this report.
Overview
Coverage1
95% of Group profit before tax
97% of Group revenue
99% of Group total assets
Key audit matters
Revenue recognition
Valuation and impairment of WIP
2021
Materiality
Group financial statements as a whole
£735,000 based on 5% of Profit before tax
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the
Group’s system of internal control, and assessing the risks of material misstatement in the financial
statements. We also addressed the risk of management override of internal controls, including assessing
whether there was evidence of bias by the Directors that may have represented a risk of material
misstatement.
The Group manages its operations from three locations in the UK and has common financial systems,
processes and controls covering all significant components.
In assessing the risk of material misstatement in the Group financial statements, and to ensure we had
adequate quantitative coverage of significant amounts in the financial statements, we determined that four
significant components, Springfield Properties Plc, Walker Holdings (Scotland) Limited, Walker Group
(Scotland) Limited and Dawn Homes Limited, represented the principal business units within the Group. A
full scope audit was undertaken on these components by the group audit team, who also carried out a limited
scope review of the non-specific components.
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) that 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.
1 These are areas which have been subject to a full scope audit by the group engagement team
43
SPRINGFIELD PROPERTIES PLC
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF SPRINGFIELD
PROPERTIES PLC (CONTINUED)
Key audit matter
Revenue recognition
Refer Accounting policies
Note 2.5 (page 56) and
Note
the
financial
consolidated
statements (page 62).
of
4
is
to
occur
/
Revenue from private
house sales and land
sales
recognised
when control has been
transferred
the
purchaser which will
at
normally
handover
legal
completion. Revenue
construction
from
contracts is recognised
based on measured
stage of completion.
Other revenue streams
are recognised at point
of sale.
could
There is a potential risk
of fraud as revenue and
profit
be
manipulated through
recognised
sales
completion,
before
through
incorrect
allocation of costs in
WIP
the
margins on individual
and
developments
through the posting of
manual journals
skew
to
Revenue recognition is
an area of focus for our
in considering
audit
possible
of
areas
management bias and
fraud.
Valuation
and
impairment of work in
progress
Refer,
Accounting
policies Note 2.16 (page
59) and Note 17 of the
financial
consolidated
statements (page 71).
The value of work in
progress is the most
significant asset on the
balance sheet (page
51). Inventory and work
in progress comprises
land work in progress
(“WIP”)
in effect of
private housing; WIP
transfers
to cost of
sales upon sale of a
property.
How the scope of our audit addressed the
key audit matter
We assessed the design implementation and
tested the operating effectiveness of key
controls management have implemented to
reduce the risk of inappropriate revenue
recognition.
In significant components we tested 100% of
revenue from private house sales to third
party evidence to check that revenue had
been appropriately recognised.
For construction revenue, we obtained the
third-party valuation reports for a sample of
sites and recalculated the revenue to be
recognised.
We performed procedures on all material
revenue streams for defined periods before
and after the year end and agreed samples
to originating
of
recognised
documentation
that
transactions were recorded in the correct
period.
to gain assurance
revenue
We performed journal entry testing, applying
a particular focus to individually unusual
and/or material manual journals posted to the
revenue account throughout the year. We
agreed
journals meeting predetermined
criteria to supporting evidence to confirm that
the revenue recognised was appropriate, had
an appropriate business rationale and was in
line with the Group’s accounting policy.
We considered
the
accounting standards to the Group’s revenue
recognition policies and practices.
the application of
Key observations:
Based on the procedures performed, we note
a prior year adjustment in relation to revenue
recognition on affordable housing, refer note
2.1. After this adjustment we consider that
revenue has been recognised appropriately.
We assessed the design and implementation
and tested the operating effectiveness of key
controls management have
implemented
those
throughout
surrounding cost allocation and purchase
authorisation.
the process,
including
We recalculated the release to cost of sales
for a sample of sites with reference to the
correct point of revenue recognition and the
44
SPRINGFIELD PROPERTIES PLC
of
inherent
is
There
complexity
and
significant judgement in
the valuation of work in
progress as the correct
each
valuation
development project is
dependent on accurate
cost allocation and
projected profitability of
the
overall
development, including
forecast revenue and
costs to complete.
WIP valuation, the risk
of impairment and the
to
costs
is
cost
therefore an area of
audit focus.
transferred
sales
of
total project margin as referenced in the cost
valuation report (CVR).
process,
including
We performed procedures over the cost to
complete estimates included as part of the
CVR
an
understanding of movements against original
appraisals and assessing the forecasting
accuracy of prior year CVRs against projects
completed during the year and since year
end.
gaining
impairment
We reviewed Management’s
assessment against
to
complete and projected margins to ensure
that, where any impairment indicators had
been noted, these had been correctly treated.
forecast costs
Key observations:
Based on the procedures performed we
consider
by
management in valuing work in progress are
reasonable.
judgements made
the
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which misstatements, including omissions,
could influence the economic decisions of reasonable users that are taken on the basis of the financial
statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we
use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly,
misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of
the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating
their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and
performance materiality as follows:
for
Materiality
Basis
determining
materiality
the
Rationale
benchmark applied
for
Performance
materiality
Basis
determining
performance
materiality*
Group financial statements
2021
£
735,000
Profit before
tax
2020
£
487,000
Profit before tax
Principal
consideration in
assessing
financial
performance of
the business
435,000
Principal
consideration in
assessing
financial
performance of
the business
292,200
Parent company financial
statements
2021
£
700,000
2020
£
373,500
Net Assets Position within the
Group and relative
turnover
Holding
company
420,000
224,100
for
60% of
Materiality
60% of
Materiality
60% of
Materiality
60% of Materiality
45
SPRINGFIELD PROPERTIES PLC
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF SPRINGFIELD
PROPERTIES PLC (CONTINUED)
We set performance materiality at this percentage due to it being a first year audit and our ability to assess
the likelihood of misstatements.
The materiality for the Group financial statements as a whole was set at £735,000. This was determined with
reference to 5% of profit before tax which we consider to be the principal consideration in assessing the
financial performance of the Group as the Group is a profit orientated trading business. The overall financial
statement materiality for the Parent Company was set at £700,000. This was determined with reference to
3% of net assets. Materiality has been calculated based on preliminary figures and not adjusted upwards
where final results were higher than those used to calculate materiality.
Specific materiality
We also determined that for operating accounts, such as revenue, cost of sales, trade receivables and
payables, contract accruals, prepayments and payroll, a misstatement of less than materiality for the financial
statements as a whole, specific materiality, could influence the economic decisions of users. As a result, we
determined materiality for these items based on 3% of gross profit (£500,000). We further applied a
performance materiality level of 60% of specific materiality to ensure that the risk of errors exceeding specific
materiality was appropriately mitigated. In addition, we determined that for administration costs, a
misstatement of less than materiality for the financial statements as a whole, specific materiality, could
influence the economic decisions of users. As a result, we determined materiality for these items based on
1.5% of gross profit (£250,000). We further applied a performance materiality level of 60% of specific
materiality to ensure that the risk of errors exceeding specific materiality was appropriately mitigated.
Component materiality
We set materiality for each component of the Group based on a percentage of between 15% and 50% of
Group materiality dependent on the relative size and our assessment of the risk of material misstatement of
that component. Component materiality ranged from £105,000 to £360,000. In the audit of each component,
we further applied performance materiality levels of 60% of the component materiality to our testing to ensure
that the risk of errors exceeding component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess
of £29,000.). We also agreed to report differences below this threshold that, in our view, warranted reporting
on qualitative grounds.
Other information
The Directors are responsible for the other information. The other information comprises the information
included in the Annual Report and Financial Statements 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. 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 course
of 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 this gives rise to a material
misstatement in the financial statements themselves. 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.
46
SPRINGFIELD PROPERTIES PLC
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF SPRINGFIELD
PROPERTIES PLC (CONTINUED)
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are
required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described
below.
Strategic
Report
Directors’
Report
and
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.
•
1
2In the light of the knowledge and understanding of the Group and 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.
Matters
on
which we are
to
required
report
by
exception
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 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 Statement of Director’s Responsibilities, 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.
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.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below:
47
SPRINGFIELD PROPERTIES PLC
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF SPRINGFIELD
PROPERTIES PLC (CONTINUED)
Identifying and assessing potential risks related to irregularities, including fraud
In identifying and assessing the risks of material misstatement in respect of irregularities including fraud and
non-compliance with laws and regulations, we considered the following:
-
The nature of the industry and sector control environment and business performance including the
design of the Group’s remuneration policies, key drivers for Directors, remuneration, onus levels and
performance targets;
- Enquiring of Management and the Audit Committee, including obtaining and reviewing supporting
documentation, concerning the Group’s policies and procedures relating to:
-
Identifying, evaluating and complying with laws and regulations and whether they were aware
of any instances of non-compliance;
- Detecting and responding to risks of fraud and whether they have knowledge of any actual,
-
suspected, or alleged fraud;
The internal controls established to mitigate risks related to fraud or non-compliance with laws
and regulations; and
- Discussing among the engagement team and involving relevant internal specialists, including tax,
valuations, and industry specialists regarding how and where fraud might occur in the financial
statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the
organisation for fraud and identified the greatest potential for fraud in revenue recognition and work in
progress valuation, including margin recognition. In common with all audits under ISAs (UK), we are also
required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the Group operates in,
focusing on provisions of those laws and regulations that had a direct effect on the determination of material
amounts and disclosures in the financial statements. The key laws and regulations we considered in this
context included the UK Companies Act, AIM Listing Rules, tax legislation and housebuilding and
construction legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the
financial statements but compliance with which may be fundamental to the Group’s and Parent Company’s
ability to operate or to avoid material penalty. These included building regulations, employment law and
environmental regulations.
Audit response to risks
As a result of performing the above, we identified revenue recognition from private housebuilding activities,
revenue recognition from construction contracts and valuation of work in progress, including margin
recognition, to be key audit matters. The key audit matters section of our report explains these matters in
more detail and also describes the specific procedures we performed in response to each key audit matter.
In addition to the above, our procedures to respond to risks identified included the following:
-
performing analytical procedures to identify unusual or unexpected relationships that may indicate risks
of material misstatement due to fraud and carrying out testing accordingly;
reading minutes of Management meetings and of those charged with governance and reviewing
correspondence with regulatory bodies, such as HMRC, and reviewing documentation for indications of
non-compliance with laws and regulations.
assessing whether the accounting policies, treatments and presentation adopted in the financial
statements is in accordance with applicable law and accounting standards and whether there are
instances of potential bias in areas with significant degrees of judgement.
in addressing the risk of fraud through management override of controls, testing the appropriateness of
journal entries and other adjustments; assessing whether the judgements made in making accounting
estimates are indicative of a potential bias; and evaluating the business rationale of any significant
transactions that are unusual or outside the normal course of business;
carrying tests of management control in certain areas or functions, such as the authorisation of business
expenditure and the approval of payments to suppliers;
vouching balances and reconciling items in Management’s key control account reconciliations to
supporting documentation as at 31 May 2021; and
-
-
-
-
-
Our audit procedures were designed to respond to risks of material misstatement in the financial statements,
recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not
48
SPRINGFIELD PROPERTIES PLC
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF SPRINGFIELD
PROPERTIES PLC (CONTINUED)
detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and
the further removed non-compliance with laws and regulations is from the events and transactions reflected
in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent 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 Parent
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 Parent Company and the Parent Company’s members as a body, for our audit work, for this report,
or for the opinions we have formed.
Alastair Rae (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Edinburgh, UK
13 September 2021
BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).
49
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MAY 2021
Revenue
Cost of sales
Gross profit
Note
4
Administrative expenses before exceptional items
Exceptional items
11
Total Administrative expenses
Other operating income
Operating profit
Finance income
Finance costs
Share of profits from joint venture
Profit before taxation
Taxation
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
6
9
10
2021
£000
216,692
(177,895)
38,797
(19,422)
(622)
(20,044)
375
19,128
367
(1,607)
-
17,888
(4,178)
13,710
13,710
-
13,710
Earnings per share (pence per share)
Basic earnings on profit for the year
Diluted earnings on profit for the year
13
13
13.79p
13.55p
Adjusted earnings per share (pence per share)
Basic earnings on profit for the year
Diluted earnings on profit for the year
14.41p
14.16p
13
13
2020
As restated
(Note 2.1)
£000
143,516
(116,165)
27,351
(16,520)
(422)
(16,942)
428
10,837
320
(2,273)
852
9,736
(2,093)
7,643
7,646
(3)
7,643
7.89p
7.81p
8.33p
8.24p
The Group has no items of other comprehensive income.
The accompanying notes on pages 54 to 83 form an integral part of these financial statements.
50
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
FOR THE YEAR ENDED 31 MAY 2021
Non-current assets
Property, plant and equipment
Intangible assets
Investments
Deferred taxation
Accounts receivables
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Bank term loan
Deferred consideration
Short-term obligations under lease liabilities
Corporation tax
Non-current liabilities
Long-term bank borrowings
Long-term obligations under lease liabilities
Deferred taxation
Contingent consideration
Provisions
Total liabilities
Net assets
Equity
Share capital
Share premium
Retained earnings
Equity attributable to owners of the parent company
Note
14
15
16
23
18
17
18
27
19
21
24
22
21
22
23
25
25
26
26
2021
£000
4,539
1,649
-
539
5,411
12,138
156,774
23,683
15,826
196,283
208,421
51,646
34,000
-
760
901
87,307
-
1,854
2,920
3,900
1,210
9,884
97,191
2020
As restated
(Note 2.1)
£000
6,342
1,649
202
203
4,899
13,295
174,400
8,968
1,522
184,890
198,185
20,571
18,000
2,107
1,188
780
42,646
51,000
2,255
2,413
3,797
210
59,675
102,321
111,230
95,864
128
56,761
54,341
111,230
122
52,330
43,412
95,864
These financial statements were approved and authorised for issue by the Board of Directors on 13
September 2021. Signed on behalf of the Board by:
Sandy Adam - Executive Chairman
The accompanying notes on pages 54 to 83 form an integral part of these financial statements.
Company number: SC031286
51
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2021
Share
capital
Share
premium
Retained
earnings
Notes
£000
£000
£000
Non-
controlling
interest
£000
1 June 2019
Share issue
Total comprehensive
income for the year
Share based payments
26
Acquisition of minority
interest
Dividends
31 May 2020
Share issue
Total comprehensive
income for the year
Share based payments
Dividends
31 May 2021
12
26
26
12
120
2
50,118
2,212
-
-
-
-
-
-
-
-
122
52,330
38,292
-
7,646
557
-
(3,083)
43,412
6
-
-
-
4,431
-
-
-
-
13,710
493
(3,274)
54,341
128
56,761
30
-
(3)
-
(27)
-
-
-
-
-
-
-
Total
£000
88,560
2,214
7,643
557
(27)
(3,083)
95,864
4,437
13,710
493
(3,274)
111,230
The share capital account records the nominal value of shares issued.
The share premium account records the amount above the nominal value received for shares sold, less share
issue costs.
Retained earnings represents accumulated profits less losses, and distributions. Retained earnings also
includes share based payments.
The accompanying notes on pages 54 to 83 form an integral part of these financial statements.
52
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR TO 31 MAY 2021
Cash flows generated from operations
Profit for the year
Adjusted for:
Exceptional items
Taxation charged
Finance costs
Finance income
Adjusted operating profit before working capital movement
Exceptional items – cash movement
Gain on disposal of tangible fixed assets
Share based payments
Non-cash movement
Share of joint venture profit
Amortisation of intangible fixed assets
Depreciation and impairment of tangible fixed assets
Operating cash flows before movements in working capital
Decrease/(increase) in inventory
(Increase)/decrease in accounts and other receivables
Increase/(decrease) in accounts and other payables
Net cash from/(used in) operations
Taxation paid
Net cash inflow / (outflow) from operating activities
Investing activities
Purchase of property, plant and equipment
Proceeds on disposal of property, plant and equipment
Deferred consideration paid on acquisition of subsidiary
Acquisition of subsidiary, net of cash acquired
Interest received
Proceeds from joint venture loan
Net cash from/(used in) investing activities
Financing activities
Proceeds from issue of shares
Proceeds from bank loans
Repayment of bank loans
Payment of lease liabilities
Dividends paid
Interest paid
Net cash (outflow)/inflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Note
11
6
26
32
32
32
12
27
2021
£000
13,710
622
4,178
1,607
(367)
19,750
(622)
(148)
493
81
-
61
2,175
21,790
17,498
(14,321)
32,037
57,004
(4,227)
52,777
(206)
218
-
304
13
-
329
2,249
-
(35,000)
(1,480)
(3,274)
(1,297)
(38,802)
14,304
1,522
15,826
The accompanying notes on pages 54 to 83 form an integral part of these financial statements.
2020
£000
7,643
422
2,093
2,273
(320)
12,111
(341)
(71)
557
550
319
8
2,356
15,489
(25,642)
6,533
(22,960)
(26,580)
(3,125)
(29,705)
(553)
101
(4,000)
-
38
828
(3,586)
26
38,000
-
(1,531)
(3,083)
(1,661)
31,751
(1,540)
3,062
1,522
53
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
1. Organisation and trading activities
Springfield Properties PLC is incorporated and domiciled in Scotland as a public limited Company and
operates from its registered office in Alexander Fleming House, 8 Southfield Drive, Elgin, Morayshire, IV30
6GR. The Group consists of Springfield Properties PLC and its subsidiaries Glassgreen Hire Limited,
DHomes 2014 Holdings Limited, Walker Holdings (Scotland) Limited and SP Sub 2018 Limited. The Group
also indirectly includes Dawn Homes Limited, DHPL Limited and DHHG1 Limited which are subsidiaries of
DHomes 2014 Limited.
The Group also indirectly includes Walker Group (Scotland) Limited, Walker Contracts (Scotland) Limited
and Craig Developments Limited which are subsidiaries of Walker Holdings (Scotland) Limited.
2. Summary of significant accounting policies
The principal accounting policies adopted and applied in the preparation of the financial statements are set
out below.
These have been consistently applied to all the years presented unless otherwise stated.
2.1
Basis of accounting
The financial statements of Springfield Properties PLC have been prepared in accordance with international
accounting standards in conformity with the requirements of the Companies Act 2006.
The Group has adopted all the standards and amendments to existing standards which are mandatory for
accounting periods beginning on 1 June 2020.
The financial statements have been prepared under the historical cost convention except for contingent
consideration.
Standards adopted for the first time
There are no new or revised standards effective for annual periods beginning on or after 1 June 2020 that
are relevant to the Group.
Standards, amendments and interpretations to existing standards that are not yet effective
There are no new standards, amendments to existing standards or interpretations that are effective as at 31
May 2021 relevant to the Group. After Brexit, the UK will continue to apply International Accounting Standards
in conformity with the requirements of the Companies Act 2006.
Prior period restatement
On reviewing the Group’s accounting policy for revenue recognition on construction contracts for the year
ended 31 May 2020, the Board concluded that the application of the policy resulted in the Group accruing for
costs that had not yet been incurred, which is now understood to be non-compliant with IFRS15. The Group
has therefore moved to a policy based on stage of completion being determined by the development cost
incurred as a proportion of the total expected development cost as this is considered to be in line with the
satisfaction of the underlying performance obligations. The accounting policy note (Note 2.5) has been
updated to reflect this change. As a result, in May 2020 both revenue and cost of sales have been reduced
by £0.9m with no impact on the profit for the year. An amount of £2.8m has also been reclassified on the
balance sheet from accruals to payments on account with no impact on current liabilities or net assets (see
Note 19).
The Directors have reviewed the liabilities included in the provisions line in the prior year and have concluded,
in line with accounting standards, that deferred taxation of £2,413,000, deferred consideration of £2,107,000
and contingent consideration of £3,797,000 should have been presented separately. The prior year has been
restated to reflect that. These presentation changes have no impact on net assets in either period.
54
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
2. Summary of significant accounting policies (continued)
Basis of consolidation
2.2
The consolidated financial statements incorporate those of Springfield Properties PLC and its subsidiaries
and jointly controlled entities. Where the company has control over an investee, it is classified as a subsidiary.
The company controls an investee if all three of the following elements are present: power over the investee,
exposure to variable returns from the investee, and the ability of the investor to use its power to affect those
variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a
change in any of these elements of control. Contingent consideration is measured at its fair value at the date
of acquisition. If the contingent consideration meets the definition of equity, it is not remeasured, and
settlement is accounted for within equity. Other contingent consideration is remeasured at fair value at each
reporting date with subsequent changes in the fair value of the contingent consideration recognised in the
consolidated profit and loss account.
All financial statements are made up to 31 May 2021.
All intra-Group transactions, balances and unrealised gains on transactions between Group companies are
eliminated on consolidation.
2.3.
Functional and presentation currencies
The financial statements are presented in Pound Sterling (£), 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
The financial year ending 31 May 2021 was an exceptional one for the Group with a strong rebound from
COVID-19 seeing record sales and profit levels. The £18m term loan which was secured in April 2020 to
cover the Group in the event of an extended lockdown period was repaid in full in April 2021.
The Group continues to have a strong relationship with Bank of Scotland as principal bankers. In September
2021, the revolving credit facility (£64.5m) was extended and is now repayable in January 2025. As part of
securing the extension of the revolving credit facility the Group prepared a 3-year plan which incorporated
the Board approved budget to May 2022.
A range of sensitivities were run including reducing selling prices, build costs increasing offset by land
purchase delays and any associated revenue impact.
The extended bank facility and detailed 3-year plan gives the Directors comfort that the Group has adequate
resources to continue in operational existence for the foreseeable future. Thus, the Directors continue to
adopt the going concern basis of accounting in preparing the financial statements.
2.5.
Revenue and profit recognition
Sale of private homes
Revenue on private home sales is recognised at a point in time and the performance obligation is the transfer
of the completed property to the customer on legal completion and receipt of cash. Revenue is measured at
the fair value of the consideration received net of VAT and trade discounts.
The Group’s site valuation process determines the forecast profit margin for each site. The valuation process
acts as a method of allocating land costs and construction work in progress costs of a development to each
individual plot and drives the recognition of costs in the profit and loss account as each plot is sold. Any
changes in the forecast profit margin of a site from changes in sales prices or costs to complete is recognised
across all homes sold in both the current period and future periods.
55
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
2. Summary of significant accounting policies (continued)
2.5.
Revenue and profit recognition (continued)
Revenue on contracts recognised over time
Revenue from affordable housing contracts is recognised over time as development progresses as the
construction activity enhances an asset controlled by the customer.
Where the outcome of a contract can be estimated reliably, the amount of revenue recognised depends on
the stage of completion. This is based on the development costs incurred as a proportion of the total expected
development costs.
Contractual cashflows are determined by independent surveys of work performed to date. These do not
always align with the revenue recognised on the underlying performance obligation and any cashflows
received that are in excess of the revenue recognised are included as payments on account. Where the
cashflows received are less than revenue recognised the difference is included within trade debtors.
Revenues derived from variations on contracts are recognised only when they can be reliably measured.
Where the outcome of a construction contract cannot be estimated reliably, contract costs are recognised as
expenses in the period in which they are incurred and contract revenue is recognised to the extent of contract
costs incurred where it is probable that they will be recoverable. When it is probable that total contract costs
will exceed contract turnover, the expected loss is recognised as an expense immediately.
Land Sales
Revenue from land sales is recognised on legal completion based on fair value at transfer.
2.6.
Grants
Grants are recognised when it is probable that the grants will be received and that all related conditions will
be met, usually on submission of a valid claim for payment. Revenue grants are credited to the profit and
loss account as and when the relevant expenditure is incurred.
2.7.
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense in the period in which
the services are received, unless those costs are required to be recognised as part of the cost of stock.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are
received.
Termination benefits are recognised immediately as an expense when the Group is demonstrably committed
to terminate the employment of an employee or to provide termination benefits.
2.8.
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
56
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
2. Summary of significant accounting policies (continued)
2.9.
Net finance costs
Finance costs comprise interest payable on bank loans and and the unwinding of the discount from nominal
to present day value of provisions and lease liabilities. Finance income comprises the unwinding of the
discount from nominal to present day value of shared equity. Interest income and interest payable is
recognised in the income statement on an accruals basis.
2.10. Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as
reported in the profit and loss account because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable or deductible. The Group’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the
reporting date.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets
and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax is not recognised on temporary differences arising from the initial recognition of goodwill or other
assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax is measured on a non-discounted basis using the tax rates and laws that have then been
enacted or substantively enacted by the reporting date.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that
it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be
recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability
is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except
when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with
in equity. Deferred tax assets and liabilities are offset when the Company has a legally enforceable right to
offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the
same tax authority.
2.11. Exceptional items
Exceptional items are those material items which, by virtue of their size or incidence, are presented
separately in the profit and loss account to enable a full understanding of the Group’s financial performance.
Transactions that may give rise to exceptional items include transactions relating to acquisitions and costs
relating to changes in share capital structure as well as redundancy and restructuring costs.
With respect to the impact of COVID-19, the furlough grant income received from the government has been
separately disclosed within the consolidated profit and loss account as exceptional, due to its incremental
nature. The direct furlough payroll costs are considered abnormal costs in the current year and consistent
with previous years, any direct payroll costs reflecting employee down time (abnormal production) is
expensed to the profit and loss account. Due to the COVID-19 pandemic and sites being closed from April
until the end of June 2020, the quantum of direct employee down time in the current year is significant. The
administrative furlough payroll costs disclosed as exceptional are considered to be interdependent with the
related government grant income and while not being incremental or abnormal in nature, the government
support measures were key in protecting these jobs. See Note 11.
57
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
2. Summary of significant accounting policies (continued)
2.12. Property, plant and equipment
Tangible fixed assets are initially measured at cost and subsequently measured at cost net of depreciation
and any impairment losses. Depreciation is recognised so as to write off the cost of assets less their residual
values over their useful lives on the following bases:
Buildings
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Right of use leased assets
Land is not depreciated.
- 2% and 5% straight line
- 2-10 years straight line
- 2-5 years straight line
- 4-5 years straight line
- over the lease term, straight line with no residual value
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds
and the carrying value of the asset and is credited or charged to the profit and loss account.
2.13.
Intangible fixed assets
Intangible assets comprise of market related assets (e.g. trademarks, imprints & brands) and goodwill on
acquisition.
Market related assets
Market-related assets are expected to have an indefinite useful life; however, impairment reviews are
performed annually. Any impairment losses or reversals of impairment losses are recognised immediately in
the profit and loss account.
Goodwill on acquisition
Goodwill on acquisitions of subsidiaries represents the excess of the consideration transferred, the amount
of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity
interest in the acquiree over the fair value of the net identifiable assets acquired.
Any impairment losses are recognised immediately in the profit and loss account.
2.14. Fixed asset investments
Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any
accumulated impairment losses. The investments are assessed for impairment at each reporting date and
any impairment losses are recognised immediately in the profit and loss account. Costs associated with the
acquisition of subsidiaries are recognised in the profit and loss account as an exceptional item.
2.15.
Impairment of fixed assets
At each reporting end date, the Group reviews the carrying amounts of its tangible fixed assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment
loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value-in-use. Any impairment loss and
reversal of losses are recognised in the profit and loss account.
58
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
2. Summary of significant accounting policies (continued)
2.16.
Inventories and work in progress
Property, including land held under development, acquired or being constructed for sale in the ordinary
course of business, rather than to be held for rental or capital appreciation, is held as stock and is measured
at the lower of cost and net realisable value.
Cost comprises of the invoiced value of the goods purchased and includes attributable direct costs, labour
and production overheads.
Net realisable value is the estimated selling price in the ordinary course of the business, based on market
prices at the reporting date and discounted for the time value of money if material, less estimated costs of
completion and the estimated costs necessary to make the sale. Any excess of the carrying amount of stocks
over its net realisable value is recognised as an impairment loss in the profit and loss account.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks
over its estimated selling price less costs to complete and sell is recognised as an impairment loss in the
profit and loss account.
Where sites are ‘secured’ via option agreements, these sites are only included as stock when the agreement
becomes unconditional.
Options included as part of stock are stated at the lower of cost and net realisable value.
2.17. Financial instruments
Financial instruments are recognised in the balance sheet when the Group becomes party to the contractual
provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when
there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a
net basis or to realise the asset and settle the liability simultaneously.
Financial assets at amortised cost
Financial assets with fixed or determinable payments that are not quoted in an active market. Financial assets
are recognised initially at cost. Subsequent to initial recognition they are measured at amortised cost using
the effective interest rate method, less any impairment losses.
Loans outside the Group are valued at the recoverable amount and a market rate of interest is charged.
Impairment of financial assets
The Group recognises an allowance for expected credit losses for all debt instruments not held at fair value
through profit and loss account. Expected credit losses are based on the difference between the contracted
cash flows due in accordance with the contract and all the cash flows that the Group expects to receive,
discounted at an approximation of the original effective interest rate.
For trade receivables and, in the Parent Company, intercompany receivables, the Group applies a simplified
approach in calculating expected credit losses. The Group does not track changes in credit risk, but instead
recognises a loss allowance based on lifetime expected credit losses at each reporting date.
59
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
2. Summary of significant accounting policies (continued)
2.17. Financial instruments (continued)
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire
or are settled, or when the Group transfers the financial asset and substantially all the risks and rewards of
ownership to another entity, or if some significant risks and rewards of ownership are retained but control of
the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third
party.
Financial liabilities
All of the Group’s financial liabilities are measured at amortised cost.
Other financial liabilities
Other non-derivative financial liabilities are initially measured at historical cost less any directly attributable
transaction costs. Subsequent to initial recognition, these liabilities are measured at amortised cost using the
effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments through the expected life of the financial liability to the net carrying
amount on initial recognition.
Derecognition of other financial liabilities
Financial liabilities are derecognised when the Group’s contractual obligations expire or are discharged or
cancelled.
2.18. Deferred consideration
Deferred consideration payments are initially recognised at fair value at the date of acquisition which is based
on the timing of the cash outflows and an appropriate discount rate. It is subsequently measured at amortised
cost.
2.19. Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks and bank overdrafts. Bank
overdrafts are shown within borrowings in current liabilities.
2.20. Dividends
Dividends are recognised as liabilities in the period in which the dividends are approved and once they are
no longer at the discretion of the Company.
2.21.
Leases
All leases are accounted for by recognising a right-of-use asset and a lease liability except for leases of low
value assets and leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the
lease term, with the discount rate determined by reference to the Group’s incremental borrowing rate at
commencement of the lease.
60
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
2. Summary of significant accounting policies (continued)
Leases (continued)
2.21.
Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives
received. Subsequent to initial measurement lease liabilities increase as a result of interest charged at a
constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are
amortised on a straight-line basis over the remaining term of the lease. Right of use assets comprise the
Group’s existing premises in Elgin, Larbert, Livingston and Glasgow along with certain items of office
equipment and motor vehicles.
2.22. Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of a Group after deducting
all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received net of share
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
share issue costs associated with the issuing of shares are deducted from share premium, net of any related
income tax benefits. Any bonus issues are also deducted from share premium.
Retained earnings include all current and prior period results as disclosed in the profit and loss account.
2.23. Share-based payments
Equity-settled share-based payments are measured at fair value at the date of grant and recognised as an
expense over the vesting period. The amount recognised as an expense is adjusted for leavers to the
scheme. Fair value is measured by use of a relevant pricing model.
3. 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. Carrying value of inventories
Inventories are stated at the lower of cost and net realisable value. The assessment of net realisable value
is performed on a site by site basis taking into account estimated costs to complete and remaining revenue.
These assessments are carried out on a regular basis throughout the year to ensure an effective review of
inventory carrying values and the costs to complete developments – this includes forecast selling prices and
forecast costs to come based on general market conditions and anticipated completion date.
There is an element of uncertainty when estimating the profitability of a site and the Group ensures there is
a strong level of internal control around the reporting of these assessments to ensure an accurate
assessment is made of inventory carrying values
3.2. Cost allocation
In order to allocate the costs that the Group recognises on its developments in a specific period, the Group
has to allocate site-wide development costs between homes built in the current year. It also has to estimate
costs to complete on such developments. In making these assessments there is a degree of inherent
uncertainty. The Group has developed internal controls to assess and review carrying values and the
appropriateness of estimates made.
61
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
4. Revenue
Analysis of the Group’s revenue is as follows:
Revenue
Private residential properties
Affordable housing
Other revenue
Revenue from the sale of goods and services as reported in the profit and
loss account
Other operating income
Finance income
Share of profit from JV
Total revenue and other income
2021
£000
144,584
55,143
16,965
As restated
2020
£000
98,924
42,504
2,088
216,692
143,516
375
367
-
428
320
852
217,434
145,116
For affordable housing revenue, the Group has taken advantage of the practical expedient in IFRS 15 from
the disclosure of information relating to its remaining performance obligations as revenue is recognised in
accordance with right to invoice which is based on work completed, as certified by a third party valuation.
Contract balances
The following table provides information about balances arising from contracts with customers:
Amounts included in trade receivables
Amounts included within other payables
2021
£000
11,708
(1,892)
2020
£000
4,186
(1,116)
Amounts included in trade receivables relate to work certified and invoiced but not paid on Housing
Association contracts.
Amounts included within payables represents customer deposits on private homes sales and deferred land
sales.
62
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
5. Segmental reporting
A segment is a distinguishable component of the Group’s activities from which it may earn revenues and
incur expenses, whose operating results are regularly reviewed by the Group’s chief operational decision
makers to make decisions about the allocation of resources and assessment of performance and about which
discrete financial information is available. In identifying its operating segments, management generally
follows the Group’s service line which represent the main products and services provided by the Group. The
Directors believe that the Group operates in one segment:
• Housing building activity
As the Group operates solely in the United Kingdom segment reporting by geographical region is not
required.
Revenue
Private residential properties
Affordable housing
Other
Total revenue
Gross profit
Administrative expenses
Exceptional items
Other operating Income
Finance income
Finance expenses
Share of profit from JV
Profit before tax
Taxation
Profit for the period
6. Operating profit
2021
£000
144,584
55,143
16,965
216,692
38,797
(19,422)
(622)
375
367
(1,607)
-
17,888
(4,178)
13,710
Operating profit is stated after charging / (crediting):
Depreciation of owned tangible fixed assets
Depreciation of tangible fixed assets held under leases
Depreciation of right of use assets
Gain on disposal of tangible fixed assets
Cost of inventories recognised as an expense
Exceptional items
Expenses relating to short term and low value leases
Notes
14
14
14
11
2021
£000
1,117
571
487
(148)
177,895
622
82
2020
As restated
£000
98,924
42,504
2,088
143,516
27,351
(16,520)
(422)
428
320
(2,273)
852
9,736
(2,093)
7,643
2020
£000
1,068
798
490
(71)
116,165
422
121
63
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
7. 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’s auditor and their associates for other services to the
Group and Company - other non-audit services
2021
£000
60
38
5
103
2020
£000
52
39
107
198
8. 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
2021
398
252
650
2021
£000
26,405
493
2,850
1,128
30,876
2020
437
273
710
2020
£000
26,526
557
3,389
1,227
31,699
Full details of the Directors’ remuneration is provided in the Remuneration Committee Report on page 32.
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 account in respect of defined contribution schemes was £1,128k (2020:
£1,227k). Contributions totalling £182k (2020: £154k) were payable to the fund at the year-end and are
included in creditors.
64
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
9. Finance costs
Interest on bank overdrafts and loans
Interest on lease liabilities
Other interest
10. 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
The charge for the year can be reconciled to the standard rate of tax as follows:
Profit before tax
Tax at the UK corporation tax rate of 19% (2020: 19%)
Effects of:
Tax effect of expenses that are not deductible in determining taxable profit
Exceptional items – 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
Other timing differences
Adjust deferred tax to closing average rate
Tax charge for period
11. Exceptional items
Redundancy costs
Acquisition and other transaction related costs (1)
Wages costs for furloughed employees (2)
Grant furlough income (2)
2021
£000
1,172
244
191
1,607
2021
£000
4,016
(10)
4,006
158
14
172
4,178
2021
£000
17,888
3,399
19
-
(10)
17
14
-
(105)
844
4,178
2021
£000
389
-
2,318
2,707
(2,085)
622
2020
£000
1,561
214
498
2,273
2020
£000
1,929
101
2,030
61
2
63
2,093
2020
£000
9,736
1,850
30
15
101
5
2
(1)
102
(11)
2,093
2020
£000
-
81
3,064
3,145
(2,723)
422
(1)
(2)
2020 Acquisition and other transactions related costs relate to the planning being achieved at Carlaverock which had previously been assessed as 98%
likely.
The £2,318k (2020: £3,064k) is the Company cost of all employees who were on furlough during the year. The £2,085k (2020: £2,723k) is the furlough
grant income received from the UK government in relation to the furloughed employees for the year.
65
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
12. Dividends
On 30 October 2020, a final dividend of 2.0p (2020: 3.2p) per share was paid to shareholders, amounting to
£1,957,644 (2020: £3,083,186). In respect of the current year, on 23 February 2021, an interim dividend of
1.3p (2020: nil) per share was paid to shareholders, amounting to £1,316,186 (2020: £nil). The Directors
propose that a dividend of 4.45p per share will be paid to shareholders on 9 December 2021. This dividend
is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability
in these financial statements. The proposed final dividend for 2021 is payable to all shareholders on the
Company’s Register of Members on the record date of 5 November 2021.
13. Earnings per share
The basic earnings per share is based on the profit for the year divided by the weighted average number of
shares in issue during the year. The weighted average number of ordinary shares for the year ended 31 May
2021 assumes that all shares have been included in the computation based on the weighted average number
of days since issue.
In respect of diluted earnings per share the weighted average is calculated by adjusting for all outstanding
share options that are potentially dilutive (i.e. where the exercise price is less than the average market price
of the shares during the year).
Profit for the year attributable to owners of the Company
Adjusted for the impact of exceptional costs in the year
Normalised earnings
2021
£000
13,710
622
14,332
2020
£000
7,646
422
8,068
Weighted average number of ordinary shares for the purpose of basic
earnings per share
Effect of dilutive potential shares: share options
Weighted average number of ordinary shares for the purpose of diluted
earnings per share
99,436,929
1,767,609
96,850,807
1,080,721
101,204,538
97,931,528
Earnings per ordinary shares (pence per share)
Basic earnings on profit for the year
Diluted earnings on profit for the year
Adjusted earnings per ordinary shares (price per share) (1)
Basic earnings on profit for the year
Diluted earnings on profit for the year
13.79
13.55
14.41
14.16
7.89
7.81
8.33
8.24
(1) Underlying earnings is presented as an additional performance measure and is stated before exceptional items.
66
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
14. Property, plant and equipment
Property, plant and equipment
Right of use assets
Property, plant and equipment
2021
£000
2,952
1,587
4,539
2020
£000
4,331
2,011
6,342
Land &
buildings
£000
Plant &
machinery
£000
Fixtures,
fittings &
equipment
£000
Motor
vehicle
£000
Cost
At 1 June 2019
Additions
Disposals
At 31 May 2020
Additions
Disposals
At 31 May 2021
Accumulated depreciation
At 1 June 2019
Depreciation charge
Disposals
At 31 May 2020
Depreciation charge
Disposals
At 31 May 2021
Net book value
At 31 May 2021
At 31 May 2020
At 31 May 2019
681
299
-
980
6
-
986
72
21
-
93
27
-
120
866
887
609
6,925
785
(206)
7,504
477
(1,693)
6,288
3,105
1,606
(164)
4,547
1,446
(1,407)
4,586
1,702
2,957
3,820
1,919
166
(1)
2,084
129
(51)
2,162
1,489
186
-
1,675
181
(51)
1,805
357
409
430
Total
£000
10,020
1,263
(243)
11,040
612
(1,906)
9,746
5,043
1,866
(200)
6,709
1,688
(1,603)
6,794
2,952
4,331
495
13
(36)
472
-
(162)
310
377
53
(36)
394
34
(145)
283
27
78
118
4,977
67
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
14. Property, plant and equipment (continued)
Right of use assets
Cost
At 1 June 2019
Additions
Disposals
At 31 May 2020
Additions
Disposals
At 31 May 2021
Accumulated
depreciation
At 1 June 2019
Depreciation charge
Disposals
At 31 May 2020
Depreciation charge
Disposals
At 31 May 2021
Net book value
At 31 May 2021
At 31 May 2020
At 31 May 2019
Land &
buildings
£000
Fixtures,
fittings &
equipment
£000
Motor
vehicle
£000
2,220
-
-
2,220
-
(92)
2,128
-
357
-
357
357
(35)
679
1,449
1,863
2,220
29
-
-
29
41
(5)
65
-
9
-
9
9
(3)
15
50
20
29
252
-
-
252
78
(82)
248
-
124
-
124
121
(85)
160
88
128
252
Fixed assets with the carrying value of £2,875k (2020: £3,503k) are pledged as security.
Total
£000
2,501
-
-
2,501
119
(179)
2,441
-
490
-
490
487
(123)
854
1,587
2,011
2,501
68
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
15. Intangible fixed assets
Goodwill
Marketing-
related assets
Cost
At 1 June 2019
Additions
At 31 May 2020
Additions
At 31 May 2021
Amortisation
At 1 June 2019
Impairment
At 31 May 2020
Impairment
At 31 May 2021
Net book value
At 31 May 2021
At 31 May 2020
At 31 May 2019
£000
1,049
8
1,057
61
1,118
-
8
8
61
69
1,049
1,049
1,049
£000
600
-
600
-
600
-
-
-
-
-
600
600
600
Total
£000
1,649
8
1,657
61
1,718
-
8
8
61
69
1,649
1,649
1,649
Marketing-related assets comprises of brand name and licences which have been measured at cost. Market-
related assets are expected to have an indefinite useful life. Goodwill of £1,049k (2020: £1,049k) relates to
the acquisition of Walker Holdings (Scotland) Limited and is subject to annual impairment reviews.
The recoverable amount of the marketing intangible has been determined based on a value in use calculation
using cash flow projections based on the actual results for Springfield company only for the year ended 31
May 2021 and the financial budget approved by the Board covering the period to 31 May 2022, with projected
cash flows for the years ending 31 May 2023 to 31 May 2025 based on a growth rate of 5% per annum.
The recoverable amount of the goodwill has been determined based on a value in use calculation using cash
flow projections based on the actual results for Walker Holdings (Scotland) Limited for the year ended 31
May 2021 and the financial budget approved by the Board covering the period to 31 May 2022, with projected
cash flows for the years ending 31 May 2023 to 31 May 2025 based on a growth rate of 0% per annum.
The discount rate applied to cash flows is 6% based on the market rate of interest applied previously to the
external loan discounting. As a result of the impairment review, there has been no impairment to the carrying
value of the intangible assets.
The Directors believe that any reasonably possible further change in the key assumptions on which the
recoverable amount is based would not cause the carrying amount to exceed the recoverable amount.
69
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
16. Fixed assets investments
Cost
Investment in joint ventures
2021
£000
-
-
2020
£000
202
202
On 1 June 2020, the remaining shares in DHHG 1 Limited were purchased for consideration of £264,502 and
as a result the DHHG 1 Limited balance sheet is now consolidated within the group accounts and there is no
investment held on the face of the balance sheet. The goodwill of £61,098 on acquisition was fully amortised
during the year ended 31 May 2021 (Note 15).
Movement in fixed asset investments
Cost
At 1 June 2019
Additions
Share of profit after tax and dividends
Repayment of loan from joint venture
At 31 May 2020
Reclassification to investment in subsidiary
At 31 May 2021
Investment
in joint
venture
£000
Loans to joint
venture
Total
£000
£000
674
-
(472)
-
202
(202)
-
807
21
-
(828)
-
-
-
1,481
21
(472)
(828)
202
(202)
-
The Group’s aggregate share of joint ventures at the year-end is as follows:
Profit before interest and tax
Interest
Taxation
Dividend
Loss after tax and dividends
Share of assets
Current assets
Share of liabilities
Liabilities due with one year
Share of net assets
2021
£000
-
-
-
-
-
2021
£000
-
-
-
2020
£000
852
(70)
(154)
(1,100)
(472)
2020
£000
419
(217)
202
70
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
17. Inventories
Work in progress
18. Trade and other receivables
Amounts falling due within one year
Trade receivables
Other receivables
Prepayments and accrued income
2021
£000
156,774
156,774
2020
£000
174,400
174,400
2021
£000
12,176
10,718
789
23,683
2020
£000
4,496
3,543
929
8,968
The Directors consider the carrying amount of the receivables approximates to their fair value.
The Group’s exposure to credit risk is limited by the fact that the Group generally receives cash at the point
of legal completion of its sales. There are certain categories of revenue where this is not the case; for
instance, housing association revenues or land sales where management considers that the ratings of these
various debtors are good and therefore credit risk is low. Loans to related parties have also been assessed
as low credit risk based on the expected profitability of their future contracts. The Group has low concentration
of credit risk, with exposure spread over a large number of customers and developments. The maximum
exposure to credit risk at 31 May 2021 is represented by the carrying amount of each financial asset.
Amounts falling due after one year
Shared equity receivables
Other receivables
Shared equity receivables
At 1 June 2020
Repaid during the year
Finance income
At 31 May 2021
2021
£000
365
5,046
5,411
2021
£000
415
(58)
8
365
2020
£000
415
4,484
4,899
2020
£000
548
(149)
16
415
Shared equity loan receivables comprise loans which were granted as part of sales transactions. They are
secured by way of a second ranking legal charge over the related property. The assets are recorded at fair
value, being the estimated future amount receivable by the Group, discounted to present day values. The
Directors review the future anticipated receipts from the assets at the end of each financial year. Credit risk,
which the Directors currently consider to be mitigated through holding a second legal charge over the assets,
is accounted for in determining fair values and appropriate discount factors are applied. The Directors review
the financial assets for impairment at each balance sheet date. The Directors expect an average maturity
profile of between 2 and 5 years from the balance sheet date.
71
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
19. Trade and other payables
Trade creditors
Other taxation and social security
Other creditors
Payments on account
Accruals and deferred income
2021
£000
22,514
880
4,158
3,206
20,888
51,646
2020
As
restated
£000
3,427
2,574
668
2,774
11,128
20,571
Revenue recognised in the year ended 31 May 2021 included £2,774k that was included in the contract
liability balance at 31 May 2020.
The Directors consider the carrying amount of the accounts payable approximates to their fair value.
20. Financial assets and liabilities
Assets
Financial assets at amortised cost
Total
Liabilities
Measured at amortised cost
Total
2021
£000
39,264
39,264
2021
£000
86,696
86,696
2020
£000
14,593
14,593
2020
£000
89,536
89,536
Included within loans and receivables is a loan to a related party which is valued at amortised cost. £355k
(2020: £252k) has been recognised as interest received in the profit and loss account. A market rate of
interest has been charged (Note 29).
The above amortised costs figures are deemed to be approximate to their fair values.
21. Bank borrowings
Secured borrowings:
Bank loans
Less: payable within one year
Payable after one year
2021
£000
34,000
34,000
34,000
-
2020
£000
69,000
69,000
18,000
51,000
The bank loan comprises of a revolving credit facility which was extended in September 2021 and is
repayable by January 2025 and is secured over certain of the Company's properties. The facility attracts an
interest rate of 2.15% per annum above the Bank of England Sonia (Sterling overnight index average
response rate). The amount payable within one year in the prior year related to a Term loan which was drawn
down on 24 April 2020 and repaid in full in April 2021, attracted an interest rate of 2.5% above the Bank of
England Base Rate.
72
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
22. Obligations under leases
Lease 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. Leases are stated at the present
value of the contractual payments due to the lessor over the lease term.
Future minimum payments due:
Not later than one year
After one year but not more than five years
After five years
Less finance charges allocated to future periods
Present value of minimum lease payments:
Not later than one year
After one year but not more than five years
After five years
23. Deferred taxation
The movement in the deferred taxation provision during the year was:
Provision brought forward
Timing differences
Change of rate
Prior year adjustment
Provision carried forward
Deferred tax liability
Deferred tax assets
The elements of deferred taxation are as follows:
Fixed asset timing differences
Other timing differences
2021
£000
897
1,506
692
3,095
(481)
2,614
760
1,251
603
2,614
2021
£000
2,210
(687)
844
14
2,381
2021
£000
2,920
(539)
2,381
2021
£000
-
2,381
2,381
2020
£000
1,369
1,783
963
4,115
(672)
3,443
1,188
1,441
814
3,443
2020
£000
2,147
72
(11)
2
2,210
2020
£000
2,413
(203)
2,210
2020
£000
68
2,142
2,210
73
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
24. Deferred consideration
As part of the purchase agreement of Walker Holdings (Scotland) Limited, there was a further £4,375,000 of
Deferred consideration payable. This can be broken down into: (i) £2,187,500 payable on the first
anniversary of the acquisition date (31 January 2020); (ii) £2,187,500 payable on the second anniversary of
the acquisition date (31 January 2021). The outstanding discounted amount payable at the period end is £nil
(2020: £2,107,289).
Deferred consideration
25. (a) Contingent consideration
2021
£000
-
-
2020
£000
2,107
2,107
As part of the purchase agreement of Walker Holdings (Scotland) Limited, there was a further £6,000,000
payable which is included within Provisions. £4,000,000 is payable when outline planning is granted at
Carlaverock and £2,000,000 payable when detailed planning is granted at Carlaverock with probability was
assessed at 98% and 95% respectively. The outstanding discounted amount payable at the year end is
£1,900,000 (2020: £1,796,486). The remaining £100,000 (5% on the £2,000,000 still to be paid) has been
treated as a contingent liability due to the uncertainty over the future payment.
As part of the purchase agreement of DHomes 2014 Limited there was a further £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 land being zoned
and have included provision of £2,000,000 based on 80% probability. The outstanding amount payable at
the period end included within Provisions is £2,000,000 (2020: £2,000,000). The remaining £500,000 (20%
on the £2,500,000 still to be paid) has been treated as a contingent liability due to the uncertainty over the
future payment.
Acquisition of DHomes 2014 Holdings Limited (“Dawn”)
Acquisition of Walker Holdings (Scotland) Limited (“Walker”)
2021
£000
2,000
1,900
3,900
2020
£000
2,000
1,797
3,797
25. (b) Provisions
Dilapidation provisions are included for all rented buildings within the Group. An onerous lease provision has
been created due to the closure of the Walker office in Livingston. Maintenance provisions relate to costs to
come on developments where the final homes have been handed over.
Dilapidation provision
Onerous lease provision
Maintenance provision
26. Share capital
2021
£000
185
200
825
1,210
2020
£000
-
-
210
210
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 share issue
costs.
Ordinary shares of 0.125p - allotted, called up
and fully paid
At 1 June 2020
Share issue
At 31 May 2021
Number of shares
Share capital
£000
97,860,963
4,216,563
102,077,526
122
6
128
Share
premium
£000
52,330
4,431
56,761
During the year 2,539,270 shares (2020: 30,660) were issued in satisfaction of share options exercised.
On 31 January 2021, 1,677,293 shares (2020: 1,480,742) were issued to satisfy the second anniversary
(2020: first anniversary) payment for Walker Holdings (Scotland) Limited as detailed in Note 24.
74
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
26. Share Capital (continued)
Share based payments
During the year the Group operated four 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, ESOP and Performance Share Plan (“PSP”) scheme. The PSP was introduced
during the year and under which key executives could be granted conditional “whole share” awards (i.e. rights
to acquire shares where the individual is required to pay a zero or negligible exercise price) the vesting of
which is normally conditional on both continued employment and the satisfaction of specified performance
measures.
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.
CSOP
Options at the beginning of the
year
Granted during the year
Lapsed during the year
Exercised during the year
Options at the year end
Share option
2021
2020
Number of
shares
Weighted
average
exercise
price (pence)
Number of
shares
Weighted
average
exercise price
(pence)
1,240,111
-
(41,451)
(396,915)
801,745
111.95
-
109.29
106.31
114.89
1,215,406
95,930
(71,225)
-
1,240,111
112.29
108.50
112.98
-
111.95
Grant Price
(p)
Number of
shares at year
end
Exercise price
(p)
Vesting
period
(years)
CSOP – 16th October 2017
CSOP – 8th December 2017
CSOP – 3rd May 2018
CSOP – 16th May 2018
CSOP – 1st October 2018
CSOP – 4th June 2019
106.00
111.00
134.00
134.00
122.50
108.50
405,558
27,027
22,388
132,396
151,400
62,976
106.00
111.00
134.00
134.00
122.50
108.50
3
3
3
3
3
3
75
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
26. Share capital (continued)
Share based payments (continued)
ESOP
Options at the start of the year
Lapsed during the year
Exercised during the year
Options at the year end
Share option
ESOP – 16th October 2017
ESOP – 3rd May 2018
ESOP – 16th May 2018
ESOP – 1st October 2018
SAYE
Options at the start of the year
Granted during the year
Lapsed during the year
Exercised during the year
Options at the year end
Share option
SAYE – 16th October 2017
SAYE – 29th April 2021
PSP
Options at start of the year
Granted during the year
Lapsed during the year
Options at the year end
Share option
PSP – 9th January 2020
PSP – 30th October 2020
2021
Number
of shares
2,167,027
(95,579)
(46,612)
2,024,836
Weighted
average
exercise
price (pence)
119.23
122.50
106.17
119.38
2020
Number of
shares
2,271,757
(104,730)
-
2,167,027
Weighted
average
exercise price
(pence)
119.29
120.51
-
119.23
Grant Price
(p)
106.00
134.00
134.00
122.50
Number of
shares at year
end
446,926
72,761
18,322
1,486,827
Exercise price
(p)
106.00
134.00
134.00
122.50
Vesting
period
(years)
3
3
3
3
2021
2020
Number of
shares
2,436,799
2,094,548
(242,609)
(2,095,743)
2,192,995
Weighted
average
exercise
price (pence)
84.80
130.50
84.80
84.80
128.45
Number of
shares
2,717,824
-
(250,365)
(30,660)
2,436,799
Weighted
average
exercise price
(pence)
84.80
-
84.80
84.80
84.80
Grant Price
(p)
112.00
145.00
Number of
shares at year
end
98,447
2,094,548
Exercise price
(p)
84.80
130.50
Vesting
period
(years)
3
3
2021
Number of
shares
376,936
648,422
(18,725)
1,006,633
Weighted
average
exercise
price (pence)
0.13
0.13
0.13
0.13
Number of
shares
-
376,936
-
376,936
Weighted
average
exercise price
(pence)
-
0.13
-
0.13
Grant Price
(p)
0.13
0.13
Number of
shares at year
end
358,211
648,422
Exercise price
(p)
0.13
0.13
Vesting
Period
(years)
3
3
76
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
26. Share capital (continued)
Share based payments (continued)
Inputs used to determine fair value of options
Expected volatility
Risk free interest rate
Expected dividends
Fair value of options
Charge per option
CSOP
ESOP
29.00%
0.49%
-
34.00p
32.00p
29.00%
0.49%
-
39.00p
37.00p
SAYE
29.00%
0.49%
-
37.00p
35.00p
PSP
7.50%
-1.18%
5.00%
131.13p
131.13p
Expected volatility was calculated using historical share price information of the house-building sector for the
CSOP and ESOP and the 12-month average Springfield share price prior to the grant of the PSP options.
CSOP – 396,915 (2020: nil) of options were exercised during the year and 587,369 (2020: nil) shares were
exercisable.
ESOP – 46,612 (2020: nil) of options were exercised during the year and 538,009 (2020: nil) shares were
exercisable.
SAYE – 2,095,743 (2020: 30,660) of options were exercised during the year and 15,668 (2020: nil) shares
were exercisable.
PSP - no share options have vested in the year and none can be exercised at the year-end.
Charge for share based incentive schemes
The total charge for the year relating to employee share-based plans were £493k (2020: £557k), all of which
related to equity-settled share-based payment transactions.
27. Cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents comprise the following as
at 31 May:
Cash at bank and in hand
2021
£000
15,826
15,826
2020
£000
1,522
1,522
At 31 May 2021, the Group had available £33,000k (2020: £16,000k) of undrawn committed borrowing
facilities.
28. 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.
77
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
29. 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.
29.1. 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.
29.2. Interest 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.
The responsibility for setting the level of fixed rate debt lies with the Board and is continually reviewed in the
light of economic data provided by a variety of sources.
Financial liabilities at fixed rate
Financial liabilities at floating rate
Non-interest-bearing financial liabilities
Interest rate sensitivity analysis
2021
£000
2,613
34,000
50,083
86,696
2020
£000
3,443
69,000
17,093
89,536
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 2021
Interest rate
–0.5%
£000
170
Interest rate
+0.5%
£000
(170)
Bank of England base rate
31 May 2020
Interest rate
–0.5%
£000
345
Interest rate
+0.5%
£000
(345)
(Loss) / profit
78
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
29. Financial risk management (continued)
29.2. Interest risk (continued)
Limitations of sensitivity analysis
The above tables demonstrate the effect of a change in a key assumption while other assumptions remain
unchanged. In reality, there is a correlation between the assumptions and other factors. It should also be
noted that these sensitivities are non-linear and larger or smaller impacts should not be interpolated or
extrapolated from these results. The sensitivity analysis does not take into consideration that the Group’s
assets and liabilities are actively managed. Additionally, the financial position of the Group may vary at the
time that any actual market movement occurs.
Other limitations in the above sensitivity analysis include the use of hypothetical market movements to
demonstrate potential risk that only represent the Group’s view of possible near-term market changes that
cannot be predicted and the assumption that all interest rates move in an identical fashion.
This analysis is for illustrative purposes only, as in practice market rates rarely change in isolation of other
factors that also affect Group’s financial position and results.
Management believe that fair value of the loans, borrowings and finance lease obligations approximates their
carrying amounts as the majority of obligations bear interest rates approximating market rates at 31 May
2021.
29.3.
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 leases. The Directors continually assess the balance of
capital and debt of the Group.
They consider the security of capital funding against the potentially higher rates of return offered by debt
financing in order to set an efficient but stable balance appropriate to the size of the Group.
The Board reviews projects against build programmes and contractual agreements to avoid any risk of
incurring contractual penalties or damaging the Group’s reputations, which would in turn reduce the Group’s
ability to borrow at optimal rates. Covenant tests are continually reviewed to ensure covenant criteria are met
in the event of deterioration in market conditions.
The maturity profile of the Group and parent Company’s financial liabilities based on contractual
undiscounted payments (including interest payments) is as follows:
31 May 2021
Accounts payable
Bank borrowings
Leases
Carrying
amount
£000
50,083
34,000
2,613
86,696
Total minimum
future
payment
£000
50,083
34,000
3,095
87,178
Within
1 year
£000
50,083
34,000
897
84,980
Within 1-2
years
£000
-
-
725
725
Within 2-5
years
£000
-
-
781
781
Greater
than
5 years
£000
-
-
692
692
79
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
29. Financial risk management (continued)
29.3. Liquidity risk (continued)
31 May 2020
Carrying
amount
£000
17,093
69,000
3,443
89,536
Total minimum
future payment
£000
17,093
69,000
4,115
90,208
Within
1 year
£000
17,093
18,000
1,369
36,462
Within 1-2
years
£000
-
51,000
828
51,828
Within 2-5
years
£000
-
-
954
954
Accounts payable
Borrowings
Leases
29.4
Credit risk
Greater
than
5 years
£000
-
-
964
964
The nature of Scotland’s housing industry and the legal framework surrounding it results in the Group having
a low exposure to 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 its level of trade receivables and following up when they
are overdue more than three months. The ageing profile of trade receivables was:
Current
Overdue 90 days
31 May 2021
31 May 2020
Total book
value
£000
9,815
202
10,017
Allowance for
impairment
£000
-
-
-
Total book
value
£000
2,686
128
2,814
Allowance for
impairment
£000
-
-
-
During the year, the Group had no charge for impairment for trade receivables.
The ageing profile of other receivables was:
Current
31 May 2021
31 May 2020
Total book
value
£000
18,288
18,288
Allowance for
impairment
£000
-
-
Total book
value
£000
10,125
10,125
Allowance for
impairment
£000
-
-
During the year, the Group had no charge for impairment for other receivables.
80
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
30. Transactions with related parties
Other related parties include transactions with a retirement schemes in which Directors and close family
members of key management personnel are beneficiaries. During the year dividends totalling £1,415k (2020:
£1,446k) 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:
Name of Director
Mr Sandy Adam
Mr Innes Smith
Ms Michelle Motion
Mr Matthew Benson
Mr Roger Eddie
Mr Colin Rae
Mr Nick Cooper
2021
£000
1,353
32
2
1
2
1
-
1,391
2020
£000
1,402
38
2
1
2
1
-
1,446
The remuneration of the key management personnel (PLC Directors and Group Directors) of Springfield
Properties PLC is set out below in aggregate for each of the categories specified in IAS 24 – Related Party
Disclosures:
Short-term employee benefits
Share-based payments
Post-employment benefits
During the year the Group entered into the following transactions with related parties:
Bertha Park Limited (1)
DHHG 1 Limited (2)
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
2021
£000
8,989
-
118
44
121
9,272
2020
£000
14,911
2,519
1,249
32
5
18,716
Sales to related parties represent those undertaken in the ordinary course of business.
2021
£000
3,539
356
181
4,076
2020
£000
2,314
186
175
2,675
Purchase of goods
2020
£000
-
-
2021
£000
-
-
33
-
313
346
232
-
-
232
Entities which key management personnel have
control, significant influence or hold a material
interest in
Key management personnel
Other related parties
Rent paid
2021
£000
176
11
128
315
2020
£000
153
3
104
260
81
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
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)
DHHG 1 Limited (2)
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)
James Adam
Other related parties
2021
£000
2020
£000
355
355
260
260
2021
£000
6,772
-
3
3
3
6,781
2020
£000
6,755
26
3
-
-
6,784
2021
£000
2020
£000
8
-
58
66
15
283
-
298
Amounts owed to/from related parties are included within creditors and debtors respectively at the year-end.
No security has been provided on any balances.
Transactions between Group companies have been eliminated on consolidation and are not disclosed in this
note.
(1) Bertha Park Limited is a Company in which Sandy Adam and Innes Smith are Directors. During the year the Group made sales to Bertha Park Limited of £8,989k (2020:
£14,911k) in relation to a build contract. At the year-end £1,772k (2020: £2,411k) is included in trade debtors and included within other debtors is a loan of £5,000k (2020:
£4,344k) at the year-end.
(2) During the year, DGGH 1 Limited became a wholly owned subsidiary therefore the transactions during the year are eliminated on consolidation. For the year ended 31
May 2021, DHHG 1 Limited was a jointly owned entity of Dawn Homes Limited, which Michelle Motion is a Director. Comparative figures show that the Group made sales
to DHHG 1 Limited totalling £2,519k in relation to a build contract and management fees.
31. Commitments and guarantees
In the ordinary course of the Group's business the Group is required to enter into performance bond
arrangements. At 31 May 2021, the Group had bonds of £28,500k (2020: £28,462k) provided by financial
institutions.
82
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2021
31. Commitments and guarantees (continued)
31.1. Capital commitments
Call and put options for the purchase of plots for development
32. Analysis of net debt
The Analysis of net debt is as follows:
Cash in hand and bank
Bank borrowings
Lease liability
Net debt
2021
£000
1,600
2020
£000
1,550
2021
£000
15,826
(34,000)
(18,174)
(2,613)
(20,787)
2020
£000
1,522
(69,000)
(67,478)
(3,443)
(70,921)
Reconciliation of net cashflow to movement in net debt is as follows:
At 1 June
2020
New
Leases
Cashflow
Fair Value
At 31 May
2021
£000
1,522
(69,000)
(3,443)
(70,921)
£000
£000
£000
£000
-
-
(525)
(525)
14,304
35,000
-
-
15,826
(34,000)
1,480
(125)
(2,613)
50,784
(125)
(20,787)
Cashin hand and bank
Bank Borrowings
Lease
Net Debt
83
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
COMPANY BALANCE SHEET
AS AT 31 MAY 2021
Non-current assets
Property, plant and equipment
Intangible assets
Investments
Deferred taxation
Trade and other receivables
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Bank term loan
Deferred consideration
Short-term
liabilities
Corporation tax
obligations
under
lease
Non-current liabilities
Long-term bank borrowings
Long-term obligations under lease liabilities
Contingent consideration
Provisions
Total liabilities
Net assets
Equity
Share capital
Share premium
Retained earnings
Total equity
Note
1
2
3
10
5
4
5
14
6
8
11
9
8
9
12
12
13
13
2021
£000
2,843
600
54,467
459
5,046
63,415
91,306
22,184
4,615
118,105
2020
As restated
(Note 2.1)
£000
4,166
600
54,467
124
4,484
63,841
99,194
14,791
794
114,779
181,520
178,620
55,961
34,000
-
166
428
90,555
-
1,149
3,900
950
5,999
96,554
84,966
128
56,761
28,077
19,456
18,000
2,107
486
361
40,410
51,000
1,347
3,797
210
56,354
96,764
81,856
122
52,330
29,404
84,966
81,856
As permitted by 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 £1,453,685 (2020: profit of £376,430).
These financial statements were approved by the Board of Directors on 13 September 2021.
Signed on behalf of the Board by:
Sandy Adam
Executive Chairman
Company number: SC031286
Company accounting policies are in line with Group – See Group Note 2. The accompanying notes on pages
87 to101 form an integral part of these financial statements
84
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
COMPANY STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 MAY 2021
Share
capital
£000
Share
premium
£000
Retained
earnings
£000
Notes
1 June 2019
Issue of share capital
Total comprehensive income
for the year
Dividends
Share based payments
31 May 2020
Issue of share capital
Total comprehensive income
for the year
Dividends
Share based payments
31 May 2021
13
120
2
-
-
-
122
6
-
-
-
128
50,118
2,212
-
-
-
52,330
4,431
-
-
-
56,761
31,554
-
376
(3,083)
557
29,404
-
1,454
(3,274)
493
28,077
Total
£000
81,792
2,214
376
(3,083)
557
81,856
4,437
1,454
(3,274)
493
84,966
The share capital account records the nominal value of shares issued.
The share premium account records the amount above the nominal value received for shares sold, less share
issue costs.
Retained earnings represents accumulated profits less losses and distributions. Retained earnings also
includes share based payments.
Company accounting policies are in line with Group – See Group Note 2
The accompanying notes on pages 87 to 101 form an integral part of these financial statements.
85
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
COMPANY STATEMENT OF CASH FLOWS
YEAR TO 31 MAY 2021
Cash flows generated from operations
Profit for the year
Adjusted for:
Exceptional items
Taxation charged
Finance costs
Finance income
Adjusted operating profit before working capital movement
Gain on disposal of tangible fixed assets
Exceptional items – cash movement
Depreciation and impairment of tangible fixed assets
Share based payments
Non-cash movement
Operating cash flows before movements in working capital
Decrease/(increase) in inventory
(Increase)/decrease in accounts and other receivables
Increase/(decrease) in accounts and other payables
Net cash generated from/(used in) operations
Taxation paid
Net cash inflow/(outflow) from operating activities
Investing activities
Purchase of property, plant and equipment
Proceeds on disposal of property, plant and equipment
Purchase of subsidiary Company
Interest received
Net cash used in investing activities
Financing activities
Proceeds from issue of shares
Proceeds from bank loans
Repayment of bank loans
Payment of lease liabilities
Dividends paid
Interest paid
Net cash (outflow)/inflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Note
1
11
1
10
13
17
17
17
Cash and cash equivalents at end of year
14
2021
£000
1,453
409
94
1,465
(355)
3,066
(32)
(409)
1,225
493
81
4,424
7,505
(11,501)
45,316
45,744
(3,957)
41,787
(135)
2
-
-
(133)
2,249
-
(35,000)
(573)
(3,274)
(1,235)
(37,833)
3,821
794
4,615
Company accounting policies are in line with Group – See Group Note 2
The accompanying notes on pages 87 to 101 form an integral part of these financial statements.
2020
£000
377
342
289
2,116
(273)
2,851
-
(262)
1,306
557
550
5,002
(20,125)
5,407
(18,039)
(27,755)
(891)
(28,646)
(446)
1
(4,000)
33
(4,412)
26
38,000
-
(714)
(3,083)
(1,542)
32,687
(371)
1,165
794
86
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2021
1.
Property, plant and equipment
Property, plant and equipment
Right of use assets
Total property, plant and equipment
2021
£000
1,643
1,200
2,843
Land and
buildings
£000
Plant and
machinery
£000
Fixtures,
fittings &
equipment
£000
Cost
At 1 June 2019
Additions
Disposals
At 31 May 2020
Additions
Disposals
At 31 May 2021
Accumulated depreciation
At 1 June 2019
Depreciation charge
Disposals
At 31 May 2020
Depreciation charge
Disposals
At 31 May 2021
Net book value
At 31 May 2021
At 31 May 2020
At 31 May 2019
681
299
-
980
6
-
986
73
21
-
94
27
-
121
865
886
608
3,521
1
(15)
3,507
-
(1,286)
2,221
1,255
855
(4)
2,106
761
(1,084)
1,783
438
1,401
2,266
2020
£000
2,669
1,497
4,166
Total
£000
5,751
458
(16)
6,193
135
1,549
158
(1)
1,706
129
(45)
(1,331)
1,790
4,997
1,161
163
-
1,324
170
(44)
2,489
1,039
(4)
3,524
958
(1,128)
1,450
3,354
340
382
388
1,643
2,669
3,262
87
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2021
1.
Property, plant and equipment (continued)
Right of use assets
Land and
buildings
£000
Fixtures,
fittings &
equipment
£000
Cost
At 1 June 2019
Additions
Disposals
At 31 May 2020
Additions
Disposals
At 31 May 2021
Accumulated depreciation
At 1 June 2019
Depreciation charge
Disposals
At 31 May 2020
Depreciation charge
Disposals
At 31 May 2021
Net book value
At 31 May 2021
At 31 May 2020
At 31 May 2019
2.
Intangible fixed assets
Cost
1 June 2019 and 31 May 2020
Additions
At 31 May 2021
Amortisation
At 1 June 2019 and 31 May 2020 and 31 May 2021
Net book value
At 31 May 2021
At 1 June 2019 and 31 May 2020
1,736
-
-
1,736
-
(92)
1,644
-
259
-
259
258
(35)
482
1,162
1,477
1,736
29
-
-
29
29
(5)
53
-
9
-
9
9
(3)
15
38
20
29
Total
£000
1,765
-
-
1,765
29
(97)
1,697
-
268
-
268
267
(38)
497
1,200
1,497
1,765
Marketing-related
assets
£000
600
-
600
-
600
600
88
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2021
2.
Intangible fixed assets (continued)
Marketing-related assets comprises of brand name and licences which have been measured at cost. Market-
related assets are expected to have an indefinite useful life. The recoverable amount of the marketing
intangible has been determined based on a value in use calculation using cash flow projections based on
the actual results for Springfield company only for the year ended 31 May 2021 and the financial budget
approved by the Board covering the period to 31 May 2022, with projected cash flows for the years ending
31 May 2023 to 31 May 2025 based on a growth rate of 5% per annum.
The discount rate applied to cash flows is 6% based on the market rate of interest applied previously to the
external loan discounting. As a result of the impairment review, there has been no impairment to the carrying
value of the intangible assets. The Directors believe that any reasonably possible further change in the key
assumptions on which the recoverable amount is based would not cause the carrying amount to exceed the
recoverable amount.
3.
Fixed asset investments
Cost
Investment in subsidiaries
Provision for impairment
Impairment
Net book value
2021
£000
2020
£000
91,467
91,467
(37,000)
(37,000)
54,467
54,467
Impairment is as a result of a £37,000k dividend from Walker Holdings (Scotland) Limited in the month after
acquisition.
Movement in fixed asset investments
Cost
At 1 June 2019
Additions
At 31 May 2020 and 31 May 2021
Provisions for impairment
At 1 June 2019
Impairment
At 31 May 2020 and 31 May 2021
Net book value
At 31 May 2020 and 31 May 2021
At 31 May 2019
Share in
Group
undertakings
£000
91,431
36
91,467
(37,000)
-
(37,000)
54,467
54,431
Total
£000
91,431
36
91,467
(37,000)
-
(37,000)
54,467
54,431
89
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2021
3. Fixed asset investments (continued)
Details of the Company’s subsidiaries and jointly owned entities at 31 May 2021 are as follows:
Name of undertaking
Nature of business
Class of
shares held
% Held
Glassgreen Hire Limited
Hire of plant and machinery
Ordinary
100%
DHomes 2014 Holdings Limited
Holding Company
Ordinary
100%
Dawn Homes Limited *
DHPL Limited *
Housebuilder/
Construction
Ordinary
100%
Buying and selling of own real
estate
Ordinary
100%
Walker Holdings (Scotland) Limited
Walker Group (Scotland) Limited *
Housebuilder/
Construction
Housebuilders/
property development/
management services
Ordinary
100%
Ordinary
100%
Walker Contracts (Scotland) Limited * Dormant
Ordinary
100%
Craig Developments Limited *
Sale of residential property
Ordinary
100%
SP SUB 2018 Limited
Dormant
Ordinary
100%
DHHG 1 Limited *
Housebuilder/
Construction
Ordinary
100%
*Indirectly held
All of the above have a registered office address of:
Alexander Fleming House 8 Southfield Drive Elgin, Morayshire IV30 6GR
90
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2021
4.
Inventories
Work in progress
5.
Trade and other receivables
Amounts falling due within one year
Trade receivables
Other receivables
Amounts recoverable on contracts
Amounts due from Group undertakings
Prepayments and accrued income
2021
£000
91,306
91,306
2020
£000
99,194
99,194
2021
£000
9,197
7,687
2,524
2,344
432
22,184
2020
£000
2,708
3,089
1,682
6,779
533
14,791
The Directors consider the carrying amount of the receivables approximates to their fair value.
The Company’s exposure to credit risk is limited by the fact that the Company 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. The Company has low
concentration of credit risk, with exposure spread over a large number of customers and developments. The
maximum exposure to credit risk at 31 May 2021 is represented by the carrying amount of each financial
asset.
Amounts falling due after one year
Other receivables
6.
Trade and other payables
Trade creditors
Other taxation and social security
Other creditors
Amounts due to Group undertakings
Payments on account
Accruals and deferred income
2021
£000
5,046
5,046
2021
£000
16,708
739
308
23,304
3,206
11,696
55,961
2020
£000
4,484
4,484
2020
As
restated
£000
2,167
1,836
195
5,774
2,774
6,710
19,456
The Directors consider the carrying amount of the accounts payable approximates to their fair value.
91
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2021
7.
Financial assets and liabilities
Assets
Financial assets at amortised cost
Total
Liabilities
Measured at amortised cost
Total
2021
£000
31,413
31,413
2021
£000
90,090
90,090
2020
£000
19,536
19,536
2020
£000
88,451
88,451
Included within financial assets is a loan to a related party which is valued at amortised cost. £355k (2020:
£252k) has been recognised as interest received in the profit and loss account. Market rate interest has been
used (Note 16).
8.
Bank borrowings
Secured borrowings:
Bank loans
Less: payable within one year
Payable after one year
2021
£000
34,000
34,000
(34,000)
-
2020
£000
69,000
69,000
(18,000)
51,000
The bank loan comprises of a revolving credit facility which was extended in September 2021 and is
repayable by January 2025 and is secured over certain of the Company's properties. The facility attracts an
interest rate of 2.15% per annum above the Bank of England Sonia (Sterling overnight index average
response rate). The amount payable within one year in the prior year related to a Term loan which was drawn
down on 24 April 2020 and repaid in full in April 2021, attracted an interest rate of 2.5% above the Bank of
England Base Rate.
92
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2021
9.
Obligations under leases
Lease payments represent rentals payable by the Company for certain items of plant and machinery and
buildings 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. Leases are
stated at the present value of the contractual payments due to the lessor over the lease term.
Future minimum payments due:
Not later than one year
After one year but not more than five years
After five years
Less finance charges allocated to future
periods
Present value of minimum lease payments
is:
Not later than one year
After one year but not more than five years
After five years
10.
Deferred taxation
¤
¤
¤
¤
¤
¤
¤
¤
¤
¤
¤
¤
¤
2021
£000
242
2020
£000
592
762
693
1,697
882
849
2,323
(382)
1,315
(490)
1,833
166
486
547
602
1,315
629
718
1,833
2019
£000
93
(149)
(56)
Profit &
loss
account
£000
-
(68)
(68)
2020
£000
93
(217)
(124)
Profit &
loss
account
£000
(187)
(148)
(335)
2021
£000
459
459
2021
£000
(94)
(365)
(459)
2020
£000
124
124
Fixed assets –
differences
Other
differences
–
temporary
temporary
Deferred tax assets
11.
Deferred consideration
As part of the purchase agreement of Walker Holdings (Scotland) Limited, there was a further £4,375,000 of
Deferred consideration payable. This can be broken down into: (i) £2,187,500 payable on the first
anniversary of the acquisition date (31 January 2020); (ii) £2,187,500 payable on the second anniversary of
the acquisition date (31 January 2021) – see Note 13. The outstanding discounted amount payable at the
period end is £nil (2020: £2,107,289).
Deferred consideration
2021
£000
-
-
2020
£000
2,107
2,107
93
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2021
12. (a) Contingent consideration
As part of the purchase agreement of Walker Holdings (Scotland) Limited, there was a further £6,000,000
payable which is included within Provisions. £4,000,000 is payable when outline planning is granted at
Carlaverock and £2,000,000 payable when detailed planning is granted at Carlaverock, the probability of
which was assessed at 98% and 95% respectively. The outstanding amount payable at the period end is
£1,900,000 (2020: £1,796,486). The remaining £100,000 (5% on the £2,000,000 still to be paid) has been
treated as a contingent liability due to the uncertainty over the future payment. As part of the purchase
agreement of DHomes 2014 Limited there was a further £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 land being zoned and have included provision
of £2,000,000 based on 80% probability. The outstanding amount payable at the period end included within
Provisions is £2,000,000 (2020: £2,000,000). The remaining £500,000 (20% on the £2,500,000 still to be
paid) has been treated as a contingent liability due to the uncertainty over the future payment.
Acquisition of DHomes 2014 Holdings Limited (“Dawn”)
Acquisition of Walker Holdings (Scotland) Limited (“Walker”)
2021
£000
2,000
1,900
3,900
2020
£000
2,000
1,797
3,797
12. (b) Provisions
Dilapidation provisions are included for all rented buildings. Maintenance provisions relate to costs to come
on developments where the final homes have been handed over.
Dilapidation provision
Maintenance provision
13. Share capital
2021
£000
125
825
950
2020
£000
-
210
210
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 share
issue costs.
Ordinary shares of 0.125p - allotted, called up
and fully paid
Number of
shares
Share capital
£000
Share premium
£000
At 1 June 2020
Share issue
At 31 May 2021
97,860,963
4,216,563
102,077,526
122
6
128
52,330
4,431
56,761
During the year 2,539,270 shares (2020: 30,660) were issued in satisfaction of share options exercised.
On 31 January 2021, 1,677,293 shares (2020: 1,480,742) were issued to satisfy the second anniversary
payment (2020: first anniversary payment) for Walker Holdings (Scotland) Limited.
Share based payments
During the year the Company operated four share based schemes.
Share related share options scheme
The Company 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.
94
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2021
13.
Share capital (continued)
Share based payments (continued)
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, ESOP and Performance Share Plan (“PSP”) scheme. The PSP was introduced
during the year and under it key executives could be granted conditional “whole share” awards (i.e. rights to
acquire shares where the individual is required to pay a zero or negligible exercise price) the vesting of which
is normally conditional on both continued employment and the satisfaction of specified performance
measures.
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 of the CSOP and ESOP.
CSOP
Options at the beginning of the
year
Granted during the year
Lapsed during the year
Exercised during the year
Options at the year end
Share option
CSOP – 16th October 2017
CSOP – 8th December 2017
CSOP – 3rd May 2018
CSOP – 16th May 2018
CSOP – 1st October 2018
CSOP – 4th June 2019
ESOP
Options at the beginning of the
year
Lapsed during the year
Exercised during the year
Options at the year end
Number
of shares
1,240,111
-
(41,451)
(396,915)
801,745
2021
Weighted
average
exercise price
(pence)
Number
of shares
2020
Weighted
average
exercise price
(pence)
111.95
-
109.29
106.31
114.89
1,215,406
95,930
(71,225)
-
1,240,111
Grant Price
(p)
106.00
111.00
134.00
134.00
122.50
108.50
Number of
shares at year
end
405,558
27,027
22,388
132,396
151,400
62,976
Exercise price
(p)
106.00
111.00
134.00
134.00
122.50
108.50
112.29
108.5
112.98
-
111.95
Vesting
period
(years)
3
3
3
3
3
3
Number
of shares
2,167,027
(95,579)
(46,612)
2,024,836
2021
Weighted
average
exercise price
(pence)
Number
of shares
2020
Weighted
average
exercise price
(pence)
119.23
122.50
106.17
119.38
2,271,757
(104,730)
-
2,167,027
119.29
120.51
-
119.23
95
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2021
13.
Share capital (continued)
Share based payments (continued)
Share option
ESOP – 16th October 2017
ESOP – 3rd May 2018
ESOP – 16th May 2018
ESOP – 1st October 2018
SAYE
Grant Price
(p)
106.00
134.00
134.00
122.50
Number of
shares at year
end
446,926
72,761
18,322
1,486,827
Exercise price
(p)
106.00
134.00
134.00
122.50
Vesting
period
(years)
5
5
5
5
2021
2020
Number
of shares
Weighted
average
exercise price
(pence)
Number
of shares
Weighted
average
exercise price
(pence)
Options at the beginning of
the year
Granted during the year
Lapsed during the year
Exercised during the year
Options at the year end
2,436,799
2,094,548
(242,609)
(2,095,743)
2,192,995
84.80
130.50
84.80
84.80
128.45
2,717,824
-
(250,365)
(30,660)
2,436,799
Share option
SAYE – 16th October 2017
SAYE – 29th April 2021
Grant Price
(p)
112.00
145.00
Number of
shares at year
end
98,447
2,094,548
Exercise price
(p)
84.80
130.50
84.80
-
84.80
84.80
84.80
Vesting
period
(years)
3
3
PSP
2021
2020
Number
of shares
Weighted
average
exercise price
(pence)
Number
of shares
Weighted
average
exercise price
(pence)
Options at the beginning of
the year
Granted during the year
Lapsed during the year
Options at the year end
Share option
PSP – 9th January 2020
PSP – 30th October 2020
376,936
648,422
(18,725)
1,006,633
Grant Price
(p)
0.13
0.13
0.13
0.13
0.13
0.13
-
376,936
-
376,936
Number of
shares at year
end
358,211
648,422
Exercise price
(p)
0.13
0.13
-
0.13
-
0.13
Vesting
Period
(years)
3
3
96
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2021
13.
Share capital (continued)
Share based payments (continued)
Inputs used to determine fair value of options
Expected volatility
Risk free interest rate
Expected dividends
Fair value of options
Charge per option
CSOP
ESOP
29.00%
0.49%
-
34.00p
32.00p
29.00%
0.49%
-
39.00p
37.00p
SAYE
29.00%
0.49%
-
37.00p
35.00p
PSP
28.56%
-0.10%
5.00%
131.13p
131.13p
Expected volatility was calculated using historical share price information of the house-building sector for the
CSOP, ESOP and SAYE and the 12 month average Springfield share price prior to the grant of the PSP
options.
CSOP – 396,915 (2020 - nil) of options were exercised during the year and 587,369 (2020: nil) shares were
exercisable.
ESOP – 46,612 (2020 - nil) of options were exercised during the year and 538,009 (2020: nil) shares were
exercisable.
SAYE – 2,095,743 (2020 – 30,660) of options were exercised during the year and 15,668 (2020: nil) shares
were exercisable.
PSP - no share options have vested in the year and none can be exercised at the year-end.
Charge for share based incentive schemes
The total charge for the year relating to employee share-based plans were £493k (2020: £557k), all of which
related to equity-settled share-based payment transactions.
14.
Cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents comprise the following as
at 31 May:
Cash at bank and in hand
2021
£000
4,615
4,615
2020
£000
794
794
At 31 May 2021, the Company had available £33,000k (2020: £16,000k) of undrawn committed borrowing
facilities.
97
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2021
15.
Capital risk management
The Company manages its capital to ensure that the Company 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 Company consists of issued capital, reserves and retained earnings, all as
disclosed in the balance sheet. The Company is not subject to externally imposed capital requirements other
than those included, from time to time, in the financial covenants associated with bank borrowing.
16.
Financial risk management
The Company is exposed to a variety of financial risks which result from both its operating and investing
activities. The Company’s risk management is coordinated by the Board of Directors, and focuses on actively
securing the Company’s short to medium term cash flows by minimising the exposure to financial markets.
16.1 Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will
affect the Company’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 Company’s exposure to the interest rate risk relates primarily to its
floating rate borrowings.
The responsibility for setting the level of fixed rate debt lies with the Board and is continually reviewed in the
light of economic data provided by a variety of sources.
Financial liabilities at fixed rate
Financial liabilities at floating rate
Non-interest-bearing financial liabilities
Interest rate sensitivity analysis
2021
£000
1,315
34,000
54,775
90,090
2020
£000
1,833
69,000
17,618
88,451
The table below details the Company’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 2021
Bank of England base rate
31 May 2020
Interest rate
+0.5%
£000
(170)
Interest rate
-0.5%
£000
170
Interest rate
+0.5%
£000
(345)
Interest rate
-0.5%
£000
345
(Loss) / profit
98
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2021
16.
Financial risk management (continued)
16.1 Market risk (continued)
Limitations of sensitivity analysis
The above tables demonstrate the effect of a change in a key assumption while other assumptions remain
unchanged. In reality, there is a correlation between the assumptions and other factors. It should also be
noted that these sensitivities are non-linear and larger or smaller impacts should not be interpolated or
extrapolated from these results. The sensitivity analysis does not take into consideration that the Company’s
assets and liabilities are actively managed. Additionally, the financial position of the Company 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 Company’s view of possible near-term market changes
that cannot be predicted and the assumption that all interest rates move in an identical fashion.
Limitations of sensitivity analysis (continued)
This analysis is for illustrative purposes only, as in practice market rates rarely change in isolation of other
factors that also affect the Company’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
2021.
16.2 Liquidity risk
Liquidity risk is the risk that the Company will be unable to meet its liabilities as they fall due. The Company’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 Directors continually assess
the balance of capital and debt of the Company. They consider the security of capital funding against the
potentially higher rates of return offered by debt financing in order to set an efficient but stable balance
appropriate to the size of the Company.
The Board reviews projects against build programmes and contractual agreements to avoid any risk of
incurring contractual penalties or damaging the Company’s reputation, which would in turn reduce the
Company’s ability to borrow at optimal rates. Covenant tests are continually reviewed to ensure covenant
criteria are met in the event of deterioration in market conditions.
The maturity profile of the Company’s financial liabilities based on contractual undiscounted payments
(including interest payments) is as follows:
31 May 2021
Accounts
payable
Bank
borrowings
Leases
Carrying
amount
£000
Total minimum
future payment Within 1 year
£000
£000
Within 1-2
years
£000
Within 2-5
years
£000
54,775
34,000
1,315
90,090
54,775
54,775
34,000
1,697
90,472
34,000
242
89,017
-
-
214
214
-
-
548
548
Greater
than 5
years
£000
-
-
693
693
99
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2021
16.
Financial risk management (continued)
16.2 Liquidity risk (continued)
Carrying
amount
£000
Total minimum
future payment Within 1 year
£000
£000
Within 1-2
years
£000
Within 2-5
years
£000
17,618
69,000
1,833
88,451
17,618
17,618
-
69,000
18,000
51,000
2,323
88,941
592
36,210
313
51,313
-
-
569
569
Greater
than 5
years
£000
-
-
849
849
31 May 2020
Accounts
payable
Bank
borrowings
Leases
16.3 Credit risk
Credit risk is the risk that a customer may default or not meet its obligations to the Company on a timely
basis, leading to financial losses to the Company.
The Company’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 Company.
The Company manages credit risk by actively monitoring the level of trade receivables and following up when
they are overdue more than three months.
The ageing profile of trade receivables was:
Current
Overdue 90 days
31 May 2021
31 May 2020
Total book
value
£000
9,043
154
9,197
Allowance for
impairment
£000
-
-
-
Total book
value
£000
2,595
113
2,708
Allowance for
impairment
£000
-
-
-
During the year, the Company had no allowance for impairment for trade receivables.
The ageing profile of other receivables was:
Current
31 May 2021
31 May 2020
Total book
value
£000
15,211
15,211
Allowance for
impairment
£000
-
-
Total book
value
£000
9,114
9,114
Allowance for
impairment
£000
-
-
During the year the Company had no allowance for impairment for other receivables.
100
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2021
17.
Analysis of net debt
The analysis of net debt is as follows:
Cash in hand and bank
Bank borrowings
Lease liability
Net debt
2021
£000
4,615
(34,000)
(29,385)
(1,315)
(30,700)
Reconciliation of net cashflow to movement in net debt is as follows:
At 1 June
2020 New Leases
Cashflow
Fair Value
£000
794
(69,000)
(1,833)
(70,039)
£000
-
-
(28)
(28)
£000
3,821
35,000
573
39,394
£000
-
-
(27)
(27)
Cashin hand and bank
Bank Borrowings
Lease
Net Debt
2020
£000
794
(69,000)
(68,206)
(1,833)
(70,039)
At 31 May
2021
£000
4,615
(34,000)
(1,315)
(30,700)
101