REG - Springfield Props. - Final Results and Publication of Annual Report
17/09/2024 07:00
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RNS Number : 4141E Springfield Properties PLC 17 September 2024
17 September 2024
Springfield Properties plc
("Springfield", the "Company", the "Group" or the "Springfield Group")
Final Results and Publication of Annual Report
Springfield Properties (AIM: SPR), a leading housebuilder in Scotland focused
on delivering private and affordable housing, announces its final results for
the year ended 31 May 2024.
Financial Summary
2024 2023 Change
£m £m
Revenue 266.5 332.1 (19.8)%
Private housing revenue 184.7 253.4 (27.1)%
Affordable housing revenue 47.0 53.9 (12.9)%
Contract housing revenue 5.0 19.7 (74.6)%
Land sales 28.1 3.7 663.2%
Other revenue 1.8 1.5 19.3%
Gross margin 16.3% 14.4% 190bps
Administrative expenses* 26.5 28.0 (5.3)%
Operating profit 17.0 20.0 (14.8)%
Adj. operating profit* 17.9 20.7 (13.4)%
Profit before tax 9.7 15.3 (36.7)%
Adj. profit before tax* 10.6 16.0 (33.8)%
Basic EPS (p) 6.36 10.19 (37.6)%
Adj. basic EPS* (p) 7.05 10.74 (34.4)%
Net bank debt 39.9 61.8 (35.4)%
Total dividend per share (p) 1.0 - -
* Adjusted to exclude exceptional costs of £0.9m (2023: £0.7m) (See the
Financial Review for further detail)
Highlights
· Adjusted profit before tax* of £10.6m (2023: £16.0m), ahead of
management's original expectations due to strong profits on land sales
· Delivered key objective of significantly reducing net bank debt,
exceeding target of £55.0m with net bank debt of £39.9m (31 May 2023:
£61.8m):
o Decisive action taken to reduce costs and manage working capital across
the business
o Profitable land sales of £28.1m
· Total completions of 878 (2023: 1,301), in line with market
expectations, reflecting challenging market conditions in the housing industry
· Private housing revenue of £184.7m (2023: £253.4m) as demand in the
year was impacted by high interest rates, mortgage affordability, the
cost-of-living crisis and reduced homebuyer confidence
o Since year end, the Group is experiencing initial signs of recovery, with
reservation rates ahead of the same period last year
· Affordable housing revenue of £47.0m (2023: £53.9m) reflecting the
Group's decision in the prior year to pause entering into new affordable-only
fixed price contracts
o During the year, the Group recommenced actively engaging with affordable
housing providers following the introduction of the new Scottish Government
benchmark - with contracts worth over £50m signed in the year for delivery
during FY 2024 and beyond
· Total owned land bank of 5,593 plots, 88% with planning permission,
secured at an attractive cost per plot, and a strategic land bank of a further
3,147 acres, equating to 31,471 plots
o One of the largest land banks in Scotland, including significant holdings
in the North of the country where the Group will benefit from the expected
sharp increase in demand for housing to support the delivery of the
Inverness and Cromarty Firth Green Freeport and substantial upgrades to the
power network
· Strategic collaboration agreement signed with Barratt Developments
for the Group's Durieshill site to create a new village, spanning almost 600
acres, near Stirling:
o Completed a land sale to Barratt during the year for 34 acres of land at
the site for £10m, realising value from the Group's substantial and
high-quality land holding
o Separately, over the coming years, Barratt will receive land at the site
in exchange for providing and funding the major infrastructure development for
the entire site - accelerating site development while eliminating the Group's
need to tie up capital over a multi-year period
· Long-term fundamentals of the Scottish housing market remain strong
with the undersupply of housing across all tenures becoming more acute and
greater private housing affordability than the UK as a whole
· Resumption of dividend - declaring a total dividend for the year of
1p per share (2023: nil)
Current Trading and Outlook for FY 2025
· Entered the new financial year in a better position than the same
point of the previous year - with a stronger balance sheet, improving private
market backdrop and larger contracted order book in affordable housing
· Recovery being experienced in private housing - reservation rate for
1 June 2024 to date ahead of same period last year
· Substantial proportion of forecast FY 2025 revenue for affordable
housing is already contracted with the balance under negotiation - strong
year-on-year revenue growth and significant improvement in gross margin
expected
· On track to report results for FY 2025 in line with market
expectations, with total revenue remaining level and profitability growing
over FY 2024
Innes Smith, Chief Executive Officer of Springfield Properties, said:
"Against a challenging market backdrop, we successfully delivered our
objectives for the year. A key priority was reducing our debt, and we're very
pleased that we have exceeded our target. This was achieved through taking
decisive action to reduce costs, manage working capital and secure profitable
land sales of sites that do not impact on our near-term development pipeline.
We are now in a strong position to deliver future growth as more favourable
economic and trading conditions return.
"We are also encouraged by early indications for an improving backdrop. Many
of the key elements that underpin homebuyer confidence are strengthening,
including decreasing inflation and the first Bank of England interest rate
reduction in over four years. While it remains early days, we are pleased we
have started to see an improvement in private housing demand since year end -
with reservation rates being ahead of the same time last year. Similarly,
having actively recommenced signing affordable contracts, contracted order
book in affordable housing at year end was also ahead of where it was at the
same point in the previous year.
"We continue to have one of the largest owned land banks in Scotland, with a
high proportion of sites having planning already in place. We are particularly
excited about the forthcoming investment in Scotland with the creation of the
Inverness and Cromarty Firth Green Freeport and the development of Scottish
& Southern Energy Networks' new powerlines to provide the UK with
renewable energy, which will require the building of thousands of new homes.
We have worked across the North of Scotland for decades and are passionate
about growth and development for the region. With significant land holdings in
Moray and the Highlands, we are uniquely placed to help deliver this
opportunity as the housing market recovers.
"As a result, we look to the future with increasing confidence and,
accordingly, we are pleased to be able to return to making dividend payments
earlier than initially anticipated. We thank our shareholders for their
continued support and look forward to updating them on our progress."
Enquiries
Springfield Properties
Sandy Adam, Chairman +44 1343 552550
Innes Smith, Chief Executive Officer
Iain Logan, Chief Financial Officer
Singer Capital Markets
Shaun Dobson, James Moat, Oliver Platts (Investment Banking) +44 20 7496 3000
Gracechurch Group
Harry Chathli, Claire Norbury, Henry Gamble +44 20 4582 3500
Analyst Research
Equity Development and Progressive Equity produce freely available research on
Springfield Properties plc, including financial forecasts. This is available
to view and download here:
https://www.thespringfieldgroup.co.uk/news/updates-and-analyst-reports
(https://www.thespringfieldgroup.co.uk/news/updates-and-analyst-reports)
Results Investor Webinar
Sandy Adam, Chairman, Innes Smith, Chief Executive Officer, and Iain Logan,
Chief Financial Officer, will be presenting to shareholders via a webinar
hosted by Equity Development at 9.00am BST on Wednesday 18 September 2024.
Investors can register their attendance for the webinar: here
(https://www.equitydevelopment.co.uk/news-and-events/spr-investor-presentation-18sept2024)
.
Operational Review
In line with market expectations, the Group completed 878 homes in the year
to 31 May 2024 (2023: 1,301), reflecting the challenging market backdrop with
subdued homebuyer confidence and reduced affordable housing activity
reflecting the Group's decision in FY 2023 to pause entering new
affordable-only contracts until the economics became more attractive. The
Group acted decisively in response to these conditions and adopted a strategy
focusing on lowering its debt by reducing costs, managing working capital and
pursuing profitable land sales to accelerate cash realisation from its large
land bank. The Group delivered on its objective - with the actions taken
enabling a significant reduction in net bank debt to £39.9m as at 31 May
2024 (31 May 2023: £61.8m), well ahead of the original £55m target.
As a result of the decisive actions taken during the year, and with continued
careful cost control, the Group is in a stronger position to deliver future
growth as more favourable economic and trading conditions return.
Land Bank
As noted, a key element of the Group's strategy to reduce net bank debt was
the active pursuit of profitable land sales. During the year, the Group
completed land sales of £28.1m, generating profit of £6.2m. These sites
were not part of the Group's near-term development pipeline and therefore
increase monetisation of the Group's land bank. The Group also significantly
reduced land buying activity. Springfield's high-quality land bank has mostly
been secured off market without planning, resulting in a very low average cost
per plot that enables the Group to maximise the long-term value of its sites.
The Group continues to have one of the largest land banks in Scotland, in key
locations across the country. This includes across the North of Scotland where
the Group is set to benefit from the expected sharp increase in housing demand
to support the delivery of renewable infrastructure projects.
The Inverness and Cromarty Firth Green Freeport is expected to create more
than 10,000 new jobs in the area and receive over £3bn of new investment. In
addition, Scottish & Southern Energy Networks ("SSEN") has made a
commitment to contribute to the development of thousands of homes across the
North of Scotland to support the building of its new powerline. With
significant land holdings in this region, the Group is uniquely placed to help
deliver this opportunity and build the new homes required.
At 31 May 2024, the Group had 5,593 owned plots (31 May 2023: 6,712), of which
88% had planning permission (31 May 2023: 83%), equating to six years of
activity. In addition, the Group's strategic land bank consisted of 3,147
acres (31 May 2023: 3,255 acres), equating to 31,471 plots, providing over 30
years of activity. Within the strategic land bank, the Group had options over
24,605 plots and 6,866 plots were contracted, of which 57% already have
planning.
The gross development value of the owned land bank at 31 May 2024 was £1.5bn
(31 May 2023: £1.8bn).
At year end, the Group was active on 42 developments (31 May 2023: 50) and
during the year 25 developments were completed and 17 new developments became
active.
Private Housing
The number of private home completions was 584 for the year (2023: 866),
reflecting the impact of market conditions. In line with industry trends,
reduced homebuyer confidence resulted in the Group entering the financial year
with a lower forward orderbook than at the same point of the prior year, with
demand remaining subdued through the first half. The Group experienced some
recovery in private housing demand from January 2024, and continued to
experience a steady level of reservations through to year end. While it
remains early days, the Group has also experienced an improvement in private
housing since year end. In particular, there was a significant increase in
reservation rates during the traditionally quieter school summer holiday
period compared with the same period last year.
In response to the challenging market backdrop, and as previously stated, in
September 2023 the Group decided to significantly curtail its speculative
development activities and only build homes when a reservation was secured.
This was largely maintained through the end of the financial year when the
Group began to undertake soft launches to test the market ahead of building.
The average selling price ("ASP") for private housing during the year
increased to £316k (2023: £293k), reflecting changes in the housing mix and
with selling prices being upheld across the Group's brands.
As at 31 May 2024, the Group was active on 29 private housing developments (31
May 2023: 32), with 7 active developments added during the year and 10
developments completed. In total, as at 31 May 2024, the owned private housing
land bank consisted of 3,837 plots (31 May 2023: 5,075 plots), of which 87%
had planning permission (31 May 2023: 86%).
Village Developments
Springfield Villages are large, standalone developments that include up to
3,000 homes across tenures, infrastructure and neighbourhood amenities, and
with ample greenspace. At Bertha Park and Elgin South, new phases of homes
were released for sale during the year. 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.
A key milestone was the signing of a strategic collaboration agreement with
Barratt Developments for the development of the Group's Durieshill site, to
create a new village, spanning almost 600 acres, near Stirling. The
development has the planning in place - with the section 75 agreement being
received in the year - for 3,000 private and affordable homes alongside new
schools, local shops and other business opportunities, community woodlands and
greenspace. The Group completed a land sale to Barratt during the year for an
initial 34 acres of land at the site for £10m, realising value from the
Group's substantial and high-quality land holding. Separately, over the coming
years, Barratt will receive land at the site in exchange for providing and
funding the major infrastructure development for the entire site. This
agreement will accelerate the development of the site while eliminating the
Group's need to tie up capital over a multi-year period.
Affordable Housing
During the year, the Group recommenced actively engaging with affordable
housing providers. This followed the Scottish Government increasing the
affordable housing investment benchmarks and a reduction in levels of cost
price inflation of both labour and materials, which enabled housing
associations to increase the price of affordable housing contracts. Affordable
housing offers high revenue visibility with low capital exposure and strong
cash flow dynamics. The Group received encouraging demand during the year,
signing affordable housing contracts totalling over £50m for delivery
during FY 2024 and beyond. The Group is focusing on securing shorter-term
contracts, typically for 12-18 months, which provides a greater degree of cost
certainty than with large, multi-year contracts.
The Group completed 270 affordable homes during the year (2023: 328). This
reduction reflects the decision in the previous year to pause entering new
affordable-only contracts until the economics became more attractive in the
inflationary environment. Average selling price was £174k (2023: £164k)
with new contracts reflecting the uplift in the Scottish Government grant
available per home. The number of active affordable housing developments was
10 at 31 May 2024 (31 May 2023: 15), with 10 active developments added during
the year and 15 developments completed. This included completing two large,
legacy contracts that had been impacting margin due to the high cost price
inflation that had occurred since the contracts were signed.
As at 31 May 2024, the total owned affordable housing land bank consisted of
1,756 plots (31 May 2023: 1,637), of which 89% had planning permission (31 May
2023: 79%).
Contract Housing
In contract housing, the Group provides development services to third party
private organisations and receives revenue based on costs incurred plus fixed
mark up. To date, this has largely consisted of services provided to Bertha
Park Limited.
At 31 May 2024, the contract housing land bank with planning consent consisted
of 579 plots (31 May 2023: 603). The 24 homes completed during the year (2023:
107) comprised 10 private homes, 13 affordable homes and one private rented
sector ("PRS") home at Bertha Park. The reduction reflects no new phases of
private housing being released until the end of the year and the contribution
to 2023 of delivery under the Group's PRS contract. As previously noted, the
Group's strategy to expand PRS activity was put on hold following the
introduction of rent control by the Scottish Government in FY 2023. While the
national rent cap has since been lifted, the publication of a Housing Bill
proposing the potential for local rent setting has meant that PRS investors
are not committing to projects in Scotland.
Financial Review
Revenue 2024 2023 Change
£'000 £'000
Private housing 184,734 253,362 (27.1)%
Affordable housing 46,975 53,931 (12.9)%
Contract housing 4,995 19,681 (74.6)%
Land sales 28,055 3,676 663.2%
Other 1,768 1,482 19.3%
TOTAL 266,527 332,132 (19.8)%
For the year ended 31 May 2024, revenue was £266.5m (2023: £332.1m). Private
housing remained the largest contributor to Group revenue, accounting for
69.3% of total sales (2023: 76.3%), with revenue of £184.7m (2023: £253.4m).
The reduction was primarily due to the reduced homebuyer confidence that was
experienced across the industry resulting in the Group entering the financial
year with a lower orderbook than in the previous year. Affordable housing
revenue was £47.0m (2023: £53.9m), accounting for 17.6% of total sales
(2023: 16.2%), with the lower revenue reflecting the decision in the previous
year to pause entering new affordable-only contracts until the economics
became more attractive in the inflationary environment. In contract housing,
which accounted for 1.9% of total sales (2023: 5.9%), revenue was lower as no
new phases of private housing were released at Bertha Park until the end of
the year and because of the contribution to 2023 from revenue generated
through delivery under the Group's PRS contract.
As previously noted, a key part of the Group's strategy during the year was to
reduce the debt position through profitable sales of land at sites that do not
impact the Group's near-term development pipeline. Accordingly, there was a
substantial increase in revenue generated from land sales to £28.1m (2023:
£3.7m), which generated a profit of £6.2m.
Gross profit for the year was £43.4m (2023: £48.0m) due to the lower
revenue. Gross
margin for the Group was 16.3% (2023: 14.4%), which primarily reflects the
contribution from profitable land sales. Gross margin in private housing was
broadly maintained while there was an improvement in affordable housing gross
margin reflecting the lesser impact of the legacy contracts that had impacted
the prior year.
Administrative expenses, excluding exceptional items, were £26.5m (2023:
£28.0m), reflecting the sustained focus on generating cost savings and
rationalisation across the Group.
Finance costs were £7.5m (2023: £4.8m), which represents higher bank
interest payments due to the increase in interest rates and the increase in
average bank debt over the period to fund the final deferred payment for the
acquisition of Tulloch Homes as well as the first deferred payments for the
Mactaggart & Mickel Homes acquisition.
Exceptional items were £0.9m (2023: £0.7m), which mainly relates to
restructuring costs involved with reducing the ongoing cost base of the Group.
Operating profit was £17.0m (2023: £20.0m). Excluding exceptional items,
operating profit was £17.9m (2023: £20.7m). Statutory profit before tax was
£9.7m (2023: £15.3m) and adjusted profit before tax and exceptional items
was £10.6m (2023: £16.0m).
Basic earnings per share (excluding exceptional items) were 7.05 pence (2023:
10.74 pence). Statutory basic earnings per share were 6.36 pence (2023: 10.19
pence). Return on capital employed was 8% (2023: 8.8%), which primarily
reflects the lower profit.
Net bank debt at 31 May 2024 was significantly reduced to £39.9m (31 May
2023: £61.8m), reflecting the sustained focus on reducing the debt position
as described above. Net bank debt to EBITDA ratio was 2.0 (2023: 2.8).
A term loan of £18.0m that had a repayment date in September 2024 was paid
in full in May 2024. The Group's revolving credit facility of £87.5m that was
initially due to expire in January 2025 has, post year end, been extended for
a further 12 months to January 2026 and a £7.5m overdraft facility has also
been put in place for 12 months until September 2025.
Customer Satisfaction
The Group achieved 96% (2023: 94%) customer satisfaction, striving towards its
aspirational target of 100%. Springfield is proud to offer customers a high
level of specification as standard, significant choice and excellent customer
service through all stages of the house buying journey. During the year, the
Group was also successfully re-certified for ISO 9001 (Quality Management).
With a years' experience delivering homes under the New Homes Quality Board
Code of Practice, the new processes introduced have created value,
particularly in managing final touches with homes now completed at least two
weeks prior to customers moving in.
Build Quality and Efficiencies
Following a review of the house types offered across its brands, the Group
streamlined its portfolio down to the most popular homes that are most
efficient to build and capable of accommodating future building standards to
maximise energy efficiency. The entire new range can be built efficiently from
timber kits and maximises the use of modern methods of construction on site.
The greater build efficiency will mitigate the cost increases associated with
new regulation. For all new planning applications, homes for each brand are
now selected from a portfolio of 40 house types ranging from 700sq.ft to
2,500sq.ft offering two bed to five bed homes. Architecturally, the new
portfolio has protected the quality, space and character in house design. This
includes a mix of elevations for the interesting streetscapes that Springfield
is renowned for. The consistent build approaches will enable the Group to
increase the quality of its housing delivery.
Environment and People - ESG
The Group builds highly energy efficient homes within communities designed for
residents to live sustainably. The Group utilises modern methods of
construction to build the timber kits for its homes off-site in two regional
factories. Springfield has led the way in the delivery of developments
utilising air source technology and, during the year, almost half of the homes
delivered were without gas.
A number of strategic projects were progressed during the year that are
designed to add meaningful value to the Group's people - employees, customers
and the communities in which the Group builds - and the environment, with
changes to the Group's operations reducing carbon, preventing waste or
protecting habitats. This has been captured in the Group's annual ESG Strategy
Update, which has been published on the Springfield Group website.
Springfield's industry-leading levels of investment in training and
development also continued during the year, with 22% of the Group's site
workers undertaking apprenticeships and 6% of office employees working towards
formal learning & development qualifications.
Markets
The requirement for new housing in Scotland is at an all-time high and drops
in housing supply across the industry further compound housing needs. The
Scottish Government declared a national housing emergency in May 2024. This
has created impetus for the Government to address barriers to new housing
delivery, including a review of PRS rent regulation. The scale of unmet demand
continues to underpin the fundamentals of the Group's business, allowing a
return to growth as confidence in the private housing market increases.
In private housing, while the subdued market has resulted in lower
completions, aspirations for the type of homes that the Group offers remain
high. Across each of Springfield's brands, the Group builds quality, spacious,
energy efficient homes in highly desirable areas with generous private gardens
and plenty of surrounding greenspace. Mortgage lenders are keen to lend to
buyers of energy efficient new build homes. The Bank of England reduced its
base rate in August and with further stability, homebuyers' confidence is
expected to increase. There continues to be greater affordability in Scotland
compared with the UK as a whole. The Scottish missive system continues to give
the Group confidence in its sales, with the Group's customers contracted into
the purchase earlier in the build programme than in other parts of the UK.
The Group is particularly excited by the opportunities offered by the incoming
investment in UK Government-financed green infrastructure development in
Scotland and the action being taken to ensure there is sufficient housing in
key regions to attract the thousands of new workers that are required. This
includes the Inverness and Cromarty Firth Green Freeport where a pipeline of
renewable energy projects is placing the Highlands and Moray at the heart of
the drive towards net-zero, creating 10,000 jobs locally and expected new
investment of over £3bn. Investment is already being made into ports across
the region and new housing will be an essential part of the supporting
infrastructure. In addition, from 2026, SSEN is significantly upgrading the
Scottish national power network with the creation of a new powerline. It is
estimated that up to 6,000 workers will be required over the initial five-year
build programme and SSEN has made a commitment to contribute to the
development of thousands of homes across the North of Scotland. The Group is
already exploring with key stakeholders how this demand can be met while
satisfying SSEN's desire to leave a lasting legacy for the local communities.
With land holdings across the North of Scotland, the Group is extremely
well-placed to assist and help realise the potential for economic stimulus to
these regions.
With housing receiving political focus across the UK, there has been an
increased urgency in response from public and private sectors and an appetite
for collaboration to provide more homes across tenures and meet the Scottish
Government's long-standing commitment to deliver 110,000 affordable homes by
2032. As a member of the Scottish Government's Housing Investment Task Force
established in April 2024, the Group is working closely with the Housing
Minister and key stakeholders from housing and finance to identify ways of
attracting additional investment into housing, including the unlocking of PRS
investment in Scotland.
Dividend
The Board is pleased to recommend a dividend for the year of 1p per ordinary
share (2023: nil), subject to shareholder approval at the next annual general
meeting, with an ex-dividend date of 7 November 2024, a record date of 8
November 2024 and a payment date of 12 December 2024.
Outlook
The Group entered the new financial year in a better position than at the same
point in the previous year - with a stronger balance sheet, an improving
private market backdrop and a larger contracted order book in affordable
housing. Since year end, the Group has experienced an increase in private
housing reservation rate, with the reservation rate from 1 June 2024 to date
being ahead of the same period last year.
With the sustained improvement in market conditions and homebuyer confidence,
as described above, the Group is on track to deliver revenue for private
housing for FY 2025 in line with market expectations. In affordable housing, a
significant proportion of the Group's forecast revenue for FY 2025 is already
contracted and the balance is under negotiation. Accordingly, the Board
continues to expect to achieve strong year-on-year growth in affordable
housing revenue as well as a significant improvement in affordable housing
gross margin. In addition, build cost inflation is expected to be broadly flat
for FY 2025. As a result, the Group is on track to report results for the year
to 31 May 2025 in line with market expectations, with total revenue remaining
level with FY 2024 and growth in profitability.
Looking further ahead, the fundamentals of the business and of the housing
market in Scotland remain strong. The undersupply of housing, which is across
all tenures, is intensifying. The Group offers high quality, energy efficient
homes in popular locations across the country under multiple well established,
reputable brands. It has one of the largest owned land banks in Scotland, 88%
of which has planning permission. This includes significant land holdings in
the North of Scotland, a region that will require thousands of new homes in
the coming years to support the planned development of green infrastructure.
In addition, management is hopeful of a change in the policy environment
regarding rent cap barriers, which would encourage PRS providers to resume
activity in Scotland. The Group is well positioned to benefit from any return
of PRS housing development, which would represent an upside to forecasts,
having successfully delivered the first houses built specifically for private
rent in Scotland.
Accordingly, the Board remains confident in the Group's prospects and in its
ability to generate shareholder value.
Publication of Annual Report
The Company's annual report and accounts for the year ended 31 May 2024 are
being sent to shareholders today and have been made available on the
'Financial Results and Reports' page of the Company's website:
www.thespringfieldgroup.co.uk (http://www.thespringfieldgroup.co.uk)
COnsolidated PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 May 2024
2024 2023
Note £000 £000
Revenue 3 266,527 332,132
Cost of sales (223,155) (284,177)
Gross profit 43,372 47,955
Administrative expenses before exceptional items (26,485) (27,955)
Exceptional items 5 (898) (720)
Total administrative expenses (27,383) (28,675)
Other operating income 1,021 688
Operating profit 17,010 19,968
Finance income 159 133
Finance costs (7,501) (4,812)
Profit before taxation 9,668 15,289
Taxation 4 (2,120) (3,216)
Profit for the year and total comprehensive income 7,548 12,073
Profit for the year and total comprehensive income is attributable to:
Owners of the parent company 7,548 12,073
7,548 12,073
Earnings per share
Basic earnings on profit for the year 7 6.36p 10.19p
Diluted earnings on profit for the year 7 6.12p 9.90p
Adjusted earnings per share
Basic earnings on profit for the year 7 7.05p 10.74p
Diluted earnings on profit for the 7 6.77p 10.43p
year
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 form an integral part of these financial statements.
COnsolidated BALANCE SHEET
FOR THE YEAR ENDED 31 May 2024
2024 2023
Non-current assets Note £000 £000
Property, plant and equipment 7,184 7,816
Intangible assets 5,698 5,953
Deferred taxation 1,787 1,783
Trade and other receivables 5,000 5,000
19,669 20,552
Current assets
Inventories 244,297 277,633
Trade and other receivables 26,352 22,588
Cash and cash equivalents 14,935 8,909
285,584 309,130
Total assets 305,253 329,682
Current liabilities
Trade and other payables 49,632 55,788
Short-term bank borrowings 9 54,839 -
Deferred consideration 10 7,339 11,785
Short-term obligations under lease liabilities 1,567 1,884
Provisions 12 2,018 1,710
Corporation tax 1,342 362
116,737 71,529
Non-current liabilities
Long-term bank borrowings 9 - 70,673
Long-term obligations under lease liabilities 3,971 4,016
Deferred taxation 2,958 3,615
Deferred consideration 10 17,123 24,332
Contingent consideration 11 2,000 2,000
Provisions 12 4,257 2,884
30,309 107,520
Total liabilities 147,046 179,049
158,207 150,633
Net assets
Equity
Share capital 13 148 148
Share premium 13 78,744 78,744
Retained earnings 79,315 71,741
Equity attributable to owners of the parent company 158,207 150,633
consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 31 MAY 2024
Share capital Share premium Retained earnings Total
Notes £000 £000 £000 £000
1 June 2022 148 78,744 64,635 143,527
Total comprehensive income for the year - - 12,073 12,073
Share-based payments 13 - - 601 601
Dividends 6 - - (5,568) (5,568)
31 May 2023 148 78,744 71,741 150,633
Total comprehensive income for the year - - 7,548 7,548
Share-based payments 13 - - 26 26
31 May 2024 148 78,744 79,315 158,207
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.
Consolidated Statement of Cash Flows
year to 31 May 2024
2024 2023
Cash flows generated from operations Note £000 £000
Profit for the year - Adjusted for: 7,548 12,073
Exceptional items 898 720
Taxation charged 2,120 3,216
Finance costs 7,501 4,812
Finance income (159) (133)
Adjusted operating profit before working capital movement 17,908 20,688
Exceptional items (898) (720)
Gain on disposal of tangible fixed assets (215) (312)
Gain on disposal of investment - (158)
Share-based payments 26 601
Amortisation of intangible fixed assets 259 255
Depreciation and impairment of tangible fixed assets 2,332 2,257
Operating cash flows before movements in working capital 19,412 22,611
32,086 (3,251)
(Decrease)/increase in inventory
Increase in accounts and other receivables (2,497) (404)
Decrease in accounts and other payables (4,496) (10,818)
Net cash from operations 44,505 8,138
Taxation paid (1,818) (2,900)
Net cash inflow from operating activities 42,687 5,238
Investing activities
Purchase of property, plant and equipment (177) (478)
Proceeds on disposal of property, plant and equipment 270 427
Proceeds on disposal of investment - 678
Interest received 155 -
Acquisition of subsidiary, net of cash acquired - (15,867)
Purchase of intangible assets (4) (30)
Net cash from/(used in) investing activities 244 (15,270)
Financing activities
Deferred consideration paid on acquisition of subsidiary (12,141) (6,138)
Proceeds from bank loans - 20,187
Repayment of bank loans (15,834) -
Payment of lease liabilities (2,234) (2,147)
Dividends paid 6 - (5,568)
Interest paid (6,696) (3,783)
Net cash (outflow)/inflow from financing activities (36,905) 2,551
Net increase/(decrease) in cash and cash equivalents 6,026 (7,481)
Cash and cash equivalents at beginning of year 8,909 16,390
Cash and cash equivalents at end of year 14,935 8,909
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR TO 31 MAY 2024
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.
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 2023.
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:
· IFRS 17 Insurance Contracts (including amendments to IFRS 17)
· Amendments to IAS 1 and IFRS PS2 'Disclosure of accounting
policies'
· Amendments to IAS 1 'Classification of liabilities as current or
non-current'
· Amendments to IAS 8 'Definition of Accounting Estimates'
· Amendments to IAS 12 'Deferred tax related to assets and
liabilities arising from a single transaction'
· Amendments to IAS 12 'International tax reform'
The following new standards and amendments to standards have been issued but
are not effective for the financial year beginning 1 June 2023 and have not
been early adopted:
· Amendments to IAS 1 'Classification of liabilities as current or
non-current'
· Amendments to IAS 1 'Classification of Liabilities as Current or
Non-current - Deferral of Effective Date'
· Amendments to IAS 1 'Non-current Liabilities with Covenants'
· Amendments to IFRS 16 'Lease liability in a sale and leaseback
· Amendments to IAS 7 and IFRS 7 'Supplier Finance Arrangements'
· Amendments to IAS 21 'Lack of Exchangeability'
The new standards and amendments to the standards noted above are expected to
have no significant impact on the financial statements.
2.2 Basis of consolidation
The consolidated financial statements incorporate those of Springfield
Properties PLC and its subsidiaries and jointly controlled entities. Where the
Company has control over an investee, it is classified as a subsidiary. The
Company controls an investee if all three of the following elements are
present: power over the investee, exposure to variable returns from the
investee, and the ability of the investor to use its power to affect those
variable returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of control.
Contingent consideration is measured at its fair value at the date of
acquisition. If the contingent consideration meets the definition of equity,
it is not remeasured, and settlement is accounted for within equity. Other
contingent consideration is remeasured at fair value at each reporting date
with subsequent changes in the fair value of the contingent consideration
recognised in the consolidated profit and loss account.
All financial statements are made up to 31 May 2024. 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
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 36 of
the Company's annual report for the year ended 31 May 2024 (the "2024 Annual
Report").
The material financial and operational risks and uncertainties that may affect
the Group's performance and their mitigation are outlined on pages 14 to 16 of
the 2024 Annual Report, and financial risks including liquidity, market,
interest and capital risks are outlined in Note 29 to the Financial Statements
in the 2024 Annual Report.
Bank debt at 31 May 2024 was significantly reduced to £39.9m (31 May 2023:
£61.8m), reflecting the Group's sustained focus on reducing the debt position
and was ahead of the target of £55m set at this time last year.
A 12-month term loan of £18.0m that had a repayment date in September 2024
was repaid in full in May 2024.
The revolving credit facility of £87.5m that was initially due to expire in
January 2025 has been extended for a further 12 months to January 2026 and a
£7.5m overdraft facility has also been put in place for 12 months until
September 2025 to provide working capital facilities.
In order to support the going concern period to 30 September 2025, the
Board-approved budget to May 2025, with a further year added to May 2026,
forms the basis of the detail and assessment to confirm the appropriateness of
the going concern basis being adopted for the preparation of the 31 May 24
statutory accounts.
In addition to the Board budget two sensitivity scenarios have been prepared
reducing private home plots by c10% and c15% in the year to May 2025 from the
original Board-approved budget. Under the 15% reduction scenario, the peak
borrowing utilises 81% of the banking facilities. Under this scenario there
are a number of mitigating actions that are within the control of the Group
and could be pursued if required, which are not currently forecasted and would
increase the headroom in the banking facilities.
Under all three scenarios the Group is able to operate within its bank
facilities and covenants and at May 2025, the bank facility utilisation based
on the Board-approved budget is forecast to be around 40%.
We continue to retain the discipline around controlling build spend on sites
and continue to adopt a cautious approach to new site openings. The profitable
land sales in the year demonstrate the ability to generate cash quickly -
there remains strong interest in our land bank should we wish to make further
sales.
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 2024.
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.
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. 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.
2.7. 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 assets and liabilities are recognised on temporary differences
arising between the tax bases of assets and liabilities and their carrying
amounts in the financial statements. The following temporary differences are
not provided for: goodwill, the initial recognition of assets and liabilities
that affects neither the tax profit nor the accounting profit, and differences
relating to investments in subsidiaries to the extent that they will probably
not reverse in the foreseeable future. Deferred tax is determined using tax
rates and laws that have been enacted or substantively enacted by the balance
sheet date and are expected to apply when the related deferred tax asset is
realised, or the deferred tax liability is settled.
A deferred tax asset is recognised for unused tax losses and unused tax
credits only if it is probable that future taxable amounts will arise
against which those temporary differences and losses may be utilised.
2.8. 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.
2.9. Property, plant and equipment
Tangible fixed assets are initially measured at cost and subsequently measured
at cost net of depreciation and any impairment losses. Depreciation is
recognised so as to write off the cost of assets less their residual values
over their useful lives on the following bases:
Buildings
- 2% and 5% straight line
Plant and machinery - 2-10
years straight line
Fixtures, fittings & equipment - 2-5 years straight
line
Motor
vehicles
- 4-5 years straight line
Right-of-use leased assets - over the lease term, straight line with no
residual value
Land is not depreciated
The gain or loss arising on the disposal of an asset is determined as the
difference between the sale proceeds and the carrying value of the asset and
is credited or charged to the profit and loss account.
2.10. 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.
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.
2.11. Fixed asset investments
Interests in subsidiaries are initially measured at cost and subsequently
measured at cost less any accumulated impairment losses. The investments are
assessed for impairment at each reporting date and any impairment losses 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.
2.12. Impairment of fixed assets
At each reporting end date, the Group reviews the carrying amounts of its
tangible fixed assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where it is not possible to estimate the
recoverable amount of an individual asset, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and
value-in-use. Any impairment loss and reversal of losses are recognised in the
profit and loss account.
2.13. 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.
2.14. 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
Financial assets with fixed or determinable payments that are not quoted in an
active market. Financial assets are recognised initially at cost. Subsequent
to initial recognition they are measured at amortised cost using the effective
interest rate method, less any impairment losses.
Loans outside the Group are valued at the recoverable amount and a market rate
of interest is charged.
Impairment of financial assets
The Group recognises an allowance for expected credit losses for all debt
instruments not held at fair value through 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.
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.
2.15. 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.
2.16. Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with
banks and bank overdrafts. Bank overdrafts are shown within borrowings in
current liabilities.
2.17. 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.
2.18. Leases
All leases are accounted for by recognising a right-of-use asset and a lease
liability except for leases of low value assets (less than £5,000) and leases
with a duration of 12 months or less.
Lease liabilities are measured at the present value of the contractual
payments due to the lessor over the lease term, with the discount rate
determined by reference to the Group's incremental borrowing rate at
commencement of the lease.
Right-of-use assets are initially measured at the amount of the lease
liability, reduced for any lease incentives received. Subsequent to initial
measurement lease liabilities increase as a result of interest charged at a
constant rate on the balance outstanding and are reduced for lease payments
made. Right-of-use assets are amortised on a straight-line basis over the
remaining term of the lease. Right-of-use assets comprise the Group's existing
premises in Elgin, Larbert, Inverness and Glasgow along with certain items of
office equipment and motor vehicles.
2.19. 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.
2.20. 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.
2.21. 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.
3. Segmental reporting
The Group has only one reportable operating segment, being housebuilding
within the UK, under the control of the Board. The Board has been identified
as the Chief Operating Decision Maker as defined under IFRS 8 Operating
Segments. The Board regularly reviews the Group's profit and loss account and
balance sheet position at both a divisional and consolidated level. Each of
these divisions is an operating segment as defined by IFRS 8 in that the
Directors assess performance and allocate resources at this level. The
divisions have been aggregated into one reporting segment on the basis that
they share similar economic characteristics. In addition, each division
builds and delivers residential homes, uses consistent methods of
construction, sells homes to both private customers and housing associations,
have a comparable sales process and operations, and are all subject to the
same macroeconomic factors including mortgage availability and Government
policy. As the Group operates solely in the United Kingdom segment reporting
by geographical region is not required.
2024 2023
Revenue £000 £000
Private residential housing 184,734 253,362
Affordable housing 46,975 53,931
Contract housing 4,995 19,681
Land sale 28,055 3,676
Other 1,768 1,482
Total revenue 266,527 332,132
Gross profit 43,372 47,955
Administrative expenses (26,485) (27,955)
Exceptional items (898) (720)
Other operating income 1,021 688
Finance income 159 133
Finance expenses (7,501) (4,812)
Profit before tax 9,668 15,289
Taxation (2,120) (3,216)
Profit for the period 7,548 12,073
4. Taxation
2024 2023
£000 £000
Current tax
UK corporation tax on profits for the current period 2,824 3,069
Adjustments in respect of prior periods (43) (92)
2,781 2,977
Deferred tax
Origination and reversal of timing differences (660) 239
Adjustments in respect of prior periods (1) -
(661) 239
2,120 3,216
The charge for the year can be reconciled to the standard rate of tax as
follows:
2024 2023
£000 £000
Profit before tax 9,668 15,289
2,417 3,058
Tax at the UK corporation tax rate of 25% (2023: 20%)
Effects of:
Tax effect of expenses that are not deductible in determining taxable profit 55 257
Adjustments in respect of prior years (43) (92)
Depreciation on assets not qualifying for tax allowances (42) (40)
Land remediation relief - (1)
Income not taxable - 11
Deferred tax adjustments in respect of prior years (1) -
Temporary difference not recognised 34 291
Other timing differences (27) (3)
Adjust deferred tax to closing average rate (273) (265)
Tax charge for period 2,120 3,216
5. Exceptional items
2024 2023
£000 £000
Redundancy costs 898 349
Acquisition and other transaction - related costs (1) - 371
898 720
(1) 2023 - Acquisition and other transactions - related costs for
the acquisition of the housebuilding business of Mactaggart & Mickel Group
Ltd.
6. Dividends
For the year to 31 May 2024, a final dividend of 1p per share is proposed to
be paid. No interim dividend was paid during the year.
In respect of the prior year, there was no interim or final dividend paid to
shareholders.
On 16 December 2022, a final dividend for the year ended 31 May 2022 was paid
to shareholders, amounting to £5,568,061 which equated to 4.7p per share.
7. 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 2024 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).
2024 2023
£000 £000
Profit for the year attributable to owners of the Company 7,548 12,073
Adjusted for the impact of tax adjusted exceptional costs in the year 811 652
Adjusted earnings 8,359 12,725
Weighted average number of ordinary shares for the purpose of basic earnings 118,572,439 118,478,254
per share
Effect of dilutive potential shares: share options 4,830,426 3,507,257
Weighted average number of ordinary shares for the purpose of diluted earnings 123,402,865 121,985,511
per share
Earnings per ordinary share
Basic earnings on profit for the year 6.36p 10.19p
Diluted earnings on profit for the year 6.12p 9.90p
Adjusted earnings per ordinary share (1)
Basic earnings on profit for the year 7.05p 10.74p
Diluted earnings on profit for the year 6.77p 10.43p
((1) ) Adjusted earnings is presented as an
additional performance measure and is stated before exceptional items and is
used in adjusted EPS calculation.
8. Acquisition of subsidiary company
During the year, the Group purchased 100% of the share capital of SP SUB 2024
Limited. This company has yet to trade.
9. Bank borrowings
2024 2023
Secured borrowings: £000 £000
Bank loans 54,839 70,673
Less: payable within one year (54,839) -
Payable after one year - 70,673
The bank loan comprises of a revolving credit facility of £87.5m that was
initially due to expire in January 2025. This has been extended for a further
12 months to January 2026. The facility attracts an interest rate of 2.75% 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
2024 work in progress value of £36.6m.
A term loan of £18.0m that had a repayment date in September 2024 was repaid
in full in May 2024.
At 31 May 2024, the Group had available £32.5m (2023: £16.5m) of undrawn
committed borrowing facilities.
The Group's lender has a floating charge over the assets of the Company and of
its subsidiaries.
10. Deferred consideration
As part of the purchase agreement of Tulloch Homes Holdings Limited, there was
a further £13,000,000 of deferred consideration payable. This can be broken
down into: (i) £362,330 paid on 24 April 2022 (ii) £6,137,670 paid in
November 2022 and (iii) £6,500,000 paid in August 2023. The outstanding
discounted amount payable at the period end is £nil (2023: £6,493,552).
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 £24,462,203 (2023:
£29,623,127).
2024 2023
£000 £000
Acquisition of Tulloch Homes Holdings Limited - 6,494
Acquisition of the housebuilding business of Mactaggart & Mickel Group 24,462 29,623
Limited
24,462 36,117
2024 2023
£000 £000
Deferred consideration < 1 year 7,339 11,785
Deferred consideration > 1 year 17,123 24,332
24,462 36,117
11. 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 (2023: £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.
2024 2023
£000 £000
Acquisition of Dawn Homes Holdings Limited 2,000 2,000
2,000 2,000
12. Provisions
Dilapidation provisions are included for all rented buildings within the
Group. Maintenance provisions relate to costs to come on developments where
the final homes have been handed over.
2024 2023
£000 £000
Dilapidation provision 113 169
Provisions for onerous contracts - 353
Maintenance provision 6,162 4,072
6,275 4,594
2024 2023
£000 £000
Provisions < 1 year 2,018 1,710
Provisions > 1 year 4,257 2,884
6,275 4,594
13. 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 Share premium
£000 £000
At 1 June 2023 118,496,001 148 78,744
Share issue 173,123 - -
At 31 May 2024 118,669,124 148 78,744
During the year, 173,123 shares (2023: 26,602) were issued in satisfaction of
share options exercised for a consideration of £26 (2023: £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
2024 2023
Number of shares Weighted average exercise price (pence) Number of shares Weighted average exercise price (pence)
Options at the beginning of the year 606,413 115.28 627,558 115.33
Lapsed during the year (22,775) 131.72 (21,145) 116.71
Options at the year end 583,638 114.64 606,413 115.28
Share option Grant Price Number of shares at year end Exercise price (p) Vesting period
(p) (years)
CSOP - 16(th) October 2017 106.00 307,821 106.00 3
CSOP - 8(th) December 2017 111.00 27,027 111.00 3
CSOP - 3(rd) May 2018 134.00 22,388 134.00 3
CSOP - 16(th) May 2018 134.00 91,746 134.00 3
CSOP - 1(st) October 2018 122.50 98,165 122.50 3
CSOP - 4(th) June 2019 108.50 36,491 108.50 3
2024 2023
ESOP Number of shares Weighted average exercise price (pence) Number of shares Weighted average exercise price (pence)
Options at the start of the year 1,727,589 118.80 1,746,570 118.84
Lapsed during the year (44,108) 122.14 (18,981) 122.50
Options at the year end 1,683,481 118.71 1,727,589 118.80
Share option Grant Price Number of shares at year end Exercise price (p) Vesting period
(p) (years)
ESOP - 16(th) October 2017 106.00 445,432 106.00 3
ESOP - 3(rd) May 2018 134.00 72,761 134.00 3
ESOP - 16(th) May 2018 134.00 11,157 134.00 3
ESOP - 1(st) October 2018 122.50 1,154,131 122.50 3
2024 2023
SAYE Number of shares Weighted average exercise price (pence) Number of shares Weighted average exercise price (pence)
Options at the start of the year 1,084,972 130.50 1,837,747 130.50
Lapsed during the year (660,187) 130.50 (752,775) 130.50
Options at the year end 424,785 130.50 1,084,972 130.50
Share option Grant Price Number of shares at year end Exercise price (p) Vesting period
(p) (years)
SAYE - 29(th) April 2021 145.00 424,785 130.50 3
2024 2023
PSP Number of shares Weighted average exercise price (pence) Number of shares Weighted average exercise price (pence)
Options at start of the year 2,853,274 0.13 2,368,181 0.13
Granted during the year 2,161,933 0.13 776,800 0.13
Lapsed during the year (456,085) 0.13 (265,105) 0.13
Exercised during the year (173,123) 0.13 (26,602) 0.13
Options at the year end 4,385,999 0.13 2,853,274 0.13
Share option Grant Price Number of shares at year end Exercise price (p) Vesting Period
(p) (years)
PSP - 9(th) January 2020 0.13 24,132 0.13 3
PSP - 30(th) October 2020 0.13 159,678 0.13 3
PSP - 21(st) December 2021 0.13 1,263,456 0.13 3
PSP - 28(th) March 2023 0.13 776,800 0.13 3
PSP - 30(th) October 2023 0.13 2,161,933 0.13 3
Inputs used to determine fair value of options
CSOP ESOP SAYE PSP
Expected volatility 29.00% 29.00% 29.00% 17.83%
Risk free interest rate 0.49% 0.49% 0.49% -1.91%
Expected dividends - - - 2.50%
Fair value of options 34.00p 39.00p 37.00p 49.04p
Charge per option 32.00p 37.00p 35.00p 49.04p
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 (2023: nil) of options were exercised during the year and 547,147
(2023: 606,413) shares were exercisable.
ESOP - nil (2023: nil) of options were exercised during the year and 1,683,481
(2023: 1,727,589) shares were exercisable.
SAYE - nil (2023: nil) of options were exercised during the year and 424,785
(2023: nil) shares were exercisable.
PSP - 173,123 (2023: 26,602) of options were exercised during the year and
183,810 (2023: 56,929) shares were exercisable.
Charge for share-based incentive schemes
The total charge for the year relating to employee share-based plans were
£26k (2023: £601k), all of which
related to equity-settled share-based payment transactions.
14. 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 £nil (2023: £1,854k)
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:
2024 2023
Name of Director £000 £000
Mr Sandy Adam - 1,776
Mr Innes Smith - 43
Ms Michelle Motion - 5
Mr Matthew Benson - 1
Mr Roger Eddie - 2
Mr Colin Rae - 1
Mr Nick Cooper - 1
- 1,829
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:
2024 2023
£000 £000
Short-term employee benefits 2,542 2,696
Share-based payments 248 555
Post-employment benefits 9 208
2,799 3,459
During the year the Group entered into the following transactions with related
parties:
Sale of goods Purchase of goods
2024 2023 2024 2023
£000 £000 £000 £000
Bertha Park Limited (1) 4,906 13,751 319 -
Other entities that key management personnel have control, significant 41 76 20 325
influence or hold a material interest in
Key management personnel 46 244 - -
Other related parties 156 1 2,016 1,616
5,149 14,072 2,355 1,941
Sales to related parties represent those undertaken in the ordinary course of
business.
Rent paid
2024 2023
£000 £000
Entities that key management personnel have control, significant influence or 80 162
hold a material interest in
Key management personnel - 3
Other related parties 64 100
144 265
2024 2023
£000 £000
Interest received:
Entities that key management 125 125
personnel have control, significant influence or
hold a material interest in (short-term)
125 125
The following amounts were outstanding at the reporting end date:
2024 2023
£000 £000
Amounts receivable:
Bertha Park Limited (1) 7,259 8,524
Other entities that key management personnel have control, significant - 5
influence or hold a material interest in (short-term)
Key management personnel 1 -
Other related parties 36 -
7,296 8,529
2024 2023
£000 £000
Accounts payable:
Entities which key management personnel have control, significant influence or - 62
hold a material interest in (short-term)
Other related parties 2,343 678
2,343 740
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
£4,906k (2023: £13,751k) in relation to a build contract. At the year-end
£2,259k (2023: £3,399k) is included in trade debtors and included within
other debtors is a loan of £5,000k (2022: £5,125k). During the year the
Group had purchases from Bertha Park Limited of £319 (2023: £nil) in
relation to a build contract.
15. Analysis of net debt
The Analysis of net debt is as follows:
2024 2023
£000 £000
Cash in hand and bank 14,935 8,909
Bank borrowings (54,839) (70,673)
(39,904) (61,764)
Lease liability (5,538) (5,900)
Net debt (45,442) (67,664)
Deferred consideration (24,462) (36,117)
(69,904) (103,781)
Reconciliation of net cashflow to movement in net debt is as follows:
At 1 June 2023 New leases Cashflow Fair value At 31 May 2024
£000 £000 £000 £000 £000
Cash and cash equivalents 8,909 - 6,026 - 14,935
Bank borrowings (70,673) - 15,834 - (54,839)
Lease (5,900) (1,593) 2,234 (279) (5,538)
Net debt (67,664) (1,593) 24,094 (279) (45,442)
Deferred consideration (36,117) - 12,141 (486) (24,462)
(103,781) (1,593) 36,235 (765) (69,904)
At 1 June 2022 New leases On acquisition Cashflow Fair value At 31 May 2023
£000 £000 £000 £000 £000 £000
Cash and cash equivalents 16,390 - - (7,481) - 8,909
Bank borrowings (50,486) - - (20,187) - (70,673)
Lease (3,954) (3,694) - 2,147 (399) (5,900)
Net (debt)/cash (38,050) (3,694) - (25,521) (399) (67,664)
Deferred consideration (12,574) - (30,781) 6,137 1,101 (36,117)
(50,624) (3,694) (30,781) (19,384) 702 (103,781)
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