REG - Springfield Props. - Interim Results
22/02/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220222:nRSV3509Ca&default-theme=true
RNS Number : 3509C Springfield Properties PLC 22 February 2022
22 February 2022
Springfield Properties plc
("Springfield", the "Company" or the "Group")
Interim Results
Excellent build and sales activity across the business and on track for
significant full year growth
Springfield Properties (AIM: SPR), a leading housebuilder in Scotland
delivering private, affordable and PRS housing, announces its interim results
for the six months ended 30 November 2021.
Financial Summary
H1 2022 H1 2021*
£m £m
Revenue 87.3 94.4
Private housing revenue 47.3 71.9
Affordable housing revenue 31.7 18.3
Contract housing revenue 7.5 3.8
Other revenue 0.8 0.4
Gross margin** 18.5% 19.6%
Operating profit 6.7 9.3
Profit before tax 6.2 8.6
Basic EPS (p) 4.93 7.07
Interim dividend per share (p) 1.5 1.3
* H1 2021 results reflect additional sales from completions rolled over due to
COVID-19
** Gross margin reflects sales mix, namely record revenue from affordable
housing in H1 2022
Operational Summary
· On track to deliver full year results in line with market
expectations
· Private housing
o 197 private homes completed (H1 2021: 299), reflecting the more normal
seasonal phasing of completions across the financial year, with H1 2021 being
boosted by completions that had been scheduled for the end of FY 2020, but
delayed due to the public lockdown
o Record order book to be delivered in H2 following strong sales in the period
o Eight new private developments commenced completions post period
· Affordable housing
o 204 affordable homes completed (H1 2021: 126) reflecting delivery against
the Group's substantial contracted affordable order book
o On track to deliver a record year in affordable housing, with year-on-year
revenue expected to increase by approximately 35%
· Contract housing
o In contract housing, where the Group provides development services to third
party private organisations, 58 homes were delivered (H1 2021: 18)
o Commenced generating revenue under private rented sector ("PRS") housing
contract
· Effectively managed cost and supply chain pressures with gross
margins maintained when excluding the impact of regional and housing mix in
private and affordable housing respectively
· Planning approval received for 240 homes during the period and the
proportion of land bank with planning permission was 51.6% (31 May 2021:
52.4%); post period submitted planning application for a new, large
development of up to 1,000 homes in Edinburgh commuter belt
· Total land bank of 15,308 plots at period end (31 May 2021: 15,281)
with Gross Development Value ("GDV") of £3.1bn (31 May 2021: £3.1bn)
· Post period, acquired Tulloch Homes, an Inverness-based housebuilder
focused on building high-quality private housing in the Scottish Highlands and
with a GDV of £375.4m, to accelerate growth, enhance earnings and strengthen
the Company's foothold in an area of high demand
Innes Smith, Chief Executive Officer of Springfield Properties, commented:
"This was a strong period for Springfield. We continued to experience high
demand across the business and our total order book grew to a record level. We
maintained excellent build activity, setting us up for an outstanding second
half of the year - with handovers starting on eight new private sites since
period end. I am pleased at how we effectively managed the material and supply
chain pressures facing our industry, and that we were able to maintain
impressive levels of customer satisfaction. Sustainability continued to be a
focus. We're proud that we already deliver over 90% of our homes off-site from
timber kits, and we will be setting benchmarks for further measures across
operations in our ESG strategy later this year.
"We entered the second half on track for strong growth for FY 2022 in line
with market expectations. This confidence is based on homes completed,
reserved and missived, and our highest ever revenue in affordable housing,
giving us significant visibility over our revenue forecasts. Our position was
further strengthened, post period, with the acquisition of Tulloch Homes. This
enhances our foothold in the Highlands, an area of strategic importance, and
will accelerate our growth, being earnings enhancing from the current year.
Supported by long-term market drivers and with demand continuing to outstrip
supply, the Board continues to look to the future with great confidence and to
delivering sustainable value for all of our stakeholders."
Enquiries
Springfield Properties
Sandy Adam, Chairman +44 1343 552550
Innes Smith, Chief Executive Officer
Singer Capital Markets
Shaun Dobson, Rachel Hayes, James Moat +44 20 7496 3000
(Investment Banking)
Luther Pendragon
Harry Chathli, Claire Norbury +44 20 7618 9100
Analyst Presentation
Innes Smith, Chief Executive Officer, Michelle Motion, Chief Financial
Officer, and Martin Egan, Chief Operating Officer, will be hosting a webinar
for analysts at 9:00am GMT today. To register to participate, please contact
tanweersiddique@luther.co.uk.
Operational Review
The Group maintained strong build activity throughout the period to 30
November 2021 with total completions increasing to 459 homes (H1 2021: 443)
and has substantial work-in-progress for delivery in the second half. There
was a significant increase in affordable and contract housing completions,
with the Group on track to deliver record revenue in affordable housing this
year. Private housing completions were comparatively lower primarily due to H1
2021 being boosted by completions that had been scheduled for handover in the
final two months of 2020, but rolled over due to the COVID-19 lockdown. It
also reflects the timing of completions, with handovers having started at
eight new private developments since period end. Sales activity continued to
be strong with high demand experienced across the business, including a
significant increase in private housing reservations leading to growth in the
Group's total order book for delivery over the next two years.
Springfield continued to advance the delivery of its strategy. During the
period construction commenced on, and the first revenue was received for, its
first PRS housing, which further diversifies the Group's revenue streams. In
addition, post period, in line with its stated strategy of expanding via
acquisition and into new territories to accelerate growth, the Group acquired
Tulloch Homes. The acquisition expands the Group's land bank in the Highlands
of Scotland around Inverness, which is an area of high and growing demand
where Springfield has been organically building a presence over the last few
years.
The Group continued to effectively manage current industry-wide material and
labour supply constraints, with gross margins maintained when excluding the
impact of regional or housing mix. The large proportion of fixed price
contracts for materials that the Group had in place during the period as well
as house price inflation served to mitigate the impact of increased costs.
Similarly, Springfield's strong, established relationships with
sub-contractors, together with its large directly employed workforce, helped
the Group maintain its labour force.
Land Bank
At 30 November 2021, the Group had 44 active developments (31 May 2021: 45
active developments) and during the period:
· 8 developments were completed;
· 7 new active developments were added to the land bank;
· planning was granted on 240 plots on 2 developments, with the
proportion of the land bank with planning consent being 51.6% at 30 November
2021 (31 May 2021: 52.4%); and
· the land bank consisted of 15,308 plots (31 May 2021: 15,281).
Post period, the land bank was further expanded with a planning application
being submitted for a new, large development of up to 1,000 homes in the
Edinburgh commuter belt and in the Highlands region of Scotland, with the
acquisition of Tulloch Homes. On acquisition, Tulloch Homes' land bank
consisted of 1,791 plots of which 91% was owned and paid for, and 87% with
planning permission.
Private Housing
During the period, the Group completed 197 private homes (H1 2021: 299).
This primarily reflects H1 2021 being boosted by completions that were
scheduled to be handed over at the end of the 2020 financial year but were
postponed until lockdown restrictions were lifted. It also represents the
timing of handovers, with eight new private developments having started
handing over homes in H2 2022, which will contribute significantly to full
year revenue.
The average selling price for private housing was £240k (H1 2021: £240k).
There was a general increase in sales prices on an underlying basis, excluding
regional and housing-type mix, with a larger proportion of revenue and
completions in regions of Scotland, which typically have lower house prices.
The Group continued to experience excellent demand, with a significant
increase in the number of homes missived or reserved at 30 November 2021
compared with 31 May 2021, resulting in a record order book in private housing
at period end. In addition, the proportion of available-for-sale homes that
were missived or reserved at 30 November 2021 was higher than at both 31 May
2021 and 30 November 2020.
The Group had 27 active private housing developments at 30 November 2021
(31 May 2021: 24), with six active developments added during the period and
three developments completed. In total, as at 30 November 2021,
the private housing land bank was 10,562 plots on 59 developments
(31 May 2021: 10,426 plots on 56 developments).
Planning consent was granted for 225 plots on two developments for private
housing. As at 30 November 2021, 49.4% (5,215 plots) of private housing
plots had planning consent (31 May 2021: 48.7%), with 25.0%
going through the planning process and
25.6% at the pre-planning stage.
Post period, the Group submitted a planning application for a new, large
development of up to 1,000 homes. This development is to be built on land that
the Group purchased in the prior year in Midlothian in the Edinburgh commuter
belt. The proposed development is designed as a new neighbourhood with a
distinct identity which will, following the Scottish government's 20-minute
neighbourhood model, integrate into existing settlements where residents can
easily access high quality services and amenities.
Village developments
Springfield Villages are standalone developments that include infrastructure
and neighbourhood amenities. Each Village is designed to have up to
approximately 3,000 homes, catering for around 7,000 residents, with ample
green space and community facilities. They primarily offer private housing,
but also include affordable housing and, beginning with Bertha Park, include
PRS housing. Springfield has three Villages that are already home to growing
communities and two Village developments that are going through the planning
process. The Group delivers housing at Bertha Park under contract as described
in 'Contract Housing' below.
There were 51 private completions at the Group's Village developments during
the period (H1 2021: 56). This number increases to a total of 74 private
completions when Bertha Park is included (H1 2021: 68). In addition, a
contract was signed for a retail unit at Bertha Park.
There was also a continued expansion of amenities and strengthening of
community engagement at the Village developments. This includes the hosting of
community events, the establishment of a school bus route through Dykes of
Gray and Bertha Park gaining its own post box, being symbolic of a 'place'
being created.
Affordable Housing
There was a significant increase in the number of affordable home completions
to 204 (H1 2021: 126). The growth in completions reflects delivery against the
Group's substantial contracted order book, with the Group on track to achieve
its highest ever revenue in affordable housing this year. Average selling
price increased to £155k (H1 2021: £146k) as a result of a change in housing
mix.
The number of active affordable housing developments was 15 at 30 November
2021 (31 May 2021: 19), with one active development added during the period
and five developments completed. As at 30 November 2021, the total affordable
housing land bank was 4,004 plots on 47 developments (31 May 2021: 4,055 plots
on 48 developments).
The Group secured two new affordable housing contracts during the period and
one post period. The Group also expanded its partnership network with the
signing of its first contract with Aberdeenshire Council, for 38 homes at
Banff.
Springfield continued to make progress under its local authority framework
agreement with Moray Council for 10 affordable-only developments. The handover
of two developments was completed during the period, bringing the total number
delivered under this agreement to five. Construction is underway on two new
developments, one of which began during the period, and contract negotiations
commenced for the remaining three developments under this agreement.
In total, the Group expects to commence work on eight new affordable housing
contracts during the second half of the year.
As at 30 November 2021, 48.7% (1,947 plots) of affordable housing plots had
planning (31 May 2021: 52.7%), with 27.7% of plots going through the planning
process and 23.6% 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). At present, the Group's contract housing delivery consists of
services provided to Bertha Park Limited, the developer of the Bertha Park
Village, under a framework agreement. The Group performs development services
and receives revenue based on costs incurred plus a fixed mark up. At Bertha
Park, the Group is delivering private, affordable and PRS housing. The Group
has introduced contract housing as a segment because of the increased
materiality of revenue now being generated from the provision of development
services to Bertha Park Limited, particularly due to beginning the delivery of
PRS housing.
At 31 May 2021, the contract housing land bank with planning consent consisted
of 742 plots (31 May 2021: 800). The 58 homes completed during the period (H1
2021: 18) comprised 23 private homes, 17 affordable homes and 18 PRS homes at
Bertha Park Village. This represented the completion of the second phase of
affordable homes at Bertha Park. The Group also commenced construction on the
first Mid-Market Rent housing to be offered at Bertha Park, which is a form of
affordable housing for those in work where housing associations utilise grants
to enable market rents to be discounted.
A key milestone was achieved with the commencement of revenue received for the
delivery of Springfield's first PRS housing, in partnership with Sigma Capital
Group plc ("Sigma"), a high-quality PRS provider specialising in suburban,
family homes. At Bertha Park, the Group will deliver 75 purpose-built homes
for families to rent privately, which, following handover, will be owned, let
and managed by Sigma. This is expected to increase the build out rate for the
Village and underscores Springfield's commitment to develop mixed-tenure
Villages that meet everyone's housing needs. During the period, the Group
began construction on the PRS homes.
Acquisition of Tulloch Homes
As announced on 1 December 2021, post period, the Group acquired Thistle SPV2
Limited, the owner of Tulloch Homes, an Inverness-based housebuilder focused
on building high-quality private housing in the Scottish Highlands, for a net
consideration of £56.4m.
Tulloch Homes is a profitable, cash generative and well-run housebuilder with
significant land ownership in the Scottish Highlands, in and around Inverness.
On acquisition, Tulloch Homes' land bank consisted of 1,791 plots (87% with
planning permission) across 11 active and 22 future developments with a total
GDV of £375.4m. In relation to the composition of its land bank, 91% is
owned and paid for and 9% is contracted.
The acquisition expands the Group's land bank in an area of high and growing
demand where the Group has been strategically building a presence over the
last few years. In particular, it strengthens the Group's private housing land
bank while creating opportunities for affordable housing.
The Group is gaining a strong, established management team and expects the
acquisition to reinforce the Group's supply chain capabilities with access to
labour and subcontractors in the local area.
Accordingly, the acquisition of Tulloch Homes is expected to accelerate growth
and enhance earnings per share from the current year and significantly enhance
earnings in its first full year of ownership, before consideration of
potential synergies.
Financial Review
Revenue for the six months to 30 November 2021 was £87.3m (H1 2021: £94.4m),
with the largest portion continuing to be generated by private housing but
with a significant increase in the contribution from affordable housing in
particular.
Revenue H1 2022 H1 2021
£'000 % £'000 %
Private housing 47,257 54.2 71,884 76.1
Affordable housing 31,670 36.3 18,342 19.5
Contract housing 7,510 8.6 3,805 4.0
Other* 833 0.9 391 0.4
TOTAL 87,270 94,422
*Primarily land sales
The lower Group revenue compared with the same period of the previous year was
due to additional sales in H1 2021 from completions rolled over due to
COVID-19.
As noted above, the reduction in private housing revenue primarily reflects
the more normal seasonal phasing of completions of private homes across the
financial year, with H1 2021 including additional sales completions that had
been scheduled for the end of 2020. It also represents the timing of
handovers, with handovers on eight new private developments having started
after the period end, which will contribute significantly to full year
revenue. The strong growth in affordable housing reflects delivery of the
Group's substantial contracted order book, with the Group having entered the
year with its highest ever order book in affordable housing. In addition, the
Group received its first revenue in contract housing from delivery under its
PRS contract.
Gross profit was £16.1m (H1 2021: £18.5m) and gross margin was 18.5% (H1
2021: 19.6%), reflecting the increased contribution of affordable housing
compared to private housing in the period. On an underlying basis, to exclude
the impact of regional and housing mix, gross margins were maintained across
the business, reflecting the Group's effective management of inflationary cost
pressures and supported by house price increases.
Total administrative expenses were £9.5m (H1 2021: £9.3m). When adjusted to
exclude exceptional items relating to the cost of furloughed employees
(largely offset in the prior year by grant income received under the UK
Government's Coronavirus Job Retention Scheme, with no grant income being
claimed during the period) and redundancy costs from a rationalisation of the
business, administrative expenses were £9.4m compared with £8.9m for H1
2021. The increase reflects the fact that the prior period includes almost two
months of limited operations due to the pandemic lockdown (which was longer in
Scotland than in England).
The Group made an operating profit of £6.7m (H1 2021: £9.3m) and profit
before tax was £6.2m (H1 2021: £8.6m), primarily reflecting the lower
revenue and gross margin.
Tax expense was £1.2m (H1 2021: £1.6m) resulting in profit after tax of
£5.0m (H1 2021: £6.9m). The Group is not subject to the Residential Property
Developers Tax ('cladding tax') as it is currently below the £25m profit
threshold.
Basic earnings per share were 4.93 pence (H1 2021: 7.07 pence).
Net debt at 30 November 2021 was £43.0m (31 May 2021: £20.8m). This reflects
the significant work-in-progress at the end of the period for delivery in the
second half of the 2022 financial year as well as the contribution to the year
ended 31 May 2021 of the receipt of revenues from homes where the majority of
build costs had been incurred in the prior year.
During the period, the Group secured an extension to its £64.5m revolving
credit facility ("RCF") to January 2025 on similar terms to the existing
facility. Post period, the amount available under the RCF was increased to
£87.5m, with the margin and basis of interest calculation remaining the same.
The majority of this increase (£21.4m) was used to fund a portion of the
initial cash consideration in relation to the acquisition of Tulloch Homes.
The Group also established new loan facilities post period, totalling £43.2m,
for the purposes of providing bridging funding for the acquisition of Tulloch
Homes. These bridging finance facilities were fully repaid by the end of
January 2022 using the net cash of Tulloch Homes on completion of the
acquisition and the proceeds of the Group's fundraising that, in December
2021, raised approximately £22.0m (excluding expenses) through the placing of
15,714,286 new ordinary shares.
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 and
the Group has an excellent current Net Promoter Score of 61.1. The Customer
Feedback Group, introduced at the end of last year to consider the qualitative
feedback received in customer surveys, is making good progress. An early
outcome of this has been the piloting of 'Spaciable', an online portal and app
that allows customers to access paperwork relating to their home, after sales
information and instructional videos.
Quality management systems have continued to be a focus with the Group
promoting continuous improvement and driving up standards across the brands.
ISO9001 was recertified within the Springfield brand following an in-period
audit and plans are in place for this quality accreditation to be rolled out
across Group operations.
The Group welcomed the publication, in December 2021, of 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. The Group is well-placed to meet the
requirements of the NHQB Code and become a registered developer with the New
Homes Quality Board well ahead of the December 2022 deadline.
Sustainability
Springfield has always had sustainability at its core and already has an
excellent reputation within the sector as a progressive builder. With a
commitment to formalising its approach to sustainability to capture and report
on activities in support of this philosophy, Springfield will publish a
dedicated strategy for ESG later this calendar year.
Springfield is taking a comprehensive approach to developing its ESG strategy
to establish a framework to inform shareholders, partners and its employees of
its performance and progress. During the period, a Group Quality, Environment
and Sustainability Manager was appointed and a specialist consultant was
engaged to work with the wider Board and senior management team. Work has
begun to establish a baseline of activities across its operations, which will
be used to set targets, outline route maps and identify key partners to
collaborate with along the journey. Described as a materiality assessment, the
Group is reviewing how each and every operational activity can contribute to
the United Nations Sustainable Development Goals.
The Group is well established on the route map to net zero with timber frame
construction already being used in over 90% of homes and vast experience
gained across over 60 developments in delivering air-source heating as an
alternative to fossil fuels. Springfield has had its own off-site timber frame
factory for several years. With housebuilding peers striving to increase the
number of homes they deliver off-site and from timber, this is a key
differentiator for the Group. With the exception of some bespoke apartment
blocks delivered for affordable housing partners, the Group is committed to
constructing all homes from timber. In addition, the timber used is sourced
responsibly and accredited by the Forest Stewardship Council or the Programme
for the Endorsement of Forest Certification.
During the period, the first electric van was introduced for the Group's
timber kit factory, as part of the phasing in of a fully electric fleet, and
the Group began providing the option of zero emission electric vehicles for
staff. The Group has also increased its support for communities with the
appointment, post period, of a full-time Community Engagement
Co-ordinator. This resource will facilitate stronger engagement during the
planning process and support the creation of new communities within the
Group's larger developments, in particular the Villages.
Markets
The Group continues to be supported by strong short- and long-term market
drivers across its private and affordable housing.
Demand for housing in Scotland continues to outstrip supply, which is
supported by a competitive mortgage market with a good range of products. As a
result, house price inflation in Scotland was 11.4% in the year to November
2021. For new build homes, the increase in house prices is largely offsetting
the industry-wide increases in material costs.
A further key trend is the increasing desirability for the type of housing
Springfield offers. Customers are prioritising homes that are more spacious,
with gardens and greenspace and, as particularly provided by the Group's
Village developments, which have local amenities within walking distance.
Key differences in the Scottish legal system continue to provide strong
visibility. In particular, the Scottish missive system ensures that customers
are contracted into the purchase much earlier in the build programme. In
addition, with all homes sold on freehold, where the buyer becomes the sole
owner of both the building and the land on which it stands, the Group is not
impacted by the ground rents investigations seen elsewhere in the UK.
The Scottish Government remains committed to the delivery and funding of
affordable housing. Following re-election in May 2021, the Scottish Government
established a target to deliver 110,000 energy efficient affordable homes by
2032 with almost £3.5bn earmarked for affordable housing funding through to
March 2026. Springfield's continued strong partnerships with local authorities
and housing associations mean that it is well-placed to deliver homes to help
achieve this target.
The Scottish Government has also set out an increase in affordable housing
investment benchmarks from October 2021 and confirmed that the benchmarks will
be adjusted to account for inflation on an annual basis. Additional grant
funding will now also be available for quality measures, which includes
specifications that Springfield's affordable housing already offer as
standard, such as space for home working. The Group and its partners expect to
benefit from these changes going forward.
Dividend
The Board is pleased to declare an increased interim dividend of 1.5p per
share (H1 2021: 1.3p) with an ex-dividend date of 10 March 2022, a record date
of 11 March 2022 and a payment date of 31 March 2022.
Outlook
Springfield entered the second half of the financial year with substantial
work-in-progress for delivery in H2 and with excellent visibility over full
year revenue forecasts based on homes delivered, contracted (missived and
affordable contracts) and reserved. The Group also entered the second half
with a record total order book. The Group's position was further enhanced with
the acquisition of Tulloch Homes - strengthening the Group's foothold in an
area of strategic importance and further accelerating growth. Accordingly, the
Group is on track to deliver its highest ever annual revenue.
In particular, the Group continues to expect a significantly increased
contribution to revenue from affordable housing, which is on track for a
record year. In private housing, the Group anticipates delivering strong
growth, reflecting the same level of private housing sales year-on-year
(despite the beneficial contribution to FY 2021 from the large number of homes
that were rolled over due to the pandemic) on an underlying basis and
bolstered by the contribution from Tulloch Homes. Revenue from contract
housing is also expected to increase, supported by the generation of revenue
from PRS housing this year.
The Group is experiencing excellent demand across the business, which is
supported by strong market drivers in private and affordable housing. There
remains an undersupply of housing in Scotland and the desirability of the type
of housing Springfield offers has increased. There is good mortgage
availability and the Scottish Government has restated its commitment to
investing in the delivery of more affordable homes.
The Group is well-positioned to manage the moderate inflationary cost
pressures that are being experienced across the industry thanks to its robust
supply chain, with a high proportion of materials being procured directly. The
Group also continues to expect house price inflation to absorb any increased
build costs this year.
As a result, the Board remains confident of delivering growth for the full
year in line with market expectations.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE HALF YEAR ENDED 30 NOVEMBER 2021
Unaudited Period to Unaudited Period to Audited Year to
30 November 2021 30 November 2020 31 May 2021
Notes
£000 £000 £000
Revenue 4
87,270 94,422 216,692
Cost of sales
(71,151) (75,917) (177,895)
Gross profit 4
16,119 18,505 38,797
Administrative expenses before exceptional items
(9,386) (8,864) (19,422)
5 (163) (472) (622)
Exceptional items
Total administrative expenses (9,549) (9,336) (20,044)
Other operating income
88 135 375
Operating profit
6,658 9,304 19,128
Finance income
66 148 367
Finance costs
(512) (894) (1,607)
Profit before taxation
6,212 8,558 17,888
Taxation 6
(1,170) (1,640) (4,178)
Profit for the period and total comprehensive income 4
5,042 6,918 13,710
Profit for the period and total comprehensive income is attributable to:
- Owners of the parent
company
5,042 6,918 13,710
5,042 6,918 13,710
Earnings per share (pence per share)
Basic earnings per share 7
4.93p 7.07p 13.79p
Diluted earnings per share 7
4.84p 6.96p 13.55p
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 2021
Unaudited Unaudited Audited
30 November 2021 30 November 2020 31 May
As restated 2021
Non-current assets Notes £000 £000 £000
Property, plant and equipment 4,935 5,436 4,539
Intangible assets 1,649 1,655 1,649
Deferred taxation 524 198 539
Accounts receivable 5,324 563 5,411
12,432 7,852 12,138
Current assets
Inventories 185,809 155,066 156,774
Trade and other receivables 22,742 17,586 23,683
Corporation tax 191 - -
Cash and cash equivalents 70,887 1,748 15,826
279,629 174,400 196,283
Total assets 292,061 182,252 208,421
Current liabilities
Trade and other payables 57,996 34,622 51,646
Deferred consideration 10 - 2,167 -
Short term bank borrowings 43,200 18,000 34,000
Short-term obligations under lease liabilities 902 941 760
Corporation tax - 494 901
102,098 56,224 87,307
Non-current liabilities
Long-term bank borrowings 67,422 16,000 -
Long-term obligations under lease liabilities 2,322 2,046 1,854
Contingent consideration 11 3,900 3,848 3,900
Deferred taxation 2,861 2,419 2,920
Provisions 12 961 522 1,210
77,466 24,835 9,884
Total liabilities 179,564 81,059 97,191
Net assets 112,497 101,193 111,230
Equity
Share capital 9 128 122 128
Share premium 9 57,262 52,382 56,761
Retained earnings 55,107 48,689 54,341
Equity attributable to owners of the parent company 112,497 101,193 111,230
At 30 November 2021, the directors reviewed the liabilities included in the
provisions line in the prior half year and have concluded, in line with
accounting standards, that contingent consideration should be presented
separately. The prior half year was restated to reflect that. These
presentation changes have no impact on net assets.
The accompanying notes form an integral part of these financial statements.
CONSOLIDATED Statement of Changes in Equity
FOR THE PERIOD ENDED 30 NOVEMBER 2021
Share Capital Share Premium Retained earnings Total
Notes £000 £000 £000 £000
1 June 2020 122 52,330 43,412 95,864
Share issue - 52 - 52
Total comprehensive income for the period - - 6,918 6,918
Dividends 8 - - (1,958) (1,958)
Share based payments - - 317 317
30 November 2020 122 52,382 48,689 101,193
Share issue 6 4,379 - 4,385
Total comprehensive income for the period - - 6,792 6,792
Dividends - - (1,316) (1,316)
Share based payments - - 176 176
31 May 2021 128 56,761 54,341 111,230
Share issue 9 - 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
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
PERIOD to 30 NOVEMBER 2021
Unaudited Unaudited Audited
Period to 30 November 2021 Period to 30 November 2020 Year to 31 May 2021
Cash flows generated from operations £000 £000 £000
Profit for the period 5,042 6,918 13,710
Adjusted for:
Exceptional items 163 472 622
Taxation charged 1,170 1,640 4,178
Finance costs 512 894 1,607
Finance income (66) (148) (367)
Adjusted operating profit before working capital movement 6,821 9,776 19,750
Exceptional items - cash movements (163) (472) (541)
Gain on disposal of tangible fixed assets (72) (39) (148)
Share based payments 282 317 493
Non-cash movement - 150 -
Amortisation of intangible fixed assets - 56 61
Depreciation of tangible fixed assets 826 1,138 2,175
Operating cash flows before movements in working capital 7,694 10,926 21,790
(Increase)/decrease in inventory (29,035) 19,438 17,498
Increase in trade and other receivables (3,487) (4,125) (14,321)
Increase in trade and other payables 6,142 12,326 32,037
Net cash (used in)/generated from operations (18,686) 38,565 57,004
Taxation paid (2,305) (2,272) (4,227)
Net cash (outflow)/inflow from operating activities (20,991) 36,293 52,777
Investing activities
Purchase of property, plant and equipment (170) (49) (206)
Proceeds on disposal of property, plant and equipment 124 87 218
Acquisition of subsidiary, net of cash acquired - 304 304
Interest received 4 8 13
Net cash (used in)/from investing activities (42) 350 329
Financing activities
Proceeds from issue of shares 501 52 2,249
Proceeds from bank loans 76,622 - -
Repayment of bank loans - (35,000) (35,000)
Payment of lease liabilities (545) (753) (1,480)
Dividends paid - - (3,274)
Interest paid (484) (716) (1,297)
Net cash inflow/(outflow) from financing activities 76,094 (36,417) (38,802)
Net increase in cash and cash equivalents 55,061 226 14,304
Cash and cash equivalents at beginning of period 15,826 1,522 1,522
Cash and cash equivalents at end of period 70,887 1,748 15,826
The accompanying notes form an integral part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 NOVEMBER 2021
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 2021 comprises the Company and its subsidiaries.
The basis of preparation of the consolidated interim financial statements is
set out in note 2 below.
The Group consists of Springfield Properties PLC and its subsidiaries
Glassgreen Hire Limited, DHomes 2014 Holdings Limited, Walker Holdings
(Scotland) Limited and SP Sub 2018 Limited.
The Group also indirectly includes Dawn Homes Limited, DHPL Limited and DHHG 1
Limited who are subsidiaries of DHomes 2014 Limited.
The Group also indirectly includes Walker Group (Scotland) Limited, Walker
Residential (Scotland) Limited, Walker Contracts (Scotland) Limited and Craig
Developments Limited who are subsidiaries of Walker Holdings (Scotland)
Limited.
The financial information for six month period ended 30 November 2021 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 2021, which has been prepared in
accordance with International Accounting Standards in conformity with the
requirements of the Companies Act 2006. The statutory accounts for year
ended 31 May 2021 have been delivered to the Registrar of Companies. The
auditors' report on those accounts 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 Directors have considered the principal risks and uncertainties the Group
faces and other factors impacting the Group's future performance such as the
COVID-19 pandemic. The actions taken in the period give the Directors
comfort that the Group has adequate resources to continue in operational
existence for the foreseeable future.
The interim financial statements have been presented in pounds and all values
are rounded to the nearest thousand (£'000), except when otherwise indicated.
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 May 2021
year end accounts 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 2021. There
has been no significant change in any risk management polices since the date
of the last audited 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 2021.
The IASB and IFRIC have issued the following standards and interpretations,
which are considered relevant to the Group.
· IAS 1 Presentation of Financial Statements and IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors (Amendment - Disclosure
Initiative - Definition of Material)
· IFRS 3 Business Combinations (Amendment - Definition of Business)
· Conceptual Framework for Financial Reporting (Revised)
· IBOR Reform and its Effects on Financial Reporting - Phase 1
The above standards and interpretations will be adopted in accordance with
their effective dates. The Directors continue to review the requirements of
the standards and interpretations listed above, however they are not expected
to have a material impact on the Group's financial statements in the period
of initial application.
Prior period restatement
The directors have reviewed the liabilities included in the provisions line in
the prior half year and have concluded, in line with accounting standards,
contingent consideration should be presented separately. The prior half year
have been restated to reflect that. These presentation changes have no impact
on net assets.
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 our
latest annual financial statements for the year ended 31 May 2021. We have
reviewed these risks and uncertainties which remain relevant for both the 6
months to 30 November 2021 and the full financial year to 31 May 2022. We
continue 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.
With respect to the impact of COVID-19, the furlough grant income received
from the government has been separately disclosed within the consolidated
profit and loss account as exceptional, due to its incremental nature. The
direct furlough payroll costs are considered abnormal costs in the current
period and consistent with previous periods, any direct payroll costs
reflecting employee down time (abnormal production) is expensed to the profit
and loss account.
Redundancy costs relate to a review of our business to identify areas for
greater efficiency and rationalisation including consolidating our Livingston
operations at our office in Larbert.
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 2021 Unaudited Period to 30 November 2020 Audited
Year to 31 May 2021
Revenue £000 £000 £000
Private residential properties 47,257 71,884 138,646
Affordable housing 31,670 18,342 52,940
Contracting 7,510 3,807 8,692
Other 833 389 16,414
Total Revenue 87,270 94,422 216,692
16,119 18,505 38,797
Gross Profit
Administrative expenses (9,386) (8,864) (19,422)
Exceptional items (163) (472) (622)
Other operating Income 88 135 375
Finance income 66 148 367
Finance expense (512) (894) (1,607)
Profit before tax 6,212 8,558 17,888
Taxation (1,170) (1,640) (4,178)
Profit for the period 5,042 6,918 13,710
5. Exceptional items
Unaudited Period to 30 November 2021 Unaudited Period to 30 November 2020 Audited
Year to 31 May 2021
£000 £000 £000
Government grant income (1) - 1,803 2,085
Wage cost for furloughed employees (1) (22) (1,959) (2,318)
(22) (156) (233)
Redundancy costs (2) (141) (316) (389)
Exceptional items (163) (472) (622)
(1) The £22k (p/e 30 November 2020: £1,959k; y/e 31 May 2021:
£2,318k) is the Company cost of all employees who were on furlough during the
period to 30 November 2021. The £nil (p/e 30 November 2020: £1,803k; y/e 31
May 2021: £2,085) is the furlough grant income received from the UK
government in relation to the furloughed employees for the period to 30
November 2021.
(2) Redundancy costs relate to a review of our business to
identify areas for greater efficiency and rationalisation including
consolidating our Livingston operations at our office in Larbert.
6. Taxation
The results for the six month to 30 November 2021 include a tax charge of
18.8% of profit before tax (30 November 2020: 19.2%; 31 May 2021: 23.4%),
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 2021 Unaudited Period to 30 November 2020 Audited
Year to
31 May 2021
Earnings £000 £000 £000
Profit for the year attributable to owners of the Company 5,042 6,918 13,710
Adjusted for the impact of exceptional costs in the year 163 472 622
Normalised earnings 5,205 7,390 14,332
Unaudited Period to 30 November 2021 Unaudited Period to 30 November 2020 Audited
Year to 31 May 2021
Number of Shares
Weighted average number of ordinary shares for the purpose of basic earnings 102,306,694 97,885,334 99,436,929
per share
Effect of dilutive potential ordinary shares: share options 1,929,619 1,442,779 1,767,609
Weighted average number of ordinary shares for the purpose of diluted earnings 104,236,313 99,328,113 101,204,538
per share
Unaudited Period to 30 November 2021 Unaudited Period to 30 November 2020 Audited
Year to 31 May 2021
Pence Pence Pence
Earnings per ordinary share (pence per share)
Basic earnings per share 4.93 7.07 13.79
Diluted earnings per share 4.84 6.96 13.55
Adjusted per ordinary share (pence per share)
Basic earnings per share 5.09 7.55 14.41
Diluted earnings per share 4.99 7.44 14.16
8. Dividends
Unaudited Period to 30 November 2021 Unaudited Period to 30 November 2020 Audited
Year to 31 May 2021
£000 £000 £000
Final dividend - y/e 31 May 2020 - 1,958 1,958
Interim dividend - y/e 31 May 2021 - - 1,316
Final dividend - y/e 31 May 2021 4,558 - -
4,558 1,958 3,274
The final dividend declared for the year ended 31 May 2021 is 4.5p per share
amounting to £4,557,827. This dividend was declared before 30 November 2021
and is included within liabilities at 30 November 2021. The dividend was paid
on 9 December 2021.
The interim dividend declared for the year ended 31 May 2022 is 1.5p per share
amounting to £1,774,983.
The interim dividend for the year ended 31 May 2022 was declared after 30
November 2021 and as such the liability (based on 118,332,225 ordinary shares
in issue as at 17 February 2022) of £1,774,983 has not been recognised at
this date.
9. 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. 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 £1 - allotted, called up and fully paid Number of shares Share capital Share Premium
£000 £000
At 1 December 2020 97,922,282 122 52,382
Share issue 4,155,244 6 4,379
At 31 May 2021 102,077,526 128 56,761
Share issue 487,790 - 501
At 30 November 2021 102,565,316 128 57,262
10. Deferred Consideration
As part of the purchase agreement of Walker Holdings (Scotland) Limited, there
was a further £4,375,000 of Deferred consideration payable. This can be
broken down into: (i) £2,187,500 payable on the first anniversary of the
acquisition date (31 January 2020); (ii) £2,187,500 payable on the second
anniversary of the acquisition date (31 January 2021), The outstanding
discounted amount payable at the period end is £nil (30 November 2020:
£2,167,447; 31 May 2021: £nil).
Unaudited Period to 30 November 2021 Unaudited Period to 30 November 2020 Audited
Year to 31 May 2021
£000 £000 £000
Deferred consideration < 1 year - 2,167 -
- 2,167 -
11. Contingent consideration and contingent liabilities
As part of the purchase agreement of Walker Holdings (Scotland) 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 with
probability was assessed at 98% and 95% respectively. This has been
discounted at a market value of interest. £4,000,000 was paid in December
2019. The outstanding discounted amount payable at the period end is
£1,900,000 (30 November 2020: £1,848,243; 31 May 2021: £1,900,000).
The remaining £100,000 (5% on the £2,000,000 still to be paid) has been
treated as a contingent liability due to the uncertainty over the future
payment.
As part of the purchase agreement of DHomes 2014 Limited there is a further
£2,500,000 payable for an area of land if (i) we make a planning application
when we reasonably believe the council will recommend approval; or (ii) it is
zoned by the council. The directors have assessed the likelihood of the land
being zoned and have included provision of £2,000,000 based on 80%
probability. The outstanding amount payable at the period end included
within Provisions is £2,000,000 (30 November 2020: £2,000,000; 31 May 2021:
£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 2021 Unaudited Period to 30 November 2020 Audited
Year to 31 May 2021
£000 £000 £000
Walker (Scotland) Limited 1,900 1,848 1,900
DHomes 2014 Limited 2,000 2,000 2,000
3,900 3,848 3,900
Contingent liabilities Unaudited Period to 30 November 2021 Unaudited Period to 30 November 2020 Audited
Year to 31 May 2021
£000 £000 £000
Walker (Scotland) Limited 100 100 100
DHomes 2014 Limited 500 500 500
600 600 600
12. Provision
Dilapidation provisions are included for all rented buildings within the
Group. An onerous lease provision has been created due to the closure of the
Walker office in Livingston. Maintenance provisions relate to costs to come on
developments where the final homes have been handed over.
Unaudited Period to 30 November 2021 Unaudited Period to 30 November 2020 Audited
Year to 31 May 2021
£000 £000 £000
Dilapidation provision 190 55 185
Onerous lease provision 100 - 200
Maintenance provision 671 467 825
961 522 1,210
13. Transactions with related parties
Other related parties include transactions with a retirement scheme in which
the directors are beneficiaries, and close family members of key management
personnel. During the period dividends totalling £1,933k (p/e November
2020: £892k; y/e May 2021: £1,415k) 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 2021 Unaudited Period to 30 November 2020 Audited
Year to 31 May 2021
£000 £000 £000
Bertha Park Limited ((1)) 7,726 3,959 8,989
Other entities which key management personnel have control, significant 39 50 118
influence or hold a material interest in
Key management personnel 10 19 44
Other related parties 2 15 121
7,777 4,043 9,272
Sales to related parties represent those undertaken in the ordinary course of
business.
Purchase of goods Unaudited Period to 30 November 2021 Unaudited Period to 30 November 2020 Audited
Year to 31 May 2021
£000 £000 £000
Bertha Park Limited ((1)) 350 - -
Entities which key management personnel have control, significant influence or 196 8 33
hold a material interest in
Key management personnel - - -
Other related parties 42 109 313
588 117 346
Unaudited Period to 30 November 2021 Unaudited Period to 30 November 2020
Audited
Year to 31 May 2021
Rent paid to £000 £000 £000
Entities which key management personnel have control, significant influence or
hold a material interest in
80 86 176
Key management personnel 5 - 11
Other related parties 14 63 128
99 149 315
13. Transactions with related parties (continued)
Unaudited Period to 30 November 2021 Unaudited Period to 30 November 2020
Audited
Year to 31 May 2021
Interest received from £000 £000 £000
Bertha Park Limited ((1))
63 141 355
63 141 335
The following amounts were outstanding at the reporting end date:
Unaudited Period to 30 November 2021 Unaudited Period to 30 November 2020
Audited
Year to 31 May 2021
Amounts receivable £000 £000 £000
Bertha Park Limited ((1)) 6,566 6,856 6,772
Entities which key management personnel have control, significant influence or
hold a material interest in
56 19 3
Key management personnel 3 1 3
Other related parties - 5 3
6,625 6,881 6,781
Unaudited Period to 30 November 2021 Unaudited Period to 30 November 2020
Audited
Year to 31 May 2021
Amounts payable £000 £000 £000
Entities which key management personnel have control, significant influence or
hold a material interest in
44 32 8
Key management personnel - - -
Other related parties - 48 58
44 80 66
Amounts owed to/from related parties are included within creditors and debtors
respectively at the year-end. No security has been provided on any balances.
Transactions between the company and its subsidiary, 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 2021 Unaudited Period to 30 November 2020 Audited
Year to 31 May 2021
£000 £000 £000
Cash in hand and bank 70,887 1,748 15,826
Bank borrowings (110,622) (34,000) (34,000)
Net bank debt (39,735) (32,252) (18,174)
Lease liability (3,224) (2,987) (2,613)
Net debt (42,959) (35,239) (20,787)
Reconciliation of net cashflow to movement in net debt is as follows:
At 1 December 2020 At 30 November 2021
New Leases Cashflow Fair Value
£000 £000 £000 £000 £000
Cash in hand and bank 1,748 - 69,139 - 70,887
Bank borrowings (34,000) - (76,622) - (110,622)
Lease (2,987) (1,407) 1,315 (145) (3,224)
Net Debt (35,239) (1,407) (6,168) (145) (42,959)
The majority of the large cash balance above relates to the £64.6m of bank
funding draw down on 30 November 2021 in order to fund the acquisition of
Thistle SPV2 Limited on 1 December 2021.
15. Post balance sheet events
On 1 December 2021, the Group purchased 100% of the share capital of Thistle
SPV2 Limited, the owner of Tulloch Homes, an Inverness-based housebuilder
focused on building high-quality private housing in the Scottish Highlands,
for a net consideration of £56.4m, being gross consideration of £77.6m less
expected net cash in the Tulloch Homes business, on completion, of not less
than £21.2m. The £56.4m is comprised of initial cash consideration of
£43.4m and deferred cash consideration of £13.0m. The projected net asset
value acquired is approximately £53.4m.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR FFFIFFSILFIFRecent news on Springfield Properties
See all newsREG - Springfield Props. - Trading Update
AnnouncementREG - Springfield Props. - Director Share Purchase
AnnouncementREG - Springfield Props. - Total Voting Rights
AnnouncementREG - Springfield Props. - Director Share Purchase
AnnouncementREG - Springfield Props. - Total Voting Rights
Announcement