Spirit AeroSystems Annual Report 2023

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FY2023 Annual Report · Spirit AeroSystems

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Company Registration No. SC031286 (Scotland)

SPRINGFIELD PROPERTIES PLC

ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MAY 2023

CONTENTS

COMPANY INFORMATION

DIRECTORS:

Mr Sandy Adam
Mr Innes Smith
Mr Iain Logan
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

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 2023.

FINANCIAL HIGHLIGHTS
FOR THE YEAR ENDED 31 MAY 2023

Group
Revenue

Group
Completions

Group
Adjusted
PBT*

2023:
£332.1m

2023:
1,301 homes

2023:
£16.0m

Private
Homes
Revenue

2023:
£253.4m

Affordable
Homes
Revenue

Contracting
Homes
Revenue

2023:
£53.9m

2023:
£19.7m

2022: £257.1m

2022: 1,242

2022: £20.8m

2022: £174.4m

2022: £64.3m

2022: £16.5m

Group

Revenue

Gross profit

Gross margin

Statutory profit before tax

Adjusted profit before tax*

Earnings per share

Net debt**

2022/23
£m
332.1

48.0

14.5%

15.3

16.0

10.19p

67.7

2021/22
£m
257.1

43.1

16.8%

19.7

20.8

14.74p

38.1

Change
%
+29%

+11.4%

-230bps

-22.3%

-23.1%

-30.9%

+77.7%

*Adjusted profit before tax excludes exceptional items detailed at Note 10.
**Net debt is defined as 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

 Revenue growth driven by full year contribution from acquisition of Tulloch Homes and Mactaggart

& Mickel Homes.

 Total owned land bank of 6,712 plots, 83% with planning permission, and strategic options over

a further 3,255 acres representing c. 33,000 plots

o One of the largest land banks in Scotland, in areas of high demand and with a low cost

per plot, underpins the Board’s long-term confidence

o Large owned land bank provides asset for cash generation
 Acquisition of the Scottish housebuilding business of Mactaggart & Mickel.
 Progress of ESG strategy against first year objectives as noted in the CEO report.

SPRINGFIELD PROPERTIES PLC

STRATEGIC REPORT

EXECUTIVE CHAIRMAN’S STATEMENT
FOR THE YEAR ENDED 31 MAY 2023

This year we delivered a record turnover of £332.1m, a year-on-year increase of 29%. While we were not
immune to the significant market turmoil, which did impact our profits, given this backdrop, our revenue
growth is quite an achievement.

With over 700 employees, across six well-established brands, we are one of the largest house builders in
Scotland and we operate in all key regions. We have one of the largest land banks in Scotland – with over
6,700 owned plots, 83% of which has planning permission, situated in areas of significant demand. We are
proud to have continued to receive recognition from our peers, including, for the first time, being awarded
accolades on a UK-wide platform in recognition of the quality of the communities being developed in our
Villages and the quality of the communities being developed there.

Our ethos remains centred on a strong belief that everyone in Scotland deserves a good home and our
business culture is underpinned by our commitment to building quality, energy efficient homes and looking
after our customers, our employees, our sub-contractors and the communities in which we operate. This year
we have taken significant steps to deliver against our first ESG Strategy and our progress has been captured
in an update published alongside this report.

People

Our commitment to being a quality employer remains at the fore as we continue to create an environment
where everyone can thrive. We have a great package of benefits for our employees to ensure that we retain,
reward, support and attract the best people. In recognition of the cost-of-living challenges being experienced
nationwide, three pay increases were awarded to employees during calendar year 2022, which included
passing on to our employees our own National Insurance saving of 1.25% following the UK Government
announcement that the rate payable would be reduced from November 2022. During the year, we also
extended quality private health care cover to employees across the Group, crucially including trade
employees working on our sites.

Looking after the mental health of our employees continued to be a focus, targeting in particular construction
workers, apprentices and also our subcontractors. We increased the number of fully trained mental health
first aiders and undertook a number of engaging campaigns in partnership with the Lighthouse Club, a mental
health support charity exclusively for those within the construction sector and their families. A specific focus
was given to mental wellbeing amongst apprentices, with nearly 100 apprenticeship employees completing
mental health awareness training with specialist charity Mikeysline.

We improved our employee engagement with the launch of our very first intranet site. The platform provides
access to support resources and a forum to share positive news, and is designed to bring employees together
from across the Group, whether they work out on site, at a sales centre, at our workshops, or in one of our
offices.

We take our position as a major employer in the housebuilding industry seriously and pride ourselves in the
active role we take in the skills development of our workforce. This year, 16% of our employees were
undertaking an apprenticeship or formal training, which is far greater than the industry standard. In total, 50
employees completed formal qualifications during the year and we were pleased to award 48 promotions,
reflecting our commitment to helping our people to flourish.

At the same time, we have also had to make some tough decisions to generate resource efficiencies across
the Group in response to the challenging market conditions. Alongside other actions that we have taken, in
some areas of the business most affected by the downturn, it has unfortunately meant making some
redundancies.

SPRINGFIELD PROPERTIES PLC

STRATEGIC REPORT

EXECUTIVE CHAIRMAN’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

This year also saw changes at the senior management and Board level. In March, Michelle Motion stepped
down as Chief Financial Officer after nine years with Springfield and Iain Logan, then Finance Director,
became interim CFO. The Board was very pleased with Iain's performance in this role and, post year end,
unanimously decided to make the position permanent as well as appoint him to the Board. In addition, during
the year we restructured a number of Group Director reporting lines to maximise the breadth of experience
held by Chief Operating Officer, Martin Egan. This allowed a strong emphasis to be placed on the operational
and technical efficiencies that are being driven across the Group.

I would like to thank all of our employees, past and present, for their hard work and commitment this year.

Finally, I would also like to express my gratitude to Roger Eddie who, in the interests of corporate governance,
has notified the Board of his intention to retire as a Non-executive Director during the course of the year. A
selection process has started, which may or may not identify a replacement.

Markets

Market conditions across our business were particularly challenging this year and this has continued post
period. In private housing, there was a marked slowdown in the UK housing market, particularly following the
UK Government’s mini-budget in September 2022, as mortgage rate increases and cost-of-living pressures
impacted affordability and the confidence of buyers. Whilst we saw some recovery after the traditionally
quieter festive period, the market took another dip following the Bank of England’s decision to increase rates
to 5% and buyer confidence has been affected since.

However, within a UK context, there is greater affordability in Scotland, characterised by lower income
multiples and lower levels of house price inflation. Our private housing is also supported by the Scottish
missive system, which ensures that customers are contracted into the purchase much earlier in the build
programme. The fundamental demand for the type of private housing that we offer remains strong. Across
each of our brands, we build quality, spacious, energy efficient homes in highly desirable areas with generous
private gardens and plenty of surrounding greenspace. The mortgage market is also more supportive of new
build homes, particularly given their energy credentials.

We remain extremely proud of our record in affordable housing and the benefits it provides to communities.
This year our ability to deliver affordable homes was curtailed due to the significant build cost inflation and
the fixed price nature of contracts in this part of the business. Accordingly, we took the strategic decision to
pause entering into new, large, long-term affordable-only contracts and we reassessed the costs to
completion for our ongoing affordable housing projects. Consequently, our activity in affordable housing was
far lower than we had originally expected. However, since year end, the Scottish Government has announced
an eagerly anticipated increase to their affordable housing investment benchmarks. As a result, and with
build cost inflation easing, we envisage a strong return in this area of the business to deliver against built-up
demand – which remains exceptionally high with 178,000 applicants on Local Authority housing lists across
Scotland. In addition, the Scottish Government remains committed to delivering new affordable homes,
illustrated by their target to deliver 110,000 energy efficient affordable homes by 2032.

The position regarding private rented sector (“PRS”) housing remained unchanged throughout the year. The
uncertainty surrounding the Scottish Government rent caps, which had been put in place to support families
with cost-of-living concerns, has deterred PRS providers from entering new contracts in Scotland. While there
is nothing yet to suggest a change to this policy environment, we are hopeful that proven demand for purpose-
built, high quality, energy efficient PRS homes will drive investment into Scotland. The 75 PRS homes we
delivered at Bertha Park have been extremely popular amongst families looking to move into the area.

There remains an undersupply of all types of housing across Scotland. This can only be satisfied through the
delivery of new homes. With one of the largest land banks with 6,712 plots owned, 83% of which with planning
permission, we are well-positioned to take advantage of opportunities when market conditions improve.

SPRINGFIELD PROPERTIES PLC

STRATEGIC REPORT

EXECUTIVE CHAIRMAN’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Our commitment to Environmental, Social, Governance (“ESG”)

This year we were proud to publish our first ESG Strategy, bringing together all the good practice from across
our brands and regions and setting new, challenging objectives to ensure we continue to improve. The
strategy included priorities identified across the ESG spectrum that we saw as critical to the future success
of our organisation and valued by our varied stakeholders. Being the first year of a formal strategy, much of
the objectives involved research and data collection, setting a baseline upon which we can improve, measure
and report performance.

A new governance structure was launched with our CEO leading a dedicated ESG Committee of the Board.
Since its launch in August 2022, the ESG Committee has met a number of times to monitor progress of
strategy delivery, with a report having been made to the PLC board. Alongside this annual report, we are
pleased to be publishing an update to our ESG strategy for our investors. The publication, which can be
found within the ESG pages of the Springfield Group website, reports on our performance within year one,
summarises findings within today’s economic and environmental climate and sets objectives for the year
ahead.

Alongside our strategy development and delivery, we became the first housebuilder to engage with
NextGeneration Core. This initiative was recently launched by NextGeneration – which provides an external
assessment of the largest 25 housebuilders in the UK – to encourage small to medium-sized businesses to
benchmark their performance. Through the voluntary scheme, we were assessed against 14 key criteria
including our policies for reducing energy use and waste, our health and safety standards, commitment to
placemaking and affordable housing, and educating our workforce. We were delighted with the feedback.
Our drive to reach net zero stood out, with our head start on the use of air source heat pumps being
commended. We were particularly pleased to receive recognition for our efforts in placemaking, where it was
noted that Springfield’s role in community creation met aspirational standards and far exceeded practice
elsewhere in the wider UK industry.

At Springfield, we build more than homes, we create sustainable communities for families to enjoy for years
to come. Our dedicated Community Engagement Co-ordinator has made a strong impact within their first full
year in post, working closely with communities where we are building and engaging new residents within our
Village developments through community events. This year we also took steps to strengthen our approach
to community engagement during the planning process. Despite the challenges in delivering affordable
housing, our commitment to regeneration was reinforced in May through the signing of a contract to deliver
new homes at the previously condemned housing estate in Deans South. This has been a project close to
my heart for a number of years where the building of new homes will have a transformational impact on the
Livingston community and the lives of the families who are desperate to return.

Our abilities in placemaking and the creation of sustainable communities are well showcased at our
Springfield Villages, with Bertha Park in Perth and Dykes of Gray in Dundee being the most developed. We
were delighted when both were awarded prestigious accolades from the WhatHouse? Awards. Bertha Park
was named the Best Sustainable Development in the UK and Dykes of Gray received a silver award in
recognition of the strength of its public realm. Similarly, Bertha Park was also named the best development
in Scotland at the Scottish Home Awards.

Our approach to charitable donations was refreshed during the year to ensure we are maximising our impact,
which included the creation of a dedicated webpage encouraging applications. This year we donated
£80,284, supporting 86 local causes as a result.

Dividend

While recognising the importance of the dividend to shareholders, the Board has resolved not to propose a
dividend for FY 2023 as a measure to preserve liquidity in response to market conditions. Our focus is on
managing cash flow and reducing debt to ensure that we are in the optimal position for when market
conditions improve. The Board intends to resume making dividend payments once the Group’s bank debt is
materially reduced.

SPRINGFIELD PROPERTIES PLC

STRATEGIC REPORT

EXECUTIVE CHAIRMAN’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Looking to the future

The continued market turmoil being faced across the UK housebuilding industry means that, in the immediate
term, our strategic priorities have shifted. We are sharply focused on managing our cash flow and reducing
our bank debt to put us in a position of strength for when market conditions improve and enable us to deliver
on our goals.

The fundamentals of our business and of the Scottish housing market remain strong. We are extremely proud
of our high-quality land bank. A high number of our development sites are owned with planning permission
in place, in desirable locations across Scotland. As well as offering the Springfield Group with a solid pipeline,
it provides an asset for cash generation. With the new National Planning Framework creating challenges on
unallocated sites, we are in a strong position to capitalise on our land bank when the terms are favourable,
and we are currently in discussions with a number of housebuilders, affordable housing and PRS providers
about a number of our sites.

Whilst times are tough just now, we retain an extremely significant place within the Scottish housing market
and are excellently placed to springboard when the time is right. We build homes of exceptional quality with
an unrivalled level of specification and choice for customers across our established housebuilder brands.
Our ability to deliver sustainable communities is highly regarded.

For over two decades, we have intentionally diversified our business, delivering not only private homes for
sale but also quality new homes in partnership with local authorities and housing associations. From the
outset, we saw value in the cash flow benefits of affordable housing delivery and this value is set to return.
Build cost inflation has eased, the Scottish Government affordable housing investment benchmarks have
increased, we have signed two, short term, affordable contracts and discussions are well underway with our
well established partners on new projects to allow us to start delivering affordable homes that are much
needed across the country.

Similarly, as we see demand for all housing tenures increase, and as UK operators come to better understand
the policy dynamics in Scotland, I also expect to see a return to delivering homes for the private rented sector
through partnerships. The homes that we delivered for Sigma Capital at Bertha Park Village provide an
excellent example. I am confident that our vast experience of delivering homes through partnerships, together
with our effective land bank, will stand us in excellent stead for embracing new opportunities.

Accordingly, we are highly confident in the future of our business and in our ability to deliver growth for our
shareholders.

I would like, again, to thank our skilled management team for the decisive action they have taken, within and
post period, to navigate the business through the turmoil. The continued support for our business from all of
our stakeholders is critical and ever more appreciated in the challenging times. We very much look forward
to creating value across our business and to delivering great homes and communities for our customers.

Sandy Adam
Executive Chairman
20 September 2023

SPRINGFIELD PROPERTIES PLC

STRATEGIC REPORT

CHIEF EXECUTIVE’S STATEMENT
FOR THE YEAR ENDED 31 MAY 2023

Against a challenging market backdrop, this year we delivered our highest level of annual completions and
revenue. We brought another premium brand into the Group through the acquisition of Mactaggart & Mickel
Homes, and on favourable payment terms. While we were significantly impacted by the build cost inflation,
particularly in affordable housing, we took decisive action to address this, resulting in annualised cost savings
of £4.0m.

Alongside the build cost inflation, there was a sharp reduction in homebuyer confidence resulting from rising
mortgage rates and cost-of-living challenges, which peaked around the time of the UK Government’s mini-
budget. In addition, following the Scottish Government’s introduction of rent controls, our plans for expanding
our PRS housing activity were withdrawn. Accordingly, while the fundamentals of the housing sector in
Scotland and of our business remain strong, the market conditions during 2023 were particularly challenging.

During 2023, total revenue grew by 29.2% to £332.1m (2022: £257.1m), and we completed 1,301 homes
(2022: 1,242). This was driven by private housing, with revenue increasing by 45.2% to £253.4m (2022:
£174.4m), primarily due to the first full 12-month contributions from Tulloch Homes and Mactaggart & Mickel
Homes, but we also delivered organic revenue growth in private housing. The increased revenue in private
housing offset the reduction in affordable housing to £53.9m (2022: £64.3m), which was due to the significant
build cost inflation. This also impacted gross margin, resulting in profit before tax and exceptional items being
£16.0m (2022: £20.8m). Our net debt position at year end was £67.7m (2022: £38.1m), primarily reflecting
the Mactaggart and Mickel Homes acquisition; the first deferred payment of £6.1m for the acquisition of
Tulloch Homes; and the significantly higher interest payments.

Trading conditions have remained tough into the new financial year as private housing reservations continue
to be impacted by reduced homebuyer confidence. We do not expect to see any material improvement in
homebuyer confidence before next Spring. Our priority is to maximise cash generation to reduce our debt to
ensure we maintain the value of our business. Accordingly, we are pausing all speculative private housing
development. We will build based on sales and not sell based on build. We are actively pursuing land sales
and will further reduce our cost base where necessary. We are also encouraged by the interest we are now
receiving in affordable housing, which has strong cash flow dynamics.

The fundamentals of our business and our position within the Scottish housing market remain strong. We
have one of the largest land banks in Scotland – with over 6,700 owned plots and 83% of which has planning
permission. This is particularly valuable given the current planning difficulties being faced in Scotland. We
have an excellent reputation of offering high quality, energy efficient homes in desirable locations in key
housing markets across Scotland. In addition, there is an undersupply of housing of all tenures, which is
being exacerbated by the current conditions, and which can only be addressed through building new homes.
The stability in house prices and the better affordability in Scotland underpin our opportunities for medium-
term growth.

Decisive Response to Market Conditions

To address the uncertain and difficult market conditions, we took decisive action during the year alongside
maintaining tight cost control. We halted entering new large long-term affordable housing contracts, as
described further below, and we adopted a cautious approach to new site launches in private housing,
including undertaking ‘soft launches’ to test the market before making further investment into site
infrastructure. We reduced land buying activity and completed a land sale for £3.7m. We paused recruitment
and reduced staffing levels in areas most impacted by the market downturn as well as identifying synergies
across the Group. As a result of these actions, we have delivered savings of approximately £4.0m on an
annualised basis.

SPRINGFIELD PROPERTIES PLC

STRATEGIC REPORT

CHIEF EXECUTIVE’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Since year end, we have continued to closely monitor the economy and buyer behaviour in both the housing
and land market and carefully manage our activities to limit exposure in the slower sales environment. With
private housing reservations remaining subdued and the uncertainty around when demand will improve, we
are now acutely focused on managing cash flow and prioritising cash generation to reduce debt. Accordingly,
we will now only build a private home once a reservation is secured, which will improve cash generation in
this part of this business. We are actively seeking land sales, on favourable terms, in order to accelerate the
realisation of cash from our large land bank – with the target of selling 800-1,000 plots within two years. We
will also take action to further reduce our cost base where necessary and have paused the payment of
dividends until debt has been materially reduced.

Through these actions, we will limit our exposure to the uncertain conditions in the short term while
maximising cash generation to reduce debt and thereby be in a stronger position for when normalised
demand returns. This is further supported by having one of the largest land banks in Scotland with 6,712
owned plots – 83% with planning permission – and strategic options over a further 3,255 acres representing
c. 33,000 plots.

Land Bank

During the year, we strengthened our land bank with the acquisition of Mactaggart & Mickel Homes. This
comprised a total of 701 plots in highly desirable locations within the Central Belt of Scotland and strategic
options over a further c. 2,300 acres.

At the same time, we continued to realise value from our large, high-quality land bank with the sale of land
to a housebuilder. We are actively seeking further opportunities for land sales where the terms and price
are desirable and we are currently in discussions with a number of housebuilders about a selection of our
sites. The slowdown across the industry has had a corresponding impact on the land market, however we
expect this position to change in the near term and will be well placed to benefit from this pent-up demand.

We significantly reduced land buying activity in response to the current market conditions. In addition, we
made the decision to no longer pursue Gavieside in Livingston, a site of 2,500 plots without planning
approval, that had previously been identified as a further Village development. Having explored various
options, we concluded that, under current market conditions and with a difficult planning environment, it
would be prudent to reduce cash outflows and that our resources will be better utilised by focusing on our
sites that are more advanced. Accordingly, we no longer have the Gavieside site under option.

At 31 May 2023, we had 6,712 owned plots and strategic options over a further 3,255 acres representing c.
33,000 plots.

Of the owned land bank, 83% has planning permission (including detailed and outline planning), which
provides an asset for cash generation. The gross development value of the owned land bank at 31 May
2023 was £1.9bn.

Approximately 22% of the land under strategic option is contracted and c. 14% has planning permission.

At year end, we were active on 50 developments (2022: 51) and during the year 16 developments were
completed and 15 new active developments were added to the land bank (of which 7 were under
Mactaggart & Mickel Homes).

SPRINGFIELD PROPERTIES PLC

STRATEGIC REPORT

CHIEF EXECUTIVE’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Private Housing

The number of private home completions increased by 21.6% to 866 (2022: 712), which primarily reflects the
contributions from Tulloch Homes and Mactaggart & Mickel Homes.

The challenging market backdrop impacted reservation rates as increased mortgage rates combined with
ongoing cost-of-living pressures reduced affordability and homebuyer confidence. In particular, there was a
sharp reduction in sales levels following the UK Government’s mini-budget in September 2022, which
remained low for a three-month period. While there was recovery in January to May 2023, the forward order
book at year end was below that of the previous year.

We saw a further softening in demand following the Bank of England increasing interest rates to 5% towards
the end of June 2023. Sales levels remained low over the summer weeks, with a traditional seasonal dip
during the school holidays. Since schools in Scotland reopened in the middle of August, reservation rates
have continued to be significantly below the levels usually experienced at this time of year. As a result, and
as described further above, we have taken the decision to significantly curtail our development activities and
only build homes when a reservation is secured.

The average selling price (“ASP”) for private housing during the year was £293k (2022: £245k). This reflects
the contribution from Mactaggart & Mickel Homes, which has higher selling prices than the rest of the Group,
as well as a general increase in sales prices across our brands. This served to mitigate some of the build
cost inflation in private housing during the year. As previously stated, private house price growth is no longer
anticipated in the short term, however we are pleased to note that selling prices have remained stable across
our developments post year end, supported by the established reputation of high quality of our brands. This
also reflects the strength of the market in Scotland, where house prices have outperformed the rest of the
UK market as a result of the greater affordability in Scotland and undersupply of housing.

As at 31 May 2023, we were active on 32 private housing developments (2022: 31), with 9 active
developments added during the year, of which 4 were from Mactaggart & Mickel Homes, and 8 developments
completed. In total, as at 31 May 2023, the owned private housing land bank consisted of 5,075 plots (2022:
4,605), of which 86% had planning permission.

Village Developments

Springfield Villages are large, standalone developments that include infrastructure and neighbourhood
amenities. Each Village is designed to deliver approximately 3,000 homes, primarily for private sale, but also
include affordable, and at Bertha Park, PRS housing, with ample green space and community facilities.

We have three Villages that are well underway and already home to thriving communities: Dykes of Gray,
Dundee; Bertha Park, Perth; and Elgin South (formally ‘Linkwood Village’), Elgin. Post year end, in August
2023, a section 75 agreement was reached with Stirling Council for 3,042 homes at Durieshill. The Village
was granted planning in 2019 and is believed to be the largest detailed planning consent to have been
granted in Scotland to date. With the section 75 now in place, we have all consents required to commence
work on site, which is expected in 2024. As noted above, during the year, we decided to no longer pursue
Gavieside, a site in Livingston that had been identified as a further Village, in order to reduce cash outflows
and focus resources on more advanced sites.

While not immune to the broader market trends, demand for Springfield’s Villages remained high, driven by
the desirability of larger family housing, with local amenities and commuting distance to major cities. In total
(including homes delivered under contract), there were 145 private housing completions at the Villages during
the year (2022: 143). At Elgin South, a new phase of homes has been released for sale since year end.

SPRINGFIELD PROPERTIES PLC

STRATEGIC REPORT

CHIEF EXECUTIVE’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

There was also a continued expansion of amenities and strengthening of community engagement at the
Village developments, enabling the local communities to become more established. At Dykes of Gray, for
example, a community woodland was created while at Bertha Park a new food takeaway opened and a
resident of the village submitted planning permission for a café which was approved post period.

The success of our Villages has been recognised by several industry awards. This year, two of our Villages
secured awards from WhatHouse?, a UK-wide platform. Bertha Park was named Best Sustainable
Development (Gold) and Dykes of Gray secured the Best Public Realm (Silver) title. In Scotland, Bertha Park
was also named Best Large Development by the Scottish Home Awards.

Affordable Housing

Our affordable housing business was significantly impacted during the year by the macro-economic
conditions. Build cost inflation, which peaked at c.30%, substantially reduced gross margin due to the
industry’s model of fixed-price contracts. In particular, our margin suffered from the delivery of two large,
long-term contracts that had been signed in early 2020 and were therefore based on expectations of lower
material and labour costs. We were also impacted in the first half of the year by key subcontractors going out
of business, which necessitated the finding of replacement subcontractors that led to some delays and higher
costs. Alongside this, we were disappointed that the Scottish Government did not review its affordable
housing investment benchmarks during the year to take account of the significant level of inflation.

As a result, during the year, we took the decision to pause entering new long-term affordable-only contracts.
However, we were pleased to note that, post year end, in June 2023, the Scottish Government increased the
affordable housing investment benchmarks by 16.9%. This, combined with a reduction in levels of cost price
inflation, is expected to enable housing associations to increase the price of affordable housing contracts to
progress the building programmes required to meet the Government’s affordable housing targets.
Accordingly, along with other housebuilders, we are now finding affordable housing more attractive. We have
recommenced engaging with affordable housing providers, with a focus on short-term contracts with lower
pricing risk, and we are pleased to have signed one contract on 31 May 2023 for £9.7m and another post
year end for £8.1m for the delivery of 40 affordable homes at Bertha Park Village. We are currently in
negotiations for a further 13 contracts representing 460 homes.

The contract signed on 31 May 2023 was with the Wheatley Group to deliver 55 homes (including 9 private
homes) at Deans South in Livingston to regenerate a former residential Council development that was
condemned in 2004 and earmarked for demolition. This reflects our longstanding commitment to the
transformation of Deans South, and our support for the local community, as discussed further in Chairman’s
Statement.

The fundamentals of affordable housing delivery remain strong. The nature of affordable housing contracts
provides high revenue visibility with low capital exposure and strong cash flow dynamics. We are well placed
to benefit from a return in this market as we have significant experience and an excellent track record, having
been delivering developments exclusively dedicated to affordable housing since 2002. Accordingly, we have
established relationships with housing associations, local authorities and other public bodies throughout
Scotland. We are encouraged by the interactions that we are having with affordable housing providers since
the increasing of the affordable housing investment benchmarks and expect to sign further contracts in the
coming months, which will support our cash generation. This also includes opportunities for bulk sales of
private homes that are already under construction but unreserved.

SPRINGFIELD PROPERTIES PLC

STRATEGIC REPORT

CHIEF EXECUTIVE’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

During the year, we completed 328 affordable homes (2022: 405). Average selling price was £164k (2022:
£159k). The number of active affordable housing developments was 15 at 31 May 2023 (2022: 18), with 5
active developments (under section 75 agreements) added during the year and 8 developments completed.
This included delivering our first affordable housing development for Aberdeenshire Council and completing
an additional phase of affordable housing at Elgin South Village for Moray Council. Post year end, we
completed handovers of another affordable-only development under our local authority framework
agreement with Moray Council, bringing the total number of projects completed in this framework to 6.

As at 31 May 2023, the total owned affordable housing land bank consisted of 1,637 plots (2022: 1,626), of
which 79% had planning permission.

Contract Housing

In contract housing, we provide development services to third party private organisations and receive
revenue based on costs incurred plus fixed mark up. To date, this has largely consisted of services provided
to Bertha Park Limited, which, during the year, included homes across all tenures – private, affordable and
PRS housing. During the year, contract housing also included a small number of PRS houses to complete
historic contracts through Mactaggart & Mickel Homes.

At 31 May 2023, the contract housing land bank with planning consent consisted of 603 plots (2022: 675).
The 107 homes completed during the year (2022: 125) comprised 57 private homes, 12 affordable homes
and 38 PRS homes at Bertha Park Village as well as 10 homes through Mactaggart & Mickel Homes.

This handover of homes for PRS at Bertha Park Village marked the completion of our first PRS contract.
They represent the first houses built specifically for private rent in Scotland and we have been pleased to
note the popularity of the quality, energy-efficient homes amongst families looking to live in the area. While
our strategy to expand PRS activity was put on hold following the introduction of rent control by the Scottish
Government, we are hopeful that opportunities to build more PRS homes, particularly in our Village
developments, will return when PRS providers adjust to the policy environment and invest in Scotland.

Acquisition

At the start of the year, in June 2022, we acquired the Scottish housebuilding business of Mactaggart &
Mickel Group Ltd for a total consideration of £46.3m to be paid over five years, interest-free, with an option
of a payment holiday for one year. Mactaggart & Mickel Homes 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 7 live private, affordable and contracting sites with work in
progress, and acquired a brand licence to build homes as Mactaggart & Mickel Homes on a further 11 private
and affordable sites, which would transfer to Springfield as homes are sold in line with the payments of the
deferred consideration (with a minimum annual payment of £7.7m). In addition, we were given strategic
options over a further c. 2,300 acres of land still owned by Mactaggart & Mickel Group Ltd across Scotland.

The acquisition also included Timber Systems, a timber frame factory near Glasgow. The addition of a second
timber frame factory, to complement our pre-existing facility in Elgin, will secure kit supply and increase
capacity for future growth while further reducing our carbon footprint. It also enables sales of kits to third
parties. In addition, as part of the consolidation progress, we undertook some restructuring of the Mactaggart
& Mickel Homes business to consolidate some of the operations with the existing Group, which has generated
cost savings.

SPRINGFIELD PROPERTIES PLC

STRATEGIC REPORT

CHIEF EXECUTIVE’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

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 exceptionally proud to offer customers a high level of specification as
standard as well as significant choice. Feedback from mortgage lenders and surveyors suggests that they
also recognise the high specification that is offered as standard and have strong confidence in our house
prices.

In July 2022, we registered for the New Homes Quality Board Code of Practice (“NHQB Code”), well ahead
of the December 2022 deadline. The NHQB Code aims to improve consumer protection covering important
aspects of the new home construction, inspection and the sales process. In preparation for activation, a full
review of processes was undertaken across the Group ensuring compliance and best practice was in place.

Across the Springfield Group, customers who reserved homes since 4 April 2023 have done so under the
new NHQB Code. In addition, a new formal, online complaints process was launched to improve service
levels and the monitoring of any complaints received. New processes being rolled out across operations
complemented our Quality Management System and ISO 9001 was recertified within the year.

We have set an objective to work towards 100% customer satisfaction to encourage year-on-year
improvements and ensure we are always doing what we can to provide the best product and service to our
customers. This year we achieved an overall customer satisfaction rating of 94% (2022: 93%), showing a
positive start against this aspiration.

Build Quality and Efficiencies

As we have acquired new brands within the Springfield Group, we have inherited a range of over 200 house
types. Detailed planning consents and building warrants that came along with each acquisition made it
efficient to build out the homes that were already planned. This year, however, we have undertaken a
fundamental review of the house types that we offer across the Group and have rationalised this portfolio
down to the most popular homes that are most efficient to plot, build and be capable of accommodating future
building standards to maximise energy efficiency.

For all new planning applications, homes for each brand will now be selected from a portfolio of under 50
house types. Where planning is in place for larger sites, remix applications are also to be considered to bring
forward the benefits. The rationalisation of house types will enable the standardisation of construction
processes and will ensure we maximise capacity within our two timber kit factories. Standardisation in
component parts have also been agreed, including for kitchens, bathrooms, window sizes and roof details,
which will also enable us to capitalise on Group purchasing opportunities.

Environment and People

This year the Group published its first ESG Strategy, bringing together all the good practice from across the
brands and regions and setting new, challenging objectives to ensure the Group continues to improve. The
strategy included priorities identified across the ESG spectrum that were regarded as critical to the future
success of the Group and valued by its varied stakeholders. Being the first year of a formal strategy, much
of the objectives involved research and data collection, setting a baseline upon which to improve, measure
and report performance.

SPRINGFIELD PROPERTIES PLC

STRATEGIC REPORT

CHIEF EXECUTIVE’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

A new governance structure was launched with the CEO leading a dedicated ESG Committee of the Board.
Since its launch in August 2022, the ESG Committee has met a number of times to monitor progress of
strategy delivery, with a report having been made to the Board. Alongside this annual report, the Group is
pleased to be publishing an update to its ESG Strategy for investors. The publication, which can be found
within the ESG pages of the Springfield Group website, reports on the performance within year one,
summarises findings within today’s economic and environmental climate and sets objectives for the year
ahead.

Alongside strategy development and delivery, the Group became the first housebuilder to engage with
NextGeneration Core. This initiative was recently launched by NextGeneration – which provides an external
assessment of the largest 25 housebuilders in the UK – to encourage small to medium-sized businesses to
benchmark performance. Through the voluntary scheme, the Group was assessed against 14 key criteria
including policies for reducing energy use and waste, health and safety standards, commitment to
placemaking and affordable housing, and educating its workforce. In the feedback, the Group’s drive to reach
net zero stood out, with its head start on the use of air source heat pumps being commended. In recognition
of its efforts in placemaking, it was noted that the Group’s role in community creation met aspirational
standards and far exceeded practice elsewhere in the wider UK industry.

The Group’s dedicated Community Engagement Co-ordinator has made a strong impact within the first full
year in post, working closely with communities where the Group is building and engaging new residents
within Village developments through community events. This year, steps were taken to strengthen the
Group’s approach to community engagement during the planning process. Despite the challenges in
delivering affordable housing, the Group’s commitment to regeneration was reinforced by the signing of the
contract to deliver new homes at Deans South.

As noted above, the Group’s abilities in placemaking and the creation of sustainable communities, particularly
at its Village developments, were recognised with several awards during the year.

The Group’s approach to charitable donations was refreshed during the year to ensure it maximised its
impact, which included the creation of a dedicated webpage encouraging applications. This year, the Group
donated £80,284, supporting 86 local causes as a result.

Outlook

The challenging and uncertain market conditions have been sustained into the new financial year, with
reservations in private housing continuing to be significantly depressed due to reduced homebuyer
confidence as interest rates have remained high.

The Board does not expect this to materially improve before Spring 2024. To limit exposure in the uncertain
conditions, we are curtailing private housing development activity to only commence building a home once it
is reserved. This will enable us to maximise cash generation from work-in-progress to reduce debt. We are
also encouraged by the engagement we are having with affordable housing providers following the Scottish
Government increasing the affordable housing investment benchmarks. We now expect affordable housing
contracts signed this year to make a material contribution to Group revenue while also supporting our efforts
to maximise cash generation due to the strong cash flow dynamics associated with affordable housing. We
are also actively pursuing land sales to accelerate cash realisation from our large land bank, and will further
reduce our cost base where necessary.

SPRINGFIELD PROPERTIES PLC

STRATEGIC REPORT

CHIEF EXECUTIVE’S STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Notwithstanding the short-term challenges, the fundamentals of our business and of the Scottish housing
market remain strong. We offer high quality, energy efficient homes in popular locations across Scotland
under multiple highly respected brands. We have one of the largest land banks in Scotland, with 6,712 owned
plots – 83% of which have planning permission – and strategic options over a further 3,255 acres
representing c. 33,000 plots. This can be developed – with a low cost per plot – for years to come as well as
providing an asset for cash generation.

There remains an undersupply of housing across all tenures in Scotland, which is being exacerbated by
current conditions and can only be rectified through the building of new homes. The Scottish Government’s
increase of the affordable housing investment benchmarks demonstrates its commitment to affordable
housing. While in private housing, there is greater affordability in Scotland compared with the UK as a whole.
Together, this provides an excellent platform to take advantage of the next upturn in the market cycle.

As a result, while the current period is not without its challenges, the Board remains confident in the Group’s
prospects and in our ability to generate shareholder value.

Innes Smith
Chief Executive Officer
20 September 2023

SPRINGFIELD PROPERTIES PLC

STRATEGIC REPORT

CHIEF FINANCIAL OFFICER’S REVIEW
FOR THE YEAR ENDED 31 MAY 2023

I am pleased to present my first annual report as Chief Financial Officer, following my appointment in July
2023 and having served in the interim position for four months prior to that.

The financial year ended 31 May 2023 was a year of record revenue delivery against a backdrop of significant
turmoil in the housing industry.

In summary, for the year ended 31 May 2023, revenue increased by 29.2% to £332.1m (2022: £257.1m),
adjusted profit before tax and exceptional items was £16.0m (2022: £20.8m) and statutory profit before tax
was £15.3m (2022: £19.7m). Net debt at 31 May 2023 was £67.7m compared to £38.1m at 31 May 2022,
with the increase in debt primarily reflecting acquisition payments.

The significant increase in revenue was driven by the acquisitions of Tulloch Homes in December 2021 and
Mactaggart & Mickel Homes in June 2022, reflecting their first full 12-month contributions.

Revenue

Private housing
Affordable housing
Contract housing
Other*
TOTAL

*Primarily land sales

2023
£000
253,362
53,931
19,681
5,158
332,132

2022
£000
174,442
64,251
16,494
1,908
257,095

Change

+45.2%
-16.1%
+19.3%
+170.3%
+29.2%

Private housing remained the largest contributor to Group revenue, accounting for 76.3% (2022: 67.9%) of
total sales, and grew by £79.0m to £253.4m. This was primarily due to the contributions from the acquisitions,
but we also achieved increased sales in private housing of 13% on an organic basis.

The reduction in affordable housing revenue to £53.9m (2022: £64.3m) reflects lower activity, as discussed
in the Chief Executive Officer’s Review, as well as inflation in development costs based on the revenue
recognition model in affordable housing (see Note 2.5 to the financial statements).

In contract housing, revenue grew as we completed delivery of our contract for PRS homes at Bertha Park;
completed two PRS developments for Mactaggart & Mickel Homes; and generated increased revenue from
private housing delivery at Bertha Park. There was also a significant increase in other revenue, driven by
£3.7m received from a strategic land sale (2022: £0.2m in land sales).

Gross profit increased by 11.4% to £48.0m (2022: £43.1m) due to the significant growth in revenues. Gross
margin was 14.5% (2022: 16.8%), which reflects a significant reduction in affordable housing margin as well
as a reduction in private housing margin, primarily reflecting sales mix. In private housing, higher costs
impacted the margin of a small number of sites that were reaching the end of development. However, in
general, cost price inflation in private housing was softened by house sales price inflation. In affordable
housing, margin was significantly impacted by the industry-wide inflation in materials and labour costs as a
result of the fixed-price nature of contracts in this area of the business.

Administrative expenses, excluding exceptional items, were £28.0m (2022: £20.9m). This reflects the
increase in overheads from the acquisitions of Tulloch Homes and Mactaggart & Mickel Homes. During the
year, we focused on tight cost control and took a number of actions to address the uncertain market
conditions and reduce our fixed cost base, such as restructuring the acquired Mactaggart & Mickel Homes
business to consolidate some of the operations with the existing Group, and pausing recruitment and
reducing staffing levels in areas most impacted by the downturn. As a result of these actions, the Group has
delivered savings of approximately £4.0m on an annualised basis.

SPRINGFIELD PROPERTIES PLC

STRATEGIC REPORT

CHIEF FINANCIAL OFFICER’S REVIEW (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Finance costs were £4.8m (2022: £1.9m), which represents greater bank interest payments due to the rise
in interest rates and the increase in bank debt to fund the Mactaggart & Mickel Homes acquisition and the
first deferred payment for the acquisition of Tulloch Homes.

Exceptional items were £0.7m (2022: £1.1m), which mainly relates to the Mactaggart & Mickel Homes
acquisition. Prior year exceptional items mainly relate to the Tulloch Homes acquisition.

Operating profit was £20.0m (2022: £21.5m). Excluding exceptional items, operating profit was £20.7m
(2022: £22.6m). Statutory profit before tax was £15.3m (2022: £19.7m) and adjusted profit before tax and
exceptional items was £16.0m (2022: £20.8m). This reflects the lower gross margin and increased
administrative expenses offsetting the growth in revenue. It also includes the impact of a c. £750k write-off
as a result of the decision to no longer pursue Gavieside.

Basic earnings per share (excluding exceptional items) were 10.74 pence (2022: 15.63). Statutory basic
earnings per share were 10.19 pence (2022: 14.74). Return on capital employed was 8.8% (2022: 13.6%),
which primarily reflects the significant increase in total assets due to the land and work in progress gained
through the Mactaggart & Mickel Homes acquisition.

In June 2022, we acquired Mactaggart & Mickel Homes for a total consideration of £46.3m, comprising
£10.5m cash paid on completion and a deferred cash consideration of £35.8m to be paid proportionally as
homes are sold over a five-year period, of which £5.1m was paid by year end. The acquisition is being funded
from Springfield’s internal resources and existing debt facilities with Bank of Scotland.

Net debt at 31 May 2023 was £67.7m compared to £38.1m at 31 May 2022. Net debt to EBITDA was 2.9
times (2022: 1.6). The net debt increase primarily reflects the Mactaggart & Mickel Homes acquisition; the
first deferred payment of £6.1m for the acquisition of Tulloch Homes; and the significantly higher interest
payments as described above.

We continue to have a strong relationship with the Bank of Scotland. The revolving credit facility of £87.5m
is in place until January 2025. In December 2022, the Group’s overdraft facility was increased from £2.5m to
£12.5m with an expiry date of 31 August 2023, to provide extra short-term headroom. This has now been
extended to 30 September 2024. In addition, a term loan of £18.0m has been put in place with a repayment
date of 30 September 2024 to provide extra surety against the current market backdrop.

We are highly focused on reducing our debt position. As described above, we have taken decisive action in
response to the market conditions and are significantly curtailing our activities to limit exposure and increase
cash generation while also seeking land sales. As a result, we are planning to reduce net debt to c. £55m by
31 May 2024.

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. Key Performance Indicators are detailed on
the financial highlights page and are discussed throughout the annual report.

Iain Logan
Chief Financial Officer
20 September 2023

SPRINGFIELD PROPERTIES PLC

STRATEGIC REPORT

COMPANY OVERVIEW AND RISKS
FOR THE YEAR ENDED 31 MAY 2023

Climate Change Risks

In September 2023 we published our first Environmental Social Governance (ESG) Strategy and committed
to being net zero carbon ahead of the Scottish Government’s target of 2045. A route map detailing our journey
to net zero was developed during 2022/23 with milestones outlining steps to be taken up to 2045. During the
period we achieved ISO14001 certification for our Environmental Management System.

The homes we deliver 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, to protect
biodiversity in the area for future generations. We have delivered over 60 developments without fossil fuels,
using air source technology as a successful alterative. We also have a head start on modern methods of
construction with two timber kit factories and all of our homes built off-site from sustainable timber.

This year we will publish our first Task Force on Climate-related Financial Disclosures covering the risks and
opportunities we have identified against the four pillars of Governance, Strategy, Risk Management and
Metrics and Targets.

Quality Management

We became ISO 14001:2015 certified during this financial year and we aim to be ISO 14001:2015 compliant
by the end of the 2023/2024 financial year.

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 launch of a new
Group intranet has helped improve communication of the Quality Management System and allows 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:

 market risk;












credit risk;
liquidity risk;
changes in consumer demand;
cash flow risk;
resources risk;
legal and regulatory risk;
health and safety risk;
land supply risk;
planning risk;
funding risk; and;
interest rate risk.

Market, interest and liquidity risks are dealt with in Note 29 of the consolidated financial statements.

Further details on how risks are managed are set out in page 20-21.

SPRINGFIELD PROPERTIES PLC

STRATEGIC REPORT

COMPANY OVERVIEW AND RISKS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Changes in Consumer Demand

The risk of reducing prices or 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 Mactaggart & Mickel’s Scottish housebuilding business has diversified the
Group’s geographical and product offering.



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 continues to be an upward pressure on building material
prices. Strategies in place to maintain Springfield’s reputation as a good employer and ensure the appropriate
supply of skills include:








annual remuneration and reward review;
annual training review for every employee;
a Board led culture of empowerment;
private health care for all staff;
satellite television discount and gym membership; and
during the period, the Group passed on in full to employees by way of a salary increase the
savings created by the UK Government’s reversal of a planned 1.25 per cent increase in National
Insurance.

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 consisting of three experienced solicitors 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.

SPRINGFIELD PROPERTIES PLC

STRATEGIC REPORT

COMPANY OVERVIEW AND RISKS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

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. The
purchase of the Scottish housebuilding business of Mactaggart & Mickel in June 2022 has also strengthened
the Group’s access to land in different geographical locations.

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 and Funding Risk

Details of the Group’s financial risk management objectives are set out in Note 29 to these consolidated
financial statements.

Charitable Donations and Community Support

During the year the Group made payments of £80,284 (2022: £49,154) to charities.

Springfield looks for opportunities to engage with the community in towns where we are building. We aim to
help young people achieve more and to help those who are disadvantaged. Staff visit schools to support a
variety of initiatives including careers information, mentoring, and charitable programmes.

Mentoring programmes also see young people join us for work placements 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, including amateur golfers, Summer Elliott and Calum Scott.

Springfield continued to be the headline sponsor of the Scottish Squash Open. The sponsorship is enabling
Scottish Squash to develop the game in communities around Scotland and to support its elite players. Tulloch
Homes commitment to Shinty, a predominantly Scottish highland sport, continued with the sponsorship of
The Camanachd Cup.

SPRINGFIELD PROPERTIES PLC

STRATEGIC REPORT

COMPANY OVERVIEW AND RISKS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

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.

Board factors stakeholder interest into long term policies and objectives. The business of the Company
requires engagement with shareholders, customers, local authorities, housing associations, employees and
suppliers.

The Board, when considering stakeholder interest, is responsible for ensuring the long-term policies and
objectives 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 pages 43
to 44.

SPRINGFIELD PROPERTIES PLC

STRATEGIC REPORT

TASKFORCE ON CLIMATE RELATED FINANCIAL DISCLOSURE
FOR THE YEAR ENDED 31 MAY 2023

1. Governance pillar:

a. The Board’s oversight of climate-related risks and opportunities

The ultimate responsibility for the long-term success of the company lies with the Board, who determines
the strategy, purpose, governance, and risk management of the company. Non-executive director, Colin
Rae, was tasked with looking at environmental, social and governance (ESG) matters in 2021. ESG is a
standing item on the Board agenda for every board meeting. Climate-related risks and opportunities were
discussed as a focus area within ESG in meetings in the financial year ending 2023. An example of topics
covered in the Board meeting is our net zero commitment.

Given the specialist knowledge required to understand and respond to climate risk, selected members of
the Board, ESG Committee and management undertook training on climate change led by RSM.
The terms of reference for the Board and Audit Committee have been amended to include responsibilities
for climate change.

The Board delegates operational responsibility to the ESG Committee. The ESG Committee includes
members from all key areas of your business:

 CEO
 Group Corporate Communication Director
 Group HR Director
 Group ESG Manager
 Senior Group Counsel (Secretariat of Committee)
 Non-exec Director with responsibility for ESG
 Group Safety, Health, Environment and Quality


(SHEQ) Director

The ESG Committee is responsible for reviewing sustainability and climate change strategy and project
implementation.

The governance structure is presented in the table on the next page to show the levels of governance,
alongside the key roles and responsibilities for management and the Board. Information in the table
should be read alongside the narrative text.

SPRINGFIELD PROPERTIES PLC

STRATEGIC REPORT

TASKFORCE ON CLIMATE RELATED FINANCIAL DISCLOSURE (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Board of directors
Meeting frequency in 2022 / 2023: 5 meetings

Key role: Oversees climate-related risks and opportunities.
The Board includes a non-executive director appointed as ESG lead and reports the progress of the
ESG Committee to the Board.

The Board is responsible for the following:
 Reviewing strategic planning to ensure full integration of climate-related risks and opportunities
 Overseeing major capital expenditures, acquisitions, divestments with consideration of climate

change

 Delegating specific climate matters to the relevant committee
 Ensuring the interests of all stakeholders are considered in decision making

Reporting
Informing
The Board delegates specific ESG matters to its Committees

ESG Committee

Audit Committee

Meeting frequency in 2022 / 2023: 5 meetings
The ESG Committee is chaired by the CEO.
The ESG Committee is responsible for:
 Overseeing the implementation of the ESG

strategy, including climate-related matters

Meeting frequency in 2022 / 2023: 3 meetings
The Audit Committee is chaired by a non-executive
director.
The Audit Committee is responsible for:
 Monitoring climate-related risks as part of the

 Making recommendations

the Board
concerning policies and practices required
to improve ESG performance

review over principal risks

 Receiving

and

from
reviewing
management and the auditors relating to the
annual report

reports

Informing

Reporting

Executive Leadership Team

 Overseeing the internal controls system

The CEO is ultimately responsible for ESG performance, including climate change. This is demonstrated
through implementing and achieving the ESG strategy, including the management of climate-related risks
and opportunities.

The Group Operational Directors are process owners against ESG objectives. They report to the CEO
through the Group Director meetings. Examples of ESG responsibilities for the executive leadership team
include:

 Glassgreen Hire is part of the Springfield Group and specialises in the provision of plant and
transport services. The Glassgreen Managing Director is responsible for exploring alternatives to
diesel fuel usage.

 Group Architectural Director is responsible for alternatives to fossil fuel use in new homes.

Informing

Reporting

Operational management

ESG Team

Operational Management

The Group ESG Manager is responsible for
implementing the ESG strategy. The Group
ESG Manager is responsible for:
 Collecting operational performance
data on carbon emissions and other
environmental metrics.

 Assessing and managing climate-
related risks on the risk register .

team

supports

The management
the
Operational Directors in implementing their ESG
objectives. The management team integrates
climate change considerations into their roles in
line with the group strategy. An example action
includes designing homes that use alternative
low carbon technologies to avoid fossil fuels.

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b. Management’s role in assessing and managing climate-related risks and opportunities:

The members of the Group Operational Board are responsible for setting management’s role in assessing
and managing climate-related risks and opportunities. The Operational Directors are process owners of ESG
objectives driven by the ESG strategy. The Operational Directors will delegate day to day management of
the ESG objectives to their senior leadership teams. The Group Operational Board includes:

 CEO
 COO
 CFO
 General Counsel
 Group SHEQ Director
 Group HR Director
 Group Corporate Communications

Director

 Group Engineering Director
 Group Commercial Director
 Group Architectural Director
 Springfield North Managing Director
 Glassgreen Hire Managing Director
 Tulloch Homes Managing Director
 Springfield Partnerships Managing

Director

An example of climate change consideration in the year is inclusion of the environmental performance of
machinery in Glassgreen when making capital expenditure decisions. The Managing Director of Glassgreen
is ultimately responsible for the change in the current fleet and machinery that uses diesel currently to low or
no emissions alternatives.

2. Strategy pillar:

a. Climate-related risks and opportunities the organisation has identified over the short, medium, and long
term:
The time horizon for the risk and opportunities assessment have been defined as follows:

Timeframe

Short term

Medium term

Long term

Years

1 – 3 years
2023 - 2026

4 – 9 years
2027 - 2032
10 – 22 years
2033 - 2045

Reason
Aligns to time horizon considered in the business strategy and
reflects changes to known future legislation including the New
Build Heat Standard.
Aligns to planning and site development time horizon.

Aligns with the Group’s net zero carbon target to reach net
zero emissions by 2045. This target is consistent to Scottish
government’s own net zero target.

Physical risks relate to changing weather patterns as a result of climate change, both chronic changes which
are longer term shift in climate patterns and an increasing frequency of extreme weather events. Transition
risks relate to policy, legal, market and technology changes that will occur as part of the transition to a low
carbon technology. Both types of climate risk have been identified by the Group through the workshop
facilitated by RSM. Opportunities from the transition to a low carbon economy were also identified in the
workshop.

The climate-related risks are included in a climate risk register. This is updated at least annually, and details
the potential impact of the risk, the risk grading, any mitigating actions, and the risk owner. The risk grading
is categorised as high, medium or low impact driven by knowledge of the business and informed by the
scenario analysis.

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Details of material climate-related risks and their corresponding impact over short, medium, and long term
are summarised under recommendation b. of the strategy pillar. The risks and opportunities included in this
report are deemed to be material as they have the greatest potential impact and greatest likelihood of
materialising. We are working to extend our use of quantifiable risk gradings, including those that are
financially defined. This work is a planned action for 2023/2024 to formalise this within the enterprise risk
framework. The climate-related risks will align to the risk gradings and appetite.

b. The impact of climate-related risks and opportunities on the business, strategy, and financial planning:

The impact of climate risks has been assessed over the short, medium, and long term time horizons using
qualitative and quantitative scenario analysis. The assessment has used data from a range of sources
(detailed in Appendix A) – page 41.

We have not performed detailed scenario analysis for the short term (2026) because the impacts from both
physical and transitional risks are consistent with information we have today. The medium term (2030) time
horizon helps to identify business risks in relation to interim carbon reduction targets. The long term (2050)
time horizon helps identify business risks in relation to future climate risks. There are limited data sets for
2045. Therefore, we have used the year 2050 as a proxy to understand climate-related risks and
opportunities over the long term horizon.

The impact from the physical and transitional climate risks varies dependent on different future scenarios.
Two scenarios have been utilised, in line with TCFD recommendations, which illustrate the contrasting
possible future pathways of climate change, we have used a “below 2°C” and “above 4°C” temperature
outlook. Two different sources are used for physical and transitional risks for medium and long term analysis.
These are summarised in the table below:

Temperature rise
post 2050

Below 2°C

Scenario used

Risks observed

Example type of risks

Intergovernmental Panel
on Climate Change
(IPCC) Representative
Concentration Pathway
(RCP) 2.6

Physical risks

Overheating Homes; Floods;
Drought stress; Precipitation;
Windstorms in the UK; Heat stress;
Wildfire

Physical risks

Overheating Homes; Floods;
Drought stress; Precipitation;
Windstorms in the UK; Heat stress;
Wildfire

3 – 4°C

IPCC RCP 6.0

Physical risks

Overheating Homes; Floods;
Drought stress; Precipitation;
Windstorms in the UK; Heat stress;
Wildfire

1.8°C

Shared Socioeconomic
Pathways (SSP) 1 - 2.6

Transition risks

Potential carbon prices and future
energy mix

Above 4°C

SSP 5 - 6.0

Transition risks

Potential carbon prices and future
energy mix

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Please note, SSP scenarios for global carbon price do not reflect the regional context of carbon price in EU and UK. Consideration on actual carbon price in the EU
ETS and UK ETS were in place in the impact analysis.

2.1. Summary of material physical risks:

The table below details the material physical risks. The potential impact has been classified as low, medium or high risk over the three time horizons (short, medium
and long term). The grading of the risks is subjective. However, the financially quantified grading will be finalised through our risk management review in 2023. The
mitigation actions were identified by the Operational Directors response for the area of the business.

Risks

Details of risks

Short
term

Medium
term

Long
term

Impact on Springfield

Mitigation and adaptation

Storms

Increased frequency of
storms caused by
windstorms and tropical
storms will disrupt
construction activities.
Greater severity of
storm-related damage is
expected in an above 4
°C scenario.

Storms can also affect
the origin of raw
materials, with greater
uncertainty expected in
the supply chain over
the longer term.

Low Medium High

Impact on construction sites in Scotland

Both RCP 2.6 (below 2°C) and RCP 6.0 (3 – 4°C)
scenarios showed an increase in annual expected
damages from tropical cyclones in the UK compared
to 2015 reference year, specifically:

 Short term: increase by 6% (for both RCP 2.6

and RCP 6.0)

 Medium term: increase by 9% (for both RCP 2.6



and RCP 6.0)
Long term: increase by 14% (for RCP 2.6) and
by 17% (for RCP 6 .0)

The storms will impact the Group through:

 Disruptions to construction activities. For

example, strong winds could lead to delays on
site and delays to materials arriving

 Damage to infrastructure on site and in the local

area. For example, damage to power supply or
roads)

We comply with all current regulation
regarding wind design to mitigate risk
from damage on construction sites. It
is expected that planning requirements
will adapt to the future risk profile of
storms.

The impact of storms on the supply
chain is mitigated by using several
suppliers through offering alternatives
in times of product shortage, delay, or
price increase. This includes exploring
options for Scottish timber production.
The procurement team are in regular
contact with suppliers to manage the
supply of materials.

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2.1. Summary of material physical risks (continued):

Risks

Details of risks

Short
term

Medium
term

Long
term

Impact on Springfield

Mitigation and adaptation

Impact on Supply Chain

Our supply chain is located worldwide, with most tier
1 suppliers based in the UK.

 Tier 1 suppliers are importing raw materials into

the UK from locations including North America
and Scandinavia, where timber is sourced.
These locations may also experience higher
levels of disruption due to increased frequency
of storms.

Extreme cold conditions or other extreme weather are
expected to increase in frequency and severity under
an RCP 6.0 scenario. This may lead to disruptions or
emergency stops for construction work. This could
affect working conditions on site and progress of
projects.

Our current sites are all based in Scotland. There are
currently no sites exposed to a high risk of drought.
However, this could be an emerging risk and we will
continue to monitor drought risk.

Low

High

Extreme
weather
events

Sudden changes in
temperature and
increased frequency of
extreme weather
events are expected in
the UK. This can
include extreme cold
and changes in rainfall
patterns.

We comply with health and safety
regulation to ensure the safety of
construction workers in extreme
weather conditions. It is expected that
health and safety regulation will adapt
and provide guidance for emerging
extreme weather events.

In extreme heat events, shift patterns
may need to be changed for
construction workers to avoid the
hottest parts of the day. However, this
can only occur if local building
regulations allow earlier start times.

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2.2. Summary of material transition risks:

Short
term

Medium
term

Long
term

Low

High

Impact on Springfield

Mitigation and adaptation

Our suppliers of certain construction materials are
exposed to carbon prices through policy mechanisms
like the UK Emissions Trading Scheme (UK ETS).
Materials exposed to carbon price currently include
bricks, concrete and other energy intensive
materials. Other suppliers may offset emissions
voluntarily to sell carbon neutral products. Suppliers
may pass these costs on to the Group.

Higher carbon prices are expected with scenario
SSP 1 – 2.6 (1.8°C) compared to the SSP 5-6.0
(Above 4°C) especially over the medium and long
term. Please see Appendix A.

Supplier and industry initiatives are
reducing the embodied carbon in
construction materials. This would
reduce the exposure to the cost of
carbon through UK ETS.

Timber frame construction has a
lower embodied carbon than materials
used in traditional building methods,
such as bricks and concrete. Modern
methods of construction mean more
timber is used than traditional building
materials.

 Additionally, the actual carbon prices reflected
in the UK ETS and EU ETS from late 2022 and
early 2023 have already exceeded the projected
prices in SSP scenarios. We therefore expect
the price of carbon in the medium and long term
to increase further than current projections.

Risks

Details of risks

Carbon
price

An increase in
carbon price may
increase material
costs but lead to a
reduction in
embodied carbon in
construction
materials. Embodied
carbon is the carbon
dioxide emissions
associated with the
materials used in
construction. In
addition, there may
be an introduction of
carbon price across
all materials.

The risk may be
amplified by an
increased demand
for lower carbon
materials, for
example, as all
house builders move
towards modern
methods of
construction.

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2.2. Summary of material transition risks (continued):

Short
term

Medium
term

Long
term

Med. High

Low

High Medium

Low

Risks

Details of risks

Supply
chain

Housing
regulations

Transitional risks in
the supply chain
relate to the housing
sectors objectives to
reduce embodied
carbon. Modern
methods of
construction,
including the use of
timber kits, is
expected to increase.
The Scottish
Government has
increased the
stringency of building
regulations to
improve the energy
efficiency of homes
and reduce the
reliance on a fossil
fuel heating systems.

Impact on Springfield

Mitigation and adaptation

The increase in timber used by national house
builders could increase demand and costs of
materials. This is expected to increase over the short
to medium term in line with building regulations and
company targets to reduce embodied carbon. In the
long term, the demand may remain consistent with
the medium term.

The Future Home Standard, and other building
regulations, increases the sustainability requirements
of homes built.

Failure to keep up with the regulation and standards
could lead to financial damages.

There may be increased costs for research and
development, including trialling new technology to
meet the building regulations. There may also be
increased costs to comply with the regulations as
additional or different materials are required to build
a home. There may be supply shortages of in
demand products, including solar panels.

The risk is higher in the short term but is expected to
become part of business as usual in the medium to
long term.

The impact of increased demand for
timber is mitigated by using several
suppliers to provide alternate options
in times of shortages or price
increases. For example, exploring
opportunities for Scottish timber. The
procurement team are in regular
contact with suppliers to manage the
supply of materials.

Involvement in industry groups and
with regulators can help understand
expectations to comply with evolving
regulations.

Immediate changes in building
regulations have been incorporated
into home design and through
updates to planning permission
applications.

Springfield has ongoing R&D projects
lead by the in-house architectural
team that look beyond regulatory
requirements when designing and
building homes.

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2.2. Summary of material transition risks (continued):

Short
term

Medium
term

Long
term

Med. High

Low

Risks

Details of risks

New
technology

New technology is
required to
decarbonise
Springfield’s own
operations, as well
as reducing the
energy used in new
homes.

Failure to adopt new
technology may lead
to Springfield not
meeting carbon
reduction targets.
The adoption of new
technology could
lead to higher capital
costs.

Impact on Springfield

Mitigation and adaptation

We have been designing and building
homes with low carbon technologies
for several years and this work has
gained momentum through one of our
ESG projects, led by our in-house
architectural team. This includes air
source heat pumps, and hybrid or
solar powered machinery.

New technology includes alternatives to fossil fuel
heating and construction machinery, such as air
source heat pumps and solar batteries.

A high capital investment is expected with new
technologies. This includes trialling new technology
to see how they work against more carbon intensive
alternatives.

The workforce may need to be upskilled to install
new technology in homes.

Competitors may adopt new technology earlier which
would result in a poor sustainability profile compared
to competitors.

Failure to find and adopt alternatives to diesel
generators will mean we do not meet carbon
reduction targets.

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2.3. Summary of opportunities:

Opportunities

Green finance

Details

Impact

Increased offering of sustainability linked loans and other finance
solutions can help provide the capital to accelerate the transition
to a low carbon future. This may include reduced interest rates for
meeting green lending criteria.

There may be a small reduction in interest payments from sustainability
linked loans by meeting ESG targets. In preparation of the increased
availability of green finance, we have been involved with Next Generation, a
sustainability benchmarking programme for UK housebuilders.

Modern
methods of
construction

The UK housing market is moving towards using modern
methods of construction approaches driven by industry initiatives
and government regulation.

There may also be increased access to additional investors by
demonstrating strong ESG performance.

The Group has two timber kit factories as part of our operations which offers
a competitive advantage over other housebuilders. We have already started
a review to increase the percentage of the home that is built in the timber
factory before reaching site. There is an opportunity to increase the output of
the timber kit factories, including selling timber kits to other house builders
who do not have their own infrastructure. There are opportunities for us to
conduct pilot projects with locally sourced materials, including timber. This
will assess the feasibility and quality of Scottish grown timber. Local supply
chains can also reduce logistics costs, cutting both transport related
expenses and reducing carbon emissions.

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2.3. Summary of opportunities (continued):

Opportunities

Details

Impact

Location of
land bank

The location of the Group’s current land bank has limited
exposure to flood risk, and other physical climate risks.

Green homes

Improved energy efficiency in new homes may create a
competitive advantage for low carbon homes compared to older
housing stock.

Green mortgage products for customers may be available for
those buying energy efficient homes.

Scenario analysis on physical risks faced by Scotland has identified areas,
such as Fort William region, prone to flooding under both below 2°C
scenario and above 4°C degree scenario.

Strategic selection of land at our targeted areas not significantly affected by
climate change. For instance, flood maps produced by Scottish
Environmental Protection Agency (SEPA) have been incorporated in the
existing land acquisition process.

The consideration of physical risks of climate change on land acquisition
creates a competitive advantage for the group to secure future value of land.

The early adoption of low carbon products and low carbon technology can
create competitive advantage over other house builders in the market.

In 2023, a survey was sent to customers. 74% of consumers surveyed are
willing to pay up to 5% more for an energy efficient home. Examples of
consumer demand for low carbon technologies include solar panels and
battery storage for solar energy.

Green mortgage products are on the rise. Our homes are more energy
efficient than older housing stock and therefore customers may be able to
qualify for green mortgage products. This could increase customer demand
for the new homes we build.

New
technologies
and resource
efficiency

Improved technology for onsite machinery can reduce energy
usage leading to cost savings.

The decarbonisation of the UK energy supply will result in lower
operational emissions.

Diesel machinery is used on site. There will be financial and environmental
gains achieved by using more efficient machinery. Alternatives to diesel
generators on site can include accessing the grid energy supply at an earlier
stage of the development.

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2.3. Summary of opportunities (continued):

Opportunities

Details

Impact

Attracting
more talent

Employees are increasingly motivated to work with companies
with strong ESG credentials.

Increasing the positive brand image for environmentally and socially friendly
operations and the delivery of green homes can help attract more talents.

Internal training programmes can also be planned to upskill the current
workforce to incorporate sustainability in their current roles and
responsibilities.

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c. The resilience of the Group’s strategy, taking into consideration different climate-related scenarios,
including a 2°C or lower scenario:

We have assessed the resilience of the strategy and business model through detailed scenario analysis and
have a number of climate change mitigation strategies in place that increases the resilience to potential risks.
For example, climate risks are assessed when performing land valuations and meeting planning
requirements.

The main impacts across the below 2°C scenario and above 4°C have been identified.

The main impacts of a below 2°C scenario are:

Carbon price

There is a risk of increasing costs of raw materials used in the construction sector in a below 2°C scenario.
A carbon price is assumed to be incorporated in high emitting sectors covering different construction
materials, such as bricks, cement, and concrete. Under this scenario, our suppliers could pass on the impact
of carbon pricing for high carbon building materials onto the Group. This would increase the costs of
operations in the short and medium term. Prices may be consistent in the long term.

The assumptions in a below 2°C model is that regulations become more stringent to transition to a low carbon
economy. The carbon price is modelled on several countries and sectors.

In a below 2°C scenario, the SSP 1 - 2.6 model projected a medium term carbon price of circa £27 per tonne
of CO2e by 2030, while the long term global carbon price for 2050 is projected to be £82 per tonne of CO2e.

Based on the scope 3 assessment performed in 2023, see the metrics and targets pillar, approximately 12.21
tonnes of CO2e are attributed to bricks per average house built and 10.41 tonnes of CO2e from the concrete
used in an average house built. By using the expected carbon costs for bricks and concrete as an example,
the overall increase in construction materials would be £0.6m (1%) for 2030 and £1.8m (2%) for 2050
(assuming the level of construction activities stayed consistent as with FY2022).

It should be noted that, the average price for carbon in UK Emission Trading Scheme reached £97 per tonne
of CO2e in 2022, which has already exceeded the projected price by SSP 1 - 2.6 model.

Therefore, it is likely that we will be exposed to a higher cost of materials. We are starting to engage with our
value chain to reduce greenhouse gas emissions of materials, including understanding suppliers own carbon
reduction plans.

Regulatory requirements

The Housing to 2040 strategy from the Scottish Government includes a target for all residential properties in
Scotland to have an Energy Performance Certificate (ECP) with a minimum of a ‘C’ rating. New homes in
Scotland which are consented from 2024 onwards, must have zero direct emissions. It means no gas boilers
or other fossil-fuel-based heat or power. Overall, the measures will see the equivalent to a 68% reduction in
emissions from heat in buildings by 2030 based on 2020.

Scotland has a net zero target of 2045 and housing is expected to make-up a significant part of the emission
reduction efforts. Technological solutions are required to phase out the current reliance on fossil fuel in homes
which could affect the cost to build new homes. In addition to cost increases, there could be a shortage in
supply of technology and expertise, leading to delays in the construction and maintenance of homes that are
compliant with the regulations.

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Impact on current and future sites

We have obtained a list of all current and future sites from the land team to understand the location of the
land bank. We have assessed the land bank against several physical climate risks, using the data sources
documented under recommendation b. of the strategy pillar and Climate Impact Explorer. The impact of
physical climate risks on the land bank has been assessed over the medium and long term.

The results of this are shown in the table below:

Overheating
Homes

Flood

Heat
stress

Precipitation Wildfires

Medium term (% of sites
exposed to increased risk)

Long term (% of sites exposed
to increased risk)

14%

As shown above, precipitation poses the largest risk based on the current land bank. Over the medium term,
4% of sites will experience annual increases in precipitation of more than 2%. Over the long term, this
increases to 14% of sites. The expected increased rainfall could increase risk of flooding and require
additional flood defences on the site and may delay construction work.

The risk of wildfires is low over the medium term, 4% of sites in 2030 have an increased risk of wildfires by
0.05%. Although, over the long term this increases to 6% of sites. The location of future homes may not be
in close proximity to the woodland or forest. Therefore, the analysis only indicates that sites are closely
located to woodland or forest areas with an increased wildfire risk so will feed into planning decisions.

The impact from precipitation and wildfires are relatively low risk. The other physical risks are not likely to
impact our current sites under the below 2°C scenario. As the analysis is based on the current land bank,
the risk profile of future sites is likely to change.

The main impact of above 4°C scenario includes:

Impact on operations

Physical risks under the above 4 °C scenario analysis manifest over a longer timeframe. There will likely be
an increase of extreme weather in Scotland including flooding, and unusually high or low temperatures. The
results of this scenario are shown in the table below:

Medium term (% of sites
exposed to increased risk)

Long term (% of sites exposed
to increased risk)

Overheating
Homes

Flood

Heat
stress

Precipitation Wildfires

21%

94%

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The results of the analysis into the sites under the above 4°C scenario are consistent with the below 2°C
scenario over the medium term. The physical risks under the above 4°C scenario may be more extreme but
take longer to materialise in Scotland. The analysis is based on the current land bank, which is subject to
change over the longer term.

Scotland will experience an increase in precipitation in all locations, apart from certain areas of Northern
Scotland. Over the long term, 94% of sites have been identified as having an increase in precipitation by 2%
annually.

Over the long term, 21% of sites have an increased risk of overheating homes. Homes in urban areas are
more exposed to overheating due to the heat island effect. The overheating of homes has not been identified
as material risk as mitigations for heat stress are expected to feature in future building regulations over the
longer term.

While we did not identify any sites at risk of flooding, there is a high risk of flooding around the Fort William
area and in Aberdeenshire. The Group does not currently have any land in these areas, however, the impact
of these could push competitor housebuilders into other locations impacting land availability.

The impact from wildfires in consistent with the RCP 2.6 scenario.

Impact on supply chain

The physical risks of climate change will also impact the Group’s suppliers differently, depending on their
locations. An increased risk of extreme weather events could damage supplier facilities or access, quality,
and availability of raw materials.

We use timber as a key material in the kit factories, sourced from Scandinavia and Canada. These locations
are exposed to different physical risks. If these risks materialise, it could cause a reduction in the quality of
the timber, shortages of supply due to increased demand or damaged stock leading to increased costs of
material.

Demand for timber is expected to increase as more UK housebuilders opt for timber as a lower carbon
alternative to traditional brick construction. Whilst this presents competition for supplies, it may present an
opportunity to work with local Scottish suppliers to source quality Scottish timber. The quality must be
assessed, but there are early discussions around the use of new technologies to strengthen the faster
growing local timber to offset the need to import from colder climates which have traditionally grown a better
product.

Overall assessment of resilience

The Group has started to take steps to understand the business impact from climate-related risks by
analysing risks and opportunities through engaging with external consultants on climate issues.

The highest impact risk expected over the medium term is carbon price costs leading to an increased cost of
raw materials under a below 2°C scenario. As part of the Scope 3 assessment, carbon intensive materials
have been identified and supplier engagement will be conducted. There are several industry led initiatives to
reduce the carbon intensity of construction materials. In addition, we have set a Net Zero target, including
Scope 3 emissions, for 2045.

The highest impact risk expected over the long term are physical climate risks. Climate risks are assessed
when purchasing land, and when developing the land through planning permission requirements. However,
there may be challenges in the future where land in certain locations is in scarce supply or require significant
climate mitigation costs. The impact of physical climate risks will be monitored at least annually.

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3. Risk management pillar:

a. The organisation’s processes for identifying and assessing climate-related risks:

Climate change has been determined to be a principal risk and is assessed and managed in line with the
Group’s risk management framework, as detailed under recommendation c. of the risk management pillar
below.

The process of identifying and assessing climate-related risks followed the below stages:

1. A broad range of climate-related risks were considered across both transitional and physical risks.
Different sources were used to identify these risks, including industry briefing papers and emerging
government policies.

2. The impacts of each climate-related risk were considered as part of a workshop with the executive
team and function directors/heads of departments (for attendee information see the introduction to
the report.) For each risk the potential impact on the Group’s business model and future strategy
was discussed using qualitative scenario analysis over the defined short, medium, and long term
time horizons. This enabled the identification of material risks for our business.

3. For the material climate-related risks identified, additional quantitative scenario analysis was

performed (see recommendation a. of the strategy pillar for more details).

4. Material climate risks were added to the risk register. Where appropriate, climate-related risks

were also included in functional risk registers by business areas. Example business areas include
health and safety, environment and people, construction, and land and planning.

5. The potential impact of each risk was coded as low, medium, or high (see recommendation b.

under the risk management pillar for more details).

6. High impact risks identified were added to the principal risk register. For these risks, either the
CEO or CFO will be the risk owner, and it will be reviewed by the Board and Audit Committee.

The climate risk register will be updated at least annually by assessing the relevance of the identified risks
and conducting further scenario analysis supported by more granular data analysis.

b. Processes for managing climate-related risks:

This is updated at least annually, and details the potential impact of the risk, the risk grading, any
mitigating actions, and the risk owner. The climate risk register includes details of the potential impact and
risk grading for each risk, these are classified as low, medium, or high for both grade and impact. The
grading system is based on the senior management team’s professional judgement and a materiality
assessment across different business functions. Different risks are managed differently depending on the
grading:

 Risks categorised as low indicate that we recognise the risk, but it is not actively managed as the

risk is unlikely to affect the organisational strategy.

 Medium risks require management and has an allocated senior manager as the risk owner.
 High impact risks are included on the principal risk register. The ultimate risk owners are the CEO,
COO and/or CFO of the group. The principal risk register is reviewed by the Audit Committee and
the Board as described under governance pillar.

Risk registers are maintained within each department and centralised risk reporting is in place to
consolidate group level risks. As the main activity of the majority of subsidiaries are the construction of
homes, most risks are consolidated at a group level. The timber kit factories are exposed to a different
profile of risks.

Mitigation methods are identified and assessed against the risks outlined on functional risk registers.
Risks are assigned with new grading scores after considering mitigation measures. Mitigation for climate-
related risks is detailed under recommendation b. of the strategy pillar.

SPRINGFIELD PROPERTIES PLC

STRATEGIC REPORT

TASKFORCE ON CLIMATE RELATED FINANCIAL DISCLOSURE (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

c. How processes for identifying, assessing and managing climate-related risks are integrated into the
Group’s overall risk management:

Climate-related risks are identified considering a longer time frame than is typically considered in the
enterprise risk process. Therefore, it is appropriate to maintain a climate risk register. Climate risks from
this register may be included in the functional risk registers, where they are assessed and managed using
the same principles of the established risk process in the short term. For example, climate risks within the
functional risk register are subject to the same assessments of grade and impact as other risks.
The risk appetite and the financial categorised risk gradings have not yet been defined as part of the
enterprise risk process. This is a planned action for 2023. The climate-related risks and opportunities will
use the same criteria when this has been defined and approved by the Risk Committee.

4. Metrics and targets pillar:

a. Detailed below the metrics used by the organisation to assess climate-related risks and opportunities in
line with its strategy and risk management process:

We monitor emissions from our own emissions, in accordance with the GHG Protocol Corporate
Standard. Other metrics have been identified to show progress towards climate-related risks or
opportunities. Please see the table below.

Metric

Average Standard
Assessment Procedure
(SAP) rating across all
homes built in the past
year.

Percentage of homes
completed in the past
year with no fossil fuel
access.

Percentage of Ultra Low
Emission Vehicles in
company fleet.

Linked risk or
opportunity
Future Homes
Standard, including
varying standards
across the UK,
requiring improved
energy efficiency and
reduced carbon
footprint.
Improved energy
efficiency in new
homes and create
competitive advantage
in low carbon home
offering to consumers.
Failure to adopt new
technology may lead
to Springfield not
meeting carbon
reduction targets.

Target

Performance in
FY23
86

We are assessing the
feasibility of setting a
target.

32%

We are assessing the
feasibility of setting a
target.

Company cars
reached 99.25%
electrification.
Company vans
reached 2.83%
electrification. The
number of electric
vans has increased
from 0 in 2020 to 3
in 2023.
The overall
percentage of
company owned
electric vehicles is
56.67%.

SPRINGFIELD PROPERTIES PLC

STRATEGIC REPORT

TASKFORCE ON CLIMATE RELATED FINANCIAL DISCLOSURE (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

b. Scope 1, scope 2 and, if appropriate, scope 3 greenhouse gas (GHG) emissions and the related risks:

Scope 1 and Scope 2 carbon emissions are disclosed as part of the Streamlined Carbon and Energy
Reporting (SECR) in the annual report.

The Group has undertaken an initial assessment of Scope 3 emissions in 2022. The first assessment of
Scope 3 has focused on upstream value chain emissions. The Scope 3 emissions have been calculated
using guidance from the GHG Protocol and the approach taken to calculate each emission source is
detailed in the table below.

Categories of scope 3
under consideration for
FY2022

Tonnes CO2e

Percentage
share of
upstream scope
3 emissions

Purchased goods and
services

56,678.14

92%

 Capital goods

3,241.27

 Fuel- and energy-related

825.72

activities

 Upstream transportation

96.75

and distribution

 Waste generated in

248.44

operations

 Business travel

429.36

 Employee commuting

369.65

 Total scope 3 under

61,889.33

100%

consideration

Approach taken

It was expected that construction
materials would contribute to a
significant proportion of the
emissions. To improve accuracy, the
quantity of construction materials
consumed in the year was used to
calculate.

Other purchased goods and services
have been calculated based on
financial spend.

Calculated using financial spend.

Calculated based on Scope 1 and 2
emissions.

Calculated using financial spend.

Calculated using volume data of
waste produced in operations.

Business travel is included in the
SECR disclosure.

Calculated using employee numbers
and average commuting distances

We used emission factors produced by the Department for Energy Security and Net Zero, and the
Department for Business, Energy, and Industrial Strategy.

c. The targets used by the Group to manage climate-related risks and opportunities and performance
against targets:

A net zero target for Scope 1 and Scope 2 are set for 2045. An interim carbon reduction target has been set
at 39% by 2030 for location-based scope 1 & 2 emissions and 47% for market-based emissions. The interim
target ensures that actions to improve energy efficiency and reduce carbon emissions are prioritised in the
short term.

An engagement target is used for Scope 3 emissions to reduce the emissions from our value chain, with a
focus on purchased goods and services. Based on guidance from the science-based target initiative (SBTi),
within an engagement target, the coverage of suppliers should reach at least 67% of Scope 3 emissions.

SPRINGFIELD PROPERTIES PLC

STRATEGIC REPORT

TASKFORCE ON CLIMATE RELATED FINANCIAL DISCLOSURE (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

The Group has started to monitor additional ESG data, including the metrics included under recommendation b. of the metrics and targets pillar. Performance across
the metrics is monitored by the ESG Committee. However, no other external targets have been set.

Appendix A. Scenario Analysis Sources
The following sources were used to aid our scenario analysis:

Scenario
element
Site
locations
Physical
risk
scenarios

Sources

Locations covered both current sites and future sites across the Group.

Climate Impact Explorer was used as the basis for 2030 and 2050 scenario analysis, comprising of RCP
2.6 and RCP 6.0 scenarios.

The Climate Impact Explorer provides projections for future climate impacts at different warming levels
and for several policy-relevant greenhouse gas emission scenarios.

Extra information

No extra information.

The physical risks reviewed include
overheating homes, floods, drought stress,
precipitation, windstorms in the UK, heat
stress and wildfire.

The Climate Impact Explorer was developed by Climate Analytics, together with Flavio Gortana, the
Potsdam Institute for Climate Impact Research and ETH Zürich. Its development was supported by
ClimateWorks Foundation and Bloomberg Philanthropies in the context of a collaboration with the
Network for Greening the Financial System, as well as the German Ministry for Education and Research.
Data Explorer: IPCC scenarios was used as the source for carbon price scenarios, comprising the
Shared Socioeconomic Pathways scenarios. The Shared Socioeconomic Pathways are a set of
scenarios which are central to the work of the UN climate reports produced by the Intergovernmental
Panel on Climate Change (IPCC).

Transition
risk
scenarios

The data presented on Data Explorer: IPCC scenarios was based on the work of Keywan Riahi et a.
(2017), which brings together the results of independent researchers that have mapped out a range of
socioeconomic scenarios for how the world could change in the coming decades.

Reference: Riahi, K., Van Vuuren, D. P., Kriegler, E., Edmonds, J., O’neill, B. C., Fujimori, S., … &
Tavoni, M. (2017). The shared socioeconomic pathways and their energy, land use, and greenhouse gas
emissions implications: an overview. Global environmental change, 42, 153-168.

The actual carbon price as reflected from
UK and EU emission trading schemes can
be referenced from the carbon price
tracker by Ember.

Under the SSP 1-2.6 – global carbon price
is expected to be $11.72 (£10) per tonne
in 2030 and $99.97 (£82) per tonne in
2050.

Under the SSP 5-6.0, the expected carbon
price is $11.72 (£10) per tonne in 2030
and $26.28 (£22) per tonne in 2050.

SPRINGFIELD PROPERTIES PLC

STRATEGIC REPORT

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 42.

Signed by order of the Directors on behalf of the Board.

Sandy Adam
Executive Chairman

20 September 2023

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 in 2022. Sandy has over 35 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
(Chair of ESG Committee)

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.

Iain Logan, Chief Financial Officer
(appointed interim CFO in March 2022 and appointed on a permanent basis after year end)

Iain has 13 years professional experience working in a PLC environment. Iain qualified as a Chartered
Accountant in 2002 with PricewaterhouseCoopers in Edinburgh. He then spent eight years with Murray
International Holdings Limited gaining extensive corporate finance experience working on all aspects of
acquisitions, disposals and fund raising within its investment company. He also held the Financial Controller
role for its residential and property development company.

Iain then spent nine years as Group Financial Controller of Omega Diagnostics PLC where he had full
responsibility for all financial reporting and management of finance teams in the UK, Germany and India.

Iain joined Springfield in 2020 as Group Financial Controller and was promoted to Finance Director in 2021
leading all aspects of financial operations and establishing strong relationships with external stakeholders.
He played a key role in the acquisitions of Tulloch Homes in 2021 and the Scottish housebuilding division of
Mactaggart & Mickel in 2022 and was appointed as CFO in 2023.

Roger Eddie, Non-Executive Director
(Chair of Remuneration and Nomination Committees, sits on ESG 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.

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

BOARD OF DIRECTORS (CONTINUED)

Matthew Benson, Non-Executive Director
(Chair of Audit Committee, sits on Remuneration, ESG 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.

Nick Cooper, Non-Executive Director
(Sits on Audit, Remuneration, ESG and Nomination Committees)

Nick is a qualified solicitor with over 20 years board experience with UK-listed and private companies. Since
2020 Nick has been a member of the Group Leadership Team at Johnson Matthey plc, firstly as Group
General Counsel and Company Secretary and now Head of Global Business Services. 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, ESG 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. In addition to his role with Springfield, Colin now acts as senior advisor for a number of
property businesses active in the residential sector. 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.

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

QCA CODE COMPLIANCE AND SECTION 172 STATEMENT
FOR THE YEAR ENDED 31 MAY 2023

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
62 to 65 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.

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, Tulloch Homes and Mactaggart & Mickel brands. 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 and organically.

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 master planning 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 (the most recent number
available), 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. While a strategic decision has been taken to
temporarily pause entering new long-term affordable housing contracts until market conditions improve, post
period, the Scottish Government increased the affordable housing investment benchmarks by 16.9%. This
is expected to enable housing associations to increase the price of affordable housing contracts to progress
the building programmes required to meet the Government's affordable housing targets and we have already
engaged in conversations with our partners and signed two short term contracts to deliver much needed
affordable homes. The Group believes that the longer-term fundamentals of affordable housing remain
strong, and it expects to recommence signing contracts when more normal market conditions resume.
Further details on our strategy and business model are discussed in the Chairman’s statement on pages 5
to 8.

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

QCA CODE COMPLIANCE AND SECTION 172 STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Private Rental Sector (PRS):
The Group provides development services to third party private organisations (compared with affordable
housing where the Group’s services are delivered to local authorities, housing associations or other public
bodies). To date, contract housing delivery has largely consisted of services provided to Bertha Park Limited,
the developer of the Bertha Park Village, under a framework agreement. Springfield performs development
services and receives revenue based on costs incurred plus a fixed mark up. During the period, it also
included a small number of PRS houses through Mactaggart & Mickel Homes.

During the period, the Group completed the final handovers of homes under its first PRS contract. The
uncertainty surrounding the Scottish Government rent caps, which had been put in place to support families
with cost-of-living concerns, have deterred our PRS partner, Sigma, from entering new contracts in Scotland.
While there is nothing yet to suggest a change to this policy environment, we are hopeful that proven demand
for purpose-built, high quality, energy efficient PRS homes will drive investment into Scotland. The 75 PRS
homes we delivered at Bertha Park have been extremely popular amongst families looking to move into the
area.

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
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 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.

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 805 employees as at 31 May 2023. 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. Springfield creates a climate where everyone can
thrive and this year we published our first Equality, Diversity and Inclusion (EDI) policy.

Employees (training & education): As at May 31 2023 we supported 128 in further education, training, and
apprenticeships. This includes 108 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 encourage student
placement programmes and we have placed seven university students in a variety of work experience roles
over the past two years.

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

QCA CODE COMPLIANCE AND SECTION 172 STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Customers: Customer views are sought via In-house Research Limited who contact our customers around
between four and six 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,
94% 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. The Group registered as a
developer under the New Homes Quality Code and activated the code for customers in period. As part of the
implementation a review was undertaken across the Group to ensure we were consistently offering a high
quality service to our customers throughout their buying journey and to ensure our approach was code
compliant. A new formal complaints procedure was also introduced to further improve customer experience
when things do go wrong.

Suppliers: The Group’s commercial and purchasing teams communicate closely with suppliers. This is vitally
important through 2022/23 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 two community
consultations. These events allow 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. To strengthen this engagement, Springfield has committed to also hosting an online
session to increase accessibility to interested households unable to attend in person, for example those with
caring responsibilities. In addition, building upon our existing engagement with schools, for each major
planning application we will offer a local primary school a visit to feed into the curriculum and raise awareness
of sponsorship opportunities that may be available.

Environment: We developed and published our first Group-wide ESG strategy and developed a route map
to net zero. We were the first housebuilder to participate in Next Generation Core Sustainability Benchmark
following collaboration with JLL and Lloyds Banking Group. A Committee of the Board for ESG meets
regularly to monitor progress against the ESG Strategy with the CEO as Chairman.

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.

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

QCA CODE COMPLIANCE AND SECTION 172 STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

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.

Maintaining a Well-Functioning Board

The skills and experience of the Board are set out in their biographical details on pages 43 to 44. 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.

The Board consider Colin Rae and Nick Cooper to be independent Directors for the purpose of the QCA
Code. From 13 November 2023, Roger Eddie will have completed 15 years' service as a Director. From 1
September 2023, Matthew Benson will have completed 12 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.

During the period, Michelle Motion resigned as a Director and as Chief Financial Officer. Post period, Iain
Logan was appointed as a Director and as Chief Financial Officer.

Director Skills and Capabilities

As mentioned under principle 5, all Directors and their professional experience, are set out on pages 43 to
44. 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 New Homes Quality Code training by
our in-house legal department in the period.

All 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.

Evaluation of Board Performance

The Board will implement a formal review process in 2023/2024. The Chairman regular reviews individual
Director performance and takes informal feedback from the Board on how it can improve its performance.

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

QCA CODE COMPLIANCE AND SECTION 172 STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

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 and affordable homes through its partnership
arm which works with housing associations and local authorities. While Scottish Government changes to
regulation on rent caps has resulted in a pause in our PRS activity with strategic partner Sigma, we are
hopeful that we can build homes for families to rent privately again in the future.

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 UK wide awards for our
Village developments with Dykes of Gray named Best Public Realm (Silver) and Bertha Park named Best
Sustainable Development (Gold) at the WhatHouse? awards in November. Bertha Park also secured the
Large Development of the Year title at the Scottish Home Awards in June 2022, where the Springfield Group
was named Large Housebuilder of the Year. At the Herald Property awards in September, Walker’s
Gladstone house style won Best Family Home and the Leven show home built by Dawn, was award Best
show home. Springfield, Dawn Homes and Tulloch Homes 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.

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 takes responsibility for ensuring the Group maintains appropriate
corporate governance practices. In addition, the Chairman and CEO take responsibility for obtaining
feedback from key stakeholders.

Springfield operates processes to identify, measure, manage and monitor risks which impact the Group’s
business within acceptable limits identified by the Board. Further details on our approach to risk are set out
in response to principle 4 above.

The Board is supported by the Audit, Remuneration, Nomination and ESG committees.

The Audit Committee is responsible for determining and reviewing matters relating to the financial affairs of
the Group and met three times during the year. 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 structure, size and composition of the Board, providing
recommendations for change where appropriate.

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

QCA CODE COMPLIANCE AND SECTION 172 STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

The Environmental, Social and Governance (ESG) Committee 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 on the Audit and Remuneration Committees can be found in the Audit and Remuneration
Committees’ reports on pages 51 to 62.

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.

In the period, we 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
20 September 2023

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

AUDIT COMMITTEE REPORT
FOR THE YEAR ENDED 31 MAY 2023

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 2023.
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 how 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 2023, the Committee met three 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. In the year to 31 May 2023 the Chief Financial Officer attended all Committee meetings.

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. This year, the Group appointed a third party recruitment agency to identify a senior candidate to lead
this function for the group. The group interviewed several candidates however, due to the Chief Financial
Officer stepping down in March 2023, it was decided to pause recruitment until a new Chief Financial Officer
was appointed. Following the appointment of a new Chief Financial Officer post period, the CFO and group
will take steps to recruit and implement a Business Assurance function in this 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.

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

AUDIT COMMITTEE REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

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 BDO LLP (BDO).

BDO have not carried out any non-audit work during the year. The Group policy is that, where possible,
advisors should be appointed other than the external auditor to perform non-audit work.

External Audit process

BDO 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.

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

AUDIT COMMITTEE REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

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, 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
Revenue
is
recognised over time depending on the stage of
completion with cashflows received in excess of
revenue recognised included as payments on
account.

Given the significant impact on margins from build
cost inflation on fixed-price contracts in affordable
housing the committee has kept a close watch
through monthly management accounts and
updates from the affordable Managing Director to
ensure movements have been captured.

in estimations of

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
these construction
contracts surrounding costs to complete and the
overall expected profit margin.
Valuation of inventories and work in progress
The largest asset on the Group balance sheet is
inventory which includes land and work in progress.
The Group values inventory at the lower of cost and
is dependant on
net realisable value which
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.

Acquisition
The Group acquired the Scottish housebuilding
business of Mactaggart and Mickel Group. Under
IFRS3 the assets and liabilities were 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 extended bank
facility limits which are in place.

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
20 September 2023

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

REMUNERATION COMMITTEE REPORT
FOR THE YEAR ENDED 31 MAY 2023

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 2023.

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 2023, 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 2023, 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.

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

REMUNERATION COMMITTEE REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Basic Salaries

Increases effective from 1 June 2022

Each Executive Director receives a base salary, the level of which reflects the particular individual’s
experience and performance, the nature and complexity of their work and the market in which the Group
operates.

The Committee 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 2022, the annual rates of base salaries for the Executive Directors were set at:

 Sandy Adam - £151,050;

Innes Smith - £302,100; and
 Michelle Motion - £227,900.

The above increases represented an uplift of 6% from the annual rates of salaries that were paid to the
Executive Directors at the end of the financial year to 31 May 2022. This reflected the average annual
increase that was awarded to the broader workforce at that time.

Increases effective from 1 November 2022

With effect from 1 November 2022, and in order to reflect the decrease in the rates of national insurance
contributions that became effective on 6 November 2022, all employees of the Group, including the Executive
Directors, benefited from a 1.25% increase in their annual salaries.

Following the above increases, the annual rate of base salaries for the Executive Directors were as follows:

 Sandy Adam - £152,938;
Innes Smith - £305,876; and

 Michelle Motion - £230,749.

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 2023, 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 2022). The following table identifies the measures used, their
respective weightings and the bonus award derived from the level of achievement over the year:

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

REMUNERATION COMMITTEE REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

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)
Total bonus payable after individual waiver2

Bonus earned as a result of
performance against specific
measure in the relevant year1
(as a % of maximum opportunity)
Michelle Motion
0%
0%
0%
N/A
0%
100%
0%
N/A

Innes Smith
0%
0%
0%
9.4%
9.4%
125%
11.75%
0%

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.

2 Further information relating to the waiver of bonus entitlements in respect of the financial year to 31 May 2023 is set out below.

As shown in the above table, the assessment of the applicable performance measures under the bonus
scheme resulted in Innes Smith earning a bonus for the year to 31 May 2023 equal to 11.75% of salary.

However, for a variety of reasons, including the overall performance of the Company during the period, Innes
felt it would be inappropriate for him to receive any such award. As a result, he voluntarily waived the whole
of his entitlement to a bonus for the year.

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 following
the assessment of the applicable performance measures where it is appropriate having regard to the health
and safety performance of the Company over the period in question. Given that no bonus awards were paid
under the scheme in respect of the financial year to 31 May 2023, the Committee was not required to consider
the exercise of this discretion.

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”).

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

REMUNERATION COMMITTEE REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

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.

Vesting of awards held by Executive Directors during the year to 31 May 2023

On 31 May 2022, the three-year performance period applicable to the PSP awards granted to Innes Smith
and Michelle Motion on 9 January 2020 came to end. As soon as reasonably practicable thereafter, the
Committee carried out its formal assessment of the extent to which the relevant conditions (which related to
the Company’s adjusted basic earnings per share (”EPS”) and its net debt / EBITDA ratio) had been met.

The following table contains further information relating to the relevant performance conditions and sets out
details of the outturn from the Committee’s above noted assessment:

Measure1

Weighting
(as a % of total shares under award)

Vesting achieved as a result of
performance against specific measures
over the performance period
(as a % of total shares under award)

Innes Smith

Michelle Motion

Innes Smith

Michelle Motion

EPS2

Net Debt / EBITDA3

75%

25%

75%

25%

Aggregate vesting percentage = (a)

Total number of shares under award = (b)

16.66%

127,828

No. of shares over which awards vested = (a) x (b)

21,296

16.66%

68,176

11,358

Notes:
1 For both the EPS and Net Debt / EBITDA measures, the Committee specified, for each of the financial years in the three-year
performance period, a sliding scale of achievement (between threshold and maximum) which was used to determine the extent
to which the relevant part of the awards vested.

2 In terms of the EPS measure, the threshold level that had to be achieved before any portion of the award vested was 14.575p
for the year to 31 May 2020; 16.075p for the year to 31 May 2021; and 17.55p for the year to 31 May 2022. Given that none of
these targets were achieved, no part of the EPS elements of the awards vested.

3 In terms of the Net Debt / EBITDA measure, the maximum level of performance for both the years ended 31 May 2021 and 31
May 2022 (being ratios of 1.62 and 1.50 respectively) were achieved. However, the threshold level for the year to 31 May 2020
(being a ratio of 1.89) was not met. As a result, two thirds of the Net Debt / EBITDA elements vested (being 16.66% of the total
number of shares over which the awards subsisted).

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

REMUNERATION COMMITTEE REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

The 9 January 2020 awards held by Innes Smith and Michelle Motion subsequently vested and became
exercisable in respect of the above numbers of shares on 9 January 2023, being the third anniversary of their
date of grant. For the avoidance of doubt, any part of these awards that did not vest on this date immediately
lapsed.

Exercises by Executive Directors during the year to 31 May 2023

On 19 January 2023, Innes Smith and Michelle Motion part-exercised their January 2020 PSP options over
10,648 shares and 5,679 shares respectively. The exercise price payable under these options was 0.125p
per share and the closing share price on the date of exercise was 92.5p. Both Innes Smith and Michelle
Motion elected to retain all the shares acquired as a result of their exercises.

The above awards were granted with the benefit of “dividend equivalent” rights (being an entitlement to
receive additional sums on their exercise equal to the amount of dividends declared on the acquired shares
during the period commencing on the date of grant and ending on the vesting date). This resulted in a further
cash payments of £1,485 and £792 being paid to Innes Smith and Michelle Motion respectively on their award
exercises. Details of these amounts are included in the remuneration table on page 58.

Grants made to Executive Directors during the year to 31 May 2023

In last year’s Remuneration Committee report, it was explained that the Committee had adopted a revised
policy in terms of which PSP awards would be granted to Executive Directors once every three years, with
the first such grant occurring on 22 December 2021. As a consequence, no PSP grants were made to the
Executive Directors during the year to 31 May 2023.

The Remuneration Committee is, however, in the process of reviewing this policy due to a number of factors
including, in particular:




recent changes to the Company’s senior management team (see below for details); and
developments in the regulatory and macro economic environment in which the Company
operates.

In the event that this review results in the next tranche of awards being granted to Executive Directors earlier
than was previously anticipated, full details will be included in the relevant Remuneration Committee report.

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 Company’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 2023 (and as disclosed in the table set out on page 61), 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.

Board Changes

Departure of Michelle Motion

As previously announced, Michelle Motion stepped down from her role as the Company’s Chief Financial
Officer on 10 March 2023 and ceased to be a director on that same date. Thereafter, Michelle continued as
an employee of the Company until 10 September 2023, being the date on which her contractual six months’
notice period expired. During this notice period, she was placed on garden leave but continued to receive
salary and benefits (including pension contributions) in the normal way.

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

REMUNERATION COMMITTEE REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Michelle has been treated as a “good leaver” for the purposes of the ESOP and PSP with the result that she
is entitled to retain her outstanding awards under those arrangements (subject, in the case of entitlements
that were “unvested” on the date she ceased employment, to appropriate time pro-rating reductions).
However, her option under the SAYE Scheme (details of which are included in the table on page 61) lapsed
in full on 10 September 2023. On or around that same date, Michelle was paid a sum of £20,000 in settlement
of any claims arising in connection with the termination of her employment.

Appointment of Iain Logan

Iain Logan assumed the role of Interim CFO on 13 March 2023 and was appointed as Chief Financial Officer
on 12 July 2023; he subsequently became a director of the Company on 26 July 2023.

On the basis that Iain was not a director of the Company at any time during the financial year to 31 May 2023,
he has not been included in any of the tables set out below and on page 61. Appropriate details for him will,
however, be included in next year’s Remuneration Committee report.

Remuneration in the Year

During the year to 31 May 2023, the directors received the following remuneration:

Executive Directors

Sandy Adam

Innes Smith

Michelle Motion7

Non-Executive
Directors
Matthew Benson

Roger Eddie

Nick Cooper

Colin Rae

Basic
salary/fees
1

Annual
bonus2

Taxable
benefits
3

Pension
contributions

Option
gains4

Other
payments5

2023
Total

2022
Total6

£000

152

304

230

862

168

346

262

143

518

376

952

1,201

Notes:
1Additional information relating to the salaries paid to the Executive Directors during the financial year to 31 May 2023 is set out
on page 55.

2 Further details of the Company’s annual bonus scheme for the financial year to 31 May 2023 are set out on pages 55 and 56.

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.

4 For both Innes Smith and Michelle Motion, the gains made on the exercise of options have been calculated by deducting the
applicable exercise price payable by the individual from the market value of a share on the date of exercise and then multiplying
that amount by the number of shares acquired. Further information in relation to the exercises that occurred during the financial
year to 31 May 2023 are set out on page 58.

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

REMUNERATION COMMITTEE REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

5 The other payments made to Innes Smith and Michelle Motion during the financial year to 31 May 2023 relate to the “dividend
equivalent” amounts they received in connection with the exercise of their PSP awards on 19 January 2023. Further details in
relation to these payments are set out on page 57.

6 The total figures for the financial year to 31 May 2022 have been updated to include the gains made on the exercise of share
options by directors during that period. Further information in relation to these exercises are included in last year’s Remuneration
Committee report.

7 Although Michelle Motion ceased to be a director on 10 March 2023 she continued to be an employee throughout the remainder
of the year to 31 May 2023. The above table includes details of all remuneration received by her from the Company during the
financial year.

Further details relating to the share options held by the directors during the financial year to 31 May 2023 are
set out below.

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

REMUNERATION COMMITTEE REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Share Options and PSP awards

Details of options over the Company’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 2023 are as follows:

Exercised3

Granted

Lapsed

No. of shares
under option at
31 May 2023

Exercise
price

Date of Grant

Date from which
normally
exercisable

Expiry date

Director

Scheme

No. of shares
under option at 1
June 2022

Innes Smith

CSOP

28,301

ESOP

208,019

ESOP

257,142

PSP

SAYE

PSP

127,828

202,000

13,793
401,408

(10,648)

-
-

Michelle
Motion4

1,238,491

(10,648)

ESOP

84,906

ESOP

129,795

PSP

SAYE

PSP

68,176

107,650

13,793
227,112

631,432

(5,679)

-
-

(5,679)

-
-

28,301

208,019

257,142

106p

16/10/2017

16/10/2020

16/10/2027

16/10/2017

16/10/2020

16/10/2027

122.5p

01/10/2018

01/10/2021

01/10/2028

(106,532)

10,648

0.125p

09/01/2020

09/01/2023

09/01/2030

-
-

202,000

13,793
401,408

(106,532)

1,121,311

0.125p

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

84,906

129,795

106p

16/10/2017

16/10/2020

16/10/2027

122.5p

01/10/2018

01/10/2021

01/10/2028

(56,818)

5,679

0.125p

09/01/2020

09/01/2023

09/01/2030

-
-

107,650

13,793
227,112

(56,818)

568,935

0.125p

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

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

REMUNERATION COMMITTEE REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Notes:
1 Details of the performance conditions that were assessed by the Remuneration Committee in connection with the vesting of the
options granted under the PSP on 9 January 2020 are provided on page 57. For other PSP options outstanding during the year,
high level details of the applicable performance conditions are set out in the Remuneration Committee’s report for the year in
which such awards were granted. 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 PSP options by Innes Smith and Michelle Motion during the financial year to 31
May 2023 are set out on page 58 above.

4 Michelle Motion ceased to be an employee of the Company on 10 September 2023. Details of the impact that such cessation
had on the options and awards contained in the above table are set out in page 59.

Directors’ Interests in the Company’s Shares
Directors’ interests in the Company’s shares are disclosed in the Directors’ Report (page 66).

Roger Eddie
Chairman of the Remuneration Committee
20 September 2023

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 MAY 2023

The Directors present their annual report and the audited financial statements of the Group for the year ended
31 May 2023.

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
Iain Logan
Michelle Motion
Roger Eddie
Matthew Benson
Nick Cooper
Colin Rae

Executive Chairman
Chief Executive Officer
Chief Financial Officer (appointed 26 July 2023)
Chief Financial Officer (until resignation on 13 March 2023)
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 81.

No interim dividend was declared during the period. The Board is not proposing a final dividend (2022: 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.

Equality, Diversity and Inclusion

The Group published its first Equality, Diversity and Inclusion Policy during the period. We are committed to
valuing and promoting diversity in all areas of recruitment, employment, training, and promotion. We
recognise our legal obligations under the Equality Act 2010 and work towards an environment where all
employees can develop their potential, regardless of: Age, Race, Disability, Religion, Gender reassignment,
Sex, Marriage and civil partnership, Sexual orientation, Pregnancy and maternity. Nobody should receive
less favourable treatment or be disadvantaged on any of the above grounds.

Going Concern

In determining the appropriate basis of preparation of the Financial Statements, the Directors are required to
consider whether the Group can continue to meet its liabilities and other obligations for the foreseeable future.

The Group’s business activities, together with factors that the Directors consider are likely to affect its
development, financial performance and financial position, are set out in the Strategic Report on pages 4 to
42.

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 MAY 2023

Going concern (continued)

The material financial and operational risks and uncertainties that may affect the Group’s performance
and their mitigation are outlined on pages 19 to 22, and financial risks including liquidity, market, interest and
capital risks are outlined in Note 29 to the Financial Statements.

In order to support the going concern period to 30 September 2024, the Board-approved budget to May 2024,
with a further year added to May 2025, formed the initial basis to confirm the appropriateness of the going
concern assessment.

Following the subsequent weakening in demand, the Board-approved budget has now been superseded by
a reforecast scenario with the expected number of private home sales in the year to 31 May 2024 reduced
by 12% from the original Board-approved budget with sales weighted to the second half of the year, but
where the reduction is expected to be offset by additional affordable contract income currently under
negotiation and through a reduction in payments from stopping speculative build.

In addition, the Group has prepared a worst-case sensitivity with the number of private home sales in the
year to 31 May 2024 being 12% behind the Board-approved budget, with sales weighted to the second half
of the year and with no additional affordable income included.

Under this worst-case sensitivity, the peak debt level would have been in excess of the Group’s banking
facilities of £100m.

To prepare for this worst-case scenario, should it occur, the bank has extended existing facilities and granted
an additional term loan of £18.0m with a repayment date of 30 September 2024. The term loan will be repaid
from the Group’s regular trading activities. The Board has already taken the decision to not pay a dividend
until the bank debt is materially reduced. In addition to this, the Group is targeting land sales to further reduce
the longer-term debt.

Under this worst-case scenario, the peak borrowing, which occurs in December 2023, utilises 94% of the
extended facilities. However, by the year end in May 2024, the facility utilisation is forecast to drop to around
37%. At all times the Group is able to operate within its bank facilities and covenants.

While the Board has confidence in the robustness of the asset base and considers this worst-case scenario
to be cautious, were there to be a greater downturn in the market, there are a number of further mitigating
actions that are within the control of the Group and could be pursued. These include additional land sales,
greater slowing of development activity to preserve cash and further reductions in the cost base.

Accordingly, the Directors believe that it remains appropriate to prepare the financial statements on a going
concern basis. 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 the signing of the annual report and
financial statements for the year ended 31 May 2023.

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

DIRECTORS’ REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

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 43 to 44.

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 59.

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

DIRECTORS’ REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Directors’ Interests in Shares

Name of Director

Sandy Adam
- Direct
-

Indirect
Innes Smith
- Direct
-

Indirect
Roger Eddie
- Direct
-

Indirect
Nick Cooper
Indirect

Matthew Benson

Colin Rae

Number of
Ordinary
shares

% of ordinary share
capital and voting
rights

22,118,300
17,210,750

831,697
154,029

22,152
24,981

14,895
40,802

20,000
41,110,190

18.7%
14.5%

0.7%
0.1%

0.0%
0.0%

0.0%
34.1%

Financial Risk Management Objectives and Policies

Details of the Group’s financial risk management objectives and policies are set out in Note 29 to these
consolidated financial statements.

Strategic Report

The Group has chosen in accordance with the Companies Act 2006, s.414C(11) to set out in the Group’s
Strategic Report information required by Large and Medium-Sized Companies and Groups (Accounts and
Reports) Regulations 2008, Sch. 7 to be contained in the Directors’ Report. This includes information on
future developments of the Group.

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

STREAMLINED ENERGY AND CARBON REPORTING
FOR THE YEAR ENDED 31 MAY 2023

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.

In September 2022 we published our first Environmental Social Governance (ESG) Strategy and committed
to being net zero carbon ahead of the Scottish Government’s target of 2045. A route map detailing our journey
to net zero was developed during 2022/23 with milestones outlining steps to be taken up to 2045.

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. In
financial year 2022/23, 100% of Springfield homes were built from timber kits using timber from Forest
Stewardship Council (FSC) and Programme for the Endorsement of Forest Certification (PEFC) sources.

The Scottish Government will not allow Local Authorities to issue building warrants for new build homes
heated from fossil fuels from 2024, a year earlier than the rest of the UK. At Springfield we have been
delivering homes heated from renewables for decades. To date we have over 60 developments that are
complete or under construction with homes heated by full-air source. The Group’s head start on use of air-
source technology, with established supply chains in place, will ensure the mandatory transition to fossil-fuel
alternatives will be managed with ease.

Research was undertaken this year to explore and determine the best fossil fuel alternatives. This research
re-confirmed air-source as the best non-fossil fuel technology for new build houses. Our R&D will continue
in the months and years ahead to ensure our customers benefit from energy efficient homes as new
technology emerges.

The environmental impact of our operations

We recognise our responsibility to mitigate the impact of our operations on climate change and our ESG
Strategy included objectives to reduce this wherever possible. During the period we achieved ISO14001
certification for our Environmental Management System. We also improved data collection around waste,
going further than industry practice to include waste from demolition and excavation.

Springfield has been producing its own timber kits for over 20 years. This year we benefited from ownership
of a second timber kit factory near Glasgow which complemented our existing timber kit factory in Elgin and
allowed us to reduce transport distances and our carbon footprint.

In 2022/23 we increased the number of Electric Vehicles within our fleet and by the end of the financial year
we had 123 EVs on the road. We also received two electric mini-buses that will transport employees to our
out of town kit factory in Elgin.

Within the ESG strategy we recognise the importance of MMC in low carbon homes. This year we used
government endorsed methodology to benchmark our use of Modern Methods of Construction (MMC) and
Pre-Manufactured Values (PMV) and found that our existing approaches far exceed industry practice.

Site fuel is a predominant cause of carbon emissions across the housebuilding industry because of the work
required on sites prior to connection to electricity mains. This year we undertook a project to fully explore low
carbon fuel sources for sites. We established that innovation amongst machinery providers and
manufacturers has been slow, with no viable electric models available. We have however identified a hybrid
option post year-end and are pleased to have begun to pilot this new technology.

This year we engaged our supply chain on ESG through a survey. More detailed engagement with suppliers,
who have a significant impact on our scope 3 emissions, is planned for the year ahead.

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

STREAMLINED ENERGY AND CARBON REPORTING (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Energy use and greenhouse gas emissions

As of 31 May 2023, the Group’s energy usage and associated carbon emissions for the financial year 1 June
2022 to 31 May 2023, as compared to the previous financial year, were as follow:

For the financial year ended 31 May 2023

Scope 1 energy use & emissions from stationary
combustion: gas and generator construction site fuel
use

Scope 1 energy use & emissions from mobile
combustion: transport and plant construction site fuel
use

Energy
Use kWh

Tonnes
CO₂e

Energy
Use kWh

Tonnes
CO₂e

2023

2022

3,451,300

794.42

3,185,137

779.49

8,881,257

2,140.30

8,466,137 2,130.91

Scope 2 energy use & emissions from electricity use

3,881,343

750.57

2,582,939

548.44

Scope 3 energy use & emissions from grey fleets
business mileage

1,344,709

333.77

1,716,539

429.36

Total energy use & greenhouse gas emissions

17,558,609

4,019.06 15,950,752 3,888.20

Greenhouse gas emissions per home sold

3.11

3.13

The overall energy use has increased by roughly 10% with approximately 3% increase in carbon emissions.
This is primarily due to increased operations within the group. For instance, new acquisitions since the end
of FY22 have been fully accounted for in the calculation. Despite the increased absolute carbon emissions,
the intensity ratio has stayed consistent compared to FY22 with a slight decrease of 1%.

The basis of carbon intensity ratios is disclosed below, with comparisons to previous financial year.

Homes sold

FY 2022

FY 2023

Methodology

Total

1,242

1,301

Private

Affordable

Contracting

712

866

405

328

125

107

Our Scope 1, Scope 2 and Scope 3 energy use and greenhouse gas emissions data for FY2023 has been
independently produced from information provided by the Group to an external consultancy with expertise in
this area.

To calculate the footprint, data was collated from across the Group and from our suppliers to identify the
amount of energy used in our operations. The Group used the most robust and accurate data source
available for each component of its energy use and carbon emission calculations. Assumptions and
estimations were only used when strictly necessary by means of the most robust data and assumptions
available.

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

STREAMLINED ENERGY AND CARBON REPORTING (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Where actual energy consumption data was unavailable, average energy consumption was used as a proxy
for estimation. Spend data was also adopted as a source of estimation for Mactaggart & Mickel due to
unavailability of activity level data. We do not consider refrigerant losses on our air conditioning units to be
material and as such these are not reported in our emissions data.

For vehicle emissions, the Group analysed fuel card usage, mileage information, expense claims and fuel
invoices and applied the relevant conversion factors published by the UK Government for 2022.

For emissions from fuel used on sites, the quantity of diesel based on litres delivered to site within the financial
period was used as the activity level data. 30% of overall diesel usage is assumed to be used for generators
and the remaining 70% is assumed to be used for plant. This assumption is consistent with previous financial
year.

We do not consider train travel to be material and as such this is not reported in our emissions data.

Greenhouse gas (GHG) emissions were calculated in line with GHG Reporting Protocol – Corporate standard
and reported in line with the UK Government’s Guidance on Streamlined Energy and Carbon Reporting and
mandatory GHG reporting guidance. Conversion factors were taken from the UK Government’s conversion
factors 2022.

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.

SPRINGFIELD PROPERTIES PLC

CORPORATE GOVERNANCE

STATEMENT OF DIRECTORS’ RESPONSIBILITIES
FOR THE YEAR ENDED 31 MAY 2023

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.

Sandy Adam
Executive Chairman
20 September 2023

SPRINGFIELD PROPERTIES PLC

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPRINGFIELD PROPERTIES PLC
FOR THE YEAR ENDED 31 MAY 2023

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 2023 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 2023 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.

SPRINGFIELD PROPERTIES PLC

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPRINGFIELD PROPERTIES PLC
(CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

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 21;
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 Directors’ assessment.

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

Coverage

Key audit matters

Materiality

95% (2022: 98%) of Group profit before tax
96% (2022: 98%) of Group revenue
94% (2022: 96%) of Group total assets

2023

2022

–

recognition

Revenue
construction contracts
Valuation and
work in progress
Accounting for acquisitions

impairment of

Accounting for acquisitions is no longer considered to be a key
audit matter due to the reduced level of complexity of the current
year acquisition requiring less audit focus that the much larger
acquisition in the prior year. .

Group financial statements as a whole

£810,000 (2022: £1,100,000) based on 5% (2021: 5%) of profit
before tax.

SPRINGFIELD PROPERTIES PLC

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPRINGFIELD PROPERTIES PLC
(CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

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 systems 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.

Significant components were identified with reference to either their contribution to key Group metrics
including profit before tax, revenue and total assets, or the existence of a material balance that is impacted
by key audit matters defined in the Group. Six significant components were identified based on their relative
size and one significant component had specific balances identified as being significant based on risk.

The six significant components identified were, Springfield Properties Plc, Walker Group (Scotland) Limited,
Dawn Homes Limited, Springfield M&M Homes Limited, Tulloch Homes Limited and Argyll Developments
(Scotland) Limited. In addition, land and work in progress balances within Walker Group Springfield Holdings
Limited were identified as being significant. 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.

SPRINGFIELD PROPERTIES PLC

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPRINGFIELD PROPERTIES PLC
(CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Key audit matter

Revenue
recognition –
construction
contracts

Refer
Accounting
policies Note
2.5 (page 87)
and Note 4 of
the
consolidated
financial
statements
(page 94).

from
construction
Revenue
(affordable housing
contracts
developments)
recognised
based on stage of completion
measured in reference to the
costs incurred as a proportion of
total costs (‘input method’).
Measured stage of completion is
based on actual costs incurred to
date on each project and
requires management to forecast
the estimated total costs required
to complete the development.
is
The estimation process
inherently
and
management
significant
judgement
required. The
judgement required is higher the
longer
has
remaining.

complex

contract

the

There is a potential risk of fraud
as revenue could be manipulated
through management bias
in
estimating costs to complete,
through incorrect allocation of
costs to each development to
skew the margins on individual
developments and through the
posting of manual journals.

focus

recognition

for our audit

on
Revenue
construction contracts is an area
of
in
considering possible areas of
management bias and fraud and
therefore we determined this to
be a key audit matter.

How the scope of our audit addressed the
key audit matter
For all construction revenue, we recalculated
the revenue to be recognised based on the
stage of completion using the input method.

tested

We
the design and operating
effectiveness of controls around sub-
of
contractor
procurement,
purchases and allocation of costs
to
developments and performed testing over
validity and accuracy of costs incurred to date.

approval

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
to corroboratory evidence and
complete
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
CVR’s available after year end
for any
indication of margin decline and movement in
cost estimates 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.

journals posted

We performed journal entry testing, applying a
particular focus to individually unusual and/or
the
material manual
revenue account throughout the year. We
agreed
journals meeting predetermined
criteria to supporting evidence to confirm that
the revenue recognised was appropriate, had
an appropriate business rationale and was in
line with the Group’s accounting policy.

We considered
the
accounting standards to the Group’s revenue
recognition policies and practices.

the application of

that

Key observations:
Based on the procedures performed we
in
consider
estimating the construction contract stage of
completion are appropriate and that revenue
from construction contracts has been
recognised appropriately.

judgements made

the

SPRINGFIELD PROPERTIES PLC

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPRINGFIELD PROPERTIES PLC
(CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Key audit matter

Valuation and
impairment of
in
work
progress

Refer,
Accounting
policies Note
2.16 (page 90)
and Note 17 of
the
consolidated
financial
statements
(page 103).

sheet

(page

The value of work in progress is
the most significant asset on the
balance
82).
Inventory and work in progress
comprises
in
progress in relation to private
housing. The relevant proportion
of land and work in progress is
recognised in cost of sales upon
sale of a unit.

land and work

project

judgement

There is inherent complexity and
significant
the
valuation of work in progress as
the correct valuation of each
development
is
dependent on accurate cost
allocation, projected profitability
of
the overall development,
including forecast revenue and
costs to complete, and where the
work
for
an
undeveloped
assessment of whether planning
permission will be achieved.
Each of these factors affects the
valuation of work in progress and
whether there are any indicators
of impairment.

progress

land,

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.

How the scope of our audit addressed the
key audit matter
We
the design and operating
tested
effectiveness of controls around sub-
of
contractor
procurement,
to
purchases and allocation of costs
developments and performed testing over
validity and accuracy of costs capitalised to
work in progress.

approval

We recalculated the release to cost of sales
for a sample of sites with reference to the total
project margin as referenced in the cost value
reconciliation (CVR).

We performed procedures over the cost to
complete estimates included as part of the
CVR process. This
included gaining an
understanding of movements against original
appraisals and assessing the forecasting
accuracy of prior year CVRs against projects
completed during the year and since year end.

there was any

reviewed management’s

We
impairment
to
assessment against estimated costs
complete and projected margins to assess
indication of
whether
impairment, and, where any
impairment
indicators had been noted, these had been
correctly treated. Our review of projected
margins included benchmarking of forecast
selling prices against current trends and
recent selling prices.

For a sample of work in progress balances
relating to undeveloped land we obtained
evidence that planning permission had been
prospective
that
achieved
development is estimated to be profitable.

and

the

Key observations:

Based on the procedures performed we
consider
by
management in valuing work in progress are
appropriate.

judgements made

the

SPRINGFIELD PROPERTIES PLC

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPRINGFIELD PROPERTIES PLC
(CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

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:

Group financial statements

Parent company financial statements

for

Materiality
Basis
determining
materiality
Rationale for the
benchmark
applied

2022
£m
1,100,000

2023
£m
810,000
5% of Profit before tax at planning
stage reassessed based on final
figures to confirm still appropriate
Principal
consideration
in
financial
performance of
the business

Principal
consideration
in
financial
performance of
the business

assessing

2023
£m

2022
£m

455,000
56%
of
materiality

group

520,000
9%
of
before tax

Profit

Principal
consideration
assessing
financial
performance
the business

Materiality was set
at 56% of Group
materiality
taking
into
consideration
component
risk.
aggregation
Change from prior
year approach
is
due to the parent
company being loss-
the
in
making
current year.

Performance
materiality
Basis
rationale
determining
performance
materiality

and
for

480,000

660,000

273,000

312,000

Performance materiality is set at
60% of materiality to reflect our
assessment of the risk that the
aggregate of uncorrected and
misstatements
undetected
the
for
exceeds materiality
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

For the purposes of our Group audit opinion, we set materiality for each significant component of the Group,
apart from the Parent Company whose materiality is set out above, based on a percentage of between 21%
and 65% (2022: 23% and 55% ) of Group materiality dependent on the size and our assessment of the risk
of material misstatement of that component. Component materiality ranged from £170,000 to £530,000
(2022: £258,000 to £604,000). 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.

SPRINGFIELD PROPERTIES PLC

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPRINGFIELD PROPERTIES PLC
(CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Reporting threshold

We agreed with the Audit Committee that we would report to them all individual audit differences in excess
of £32,000 (2021: £44,000). 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 other than the financial statements and our auditor’s report thereon. Our opinion
on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to
read the other information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to
be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we
are required to determine whether this gives rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.

We have nothing to report in this regard.

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
by
report
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.

SPRINGFIELD PROPERTIES PLC

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPRINGFIELD PROPERTIES PLC
(CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Responsibilities of Directors

As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the Directors determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or
the Parent Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below:

Non-compliance with laws and regulations

Based on:

 Our understanding of the Group and the industry in which it operates;
 Discussion with management, the Audit Committee and other members of those charged with

governance; and

 Obtaining an understanding of the Group’s policies and procedures regarding compliance with

laws and regulations.

we considered the significant laws and regulations to be the applicable accounting framework, UK tax
legislation and the AIM Listing Rules.

The Group is also subject to laws and regulations where the consequence of non-compliance could have a
material effect on the amount or disclosures in the financial statements, for example through the imposition
of fines or litigations. We identified such laws and regulations to be Companies Act 2006, Corporate and VAT
legislations, Employment Taxes, Health and Safety and the Bribery Act 2020.

Our procedures in respect of the above included:

 Review of minutes of meeting of those charged with governance for any instances of non-

compliance with laws and regulations;

 Review of correspondence with regulatory and tax authorities for any instances of non-compliance

with laws and regulations;

 Review of financial statement disclosures and agreement to supporting documentation;

 Review of legal expenditure accounts to understand the nature of expenditure incurred.

Involvement of tax specialists in the audit; and

SPRINGFIELD PROPERTIES PLC

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPRINGFIELD PROPERTIES PLC
(CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Fraud
We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk
assessment procedures included:

 Enquiry with management, the Audit Committee and other members of those charged with

governance regarding any known or suspected instances of fraud;

 Obtaining an understanding of the Group’s policies and procedures relating to:

o Detecting and responding to the risks of fraud; and
o

Internal controls established to mitigate risks related to fraud.

 Review of minutes of meeting of those charged with governance for any known or suspected

instances of fraud;

 Discussion amongst the engagement team as to how and where fraud might occur in the financial

statements;

 Performing analytical procedures to identify any unusual or unexpected relationships that may

indicate risks of material misstatement due to fraud; and

 Considering remuneration incentive schemes and performance targets and the related financial

statement areas impacted by these.

Based on our risk assessment, we considered the areas most susceptible to fraud to be revenue recognition
on construction contracts and valuation and impairment of work in progress.

Our procedures in respect of the above included:



assessing whether the accounting policies, treatments and presentation adopted in the financial
statements is in accordance with applicable law and accounting standards and whether there are
instances of potential bias in areas with significant degrees of judgement.
in addressing the risk of fraud through management override of controls, testing the
appropriateness of journal entries and other adjustments; assessing whether the judgements
made in making accounting estimates are indicative of a potential bias; and evaluating the
business rationale of any significant transactions that are unusual or outside the normal course of
business;
carrying out tests of management controls in certain areas or functions, such as the authorisation
of project costs and allocation of costs incurred to the correct development;
vouching balances and reconciling items in management’s key control account reconciliations to
supporting documentation as at 31 May 2023; and
carrying out detailed testing, on a sample basis, of material transactions, financial statement
categories and balances to appropriate documentary evidence to verify the completeness,
occurrence and accuracy of the reported financial statements.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement
team members who were all deemed to have appropriate competence and capabilities and we remained
alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

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.

SPRINGFIELD PROPERTIES PLC

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPRINGFIELD PROPERTIES PLC
(CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

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
20 September 2023

BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MAY 2023

Company Registration No. SC031286 (Scotland)

Revenue

Cost of sales

Gross profit

Note

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

6
5
8

2023

£000

332,132

(284,177)

47,955

(27,955)
(720)

(28,675)
688

19,968
133
(4,812)
15,289

(3,216)

12,073

Earnings per share

Basic earnings on profit for the year
Diluted earnings on profit for the year

12
12

10.19p
9.90p

Adjusted earnings per share

Basic earnings on profit for the year
Diluted earnings on profit for the year

10.74p
10.43p

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

14.74p
14.37p

15.63p
15.24p

Adjusted earnings per share is a non-GAAP measure and is presented as an additional performance
measure and is stated before exceptional items.

The Group has no items of other comprehensive income.

The accompanying notes on pages 85 to 117 form an integral part of these financial statements.

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
FOR THE YEAR ENDED 31 MAY 2023

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

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

2023

£000

7,816

5,953

1,783

5,000

20,552

277,633

22,588

8,909

309,130

329,682

55,788

11,785

1,884

1,710

362

71,529

70,673

4,016

3,615

24,332

2,000

2,884

107,520

179,049

2022

£000

5,799

5,758

520

2,133

5,641

19,851

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

150,633

143,527

148

78,744

71,741

150,633

148

78,744

64,635

143,527

These financial statements were approved and authorised for issue by the Board of Directors on 20
September 2023 signed on behalf of the Board by:

Sandy Adam - Executive Chairman

The accompanying notes on pages 85 to 117 form an integral part of these financial statements.

Company number: SC031286

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2023

Share
capital
£000

Share
premium
£000

Retained
earnings
£000

Total

£000

Notes

1 June 2021

Share issue

Total comprehensive
income for the year

Share-based payments

Dividends

31 May 2022

Total comprehensive
income for the year

Share-based payments

Dividends

31 May 2023

56,761

21,983

54,341

111,230

22,003

128

148

78,744

148

78,744

16,074

554

(6,334)

64,635

554

(6,334)

143,527

12,073

601

(5,568)

71,741

601

(5,568)

150,633

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 85 to 117 form an integral part of these financial statements.

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR TO 31 MAY 2023

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

Gain on disposal of investment

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 in inventory

(Increase)/decrease in accounts and other receivables

(Decrease)/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

Proceeds on disposal of investment

Deferred consideration paid on acquisition of subsidiary

Acquisition of subsidiary, net of cash acquired

Purchase of intangible assets

Net cash used in investing activities

Financing activities

Proceeds from issue of shares

Costs relating to share raise

Proceeds from bank loans

Payment of lease liabilities

Dividends paid

Interest paid

Net cash inflow 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

2023
£000

12,073

720

3,216

4,812

(133)

20,688

(720)

(312)

(158)

601

255

2,257

22,611

(3,251)

(404)

(10,818)

8,138

(2,900)

5,238

(478)

427

678

(6,138)

(15,867)

(30)

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)

(21,408)

(44,100)

20,187

(2,147)

(5,568)

(3,783)

8,689

(7,481)

16,390

8,909

22,728

(724)

16,486

(1,437)

(6,334)

(1,617)

29,102

564

15,826

16,390

The accompanying notes on pages 85 to 117 form an integral part of these financial statements.

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

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 that are mandatory for accounting periods beginning on 1 June 2022.

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:

 Annual improvements to IFRS 2018-2020
 Amendments to IAS 37 ‘Onerous contracts – Cost of fulfilling a contract’
 Amendments to IAS 16 ‘Property, plant and equipment – Proceeds before intended use’
 Amendments to IFRS 3 ‘Reference to the conceptual framework’

The following new standards and amendments to standards have been issued but are not effective for the
financial year beginning 1 June 2022 and have not been early adopted:

IFRS17 Insurance contracts (including amendments to IFRS17)


 Amendments to IAS 12 ‘Deferred tax related to assets and liabilities arising from a single

transaction’

 Amendments to IAS 1 and IFRS PS2 ‘Disclosure of accounting policies’
 Amendments to IAS1 and IFRS PS2 ‘Definition of accounting estimates’
 Amendments to IAS 12 ‘International tax reform’
 Amendments to IAS 1 ‘Classification of liabilities as current or non-current’
 Amendments to IFRS16 ‘Lease liability in a sale and leaseback

The new standards and amendments to the standards noted above are expected to have no significant
impact on the financial statements.

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

2. Summary of significant accounting policies (continued)

2.2

Basis of consolidation

The consolidated financial statements incorporate those of Springfield Properties PLC and its subsidiaries
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 2023. All intra-Group transactions, balances and unrealised
gains on transactions between Group companies are eliminated on consolidation.

2.3.

Functional and presentation currencies

The financial statements are presented in Pound Sterling (£), rounded to the nearest £000, which is also the
currency of the primary economic environment in which the Group operates (its functional currency).

2.4.

Going concern

The material financial and operational risks and uncertainties that may affect the Group’s performance and
their mitigation are outlined on pages 19 to 22, and financial risks including liquidity, market, interest and
capital risks are outlined in Note 29 to the Financial Statements.

Under this worst-case sensitivity, the peak debt level would have been in excess of the Group’s banking
facilities of £100m.

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

2. Summary of significant accounting policies (continued)

2.4.

Going concern (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 contract assets.

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.

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

2. Summary of significant accounting policies (continued)

2.5.

Revenue and profit recognition (continued)

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.

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, deferred consideration and lease liabilities. Finance costs are capitalised
when they are directly attributable to the acquisition, contribution or production of an asset that necessarily
takes a substantial period of time to get ready for its intended use or sale. 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.

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

2. Summary of significant accounting policies (continued)

2.10. Taxation (continued)

Deferred tax (continued)

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.

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.

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 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.

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

2. Summary of significant accounting policies (continued)

2.13. Intangible fixed assets (continued)

Goodwill on acquisition

Goodwill on acquisitions of subsidiaries or businesses 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.

Impairment reviews are performed annually with any impairment losses being recognised immediately in the
profit and loss account.

2.14. Fixed asset investments

Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any
accumulated impairment losses. The investments are assessed for impairment at each reporting date and
any impairment losses are recognised immediately in the profit and loss account. Costs associated with the
acquisition of subsidiaries are recognised in the profit and loss account as an exceptional item.

2.15.

Impairment of fixed assets

At each reporting end date, the Group reviews the carrying amounts of its tangible fixed assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment
loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value-in-use. Any impairment loss and
reversal of losses are recognised in the profit and loss account.

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 and where possible and directly attributable to a site finance costs will be included.

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.

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

2. Summary of significant accounting policies (continued)

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.

Financial assets at amortised cost

Loans outside the Group are valued at the recoverable amount and a market rate of interest is charged.

Impairment of financial assets

The Group recognises an allowance for expected credit losses for all debt instruments not held at fair value
through the 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.

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

2. Summary of significant accounting policies (continued)

2.17. Financial instruments (continued)

Other financial liabilities (continued)

The effective interest method is a method of calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments through the expected life of the financial liability to the net carrying
amount on initial recognition.

Derecognition of other financial liabilities

Financial liabilities are derecognised when the Group’s contractual obligations expire or are discharged or
cancelled.

2.18. Deferred consideration

Deferred consideration payments are initially recognised at fair value at the date of acquisition which is based
on the timing of the cash outflows and an appropriate discount rate. It is subsequently measured at amortised
cost.

2.19. Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks and bank overdrafts. Bank
overdrafts are shown within borrowings in current liabilities.

2.20. Dividends

Dividends are recognised as liabilities in the period in which the dividends are approved and once they are
no longer at the discretion of the Company.

2.21. Leases

All leases are accounted for by recognising a right-of-use asset and a lease liability except for leases of low
value assets (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.

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

2. Summary of significant accounting policies (continued)

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:

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 control around the reporting of these assessments to ensure an accurate assessment is
made of inventory carrying values.

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

3. Critical accounting estimates and judgements in applying accounting policies (continued)

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 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.

4. Revenue

Analysis of the Group’s revenue is as follows:

Revenue
Private residential housing

Affordable housing

Contracting housing

Other revenue

Revenue from the sale of goods and services as reported in the profit and
loss account

2023
£000
253,362

2022
£000
174,442

53,931

19,681

5,158

64,251

16,494

1,908

332,132

257,095

Contract balances
The following table provides information about balances arising from contracts with customers:

Amounts included in trade receivables
Amounts included within other payables

2023
£000
8,135
(4,219)

2022
£000
13,179
(10,781)

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.

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

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 housing

Affordable housing

Contract housing

Other

Total revenue

Gross profit
Administrative expenses
Exceptional items
Other operating income
Finance income
Finance expenses
Profit before tax

Taxation
Profit for the period

6. Operating profit

2023
£000
253,362

53,931

19,681

5,158

332,132

47,955
(27,955)
(720)
688
133
(4,812)
15,289

(3,216)

12,073

2022
£000
174,442

64,251

16,494

1,908

257,095

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
Gain on disposal of investment

Cost of inventories recognised as an expense
Exceptional items
Expenses relating to short term and low value leases

Notes
13
13
14

2023
£000

910
1,342
255
(312)

(158)
284,177
720
5

2022
£000

1,129
595
161
(187)

-
213,960
1,100
110

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

6. Operating Profit (continued)

Auditor’s remuneration

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

2023
£000

81
155

242

2022
£000

74
119

198

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

2023
614
262
876

2023
£000
39,266
601
3,870
1,634
45,371

2022
532
232
764

2022
£000
29,267
555
3,135
1,176
34,133

Full details of the Directors’ remuneration is provided in the Remuneration Committee Report on page 54.
The Group operates a defined contribution pension scheme for all qualifying employees. The assets of the
scheme are held separately from those of the Group in an independently administered fund.

The charge to the profit and loss account in respect of defined contribution schemes was £1,634k (2022:
£1,176k). Contributions totalling £216k (2022: £265k) 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

2023
£000
4,297
457
58
4,812

2023
£000

3,069
(92)
2,977

239
-
239
3,216

2022
£000
1,579
272
38
1,889

2022
£000

3,358
(311)
3,047

486
119
605
3,652

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

9. Taxation (continued)

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 20% (2022: 19%)
Effects of:
Tax effect of expenses that are not deductible in determining taxable profit
Adjustments in respect of prior years
Depreciation on assets not qualifying for tax allowances
Amortisation
Deferred tax adjustments in respect of prior years
Land remediation relief
Income not taxable
Temporary difference not recognised
Other timing differences
Adjust deferred tax to closing average rate
Tax charge for period

10. Exceptional items

Redundancy costs
Acquisition and other transaction – related costs (1)
Other acquisition and other transaction – related costs (2)

2023
£000
15,289

3,058

257
(92)
(40)
-
-
(1)
11
291
(3)
(265)
3,216

2023
£000

349
371
-
720

2022
£000
19,726

3,748

181
(311)
(48)
(26)
119
(1)
-
-
23
(33)
3,652

2022
£000

141
859
100
1,100

(1)
(2)

Acquisition and other transactions – related costs for the acquisition of the housebuilding business of Mactaggart & Mickel Group Ltd.
2022 -Other acquisition and other transactions – related costs relate to the planning being achieved at Carlaverock, which had previously been assessed as
95% likely.

11. Dividends

On 16 December 2022, a final dividend of 4.7p (2022: 4.5p) per share was paid to shareholders, amounting
to £5,568,061 (2022: £4,558,486).

In respect of the current year, there was no interim dividend paid to shareholders. In 2022, an interim dividend
of 1.4p per share was paid to shareholders, amounting to £1,775,716.

While recognising the importance of the dividend to shareholders, the Board has resolved not to propose a
dividend for FY 2023 as a measure to preserve liquidity in response to market conditions. The Group’s focus
is on managing cash flow and reducing its debt to ensure that it is in the optimal position for when market
conditions improve.

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

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
2023 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

2023
£000

12,073
652
12,725

2022
£000

16,074
970
17,044

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

118,478,254
3,507,257

109,022,146
2,797,323

121,985,511

111,819,469

Earnings per ordinary share
Basic earnings on profit for the year
Diluted earnings on profit for the year

Adjusted earnings per ordinary share (1)
Basic earnings on profit for the year
Diluted earnings on profit for the year

10.19p
9.90p

10.74p
10.43p

14.74p
14.37p

15.63p
15.24p

(1) Adjusted earnings is presented as an additional performance measure and is stated before exceptional items and is used in adjusted EPS

calculation.

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

13. Property, plant and equipment

Property, plant and equipment
Right-of-use assets
Property, plant and equipment

2023
£000
2,577
5,239
7,816

2022
£000
2,760
3,039
5,799

Land &
buildings
£000

Plant &
machinery
£000

Fixtures,
fittings &
equipment
£000

Motor
vehicle
£000

Cost
At 1 June 2021
Additions
Acquisition of subsidiary
Disposals
At 31 May 2022
Additions
Disposals
At 31 May 2023

Accumulated depreciation
At 1 June 2021
Depreciation charge
Disposals
At 31 May 2022
Depreciation charge
Disposals
At 31 May 2023

Net book value
At 31 May 2023

At 31 May 2022

At 31 May 2021

986
-
-
-
986
-
(142)
844

120
27
-
147
25
(26)
146

698

839

866

6,711
609
43
(405)
6,958
511
(234)
7,235

5,009
887
(374)
5,522
616
(225)
5,913

1,322

1,436

1,702

2,162
288
19
(776)
1,693
278
(13)
1,958

1,805
197
(765)
1,237
233
(6)
1,464

494

456

357

387
-
20
(165)
242
71
(144)
169

360
18
(165)
213
36
(143)
106

Total
£000

10,246
897
82
(1,346)
9,879
860
(533)
10,206

7,294
1,129
(1,304)
7,119
910
(400)
7,629

2,577

2,760

2,952

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

13. Property, plant and equipment (continued)

Right-of-use assets

Cost
At 1 June 2021
Additions
Acquisition of subsidiary
Disposals
At 31 May 2022
Additions
Disposals
At 31 May 2023

Accumulated
depreciation
At 1 June 2021
Depreciation charge
Disposals
At 31 May 2022
Depreciation charge
Disposals
At 31 May 2023

Net book value
At 31 May 2023

At 31 May 2022

At 31 May 2021

Land &
buildings
£000

Fixtures,
fittings &
equipment
£000

Motor
vehicle
£000

2,128
420
258
(235)
2,571
1,522
-
4,093

679
352
(122)
909
519
-
1,428

2,665

1,662

1,449

65
-
-
(34)
31
37
-
68

15
6
(1)
20
20
-
40

248
1,454
61
(110)
1,653
1,992
(27)
3,618

160
237
(110)
287
803
(18)
1,072

2,546

1,366

Total
£000

2,441
1,874
319
(379)
4,255
3,551
(27)
7,779

854
595
(233)
1,216
1,342
(18)
2,540

5,239

3,039

1,587

Fixed assets with the carrying value of £5,239k (2022: £3,903k) are pledged as security.

100

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

14. Intangible fixed assets

Goodwill

Website

Cost
At 1 June 2021
Additions
Disposals
Acquisition of subsidiary
At 31 May 2022
Additions
At 31 May 2023

Amortisation
At 1 June 2021
Amortisation charge in year
Amortisation on disposals
At 31 May 2022
Amortisation charge in year
At 31 May 2023

Net book value
At 31 May 2023
At 31 May 2022
At 31 May 2021

£000

1,118
-
-
513
1,631
420
2,051

69
-
-
69
-
69

1,982
1,562

1,049

£000

-
84
(144)
79
19
30
49

-
38
(38)
-
8
8

41
19
-

Marketing-
related
assets
£000

600
-
-
3,700
4,300
-
4,300

-
123
-
123
247
370

3,930
4,177

600

Total

£000

1,718
84
(144)
4,292
5,950
450
6,400

69
161
(38)
192
255
447

5,953
5,758

1,649

Goodwill relates to the prior acquisition of Walker Holdings (Scotland) Limited £1,562k (2022: £1,562k),
Tulloch Homes Holdings Limited £562k (2022: £513k) and the current year acquisition of the housebuilding
business of Mactaggart & Mickel Group Ltd (Springfield M&M Homes). £420k (2022: £nil) 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 2023 and the financial budget approved
by the Board covering the period to 31 May 2024, with projected cash flows for the years ending 31 May
2025 to 31 May 2027 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 year ended 31 May 2023 and the financial
budget approved by the Board covering the period to 31 May 2024, with projected cash flows for the years
ending 31 May 2025 to 31 May 2027 based on a growth rate of 5% per annum. The recoverable amount of
the Springfield M&M Homes goodwill has been determined based on a value in use calculation using cash
flow projections based on the actual results for the Springfield M&M Homes for the year ended 31 May 2023
and the financial budget approved by the Board covering the period to 31 May 2024, with projected cash
flows for the years ending 31 May 2025 to 31 May 2027 based on a growth rate of 5% per annum.

Marketing-related assets of £3,971k (2022: £4,177k) comprise of Springfield Properties PLC trademark asset
£600k (2022: £600k) which has been measured at cost and the Tulloch Homes brand £3,371k (2022:
£3,577k). The trademark asset is expected to have an indefinite useful life. The brand intangible £3,371k
(2022: £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 2023 and the financial budget approved
by the Board covering the period to 31 May 2024, with projected cash flows for the years ending 31 May
2025 to 31 May 2027 based on a growth rate of 5% per annum.

101

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

14. Intangible fixed assets (continued)

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.

15. Acquisition of the housebuilding business of Mactaggart & Mickel Group Limited and Timber

Kit factory

Book Value

Revaluation
adjustment

Fair Value
to Group

Property, plant and equipment
Inventories

Consideration paid on acquisition – cash

Consideration paid on first year – land creditor

Deferred consideration

Less: Goodwill (note 14)

Total

£000
-
46,195
46,195

£000
220
(2,312)
(2,092)

£000
220
43,883
44,103

10,000

5,414

29,109

44,523

(420)

44,103

A fair value assessment has been performed resulting in an adjustment of (£2,312,150) to inventories and
£219,710 to property, plant and equipment. The deferred consideration has been discounted, based on the
Government Bond 5 year rate, in the financial statements.

The housebuilding business of Mactaggart & Mickel 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. The acquisition has contributed revenue of £36,350,445 and profit before
tax of £2,053,399 from the acquisition date of 1 June 2022 to 31 May 2023.

During the year, the Group purchased a timber kit factory for a consideration of £453,000. The assets and
trade are included within Springfield Timber Kit Systems Limited.

16. Fixed assets investments

Cost
Other investments

2023
£000

2022
£000

520

On 25 June 2022, Springfield Properties PLC sold an investment in Castle Stuart for a consideration of £678k,
resulting in a gain on disposal of £158k.

102

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

16. Fixed assets investments (continued)

Movement in fixed asset investments

Investment in
joint venture

Other

Total

£000

-
-
-
-
-

-
520
520
(520)
-

Cost
At 1 June 2021
Additions
At 31 May 2022
Disposals
At 31 May 2023

17. Inventories

Work in progress

Finance costs capitalised during the year amounted to 1,672k (2022: £nil).

18. Trade and other receivables

Amounts falling due within one year

Trade receivables
Other receivables
Contract assets
Prepayments and accrued income

2023
£000
277,633
277,633

2022
£000
230,095
230,095

2023
£000
9,102
7,270
5,006
1,210
22,588

2022
£000
10,036
5,771
4,497
1,059
21,363

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 (included within other receivables great than one year) 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 2023 is represented by the carrying amount of each financial asset.

Amounts falling due after one year

Shared equity receivables
Other receivables

2023
£000
-
5,000
5,000

2022
£000
641
5,000
5,641

103

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

18. Trade and other receivables (continued)

Shared equity receivables

At 1 June 2022
Acquisition of subsidiary
Repaid during the year
Finance income
At 31 May 2023
Less: amounts receivable within one year
Amounts receivable after one year

2023
£000
641
-
(325)
13
329
(329)
-

2022
£000
365
715
(447)
8
641
-
641

Shared equity loan receivables comprise loans which were granted as part of sales transactions. They are
secured by way of a second ranking legal charge over the related property. The assets are recorded at fair
value, being the estimated future amount receivable by the Group, discounted to present day values.

The Directors review the future anticipated receipts from the assets at the end of each financial year. Credit
risk, which the Directors currently consider to be mitigated through holding a second legal charge over the
assets, is accounted for in determining fair values and appropriate discount factors are applied. The Directors
review the financial assets for impairment at each balance sheet date. The Directors expect an average
maturity profile of between 2 and 5 years from the balance sheet date.

19. Trade and other payables

Trade creditors
Other taxation and social security
Other creditors
Contract liabilities
Accruals and deferred income

2023
£000
35,377
1,328
765
2,860
15,458
55,788

2022
£000
39,262
1,308
2,207
8,117
17,619
68,513

Revenue recognised in the year ended 31 May 2023 included £5,641k (2022: £3,206k) that was included in
the contract liability balance at 31 May 2022. The Directors consider the carrying amount of the accounts
payable approximates to their fair value.

20. Financial assets and liabilities

Assets

Financial assets at amortised cost

Total

Liabilities

Measured at amortised cost

Total

2023
£000
27,443

27,443

2023
£000
162,165

2022
£000
36,589

36,589

2022
£000
121,230

162,165

121,230

Included within Financial assets at amortised cost is trade receivables, retentions and cash and cash
equivalents.

Included within Financial liabilities at amortised cost is short and long term bank borrowings, trade creditors,
short term obligations under lease liabilities, long term obligations under lease liabilities, deferred
consideration and accruals.

104

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

21. Bank borrowings

Secured borrowings:
Bank loans
Payable after one year

2023
£000
70,673
70,673

2022
£000
50,486
50,486

The bank loan comprises of a revolving credit facility of £87.5m with an expiry date of January 2025. The
facility attracts an interest rate of 2.15% per annum above Bank of England SONIA (Sterling overnight index
average response rate) and is secured over certain of the Company’s properties, with a 31 May 2023 work
in progress value of £59.8m.

Post year end, a term loan of £18.0m has been put in place with a repayment date of 30 September 2024.
The facility attracts an interest rate of 2.75% per annum above Bank of England SONIA (Sterling overnight
index average response rate).

At 31 May 2023, the Group had available £16.5m (2022: £36.5k) of undrawn committed borrowing facilities.

The Group’s lender has a floating charge over the assets of the Company and of its subsidiaries.

22. Obligations under leases

Lease payments represent rentals payable by the Group for certain items of plant and machinery and are
secured by the assets under lease in question. Leases include purchase options at the end of the lease
period, and no restrictions are placed on the use of the assets. All leases are on a fixed repayment basis and
no arrangements have been entered into for contingent rental payments. Leases are stated at the present
value of the contractual payments due to the lessor over the lease term.

Future minimum payments due:
Not later than one year
After one year but not more than five years
After five years

Less finance charges allocated to future periods

Present value of minimum lease payments:
Not later than one year
After one year but not more than five years
After five years

23. Deferred taxation

The movement in the deferred taxation provision during the year was:

Provision brought forward
On acquisition
Charge in the year
Prior year adjustment

Provision carried forward

2023
£000
2,236
3,232
1,546
7,014
(1,114)
5,900

1,884
3,273
743
5,900

2023
£000

1,593
-
239
-

1,832

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

105

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

23. Deferred taxation (continued)

Deferred tax liability

Deferred tax assets

The elements of deferred taxation are as follows:

Fixed asset timing differences
Available losses
Other timing differences

24. Deferred consideration

2023

£000

3,615

(1,783)
1,832

2023
£000

122
(554)
2,264
1,832

2022

£000

3,726

(2,133)
1,593

2022
£000

76
(801)
2,318
1,593

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 paid on 24 April 2022 (ii)
£6,137,670 paid on 1 November 2022 and (iii) £6,500,000 payable on 1 July 2023. The outstanding
discounted amount payable at the period end is £6,493,552 (2022: £12,574,228), which has subsequently
been paid.

As part of acquiring the housebuilding business of Mactaggart & Mickel Group Limited, there was a further
£30,781,108 of deferred consideration payable. This is payable quarterly in arrears as homes are sold
starting from August 2023. There is a minimum annual payment of £7,695,277. The outstanding discounted
amount payable at the period end was £29,623,127 (2022: £nil).

Acquisition of Tulloch Homes Holdings Limited
Acquisition of
Mactaggart & Mickel Group Limited

the housebuilding business of

Deferred consideration < 1 year
Deferred consideration > 1 year

2023
£000
6,494

29,623
36,117

2023
£000
11,785
24,332
36,117

2022
£000
12,574

-
12,574

2022
£000
6,119
6,455
12,574

106

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

25. (a) Contingent consideration

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) the Group make a planning application when it reasonably believes 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 (2022: £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

25. (b) Provisions

2023
£000
2,000
2,000

2022
£000
2,000
2,000

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
Provisions for onerous contracts
Maintenance provision

The movement in the provision accounts are as follows:

Dilapidation

£000

150

(15)

169

Onerous
contracts

£000

353

Balance as at 1 June 2022

Additional provision

Amount utilised

Profit and Loss

Balance as at 31 May 2023

Provisions < 1 year
Provisions > 1 year

2023
£000
169
353
4,072
4,594

Maintenance

£000

2,496

2,785

(1,516)

307

2022
£000
150
-
2,496
2,646

Total

£000

2,646

2,819

(1,531)

660

4,072

4,594

2023
£000
1,710
2,884
4,594

2022
£000
821
1,825
2,646

107

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

26. 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 2022
Share issue
At 31 May 2023

Number of shares

Share capital
£000

118,469,399
26,602
118,496,001

148
-
148

Share
premium
£000
78,744
-
78,744

During the year, 26,602 shares (2022: 677,587) were issued in satisfaction of share options exercised for a
consideration of £33.

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.

CSOP

Options at the beginning of the
year
Lapsed during the year
Exercised during the year
Options at the year end

2023

2022

Number of
shares

Weighted
average
exercise
price (pence)

Number of
shares

Weighted
average
exercise price
(pence)

627,558
(21,145)
-
606,413

115.33
116.71
-
115.28

801,745
(17,741)
(156,446)
627,558

114.89
108.50
113.84
115.33

108

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

26. Share capital (continued)

Share based payments (continued)

Share option

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
102,678
36,491

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

2023

Number
of shares

1,746,570
(18,981)
-
1,727,589

Weighted
average
exercise
price (pence)
118.84
122.50
-
118.80

2022

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

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
1,197,269

Exercise price
(p)

106.00
134.00
134.00
122.50

Vesting
period
(years)
3
3
3
3

SAYE

Options at the start of the year
Lapsed during the year
Exercised during the year
Options at the year end

2023

2022

Number of
shares

1,837,747
(752,775)
-
1,084,972

Weighted
average
exercise
price (pence)
130.50
130.50
-
130.50

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

Share option

Grant Price
(p)

SAYE – 29th April 2021

145.00

Number of
shares at year
end
1,084,972

Exercise price
(p)

130.50

Vesting
period
(years)
3

109

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

26. Share capital (continued)

Share based payments (continued)

PSP

Options at start of the year
Granted during the year
Lapsed during the year
Exercised during the year
Options at the year end

2023

Number of
shares

2,368,181
776,800
(265,105)
(26,602)
2,853,274

Weighted
average
exercise
price (pence)
0.13
0.13
0.13
0.13
0.13

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

Share option

PSP – 9th January 2020
PSP – 30th October 2020
PSP – 21st December 2021
PSP – 28th March 2023

Grant Price
(p)

0.13
0.13
0.13
0.13

Number of
shares at year
end
56,929
623,064
1,396,481
776,800

Exercise price
(p)

0.13
0.13
0.13
0.13

Vesting
Period
(years)
3
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

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 – nil (2022: 156,466) of options were exercised during the year and 606,413 (2022: 582,323) shares
were exercisable.

ESOP – nil (2022: 278,079) of options were exercised during the year and 1,727,589 (2022: 1,746,570)
shares were exercisable.

SAYE – nil (2022: 243,062) of options were exercised during the year and nil (2022: nil) shares were
exercisable.

PSP – 26,602 (2022: nil) of options were exercised during the year and 56,929 (2022: nil) shares were
exercisable.

Charge for share based incentive schemes

The total charge for the year relating to employee share-based plans were £601k (2022: £554k), all of which
related to equity-settled share-based payment transactions.

110

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

27. Cash and cash equivalents

For the purpose of the statement of cash flows, cash and cash equivalents comprise the following as
at 31 May:

Cash at bank and in hand

2023
£000
8,909
8,909

2022
£000
16,390
16,390

At 31 May 2023, the Group had an available overdraft facility of £12.5m (2022: £2.5m).

28. Capital risk management

The Group manages its capital to ensure that the Group will be able to continue as a going concern while
maximising the return to stakeholders through the optimisation of the debt and equity balance.

The capital structure of the Group consists of equity attributable to equity holders of the parent Company and
its subsidiary, comprising issued capital, reserves and retained earnings, all as disclosed in the balance
sheet. The Group is not subject to externally imposed capital requirements other than those included, from
time to time, in the financial covenants associated with bank borrowing.

29. Financial risk management

The Group is exposed to a variety of financial risks which result from both its operating and investing activities.
The Group’s risk management is coordinated by the Board of Directors, and focuses on actively securing the
Group’s short to medium term cash flows by minimising the exposure to financial markets.

29.1. Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will
affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk
management is to manage and control market risk exposures within acceptable parameters, while optimising
the return on risk.

29.2. Interest risk

Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Group’s exposure to the interest rate risk relates primarily to its floating
rate borrowings.

The responsibility for setting the level of fixed rate debt lies with the Board and is continually reviewed in the
light of economic data provided by a variety of sources.

Financial liabilities at fixed rate
Financial liabilities at floating rate
Non-interest-bearing financial liabilities

2023
£000
42,017
70,673
49,475
162,165

2022
£000
16,528
50,486
54,216
121,230

111

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

29. Financial risk management (continued)

29.2. Interest risk (continued)

Interest rate sensitivity analysis

The table below details the Group’s sensitivity to increase or decrease of floating interest rates by 0.5%,
which the Directors consider to be a 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 SONIA rate
31 May 2023
Interest rate
–0.5%
£000
353

Interest rate
+0.5%
£000
(353)

Bank of England SONIA rate
31 May 2022
Interest rate
–0.5%
£000
252

Interest rate
+0.5%
£000
(252)

(Loss) / profit

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
2023.

29.3.

Liquidity risk

Liquidity risk is the risk that the Group will be unable to meet its liabilities as they fall due. The Group’s
objective is to maintain a balance between continuity of funding and flexibility through the use of bank
overdrafts, medium to long term borrowings and leases. The Directors continually assess the balance of
capital and debt of the Group.

They consider the security of capital funding against the potentially higher rates of return offered by debt
financing in order to set an efficient but stable balance appropriate to the size of the Group.

The Board reviews projects against build programmes and contractual agreements to avoid any risk of
incurring contractual penalties or damaging the Group’s reputations, which would in turn reduce the Group’s
ability to borrow at optimal rates. Covenant tests are continually reviewed to ensure covenant criteria are met
in the event of deterioration in market conditions.

The maturity profile of the Group and parent Company’s financial liabilities based on contractual
undiscounted payments (including interest payments) is as follows:

112

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

29. Financial risk management (continued)

29.3. Liquidity risk (continued)

31 May 2023

Carrying
amount
£000

Total minimum
future payment
£000

Within
1 year
£000

Within 1-2
years
£000

Within 2-5
years
£000

49,475
70,673

36,117

5,900
162,165

49,475
71,000

37,281

7,014
164,770

49,475
-

12,271

2,236
63,982

-
71,000

7,695

1,645
80,340

-
-

17,315

2,314
19,629

Greater
than
5 years
£000

-
-

819
819

Carrying
amount
£000
54,216
50,486
12,574
3,954
121,230

Total minimum
future
payment
£000
54,216
51,000
12,638
4,588
122,442

Within
1 year
£000
54,216
-
6,138
1,506
61,860

Within 1-
2 years
£000
-
51,000
6,500
1,272
58,772

Within 2-5
years
£000
-
-
-
1,268
1,268

Greater
than
5 years
£000
-
-
-
542
542

Accounts payable
Bank borrowings

Deferred
consideration

Leases

31 May 2022

Accounts payable
Bank borrowings
Deferred consideration
Leases

29.4

Credit risk

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 2023

31 May 2022

Total book
value
£000
8,827
275
9,102

Allowance for
impairment
£000
-
-
-

Total book
value
£000
10,441
236
10,677

Allowance for
impairment
£000
-
-
-

During the year, the Group had no charge for impairment for trade receivables.

113

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

29.4

Credit risk (continued)

The ageing profile of other receivables was:

Current
Non-current

31 May 2023

31 May 2022

Total book
value
£000
7,270
5,000
12,270

Allowance for
impairment
£000
-
-
-

Total book
value
£000
5,771
5,000
10,771

Allowance for
impairment
£000
-
-
-

During the year, the Group had no charge for impairment for other receivables.

30. 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 £1,854k (2022:
£2,343k) 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

2023
£000

1,776
43
5
1
2
1
1
1,829

2022
£000

2,249
55
6
2
3
1
1
2,317

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

2023
£000

2,696
555
208
3,459

2022
£000

3,537
404
169
4,110

114

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

30. Transactions with related parties (continued)

During the year the Group entered into the following transactions with related parties:

Bertha Park Limited (1)
Other entities that key management personnel
have control, significant influence or hold a
material interest in
Key management personnel
Other related parties

Sale of goods

2023
£000
13,751

76
244
1
14,072

2022
£000
18,691

83
176
29
18,979

Purchase of goods
2022
£000
371

2023
£000
-

325
-
1,616
1,941

45
11
332
759

Sales to related parties represent those undertaken in the ordinary course of business.

Entities that key management personnel have
control, significant influence or hold a material
interest in
Key management personnel
Other related parties

Interest received:
Entities that 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 that key management personnel have control, significant influence
or hold a material interest in (short-term)
Key management personnel
Other related parties

Rent paid

2023
£000

162
3
100
265

2023
£000

125

2023
£000

8,524

5
-
-
8,529

2022
£000

170
-
107
277

2022
£000

125

2022
£000

9,167

54
39
1
9,261

115

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

30. Transactions with related parties (continued)

Accounts payable:

Entities which key management personnel have control, significant influence
or hold a material interest in (short-term)

Other related parties

2023

£000

2022

£000

678
740

52
52

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 £13,751k
(2022: £18,226k) in relation to a build contract. At the year-end £3,399k (2022: £3,983k) is included in trade debtors and included within other debtors is a loan of £5,125k
(2022: £5,125k). During the year the Group had purchases from Bertha Park Limited of £nil (2022: £371k) in relation to a build contract.

31. Commitments and guarantees

In the ordinary course of the Group's business the Group is required to enter into performance bond
arrangements. At 31 May 2023, the Group had bonds of £36,473k (2022: £35,358k) provided by financial
institutions.

31.1. Capital commitments

Call and put options for the purchase of plots for development

32. Analysis of net debt

The Analysis of net debt is as follows:

Cash in hand and bank
Bank borrowings

Lease liability
Net debt
Deferred consideration

2023

£000

2022

£000

27,275

33,204

2023
£000
8,909
(70,673)
(61,764)
(5,900)
(67,664)
(36,117)
(103,781)

2022
£000
16,390
(50,486)
(34,096)
(3,954)
(38,050)
(12,574)
(50,624)

116

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

32. Analysis of net debt (continued)

Reconciliation of net cashflow to movement in net debt is as follows:

Cash and cash
equivalents

Bank borrowings

Lease

Net debt

Deferred
consideration

At 1 June
2022

New
leases

On
acquisition

Cashflow Fair value

At 31 May
2023

£000

16,390

(50,486)

(3,954)

(3,694)

(38,050)

(3,694)

(7,481)

(20,187)

8,909

(70,673)

2,147

(399)

(5,900)

(25,521)

(399)

(67,664)

(12,574)

(30,781)

6,137

1,101

(36,117)

(50,624)

(3,694)

(30,781)

(19,384)

702

(103,781)

At 1 June
2021

New
leases

On
acquisition

Cashflow Fair value

At 31 May
2022

£000

Cash and cash
equivalents

Bank borrowings

15,826

(34,000)

23,485

(22,921)

(16,486)

Lease

(2,613)

(2,396)

(301)

1,437

Net (debt)/cash

(20,787)

(2,396)

23,184

(37,970)

(81)

16,390

(50,486)

(3,954)

(38,050)

Deferred
consideration

33. Subsequent events

(2,107)

(13,000)

2,362

171

(12,574)

(22,894)

(2,396)

10,184

(35,608)

(50,624)

Post year end, a term loan of £18.0m has been put in place and the Company’s overdraft facility was
extended by a period of 12 months, with repayment and expiry date respectively of 30 September 2024. The
term loan facility attracts an interest rate of 2.75% per annum above Bank of England SONIA (Sterling
overnight index average response rate). The overdraft facility attracts an interest rate of 3.0% per annum
above Bank of England base rate.

117

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

COMPANY BALANCE SHEET
AS AT 31 MAY 2023

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
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

2
3
4
11
6

5
6
15

7
12

10
13

9
10
12
13
13

14
14

2023

£000

2,162
641
132,697
99
5,000
140,599

114,533
32,011
2,470
149,014

2022

£000

2,727
619
132,697
162
5,000
141,205

104,916
31,446
1,073
137,435

289,613

278,640

112,136
6,494

236
886
-
119,752

70,673
1,034
-
2,000
1,191
74,898

106,334
6,119

222
364
343
113,382

50,486
1,262
6,455
2,000
852
61,055

194,650

174,437

94,963

148
78,744
16,071

104,203

148
78,744
25,311

94,963

104,203

As permitted by s408 Companies Act 2006, the Company has not presented its own profit and loss account
and related notes. The Company’s loss for the year was £4,273,216 (2022: profit of £3,014,280).

These financial statements were approved by the Board of Directors on 20 September 2023.
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
121 to 139 form an integral part of these financial statements.

118

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

COMPANY STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 MAY 2023

1 June 2021
Issue of share capital
Total comprehensive income
for the year
Dividends
Share-based payments
31 May 2022
Total
expenditure for the year
Dividends
Share-based payments
31 May 2023

comprehensive

Share
capital
£000

Share
premium
£000

Retained
earnings
£000

128
20

-
-
-
148

-
-

56,761
21,983

-
-
-
78,744

-
-

148

78,744

28,077
-

3,014
(6,334)
554
25,311

(4,273)
(5,568)
601
16,071

Total
£000

84,966
22,003

3,014
(6,334)
554
104,203

(4,273)
(5,568)
601
94,963

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 121 to 139 form an integral part of these financial statements.

119

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

COMPANY STATEMENT OF CASH FLOWS
YEAR TO 31 MAY 2023

Cash flows generated from operations
(Loss)/profit for the year
Adjusted for:
Exceptional items
Taxation (credit)/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
Amortisation and impairment of intangible fixed assets
Share based payments
Non-cash movement
Operating cash flows before movements in working capital

Increase in inventory
Increase in accounts and other receivables
Increase in accounts and other payables

Net cash (used)/generated from operations
Taxation paid
Net cash (outflow)/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
Deferred payment of subsidiary acquisition
Interest received
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
Payment of lease liabilities
Dividends paid
Interest paid
Net cash inflow from financing activities

Note

2
3
14

19
19

Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

2023
£000

(4,273)

8
(237)
4,446
(125)
(181)
(164)
(8)
559
8
601
-
815

(9,617)
(218)
8,095

(925)
(1,900)
(2,825)

(100)
324
(30)
(6,138)
125
-
(5,819)

-
-
20,187
(323)
(5,568)
(4,255)
10,041

1,397
1,073

2,470

Company accounting policies are in line with Group – See Group Note 2.

The accompanying notes on pages 121 to 139 form an integral part of these financial statements.

2022
£000

2,691

564
806
1,719
(125)
5,655
(32)
(564)
783
-
554
100
6,496

(13,610)
(8,086)
52,237

37,037
(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

120

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2023

1. 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

2023
341
170
511

2023
£000
22,312
601
2,434
930
26,277

2022
350
169
519

2022
£000
22,064
555
2,285
862
25,766

The charge to the profit and loss account in respect of defined contribution schemes was £930k (2022:
£862k). Contributions totalling £150k (2022: £152k) were payable to the fund at the year-end and are included
in creditors.

2. Property, plant and equipment

Property, plant and equipment

Right-of-use assets
Total property, plant and equipment

2023

£000

1,041

1,121
2,162

2022

£000

1,380

1,347
2,727

121

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2023

2. Property, plant and equipment (continued)

Land and
buildings
£000

Plant and
machinery
£000

Fixtures,
fittings &
equipment
£000

Cost

At 1 June 2021

Additions

Disposals

At 31 May 2022

Additions

Disposals

At 31 May 2023

Accumulated depreciation

At 1 June 2021

Depreciation charge

Disposals

At 31 May 2022

Depreciation charge

Disposals

At 31 May 2023

Net book value

At 31 May 2023

At 31 May 2022

At 31 May 2021

986
-

(142)

844

121

148

(26)

147

697

838

865

2,221
6

2,227
32

2,259

1,783

335

2,118

106

2,224

109

438

Total
£000

4,997
284

(435)

4,846
100

(155)

1,790
278

(435)

1,633
68

(13)

1,688

4,791

1,450

184

(434)

1,200

185

(6)

3,354

546

(434)

3,466

316

(32)

1,379

3,750

309

433

340

1,041

1,380

1,643

122

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2023

2. Property, plant and equipment (continued)

Right-of-use assets

Cost

At 1 June 2021

Additions

Disposals

At 31 May 2022

Additions

At 31 May 2023

Accumulated depreciation

At 1 June 2021

Depreciation charge

Disposals

At 31 May 2022

Depreciation charge

At 31 May 2023

Net book value

At 31 May 2023

At 31 May 2022

At 31 May 2021

Intangible fixed assets

Cost
1 June 2021
Additions
At 31 May 2022
Additions
At 31 May 2023

Amortisation
At 1 June 2021 and 31 May 2022
Amortisation
At 31 May 2023

Net book value
At 31 May 2023
At 31 May 2022
At31 May 2021

Land and
buildings
£000

Fixtures,
fittings &
equipment
£000

1,644
420

(16)

2,048
-

2,048

482

231

(1)

712

230

942

1,106

1,336

1,162

53
-

(22)

31
17

(1)

Total
£000

1,697
420

(38)

2,079
17

2,096

497

237

(2)

732

243

975

1,121

1,347

1,200

Marketing-related
assets
£000

600
19
619
30
649

-
8
8

641
619
600

123

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2023

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 2023 and the financial budget approved
by the Board covering the period to 31 May 2024, with projected cash flows for the years ending 31 May
2025 to 31 May 2027 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.

4. Fixed asset investments

Cost
Investment in subsidiaries

Provision for impairment
Impairment

Net book value

Movement in fixed asset investments

Cost
At 1 June 2021
Additions
At 31 May 2022 and 31 May 2023

Provisions for impairment

At 1 June 2021
Impairment
At 31 May 2022 and 31 May 2023

Net book value

At 31 May 2023

At 31 May 2022

At 31 May 2021

2023
£000

2022
£000

169,697

(37,000)

132,697

Share in
Group
undertakings
£000

91,467
78,230
169,697

(37,000)
-
(37,000)

132,697

54,467

Total
£000

91,467
78,230
169,697

(37,000)
-
(37,000)

132,697

54,467

Impairment is as a result of a £37,000k dividend from Walker Holdings (Scotland) Limited in the month after
acquisition in January 2019.

124

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2023

4. Fixed asset investments (continued)

Details of the Company’s subsidiaries and jointly owned entities at 31 May 2023 are as follows:

Name of undertaking

Nature of business

Class of shares
held

% Held

Glassgreen Hire Limited

Hire of plant and machinery

Dawn Homes Holdings Limited

Holding Company

Ordinary

Dawn Homes Limited *

Housebuilder/Construction

Ordinary

Dawn Homes (Residential) Limited *

Buying and selling of own real estate

Ordinary

100%

Dawn Homes (Cambuslang) Limited *

Housebuilder/Construction

Ordinary

100%

Walker Group Springfield (Holdings) Limited

Housebuilders/
property development/
management services

Ordinary

100%

Walker Group (Scotland) Limited) *

Housebuilders/Construction

Ordinary

100%

Walker Contracts (Scotland) Limited *

Walker Residential (Scotland) Limited*

Walker Group Developments Limited *

Dormant

Tulloch Homes Holdings Limited

Holding Company

Tulloch Homes Group Limited *

Housebuilder/Construction

Tulloch Homes Express Limited *

Housebuilder/Construction

Tulloch Homes Limited *

Housebuilder/Construction

Tulloch Limited *

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

Timber Kit Manufacturing

Ordinary

Springfield M&M Homes Limited

Housebuilder/Construction

Ordinary

All of the above have a registered office address of:
Alexander Fleming House 8 Southfield Drive Elgin, Morayshire IV30 6GR

100%

125

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2023

Inventories

Work in progress

6. Trade and other receivables

Amounts falling due within one year

Trade receivables
Other receivables
Contract assets
Amounts due from Group undertakings
Prepayments and accrued income

2023
£000
114,533
114,533

2022
£000
104,916
104,916

2023
£000
8,152
6,477
4,383
12,717
282
32,011

2022
£000
8,992
5,423
4,497
12,031
503
31,446

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 2023 is represented by the carrying amount of each financial
asset.

Amounts falling due after one year

Other receivables

7. Trade and other payables

Trade creditors
Other taxation and social security
Other creditors
Amounts due to Group undertakings
Contract liabilities
Accruals and deferred income

2023
£000
5,000
5,000

2023
£000
18,768
749
153
78,894
2,860
10,712
112,136

The Directors consider the carrying amount of the accounts payable approximates to its fair value.

2022
£000
5,000
5,000

2022
£000
20,578
940
163
66,676
8,117
9,860
106,334

126

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2023

8. Financial assets and liabilities

Assets

Financial assets at amortised cost
Total

Liabilities

Measured at amortised cost
Total

2023
£000
31,822
31,822

2023
£000
185,888
185,888

2022
£000
30,975
30,975

2022
£000
159,671
159,671

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.

9. Bank borrowings

Secured borrowings:
Bank loans
Payable after one year

2023
£000

70,673
70,673

2022
£000

50,486
50,486

The bank loan comprises of a revolving credit facility of £87.5m with an expiry date of January 2025. The
facility attracts an interest rate of 2.15% per annum above Bank of England SONIA (Sterling overnight index
average response rate) and is secured over certain of the Company’s properties with a 31 May 2023 work-
in-progress value of £34.0m.

At 31 May 2023, the Group had available £16.5m (2022: £36.5k) of undrawn committed borrowing facilities.

127

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2023

10. 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

11. Deferred taxation

¤
2023
£000
312
867
377
1,556

2022
£000
311
1,008
542
1,861

(286)
1,270

(377)
1,484

236
690
344
1,270

222
784
478
1,484

2021

£000

(94)

(365)
(459)

Profit &
loss
account
£000

291
297

2022

£000

(88)

(74)
(162)

Profit &
loss
account
£000

56
63

2023
£000
99
99

2023

£000

(81)

(18)
(99)

2022
£000
162
162

Fixed assets –
differences
Other
differences

–

temporary

Deferred tax assets

12. Deferred consideration

Deferred consideration < 1 year
Deferred consideration > 1 year

2023
£000
6,494
-
6,494

2022
£000
6,119
6,455
12,574

128

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2023

13. (a) Contingent consideration

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) the Company makes a planning application when it reasonably believes 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 (2022:
£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

13. (b) Provisions

2023
£000
2,000
2,000

2022
£000
2,000
2,000

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
Provisions for onerous contracts
Maintenance provision

The movement in the provision accounts are as follows:

Dilapidation

£000

125

Onerous
contracts

£000

353

Balance as at 1 June 2022

Additional provision

Amount utilised

Profit and Loss

Balance as at 31 May 2023

Provisions < 1 year
Provisions > 1 year

2023
£000
125
353
1,599
2,077

Maintenance

£000

1,091

993

(510)

2022
£000
125
-
1,091
1,216

Total

£000

1,216

993

(510)

378

1,599

2,077

2023
£000
886
1,191
2,077

2022
£000
364
852
1,216

129

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2023

14. 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

Number of
shares

Share capital
£000

Share premium
£000

At 1 June 2022
Share issue
At 31 May 2023

118,469,399
26,602
118,496,001

148
-
148

78,744
-
78,744

During the year, 26,602 shares (2022: 677,587) were issued in satisfaction of share options exercised for a
consideration of £33.

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.

130

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2023

14. 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

2023

Weighted
average
exercise price
(pence)

Number
of shares

2022

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

627,558
(21,145)
-
606,413

115.33
116.71
-
115.28

801,745
(17,741)
(156,446)
627,558

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

Grant Price
(p)

106.00
111.00
134.00
134.00
122.50
108.50

Number of
shares at year
end
307,821
27,027
22,388
110,008
102,678
36,491

Exercise price
(p)

106.00
111.00
134.00
134.00
122.50
108.50

114.89
108.50
113.84
115.33

Vesting
period
(years)
3
3
3
3
3
3

ESOP

Options at the beginning of the
year
Lapsed during the year
Exercised during the year
Options at the year end

Number
of shares

1,746,570
(18,981)
-
1,727,589

2023

Weighted
average
exercise price
(pence)

Number
of shares

2022

Weighted
average
exercise price
(pence)

118.84
122.50
-
118.80

2,024,836
(187)
(278,079)
1,746,570

119.38
122.50
119.31
118.84

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
1,197,269

Exercise price
(p)

106.00
134.00
134.00
122.50

Vesting
period
(years)
5
5
5
5

131

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2023

14. Share capital (continued)

SAYE

2023

Number
of shares

Weighted
average
exercise price
(pence)

2022

Number of
shares

Options at the beginning of
the year
Lapsed during the year
Exercised during the year
Options at the year end

1,837,747
(752,775)
-
1,084,972

130.50
130.50
-
130.50

2,192,995
(112,186)
(243,062)
1,837,747

Share option

Grant Price
(p)

SAYE – 29th April 2021

145.00

Number of
shares at year
end
1,084,972

Exercise price
(p)

130.50

Weighted
average
exercise
price
(pence)

128.45
130.50
86.79
130.50

Vesting
period
(years)
3

PSP

2023

2022

Number
of shares

Weighted
average
exercise price
(pence)

Number
of shares

Weighted
average
exercise price
(pence)

Options at the beginning of
the year
Granted during the year
Lapsed during the year
Exercised during the year
Options at the year end

Share option

PSP – 9th January 2020
PSP – 30th October 2020
PSP – 21st December 2021
PSP – 28th March 2023

2,368,181
776,800
(265,105)
(26,602)
2,853,274

Grant Price
(p)

0.13
0.13
0.13
0.13

0.13
0.13
0.13
0.13
0.13

1,006,633
1,396,481
(34,933)
-
2,368,181

Number of
shares at year
end
56,929
623,064
1,396,481
776,800

Exercise price
(p)

0.13
0.13
0.13
0.13

0.13
0.13
0.13
-
0.13

Vesting
Period
(years)
3
3
3
3

132

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2023

14. Share capital (continued)

Share based payments (continued)

Inputs used to determine fair value of options

Expected volatility
Risk free interest rate
Expected dividends
Fair value of options
Charge per option

CSOP

ESOP

29.00%
0.49%
-
34.00p
32.00p

29.00%
0.49%
-
39.00p
37.00p

SAYE

29.00%
0.49%
-
37.00p
35.00p

PSP

28.56%
-0.10%
5.00%
131.13p
131.13p

Expected volatility was calculated using historical share price information of the house-building sector for the
CSOP, ESOP and SAYE and the 12 month average Springfield share price prior to the grant of the PSP
options.

CSOP – nil (2022 – 156,446) of options were exercised during the year and 606,413 (2022: 582,323) shares
were exercisable.

ESOP – nil (2022 – 278,079) of options were exercised during the year and 1,727,589 (2022: 1,746,570)
shares were exercisable.

SAYE – nil (2022 – 243,062) of options were exercised during the year and nil (2022: nil) shares were
exercisable.

PSP – 26,602 (2022 – nil) of options were exercised during the year and 56,929 (2022: nil) shares were
exercisable.

Charge for share based incentive schemes

The total charge for the year relating to employee share-based plans were £601k (2022: £554k), all of which
related to equity-settled share-based payment transactions.

15. 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

2023
£000
2,470
2,470

2022
£000
1,073
1,073

At 31 May 2023, the Group had an available overdraft facility of £12.5m (2022: £2.5m).

133

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2023

16. 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.

17. 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.

17.1 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

2023
£000
7,764
70,673
107,451
185,888

2022
£000
14,058
50,486
95,127
159,671

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 SONIA rate
31 May 2023

Bank of England SONIA rate
31 May 2022

Interest rate
+0.5%
£000
(353)

Interest rate
-0.5%
£000
353

Interest rate
+0.5%
£000
(252)

Interest rate
-0.5%
£000
252

(Loss) / profit

134

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2023

17. Financial risk management (continued)

17.1 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.

17.2 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 2023

Accounts
payable
Bank
borrowings
Deferred
consideration
Leases

Carrying
amount
£000

Total
minimum
future
payment
£000

Within 1
year
£000

Within 1-2
years
£000

Within 2-
5 years
£000

Greater
than 5
years
£000

107,451

70,673

71,000

6,494
1,270
185,888

6,500
1,556
186,507

6,500
312
114,263

-
267
71,267

-
600
600

-
377
377

135

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2023

17. Financial risk management (continued)

17.2 Liquidity risk (continued)

31 May 2022

Accounts
payable
Bank
borrowings
Deferred
consideration

Leases

17.3 Credit risk

Carrying
amount
£000

Total minimum
future payment Within 1 year
£000

£000

Within 1-2
years
£000

Within 2-5
years
£000

95,127

50,486

12,574

1,484
159,671

95,127

51,000

12,638

51,000

6,138

6,500

1,861
160,626

311
101,576

289
57,789

719
719

542
542

Greater
than 5
years
£000

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 2023

31 May 2022

Total book
value
£000
7,920
232
8,152

Allowance for
impairment
£000
-
-
-

Total book
value
£000
8,858
134
8,992

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 2023

31 May 2022

Total book
value
£000
6,477
5,000
11,477

Allowance for
impairment
£000
-
-
-

Total book
value
£000
5,423
5,000
10,423

Allowance for
impairment
£000
-
-
-

During the year the Company had no allowance for impairment for other receivables.

136

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2023

18. Transactions with related parties

Name of Director

Mr Sandy Adam
Mr Innes Smith
Ms Michelle Motion
Mr Matthew Benson
Mr Roger Eddie
Mr Colin Rae
Mr Nick Cooper

2023
£000

1,776
43
5
1
2
1
1
1,829

2022
£000

2,249
55
6
2
3
1
1
2,317

Short-term employee benefits
Share-based payments
Post-employment benefits

2023
£000

2,696
555
208
3,459

2022
£000

3,537
404
169
4,110

During the year the Company entered into the following transactions with related parties:

Bertha Park Limited (1)
Other entities that key management personnel
have control, significant influence or hold a
material interest in
Key management personnel
Other related parties

Sale of goods

2023
£000
13,390

37
227
1
13,655

2022
£000
18,226

74
154
20
18,474

Purchase of goods
2022
£000
371

2023
£000
-

325
-
1,616
1,941

45
11
332
759

Sales to related parties represent those undertaken in the ordinary course of business.

Entities that key management personnel have
control, significant influence or hold a material
interest in
Key management personnel
Other related parties

Rent paid

2023
£000

162
3
100
265

2022
£000

170
-
107
277

137

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

18. Transactions with related parties (continued)

Interest received:
Entities that 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 that key management personnel have control, significant influence
or hold a material interest in (short-term)
Key management personnel

Amounts payable:

Amounts due from Group undertakings
Entities that key management personnel have control, significant influence or
hold a material interest in (short-term)
Other related parties

2023
£000

2022
£000

125
125

2023
£000

15,876
8,495

1
-
24,372

2023
£000

82,054
32

678
82,764

125
125

2022
£000

12,031
9,108

52
34
21,225

2022
£000

66,676
-

52
66,728

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 £13,390k (2022:
£18,226k) in relation to a build contract. At the year-end £3,370k (2022: £3,983k) is included in trade debtors and included within other debtors is a loan of £5,125k (2022:
£5,125k). During the year the Group had purchases from Bertha Park Limited of £nil (2022: £371k) in relation to a build contract.

Other related party transactions

During the year there were transactions between the Company and its subsidiaries as follows:

Balance at 1 June 2022
Charges to/(from) subsidiary companies
Transfers of cash from subsidiary companies
Balance at 31 May 2023

2023
£000

(54,645)
1,064
(12,596)
(66,177)

2022
£000

(20,960)
(4,239)
(29,446)
(54,645)

During the period the company made purchases from related parties of £5,900k (2022: £5,743k) and sales
to related parties of £3,331k (2022: £1,198k). Management charges of £3,653k (2022: £nil) were charged to
subsidiary companies during the year.

£10,000k (2022: £nil) was transferred to Springfield M&M Homes Limited (subsidiary company) to fund the
initial cash consideration for the acquisition of the housebuilding business of Mactaggart & Mickel Group
Limited – see group note 15.

138

SPRINGFIELD PROPERTIES PLC

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR TO 31 MAY 2023

19. Analysis of net debt

The analysis of net debt is as follows:

Cash in hand and bank
Bank borrowings

Lease liability
Net debt

2023
£000

2,470
(70,673)
(68,203)
(1,270)
(69,473)

2022
£000

1,073
(50,486)
(49,413)
(1,484)
(50,897)

Reconciliation of net cashflow to movement in net debt is as follows:

Cash and cash
equivalents

Bank borrowings

Lease

Net debt

Deferred consideration

At 1 June

2022 New Leases

Cashflow

Fair Value

At 31 May
2023

£000

1,073

(50,486)

(1,484)

(50,897)

(12,574)

(63,471)

(17)

1,397

(20,187)

323

(18,467)

6,137

(92)

(57)

2,470

(70,673)

(1,270)

(69,473)

(6,494)

(17)

(12,330)

(149)

(75,967)

Cash and cash
equivalents

Bank borrowings

Lease

Net debt

Deferred
consideration

At 1 June
2021

New
Leases

On
Acquisition

Cashflow Fair Value

At 31 May
2022

£000

4,615

(34,000)

(1,315)

(30,700)

(420)

(3,542)

(16,486)

1,073

(50,486)

318

(67)

(1,484)

(19,710)

(67)

(50,897)

(2,107)

(13,000)

2,362

(32,807)

(420)

(13,000)

(17,348)

171

104

(12,574)

(63,471)

139