REG - Springfield Props. - Interim Results
21/02/2023 07:00
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RNS Number : 5052Q Springfield Properties PLC 21 February 2023
21 February
2023
Springfield Properties plc
("Springfield", the "Company", the "Group" or the "Springfield Group")
Interim Results
Springfield Properties (AIM: SPR), a leading housebuilder in Scotland focused
on delivering private and affordable housing, announces its interim results
for the six months ended 30 November 2022.
Financial Summary
H1 2023 H1 2022 Change
£m £m
Revenue 161.9 87.3 +85%
Private housing revenue 118.6 47.3 +151%
Affordable housing revenue 27.9 31.7 -12%
Contract housing revenue 10.6 7.5 +41%
Other revenue* 4.8 0.8 +500%
Gross margin 14.0% 18.5% -450bps
Adj. operating profit** 8.2 6.8 +21%
Operating profit 7.6 6.7 +13%
Adj. profit before tax** 6.6 6.4 +3%
Profit before tax 5.9 6.2 -5%
Adj. basic EPS (p) 4.68 5.09 -8%
Basic EPS (p) 4.24 4.93 -14%
* Includes land sales of £3.7m in H1 2023 (H1 2022: £0.1m)
** Adjusted to exclude exceptional costs of £0.6m (H1 2022: £0.2m) (See the
Financial Review for further detail)
Operational Summary
· Strong growth during the period in private housing, reflecting
acquisitions of Tulloch Homes and Mactaggart & Mickel Homes and organic
growth despite challenging market backdrop
· Significant impact from build cost inflation, particularly on
fixed-price contracts in affordable housing, affecting margins across the
Group
· Decisive action taken during, and post, period across the business to
address the market conditions, resulting in expected annualised cost savings
of approximately £3.0m
· Strategic acquisition of the Scottish housebuilding business of
Mactaggart & Mickel Group Ltd ("Mactaggart & Mickel Homes") on 21 June
2022, a premium brand housebuilder with a land bank in highly desirable
locations within the Central Belt of Scotland
· Private housing
o 429 private homes were completed (H1 2022: 197), reflecting acquisitions
of Tulloch Homes and Mactaggart & Mickel Homes and organic growth
o Sales for this current financial year are largely protected by the
Scottish missive system with approximately 94% of market forecast private
housing revenue for 2023 secured
o Reduced homebuyer confidence impacted private housing reservations towards
the end of the period
o Since period end, the Group has been encouraged by the reservation levels
across its brands
· Affordable housing
o Strategic decision taken to temporarily pause entering new long-term
affordable housing contracts until market conditions improve
o 175 affordable housing completions (H1 2022: 204), with revenue and margin
impacted by build cost inflation due to industry-wide model of fixed-price
contracts
· Contract housing
o Progressed delivery of first contract for private rented sector ("PRS")
housing, with final handovers occurring post period
o Plans for the delivery of further PRS housing were withdrawn, following
the Scottish Government's intervention in rent control
· Proportion of land bank with planning permission at 30 November 2022
was 55.0% (31 May 2022: 52.1%):
o Planning approval obtained for 753 homes
o An additional 533 homes with planning were received through the Mactaggart
& Mickel Homes acquisition
· Completed a strategic land sale to generate £3.7m; will consider
further opportunities where the terms and price are desirable
· Total land bank of 16,975 plots at period end (31 May 2022: 16,652)
with Gross Development Value ("GDV") of £3.7bn (31 May 2022: £3.5bn)
Innes Smith, Chief Executive Officer of Springfield Properties, commented:
"This has been a challenging period for the housebuilding industry with
significant headwinds having a combined effect, which largely offset the
excellent growth that we achieved in private housing. The UK government's
mini-budget in September reduced the confidence of homebuyers and the cost of
mortgages increased significantly. Our affordable housing business was
greatly impacted by build cost inflation and, with the Scottish Government
still to review its affordable housing investment benchmark, it is not
currently possible to continue building affordable homes at the same pace as
we have in the past. Our plans to deliver additional homes for families
through PRS were unfortunately withdrawn as a result of the Scottish
Government's intervention in rent control. Plus, while one land sale to a
housebuilder was achieved, the industry-wide stalling of land purchases meant
that we could not secure acceptable value for additional sales.
"We have taken decisive action in response to these conditions. We've paused
entering new long-term affordable housing contracts and reduced our fixed cost
base. We've made a strategic land sale on good terms; reduced land buying
activity; and are approaching new site openings with caution. We are also
encouraged by the signs that market conditions are improving. While it is
too early to call a recovery, the green shoots we are experiencing and which
are being seen across the industry, through increased reservations and visitor
levels, are encouraging.
"The foundations of Springfield remain strong. We offer high quality, energy
efficient homes in popular locations across Scotland and have a large land
bank, over half of which has planning. This, combined with the actions we are
taking as we focus on reducing our net debt position, provides an excellent
platform from which we can take advantage as the markets continue to improve
and we remain confident in our future prospects and ability to generate
shareholder value."
Enquiries:
Springfield Properties
Sandy Adam, Chairman +44 1343 552550
Innes Smith, Chief Executive Officer
Singer Capital Markets
Shaun Dobson, James Moat, Oliver Platts (Investment Banking) +44 20 7496 3000
Gracechurch Group
Harry Chathli, Claire Norbury +44 20 4582 3500
Results Presentation
Innes Smith, Chief Executive Officer, Michelle Motion, Chief Financial
Officer, and Martin Egan, Chief Operating Officer, will be holding a
presentation for analysts at 9.00am GMT today at the office of Gracechurch
Group, Fourth Floor, 48 Gracechurch Street, London, EC3V 0EJ. To register to
participate, please contact henrygamble@gracechurchpr.com
Operational Review
During the first half of 2023, the Group delivered its highest number of
completions in a six-month period, at 673 (H1 2022: 459). This was driven by
the Group's private housing, which grew on an underlying basis and by the
contributions from Tulloch Homes and Mactaggart & Mickel Homes, which were
acquired in H2 2022 and at the start of the period respectively.
The Group's growth was achieved against an increasingly difficult market
backdrop, with significant build cost inflation, which particularly impacted
affordable housing, and reduced homebuyer confidence resulting from rising
mortgage rates and cost-of-living challenges, which peaked around the time of
the UK Government's mini-budget. Following the Scottish Government's
intervention in rent control, the Group's plans for expanding its PRS housing
activity were withdrawn, with its planned land sales and construction
contracts falling through.
However, as described further below, the Group has acted decisively to address
these conditions. The Group took the strategic decision, during the period, to
temporarily halt entering new long-term affordable housing contracts, which
are more exposed to inflationary pressures due to the fixed-price nature of
contracts, and it is carefully considering the opening of new private housing
developments. Other actions include reducing land buying activity to retain
capital; pausing recruitment and reducing staffing levels in areas most
impacted by the market downturn; and maintaining tight cost control, including
identifying synergies across the business. In addition, the Group completed a
strategic land sale during the period - albeit the Group's expectations of
selling further land did not come to fruition as the terms on offer were not
favourable as land purchases stalled across the industry. The Group continues
to consider opportunities for land sales where they represent strong value.
Land Bank
During the period, the Group strengthened its 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.
At the same time, the Group continued to realise value from its large,
high-quality land bank, and thereby strengthening the balance sheet, with the
strategic sale of land (of approximately 60 plots) to a national housebuilder.
Springfield will consider further opportunities for strategic sales or land
swaps where the terms and price are desirable. In addition, in response to the
current market conditions, the Group has significantly reduced its land buying
activity, and is focused on realising the value of its existing land bank.
As at 30 November 2022, the Group had 56 active developments (31 May 2022: 51
active developments) and during the period:
· 10 developments were completed;
· 15 new active developments were added to the land bank (of which 9
were under Mactaggart & Mickel Homes);
· Planning was granted on 753 plots on 6 developments;
· the Group received 533 plots with planning through the Mactaggart
& Mickel Homes acquisition;
· resulting in the total consented land bank increasing to 9,337 plots,
representing 55.0%, at 30 November 2022 (31 May 2022: 8,680 plots and 52.1%);
and
· the land bank consisted of 16,975 plots (31 May 2022: 16,652).
Private Housing
The number of private home completions increased by 117.8% to 429 (H1 2022:
197). This reflects growth across the majority of the Group's brands and
regions as well as the contributions from Tulloch Homes and Mactaggart &
Mickel Homes.
As previously noted, demand for private housing was sustained during much of
the first half of the year, but against a challenging market backdrop that
began to impact reservations materially towards the end of the period. The
Group has been encouraged, however, by the reservation levels across its
business during January and February 2023. This is being supported by falling
mortgage rates and an increase in customers visiting the Group's sales offices
as homebuyers adjust to the market conditions.
The Group's private housing secured sales for the current financial year are
largely protected by the Scottish missive system. As a result, the Group
remains on track for good growth for the full year. The Group currently has
homes delivered, missived or reserved representing approximately 94% of market
forecast private housing revenue for 2023.
The average selling price ("ASP") for private housing was £277k (H1 2022:
£240k). This reflects the regional and housing-type mix, including the
contribution from Tulloch Homes and Mactaggart & Mickel Homes, which have
higher selling prices than the rest of the Group, as well as a general
increase in sales prices. This served to mitigate some of the build cost
inflation in private housing during the period. As previously stated, private
house price growth is no longer anticipated in the short term, however the
Group is pleased to note that selling prices have remained stable across its
developments post period end, supported by the established reputation of high
quality across its brands.
As at 30 November 2022, Springfield was active on 38 private housing
developments (31 May 2022: 31), with 10 active developments added during the
period, of which 9 were from Mactaggart & Mickel Homes, and 3 developments
completed. In total, as at 30 November 2022, the private housing land bank
consisted of 11,920 plots on 83 developments (31 May 2022: 11,565 plots on 74
developments). As previously stated, in response to market conditions, the
Group is taking a cautious approach to opening new developments, including
undertaking 'soft launches' to test the market before making further
investment into site infrastructure.
Planning consent was granted for 492 plots on 5 developments for private
housing, and the Group gained 512 private plots (394 with planning) through
the acquisition of Mactaggart & Mickel Homes. As at 30 November 2022,
54.5% (6,500 plots) of private housing plots had planning consent (31 May
2022: 52.2%), with 21.8% going through the planning process and 23.6% at the
pre-planning stage.
Village developments
Springfield Villages are standalone developments that include infrastructure
and neighbourhood amenities. Each Village is designed with the potential to
deliver up to approximately 3,000 homes, with ample green space and community
facilities. They primarily offer private housing, but also include affordable
housing and, at Bertha Park, PRS housing. The Group has three Villages that
are already home to growing communities; one Village that has received
planning permission with the Section 75 agreement to follow; and a further
Village going through the planning process.
Demand for Springfield's Villages remains high, driven by the desirability of
larger family housing, with local amenities and commuting distance to major
cities. In total, there were fewer private housing completions at the Villages
than in the first half of the previous year, which reflects the phasing of
homes being made available for sale.
There was also a continued expansion of amenities and strengthening of
community engagement at the Village developments. The success of Springfield's
Villages has been recognised by several industry awards. This includes Bertha
Park being named Large Development of the Year by the Scottish Homes Awards in
June 2022 and Best Sustainable Development by WhatHouse? Awards, which
celebrates residential developments across the UK, in November. Dykes of Gray
also received the silver award for Best Public Realm from WhatHouse?,
reflecting the Group's commitment to sustainability, quality and placemaking.
Affordable Housing
Margin in affordable housing was significantly impacted by build cost
inflation due to the industry's model of fixed-price contracts. In particular,
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. The Group was also impacted by key subcontractors
going out of business, which necessitated the Group finding replacement
subcontractors that led to some delays and higher costs. In addition, the
Scottish Government is yet to review its affordable housing investment
benchmark to take into account the recent inflation.
As a result, during the period, Springfield took the decision to pause
entering into new long-term affordable contracts, and it has maintained this
position since period end. However, 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.
The Group completed 175 affordable homes during the first half of 2023 (H1
2022: 204). Average selling price was in line with the same period of the
prior year at £159k (H1 2022: £155k).
The number of active affordable housing developments was 16 at 30 November
2022 (31 May 2022: 18), with 5 active developments added during the period and
7 developments completed. As at 30 November 2022, the total affordable housing
land bank consisted of 4,439 plots on 61 developments (31 May 2022: 4,412
plots on 60 developments).
As at 30 November 2022, 50.0% (2,221 plots) of affordable housing plots had
planning (31 May 2022: 44.8%), with 27.2% of plots going through the planning
process and 22.8% at the pre-planning stage.
Contract Housing
In contract housing, 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.
As at 30 November 2022, the contract housing land bank with planning consent
consisted of 616 plots (31 May 2022: 675). The 69 homes completed during the
period (H1 2022: 58) comprised 27 private homes, 8 affordable homes and 24 PRS
homes at Bertha Park Village as well as 10 homes through Mactaggart &
Mickel Homes.
Post period, the Group completed the final handovers of homes under its first
PRS contract. As previously noted, the Group's plans to deliver further PRS
homes have been withdrawn. The Scottish Government's intervention in rent
control has created uncertainty and reduced the appetite of PRS providers to
invest in Scotland.
Acquisition
During the period, Springfield continued to execute on its stated strategy of
expanding via acquisition and into new territories to accelerate growth. On 21
June 2022, Springfield acquired the Scottish housebuilding business of
Mactaggart & Mickel Group Ltd for a total consideration of £46.3m.
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, the Group acquired six live
private and affordable 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.
The acquisition also included Timber Systems, a timber frame factory near
Glasgow. The addition of a second timber frame factory, to complement
Springfield's pre-existing facility in Elgin, will secure kit supply and
increase capacity for future growth while further reducing the Group's carbon
footprint. Since acquisition, the Group has progressed transitioning the use
of the new factory, which is now supplying a number of the Group's private and
affordable developments as well as new commercial opportunities arising. In
addition, as part of the consolidation progress, the Group restructured the
Mactaggart & Mickel Homes business, which is expected to generate cost
savings going forward.
Financial Review
For the six months ended 30 November 2022, revenue increased by 85.6% to
£161.9m (H1 2022: £87.3m). This primarily reflects significant growth in
private housing along with a strategic land sale and increased revenue in
contract housing.
Revenue H1 2023 H1 2022 Change
£'000 £'000
Private housing 118,626 47,257 +151.0%
Affordable housing 27,843 31,670 -12.1%
Contract housing 10,634 7,510 +41.6%
Other* 4,827 833 +479.5%
TOTAL 161,930 87,270 +85.6%
*Primarily land sales
Private housing remained the largest contributor to Group revenue, accounting
for 73.3% (H1 2022: 54.2%) of total sales, and increased by £71.4m to
£118.6m. This significant growth was driven mainly by the contributions from
Tulloch Homes, which was acquired in H2 2022, and from Mactaggart & Mickel
Homes, which was acquired at the start of the period, as well as increased
sales on an organic basis.
The reduction in affordable housing revenue to £27.9m (H1 2022: £31.7m)
reflects some reduction in activity as well as continued inflation in expected
development costs.
In contract housing, revenue grew as the Group neared the completion of
delivery of its 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 at a Walker site (H1 2022: £0.1m in land sales).
Gross profit increased by 41.0% to £22.7m (H1 2022: £16.1m) due to the
growth in revenues. Gross margin was 14.0% (H1 2022: 18.5%), 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 the Group's
contracts in this area of the business. As noted, the Group has paused
entering into new long-term contracts in affordable housing until normal
market conditions resume.
Administrative expenses, excluding exceptional items, were £14.7m (H1 2022:
£9.4m). This reflects the increase in overheads from the acquisitions of
Tulloch Homes and Mactaggart & Mickel Homes. The Group, however, focused
on tight cost control during the period and, accordingly, administrative
expenses, excluding exceptional items, as a proportion of revenue decreased to
9.1% in H1 2023 from 10.8% in H1 2022. In addition, during the period, the
Group undertook a restructuring of the acquired Mactaggart & Mickel Homes
business to consolidate some of the operations with the existing Group. This,
combined with the other actions that the Group has taken and is taking to
reduce its fixed cost base, is expected to generate further savings of
approximately £3.0m on an annualised basis.
Finance costs were £1.7m (H1 2022: £0.5m), 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.
Exceptional items during the period were £0.6m (H1 2022: £0.2m). This mainly
relates to the Mactaggart & Mickel Homes acquisition.
Operating profit grew by 13.4% to £7.6m (H1 2022: £6.7m). Excluding
exceptional items, operating profit increased by 20.6% to £8.2m (H1 2022:
£6.8m). Adjusted profit before tax and exceptional items increased by 3.1% to
£6.6m (H1 2022: £6.4m) and statutory profit before tax decreased by 4.8% to
£5.9m (H1 2022: £6.2m), which reflects the increased bank interest payments
and exceptional items described above.
Basic earnings per share (excluding exceptional items) were 4.68 pence (H1
2022: 5.09 pence). Statutory basic earnings per share were 4.24 pence (H1
2022: 4.93 pence).
Net debt at 30 November 2022 was £73.7m (31 May 2022: £38.0m; 30 November
2021: £43.0m). The increase over the six-month period primarily reflects the
usual working capital cycle, with significant work-in-progress at period end
for delivery in the second half of the year and in the next financial year, as
well as the Mactaggart & Mickel Homes acquisition. The increase compared
with the same time of the previous year also includes the funding of the
Tulloch Homes acquisition.
The Group continues to have a strong relationship with the Bank of Scotland.
The Group's revolving credit facility of £87.5m is in place until January
2025 and the Group also has a £2.5m overdraft facility that is renewed
annually. On 30 December 2022, the overdraft facility was increased by £10m
to £12.5m for the period until May 2023, to provide extra short-term
headroom.
In June 2022, the Group 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. The acquisition is being funded from
Springfield's internal resources and existing debt facilities with Bank of
Scotland.
Customer Satisfaction
The Group maintained its strong focus on customer satisfaction and is pleased
to report that, in customer surveys received in this financial year to date,
94% of customers reported that they would recommend the Group to a friend.
This is reflected in initiatives such as the introduction and roll out, during
the period, of a new website format to the Springfield Properties, Walker
Group and Dawn Homes brands that is designed to improve the user experience
for homebuyers visiting online. Following customer feedback on the importance
of energy efficiency, a comprehensive instructional video was shared with
customers on the operation of the hybrid air-source heating systems installed
in their homes to ensure they were able to maximise efficiency savings.
In rolling out a new Quality Management System across each of the brands
within the Group, Springfield achieved re-certification of ISO9001 in October.
In July, the Group registered for the New Homes Quality Board Code of Practice
("NHQB Code"), which aims to improve consumer protections covering important
aspects of the new home construction, inspection and sales process. Post
period, the Group has been preparing for the activation of the NHQB Code this
spring, including setting up training for customer facing staff and
programming construction to allow customers to inspect their home two weeks
prior to handover.
Environment & People - ESG
The Group's inherent culture of looking after the environment, through the
design of energy efficient homes within sustainable communities, and looking
after people, through engagement with stakeholders and looking after customers
and employees, was formalised during the period through the publication of the
Group's first ESG strategy. Good progress has been demonstrated against a
number of the first-year objectives set within the strategy.
During the period, the Group introduced new statistics for monitoring Health
& Safety and Waste, undertook a comprehensive survey on customer attitudes
to sustainability and achieved a significant milestone in the development of
an Environmental Management System with Springfield gaining ISO14001
certification. Crucially, to ensure governance of ESG within the Group itself,
a new Board Committee was created during the period, and which has since met
three times. The Committee, chaired by the Group's CEO, has agreed a project
plan and an approach to reporting on progress.
Post period, the Group published its first Equality, Diversity & Inclusion
Policy and refreshed its Modern Slavery Statement, reinforcing its commitment
to looking after employees. With the aim of promoting wider resilience, the
Group has also written to each of its suppliers to raise awareness of
Springfield's commitments to sustainability and to survey the supply chain on
their own progress with ESG.
Markets
The market backdrop during the period, and subsequently, has remained
challenging across the Group's activities. Material and labour supply
constraints and, consequently, build cost inflation persisted. In private
housing, the increase in interest and mortgage rates, combined with the
ongoing cost-of-living pressures, reduced affordability and impacted homebuyer
confidence. However, as noted, the Group is now experiencing signs of
stabilisation in this respect, with customers adjusting to the market
conditions and mortgage rates beginning to reduce, supported by greater
affordability in Scotland compared with the wider UK. In addition, with the
vast majority of sales within the Group being to second-, third- or
fourth-time buyers, the Group's customer base is less exposed to higher
interest rates because mortgages tend to be at a lower loan to value.
In affordable housing, the Scottish Government is yet to review its
affordable housing investment benchmark. The policy environment for PRS
housing continues to be uncertain following the Scottish
Government's intervention with a temporary rent freeze in September 2022,
which was replaced by a temporary rent cap in January 2023.
Nonetheless, the medium- to long-term fundamentals of the housing market in
Scotland remain strong. There is an undersupply of housing across all tenures,
which will continue to be exacerbated by population growth. The Scottish
Government maintains its commitment to delivering 110,000 energy efficient
affordable homes by 2032. There is also increased interest from homebuyers in
energy efficient private homes, which the Group's offer caters to.
Dividend
While the Group maintains a strong financial position, given the continued
market uncertainty, the Board has taken the decision not to propose an interim
dividend for the six months ended 30 November 2022. The Board recognises the
importance of the dividend to shareholders, but believes that this, alongside
other measures that the Group is taking to preserve its cash position, is an
appropriate and prudent measure to preserve liquidity in these uncertain
times. The Board will consider the payment of any final dividend for FY 2023
in light of the position and outlook of the Group at that time.
Outlook
The Group remains on track to deliver good revenue growth for FY 2023, driven
by strong secured sales in private housing. The Scottish missive system, which
ensures that customers are contracted into the purchase much earlier in the
build programme, means revenue expectations for the current financial year are
largely protected. In addition, with the actions that the Group is taking in
response to the challenging market conditions, the Group is confident that it
will be able to manage the inflationary pressures and report profit for the
full year to 31 May 2023 in line with market expectations.
Looking further ahead, the Board is encouraged by the reservation levels
experienced across its private housing business during January and February
2023. However, it is taking a cautious approach to future sales rates given
the continued market uncertainty. The Group is maintaining tight cost control
and will continue to closely monitor market conditions to ensure it can
respond in a timely manner as required.
The Board continues to believe that the fundamentals of the business remain
strong. The Group offers high quality, energy efficient homes in popular
locations across Scotland under multiple highly respected brands. The large
land bank, over half of which has planning permission already granted,
provides visibility. As a result, and combined with the Group focusing on
reducing its net debt position, this provides Springfield with an excellent
platform from which to take advantage of the next upturn in the market cycle.
In addition, there remains an undersupply of all tenures of housing across
Scotland, with the Scottish Government committed to investing in the delivery
of more affordable homes and there being greater affordability of private
housing compared with the UK as a whole.
As a result, while the current period is not without its challenges, the Board
remains confident in the Group's prospects and in its ability to generate
shareholder value.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE HALF YEAR ENDED 30 NOVEMBER 2022
Unaudited Period to Unaudited Period to Audited Year to
30 November 2022 30 November 2021 31 May 2022
Note
£000 £000 £000
Revenue 4
161,930 87,270 257,095
Cost of sales
(139,235) (71,151) (213,960)
Gross profit 4
22,695 16,119 43,135
Administrative expenses before exceptional items
(14,713) (9,386) (20,950)
5 (643) (163) (1,100)
Exceptional items
Total administrative expenses (15,356) (9,549) (22,050)
Other operating income
215 88 396
Operating profit
7,554 6,658 21,481
Finance income
66 66 134
Finance costs
(1,700) (512) (1,889)
Profit before taxation
5,920 6,212 19,726
Taxation 6
(896) (1,170) (3,652)
Profit for the period and total comprehensive income 4
5,024 5,042 16,074
Profit for the period and total comprehensive income is attributable to:
- Owners of the parent
company
5,024 5,042 16,074
Earnings per share
Basic earnings per share 7
4.24p 4.93p 14.74p
Diluted earnings per share 7
4.12p 4.84p 14.37p
The Group has no items of other comprehensive income.
The accompanying notes form an integral part of these financial statements
CONSOLIDATED BALANCE SHEET - AS AT 30 NOVEMBER 2022
Unaudited Unaudited Audited
30 November 2022 30 November 2021 31 May
2022
Non-current assets Note £000 £000 £000
Property, plant and equipment 7,778 4,935 5,799
Intangible assets 5,665 1,649 5,758
Investments - - 520
Deferred taxation 1,893 524 2,133
Accounts receivable 5,381 5,324 5,641
20,717 12,432 19,851
Current assets
Inventories 283,786 185,809 230,095
Trade and other receivables 25,721 22,742 21,363
Corporation tax 149 191 -
Cash and cash equivalents 19,369 70,887 16,390
329,025 279,629 267,848
Total assets 349,742 292,061 287,699
Current liabilities
Trade and other payables 62,954 57,996 68,513
Short-term bank borrowings - 43,200 -
Deferred consideration 10 14,023 - 6,119
Short-term obligations under lease liabilities 1,677 902 1,284
Provisions 12 821 - 821
Corporation tax - - 273
79,475 102,098 77,010
Non-current liabilities
Long-term bank borrowings 87,208 67,422 50,486
Long-term obligations under lease liabilities 4,148 2,322 2,670
Deferred taxation 3,651 2,861 3,726
Deferred consideration 10 27,954 - 6,455
Contingent consideration 11 2,000 3,900 2,000
Provisions 12 1,819 961 1,825
126,780 77,466 67,162
Total liabilities 206,255 179,564 144,172
Net assets 143,487 112,497 143,527
Equity
Share capital 9 148 128 148
Share premium 9 78,744 57,262 78,744
Retained earnings 64,595 55,107 64,635
Equity attributable to owners of the parent company 143,487 112,497 143,527
The accompanying notes form an integral part of these financial statements
CONSOLIDATED Statement of Changes in Equity
FOR THE HALF YEAR ENDED 30 NOVEMBER 2022
Share capital Share premium Retained earnings Total
Note £000 £000 £000 £000
1 June 2021 128 56,761 54,341 111,230
Share issue - 501 - 501
Total comprehensive income for the period - - 5,042 5,042
Dividends 8 - - (4,558) (4,558)
Share-based payments - - 282 282
30 November 2021 128 57,262 55,107 112,497
Share issue 20 21,482 - 21,502
Total comprehensive income for the period - - 11,032 11,032
Dividends 8 - - (1,776) (1,776)
Share-based payments - - 272 272
31 May 2022 148 78,744 64,635 143,527
Total comprehensive income for the period - - 5,024 5,024
Dividends 8 - - (5,568) (5,568)
Share-based payments - - 504 504
30 November 2022 148 78,744 64,595 143,487
The share capital accounts record the nominal value of shares issued.
The share premium account records the amount above the nominal value 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 form an integral part of these financial statements
CONSOLIDATED Statement of Cash Flows
FOR THE HALF YEAR ENDED 30 NOVEMBER 2022
Unaudited Unaudited Audited
Period to Period to Year to 31 May
30 November 2022 30 November 2021 2022
Cash flows generated from operations £000 £000 £000
Profit for the period 5,024 5,042 16,074
Adjusted for:
Exceptional items 643 163 1,100
Taxation charged 896 1,170 3,652
Finance costs 1,700 512 1,889
Finance income (66) (66) (134)
Adjusted operating profit before working capital movement 8,197 6,821 22,581
Exceptional items (643) (163) (1,100)
Gain on disposal of tangible fixed assets (91) (72) (187)
Gain on disposal of investment (158) - -
Share-based payments 504 282 554
Non-cash movement 95 - 100
Amortisation of intangible fixed assets 123 - 161
Depreciation of tangible fixed assets 1,061 826 1,724
Operating cash flows before movements in working capital 9,088 7,694 23,833
Increase in inventory (8,346) (29,035) (16,505)
(Increase)/decrease in trade and other receivables (4,023) (3,487) 4,253
(Decrease)/increase in trade and other payables (6,170) 6,142 7,503
Net cash (used in)/generated from operations (9,451) (18,686) 19,084
Taxation paid (1,153) (2,305) (3,522)
Net cash (outflow)/inflow from operating activities (10,604) (20,991) 15,562
Investing activities
Purchase of property, plant and equipment (172) (170) (376)
Proceeds on disposal of property, plant and equipment 109 124 247
Proceeds on disposal of investment 678 - -
Deferred consideration paid on acquisition of subsidiary (4,450) - (2,362)
Acquisition of subsidiary, net of cash acquired (11,212) - (41,525)
Purchase of intangible assets (30) - (84)
Interest received - 4 -
Net cash used in investing activities (15,077) (42) (44,100)
Financing activities
Proceeds from issue of shares - 501 22,728
Costs relating to share raise - - (724)
Proceeds from bank loans 36,722 76,622 16,486
Payment of lease liabilities (973) (545) (1,437)
Dividends paid (5,568) - (6,334)
Interest paid (1,521) (484) (1,617)
Net cash inflow from financing activities 28,660 76,094 29,102
Net increase in cash and cash equivalents 2,979 55,061 564
Cash and cash equivalents at beginning of period 16,390 15,826 15,826
Cash and cash equivalents at end of period 19,369 70,887 16,390
The accompanying notes form an integral part of these financial statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE HALF YEAR ENDED 30 NOVEMBER 2022
1. Organisation and trading activities
Springfield Properties PLC ("the Group") is incorporated and domiciled in
Scotland as a public limited company and operates from its registered office
in Alexander Fleming House, 8 Southfield Drive, Elgin, IV30 6GR.
The consolidated interim financial statements for the Group for the six-month
period ended 30 November 2022 comprises the Company and its subsidiaries. The
basis of preparation of the consolidated interim financial statements is set
out in note 2 below.
The financial information for six-month period ended 30 November 2022 is
unaudited. It does not constitute statutory financial statements within the
meaning of Section 434 of the Companies Act 2006. The consolidated interim
financial statements should be read in conjunction with the financial
information for the year ended 31 May 2022, which has been prepared in
accordance with International Accounting Standards in conformity with the
requirements of the UK adopted international accounting standards. The
statutory financial statements for year ended 31 May 2022 have been delivered
to the Registrar of Companies. The auditors' report on those financial
statements was unqualified, did not draw attention to any matters by way of
emphasis, and did not contain a statement under 498(2) or 498(3) of the
Companies Act 2006.
2. Basis of preparation
The interim financial statements have been prepared in accordance with IAS 34
- Interim Financial Reporting and in accordance with UK adopted international
accounting standards.
The interim financial statements have been prepared on a going concern basis
and under the historical cost convention, except for contingent consideration.
The preparation of financial information requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. These are also disclosed in the 31 May
2022 year-end financial statements and there have not been any changes.
Although these estimates are based on management's best knowledge of the
amounts, events or actions, actual events may ultimately differ from those
estimates.
The interim financial statements do not include all financial risk information
and disclosures required in the annual financial statements and they should be
read in conjunction with the financial information that is presented in the
Group's audited financial statements for the year ended 31 May 2022. There has
been no significant change in any risk management polices since the date of
the last audited financial statements.
Going Concern
As noted in the Group's trading update issued on 12 December 2022, Springfield
entered the 2023 financial year with a strong order book and sustained demand
in private housing, but against a challenging market backdrop. Since then, the
rise in interest rates and broader economic uncertainty have impacted
reservations for the Group's private housing. The Group's revenues for this
current financial year are largely protected by the Scottish missive system,
which ensures that customers are contracted into the purchase much earlier in
the build programme. As a result, the Group remains on track for good revenue
growth for FY 2023. However, cognisant of the continued market uncertainty,
the Board is taking a cautious approach to expectations of future sales rates.
The industry-wide inflationary pressures in materials and labour remain
challenging as supply chain disruption has persisted. Private house price
growth is not anticipated in the short-term, rendering the increase in build
costs more difficult to mitigate. The Group's affordable housing business
continues to be impacted due to the industry's model of fixed-price contracts
and with the Scottish Government yet to review its affordable housing
investment benchmark. The Group therefore continues to hold off from entering
into long-term fixed-price contracts in affordable housing. In addition, the
Group's plans to deliver homes for the private rented sector (PRS) are
unlikely to come forward in the next couple of years following the Scottish
Government's intervention in rent control.
The Group continues to have a strong relationship with the Bank of Scotland -
the revolving credit facility of £87.5m has an expiry date in January 2025
and the Group also has a £2.5m overdraft facility in place which is renewed
annually. On 30 December 2022, the overdraft facility was increased by £10m
to £12.5m for the period until May 2023.
The Group prepared revised projections in December 2022 to cover the years to
May 2023 and May 2024 - these projections form the basis of the assessment to
confirm the appropriateness of the going concern basis being adopted for the
preparation of these consolidated interim financial statements.
The Board continues to believe that the fundamentals of the business and of
the housing market in Scotland remain strong. There is an undersupply of
housing across all tenures, and the Group offers high quality, energy
efficient homes in popular locations across the country - with greater
affordability in Scotland compared with the UK as whole. The Scottish
Government maintains its commitment to investing in the delivery of more
affordable homes and the Group's strategic land bank provides opportunities
for land sales in the short term.
The Group is focused on maintaining tight cost control during this volatile
period, whilst the historic investment in the land bank, over half of which
has planning permission already granted, provides the Group with visibility
and an excellent platform from which to take advantage of the next upturn in
the market cycle.
The Directors are confident that the Group has adequate resources to continue
in operational existence for the foreseeable future. Accordingly, they
continue to adopt the going concern basis in preparing these half year
financial statements.
3. Accounting Policies
The accounting policies used in preparing these interim financial statements
are the same as those set out and used in preparing the Group's audited
financial statements for the year ended 31 May 2022.
Principal risks and uncertainties
As with any business, Springfield Properties PLC faces a number of risks and
uncertainties in the course of its day-to-day operations.
The principal risks and uncertainties facing the Group are outlined within the
Group's latest annual financial statements for the year ended 31 May 2022. The
Group has reviewed these risks and uncertainties, which remain relevant for
both the 6 months to 30 November 2022 and the full financial year to 31 May
2023. The Group continues to manage and mitigate these where relevant.
Exceptional items
Exceptional items are those material items which, by virtue of their size or
incidence, are presented separately in the consolidated 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, costs relating to changes in share capital structure
and restructuring costs.
Redundancy costs relate to a review of the Group's business to identify areas
for greater efficiency and rationalisation.
4. Segmental Analysis
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.
Unaudited Period to 30 November 2022 Unaudited Period to 30 November 2021 Audited
Year to 31 May 2022
Revenue £000 £000 £000
Private residential properties 118,626 47,257 174,442
Affordable housing 27,843 31,670 64,251
Contracting 10,634 7,510 16,494
Other 4,827 833 1,908
Total Revenue 161,930 87,270 257,095
22,695 16,119 43,135
Gross profit
Administrative expenses (14,713) (9,386) (20,950)
Exceptional items (643) (163) (1,100)
Other operating income 215 88 396
Finance income 66 66 134
Finance expense (1,700) (512) (1,889)
Profit before tax 5,920 6,212 19,726
Taxation (896) (1,170) (3,652)
Profit for the period 5,024 5,042 16,074
5. Exceptional items
Unaudited Period to 30 November 2022 Unaudited Period to 30 November 2021 Audited
Year to 31 May 2022
£000 £000 £000
Redundancy costs 276 141 141
Acquisition and other transaction related costs (1) 367 - 859
Other acquisition and other transaction related costs (2) - - 100
Wage cost for furloughed employees - 22 -
Exceptional items 643 163 1,100
(1) Acquisition and other tractions costs relating to acquiring the business
of Mactaggart and Mickel Group Limited (y/e 31 May 2022 Tulloch Homes Group
and its subsidiary companies)
(2) Y/e 31 May 2022 - other acquisition costs and other related costs
relating to planning being achieved at Carlaverock which had previously been
assessed as 95% likely
6. Taxation
The results for the six months to 30 November 2022 include a tax charge of
15.1% of profit before tax (30 November 2021: 18.8%; 31 May 2022: 18.5%),
representing the best estimate of the average annual effective tax rate
expected for the full year, applied to the pre-tax income of the six-month
period.
7. Earnings per share
The calculation of the basic (and diluted) earnings per share is based on the
following data:
Unaudited Period to 30 November 2022 Unaudited Period to 30 November 2021 Audited
Year to
31 May 2022
Earnings £000 £000 £000
Profit for the period 5,024 5,042 16,074
Adjusted for the impact of tax adjusted exceptional costs in the year 521 163 970
Normalised earnings 5,545 5,205 17,044
Unaudited Period to 30 November 2022 Unaudited Period to 30 November 2021 Audited
Year to 31 May 2022
Number of Shares
Weighted average number of ordinary shares for the purpose of basic earnings 118,469,399 102,306,694 109,022,146
per share
Effect of dilutive potential ordinary shares: share options 3,377,930 1,929,619 2,797,323
Weighted average number of ordinary shares for the purpose of diluted earnings 121,847,329 104,236,313 111,819,469
per share
Unaudited Period to 30 November 2022 Unaudited Period to 30 November 2021 Audited
Year to 31 May 2022
Pence Pence Pence
Earnings per ordinary share (pence per share)
Basic earnings per share 4.24 4.93 14.74
Diluted earnings per share 4.12 4.84 14.37
Adjusted earnings per ordinary share (pence per share)
Basic earnings per share 4.68 5.09 15.63
Diluted earnings per share 4.55 4.99 15.24
8. Dividends
Unaudited Period to 30 November 2022 Unaudited Period to 30 November 2021 Audited
Year to 31 May 2022
£000 £000 £000
Final dividend - y/e 31 May 2021 - 4,558 4,558
Interim dividend - y/e 31 May 2022 - - 1,776
Final dividend - y/e 31 May 2022 5,568 - -
5,568 4,558 6,334
The final dividend declared for the year ended 31 May 2022 was 4.7p per share
amounting to £5,568,061. This dividend was declared before 30 November 2022
and is included within liabilities at 30 November 2022. The dividend was paid
in December 2022.
9. Share Capital
The company has one class of ordinary share which carries full voting rights
but no right to fixed income or repayment of capital. Distributions are at the
discretion of the Company.
The share capital account records the nominal value of shares issued. The
share premium account records the amount above the nominal value received for
shares sold, less transaction costs.
Ordinary shares of 0.125p - allotted, called up and fully paid Number of shares Share capital Share premium
£000 £000
At 1 December 2021 102,565,316 128 57,262
Share issue 15,904,083 20 21,482
At 31 May 2022 and 30 November 2022 118,469,399 148 78,744
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) £362,300 paid on 24 April 2022 (ii) £6,137,700 paid on 1
December 2022 and (iii) £6,500,000 payable on 1 July 2023. The outstanding
discounted amount payable at the period end is £12,611,876 (p/e November
2021: £nil; y/e 31 May 2022: £12,574,228).
As part of acquiring the Scottish housebuilding business of Mactaggart &
Mickel Group Limited, there is a further £30,781,108 of deferred
consideration payable. This is to be paid proportionally as homes are sold
over 5 years, commencing in September 2023. The outstanding discounted amount
payable at the period end is £29,365,111 (p/e November 2021: £nil; y/e 31
May 2022: £nil).
Unaudited Period to 30 November 2022 Unaudited Period to 30 November 2021 Audited
Year to 31 May 2022
£000 £000 £000
Deferred consideration < 1 year 14,023 - 6,119
Deferred consideration > 1 year 27,954 - 6,455
41,977 - 12,574
11. Contingent consideration and contingent liabilities
As part of the purchase agreement of Walker Group Springfield Holdings
Limited, there was a further £6,000,000 payable which was included within
Provisions. £4,000,000 was payable when outline planning was granted at
Carlaverock and £2,000,000 payable when detailed planning is granted at
Carlaverock the probability of which was assessed at 98% and 95%
respectively. This has been discounted at a market rate of interest.
£4,000,000 was paid in December 2019 and £2,000,000 was paid in January
2022. The outstanding discounted amount payable at the period end is £nil (30
November 2021: £1,900,000; 31 May 2022: £nil).
As part of the purchase agreement of Dawn Homes Holdings Limited there is a
further £2,500,000 payable for an area of land if (i) the Group 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 provision of
£2,000,000 based on 80% probability. The outstanding amount payable at the
period end included within Provisions is £2,000,000 (30 November 2021:
£2,000,000; 31 May 2022: £2,000,000).
The remaining £500,000 has been treated as a contingent liability due to the
uncertainty over the future payment.
Contingent consideration Unaudited Period to 30 November 2022 Unaudited Period to 30 November 2021 Audited
Year to 31 May 2022
£000 £000 £000
Walker Group Springfield Holdings Limited - 1,900 -
Dawn Homes Holdings Limited 2,000 2,000 2,000
2,000 3,900 2,000
Contingent liabilities Unaudited Period to 30 November 2022 Unaudited Period to 30 November 2021 Audited
Year to 31 May 2022
£000 £000 £000
Walker Group Springfield Holdings Limited - 100 -
Dawn Homes Holdings Limited 500 500 500
500 600 500
12. Provision
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. In the prior period, an onerous lease
provision has been created due to the closure of the Walker office in
Livingston.
Unaudited Period to 30 November 2022 Unaudited Period to 30 November 2021 Audited
Year to 31 May 2022
£000 £000 £000
Dilapidation provision 177 190 150
Onerous lease provision - 100 -
Maintenance provision 2,463 671 2,496
2,640 961 2,646
Unaudited Period to 30 November 2022 Unaudited Period to 30 November 2021 Audited
Year to 31 May 2022
£000 £000 £000
Provisions < 1 year 821 - 821
Provisions > 1 year 1,819 961 1,825
2,640 961 2,646
13. Transactions with related parties
Other related parties include transactions with a retirement scheme in which
some of the directors are beneficiaries, and close family members of key
management personnel. During the period dividends totalling £1,854k (p/e
November 2021: £1,993k; y/e May 2022: £2,343k) were paid to key management
personnel.
During the period the Group entered into the following transactions with
related parties:
Sale of goods Unaudited Period to 30 November 2022 Unaudited Period to 30 November 2021 Audited
Year to 31 May 2022
£000 £000 £000
Bertha Park Limited ((1)) 8,090 7,726 18,691
Other entities which key management personnel have control, significant 45 39 83
influence or hold a material interest in
Key management personnel 189 10 176
Other related parties 17 2 29
8,341 7,777 18,979
Sales to related parties represent those undertaken in the ordinary course of
business.
Purchase of goods Unaudited Period to 30 November 2022 Unaudited Period to 30 November 2021 Audited
Year to 31 May 2022
£000 £000 £000
Bertha Park Limited ((1)) - 350 371
Entities which key management personnel have control, significant influence or 17 196 45
hold a material interest in
Key management personnel - - 11
Other related parties 118 42 332
135 588 759
Unaudited Period to 30 November 2022 Unaudited Period to 30 November 2021
Audited
Year to 31 May 2022
Rent paid to £000 £000 £000
Entities which key management personnel have control, significant influence or
hold a material interest in
81 80 170
Key management personnel 3 5 -
Other related parties 50 14 107
134 99 277
13. Transactions with related parties (continued)
Unaudited Period to 30 November 2022 Unaudited Period to 30 November 2021
Audited
Year to 31 May 2022
Interest received from £000 £000 £000
Bertha Park Limited ((1)) 63 63 125
63 63 125
The following amounts were outstanding at the reporting end date:
Unaudited Period to 30 November 2022 Unaudited Period to 30 November 2021
Audited
Year to 31 May 2022
Amounts receivable £000 £000 £000
Bertha Park Limited ((1)) 10,022 6,566 9,167
Entities which key management personnel have control, significant influence or
hold a material interest in
4 56 54
Key management personnel 40 3 39
Other related parties 4 - 1
10,070 6,625 9,261
Unaudited Period to 30 November 2022 Unaudited Period to 30 November 2021
Audited
Year to 31 May 2022
Amounts payable £000 £000 £000
Entities which key management personnel have control, significant influence or
hold a material interest in
32 44 -
Other related parties 43 - 52
75 44 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 the company and its subsidiaries, which is a related
party, have been eliminated on consolidation and are not disclosed in this
note.
((1) Bertha Park Limited, a company in which Sandy Adam and Innes Smith are
shareholders and directors.)
14. Analysis of net debt Unaudited Period to 30 November 2022 Unaudited Period to 30 November 2021 Audited
Year to 31 May 2022
£000 £000 £000
Cash in hand and bank 19,369 70,887 16,390
Bank borrowings (87,208) (110,622) (50,486)
Net bank debt (67,839) (39,735) (34,096)
Lease liability (5,825) (3,224) (3,954)
Net debt (73,664) (42,959) (38,050)
Reconciliation of net cashflow to movement in net debt is as follows:
At 30 November 2022
At 1 June 2022 New Leases Cashflow Fair Value
£000 £000 £000 £000 £000
Cash in hand and bank 16,390 - 2,979 - 19,369
Bank borrowings (50,486) - (36,722) - (87,208)
Lease (3,954) (2,703) 973 (141) (5,825)
Net Debt (38,050) (2,703) (32,770) (141) (73,664)
15. Acquisition in the period
On 21 June 2022, the Group acquired the Scottish housebuilding business of
Mactaggart & Mickel for a total consideration of £46.3m. Mactaggart &
Mickel is a premium brand housebuilder that has been delivering high-quality
housing across the Central belt of Scotland for almost 100 years.
Under the terms of the acquisition, the Group acquired six live private and
affordable sites with work in progress for a consideration of £15.0m and
acquired a brand licence to build homes as Mactaggart & Mickel on a
further 11 private and affordable sites for the deferred consideration of
£30.8m.
The housebuilder's fixed assets and WIP were purchased by Springfield M&M
Homes Limited. Employees have been transferred under a TUPE agreement.
The acquisition also included Timber Systems, a timber frame factory near
Glasgow, for a consideration of £0.5m. The addition of a second timber frame
factory, which complements the Group's existing facility in Elgin, will secure
kit supply and increase capacity for future growth while further reducing the
Group's carbon footprint.
The timber kit fixed assets and stock were purchased by Springfield Timber Kit
Systems Limited. Employees have been transferred under a TUPE agreement and
Springfield Timber Kit Systems have taken over the lease of the building.
Under IFRS 3, Business Combinations, the final fair value assessment of assets
and liabilities acquired will be fully completed within 12 months of the
acquisition date and will be reported within the 31 May 2023 financial
statements.
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