Company Registration No. SC031286 (Scotland)
SPRINGFIELD PROPERTIES PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2022
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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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”, “The Springfield Group” or the “Group”) for the year ended 31 May 2022.
FINANCIAL HIGHLIGHTS
FOR THE YEAR ENDED 31 MAY 2022
Group
Revenue
Group
Completions
Group
Adjusted
PBT*
2022:
1,242 homes
2022:
£20.8m
Private
Homes
Revenue
2022:
£174.5m
Affordable
Homes
Revenue
Contracting
Homes
Revenue
2022:
£64.3m
2022:
£16.5m
2021: 973
2021: £18.5m
2021: 138.6m
2021: £52.9m
2021: £8.1m
2022:
£257.1m
2021: 216.7m
Group
Revenue
Gross profit
Gross margin
Adjusted profit before tax*
Statutory profit before tax
Earnings per share
Net debt**
2021/22
£m
257.1
43.1
16.8%
20.8
19.7
14.74p
38.1
2020/21
£m
216.7
38.8
17.9%
18.5
17.9
13.79p
20.8
Change
%
+18.6%
+11.1%
-110bps
+12.4%
+10.1%
+6.9%
+83.2%
*Adjusted profit before tax excludes exceptional items detailed at Note 10.
** Net debt is defined as long term bank borrowings plus long-term obligations under lease liabilities plus
short term obligations under lease liabilities less cash and cash equivalents.
Strategic and Operational Highlights
Land bank 16,652 plots – 52.1% with planning achieved
Highest ever annual turnover and substantial increase in profit before tax
Gross development value of land bank of £3.5bn
Development of our first ESG Strategy, which launched post period
Acquisition of Tulloch Homes Group
Post year end acquisition of Mactaggart & Mickel's Scottish housebuilding business
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SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
EXECUTIVE CHAIRMAN’S STATEMENT
FOR THE YEAR ENDED 31 MAY 2022
This is the fifth set of annual accounts that we have published since we floated on AIM in 2017. I am delighted
with the progress that we are able to present. In five years, we have increased our turnover by 132.5% to
£257.1m, our profit before tax and exceptional items by 210.4% to £20.8m and our profit before tax by 194.0%
to £19.7m. We have also grown our land bank by 34% to 16,652 plots at 31 May 2022.
This year has seen excellent growth for the Springfield Group with significant revenue growth across the
business. Our build and private sales activity has remained strong throughout the year and we have
continued to execute on our growth strategy – most notably, with the acquisition of Tulloch Homes during the
year and, post year-end, of the Scottish housebuilding business of Mactaggart & Mickel. We also reached
another milestone during the year with the first families moving into homes we have developed for the private
rented sector (“PRS”) with Sigma Capital plc (“Sigma”). Whilst achieving record growth in revenue from
affordable housing in the year, the inflationary pressures impacting fixed price contracts in affordable housing
delivery across the industry have resulted in a reassessment of cost projections in that part of the business
in the short term and steps are being taken to manage that going forward.
Today, we are a business with almost 900 employees, with developments in all key regions of Scotland, and
delivering a range of housing across every tenure. We are one of the largest housebuilders in Scotland, with
the Springfield Group now operating through six well-established and respected brands: Springfield (private
housing), Springfield Partnerships (our affordable and PRS housing business), Dawn Homes, Walker Group,
Tulloch Homes and Mactaggart & Mickel. We are proud that we have been recognised by both customers
and the industry and in particular, were delighted to be awarded Housebuilder of the Year at the Scottish
Home Awards 2022.
While the scale of our business has increased substantially, our values and our culture have been sustained.
At our core, we believe that everyone in Scotland deserves a good home, and our entire business is
underpinned by a strong ethos of building quality homes and looking after our customers, our employees,
our sub-contractors and the communities in which we operate. To this end, we have taken significant steps
to formalise our activities into a defined ESG Strategy that we have published alongside this report.
People
Since establishing Springfield and throughout its journey of growth, our ethos as a quality employer has been
at the fore. We care for our employees and pride ourselves in creating an environment where everyone can
thrive. We are particularly proud to pay males and females the same, having effectively closed the pay gap
(as disclosed in our Gender Pay Gap Report published in February 2022). In addition, over 54% of employees
are signed up to our Save As You Earn (SAYE) scheme, which is well above the industry average of 28%
and a great testament to the motivation of our employees towards the aims of the Company.
We have a great package of benefits for our employees to ensure that we retain, reward and support, as well
as attract, the best people. We have now introduced private medical insurance to all of our employees no
matter where they work in the business – whether on site, in a sales office, at our kit factories or in our offices.
Looking after the mental health of our employees is also firmly on our radar, with mental health awareness
courses being offered to all employees and some of those who have done the course going on to be fully
trained as mental health first aiders. Going forward, we have committed to offer mental health first aid courses
annually. In addition to this, we have entered into a partnership with The Lighthouse Club, a mental health
support charity exclusively for those within the construction sector and their families.
As a Group, we are a major employer in the housebuilding industry across all of Scotland. We have extensive
expertise in the sector and believe we have a responsibility to support the next generation to develop their
own skills and forge their career paths. As we continue to expand as a business, the development of
employees during their early years only grows in importance and we have committed significant investment
into the training of our people. Over the years, we have supported hundreds of people to achieve their
qualifications and today we operate one of the largest apprentice programmes in Scotland. This year, 151
employees (nearly 20%) were undertaking an apprenticeship or formal education with Springfield at 31 May
2022.
During the pandemic, apprenticeship figures across the industry dropped significantly. However, through our
community engagement efforts and involvement with schools, interest in Springfield’s programme remained
strong. Since 2009, we are proud to have supported over 200 young people to achieve a vocational
qualification and this year marks our largest apprenticeship to date with over 30 apprentices joining the Group
in one intake.
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SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
EXECUTIVE CHAIRMAN’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
Markets
The demand for the type of housing that we offer remains strong. Across our brands, we provide an excellent
product in highly desirable areas. Families continue to be particularly attracted to spacious homes with added
room to work and entertain and with private gardens and plenty of access to green space. There also remains
an undersupply of housing in Scotland, which can only be satisfied through the building of new homes.
In private housing, our core business, the demand continues to be supported by a competitive mortgage
market. New build homes are increasingly attractive to lenders who are keen to support the delivery of higher
energy efficient homes as part of their own contribution towards the road to net zero. Notably, we have seen
national lenders offer discounted interest rates for higher energy performance and higher loan to value
mortgages on new builds to make greener homes more attainable for first time buyers, reflecting the
attractiveness of the significantly lower running costs of new build homes, particularly given the current high
energy prices.
Key differences between the Scottish legal system and the rest of the UK continue to result in us having
strong visibility over the homes we deliver. The Scottish missive system, which ensures that customers are
contracted into the purchase much earlier in the build programme, supports supply chain management,
reduces risk and also enables buyers to customise their homes at an early stage in the build process.
Building affordable homes transforms lives. This year marks our 20th year in the delivery of affordable homes
for Scotland and I am exceptionally proud of what this part of our business has achieved. Whilst demand
remains extremely strong with 178,000 applicants on Local Authority housing lists, the inflationary and
regulatory environments are impacting the ability of the industry to deliver new homes for these tenures. The
level of price inflation for materials and labour being experienced poses challenges for our affordable
business given the fixed price nature of our contracts. We have reassessed the costs to completion for our
ongoing affordable housing projects, taking a prudent approach to anticipated cost changes. We are also
being cautious about entering new, large, long-term affordable-only contracts until conditions normalise.
In addition, the Scottish Government’s ‘Programme for Government’ announced earlier this month, that
emergency legislation to protect tenants will be introduced thereby freezing rents and imposing a moratorium
on evictions until at least 31 March 2023, has put on hold the Group’s strategy to expand its PRS activity with
Sigma at this time. However, this regulatory change is temporary, designed to support families facing fuel
poverty this winter, and we believe opportunities in PRS housing remain significant.
The Scottish Government’s target to deliver 110,000 energy efficient affordable homes by 2032 continues to
provide the long-term commitment that will allow the Group to build on its strong partnerships with local
authorities and housing associations. In addition, an inflation-based review of the Scottish Government’s
affordable housing investment benchmarks, which determine the amount of grant available to our partners
for each affordable home built, is expected to be announced in November 2022. With a strong lobby pointing
to the current challenges and the resultant impact on housing supply in Scotland, there is pressure on the
Scottish Government to respond.
Supporting thriving communities
At Springfield, the concept of sustainable community is at our core. Across all our developments we are
committed to doing all we can to create sustainable communities for families to enjoy for years to come. We
engage and consult the local community and residents at all stages of development from planning to post
build. During the year, we strengthened our community engagement with the appointment of a dedicated
Community Engagement Co-ordinator whose primary focus is to ensure residents feel part of their
neighbourhood and is a point of contact for all members of the community.
The creation of sustainable communities is most evident at our Springfield Village developments, designed
with housing across a variety of tenures and with everything a community needs to thrive, including local
shops and green spaces. All of our Villages are thriving and we continuously take action to support the growth
of our Village communities.
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SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
EXECUTIVE CHAIRMAN’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
Key to creating sustainable communities is engagement with the generations to come, and we are particularly
strong in our engagement with local schools. We are committed to raising awareness of career opportunities
within housebuilding, supporting the development of practical skills such as preparing school leavers for the
recruitment processes and mentoring young people who are seeking additional support or work experience
in their transition from school or further education into the workplace. This is in addition to our apprenticeship
scheme.
We also continued our charitable activities, donating £49,154 to local charities and community groups during
the year. As we ramp up our engagement with local communities, we will be increasing our commitment to
supporting community groups and charities across Scotland.
Our commitment to Environmental, Social, Governance (ESG)
Springfield has always been committed to sustainability and already has an excellent reputation within the
sector as a progressive builder.
During the year, and since year-end, we have taken considerable steps to formalise our approach to ESG
and to bring together all the good practice from across the brands and regions, whilst also challenging
ourselves to continue to improve. We undertook a rigorous process to determine our strategic objectives and
priorities across the ESG spectrum, identifying those that are critical to the future success of our organisation
and important to our varied stakeholders. Alongside this, we developed clear goals for moving forward and
a framework for measuring and reporting performance.
This has culminated in the publication, alongside this annual report, of our first ESG strategy with a focus on
environment and people. Our CEO is leading a new, dedicated ESG Committee of the Board to ensure
delivery of this strategy is led from the top, and we look forward to offering you an update on progress with
our results each year.
Dividends
During the year to 31 May 2022, we made £4.6m in dividend payments relating to the distribution for the prior
year. We were also pleased to pay an interim dividend of 1.5 pence (£1.8m) in April 2022 and to now propose
a final dividend for 2022 of 4.7 pence per ordinary share, an increase of 15% and 6% over the interim and
final dividends for 2021 respectively. This takes total dividends for the year to 6.2 pence (2021: 5.8 pence),
and an increase of 7.8% over the prior year.
Looking to the future
We are one of the largest housebuilders in Scotland, with a diversified offering through our range of products
and established brands.
The undersupply of homes in Scotland is only becoming more acute and demand across all tenures continues
to rise. We are set to benefit from this trend in the coming year as we deliver on our record order book and,
longer term, as we build out our significant, high-quality land bank. This provides us with solid foundations
for moving forward.
During the year, we experienced some exceptional circumstances in our affordable housing business, with
inflationary challenges on fixed price contracts resulting in some delays and pressure on profitability. We
have undertaken a thorough review of all existing fixed-price contract projects to reassess costs to
completion, and we have taken a prudent approach in doing so. In addition, we are being cautious about
entering into any new large, affordable-only developments until pricing is amended to make them
economically viable.
Whilst this will have a short-term impact on the affordable and contracting side of our business, as a result
of the strength of our private housing division and the long-term need for more housing across tenures in
Scotland, we are highly confident in the future of our business and in our ability to deliver further growth for
our shareholders.
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SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
EXECUTIVE CHAIRMAN’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
I would like to reserve the final word to show appreciation for the outstanding contribution of our Board
members, management team and employees. This year we have once again delivered record completions,
revenue and profit, during an extremely challenging inflationary environment, and have successfully
undertaken two significant acquisitions in a period of less than seven months. This would not have been
achievable without the incredible dedication of our people. I would also like to give special thanks to our
customers, our subcontractors, our suppliers and our shareholders: their support is critical to our business
and is very much appreciated. We look forward to continuing to provide great homes for our customers and
sustainable new places for our communities whilst creating value across our business.
Sandy Adam
Chairman
19 September 2022
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SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
CHIEF EXECUTIVE’S STATEMENT
FOR THE YEAR ENDED 31 MAY 2022
This has been another great year for the Springfield Group. In 2022, we have delivered our highest level of
completions and revenue and, despite experiencing some short-term challenges due to cost inflation on our
affordable contracts, have still managed to deliver our highest ever profit. This is our fifth annual report since
floating on AIM in 2017 and we have exceeded our stated goal of doubling in size every five years. At
£257.1m, our revenue for 2022 is more than double the £110.6m of 2017 while this year’s profit before tax
and exceptional items of £20.8m is more than triple the £6.7m of 2017.
We have continued to expand our business both organically and with the acquisition of Tulloch Homes during
the year, which has significantly strengthened our position in the high growth area of the Scottish Highlands
in and around Inverness. In addition, post year-end, we acquired the Scottish housebuilding business of
Mactaggart & Mickel, which brought another premium brand into the Group, as well as a substantial land
bank, with planning permission, in areas of significant demand. Today, we have almost 900 employees
compared with approximately 600 this time last year.
During 2022, total revenue increased by 18.6% to £257.1m (2021: £216.7m). This reflects growth in revenue
from private housing of 25.9% to £174.5m (2021: £138.6m), growth in affordable housing revenue of 21.6%
to £64.3m (2021: £52.9m) and contracting revenue more than doubling to £16.5m (2021: £8.1m). Profit
before tax (excluding exceptional items) increased to £20.8m (2021: £18.5m). This was slightly lower than
we had originally anticipated, primarily due to the impact in affordable housing of cost inflation on our fixed-
price contracts. We have now taken a thorough review of our ongoing projects and reassessed our costs to
completion taking a prudent approach. In private housing, however, our margins for 2022 were maintained
when excluding regional and housing-type mix. Our net debt position was £38.1m as at 31 May 2022 (31
May 2021: £20.8m), which primarily reflects the cost of funding the Tulloch Homes acquisition.
I am also proud of the work that we have undertaken that has resulted in the publication of our first ESG
strategy as well as registering with the New Homes Quality Board Code of Practice well before the December
2022 deadline.
Our efforts were recognised this year when we were named Housebuilder of the Year at the Scottish Home
Awards 2022. This is great industry validation of our outstanding performance and the strength of our
business.
Operational Review
This year we completed 1,242 homes, an increase of 27.6% from the 973 completions in 2021, marking the
first time we have delivered over 1,000 homes in a single year. We also delivered our first PRS housing,
which further diversifies our revenue streams and continued our expansion with the acquisition of Tulloch
Homes during the year and, post year-end, of the Scottish housebuilding business of Mactaggart & Mickel.
The cost-of-living crisis is affecting every business and, as with the rest of the housebuilding industry, we
continued to face material and labour supply constraints and inflationary cost pressures. In addition, three of
our subcontractors went out of business and, while we were able to source materials and labour elsewhere,
it was at a higher price and delayed some of our build programmes. This particularly affected recognised
revenue and gross margin in affordable housing, which was also impacted by the contribution from two large
construction contracts that had been signed in early 2020 and, accordingly, modelled on much lower
estimated costs.
However, we were largely successful in our management of the material and labour supply challenges and
were able to mitigate much of the impact during the year. As a result, in private housing, gross margins were
maintained taking into account regional and housing mix. The high 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 costs. Similarly, our strong, established relationships with subcontractors, together with a large
directly employed workforce, helped us maintain our labour force.
Land Bank
This year we significantly expanded our large, high-quality land bank with the acquisition of Tulloch Homes,
comprising 1,791 plots of which 91% were owned and paid for, and 87% had planning permission. This
particularly strengthened our presence in the Highlands region of Scotland, in and around Inverness.
9
SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
CHIEF EXECUTIVE’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
At 31 May 2022, we had 51 active developments (31 May 2021: 45 active developments) and during the
year:
15 developments were completed;
23 new active developments were added to the land bank (of which 11 were under Tulloch Homes);
planning was granted on 255 plots on five developments and we received 1,558 plots with planning
through the Tulloch Homes acquisition, with the total consented land bank increasing to 8,680 plots,
representing 52.1%, at 31 May 2022 (31 May 2021: 8,010 plots and 52.4%); and
the land bank consisted of 16,652 plots (31 May 2021: 15,281).
Post year-end, our land bank was further strengthened with the acquisition of the Scottish housebuilding
business of Mactaggart & Mickel, comprising a total of 17 sites, 11 of which will transfer to Springfield as
homes are sold. In addition, we have established a strategic alliance with an agreement that gives us
opportunities for future purchases of sites from Mactaggart & Mickel’s remaining land bank of approximately
2,300 acres across Scotland.
Our substantial land bank across Scotland also provides us with opportunities for land sales. With demand
expressed for the popular locations and quality sites in our control, we are confident that our previous
experience of selling or swapping elements of our strategic land bank could be repeated.
Private Housing
The number of private home completions increased by 27.4% to 712 (2021: 559). This reflects growth across
most of our brands and regions as well as the contribution from Tulloch Homes, following the acquisition.
Business remained buoyant, with an increase in the number of homes missived or reserved at 31 May 2022
compared with 31 May 2021. We currently have homes delivered, missived or reserved representing
approximately 75-80% of forecast private housing revenue for 2023, in line with the visibility at the same point
last year.
The average selling price (“ASP”) for private housing was £245k (2021: £248k) reflecting the regional and
housing-type mix, with a larger proportion of revenue and completions in regions of Scotland that typically
have lower house prices. On an underlying basis, we experienced a general increase in sales prices, which
offset cost price inflation to ensure gross margins were maintained.
At 31 May 2022, we were active on 31 private housing developments (31 May 2021: 24), with 15 active
developments added during the year and 8 developments completed. In total, as at 31 May 2022, the private
housing land bank was 11,565 plots on 74 developments (31 May 2021: 10,426 plots on 56 developments).
Planning consent was granted for 240 plots on 4 developments for private housing. As at 31 May 2022,
52.2% (6,030 plots) of private housing plots had planning consent (31 May 2021: 48.7%), with 24.7% going
through the planning process and 23.1% at the pre-planning stage.
In particular, during the year we submitted a planning application for a new, large development of up to 1,000
homes. This development is to be built on land that we purchased in the previous year in Midlothian in the
Edinburgh commuter belt. The proposed development is designed as a new neighbourhood with a distinct
identity, which will, following the Scottish government's 20-minute neighbourhood model, integrate into
existing settlements where residents can easily access high quality services and amenities.
Village developments
Springfield Villages are standalone developments that include infrastructure and neighbourhood amenities.
Each Village is designed with the potential to deliver up to approximately 3,000 homes, with ample green
space and community facilities. They primarily offer private housing, but also include affordable housing
and, beginning with Bertha Park, include PRS housing. We have three Villages that are already home to
growing communities; one Village that has received planning permission and with the Section 75 agreement
to follow; and a further Village going through the planning process.
10
SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
CHIEF EXECUTIVE’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
Total completions at Springfield Villages – including private, affordable and contract housing – increased. In
private housing, there was an increase in completions at Dykes of Gray and also at Bertha Park, which is
delivered under contract. At Elgin South (formerly ‘Linkwood’) Village, there were fewer completions than in
the previous year, which reflects the phasing of homes being made available for sale.
There was also a continued expansion of amenities and strengthening of community engagement at the
Village developments. This includes the hosting of community events, the establishment of a school bus
route and a public service through Dykes of Gray, and Bertha Park and Dykes of Gray each gaining their
own post box, being symbolic of a ‘place’ being created. In addition, Bertha Park was recognised as
Development of the Year at the Scottish Home Awards.
Affordable Housing
During the year under review, we achieved our highest ever affordable housing revenue. The number of
affordable home completions increased by 11.6% to 405 (2021: 363). Average selling price increased to
£159k (2021: £146k) as a result of a change in housing mix. However, revenue and margin in affordable
housing was impacted by price inflation. This was partly due to key subcontractors going out of business,
which necessitated us finding replacement subcontractors that led to some delays and higher costs. In
particular, our margin suffered from the delivery of two large, long-term contracts that had been signed in
early 2020 and therefore based on expectations of lower material and labour costs.
In affordable housing, we receive a fixed price for the land sale and design and build contract. Revenue is
recognised over time as development progresses. The amount of revenue recognised depends on the stage
of completion, which is based on the development costs incurred as a proportion of the total expected
development costs. This provides strong cash flow dynamics with high visibility and low capital exposure.
However, revenue recognition and gross margin is impacted when costs increase. Post year-end, the Group
has undertaken a thorough review of all existing contracted projects to reassess the projected costs to
completion, and the Group has taken a prudent approach to this reassessment. As a result of this
reassessment, the margin and revenue recognised on some affordable contracts during the year was lower
than previously expected. The delivery of the large contracts that Springfield signed in early 2020 are now
nearing completion. As a result of the action taken in affordable housing, the Group is well positioned for
when the market normalises.
We have also taken the pragmatic decision to temporarily pause entering into new large, long-term affordable
contracts in order to protect our margins. However, the longer-term fundamentals of affordable housing
remain strong and we expect to recommence signing contracts when more normal market conditions resume
and following the Scottish Government’s next affordable housing investment benchmark review to reflect
inflation, which is expected to be announced in November 2022.
The number of active affordable housing developments was 18 at 31 May 2022 (31 May 2021: 19), with 8
active developments added during the year and 9 developments completed. As at 31 May 2022, the total
affordable housing land bank was 4,412 plots on 60 developments (31 May 2021: 4,055 plots on 48
developments).
We expanded our partnership network with the signing of our first contract with Aberdeenshire Council, for
38 homes at Banff, which, as a relatively short-term project, is less exposed to inflationary pressure. We also
joined the Supplier Network of hub South West Scotland, a public-private partnership for the construction of
community infrastructure, with a view to providing affordable housing in a region spanning six local authority
areas in South West Scotland. Whilst we are currently being cautious about entering new projects, the
expansion of our partnership network strengthens our prospects for when normal affordable housing activity
resumes.
We continued to make progress under our local authority framework agreement with Moray Council for 10
affordable-only developments. The handover of two developments was completed during the year, bringing
the total number delivered under this agreement to five.
As at 31 May 2022, 44.8% (1,975 plots) of affordable housing plots had planning (31 May 2021: 52.7%), with
28.6% of plots going through the planning process and 26.6% at the pre-planning stage.
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SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
CHIEF EXECUTIVE’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
Contract Housing
In contract housing, we provide development services to third party private organisations (compared with
affordable housing where our services are delivered to local authorities, housing associations or other public
bodies). To date, our contract housing delivery has consisted of services provided to Bertha Park Limited, the
developer of the Bertha Park Village, under a framework agreement. We perform development services and
receive revenue based on costs incurred plus a fixed mark up. At Bertha Park, we are delivering private,
affordable and PRS housing. We have reported contract housing revenue this year as a separate revenue
stream because of the increased materiality of revenue now being generated from the provision of
development services to Bertha Park Limited, particularly due to beginning the delivery of PRS housing.
At 31 May 2022, the contract housing land bank with planning consent consisted of 675 plots (31 May 2021:
742). The 125 homes completed during the year (2021: 51) comprised 49 private homes, 31 affordable homes
and 45 PRS homes at Bertha Park Village. We also commenced construction on the first Mid-Market Rent
housing to be offered at Bertha Park, which is a form of affordable housing for those in work where housing
associations utilise grants to enable market rents to be discounted.
A key milestone was achieved with the delivery of our first PRS housing with Sigma, a high-quality PRS
provider specialising in suburban, family homes. We are delivering 75 purpose-built homes for families to rent
privately at Bertha Park, which, following handover, will be owned, let and managed by Sigma. To date, 45
PRS homes at Bertha Park have been completed and families have already moved in. The delivery of PRS
housing 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.
Notwithstanding delivery of our contract at Bertha Park, our strategy to expand our PRS activity with Sigma
is currently on hold due to the introduction of emergency legislation in Scotland to protect tenants by freezing
rents and imposing a moratorium on evictions until at least 31 March 2023. This is a temporary measure
designed to support families facing fuel poverty this winter, and we continue to believe that the delivery of
PRS housing offers a viable revenue stream in the longer term. Whilst this does not impact our existing
agreement to deliver 75 PRS homes, any decisions on the expansion of this activity will wait until the policy
environment is clearer.
Acquisitions
During the year, we continued to execute on our stated strategy of expanding via acquisition and into new
territories to accelerate growth. In December 2021, we acquired Tulloch Homes, an Inverness-based
housebuilder focused on building high-quality private housing in the Scottish Highlands, for a net
consideration of £54.4m (being £77.9m less cash acquired of £23.5m) of which £13.0m is deferred
consideration. Tulloch Homes has performed well since the acquisition and has met all of the targets and
expectations that we set at the time of purchase.
Tulloch Homes is a profitable, cash generative and well-run housebuilder with significant land ownership in
the Scottish Highlands, in and around Inverness. The acquisition expanded our land bank in an area of high
and growing demand where we have been strategically building a presence over the last few years. We also
gained a strong, established management team and the acquisition has reinforced our supply chain
capabilities with access to labour and subcontractors in the local area.
Since year-end, as announced on 22 June 2022, we acquired the Scottish housebuilding business of
Mactaggart & Mickel for a total consideration of £46.3m. Mactaggart & Mickel is a premium brand
housebuilder that has been delivering high-quality housing across the central belt of Scotland for almost 100
years. Under the terms of the acquisition, we acquired six live private and affordable sites with work in
progress, and acquired a brand licence to build homes as Mactaggart & Mickel on a further 11 private and
affordable sites, which will transfer to Springfield as homes are sold in line with the payments of the deferred
consideration. The acquisition also included Timber Systems, a timber frame factory near Glasgow. The
addition of a second timber frame factory, which complements our existing facility in Elgin, will secure kit
supply and increase capacity for future growth while further reducing our carbon footprint.
12
SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
CHIEF EXECUTIVE’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
Customer Satisfaction
Springfield strives for excellence in customer service through all stages of the house buying process and the
quality of the houses we build. We are proud to offer customers a high level of specification as standard as
well as significant choice. This year we achieved an overall customer satisfaction rating of 93% customer
satisfaction (2021: 92%) and an increased net promoter score of 59 (2021: 52). We strive to ensure that
100% of our customers are happy with their homes and feel well looked after and, within our new ESG
strategy, we have set this as our target to ensure customer satisfaction increases year on year.
Quality management systems have continued to be a focus as we aim to ensure continuous improvement
and drive up standards across our brands. ISO 9001 was recertified within the Springfield brand following an
in-period audit and plans are in place for these quality processes to be rolled out across Group operations.
We welcomed the publication, during the year, of the New Homes Quality Board Code of Practice (“NHQB
Code”), which aims to improve consumer protection covering important aspects of the new home
construction, inspection and sales process. Post year end, in July, we registered with the New Homes Quality
Board – well ahead of the December 2022 deadline.
Environment & People
At Springfield, we have always placed great importance on behaving responsibly and instilling sustainability
across our operations. This time last year we committed to formalising our activity under the broad spectrum
of ‘sustainability’ in an ESG strategy and I am very pleased to be launching that alongside these annual
results. Within our strategy entitled ‘Environment & People’, we have identified areas of focus under
‘Environment’, ‘Social’ and under ‘Governance’ that matter to our stakeholders and customers and are
critical to our future success. For each area, we have set new goals and committed to measuring
performance to ensure we continually improve.
This includes a commitment to achieving net zero by 2045, in line with the Scottish Government aspirations,
and we will aim to achieve this sooner. We are already well established on the route map to net zero with
timber frame construction already being used in over 90% of homes and vast experience gained in
delivering alternative energy technologies, such as air-source heating, with over 50 developments having
been completed, or being under construction, without gas. We now have two off-site timber frame factories
and the timber used is sourced responsibly and accredited by the Forest Stewardship Council or the
Programme for the Endorsement of Forest Certification.
During the year, the first electric van was introduced for Springfield’s timber kit factory, as part of the phasing
in of a fully electric fleet; all company cars are now zero emissions; and we began providing the option of
zero emission electric vehicles for staff under the car allowance scheme. We have also increased our
support for communities with the appointment of a full-time Community Engagement Co-ordinator. This
resource will facilitate stronger engagement during the planning process and support the creation of new
communities within our larger developments, in particular the Springfield Villages.
Outlook
While the current economic environment poses certain industry-wide challenges, the fundamentals of the
housing market in Scotland remain strong. There is an undersupply of housing across all tenures, and
demand continues for the types of homes that the Group provides in popular locations across the country.
There continues to be good mortgage availability to support home buyers, with a notable preference from
lenders for high energy performance that is achieved from new build homes. The Scottish Government
maintains its commitment to investing in the delivery of more affordable homes and our high-quality land
bank lends itself very well to the emerging suburban build-to-rent sector.
Springfield entered the 2023 financial year with a strong order book in private housing. We have excellent
visibility over full year private housing revenue, with homes already delivered, missived and reserved
representing approximately 75-80% of 2023 private housing revenue forecasts. In addition, the Group will
benefit from the full year contribution of Tulloch Homes and Mactaggart & Mickel. Accordingly, the Group is
on track to deliver significant growth in private housing in 2023, reflecting sustained demand and the
expansion of the business.
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SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
CHIEF EXECUTIVE’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
In affordable housing, the Group has paused the signing of new long-term fixed price contracts until
appropriate inflationary accommodations are introduced. We have undertaken a thorough review of all
existing projects and reassessed costs to completion. Accordingly, we are well positioned for when market
conditions normalise in affordable housing.
In addition, the temporary rent freeze announced by the Scottish Government has halted our strategy to
expand PRS activity with Sigma at this time. Consequently, the Group expects contract housing (PRS)
revenue to be lower in 2023. However, the Group expects to be able to mitigate part of this reduction through
the sale of some land that had been allocated for PRS.
Overall, the Group expects to deliver significant growth for the year to 31 May 2023, with record revenue
driven by the contribution from private housing. Accordingly, with the solid foundations that the Group has in
place, the Board remains confident in Springfield’s prospects and in its ability to deliver shareholder value,
and continues to look to the future with confidence.
Innes Smith
Chief Executive Officer
19 September 2022
14
SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
CHIEF FINANCIAL OFFICER’S REVIEW
FOR THE YEAR ENDED 31 MAY 2022
The financial year ended 31 May 2022 was strong, once again, for Springfield with record sales and profit
levels.
In summary, for the year ended 31 May 2022, revenue increased by 18.6% to £257.1m (2021: £216.7m),
adjusted profit before taxation and exceptional items by 12.4% to £20.8m (2021: £18.5m) and statutory profit
before tax by 10.1% to £19.7m (2021: £17.9m). Year-end net debt was £38.1m (2021: £20.8m), with the
increase in debt primarily reflecting the cost of funding the Tulloch Homes acquisition.
The significant increase in revenue reflected strong growth across private, affordable and contract housing
as well as the results including a six-month contribution from Tulloch Homes, which was acquired during the
year.
Private housing remained the largest contributor to Group revenue, accounting for 67.9% (2021: 64.0%) of
total sales, and increased by £35.8m to £174.5m. This significant growth was driven mainly by the
contribution from the Tulloch Homes acquisition as well as increased sales on an organic basis.
Affordable housing achieved its highest ever revenue as the Group delivered the substantial backlog of
contracts that it had signed towards the end of the prior year with revenue increasing by 21.6% to £64.3m
(2021: £52.9m). This was, however, slightly lower than originally anticipated as a result of cost inflation - with
recognised revenue based on the stage of completion driven by development costs incurred as a proportion
of total expected development costs (see Note 2.5).
Starting from this year, we are presenting contract housing separately owing to the increased significance of
revenue now being generated on this basis from services to Bertha Park Limited, particularly due to the
delivery of PRS housing. For the prior year, the relevant amounts have been reclassified into contract housing
to allow a like-for-like comparison, with £5.9m having been moved from private housing and £2.2m from
affordable housing.
There was a reduction in other revenue, which primarily consists of land sales, owing to the two significant
strategic land sales that the Group completed in the prior year.
Revenue
Private housing
Affordable housing
Contract housing
Other*
TOTAL
*Primarily land sales
2022
£’000
174,442
64,251
16,494
1,908
257,095
2021
£’000
138,646
52,939
8,142
16,965
216,692
Change
+25.9%
+21.6%
+102.6%
-88.8%
+18.6%
Gross profit increased by 11.1% to £43.1m (2021: £38.8m) due to the significant growth in revenues noted
above. Gross margin was 16.8% (2021: 17.9%), with margins largely maintained when excluding the impact
of regional or housing mix. There was an impact on gross margin in affordable housing (where we work under
fixed price construction contracts) due to the contribution to revenue from two large, long-term contracts that
had been signed in early 2020 as well as from three key subcontractors going out of business, which
necessitated finding replacements that were at a higher cost.
Administrative expenses, excluding exceptional items, were £20.9m (2021: £19.4m). This reflects cost
savings achieved from the closure of our Livingston office, which was offset by the additional overheads for
the Tulloch Homes business. Accordingly, administrative expenses, excluding exceptional items, as a
proportion of revenue was 8.1% in 2022 compared with 9.0% in 2021.
Exceptional items were £1.1m (2021: £0.6m). This mainly relates to the cost of the Tulloch Homes
acquisition.
Operating profit grew by 12.6% to £21.5m (2021: £19.1m). Excluding exceptional items, operating profit
increased by 14.1% to £22.6m (2021: £19.8m). Adjusted profit before tax and exceptional items increased
by 12.4% to £20.8m (2021: £18.5m) and statutory profit before tax by 10.1% to £19.7m (2021: £17.9m).
15
SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
CHIEF FINANCIAL OFFICER’S REVIEW (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
Basic earnings per share (excluding exceptional items) increased by 8.5% to 15.63 pence (2021: 14.41
pence). Statutory basic earnings per share grew by 6.9% to 14.74 pence (2021: 13.79 pence). Return on
capital employed (profit before interest and taxation divided by average capital employed, which is calculated
as the average of 2022 and 2021 total assets less current liabilities) was 13.6% (2021: 14.3%).
During the year, on 1 December 2021, the Group acquired Tulloch Homes for a total consideration of £77.9m
less cash acquired of £23.5m being a net consideration of £54.4m, which comprised an initial consideration
of £41.4m and deferred consideration of £13.0m which is payable in two equal instalments in November 2022
and July 2023. Total acquisition costs were £859k.
The initial consideration of £41.4m was funded through an equity raising and an increased bank revolving
credit facility. In December 2021, the Group raised gross proceeds of £22.0m from the issue of 15,714,286
new ordinary shares at a placing price of 140 pence per share. The Group’s revolving credit facility with the
Bank of Scotland of £64.5m, which was put in place for three years in September 2021 with an expiry date
in January 2025, was extended in November 2021 to £87.5m to help part fund the Tulloch Homes acquisition
on similar terms to the existing facility.
Net debt at 31 May 2022 was £38.1m compared to £20.8m at 31 May 2021. This increase primarily reflects
the cost of funding the Tulloch Homes acquisition. Net debt to EBITDA was 1.6 times (2021: 1.0 times).
The Group continues to have a strong relationship with the Bank of Scotland - the revolving credit facility of
£64.5m, which was put in place for three years in September 2021 with an expiry date in January 2025 was
extended in November 2021 to £87.5m to help part fund the Tulloch acquisition on the same terms as the
existing facility.
In order to support the going concern period to 30 September 2023, the first two years (to May 2023 and May
2024) of the Board approved 3-year plan to May 2025 forms the basis of the assessment (base case forecast)
to confirm the appropriateness of the going concern basis being adopted for the preparation of the May 2022
Annual Report and Financial Statements.
The year to May 2023 has been updated to reflect the actual months results for June and July 2022 as well
as factoring in margin changes on certain affordable developments. The forecasts for May 2023 and May
2024 do not include any PRS revenues that were not contracted at the date of the May 2022 Annual Report
and Financial Statements. There will be opportunities for PRS revenues in the future.
Sensitivities have been run based on the updated May 2023 and May 2024 numbers noted above. These
involved increasing Private and Affordable build costs by 5% and 7.5% (on an underlying basis this
represents a higher percentage increase due to the fact that for most developments a number of
subcontractor packages have a fixed price period) offset by removing land purchases that were not
contracted and that had no associated revenues in May 2023 or May 2024, other non-contracted payments
were reviewed with some removed as a mitigating action. In each of the scenarios run the Group was still
able to operate within existing banking facilities and covenants.
Under the base case forecast the peak borrowing utilises 92.5% of the bank facilities however by the year
end in May 2023 the facility utilisation is forecast to drop to around 60%. The Group also has a large and
high-quality land bank which provides another source of comfort with the projections containing no land sales
despite a number of opportunities over the next 12 months.
Alternative performance measures
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.
Michelle Motion
Chief Financial Officer
19 September 2022
16
SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
COMPANY OVERVIEW AND RISKS
FOR THE YEAR ENDED 31 MAY 2022
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. We develop sites taking account of natural resources, in order to protect biodiversity in the
area for future generations.
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.
Our first group-wide ESG strategy has been published alongside this report and this period we appointed a
dedicated Group Environment, Quality and Sustainability Manager. We were also the first housebuilder to
sign-up to the new Next Generation Core Sustainability Benchmark following collaboration with JLL and
Lloyds Banking Group. We aim to be ISO 14001:2015 certified by the end of the 2022/2023 financial year.
Quality Management
The Group continues to be accredited to ISO 9001:2015 Standard. As the Group grows, we have taken the
opportunity to undergo a full review of all business processes with an aim to align department procedures
across the Group. The review is well underway with improvements to operational processes and systems to
drive consistency and reduce business risk. The implementation of a new Group intranet will improve
communication of the Quality Management System and allow existing manual processes to become
automated and more efficient, while retaining records for future audits.
Key Risks and Uncertainties
The principal risks and uncertainties identified and mitigated against include:
Liquidity risk;
Market risk;
Credit risk;
Changes in consumer demand;
Cash Flow risk;
Resources risk;
Health and safety risk;
Land supply risk;
Planning risk; and
Funding risk.
Legal and regulatory risk;
Market, credit and liquidity risk are dealt with in Note 30 of the consolidated financial statements.
Changes in Consumer Demand
The risk of reducing prices or a reduced sales 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
Our acquisition of Tulloch Homes and post-period acquisition of Mactaggart & Mickel’s Scottish
housebuilding business has also diversified the Group’s geographical and product offering.
17
SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
COMPANY OVERVIEW AND RISKS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
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 include covenants and have
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;
Conducting an interim pay review in March 2022 to help combat cost of living increases;
Annual training review for every employee;
Developing the workforce by maintaining the percentage of employees in training, further education or
apprenticeships at 15% or above;
A Board led culture of empowerment;
Post period private health care introduced for all staff;
Satellite television discount and gym membership;
Long standing local market recruitment has reduced the potential effect of labour market changes due
border changes; and
Continuing our commitment to employee wellbeing by recently launching an intranet with useful links,
support services and internal contacts.
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;
Negotiating deals directly with manufacturers; and
The growth of the Group, and recent acquisition of competitors, has strengthened our purchasing power
and access to materials.
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 its 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;
Introducing or updating applicable policies or procedures; and
Ensuing Health Surveillance is carried out across the Group.
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
acquisitions. 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. Recent
18
SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
COMPANY OVERVIEW AND RISKS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
acquisitions have also significantly strengthened the Group’s access to land in different geographical
locations and also at different stages of the planning process.
Planning Risk
Delays in receiving planning consents could interrupt business. Planning is dealt with internally by expert
planners who have good relationships with local authorities and who are supported by a full architectural and
design team. The Board reviews the balance of land held at the various stages of planning to ensure an
appropriate flow of consented land.
Financial Risk Management Objectives
Details of the Group’s financial risk management objectives are set out in Note 30 to these consolidated
financial statements.
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 £49,154 (2021: £25,477) to charities. These donations
included:
o New Elgin JFC – 300 building blocks to help build dugouts at stadium;
o Christmas trees for Bertha Park, Dykes of Gray and Linkwood Primary School (including
solar-powered lights for Bertha Park and Dykes of Gray);
o Sponsorship of Springfield Scottish Squash Open;
o Main sponsor for The Baillie Cup – an athletics championship for primary school children
in the Highlands; and
o Sponsorship of various highland games including Forres and Glen Urquhart.
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 is the headline sponsor of Scottish Squash, which enabled the resurrection of the Scottish Squash
Open, now the Springfield Scottish Squash Open. The sponsorship is also enabling Scottish Squash to
develop the game in communities around Scotland and to support its elite players.
Section 172 Statement
A general duty is imposed on every director by Section 172 of the Companies Act 2006 to act in the way that
director considers, 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;
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.
19
SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
COMPANY OVERVIEW AND RISKS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
The Board, when considering stakeholder interest, is responsible for ensuring the long-term policies and
objectives are implemented allowing 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 is required by the Companies Act 2006 to include a Strategic Report in its Annual Report and
Financial Statements. The information that fulfils this requirement can be found from pages 4 to 20.
Signed by order of the Directors on behalf of the Board.
Sandy Adam
Executive Chairman
19 September 2022
20
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. Sandy
led the Company during its change from a market garden business into a housebuilder in 1988. Sandy has
been Chairman of the Company since 2004 and has been the driver behind many key commercial decisions
including the focus on affordable housing, the geographic expansion out of Moray in 2010, the acquisition of
Redrow’s Scottish assets/operations in 2011, the listing of Springfield on AIM in 2017 and the acquisition of
Dawn Homes in 2018, Walker Group in 2019, Tulloch Homes in 2021 and, most recently, Mactaggart &
Mickel’s Scottish housebuilding business (post-period). Sandy has over 30 years of experience in the Scottish
housing and property markets, including his role as Chairman of Homes for Scotland between 2014 and
2015.
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. 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 housebuilder Avant Group, previously known as Gladedale Group.
Michelle graduated with a BA in Accounting, has an MBA and is a qualified accountant with the Chartered
Institute of Management Accountants.
Roger Eddie, Non-Executive Director
(Chair of Remuneration and Nomination Committees, sits on Audit Committee)
Roger graduated in 1976 with an MA (Hons) Economics and joined the Bank of Scotland as a Graduate
Trainee. He obtained his Chartered Banker professional qualification and was subsequently elected a Fellow
of the Chartered Institute of Bankers in Scotland. Initially working throughout Scotland in Branch Banking,
Roger became a Business and then Corporate Banking specialist, finally becoming the Director of Real
Estate responsible for the North of Scotland property lending teams. In 2008 Roger joined Highlands and
Islands Enterprise as a Senior Development Manager in the Operations Development and Investment team
and returned to banking as a Senior Commercial Manager in 2010 shortly before retiring from full time
employment in 2012. He was appointed as a Non-Executive Director to the Board of the Port of Cromarty
Firth in January 2013 and was elected as Chairman of the Authority from 2019 until his board tenure ended
in December 2021. Roger joined Springfield as a Non-Executive Director on 13 November 2008.
Matthew Benson, Non-Executive Director
(Chair of Audit Committee, sits on Remuneration and Nomination Committees)
Matthew graduated from Oxford University and began his career with Morgan Stanley, working in
international finance in London. Matthew then established his own consultancy business focused on the
structuring and planning of high quality residential and leisure projects. Matthew joined Rettie & Co as a
Director in 2002 with responsibility for land and development, new homes and rural projects. He was
appointed to the Springfield Board as a Non-Executive Director in 2011. Matthew has a number of other
responsibilities including member of the Advisory Board of Kleinwort Hambros private bank, Trustee of
Project Scotland and Director of Edinburgh Arts Festival. Matthew was also the founding Chair of bio-tech
businesses EctoPharma Limited and Ryboquin Limited.
21
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, Company Secretary and member of the Group Management Committee 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 is a Chartered Quantity Surveyor with significant experience in the construction and housebuilding
industries. 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
Group Executive Development Director responsible for a UK-wide mixed tenure development programme
of c.£200 million. Previous experience includes project management roles at The EDI Group, and
Woolwich Homes Ltd, as well as surveyor positions at Millar Brown Associates and Gibson & Simpson.
Colin is a former director of Homes for Scotland, he is a Member of the Royal Institution of Chartered
Surveyors (MRICS) and holds a BSc in Quantity Surveying from Napier University. Colin was appointed to
the Board in 2019 as a Non-Executive Director and, among other positions, sits as a founding member of
our Environmental, Social and Governance (ESG) Committee.
22
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
QCA CODE COMPLIANCE AND SECTION 172 STATEMENT
FOR THE YEAR ENDED 31 MAY 2022
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
38 – 40 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 report including the statement is available from www.thespringfieldgroup.co.uk.
1.
Strategy and Business Model
The Group operates within three housing markets – private, affordable and Private Rental Sector (PRS). The
Group develops a mix of private, affordable and PRS housing in Scotland in developments of different sizes
and locations. It believes this combination is key to sustained long term growth and ability to weather
economic uncertainty.
Private:
The Group delivers private housing on developments of various sizes across key markets in Scotland under
its Springfield, Dawn Homes, Walker Group and Tulloch Homes brands. Post-period, the Group acquired the
Scottish housebuilding business of Mactaggart & Mickel, strengthening its offering in central Scotland. The
Group’s private housing offering 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. The Group’s landbank has grown in quality and size with the
acquisition of competitors.
Generally the Group takes a long term view of developing land and directly employs a multidisciplinary team
of experts 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 division 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 178,000 applicants to local authority housing lists in March 2021 there is a substantial need for
affordable housing in Scotland. The Scottish Government has set a target of building 110,000 affordable
homes by 2032. We have built over 1,725 affordable houses in the last five years and this year we achieved
our highest ever revenue from our affordable housing business.
Further details on our strategy and business model are discussed in the Chairman’s statement on pages 5-
8.
Private Rental Sector (PRS):
The Group has a strong working relationship with Sigma, for whom it develops purpose-build PRS homes.
This period saw families move into the first homes for private rent at Bertha Park in Perth.
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. The Board
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believes the presentations provide it with vital information to understand the needs and expectations of
Springfield’s shareholders.
We maintain a corporate website (www.thespringfieldgroup.co.uk). 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 updates
on the Group’s current projects. All press releases can be found at www.thespringfieldgroup.co.uk.
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 had 766 employees as at 31 May 2022. The post period acquisition of Mactaggart & Mickel’s
Scottish housebuilding business added a further 112 employees to the Group. We are proud that many of
our employees have remained with Springfield on a long-term basis with the average length of service being
6.3 years.
The Chairman and CEO meet employees’ departmental groups on a bi-annual basis. 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.
Employees received an annual pay review at June 2021, where there was an increase of 2.5% across the
Group. Management also decided to carry out an interim pay review in March 2022 due to the rising cost of
living, where all employees (excluding plc Directors) received an additional 3% increase. This was in addition
to the annual review in June 2022 when a further 3% increase was awarded across the board. As our craft-
based apprentices follow rates set by the Scottish Building Apprenticeship and Training Council (SBATC),
they were given a bonus payment instead. Current employees were paid at least 3% above minimum wage.
Those 23 and over receive at least the national living wage.
Springfield creates a climate where everyone can thrive and is proud to have reported this year that the
gender pay gap has effectively been closed. In a commitment to formalise what we do and ensure that this
parity remains, we have committed to publishing an Equality, Diversity and Inclusion (EDI) policy in 2023 as
part of our ESG strategy.
In November 2021 we won the Highland Business Award for Employee Wellbeing, being recognition of the
work the Group does to support employees and their families.
In addition, the Group places an emphasis on internal promotion. During the period the Group awarded 52
internal promotions, illustrating our culture of coaching, mentoring and giving employees the opportunities to
develop their careers within Springfield.
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 undertook
data protection training from our in-house legal department in the period.
Employees (training & education): As at May 31 2022 we supported 151 employees (19.7%). in further
education, training, and apprenticeships. This includes 129 apprenticeships. With the ongoing skills shortage
within the industry, the Springfield Group continue to commit to providing apprenticeship and training
opportunities seriously.
Employees (future): The Group has a strong focus on education and training. We won the 2021 S1
Recruitment Awards for ‘Best Early Careers Employers (Apprentice/Graduate). We encourage student
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placement programmes and we have placed 7 university students in a variety of work experience roles over
the past two years.
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, 93% say they would
recommend one of the Group’s homes to friends or family. In addition, our Customer Feedback Group, with
representatives from across the business, meets regularly to consider the qualitative feedback received
through the surveys and considers what improvements could be made.
Suppliers: The Group’s commercial and purchasing teams communicate closely with suppliers. This is vitally
important through 2021/22 as material supply issues were raised throughout our supply chain. We believe
our close relationship with suppliers and strong communication has helped mitigate against disruption from
shortages experienced across the construction industry. As the Group has grown, its purchasing power and
access to materials has increased.
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 Members of Scottish Parliament (MSPs) is 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 developed and published our first Group-wide ESG strategy and appointed a dedicated
Group Environment, Quality and Sustainability Manager for the first time. We were the first housebuilder to
sign-up to the new Next Generation Core Sustainability Benchmark following collaboration with JLL and
Lloyds Banking Group. A Committee of the Board for ESG has been created to monitor progress against the
ESG Strategy with the CEO as Chair.
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 21-22. 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. The
non-executive directors time commitment is approximately 20 days a year to attend to board matters.
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The Board consider Colin Rae and Nick Cooper to be independent Directors for the purpose of the QCA
Code. From 13 November 2022, Roger Eddie will have completed fourteen years' service as a Director. From
1 September 2022, Matthew Benson will have completed 11 years’ service as a Director. Having considered
both Roger and Matthew’s independence in the context of the QCA Code, the Board is satisfied that Mr
Roger Eddie and Mr Matthew Benson will remain independent notwithstanding their 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 21-22.
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. The Board were given GDPR training by our in-house legal
department in the period. Recognising the importance of the emerging ESG agenda, Colin Rae as ESG lead
for the Board passed the University of Cambridge 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.
7.
Evaluation of Board Performance
The Board implemented a formal review process in 2021/22. 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 2021/22 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. A formal review will also take place in 2022/23.
8.
Corporate Culture
The Board believes that everyone has the right to a decent home. There is a pressing need for good quality
housing 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, affordable homes through its partnership
arm which works with housing associations and local authorities and, through its strategic partnership with
Sigma, homes for families to rent privately.
Dedication to customers is at the heart of the Springfield culture. 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 was delighted to be recognised for our hard-work by winning prestigious awards such as the
Large Housebuilder of the Year and Large Development of the Year (Berth Park) at the Scottish Home
Awards. Each brand across the Group achieved the “In House Gold Award for Customer Satisfaction” over
the last year, meaning that over 90% of our customers would recommend us to their friends and family.
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.
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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.
The Board is supported by the Audit, Remuneration, Nomination and newly-formed ESG 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
Our newly-formed Environmental, Social and Governance (ESG) Committee, including, oversees the
implementation of the Group’s overall ESG strategy. The Committee also monitors current and emerging
issues which may impact the business, performance or image of the Company. Additionally, the Committee
studies investor feedback and oversees the Company’s reporting and disclosure with regard to ESG matters.
The Committee makes recommendations to the Board concerning any policies, practices or disclosures
which need adjusted in order to improve the performance with regard to ESG matters and adapt to an ever-
evolving market.
Further information can be found in the Audit and Remuneration Committees’ reports on pages 28-37.
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.
This year we have launched a new website for the Springfield Group (www.thespringfieldgroup.co.uk). This
website provides all corporate information for the Group as well as an investor relations section and
operational news of interest to shareholders, investors and the public.
Results from the AGM are announced to the market and displayed on the Group’s website after the meeting.
Andrew Todd
Company Secretary
19 September 2022
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AUDIT COMMITTEE REPORT
FOR THE YEAR ENDED 31 MAY 2022
Statement from the Chairman of the Audit Committee
On behalf of the Board, I am pleased to present the Audit Committee Report for the year to 31 May 2022.
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 2022, the Committee met six times. 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 2022 the Chief Financial Officer attended all six Committee meetings and
the Chief Executive attended two 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 given the recent acquisitions of Tulloch Homes and the
housebuilding business of Mactaggart & Mickel the timing is right to implement a Business Assurance
function to further support and derive assurance on the adequacy of the internal control and risk
management systems of the Group. The position has Board approval and will be put in place in the current
financial year.
Risk Management and internal controls
The Group has a range of internal controls, policies and procedures in place. 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 has concluded that the systems need to be reviewed and strengthened to take account of
the increased breadth and complexity of the business particularly in the context of two new acquisitions in a
short period of time. Internal controls will be further strengthened with the implementation of the Business
Assurance function as noted above.
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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
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 second time this year following the appointment
of BDO LLP (BDO) in the prior year.
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 prepares 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 below.
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.
The table below highlights the issues discussed at the audit close meeting.
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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.
How it was addressed by the Committee
With a large number of homes handed over in the
final month of the financial year due to material
supply delays, the Committee reviewed the revenue
recognised throughout the year and around the year
end. The Committee satisfied itself that there is no
issue with revenue recognition.
from affordable housebuilding
Revenue recognition - Affordable
is
Revenue
recognised over time depending on the stage of
completion with cashflows received in excess of
revenue recognised included as payments on
account.
The Group policy is 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.
Profit recognition
The Group enters into construction contracts the
performance under which takes 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
net
is dependant of
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
Acquisition of Tulloch Homes Holdings Limited
The Group acquired Tulloch Homes on 1 December
2021. Under IFRS3 the business combination is
accounted for using the acquisition method and
requires assets acquired and liability assumed to be
measured at the fair values at the acquisition date.
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 are in place until January 2025.
The Committee is satisfied based on the detailed
papers and workings produced that the acquisition
has been accounted for correctly.
Matthew Benson
Chairman of the Audit Committee
19 September 2022
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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 2022.
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 2022, 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.thespringfieldgroup.co.uk), 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 2022, 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.
Basic Salaries
Increases effective from 1 June 2021
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.
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The Committee undertakes a standard review of the Executive Directors’ salaries on an annual basis, with
the Committee’s current policy being that any increases awarded to Executive Directors as part of this
process should normally reflect those applied to the wider workforce. Any such increases typically take effect
on 1 June each year.
With effect from 1 June 2021, the annual rates of base salaries for the Executive Directors were set at:
Sandy Adam - £115,313;
Innes Smith - £230,625; and
Michelle Motion - £184,500.
The above increases represented an uplift of 2.5% from the salaries that were paid to the Executive Directors
for the financial year to 31 May 2021. This reflected the average annual increase that was awarded to the
broader workforce at that time.
Increases effective from 1 December 2021
Part way through the year to 31 May 2022, the Committee undertook a fundamental review of the rate of
basic salaries paid to the Company’s management team, including the Executive Directors. This exercise
took into account a range of factors including:
the material change to the size and complexity of the business following the acquisition of Tulloch
Homes that was announced on 1 December 2021 and the resulting increase in the responsibilities
of those senior team members, including the Executive Directors, who perform a Group-wide role;
the importance of retaining the Company’s key senior leaders in an increasingly competitive
environment;
the experience gained, and performance delivered, by the Executive Directors since the previous
detailed salary review was undertaken by the Committee; and
up-to-date benchmarking information provided to the Committee by an independent third party.
On completion of the above exercise, the Committee concluded that, rather than wait for the normal annual
review process in 2022, it would be appropriate for immediate adjustments to be applied to the salaries of
the Executive Directors. As a result, and with effect from 1 December 2021, the annual rate of base salaries
for the relevant individuals were set at:
Sandy Adam - £142,500;
Innes Smith - £285,000; and
Michelle Motion - £215,000.
At the same time as these salary changes were implemented, increases were also made to other members
of the senior leadership team who were included within the above noted review.
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 2022, the maximum bonus opportunities for Innes Smith and Michelle Motion
were 125% of salary and 100% of salary respectively (with each individual’s “salary” for these purposes being
the annual rate payable to them on 1 June 2021). The following table identifies the measures used, their
respective weightings and the bonus award derived from the level of achievement over the year:
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Measure
Weighting
(as a % of maximum opportunity)
Profit before tax
Return on capital employed
Gross margin
Customer satisfaction
Innes Smith
50%
30%
10%
10%
Michelle Motion
50%
30%
20%
N/A
Total bonus (% of maximum opportunity) = (a)
Maximum opportunity (% of salary) = (b)
Total bonus earned (% of salary) = (a) x (b)
Bonus earned as a result of
performance against specific
measure in the relevant year1
(as a % of maximum opportunity)
Michelle Motion
47.6%
24.8%
0%
N/A
72.4%
100%
72.4%
Innes Smith
47.1%
23.8%
0%
8.8%
79.7%
125%
99.6%
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 2022.
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. (For the avoidance of doubt, the rate of pension
contribution payable to Innes Smith and Michelle Motion is equal to the amount paid to the wider employee
population.)
Long Term Incentive Plan
Introduction
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 previous reports, the Springfield Properties PLC Performance Share Plan (the “PSP”) was
adopted by the Board on 9 January 2020 in order to replace the CSOP and ESOP. It allows for the grant of
conditional rights to acquire shares (in the form of “nominal value” options) that 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.
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.
33
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
REMUNERATION COMMITTEE REPORT (CONTINUED)
Exercises by Executive Directors during the year to 31 May 2022
On 9 June 2021, Michelle Motion exercised an option over 28,301 shares that had originally been granted to
her under the CSOP on 16 October 2017. The exercise price payable under this option was 106p per share
and the closing share price on the date of exercise was 167p. Michelle Motion elected to retain all the shares
acquired as a result of this exercise.
Grants made to Executive Directors during the year to 31 May 2022
Since the adoption of the PSP in early 2020, the policy of the Committee has been to grant awards to
Executive Directors (and other senior employees) on an annual basis. However, the appropriateness of this
approach was assessed at the same time as the Committee carried out its further review of Executive
Directors’ salaries that is described on page 31.
The conclusion reached by the Committee was that, for the following reasons, it would be more appropriate
to adopt a revised policy that involves making more substantial grants of PSP awards to Executive Directors
once every three years:
it allows awards to be more closely aligned to the medium term strategy of the business that is in
place at the time of the grants;
over the three year vesting period applicable to each award, it more closely aligns the interests of
the senior management team with those of our shareholders; and
it is more straightforward from an administrative perspective.
Details of the PSP grants to Innes Smith and Michelle Motion that were made under this new approach during
the financial year to 31 May 2022 are included in the table set out on page 36. The performance conditions
applicable to these awards will be assessed following the expiry of the financial year to 31 May 2024 and will
require the achievement of stretching targets relating to earnings per share (75% weighting) and the
Company’s net debt / total assets gearing (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. For the avoidance of doubt, it is the Committee’s intention
that no further PSP awards will be granted to the Executive Directors until the financial year ending on 31
May 2025.
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.
During the financial year to 31 May 2022 (and as disclosed in the table set out on page 36), both Michelle
Motion and Innes Smith continued to hold the options granted to them under the SAYE Scheme on 29 April
2021. No further options were granted under this arrangement during the year.
34
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
REMUNERATION COMMITTEE REPORT (CONTINUED)
Remuneration in the Year
During the year to 31 May 2022, the directors received the following remuneration:
Basic
salary/fees1
Annual
Bonus2
Taxable
benefits3
£000
£000
£000
Pension
contributions
£000
2022
Total
£000
2021
Total
£000
Executive Directors
Sandy Adam
Innes Smith
Michelle Motion
Non-Executive Directors
Matthew Benson
Roger Eddie
Nick Cooper
Colin Rae
129
258
200
41
41
41
41
-
230
134
-
-
-
-
8
4
5
-
-
-
-
6
26
20
-
-
-
-
143
518
359
41
41
41
41
128
456
309
40
40
40
40
751
364
17
52
1,184
1,053
Notes:
1Additional information relating to the salaries paid to the Executive Directors during the financial year to 31 May 2022 is set out
on page 31.
2 Further details of the Company’s annual bonus scheme for the financial year to 31 May 2022 are set out on page 32.
3 The taxable benefits figure in the above table for each of the Executive Directors relates to a range of benefits provided by the
Group including a car allowance and life and health assurance.
The above table does not include the value of share options held by the directors, details of which are set
out below.
35
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
REMUNERATION COMMITTEE REPORT (CONTINUED)
Share Options and PSP awards
Details of options over the Group’s shares that have been granted to Executive Directors under the CSOP, ESOP, SAYE Scheme and PSP and which were outstanding during the
year to 31 May 2022 are as follows:
Exercised3 Granted
Lapsed
No. of shares
under option
at 31 May 2022
Exercise
price
Date of Grant
Date from
which
normally
exercisable
Expiry date
Director
Scheme
Innes Smith
Michelle Motion
CSOP
ESOP
ESOP
PSP
PSP
SAYE
PSP
CSOP
ESOP
ESOP
PSP
PSP
SAYE
PSP
No. of
shares
under
option at 1
June 2021
28,301
208,019
257,142
127,828
202,000
13,793
-
837,083
28,301
84,906
129,795
68,176
107,650
13,793
-
-
-
-
-
-
-
-
-
(28,301)
-
-
-
-
-
-
-
-
-
-
-
401,408
401,408
-
-
-
-
-
-
227,112
432,621
(28,301)
227,112
-
-
-
-
-
-
-
-
-
-
-
-
-
-
28,301
208,019
257,142
127,828
202,000
13,793
401,408
1,238,491
-
84,906
129,795
68,176
107,650
13,793
227,112
631,432
106p
106p
122.5p
0.125p
0.125p
16/10/2017
16/10/2020
16/10/2027
16/10/2017
16/10/2020
16/10/2027
01/10/2018
01/10/2021
01/10/2028
09/01/2020
09/01/2023
09/01/2030
30/10/2020
30/10/2023
30/10/2030
130.05p
29/04/2021
01/06/2024
30/11/2024
0.125p
22/12/2021
22/12/2024
22/12/2031
106p
106p
122.5p
0.125p
0.125p
16/10/2017
16/10/2020
16/10/2027
16/10/2017
16/10/2020
16/10/2027
01/10/2018
01/10/2021
01/10/2028
09/01/2020
09/01/2023
09/01/2030
30/10/2020
30/10/2023
30/10/2030
130.05p
29/04/2021
01/06/2024
30/11/2024
0.125p
22/12/2021
22/12/2024
22/12/2031
36
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 during the financial
year to 31 May 2022 vest and become exercisable is provided on page 33. For PSP options granted in previous years, high level
details of the applicable performance conditions are set out in the Remuneration Committee’s report for the year in which such
grants took place. 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 CSOP options by Michelle Motion during the financial year to 31 May 2022 are
set out on page 34 above.
Directors’ Interests in the Group’s Shares
Directors’ interests in the Group’s shares are disclosed in the Directors’ Report (page 40).
Roger Eddie
Chairman of the Remuneration Committee
19 September 2022
37
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 MAY 2022
The Directors present their annual report and the audited financial statements of the Group for the year ended
31 May 2022.
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
Sandy Adam
Innes Smith
Michelle Motion
Roger Eddie
Matthew Benson
Nick Cooper
Colin Rae
Executive Chairman
Chief Executive Officer
Chief Financial Officer
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Results and Dividends
The results for the year are set out on page 54.
The Board is proposing a final dividend of 4.7p per share subject to shareholder approval at the next Annual
General Meeting to be held on 31 October 2022.
Taking into account the interim dividend of 1.5p per share already declared and paid, this equates to a total
dividend of 6.2p (2021: 5.8p) 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.
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
38
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
DIRECTORS’ REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
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 21-22.
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.
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.
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 35.
39
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
DIRECTORS’ REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
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
22,118,300
15,671,820
812,735
110,919
50,326
52,000
22,170
25,000
14,895
28,302
20,000
% of ordinary share
capital and voting
rights
18.7%
13.2%
0.7%
0.1%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
38,926,667
32.9%
Financial Risk Management Objectives and Policies
Details of the Group’s financial risk management objectives and policies are set out in Note 30 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.
The Group will make its first Taskforce on Climate-Related Financial Disclosures (TCFD) compliant
disclosure within our 31 May 2023 Annual Report and Accounts. The disclosures are required to disclose the
steps we have taken to incorporate climate-related risks and opportunities into our risk management and
strategic planning processes. It will provide information on four elements of our organisation’s operations,
namely governance, strategy, risk management and matrices and each element is being considered as part
of our ESG strategy development in preparation.
40
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
DIRECTORS’ REPORT (CONTINUED)
STREAMLINED ENERGY AND CARBON REPORTING
FOR THE YEAR ENDED 31 MAY 2022
As one of Scotland’s largest housebuilders we recognise the leading role that we can play in reducing the
carbon impact of our operations and in the delivery of energy efficient homes for our customers.
The first ESG Strategy for the Springfield Group was developed this period and published alongside our
Annual Report. The Strategy outlines the Group’s aspiration to be net zero carbon by at least 2045 which is
line with the Scottish Government’s aspirations. A route map detailing our journey to net zero carbon will be
developed.
The environmental impact of our homes
Scottish Building Standards are amongst the highest in Europe and Springfield has gone beyond current
regulations in our homes to ensure we are delivering the best for our customers now and into the future.
The Springfield approach to building a home is ‘fabric first’. Over 90% of Springfield homes are built using
timber from Forest Stewardship Council (FSC) and Programme for the Endorsement of Forest Certification
(PEFC) sources. We believe that opting for thick, quality insulation first and foremost is key to achieving
energy efficiency and provides the most direct benefit to the customer, providing a comfortable temperature,
reducing energy costs, and lowering impact on the environment.
With fossil fuelled heating in new build homes due to be outlawed in Scotland from 2024, we have strategically
gained early experience in the use of air-source technology. By making the switch to heat pump technology,
customers enjoy a warm home and save money, all while reducing their carbon emissions. To date we have,
over 50 developments that are complete or under construction with homes heated by full-air source.
As part of our ESG strategy we have committed to explore further fossil fuel alternatives by undertaking
research to understand the impact of capital cost, running cost and carbon reduction over the life of a home.
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.
Our key focus for 2022 beyond the continued roll out of Electric Vehicles within the Group’s ‘commercial fleet’
and ‘grey fleet’ has been determining our new ESG strategy. The ESG Strategy has a significant focus on
the reduction of both our own scope 1 and 2 Greenhouse Gas Emissions and also widens the focus of our
supply chain impact beyond identifying sustainable products to beginning discissions with our suppliers to
understand their own approach to sustainability.
Springfield’s first timber kit factory opened over twenty years ago in Elgin in the north of Scotland. This year
we opened a second timber kit factory in the central belt of Scotland. The addition of a second timber kit
factory secures supply and further reduces our carbon footprint as we reduce the transport distances of the
kits produced.
Within the ESG strategy we recognise the importance of MMC in building quality homes with less waste,
higher productivity and better environmental and safety outcomes overall. We have already started
developing our methodology to calculate the level of MMC utilised across our operations and will set targets
to incrementally improve.
41
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
DIRECTORS’ REPORT (CONTINUED)
STREAMLINED ENERGY AND CARBON REPORTING (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
Energy Use and Greenhouse Gas Emissions
For the financial year ended 31 May 2022
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
31 5 22
Tonnes
e
CO
31 5 22
(cid:909)
Energy
Use kWh
31 5 21
Tonnes
e
CO
31 5 21
(cid:909)
3,185,137
779.49
2,683,951
646.65
8,466,137
2,582,939
2,130.91
548.44
6,341,069
1,710,678
1,598.22
398.83
1,716,539
15,950,752
429.36
3,888.20
3.13
1,324,412
12,601,110
329.11
2,972.81
3.06
Note the 2022 figures include Tulloch Homes for 1 December 2021 to 31 May 2022 being the period during
the financial year that they belong to the Group.
Homes sold
Actual 2022
Actual 2021
Total
1,242
973
Private
712
559
Affordable
405
363
Contracting
125
51
Methodology
Our Scope 1, Scope 2 and Scope 3 energy use and greenhouse gas emissions data for 2022 has been
independently produced from information provided by the Group to an external consultancy with expertise in
this area.
SPRINGFIELD PROPERTIES PLC
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
CHIEF EXECUTIVE’S STATEMENT (CONTINUED)
SPRINGFIELD PROPERTIES PLC
applies the use of estimates for the last one to two months of the period.
FOR THE YEAR ENDED 31 MAY 2022
STRATEGIC REPORT
STRATEGIC REPORT
Where actual emissions data from energy consumption is not available for an individual site, the Group
In affordable housing, the Group has paused the signing of new long-term fixed price contracts until
calculates an average energy consumption for its show homes, plots and site cabins across the actual
appropriate inflationary accommodations are introduced. We have undertaken a thorough review of all
population that full data is held for and this average is then used. We do not consider refrigerant losses on
existing projects and reassessed costs to completion. Accordingly, we are well positioned for when market
our air conditioning units to be material and as such these are not reported in our emissions data.
conditions normalise in affordable housing.
CHIEF EXECUTIVE’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
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.
In affordable housing, the Group has paused the signing of new long-term fixed price contracts until
appropriate inflationary accommodations are introduced. We have undertaken a thorough review of all
existing projects and reassessed costs to completion. Accordingly, we are well positioned for when market
conditions normalise in affordable housing.
In addition, the temporary rent freeze announced by the Scottish Government has halted our strategy to
expand PRS activity with Sigma at this time. Consequently, the Group expects contract housing (PRS)
revenue to be lower in 2023. However, the Group expects to be able to mitigate part of this reduction through
For site diesel, usage is based on litres delivered to site within the financial period.
the sale of some land that had been allocated for PRS.
We do not consider train travel to be material and as such this is not reported in our emissions data.
In addition, the temporary rent freeze announced by the Scottish Government has halted our strategy to
Overall, the Group expects to deliver significant growth for the year to 31 May 2023, with record revenue
expand PRS activity with Sigma at this time. Consequently, the Group expects contract housing (PRS)
driven by the contribution from private housing. Accordingly, with the solid foundations that the Group has in
revenue to be lower in 2023. However, the Group expects to be able to mitigate part of this reduction through
Greenhouse gas (GHG) emissions are calculated in line with GHG Reporting Protocol – Corporate standard
place, the Board remains confident in Springfield’s prospects and in its ability to deliver shareholder value,
the sale of some land that had been allocated for PRS.
and reported in line with the UK Government’s Guidance on Streamlined Energy and Carbon Reporting and
and continues to look to the future with confidence.
mandatory GHG reporting guidance. Conversion factors are taken from the UK Governments conversion
Overall, the Group expects to deliver significant growth for the year to 31 May 2023, with record revenue
factors 2021.
driven by the contribution from private housing. Accordingly, with the solid foundations that the Group has in
place, the Board remains confident in Springfield’s prospects and in its ability to deliver shareholder value,
and continues to look to the future with confidence.
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.
Innes Smith
Chief Executive Officer
19 September 2022
42
Innes Smith
Chief Executive Officer
19 September 2022
14
14
SPRINGFIELD PROPERTIES PLC
CORPORATE GOVERNANCE
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
FOR THE YEAR ENDED 31 MAY 2022
Directors’ responsibilities
The Directors are responsible for preparing the annual report and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law
the directors are required to prepare the group and company financial statements in accordance with UK
adopted international accounting standards. Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and
company and of the 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 judgements and accounting estimates that are reasonable and prudent;
state whether they have been prepared in accordance with UK adopted international accounting
standards 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 the company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the company’s transactions and disclose with reasonable accuracy at any time the financial position of the
company and enable them to ensure that the financial statements comply with the requirements of the
Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the annual report and the financial statements are made available
on a website. Financial statements are published on the company's website in accordance with legislation
in the United Kingdom governing the preparation and dissemination of financial statements, which may vary
from legislation in other jurisdictions. The maintenance and integrity of the company's website is the
responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the
financial statements contained therein.
SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
CHIEF EXECUTIVE’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
In affordable housing, the Group has paused the signing of new long-term fixed price contracts until
appropriate inflationary accommodations are introduced. We have undertaken a thorough review of all
existing projects and reassessed costs to completion. Accordingly, we are well positioned for when market
conditions normalise in affordable housing.
In addition, the temporary rent freeze announced by the Scottish Government has halted our strategy to
expand PRS activity with Sigma at this time. Consequently, the Group expects contract housing (PRS)
revenue to be lower in 2023. However, the Group expects to be able to mitigate part of this reduction through
the sale of some land that had been allocated for PRS.
Sandy Adam
Executive Chairman
19 September 2022
Overall, the Group expects to deliver significant growth for the year to 31 May 2023, with record revenue
driven by the contribution from private housing. Accordingly, with the solid foundations that the Group has in
place, the Board remains confident in Springfield’s prospects and in its ability to deliver shareholder value,
and continues to look to the future with confidence.
Innes Smith
Chief Executive Officer
19 September 2022
43
14
SPRINGFIELD PROPERTIES PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPRINGFIELD PROPERTIES PLC
FOR THE YEAR ENDED 31 MAY 2022
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 2022 and of the Group’s profit for the year then ended;
the Group financial statements have been properly prepared in accordance with UK adopted
international accounting standards;
the Parent Company financial statements have been properly prepared in accordance with UK
adopted international accounting standards 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 2022 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 UK adopted international accounting 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 for both the Group and Parent Company;
analysing the current and forecast performance of the Group, which incorporates the Parent
Company, including working capital requirements, by assessing Directors’ assumptions against
market data and post year end performance;
re-performing the Directors’ sensitivity testing and reverse stress testing on Directors’ 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, including the utilisation, headroom and expiration
date of the revolving credit facility detailed in note 22;
recalculating the existing 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 that the going concern disclosures are appropriate, comply with the reporting standards,
and accurately reflect the Director’s assessment.
44
SPRINGFIELD PROPERTIES PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPRINGFIELD PROPERTIES PLC
(CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
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
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
Key audit matters
Materiality
98% of Group profit before tax
98% of Group revenue
96% of Group total assets
2022
2021
–
recognition
Revenue
construction contracts
Valuation and
work in progress
Accounting for acquisitions
impairment of
Group financial statements as a whole
£1,100,000 (2021: £735,000) based on 5% (2021: 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 has historically managed its operations from a single location in the UK with common financial
systems, processes and controls covering all significant components. The acquisition of Tulloch Homes
Group increased the number of key management locations to two and, during the year under audit Tulloch
Homes Group had its own financial systems, processes and controls in place.
We determined that four significant components, Springfield Properties Plc, Tulloch Homes Holdings 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 analytical review procedures on the non-significant 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.
45
SPRINGFIELD PROPERTIES PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPRINGFIELD PROPERTIES PLC
(CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
Key audit matter
Revenue
recognition
construction
contracts
–
Refer Accounting
policies Note 2.5
(page 60) and
Note 4 of
the
consolidated
financial
statements (page
66).
from
construction
Revenue
contracts is recognised based on
stage of completion measured in
reference to the costs incurred as a
total costs (‘input
proportion of
method’).
Measured stage of completion is
based on actual costs incurred to
date on each project and requires
the
to
management
estimated total costs required to
the development. The
complete
inherently
estimation process
is
significant
and
complex
management judgement is required
forecast
costs
There is a potential risk of fraud as
revenue could be manipulated
in
bias
through management
estimating
complete,
to
through incorrect allocation of costs
to each development to skew the
margins on individual developments
and through the posting of manual
journals.
Revenue recognition on construction
contracts is an area of focus for our
audit in considering possible areas
of management bias and fraud and
therefore we determined this to be a
key audit matter.
the scope of our audit
How
addressed the key audit matter
revenue, we
For all construction
recalculated
to be
recognised based on the stage of
completion using the input method.
revenue
the
We
tested controls around sub-
contractor procurement, approval of
purchases and allocation of costs to
developments and performed testing
over validity and accuracy of costs
incurred to date.
We performed procedures over a
sample of cost to complete estimates
included as part of the cost value
reconciliation
(‘CVR’) process. This
included gaining an understanding of
movements against original appraisals,
testing a sample of estimated costs to
complete to corroboratory evidence and
assessing the forecasting accuracy of
prior year CVRs against projects
completed during the year and since
year end.
We performed a review of the most
recent CVRs available after year end for
any indication of margin decline and,
where a margin decline was noted,
challenged whether the reasons for the
decline in margin relate to conditions
that exists at year end and should be
factored into the stage of completion
calculation used in determining the
revenue to be recognised in the year.
a
focus
particular
throughout
We performed journal entry testing,
applying
to
individually unusual and/or material
manual journals posted to the revenue
account
the year. We
agreed journals meeting predetermined
to
criteria
confirm that the revenue recognised
was appropriate, had an appropriate
business rationale and was in line with
the Group’s accounting policy.
to supporting evidence
We considered the application of the
accounting standards to the Group’s
recognition policies and
revenue
practices.
Key observations:
Based on the procedures performed we
consider that revenue from construction
contracts
recognised
appropriately.
been
has
46
SPRINGFIELD PROPERTIES PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPRINGFIELD PROPERTIES PLC
(CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
Key audit matter
Valuation
and
impairment of
work
in
progress
Refer,
Accounting
policies
Note
2.16 (page 63)
and Note 18 of
the consolidated
financial
statements (page
75).
The value of work in progress is the
most significant asset on
the
balance sheet (page 55). Inventory
and work in progress comprises land
and work in progress in relation to
relevant
private housing. The
proportion of
in
progress is recognised in cost of
sales upon sale of a unit.
land and work
in
of
accurate
valuation
There is inherent complexity and
significant
the
judgement
valuation of work in progress as the
each
correct
development project is dependent
on
allocation,
projected profitability of the overall
development,
forecast
revenue and costs to complete, and
where the work in progress is for
undeveloped land, an assessment
on whether planning permission will
be achieved.
including
cost
The valuation of work in progress,
the risk of impairment and the costs
recognised in cost of sales are
therefore areas of audit focus and
was determined to be a key audit
matter.
the scope of our audit
How
addressed the key audit matter
tested controls around sub-
We
contractor procurement, approval of
purchases and allocation of costs to
developments and performed testing
over validity and accuracy of costs
capitalised to work in progress.
We recalculated the release to cost of
sales
for a sample of sites with
reference to the total project margin as
referenced
value
reconciliation (CVR).
cost
the
in
an
understanding
We performed procedures over the cost
to complete estimates included as part
of the CVR process. This included
gaining
of
movements against original appraisals,
testing a sample of estimated costs to
complete to corroboratory evidence and
assessing the forecasting accuracy of
prior year CVRs against projects
completed during the year and since
year end.
reviewed
assessment
management’s
We
against
impairment
to complete and
estimated costs
projected margins to assess whether
there was any indication of impairment,
and, where any impairment indicators
had been noted,
these had been
correctly treated.
For a sample of work in progress
balances relating to undeveloped land
that planning
we obtained proof
permission had been achieved and that
the
is
prospective
estimated to be profitable.
development
Key observations:
Based on the procedures performed we
judgements made by
consider
the
in
in valuing work
management
progress are appropriate.
47
SPRINGFIELD PROPERTIES PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPRINGFIELD PROPERTIES PLC
(CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
Key audit matter
Accounting
acquisitions
for
Refer Note 17 of
the consolidated
financial
statements
(pages 74-75)
On 1 December 2021 the Group
completed its acquisition of Tulloch
Homes Group
total
for
consideration of £77.9m.
a
The Group has recorded the assets
and liabilities acquired at fair value.
attributing
to assets
fair values
acquired and liabilities assumed as
part of business combinations is
considered to be a key judgement
and, together with the calculated
purchase
directly
consideration
the calculation of any
impact
goodwill
upon
acquisition.
recognised
Furthermore, the financial statement
disclosure requirements associated
with acquisitions are extensive and
there is a risk that the disclosures
within the financial statements do
not comply with the requirements of
the accounting standards.
The acquisition accounting
is
therefore an area of audit focus and
was determined to be a key audit
matter in the current year.
the scope of our audit
How
addressed the key audit matter
the
reviewed
We obtained and
agreement for the sale and purchase of
Tulloch Homes, signed by both parties,
together with any related documents to
the Group had
determine whether
obtained the requisite control over all
entities
upon
consolidation.
included
be
to
We agreed the consideration to be paid
to the agreement for the sale and
purchase of the Tulloch Homes Group.
the discounting of
We recalculated
deferred consideration included as part
of
the
discount rate used against appropriate
independent comparators.
transaction and
tested
the
in
us
challenging
We involved internal auditor’s experts to
assist
the
assumptions used by management and
management’s expert in determining
the fair value of work in progress
acquired within
the Tulloch Homes
Group.
the analysis and
We challenged
assumptions used by management and
management’s expert in identifying and
determining the fair value of intangible
assets which had not previously been
recognised within Tulloch Homes
Group. We assessed the recognition of
the intangible assets with reference to
the requirements and guidance detailed
in the relevant accounting standards to
assets
asses whether
recognised
and
are
engaged an internal auditor’s expert to
assist in challenging the assumptions
and methodology used by management
to determine the fair value against
recognised valuation techniques and
independent industry benchmarks.
intangible
appropriate
We assessed the disclosures within the
financial statements with reference to
the accounting standards.
Key observations:
Based on the procedures performed we
judgements made by
consider
the
management
the
in accounting
acquisition of the Tulloch Homes Group
and
to be
appropriate.
the related disclosures
for
48
SPRINGFIELD PROPERTIES PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPRINGFIELD PROPERTIES PLC
(CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
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
Rationale for the
benchmark
applied
Performance
materiality
Basis
determining
performance
materiality
for
Group financial statements
Parent company financial
statements
2022
£
1,100,000
5% of Profit
before tax at
planning stage
Principal
consideration in
assessing
financial
performance of
the business
2021
£
735,000
5% of Profit
before tax
2022
£
520,000
9% of Profit
before tax
Principal
consideration in
assessing
financial
performance of
the business
Principal
consideration in
assessing
financial
performance of
the business
2021
£
700,000
3% of Net Assets
Holding company
660,000
435,000
312,000
420,000
Performance materiality is set at 60%
of materiality to reflect our
assessment of the risk that the
aggregate of uncorrected and
undetected misstatements exceeds
materiality for the financial
statements as a whole.
Performance materiality is set at 60%
of materiality to reflect our
assessment of the risk that the
aggregate of uncorrected and
undetected misstatements exceeds
materiality for the financial
statements as a whole.
Component materiality
We set materiality for each component of the Group based on a percentage of between 23% and 55% (2021:
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 £258,000 to £604,000 (2021: £105,000
to £360,00). In the audit of each component, we further applied performance materiality levels of 60% (2021:
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 £44,000 (2019: £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
49
SPRINGFIELD PROPERTIES PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPRINGFIELD PROPERTIES PLC
(CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
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.
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
Matters
on
which we are
to
required
report
by
exception
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.
In 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.
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 Directors’ 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,
50
SPRINGFIELD PROPERTIES PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPRINGFIELD PROPERTIES PLC
(CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
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:
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, bonus 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;
- 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, in work in progress
valuation, including margin recognition and in accounting for acquisitions.
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, valuation of work in progress, including margin recognition
and the accounting for acquisitions 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, reviewing
correspondence with regulatory bodies, such as HMRC, and reviewing other internal documentation,
such as claims logs and risk registers, 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;
-
-
51
SPRINGFIELD PROPERTIES PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPRINGFIELD PROPERTIES PLC
(CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
-
-
-
-
-
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;
engaging with auditor’s experts to assist us in challenging key areas of management judgement to test
that they are free from bias;
carrying out tests of management controls 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 2022; and
carrying out detailed testing, on a sample basis, of material transaction, financial statement categories
and balances to appropriate documentary evidence to verify the completeness, occurrence and
accuracy of the reported financial statements.
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
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
19 September 2022
BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).
52
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MAY 2022
Company Registration No. SC031286 (Scotland)
Revenue
Cost of sales
Gross profit
Administrative expenses before exceptional items
Exceptional items
Total administrative expenses
Other operating income
Operating profit
Finance income
Finance costs
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
Earnings per share
Basic earnings on profit for the year
Diluted earnings on profit for the year
Adjusted earnings per share
Basic earnings on profit for the year
Diluted earnings on profit for the year
Adjusted earnings per share is a non-GAAP measure.
Note
4
6
10
6
5
8
9
12
12
12
12
2022
£000
257,095
(213,960)
43,135
(20,950)
(1,100)
(22,050)
396
21,481
134
(1,889)
19,726
(3,652)
16,074
16,074
16,074
14.74p
14.37p
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
13.79p
13.55p
15.63p
15.24p
14.41p
14.16p
The Group has no items of other comprehensive income.
The accompanying notes on pages 57 to 88 form an integral part of these financial statements.
53
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
FOR THE YEAR ENDED 31 MAY 2022
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
Short-term bank borrowings
Deferred consideration
Short-term obligations under lease liabilities
Provisions
Corporation tax
Non-current liabilities
Long-term bank borrowings
Long-term obligations under lease liabilities
Deferred taxation
Deferred consideration
Contingent consideration
Provisions
Total liabilities
Net assets
Equity
Share capital
Share premium
Retained earnings
Equity attributable to owners of the parent company
Note
13
15
16
24
19
18
19
28
20
22
25
23
26
22
23
24
25
26
26
27
27
2022
£000
5,799
5,758
520
2,133
5,641
2021
£000
4,539
1,649
-
539
5,411
19,851
12,138
230,095
21,363
16,390
267,848
287,699
68,513
-
6,119
1,284
821
273
77,010
50,486
2,670
3,726
6,455
2,000
1,825
67,162
144,172
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
143,527
111,230
148
78,744
64,635
143,527
128
56,761
54,341
111,230
These financial statements were approved and authorised for issue by the Board of Directors on 19
September 2022. Signed on behalf of the Board by:
Sandy Adam - Executive Chairman
Company number: SC031286
The accompanying notes on pages 57 to 88 form an integral part of these financial statements.
54
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2022
Share
capital
£000
Share
premium
£000
Retained
earnings
£000
Notes
1 June 2020
Share issue
Total comprehensive
income for the year
Share based payments
Dividends
31 May 2021
Share issue
Total comprehensive
income for the year
Share based payments
Dividends
31 May 2022
27
11
27
27
11
122
6
-
-
-
128
20
-
-
-
52,330
4,431
-
-
-
56,761
21,983
-
-
-
148
78,744
Total
£000
95,864
4,437
13,710
493
(3,274)
111,230
43,412
-
13,710
493
(3,274)
54,341
-
22,003
16,074
554
(6,334)
64,635
16,074
554
(6,334)
143,527
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 issued, 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 57 to 88 form an integral part of these financial statements.
55
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR TO 31 MAY 2022
Cash flows generated from operations
Note
Profit for the year
Adjusted for:
Exceptional items
Taxation charged
Finance costs
Finance income
Adjusted operating profit before working capital movement
Exceptional items
Gain on disposal of tangible fixed assets
Share based payments
Non-cash movement
Amortisation of intangible fixed assets
Depreciation and impairment of tangible fixed assets
Operating cash flows before movements in working capital
(Increase)/decrease in inventory
Decrease/(increase) in accounts and other receivables
Increase in accounts and other payables
Net cash from operations
Taxation paid
Net cash inflow 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
Purchase of intangible assets
Net cash (used in)/from investing activities
Financing activities
Proceeds from issue of shares
Costs relating to share raise
Proceeds from bank loans
Repayment of bank loans
Payment of lease liabilities
Dividends paid
Interest paid
Net cash inflow/(outflow) from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
10
9
8
10
6
27
6
33
33
11
28
2022
£000
16,074
1,100
3,652
1,889
(134)
22,581
(1,100)
(187)
554
100
161
1,724
23,833
(16,505)
4,253
7,503
19,084
(3,522)
15,562
(376)
247
(2,362)
(41,525)
-
(84)
(44,100)
22,728
(724)
16,486
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)
(1,437)
(6,334)
(1,617)
29,102
564
15,826
16,390
(1,480)
(3,274)
(1,297)
(38,802)
14,304
1,522
15,826
56
The accompanying notes on pages 57 to 88 form an integral part of these financial statements.
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
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. See company note 3 for details of the subsidiary companies.
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 UK adopted
international accounting standards. The Group has adopted all the standards and amendments to existing
standards which are mandatory for accounting periods beginning on 1 June 2021.
The financial statements have been prepared under the historical cost convention except for contingent
consideration.
The following standards have been issued but have not been applied by the Group in these financial
statements. These amendments to standards and interpretations had no significant impact on the financial
statements:
Amendments to IFRS 9, IAS 39 and IFRS 7 ‘Interest Rate Benchmark Reform 2’
The following new standards and amendments to standards have been issued but are not effective for the
financial year beginning 1 June 2021 and have not been early adopted:
Amendments to IAS 1 ‘Classification of Liabilities as Current or Non-current’
Amendments IAS 16 ‘Property, Plant and Equipment’
Amendments to IAS 37 ‘Onerous Contracts’
Annual Improvements to IFRS Standards 2018-2020
Amendments to IFRS 3 ‘Reference to the Conceptual Framework’
Definition of Accounting Estimates (Amendments to IAS 8)
Amendments to IAS 1 ‘Presentation of Financial Statements’ and IFRS Practice Statement 2
Making Materiality Judgements
IFRS 17 'Insurance Contracts'
The new standards and amendments to the standards noted above are expected to have no significant
impact on the financial statements.
2.2
Basis of consolidation
The consolidated financial statements incorporate those of Springfield Properties PLC and its subsidiaries
and jointly controlled entities. Where the company has control over an investee, it is classified as a subsidiary.
The company controls an investee if all three of the following elements are present: power over the investee,
exposure to variable returns from the investee, and the ability of the investor to use its power to affect those
variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a
change in any of these elements of control. Contingent consideration is measured at its fair value at the date
of acquisition. If the contingent consideration meets the definition of equity, it is not remeasured, and
settlement is accounted for within equity. Other contingent consideration is remeasured at fair value at each
reporting date with subsequent changes in the fair value of the contingent consideration recognised in the
consolidated profit and loss account.
All financial statements are made up to 31 May 2022.
All intra-Group transactions, balances and unrealised gains on transactions between Group companies are
eliminated on consolidation.
57
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
2. Summary of significant accounting policies (continued)
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 2022 was an excellent one for the Group with record sales and profit levels.
The Group continues to have a strong relationship with the Bank of Scotland - the revolving credit facility of
£64.5m, which was put in place for three years in September 2021 with an expiry date in January 2025 was
extended in November 2021 to £87.5m to help part fund the Tulloch acquisition on the same terms as the
existing facility.
Post year end, as announced on 22 June 2022, the Group acquired the Scottish housebuilding business of
Mactaggart & Mickel. The Group’s annual budget for the year ending 31 May 2023 was approved at Board
level on Wednesday the 25th of May 2022. In advance of the completion of the Mactaggart & Mickel
acquisition an updated 3-year plan was prepared and approved by the Board on the 20th of June 2022.
In order to support the going concern period to 30 September 2023, the first two years (to May 2023 and May
2024) of the Board approved 3-year plan to May 2025 forms the basis of the assessment (base case forecast)
to confirm the appropriateness of the going concern basis being adopted for the preparation of the May 2022
Annual Report and Financial Statements.
The year to May 2023 has been updated to reflect the actual months results for June and July 2022 as well
as factoring in margin changes on certain affordable developments. The forecasts for May 2023 and May
2024 do not include any PRS revenues that were not contracted at the date of the May 2022 Annual Report
and Financial Statements. There will be opportunities for PRS revenues in the future.
Sensitivities have been run based on the updated May 2023 and May 2024 numbers noted above. These
involved increasing Private and Affordable build costs by 5% and 7.5% (on an underlying basis this
represents a higher percentage increase due to the fact that for most developments a number of sub-
contractor packages have a fixed price period) offset by removing land purchases that were not contracted
and that had no associated revenues in May 2023 or May 2024, other non-contracted payments were
reviewed with some removed as a mitigating action. In each of the scenarios run the Group was still able to
operate within existing banking facilities and covenants.
Under the base case forecast the peak borrowing utilises 92.5% of the bank facilities however by the year
end in May 2023 the facility utilisation is forecast to drop to around 60%. The Group also has a large and
high-quality land bank which provides another source of comfort with the projections containing no land sales
despite a number of opportunities over the next 12 months.
The Directors are confident 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.
58
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
2.
Summary of significant accounting policies (continued)
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 costs of a development to each individual plot
based on the overall development margin and drives the recognition of costs in the profit and loss account
as each plot is sold. Any changes in the forecast profit margin of a site from changes in sales prices or costs
to complete is recognised across all homes sold in both the current period and future periods.
Revenue on contracts recognised over time
Revenue from affordable housing contracts is recognised over time as development progresses as the
construction activity enhances an asset controlled by the customer.
Where the outcome of a contract can be estimated reliably, the amount of revenue recognised depends on
the stage of completion. This is based on the development costs incurred as a proportion of the total expected
development costs (the input method).
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 amounts recoverable
on contracts.
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.
Plant Hire Revenue
Plant hire revenue represents amounts receivable for the short-term hire of plant and equipment. Revenue
is recognised when the hire period commences and the customer benefits from the use of the plant and
equipment and is recognised evenly throughout the hire period.
59
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
2. Summary of significant accounting policies (continued)
2.6.
Grants
Grants are recognised when it is probable that the grants will be received and that all related conditions will
be met, usually on submission of a valid claim for payment. Revenue grants are credited to the profit and
loss account as and when the relevant expenditure is incurred.
2.7.
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense in the period in which
the services are received, unless those costs are required to be recognised as part of the cost of stock.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are
received.
Termination benefits are recognised immediately as an expense when the Group is demonstrably committed
to terminate the employment of an employee or to provide termination benefits.
2.8.
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
2.9.
Net finance costs
Finance costs comprise interest payable on bank loans and the unwinding of the discount from nominal to
present day value of provisions and lease liabilities. Finance income comprises the unwinding of the discount
from nominal to present day value of shared equity. Interest income and interest payable is recognised in the
income statement on an accruals basis.
2.10.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as
reported in the profit and loss account because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable or deductible. The Group’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the
reporting date.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets
and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax is not recognised on temporary differences arising from the initial recognition of goodwill or other
assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax is measured on a non-discounted basis using the tax rates and laws that have then been
enacted or substantively enacted by the reporting date.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that
it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be
recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability
is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except
when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with
in equity. Deferred tax assets and liabilities are offset when the Group or 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.
60
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
2. Summary of significant accounting policies (continued)
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.
In the prior year the furlough grant income received from the government was separately disclosed within the
consolidated profit and loss account as exceptional, due to its incremental nature. The direct furlough payroll
costs were considered abnormal costs in the prior year and consistent with previous years, any direct payroll
costs reflecting employee down time (abnormal production) is expensed to the profit and loss account. 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.
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
Trademark assets in relation to Springfield Properties PLC 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.
The brand asset in relation to Tulloch Homes has a 15 year useful life and amortisation is charged on a
straight line basis.
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.
61
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
2. Summary of significant accounting policies (continued)
2.14.
Fixed asset investments
Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any
accumulated impairment losses. The investments are assessed for impairment at each reporting date and
any impairment losses are recognised immediately in the profit and loss account. Costs associated with the
acquisition of subsidiaries are recognised in the profit and loss account as an exceptional item.
2.15.
Impairment of fixed assets
At each reporting end date, the Group reviews the carrying amounts of its tangible fixed assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment
loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value-in-use. Any impairment loss and
reversal of losses are recognised in the profit and loss account.
2.16.
Inventories and work in progress
Property, including land held under development, acquired or being constructed for sale in the ordinary
course of business, rather than to be held for rental or capital appreciation, is held as stock and is measured
at the lower of cost and net realisable value.
Cost comprises the invoiced value of the goods purchased and includes attributable direct costs, labour and
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.
62
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
2. Summary of significant accounting policies (continued)
2.17.
Financial instruments (continued)
Impairment of financial assets
The Group recognises an allowance for expected credit losses for all debt instruments not held at fair value
through profit and loss account. Expected credit losses are based on the difference between the contracted
cash flows due in accordance with the contract and all the cash flows that the Group expects to receive,
discounted at an approximation of the original effective interest rate.
For trade receivables and, in the Parent Company, intercompany receivables, the Group applies a simplified
approach in calculating expected credit losses. The Group does not track changes in credit risk, but instead
recognises a loss allowance based on lifetime expected credit losses at each reporting date.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire
or are settled, or when the Group transfers the financial asset and substantially all the risks and rewards of
ownership to another entity, or if some significant risks and rewards of ownership are retained but control of
the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third
party.
Financial liabilities
All of the Group’s financial liabilities are measured at amortised cost.
Other financial liabilities
Other non-derivative financial liabilities are initially measured at historical cost less any directly attributable
transaction costs. Subsequent to initial recognition, these liabilities are measured at amortised cost using the
effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments through the expected life of the financial liability to the net carrying
amount on initial recognition.
Derecognition of other financial liabilities
Financial liabilities are derecognised when the Group’s contractual obligations expire or are discharged or
cancelled.
2.18.
Deferred consideration
Deferred consideration payments are initially recognised at fair value at the date of acquisition which is based
on the timing of the cash outflows and an appropriate discount rate. It is subsequently measured at amortised
cost.
2.19.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks and bank overdrafts. Bank
overdrafts are shown within borrowings in current liabilities.
2.20.
Dividends
Dividends are recognised as liabilities in the period in which the dividends are approved and once they are
no longer at the discretion of the Company.
63
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
2. Summary of significant accounting policies (continued)
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 (less than £5,000) and leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the
lease term, with the discount rate determined by reference to the Group’s incremental borrowing rate at
commencement of the lease.
Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives
received. Subsequent to initial measurement lease liabilities increase as a result of interest charged at a
constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are
amortised on a straight-line basis over the remaining term of the lease. Right of use assets comprise the
Group’s existing premises in Elgin, Larbert, Inverness 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.
2.24.
Provisions
Provisions include dilapidations to cover the Group’s leased properties with an upfront liability recognised.
Maintenance provisions relate to the costs to come on developments where the final homes have been
handed over. Provisions are liabilities of uncertain timing and amount. Provisions are recognised when the
Group has a present legal or constructive obligation as a result of a past event and it is probable that an
outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
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:
64
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
3. Critical accounting estimates and judgements in applying accounting policies (continued)
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. Contract revenue
Contract revenue relates to where the Group is providing construction services to third parties, resulting in a
completed developed property, on land that is not controlled by the Group during the development phase.
Revenue is recognised over time, with reference to the stage of completion of the contract. The stage of
completion is determined using an input method that reflects the development cost incurred as a proportion
of the total expected development cost, as it is considered proportionate to the satisfaction of the underlying
performance obligation. These contracts are typically for a fixed cash consideration received on a monthly
cycle over the course of the construction services contract.
There is an element of uncertainty when estimating the final cost 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. This ensures revenue is accurately calculated on a stage of completion basis (input method).
3.3. 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.
3.4. Fair value assessment
As defined in IFRS 3, the Group uses the acquisition method of accounting with all of the acquired
subsidiaries identifiable assets and liabilities, existing at the date of acquisition being recorded at their fair
values. Judgement is applied in determining acquisition date fair values, including forecasting of future cash
flows, discount rates applied and future development profitability.
3.5 Acquisition of Tulloch Homes group
The acquisition of Tulloch Homes Group included the indirect acquisition of companies that are subject to
put and call agreements that severely restrict the Group’s ability to direct the relevant activities of the acquired
subsidiary. Judgement has been applied in determining that the restrictions result in the Group not having
control of the relevant companies. Companies determined not to be controlled by the Group have not been
consolidated into the Group’s financial statements.
65
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
4. Revenue
Analysis of the Group’s revenue is as follows:
Revenue
Private residential properties
Affordable housing
Contracting housing
Other revenue
2022
£000
174,442
64,251
16,494
1,908
2021
£000
138,646
52,939
8,142
16,965
Revenue from the sale of goods and services as reported in the profit and
loss account
257,095
216,692
For presentation purposes this year we have separated out contract housing revenues because of the
increased significance of revenue now being generated from services to Bertha Park Limited, particularly
due to the delivery of PRS housing – the relevant prior year amounts included in Private housing (£5.9m)
and Affordable housing (£2.2m) have been moved into the Contract housing line to allow a like for like
comparison.
Contract balances
The following table provides information about balances arising from contracts with customers:
Amounts included in trade receivables
Amounts included within other payables
2022
£000
13,179
(10,781)
2021
£000
11,708
(5,454)
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 as well as payments on account.
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
Contract housing
Other
Total revenue
2022
£000
174,442
64,251
16,494
1,908
257,095
2021
£000
138,646
52,939
8,142
16,965
216,692
66
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
Gross profit
Administrative expenses
Exceptional items
Other operating Income
Finance income
Finance expenses
Profit before tax
Taxation
Profit for the period
6. Operating profit
2022
£000
43,135
(20,950)
(1,100)
396
134
(1,889)
19,726
(3,652)
16,074
Operating profit is stated after charging / (crediting):
Depreciation of tangible fixed assets
Depreciation of right of use assets
Amortisation of intangible 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
Auditor’s remuneration
Notes
14
14
15
11
2022
£000
1,129
595
161
(187)
213,960
1,100
110
Fees payable to the Group’s auditor for the audit of the Group and Company
annual financial statements
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
38,797
(19,422)
(622)
375
367
(1,607)
17,888
(4,178)
13,710
2021
£000
1,688
487
61
(148)
177,895
622
82
2022
£000
74
119
5
198
2021
£000
60
38
5
103
7. Staff costs
The average monthly number of employees (including Executive Directors) for the continuing operations was:
Building staff
Administrative staff
Wages and salaries
Share based payments
Social security costs
Pension costs
2022
532
232
764
2022
£000
29,267
555
3,135
1,176
34,133
2021
398
252
650
2021
£000
26,405
493
2,850
1,128
30,876
Full details of the Directors’ remuneration is provided in the Remuneration Committee Report on page 31.
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.
67
SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
SPRINGFIELD PROPERTIES PLC
CHIEF EXECUTIVE’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
STRATEGIC REPORT
CHIEF EXECUTIVE’S STATEMENT (CONTINUED)
appropriate inflationary accommodations are introduced. We have undertaken a thorough review of all
existing projects and reassessed costs to completion. Accordingly, we are well positioned for when market
FOR THE YEAR ENDED 31 MAY 2022
In affordable housing, the Group has paused the signing of new long-term fixed price contracts until
conditions normalise in affordable housing.
In affordable housing, the Group has paused the signing of new long-term fixed price contracts until
appropriate inflationary accommodations are introduced. We have undertaken a thorough review of all
In addition, the temporary rent freeze announced by the Scottish Government has halted our strategy to
existing projects and reassessed costs to completion. Accordingly, we are well positioned for when market
expand PRS activity with Sigma at this time. Consequently, the Group expects contract housing (PRS)
revenue to be lower in 2023. However, the Group expects to be able to mitigate part of this reduction through
conditions normalise in affordable housing.
the sale of some land that had been allocated for PRS.
In addition, the temporary rent freeze announced by the Scottish Government has halted our strategy to
expand PRS activity with Sigma at this time. Consequently, the Group expects contract housing (PRS)
Overall, the Group expects to deliver significant growth for the year to 31 May 2023, with record revenue
revenue to be lower in 2023. However, the Group expects to be able to mitigate part of this reduction through
driven by the contribution from private housing. Accordingly, with the solid foundations that the Group has in
the sale of some land that had been allocated for PRS.
place, the Board remains confident in Springfield’s prospects and in its ability to deliver shareholder value,
and continues to look to the future with confidence.
Overall, the Group expects to deliver significant growth for the year to 31 May 2023, with record revenue
driven by the contribution from private housing. Accordingly, with the solid foundations that the Group has in
place, the Board remains confident in Springfield’s prospects and in its ability to deliver shareholder value,
and continues to look to the future with confidence.
Innes Smith
Chief Executive Officer
19 September 2022
Innes Smith
Chief Executive Officer
19 September 2022
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
The charge to the profit and loss account in respect of defined contribution schemes was £1,176k (2021:
£1,128k). Contributions totalling £265k (2021: £182k) were payable to the fund at the year-end and are
included in creditors.
8. Finance costs
Interest on bank overdrafts and loans
Interest on lease liabilities
Other interest
9. Taxation
Current tax
UK corporation tax on profits for the current period
Adjustments in respect of prior periods
Deferred tax
Origination and reversal of timing differences
Adjustments in respect of prior periods
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% (2021: 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
Amortisation
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
14
2022
£000
1,579
272
38
1,889
2022
£000
3,358
(311)
3,047
486
119
605
3,652
2022
£000
19,726
3,748
181
-
(311)
(48)
(26)
119
(1)
23
(33)
3,652
2021
£000
1,172
244
191
1,607
2021
£000
4,016
(10)
4,006
158
14
172
4,178
14
2021
£000
17,888
3,399
19
-
(10)
17
-
14
-
(105)
844
4,178
68
SPRINGFIELD PROPERTIES PLC
STRATEGIC REPORT
CHIEF EXECUTIVE’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
In affordable housing, the Group has paused the signing of new long-term fixed price contracts until
appropriate inflationary accommodations are introduced. We have undertaken a thorough review of all
existing projects and reassessed costs to completion. Accordingly, we are well positioned for when market
conditions normalise in affordable housing.
In addition, the temporary rent freeze announced by the Scottish Government has halted our strategy to
expand PRS activity with Sigma at this time. Consequently, the Group expects contract housing (PRS)
revenue to be lower in 2023. However, the Group expects to be able to mitigate part of this reduction through
the sale of some land that had been allocated for PRS.
Overall, the Group expects to deliver significant growth for the year to 31 May 2023, with record revenue
driven by the contribution from private housing. Accordingly, with the solid foundations that the Group has in
place, the Board remains confident in Springfield’s prospects and in its ability to deliver shareholder value,
and continues to look to the future with confidence.
Innes Smith
Chief Executive Officer
19 September 2022
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
10. Exceptional items
Redundancy costs
Acquisition and other transaction related costs (1)
Other acquisition and other transaction related costs (2)
Wages costs for furloughed employees (3)
Grant furlough income (3)
2022
£000
141
859
100
-
1,100
-
1,100
2021
£000
389
-
-
2,318
2,707
(2,085)
622
(1)
(2)
(3)
Acquisition and other transactions related costs for the acquisition of Tulloch Homes Group Limited and its subsidiary companies.
Other acquisition and other transactions related costs relate to the planning being achieved at Carlaverock which had previously been assessed as 95%
likely.
The wages costs for furlough employees £nil (2021: £2,318k) is the Company cost of all employees who were on furlough during the prior year. The grant
furlough income £nil (2021: £2,085k) is the furlough grant income received from the UK Government in relation to the furloughed employees for the prior
year.
11. Dividends
On 9 December 2021, a final dividend of 4.5p (2021: 2.0p) per share was paid to shareholders, amounting
to £4,557,827 (2021: £1,957,644). In respect of the current year, on 1 April 2022, an interim dividend of 1.5p
(2021: 1.3p) per share was paid to shareholders, amounting to £1,775,716 (2021: £1,316,186). The Directors
propose that a dividend of 4.7p per share will be paid to shareholders on 16 December 2022. 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 2022 is payable to all shareholders on the
Company’s Register of Members on the record date of 4 November 2022.
14
12. Earnings per share
The basic earnings per share is based on the profit for the year divided by the weighted average number of
shares in issue during the year. The weighted average number of ordinary shares for the year ended 31 May
2022 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 tax adjusted exceptional costs in the year
Adjusted earnings
2022
£000
16,074
970
17,044
2021
£000
13,710
622
14,332
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
109,022,146
2,797,323
99,436,929
1,767,609
111,819,469
101,204,538
Earnings per ordinary shares
Basic earnings on profit for the year
Diluted earnings on profit for the year
Adjusted earnings per ordinary shares (1)
Basic earnings on profit for the year
Diluted earnings on profit for the year
14.74p
14.37p
15.63p
15.24p
13.79p
13.55p
14.41p
14.16p
(1)
Adjusted earnings is presented as an additional performance measure and is stated before exceptional items and is used in adjusted EPS
calculation.
69
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
13. Property, plant and equipment
Property, plant and equipment
Right of use assets
Property, plant and equipment
2022
£000
2,760
3,039
5,799
2021
£000
2,952
1,587
4,539
Land &
buildings
£000
Plant &
machinery
£000
Fixtures,
fittings &
equipment
£000
Motor
vehicle
£000
Cost
At 1 June 2020
Additions
Disposals
At 31 May 2021
Additions
Acquisition of subsidiary
Disposals
At 31 May 2022
Accumulated depreciation
At 1 June 2020
Depreciation charge
Disposals
At 31 May 2021
Depreciation charge
Disposals
At 31 May 2022
Net book value
At 31 May 2022
At 31 May 2021
At 31 May 2020
980
6
-
986
-
-
-
986
93
27
-
120
27
-
147
839
866
887
7,927
477
(1,693)
6,711
609
43
(405)
6,958
4,970
1,446
(1,407)
5,009
887
(374)
5,522
1,436
1,702
2,957
2,084
129
(51)
2,162
288
19
(776)
1,693
1,675
181
(51)
1,805
197
(765)
1,237
456
357
409
549
-
(162)
387
-
20
(165)
242
471
34
(145)
360
18
(165)
213
29
27
78
Total
£000
11,540
612
(1,906)
10,246
897
82
(1,346)
9,879
7,209
1,688
(1,603)
7,294
1,129
(1,304)
7,119
2,760
2,952
4,331
70
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
14. Property, plant and equipment (continued)
Right of use assets
Cost
At 1 June 2020
Additions
Disposals
At 31 May 2021
Additions
Acquisition of subsidiary
Disposals
At 31 May 2022
Accumulated
depreciation
At 1 June 2020
Depreciation charge
Disposals
At 31 May 2021
Depreciation charge
Disposals
At 31 May 2022
Net book value
At 31 May 2022
At 31 May 2021
At 31 May 2020
Land &
buildings
£000
Fixtures,
fittings &
equipment
£000
Motor
vehicle
£000
2,220
-
(92)
2,128
420
258
(235)
2,571
357
357
(35)
679
352
(122)
909
1,662
1,449
1,863
29
41
(5)
65
-
-
(34)
31
9
9
(3)
15
6
(1)
20
11
50
20
252
81
(85)
248
1,454
61
(110)
1,653
124
121
(85)
160
237
(110)
287
1,366
88
128
Fixed assets with the carrying value of £3,903k (2021: £2,875k) are pledged as security.
Total
£000
2,501
122
(182)
2,441
1,874
319
(379)
4,255
490
487
(123)
854
595
(233)
1,216
3,039
1,587
2,011
71
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
15. Intangible fixed assets
Goodwill
Website
Cost
At 1 June 2020
Additions
At 31 May 2021
Additions
Disposals
Acquisition of subsidiary
At 31 May 2022
Amortisation
At 1 June 2020
Amortisation charge in year
At 31 May 2021
Amortisation charge in year
Amortisation on disposals
At 31 May 2022
Net book value
At 31 May 2022
At 31 May 2021
At 31 May 2020
£000
1,057
61
1,118
-
-
513
1,631
8
61
69
-
-
69
1,562
1,049
1,049
£000
-
-
-
84
(144)
79
19
-
-
-
38
(38)
-
19
-
-
Marketing-
related
assets
£000
600
-
600
-
-
3,700
4,300
-
-
-
123
-
123
4,177
600
600
Total
£000
1,657
61
1,718
84
(144)
4,292
5,950
8
61
69
161
(38)
192
5,758
1,649
1,649
Goodwill of £1,562k (2021: £1,049k) relates to the prior acquisition of Walker Holdings (Scotland) Limited
and the current year acquisition of Tulloch Homes Holdings Limited (£513k) and is subject to annual
impairment reviews. The recoverable amount of Walker Holdings (Scotland) Limited 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 2022 and the financial budget approved by
the Board covering the period to 31 May 2023, with projected cash flows for the years ending 31 May 2024
to 31 May 2026 based on a growth rate of 0% per annum. The recoverable amount of the Tulloch Homes
Holdings Limited goodwill has been determined based on a value in use calculation using cash flow
projections based on the actual results for the Tulloch Group for the six months ended 31 May 2022 and the
financial budget approved by the Board covering the period to 31 May 2023, with future PRS revenues
removed, with projected cash flows for the years ending 31 May 2024 to 31 May 2026 based on a growth
rate of 5% per annum.
Marketing-related assets of £4,177k (2022: £600k) comprise of Springfield Properties PLC trademark asset
(£600k) which has been measured at cost and the Tulloch Homes brand (2022: £3,577k). The trademark
asset is expected to have an indefinite useful life. The brand intangible (£3,577k) relates to the brand name
of Tulloch Homes Holdings Limited and is being amortised over its economic useful life (15 years). The
recoverable amount of the Springfield trademark intangible has been determined based on a value in use
calculation using cash flow projections based on the actual results for Springfield Properties PLC company
only for the year ended 31 May 2022 and the financial budget approved by the Board covering the period to
31 May 2023, adjusted for affordable margin reductions and future PRS revenues being removed, with
projected cash flows for the years ending 31 May 2024 to 31 May 2026 based on a growth rate of 5% per
annum. The recoverable amount of the Tulloch Homes Holdings Limited brand name intangible has been
determined based on a value in use calculation using cash flow projections based on the actual results for
the Tulloch Group for the six months ended 31 May 2022 and the financial budget approved by the Board
covering the period to 31 May 2023, with future PRS revenues removed, with projected cash flows for the
years ending 31 May 2024 to 31 May 2026 based on a growth rate of 5% per annum.
Website costs are stated at cost less amortised cost. The economic useful life of website costs is 3 years.
The discount rate applied to cash flows is 12% based on an estimated market rate of interest applied. 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.
72
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
16. Fixed assets investments
Cost
Other investments
2022
£000
520
520
2021
£000
-
-
On 1 December 2021, Springfield Properties PLC acquired the entire share capital of Tulloch Homes
Holdings Limited and its subsidiaries and other investments. Other investments amounted to £519,675. See
business combination Note 17 for further information.
Movement in fixed asset investments
Cost
At 1 June 2020
Reclassification
subsidiary
At 31 May 2021
Additions
At 31 May 2022
to
investment
in
Investment
in joint
venture
Other
Total
£000
£000
£000
202
(202)
-
-
-
-
-
520
520
202
(202)
-
520
520
17. Acquisition of Tulloch Homes Holdings Limited
Book value
Revaluation
adjustment
Fair Value
to Group
Net assets at date of Acquisition
Investment
Property, plant and equipment
Intangible fixed asset
Inventories
Accounts receivable
Cash and cash equivalent – acquired
cash
Accounts payable
Provisions
Obligation under lease liabilities
Corporation tax
Deferred tax
At 1 December 2022
Discharged by:
Consideration paid - Cash
Deferred consideration
Less Goodwill
Total at 1 December 2022
£000
-
401
79
45,017
2,049
23,485
(9,998)
(796)
(301)
153
2,317
62,406
£000
520
-
3,700
11,693
-
-
-
-
-
-
(925)
14,988
£000
520
401
3,779
56,710
2,049
23,485
(9,998)
(796)
(301)
153
1,392
77,394
65,010
12,897
77,907
513
77,394
73
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
17. Acquisition of Tulloch Homes Holdings Limited (continued)
A fair value assessment has been performed resulting in an adjustment of £11,693k to inventory. The
deferred consideration has been discounted in the financial statements.
Tulloch Homes Holdings Limited was purchased as it was a good opportunity to acquire a well-run business
with an excellent reputation and to accelerate growth with live sites in new areas and with a healthy land
bank pipeline. Tulloch Homes Holdings Limited has contributed revenue of £32,026,206 and profit before
tax of £4,096,435 from the acquisition date of 1 December 2021 to 31 May 2022. If the acquisition of Tulloch
Homes Holdings Limited had taken place at 1 June 2021 then the acquisition would have produced a
combined revenue of £57,884,397 and loss after exceptional items and before tax of £2,265,811.
18. Inventories
Work in progress
19. Trade and other receivables
Amounts falling due within one year
Trade receivables
Other receivables
Amounts recoverable on contract
Prepayments and accrued income
2022
£000
230,095
230,095
2021
£000
156,774
156,774
2022
£000
10,036
5,771
4,497
1,059
21,363
2021
£000
9,652
10,718
2,524
789
23,683
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, affordable housing revenues, contracting housing 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 2022 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 2021
Acquisition of subsidiary
Repaid during the year
Finance income
At 31 May 2022
2022
£000
641
5,000
5,641
2022
£000
365
715
(447)
8
641
2021
£000
365
5,046
5,411
2021
£000
415
-
(58)
8
365
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.
74
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
19. Trade and other receivables (continued)
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.
20. Trade and other payables
Trade creditors
Other taxation and social security
Other creditors
Payments on account
Accruals and deferred income
2022
£000
39,262
1,308
2,207
8,117
17,619
68,513
2021
£000
22,514
880
4,158
3,206
20,888
51,646
Revenue recognised in the year ended 31 May 2022 included £3,206k (2021: £2,774k) that was included in
the contract liability balance at 31 May 2021. The Directors consider the carrying amount of the accounts
payable approximates to their fair value.
21. Financial assets and liabilities
Assets
Financial assets at amortised cost
Total
Liabilities
Measured at amortised cost
Total
2022
£000
36,589
36,589
2022
£000
121,230
121,230
2021
£000
39,264
39,264
2021
£000
86,696
86,696
Included within Financial assets at amortised cost is trade receivables, retentions and cash and cash
equivalents.
Included within Financial liabilities at amortised cost is long term bank borrowings, trade creditors, short term
obligations under lease liabilities, long term obligations under lease liabilities, deferred consideration and
accruals.
22. Bank borrowings
Secured borrowings:
Bank loans
Less: payable within one year
Payable after one year
2022
£000
50,486
50,486
-
50,486
2021
£000
34,000
34,000
34,000
-
The bank loan comprises of a revolving credit facility of £64.5m, which was put in place for three years in
September 2021 with an expiry date in January 2025 and was extended in November 2021 to £87.5m to part
fund the Tulloch acquisition on the same terms as the existing facility and is secured over certain of the
Company's properties. The facility attracts an interest rate of 2.15% per annum above 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.
75
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
23. 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
24. Deferred taxation
The movement in the deferred taxation provision during the year was:
Provision brought forward
On acquisition
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
Available losses
Other timing differences
2022
£000
1,506
2,540
542
4,588
(634)
3,954
1,284
2,192
478
3,954
2022
£000
2,381
(1,393)
486
-
119
1,593
2022
£000
3,726
(2,133)
1,593
2022
£000
76
(801)
2,318
1,593
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
76
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
25. Deferred consideration
As part of the purchase agreement of Tulloch Homes Holdings Limited, there was a further £13,000,000 of
deferred consideration payable. This can be broken down into: (i) £362,330 payable on 24 April 2022 (ii)
£6,137,670 payable on 1 November 2022 and (iii) £6,500,000 payment on 1 July 2023 – see Note 13. The
outstanding discounted amount payable at the period end is £12,574,228 (2021: £nil).
Deferred consideration < 1 year
Deferred consideration > 1 year
26. (a) Contingent consideration
2022
£000
6,119
6,455
12,574
2021
£000
-
-
-
As part of the purchase agreement of Walker Group Springfield Holdings Limited, there was a further
£6,000,000 payable which is included within liabilities. £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 discounted amount payable at the year-
end is £nil (2021: £1,900,000). £2,000,000 was paid during the year.
As part of the purchase agreement of Dawn Homes Holdings 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 a liability of £2,000,000 based on 80% probability. The outstanding amount
payable at the period end included within liabilities is £2,000,000 (2021: £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 Dawn Homes Holdings Limited (“Dawn”)
Acquisition of Walker Group Springfield Holdings Limited (“Walker”)
2022
£000
2,000
-
2,000
2021
£000
2,000
1,900
3,900
26. (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
Provisions < 1 year
Provisions > 1 year
2022
£000
150
-
2,496
2,646
2022
£000
821
1,825
2,646
2021
£000
185
200
825
1,210
2021
£000
-
1,210
1,210
77
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
27. Share capital
The Company has one class of ordinary share which carry full voting rights but no right to fixed income or
repayment of capital. The share capital account records the nominal value of shares issued. The share
premium account records the amount above the nominal value received for shares sold, less share issue
costs.
Ordinary shares of 0.125p - allotted, called up
and fully paid
At 1 June 2021
Share issue
At 31 May 2022
Number of shares
Share capital
£000
102,077,526
16,391,873
118,469,399
128
20
148
Share
premium
£000
56,761
21,983
78,744
During the year 677,587 shares (2021: 2,539,270) were issued in satisfaction of share options exercised for
consideration of £727,647. On 21 December 2021, 15,714,286 shares were issued as part of the acquisition
of Tulloch Homes Holdings Limited at 140p per share for a consideration of £22,000,000. Expenses of
£723,816 are included within share premium relating to this share raise.
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 May 2021 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 10% 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 prior 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.
78
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
27. Share capital (continued)
Share based payments (continued)
CSOP
Options at the beginning of the
year
Lapsed during the year
Exercised during the year
Options at the year end
Share option
2022
2021
Number of
shares
Weighted
average
exercise
price (pence)
Number of
shares
Weighted
average
exercise price
(pence)
801,745
(17,741)
(156,446)
627,558
114.89
108.50
113.84
115.33
1,240,111
(41,451)
(396,915)
801,745
111.95
109.29
106.31
114.89
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
307,821
27,027
22,388
110,008
115,079
45,235
106.00
111.00
134.00
134.00
122.50
108.50
3
3
3
3
3
3
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
2022
2021
Number
of shares
2,024,836
(187)
(278,079)
1,746,570
Weighted
average
exercise
price (pence)
119.38
122.50
119.31
118.84
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
Grant Price
(p)
106.00
134.00
134.00
122.50
Number of
shares at year
end
446,402
72,761
11,157
1,216,250
Exercise price
(p)
106.00
134.00
134.00
122.50
Vesting
period
(years)
3
3
3
3
79
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
27. Share capital (continued)
Share based payments (continued)
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
2022
2021
Number of
shares
2,192,995
-
(112,186)
(243,062)
1,837,747
Weighted
average
exercise
price (pence)
128.45
-
130.50
86.79
130.50
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
SAYE – 29th April 2021
145.00
Grant Price
(p)
Number of
shares at year
end
1,837,747
Exercise price
(p)
130.50
Vesting
period
(years)
3
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
PSP – 21st December 2021
2022
Number of
shares
1,006,633
1,396,481
(34,933)
2,368,181
Weighted
average
exercise
price (pence)
0.13
0.13
0.13
0.13
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
Grant Price
(p)
0.13
0.13
0.13
Number of
shares at year
end
348,636
623,064
1,396,481
Exercise price
(p)
0.13
0.13
0.13
Vesting
Period
(years)
3
3
3
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
80
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
27. Share capital (continued)
Share based payments (continued)
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 – 156,466 (2021: 396,915) of options were exercised during the year and 582,323 (2021: 587,369)
shares were exercisable.
ESOP – 278,079 (2021: 46,612) of options were exercised during the year and 1,746,570 (2021: 538,009)
shares were exercisable.
SAYE – 243,062 (2021: 2,095,743) of options were exercised during the year and nil (2021: 15,668) 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 £554k (2021: £493k), all of which
related to equity-settled share-based payment transactions.
28. 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
2022
£000
16,390
16,390
2021
£000
15,826
15,826
At 31 May 2022, the Group had available £39,000k (2021: £33,000k) of undrawn committed borrowing
facilities.
29. 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.
81
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
30. 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.
30.1. 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.
30.2. 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
2022
£000
16,528
50,486
54,216
121,230
2021
£000
2,613
34,000
50,083
86,696
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 reasonably 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 2022
Interest rate
–0.5%
£000
252
Interest rate
+0.5%
£000
(252)
Bank of England base rate
31 May 2021
Interest rate
–0.5%
£000
170
Interest rate
+0.5%
£000
(170)
(Loss) / profit
82
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
30. Financial risk management (continued)
30.2. 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
2022.
30.3.
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 2022
Accounts payable
Bank borrowings
Deferred
consideration
Leases
Carrying
amount
£000
54,216
50,486
12,574
3,954
121,230
Total minimum
future
payment
£000
54,216
51,000
Within
1 year
£000
54,216
-
Within 1-2
years
£000
-
51,000
Within 2-5
years
£000
-
-
Greater
than
5 years
£000
-
-
12,638
4,588
122,442
6,138
1,506
61,860
6,500
1,272
58,772
-
1,268
1,268
-
542
542
83
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
30. Financial risk management (continued)
30.3. Liquidity risk (continued)
31 May 2021
Accounts payable
Borrowings
Leases
30.4
Credit risk
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
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 2022
31 May 2021
Total book
value
£000
10,441
236
10,677
Allowance for
impairment
£000
-
-
-
Total book
value
£000
9,815
202
10,017
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
Non-current
31 May 2022
31 May 2021
Total book
value
£000
5,771
5,000
10,771
Allowance for
impairment
£000
-
-
-
Total book
value
£000
18,288
-
18,288
Allowance for
impairment
£000
-
-
-
During the year, the Group had no charge for impairment for other receivables.
84
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
31. Transactions with related parties
Other related parties include transactions with retirement schemes in which Directors and close family
members of key management personnel are beneficiaries. During the year dividends totalling £2,343k (2021:
£1,415k) 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
2022
£000
2,249
55
6
2
3
1
1
2,317
2021
£000
1,353
32
2
1
2
1
-
1,391
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)
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
2022
£000
18,691
83
176
29
18,979
2021
£000
8,989
118
44
121
9,272
Sales to related parties represent those undertaken in the ordinary course of business.
2022
£000
3,537
404
169
4,110
2021
£000
3,539
356
181
4,076
Purchase of goods
2021
£000
-
2022
£000
371
45
11
332
759
33
-
313
346
Entities which key management personnel have
control, significant influence or hold a material
interest in
Key management personnel
Other related parties
Rent paid
2022
£000
2021
£000
170
-
107
277
176
11
128
315
85
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
31. Transactions with related parties (continued)
Interest received:
Entities which key management
personnel have control, significant influence or
hold a material interest in (short-term)
The following amounts were outstanding at the reporting end date:
Amounts receivable:
Bertha Park Limited (1)
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)
Other related parties
2022
£000
125
125
2022
£000
9,167
54
39
1
9,261
2021
£000
355
355
2021
£000
6,772
3
3
3
6,781
2022
£000
2021
£000
-
52
52
8
58
66
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 £18,226k
(2021: £8,989k) in relation to a build contract. At the year-end £3,983k (2021: £1,772k) is included in trade debtors and included within other debtors is a loan of £5,125k
(2021: £5,000k) at the year-end. During the year the Group had purchases from Bertha Park Limited of £371k (2021: £nil) in relation to a build contract. These were paid
in full during the year.
32. 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 2022, the Group had bonds of £35,358k (2021: £28,500k) provided by financial
institutions.
86
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
32.
Commitments and guarantees (continued)
32.1. Capital commitments
Call and put options for the purchase of plots for development
33.
Analysis of net debt
The Analysis of net debt is as follows:
Cash in hand and bank
Bank borrowings
Lease liability
Net debt
2022
£000
-
2021
£000
1,600
2022
£000
16,390
(50,486)
(34,096)
(3,954)
(38,050)
2021
£000
15,826
(34,000)
(18,174)
(2,613)
(20,787)
Reconciliation of net cashflow to movement in net debt is as follows:
At 1 June
2021
New
leases
On
acquisition
Cashflow
Fair
value
At 31 May
2022
£000
£000
£000
£000
£000
£000
15,826
(34,000)
-
-
23,485
(22,921)
-
(16,486)
(2,613)
(2,396)
(301)
1,437
(20,787)
(2,396)
23,184
(37,970)
-
-
(81)
(81)
16,390
(50,486)
(3,954)
(38,050)
At 1 June
2020
New
leases
On
acquisition
Cashflow
Fair
value
At 31 May
2021
£000
£000
£000
£000
£000
£000
1,522
(69,000)
(3,443)
(70,921)
-
-
(525)
(525)
-
-
-
-
14,304
35,000
-
-
15,826
(34,000)
1,480
(125)
(2,613)
50,784
(125)
(20,787)
Cash and cash
equivalents
Bank Borrowings
Lease
Net Debt
Cash and cash
equivalents
Bank Borrowings
Lease
Net Debt
87
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
34. Subsequent events
Since year end, as announced on 22 June 2022, the Group acquired the Scottish housebuilding
business of Mactaggart & Mickel for a total consideration of £46.3m. Mactaggart & Mickel is a premium
brand housebuilder that has been delivering high-quality housing across the Central belt of Scotland for
almost 100 years.
Under the terms of the acquisition, we acquired six live private and affordable sites with work in
progress for a consideration of £15.0m and acquired a brand licence to build homes as Mactaggart &
Mickel on a further 11 private and affordable sites, which will transfer to Springfield as homes are sold
in line with the payments of the deferred consideration of £30.8m.
The acquisition also included Timber Systems, a timber frame factory near Glasgow, for a
consideration of £0.5m The addition of a second timber frame factory, which complements our existing
facility in Elgin, will secure kit supply and increase capacity for future growth while further reducing our
carbon footprint.
The housebuilder’s fixed assets and WIP were purchased by Springfield M&M Homes Limited. Employees
have been transferred under a TUPE agreement.
The timber kit fixed assets and stock were purchased by Springfield Timber Kit Systems Limited.
Employees have been transferred under a TUPE agreement and Springfield Timber Kit Systems have
taken over the lease of the building.
At the date of this report the fair value assessment of assets and liabilities acquired has not been
completed. As such the required disclosures relating to the fair value of assets acquired and liabilities
assumed at the acquisition date and the required disclosures relating to revenue and profit has not
been included.
88
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
COMPANY BALANCE SHEET
AS AT 31 MAY 2022
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
Short-term bank borrowings
Deferred consideration
Short-term obligations under lease
liabilities
Provision
Corporation tax
Non-current liabilities
Long-term bank borrowings
Long-term obligations under lease liabilities
Deferred consideration
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
12
8
9
11
12
12
13
13
2022
£000
2,727
619
132,697
162
5,000
141,205
104,916
31,446
1,073
137,435
278,640
106,334
-
6,119
222
364
343
113,382
50,486
1,262
6,455
2,000
852
61,055
174,437
104,203
148
78,744
25,311
2021
£000
2,843
600
54,467
459
5,046
63,415
91,306
22,184
4,615
118,105
181,520
55,961
34,000
-
166
-
428
90,555
-
1,149
-
3,900
950
5,999
96,554
84,966
128
56,761
28,077
104,203
84,966
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 £3,014,280 (2021: £1,453,685).
These financial statements were approved by the Board of Directors on 20 September 2022.
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
92 to 110 form an integral part of these financial statements.
89
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
COMPANY STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 MAY 2022
Share
capital
£000
Share
premium
£000
Retained
earnings
£000
Notes
1 June 2020
Issue of share capital
Total comprehensive income
for the year
Dividends
Share based payments
31 May 2021
Issue of share capital
Total comprehensive income
for the year
Dividends
Share based payments
31 May 2022
13
122
6
-
-
-
128
20
-
-
-
148
52,330
4,431
-
-
-
56,761
21,983
-
-
-
78,744
29,404
-
1,454
(3,274)
493
28,077
-
3,014
(6,334)
554
25,311
Total
£000
81,856
4,437
1,454
(3,274)
493
84,966
22,003
3,014
(6,334)
554
104,203
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 issued, 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 92 to 110 form an integral part of these financial statements.
90
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
COMPANY STATEMENT OF CASH FLOWS
YEAR TO 31 MAY 2022
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
(Increase)/decrease/in inventory
Increase in accounts and other receivables
Increase in accounts and other payables
Net cash generated from operations
Taxation paid
Net cash inflow from operating activities
Investing activities
Purchase of property, plant and equipment
Proceeds on disposal of property, plant and equipment
Purchase of intangible fixed assets
Purchase of subsidiary Company
Net cash used in investing activities
Financing activities
Proceeds from issue of shares
Costs relating to share raise
Proceeds from bank loans
Repayment of bank loans
Payment of lease liabilities
Dividends paid
Interest paid
Net cash inflow/(outflow) from financing activities
Net (decrease)/ increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Note
1
13
1
13
18
18
14
2022
£000
2,691
564
806
1,719
(125)
5,655
(32)
(564)
783
554
100
6,496
(13,610)
(8,086)
52,237
37,307
(3,220)
33,817
(284)
50
(19)
(67,372)
(67,625)
22,728
(724)
16,486
-
(318)
(6,334)
(1,572)
30,266
(3,542)
4,615
1,073
Company accounting policies are in line with Group – See Group Note 2,
The accompanying notes on pages 92 to 110 form an integral part of these financial statements.
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
91
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2022
1.
Property, plant and equipment
Property, plant and equipment
Right of use assets
Total property, plant and equipment
2022
£000
1,380
1,347
2,727
Land and
buildings
£000
Plant and
machinery
£000
Fixtures,
fittings &
equipment
£000
Cost
At 1 June 2020
Additions
Disposals
At 31 May 2021
Additions
Disposals
At 31 May 2022
Accumulated depreciation
At 1 June 2020
Depreciation charge
Disposals
At 31 May 2021
Depreciation charge
Disposals
At 31 May 2022
Net book value
At 31 May 2022
At 31 May 2021
At 31 May 2020
980
6
-
986
-
-
986
94
27
-
121
27
-
148
838
865
886
3,507
-
(1,286)
2,221
6
-
2,227
2,106
761
(1,084)
1,783
335
-
2,118
109
438
1,401
2021
£000
1,643
1,200
2,843
Total
£000
6,193
135
(1,331)
4,997
284
(435)
4,846
3,524
958
(1,128)
3,354
546
(434)
3,466
1,706
129
(45)
1,790
278
(435)
1,633
1,324
170
(44)
1,450
184
(434)
1,200
433
340
382
1,380
1,643
2,669
92
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2022
1.
Property, plant and equipment (continued)
Right of use assets
Cost
At 1 June 2020
Additions
Disposals
At 31 May 2021
Additions
Disposals
At 31 May 2022
Accumulated depreciation
At 1 June 2020
Depreciation charge
Disposals
At 31 May 2021
Depreciation charge
Disposals
At 31 May 2022
Net book value
At 31 May 2022
At 31 May 2021
At 31 May 2020
2.
Intangible fixed assets
Cost
1 June 2020 and 31 May 2021
Additions
At 31 May 2022
Amortisation
At 1 June 2020 and 31 May 2021 and 31 May 2022
Net book value
At 31 May 2022
At 1 June 2020 and 31 May 2021
Land and
buildings
£000
Fixtures,
fittings &
equipment
£000
1,736
-
(92)
1,644
420
(16)
2,048
259
258
(35)
482
231
(1)
712
1,336
1,162
1,477
29
29
(5)
53
-
(22)
31
9
9
(3)
15
6
(1)
20
11
38
20
Total
£000
1,765
29
(97)
1,697
420
(38)
2,079
268
267
(38)
497
237
(2)
732
1,347
1,200
1,497
Marketing-related
assets
£000
600
19
619
-
619
600
93
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2022
2.
Intangible fixed assets (continued)
Marketing-related assets comprises of the Springfield trademark asset which has 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 2022 and the financial budget approved
by the Board covering the period to 31 May 2023, adjusted to reflect affordable margin changes and removing
future site PRS revenues, with projected cash flows for the years ending 31 May 2024 to 31 May 2026 based
on a growth rate of 5% per annum.
The discount rate applied to cash flows is 12% based on an estimated market rate of interest applied. 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
2022
£000
2021
£000
169,697
91,467
(37,000)
(37,000)
132,697
54,467
On 1 December 2021, the company acquired the entire share capital of Tulloch Homes Holdings Limited and
its subsidiaries, Tulloch Homes Group Limited, Tulloch Homes Limited, Tulloch Limited, Tulloch Homes
Express Limited, Tulloch Homes (Drumossie) Limited, Argyll Developments (Scotland) Limited and Argyll
Homes (Hamilton) Limited for an initial consideration of £77,907k.
The deferred consideration payment of £13,000,000 has been discounted to present value. At 1 December
2021, this was calculated as £12,898,008 with first payment of £362,330 paid in April 2022 and deemed
interest of £38,550 has been charged to the company profit and loss account to 31 May 2022. This has
resulted in deferred consideration being £12,574,228 at 31 May 2022 (Note 11).
94
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2022
3.
Fixed asset investments (continued)
Movement in fixed asset investments
Cost
At 1 June 2020
Additions
At 31 May 2021
Additions
At 31 May 2022
Provisions for impairment
At 1 June 2020
Impairment
At 31 May 2021 and 31 May 2022
Net book value
At 31 May 2022
At 31 May 2021
At 31 May 2020
Share in
Group
undertakings
£000
91,431
36
91,467
78,230
169,697
(37,000)
-
(37,000)
Total
£000
91,431
36
91,467
77,907
169,374
(37,000)
-
(37,000)
132,697
132,374
54,467
54,431
54,467
54,431
Impairment is as a result of a £37,000k dividend from Walker Holdings (Scotland) Limited in the month after
acquisition.
95
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2022
3.
Details of the Company’s subsidiaries and jointly owned entities at 31 May 2022 are as follows:
Fixed asset investments (continued)
Name of undertaking
Nature of business
Class of shares
held
% Held
Glassgreen Hire Limited
Hire of plant and machinery
Dawn Homes Holdings Limited (formerly
known as DHomes 2014 Holdings Limited)
Holding Company
Ordinary
Ordinary
Dawn Homes Limited *
Housebuilder/Construction
Ordinary
Dawn Homes (Residential) Limited (formerly
known as DHPL Limited) *
Buying and selling of own real estate
Ordinary
100%
100%
100%
100%
Dawn Homes (Cambuslang) Limited (formerly
known as DHHG 1 Limited) *
Housebuilder/Construction
Ordinary
100%
Walker Group Springfield (Holdings) Limited
(formerly known as Walker Holdings
(Scotland) Limited
Walker Group (Scotland) Limited) *
Housebuilders/
property development/
management services
Walker Contracts (Scotland) Limited *
Walker Residential (Scotland) Limited*
Walker Group Developments Limited (formerly
known as Craig Developments Limited) *
Tulloch Homes Holdings Limited
Dormant
Dormant
Dormant
Holding Company
Tulloch Homes Group Limited *
Housebuilder/Construction
Tulloch Homes Express Limited *
Housebuilder/Construction
Tulloch Homes Limited *
Tulloch Limited *
Housebuilder/Construction
Housebuilder/Construction
Argyll Developments (Scotland) Limited*
Housebuilder/Construction
Tulloch Homes (Drumossie) Limited*
Housebuilder/Construction
Argyll Homes (Hamilton) Limited *
Housebuilder/Construction
Springfield Timber Kit Systems Limited
(formerly known as SP SUB 2018 Limited)
Springfield M&M Homes Limited (formerly
known as SP SUB 2022 Limited)
Tulloch Ventures Limited**
Tulloch Longman Limited**
Inverness Caledonian Thistle Properties
Limited**
Timber Kit Manufacturing
Housebuilder/Construction
Dormant
Dormant
Investment Property
Ordinary
100%
Ordinary
100%
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
91.67%
Indirectly held
*
** No controlling interest – see consolidation note 3.2
All of the above have a registered office address of:
Alexander Fleming House 8 Southfield Drive Elgin, Morayshire IV30 6GR
The parent undertaking has provided a guarantee over the outstanding liabilities at the balance sheet date of the
subsidiaries listed below pursuant to sections 479A-C of the Companies Act 2006. These subsidiaries are exempt
from audit under section 479A of the Companies Act 2006. The subsidiaries are - Tulloch Homes Holdings Limited,
Tulloch Homes Group Limited, Tulloch Homes Express Limited, Tulloch Homes Limited, Tulloch Limited, Argyll
Developments (Scotland) Limited, Tulloch Homes (Drumossie) Limited, Argyll Homes (Hamilton) Limited.
96
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2022
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
2022
£000
104,916
104,916
2021
£000
91,306
91,306
2022
£000
8,992
5,423
4,497
12,031
503
31,446
2021
£000
9,197
7,687
2,524
2,344
432
22,184
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 credit ratings of
these various debtors are strong 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 2022 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
2022
£000
5,000
5,000
2022
£000
20,578
940
163
66,676
8,117
9,860
106,334
The Directors consider the carrying amount of the accounts payable approximates to its fair value.
2021
£000
5,046
5,046
2021
£000
16,708
739
308
23,304
3,206
11,696
55,961
97
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2022
7.
Financial assets and liabilities
Assets
Financial assets at amortised cost
Total
Liabilities
Measured at amortised cost
Total
2022
£000
30,975
30,975
159,671
159,671
2021
£000
31,413
31,413
2022
£000
90,090
90,090
Included within Financial assets at amortised cost is trade receivables, intercompany receivables, retentions
and cash and cash equivalents.
Included within Financial liabilities at amortised cost is long term bank borrowings, trade creditors,
intercompany payables, short term obligations under lease liabilities, long term obligations under lease
liabilities, deferred consideration and accruals.
8.
Bank borrowings
Secured borrowings:
Bank loans
Less: payable within one year
Payable after one year
2022
£000
50,486
50,486
-
50,486
2021
£000
34,000
34,000
(34,000)
-
The bank loan comprises of a revolving credit facility of £64.5m, which was put in place for three years in
September 2021 with an expiry date in January 2025 and was extended in November 2021 to £87.5m to part
fund the Tulloch acquisition on the same terms as the existing facility and is secured over certain of the
Company's properties. The facility attracts an interest rate of 2.15% per annum above 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.
98
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2022
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
2020
£000
93
(217)
(124)
Profit &
loss
account
£000
(187)
(148)
(335)
2021
£000
(94)
(365)
(459)
Fixed assets – temporary
differences
Other
differences
temporary
–
Deferred tax assets
11.
Deferred consideration
2022
£000
311
1,008
542
1,861
(377)
1,484
222
784
478
1,484
2021
£000
242
762
693
1,697
(382)
1,315
166
547
602
1,315
Profit &
loss
account
£000
6
291
297
2022
£000
162
162
2022
£000
(88)
(74)
(162)
2021
£000
459
459
As part of the purchase agreement of Tulloch Homes Holdings Limited, there was a further £13,000,000 of
deferred consideration payable. This can be broken down into: (i) £362,330 payable on 24 April 2022 (ii)
£6,137,670 payable on 1 November 2022 and (iii) £6,500,000 payment on 1 July 2023. The outstanding
discounted amount payable at the period end is £12,574,228 (2021: £nil).
Deferred consideration < 1 year
Deferred consideration > 1 year
2022
£000
6,119
6,455
12,574
2021
£000
-
-
-
99
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2022
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 liabilities. £4,000,000 was 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 £nil (2021: £1,900,000). £2,000,000 was paid during
the year.
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 a liability of £2,000,000 based on 80% probability.
The outstanding amount payable at the period end included within liabilities is £2,000,000 (2021:
£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”)
12. (b) Provisions
2022
£000
2,000
-
2,000
2021
£000
2,000
1,900
3,900
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
Provisions < 1 year
Provisions > 1 year
13. Share capital
2022
£000
125
1,091
1,216
2022
£000
364
852
1,216
2021
£000
125
825
950
2021
£000
-
950
950
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 2021
Share issue
At 31 May 2022
102,077,526
16,391,873
118,469,399
128
20
148
56,761
21,983
78,744
100
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2022
13.
Share capital (continued)
During the year 677,587 shares (2021: 2,539,270) were issued in satisfaction of share options exercised for
consideration of £727,647. On 1 December 2021, 15,714,286 shares were issued as part of the acquisition
of Tulloch Homes Holdings Limited, for a consideration of £22,000,000. Expenses of £723,816 are included
within share premium relating to this share raise.
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 May 2021 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 10% 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 prior 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.
101
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2022
13.
Share capital (continued)
Fair value of share options
Options are valued using the Black-Scholes option-pricing model. No performance conditions are included
in the fair value calculation of the CSOP and ESOP.
CSOP
Number
of shares
2022
Weighted
average
exercise price
(pence)
Number
of shares
2021
Weighted
average
exercise price
(pence)
Options at the beginning of 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
801,745
(17,741)
(156,446)
627,558
Grant Price
(p)
106.00
111.00
134.00
134.00
122.50
108.50
114.89
108.50
113.84
115.33
1,240,111
(41,451)
(396,915)
801,745
Number of
shares at year
end
307,821
27,027
22,388
110,008
115,079
45,235
Exercise price
(p)
106.00
111.00
134.00
134.00
122.50
108.50
111.95
109.29
106.31
114.89
Vesting
period
(years)
3
3
3
3
3
3
ESOP
Number
of shares
2022
Weighted
average
exercise price
(pence)
Number
of shares
2021
Weighted
average
exercise price
(pence)
Options at the beginning of the
year
Lapsed during the year
Exercised during the year
Options at the year end
2,024,836
(187)
(278,079)
1,746,570
119.38
122.50
119.31
118.84
2,167,027
(95,579)
(46,612)
2,024,836
119.23
122.50
106.17
119.38
Share option
ESOP – 16th October 2017
ESOP – 3rd May 2018
ESOP – 16th May 2018
ESOP – 1st October 2018
Grant Price
(p)
106.00
134.00
134.00
122.50
Number of
shares at year
end
446,402
72,761
11,157
1,216,250
Exercise price
(p)
106.00
134.00
134.00
122.50
Vesting
period
(years)
5
5
5
5
102
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2022
13.
Share capital (continued)
SAYE
2022
Number
of shares
Weighted
average
exercise price
(pence)
2021
Number of
shares
Options at the beginning of
the year
Granted during the year
Lapsed during the year
Exercised during the year
Options at the year end
2,192,995
-
(112,186)
(243,062)
1,837,747
128.45
-
130.50
86.79
130.50
2,436,799
2,094,548
(242,609)
(2,095,743)
2,192,995
Share option
SAYE – 29th April 2021
Grant Price
(p)
145.00
Number of
shares at year
end
1,837,747
Exercise price
(p)
130.50
Weighted
average
exercise
price
(pence)
84.80
130.50
84.80
84.80
128.45
Vesting
period
(years)
3
PSP
2022
2021
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
PSP – 21st December 2021
1,006,633
1,396,481
(34,933)
2,368,181
Grant Price
(p)
0.13
0.13
0.13
0.13
0.13
0.13
0.13
376,936
648,422
(18,725)
1,006,633
Number of
shares at year
end
348,636
623,064
1,396,481
Exercise price
(p)
0.13
0.13
0.13
0.13
0.13
0.13
0.13
Vesting
Period
(years)
3
3
3
103
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2022
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%
29.00%
0.49%
-
34.00p
32.00p
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 – 156,446 (2021 – 396,915) of options were exercised during the year and 582,323 (2021: 587,369)
shares were exercisable.
ESOP – 278,079 (2021 – 46,612) of options were exercised during the year and 1,746,570 (2021: 538,009)
shares were exercisable.
SAYE – 243,062 (2021 – 2,095,743) of options were exercised during the year and nil (2021: 15,668) 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 £554k (2021: £493k), 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
2022
£000
1,073
1,073
2021
£000
4,615
4,615
At 31 May 2022, the Company had available £39,000k (2021: £33,000k) of undrawn committed borrowing
facilities.
104
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2022
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
2022
£000
14,058
50,486
95,127
159,671
2021
£000
1,315
34,000
54,775
90,090
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 reasonably 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 2022
Bank of England base rate
31 May 2021
Interest rate
+0.5%
£000
(252)
Interest rate
-0.5%
£000
252
Interest rate
+0.5%
£000
(170)
Interest rate
-0.5%
£000
170
(Loss) / profit
105
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2022
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.
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
2022.
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 2022
Accounts
payable
Bank
borrowings
Deferred
consideration
Leases
Carrying
amount
£000
95,127
50,486
12,574
1,484
159,671
Total
minimum
future
payment
£000
Within 1
year
£000
Within 1-2
years
£000
Within 2-
5 years
£000
Greater
than 5
years
£000
95,127
95,127
-
51,000
12,638
1,861
160,626
-
51,000
6,138
311
101,576
6,500
289
57,789
-
-
-
719
719
-
-
-
542
542
106
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2022
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
54,775
34,000
1,315
90,090
54,775
34,000
1,697
90,472
54,775
34,000
242
89,017
-
-
214
214
-
-
548
548
Greater
than 5
years
£000
-
-
693
693
31 May 2021
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 2022
31 May 2021
Total book
value
£000
8,858
134
8,992
Allowance for
impairment
£000
-
-
-
Total book
value
£000
9,043
154
9,197
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
Non-current
31 May 2022
31 May 2021
Total book
value
£000
5,424
5,000
10,424
Allowance for
impairment
£000
-
-
-
Total book
value
£000
15,211
-
15,211
Allowance for
impairment
£000
-
-
-
During the year the Company had no allowance for impairment for other receivables.
107
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2022
17. Transactions with related parties
Other related parties include transactions with retirement schemes in which Directors and close family
members of key management personnel are beneficiaries. During the year dividends totalling £2,343k (2021:
£1,415k) 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
2022
£000
2,249
55
6
2
3
1
1
2,317
2021
£000
1,353
32
2
1
2
1
-
1,391
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
2022
£000
3,537
404
169
4,110
2021
£000
3,539
356
181
4,076
During the year the Company entered into the following transactions with related parties:
Bertha Park Limited (1)
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
2022
£000
18,226
74
154
20
18,474
2021
£000
8,989
118
44
121
9,272
Purchase of goods
2021
£000
-
2022
£000
371
45
11
332
759
33
-
313
346
Sales to related parties represent those undertaken in the ordinary course of business.
Entities which key management personnel have
control, significant influence or hold a material
interest in
Key management personnel
Other related parties
Rent paid
2022
£000
170
-
107
277
2021
£000
176
11
128
315
108
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
17. Transactions with related parties (continued)
Interest received:
Entities which key management
personnel have control, significant influence or
hold a material interest in (short-term)
The following amounts were outstanding at the reporting end date:
Amounts receivable:
Amounts due from Group undertakings
Bertha Park Limited (1)
Other entities which key management personnel have control, significant
influence or hold a material interest in (short-term)
Key management personnel
Other related parties
2022
£000
125
125
2022
£000
12,031
9,108
52
34
-
21,225
2022
£000
2021
£000
355
355
2021
£000
2,334
6,772
3
3
3
9,125
2021
£000
Accounts payable:
Amounts due to Group undertakings
Entities which key management personnel have control, significant influence or
hold a material interest in (short-term)
Other related parties
66,676
23,304
-
52
8
58
66,728
23,370
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.
(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 £18,226k
(2021: £8,989k) in relation to a build contract. At the year-end £3,983k (2021: £1,772k) is included in trade debtors and included within other debtors is a loan of £5,125k
(2021: £5,000k) at the year-end. During the year the Group had purchases from Bertha Park Limited of £371k (2021: £nil) in relation to a build contract. These were paid
in full during the year.
Other related party transactions
During the year there were transactions between the Company and its subsidiaries as follows:
Balance at 1 June 2021
Charges (from)/to subsidiary companies
Transfers of cash from subsidiary companies
Balance at 31 May 2022
2022
£000
(20,960)
(4,239)
(29,446)
(56,645)
2021
£000
1,094
4,704
(26,758)
(20,960)
During the period the company made purchases from related parties of £5,734k (2021: £3,994k) and sales
to related parties of £18,484k (2021: £8,933k).
109
SPRINGFIELD PROPERTIES PLC
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2022
18.
Analysis of net debt
The analysis of net debt is as follows:
Cash in hand and bank
Bank borrowings
Lease liability
Net debt
Reconciliation of net cashflow to movement in net debt is as follows:
2022
£000
1,073
(50,486)
(49,413)
(1,484)
(50,897)
2021
£000
4,615
(34,000)
(29,385)
(1,315)
(30,700)
At 1 June
2021 New Leases
Cashflow
Fair Value
At 31 May
2022
£000
£000
£000
£000
£000
4,615
(34,000)
(1,315)
(30,700)
-
-
(420)
(420)
(3,542)
(16,486)
318
(19,710)
-
-
(67)
(67)
1,073
(50,486)
1,484
(50,897)
At 1 June
2020 New Leases
Cashflow
Fair Value
At 31 May
2021
£000
£000
£000
£000
£000
794
(69,000)
(1,833)
(70,039)
-
-
(28)
(28)
3,821
35,000
573
39,394
-
-
(27)
(27)
4,615
(34,000)
(1,315)
(30,700)
Cash and cash
equivalents
Bank Borrowings
Lease
Net Debt
Cash and cash
equivalents
Bank Borrowings
Lease
Net Debt
110