TIDMSPR
RNS Number : 0471B
Springfield Properties PLC
18 September 2018
18 September 2018
Springfield Properties plc
("Springfield", the "Company" or the "Group")
Annual Results
Springfield Properties (AIM: SPR), a leading housebuilder in
Scotland delivering private and affordable housing, is pleased to
announce its maiden annual results, for the year ended 31 May 2018,
following its listing on AIM in October 2017.
Financial Highlights
2017/18 2016/17 Change
GBPm GBPm
Revenue 140.7 110.6 +27%
Gross profit margin 15.7% 15.1% +60bps
Adjusted operating
profit* 10.7 7.8 +37%
Adjusted profit before
tax* 9.8 6.7 +46%
Net debt 15.3 33.2 -54%
* Adjusted to exclude exceptional items - relating to IPO and
acquisition of Dawn Homes
The Directors of Springfield are pleased to propose a final
dividend of 2.7p per share, equating to a total dividend for the
year of 3.7p.
Operational Highlights
-- Increased revenue across both Private Housing and Affordable Housing divisions
-- Completion of new homes increased by 24.2% to 770 (2016/17: 620 completions)
-- Expanded into the West of Scotland through the acquisition of
DHomes 2014 Holdings Limited (trading as Dawn Homes) for a
consideration of up to GBP20.1m
-- Strengthened 15-year land bank to 12,476 plots, including
1,379 acquired through the acquisition of Dawn Homes (31 May 2017:
9,195), 39.5% of which have planning permission
-- Gross development value (GDV) of land bank was GBP2.4bn (30
November 2017: GBP1.8bn; 31 May 2017: GBP1.6bn)
Private Housing Division
-- Revenue increased by 17.9% to GBP101.9m (2016/17: GBP86.4m)
-- Completion of 460 homes (2016/17: 437)
-- Average selling price increased to GBP221.5k (2016/17: GBP197.6k)
-- Planning consent secured for 812 private plots
-- Land bank grew to 8,757 plots (31 May 2017: 6,372), including
1,366 acquired through the acquisition of Dawn Homes
-- Significant progress on Village sites:
o At Dykes of Gray, 108 homes occupied at 31 May 2018; village
centre was further developed with apartments, café, public square
and public art; planning application is being prepared for the next
phase of homes
o Sales launched at Bertha Park in September 2017 with the first
occupations expected by the end of H1 2018/19
o Planning application submitted for the 3,002-home Durieshill,
Stirling
o All agreements in place for construction to start on Linkwood,
Elgin by the end of H1 2018/19
o Post period, acquired rights to develop a new Village site
through a strategic land deal for 1,900 homes at Gavieside,
Livingston
-- Geographic expansion:
o Completed land swap with a major housebuilder of 62 plots at
Dykes of Gray for land in Kinross with a GDV of GBP13m
o Added six active sites and 13 future sites, with 1,366 plots,
in the West of Scotland through the Dawn Homes acquisition
o Progressing sites in the Highlands, including at Dornoch,
Drumnadrochit and Ardersier
Affordable Housing Division
-- Revenue increased by 60.3% to GBP37.3m (2016/17: GBP23.3m)
-- 310 homes completed (2016/17: 183)
-- Average selling price of GBP120.2k (2016/17: GBP127.0k),
slight reduction due to difference in sales mix
-- Planning consent secured during the period for 981 affordable plots
-- Land bank rose to 3,719 plots (31 May 2017: 2,823)
-- Secured land for 12 new affordable housing-only developments,
including submission of planning application for 237 homes in
Dalmarnock, Glasgow
-- Successful framework bid to a local authority with an
estimated value of GBP45m for work across 10 sites over the next
three years
Sandy Adam, Executive Chairman of Springfield Properties, said:
"In our first full year results since floating on AIM, I am pleased
to report another year of strong growth for Springfield. We built
more private and affordable homes than in any previous year. We
made great progress with the development of our Village sites and
we added significantly to our strong land bank, securing future
growth. In particular, in the final month of our financial year, we
extended our geographic reach with the acquisition of Dawn Homes,
who share Springfield's core values of looking after customers and
building high-quality homes.
"As we look to the future, I would like to thank those who have
enabled us to reach this point. In particular, I would like to
thank all of our 593 staff for their hard work and dedication, and
I would like to welcome the Dawn Homes team, a strong addition who
will ably develop our business in the West of Scotland. Springfield
entered the new financial year in a stronger position than at the
same point of the previous year. With an established pipeline,
strengthened foundations and the long-term drivers showing no sign
of abating, the Board is confident of delivering strong growth for
full year 2018/19 in line with market expectations."
Enquiries
Springfield Properties
Sandy Adam, Executive Chairman
Innes Smith, Chief Executive Officer +44 1343 552550
-----------------
N+1 Singer
-----------------
Shaun Dobson, James Moat, Rachel
Hayes +44 20 7496 3000
-----------------
Luther Pendragon
-----------------
Harry Chathli, Claire Norbury, Alexis
Gore +44 20 7618 9100
-----------------
Sandy Adam, Executive Chairman, Innes Smith, Chief Executive
Officer, and Michelle Motion, Finance Director, will be hosting a
presentation for analysts at 9.00am BST at the offices of Luther
Pendragon, 48 Gracechurch Street, London, EC3V 0EJ
Operational Review
Springfield made strong progress during the year with sales
increasing in both the Private Housing and Affordable Housing
divisions, total completions increasing by 24.2% to 770 new homes
(2016/17: 620 homes). The Group significantly added to its land
bank to secure future growth, including 1,379 plots over six active
sites and 13 future sites through the acquisition of Dawn Homes,
which also expanded the Group's land bank into the West of
Scotland. In addition, the Group achieved a number of milestones in
the development of its Villages across Scotland.
Land Bank
Springfield grew active sites to 41 (31 May 2017: 25 active
sites). Twenty-five new sites were added to the pipeline during the
year while nine sites were completed. The land bank was increased
by 35.7% to 12,476 plots, the equivalent of 15 years of activity at
current sales rates (31 May 2017: 9,195 plots, 14 years).
The Group secured 2,181 plots in 22 locations and received
planning approval on 1,793 plots over 10 different developments. As
of 31 May 2018, 39.5% of Springfield's land bank had planning
consent (31 May 2017: 36%).
Private Housing
The Group's Private Housing division offers homes, on sites of
various size, across Central and Northern Scotland. This includes
the development of standalone Village sites, with requisite
infrastructure, each with 1,000 to 3,000 plots and that include
local amenities. Springfield homes are differentiated by their
high-quality specification and a wide variety of personalised
finishes as part of the Company's 'It's Included' and 'Choices'
initiatives.
In 2017/18, Springfield's Private Housing completions were 5.3%
higher at 460 compared with 437 in the previous year. The ASP of
Springfield's Private Housing was GBP221.5k, an increase of 12.0%
(2016/17: GBP197.6k). This increase was due to the mix in the
houses being sold as well as the general increase in house prices.
Springfield grew its active Private Housing sites to 23 (31 May
2017: 17) and 10 new sites were added to the pipeline while four
sites were completed. It also added 19 sites, including 1,366
plots, to its private housing land bank through the acquisition of
Dawn Homes. In total, the Private Housing land bank was expanded to
8,757 plots on 50 sites (31 May 2017: 6,372 plots and 33
sites).
Springfield secured planning consent for 812 private plots and
submitted planning applications for 2,439 plots. As at 31 May 2018,
41.7% of the Group's private plots had planning (31 May 2017:
38.6%), with 27.9% of plots going through the planning process and
30.4% at the pre-planning stage.
Village sites
Springfield achieved a number of milestones in progressing its
Villages. As of 3 September 2018, a total of 76 plots were reserved
and missived (under contract) and 125 homes were occupied.
At its most-advanced site, Dykes of Gray near Dundee, 108 homes
were occupied as at 31 May 2018, including 52 completions during
the year. The Group progressed the development of the Village
centre with apartments, a café, a public square and public art.
Springfield is now preparing the planning application for the next
phase of homes at Dykes of Gray. Also during the year, the Group
completed a land swap with a major housebuilder of 62 plots at
Dykes of Gray for land in Kinross with a GDV of GBP13m. This swap
has delivered a development of 59 homes at Kinross, extending
Springfield's geographic presence.
At Bertha Park, a Village near Perth for approximately 3,000
homes, construction commenced and sales were launched towards the
end of the period. The Group expects the first homes to be occupied
by the end of the first half of its current financial year.
At Linkwood, Elgin, the Group secured all the necessary
approvals and legal agreements for construction to commence by the
end of the first half of 2018/19 on the first 870 homes. The Group
also submitted a planning application for 3,002 homes at Durieshill
near Stirling. The Group is working closely with Stirling Council
and expects to receive consent by March 2019.
Post period, the Group secured land for a fifth Village at
Gavieside, Livingston and work has begun on designing the
masterplan. This 1,900-home site is located where there is very
high demand for residential property.
Other sites
The Group commenced sales at The Wisp, a large development area
in South East Edinburgh. During the year the group acquired a
second tranche of land for 120 homes at The Wisp, expanding its
existing 80-home development to 200 homes.
In addition, the Group completed a further 392 homes on 22
private sites, each at varying stages of completion. This includes
the accelerated completion of the sites that the Group had acquired
from Redrow in 2011, with the final Redrow plot completed post
period-end.
The Group progressed sites at Dornoch, Drumnadrochit and
Ardersier. These are the Group's most north-westerly sites and
expand Springfield's geographic reach in the Highlands.
Affordable Housing
Springfield's Affordable Housing division's operations focus
primarily on the development of land into standalone sites that
consist entirely of affordable homes, and which are built in
partnership with local authorities, housing associations or other
public bodies. The Affordable Housing division also develops
affordable housing on the Group's private developments under
Section 75 agreements with local authorities (whereby private
developers agree to make a contribution of housing, money or
infrastructure as a condition of planning permission).
The Affordable Housing division made considerable progress, with
the number of completions increasing by 69.4% to 310 homes
(2016/17: 183). The ASP of Springfield's Affordable Housing was
GBP120.2k (2016/17: GBP127.0k), with the slight reduction due to
the difference in sales mix.
The Group secured land for 12 new affordable home only
developments, increasing active Affordable Housing sites to 18 (31
May 2017: 8) and the Affordable Housing land bank was expanded to
3,719 plots on 43 sites (31 May 2017: 2,823 plots and 32
sites).
Springfield secured planning consent for 981 Affordable Housing
plots and submitted planning applications for 1,422 plots. As at 31
May 2018, 34.4% of the Group's Affordable Housing plots had
planning (31 May 2017: 30.3%), with 38.2% of plots going through
the planning process and 27.4% at the pre-planning stage.
The growth in the Affordable Housing division is driven by local
authorities seeking to meet the Scottish Government's aim to
increase the availability of affordable housing in Scotland,
including a target of building 50,000 new affordable homes between
2016 and 2021.
Key achievements during the year include being the successful
bidder under a framework agreement with a local authority for work
across 10 sites, with an estimated value of GBP45m over the next
three years. The Group will benefit from economies of scale from
working across the 10 sites, including more efficient management of
supply chain and reduced costs. The Group also secured land and
submitted a planning application for 237 homes in Dalmarnock,
Glasgow.
Springfield completed the Linkwood View facility in Elgin that
was specifically designed for the elderly. The development, created
in partnership with Hanover Housing Association, is comprised of 30
wheelchair accessible apartments, with six of the self-contained
flats being tailored to meet the needs of residents with dementia.
Following the success of this development, Springfield is now in
negotiations to build similar facilities in Central Scotland. At
Springfield's Affordable Housing development in Muirhouse,
Edinburgh, located on the site of a former BT Training Centre, the
Group handed over the final 28 homes of the 202-home development.
This development has generated a total of GBP23.0m of revenue for
Springfield over the 45-month duration of the project.
Financial Review
Consolidated revenue for the year to 31 May 2018 was 27.2%
higher than the previous year at GBP140.7m (2016/17: GBP110.6m).
This was based on increased revenue and completions in both the
Private Housing and Affordable Housing divisions. The Private
Housing division continued to be the largest contributor to
revenue, accounting for 72.4% of total revenue (2016/17:
78.1%).
Revenue 2017/18 2016/17 Change
GBP'000 GBP'000
Private Housing 101,867 86,367 +17.9%
--------- --------- -------
Affordable Housing 37,272 23,250 +60.3%
--------- --------- -------
Other* 1,584 972 +63.0%
--------- --------- -------
TOTAL 140,723 110,589 +27.2%
--------- --------- -------
*Principally construction-only projects, typically on land not
owned or controlled by Springfield where the Company receives fees
for its design and construction work.
Gross profit for 2017/18 increased by 32.7% to GBP22.1m
(2016/17: GBP16.7m), which reflects a consolidated gross margin
improvement to 15.7% (2016/17: 15.1%). This was due to increased
gross margin in the Affordable Housing division, 17.2% compared
with 14.6% for 2016/17, while the gross margin in the Private
Housing division was 15.2% (2016/17: 15.4%). The strong improvement
in the margin in the Affordable Housing division was due to more
efficient build processes and the start of new sites with higher
margins. The slight softening in the margin in the Private Housing
division was due to the accelerated completion of the sites the
Group had acquired from Redrow in 2011 that had a lower margin than
other Springfield sites. As at 31 May 2018 only one plot from the
Redrow acquisition remained. However, the Private Housing division
continued to account for the majority of the gross profit at
GBP15.5m with the Affordable Housing division generating GBP6.4m
(2016/17: GBP13.3m and GBP3.4m respectively).
Total administrative expenses for 2017/18 were GBP12.2m compared
with GBP8.9m for the prior year. This includes exceptional costs of
GBP0.6m comprising GBP0.3m in IPO-related expenses and GBP0.3m
related to the acquisition of Dawn Homes. On an adjusted basis,
excluding these exceptional items, administrative expenses were
GBP11.6m. The increase compared with the prior year reflects the
Group's investment in its future growth with the majority of the
increase consisting of employee wages as well as reflecting the
Group's transition to becoming a public company.
Profit before tax increased by 37.7% to GBP9.2m (2016/17:
GBP6.7m). On an adjusted basis, excluding GBP0.6m of exceptional
items, profit before tax increased by 46.1% to GBP9.8m. This
increase in profit before tax was primarily due to the higher
revenue and improvement in gross margin. There was also a slight
reduction in finance costs relating to bank interest payments and a
slight increase in interest receivable.
The basic EPS for the year (excluding the exceptional items)
increased by 17.4% to 10.78p compared with 9.18p for the prior
year. The lower percentage increase compared with the increase in
profit is due to the increased share capital from the fundraising
to acquire Dawn Homes, which only contributed one month's earnings
in the period.
The return on capital employed ("ROCE") for the year ended 31
May 2018 was 11.3% compared with 11.9% for the prior year. The
reduction was due to the Dawn Homes acquisition in May 2018
reflecting only one month of earnings.
Net debt at 31 May 2018 was GBP15.3m, which is a reduction of
GBP17.9m compared with GBP33.2m at 31 May 2017. The reduction is
primarily due to the reduction of bank loans through the receipt of
the IPO proceeds of GBP25.0m and from the placing to raise
GBP15.0m, which was partly offset by the GBP15.5m cash payment for
the acquisition of Dawn Homes.
Dividend
The Directors of Springfield are pleased to propose a final
dividend of 2.7p per share, subject to shareholder approval at the
next Annual General Meeting. This equates to a total dividend for
the year, including the interim dividend already paid, of 3.7p per
share.
Dawn Homes and Group Operating Structure
The acquisition of Dawn Homes at end of the year significantly
expanded the Group's land bank in size and into a new region - West
of Scotland - as well as providing an established supply chain.
Dawn Homes operates as a separate business unit, retaining its own
brand, within the enlarged Springfield group. The integration of
the two companies is complete and Dawn Homes is trading as
expected, with two new sites expected to become active during this
current financial year. As a result, the Board continues to expect
the acquisition to accelerate the growth of the Group and to be
earnings enhancing from this current financial year.
To support the expansion of the Group, post period, Springfield
established a Group Operating Board comprising the Managing
Directors of Private Housing for North and Central, which are two
newly-created positions; the Managing Director of Dawn Homes; the
Managing Director of Affordable Housing; and the Directors of the
respective corporate functions. The Group believes that this
structure will enhance operational efficiency and support sales
growth across the business.
Outlook
Springfield entered the new financial year in a significantly
stronger position than at the same point in the prior year, having
successfully raised growth capital and joined the AIM market as
well as with an expanded land bank through the acquisition of Dawn
Homes. This was further strengthened shortly into the new financial
year with the securing of land for a 1,900-home site at Gavieside,
Livingston.
The Group has a strong pipeline and expects to commence work on
eight new sites across Scotland during this current financial year,
with significant contracted revenue for 2018/19. In the Private
Housing division, the Group is focused on geographic expansion and
on progressing the development of its Village sites. It expects
Dawn Homes to make a good contribution to earnings this year. In
the Affordable Housing division, with an increasing reputation as a
reliable partner for local authorities and housing associations
across Scotland, and having secured a framework agreement with a
local authority for 10 developments over three years, the Group
expects this division to continue to experience strong growth. The
Group also continues to seek opportunities to expand its land bank,
investing in future growth.
The Group has strengthened its foundations and enhanced the
management structure to support growth at a time when the long-term
market drivers are showing no sign of abating. Demand for housing
continues to outstrip supply and there is ongoing support from the
Scottish government for developing affordable housing. As a result,
the Board is confident of delivering strong growth for full year
2018/19 in line with market expectations.
COnsolidated PROFIT AND LOSS ACCOUNT
FOR THE YEARED 31 May 2018
2018 2018 2017
Pre - Exceptional Exceptional Post -
Items Items Exceptional
Items
Notes GBP000 GBP000 GBP000 GBP000
Revenue 2 140,723 - 140,723 110,589
Cost of sales (118,580) - (118,580) (93,905)
------------------ ------------ ------------- ----------
Gross profit 22,143 - 22,143 16,684
Administrative expenses 4 (11,625) (558) (12,183) (8,945)
Share of post-tax
profit of joint venture 21 - 21 -
Other operating income 126 - 126 93
------------------ ------------ ------------- ----------
Operating profit/(loss) 10,665 (558) 10,107 7,832
Interest receivable
and similar income 147 - 147 4
Finance costs (1,039) - (1,039) (1,145)
------------------ ------------ ------------- ----------
Profit before tax/(loss) 9,773 (558) 9,215 6,691
Tax 3 (1,854) - (1,854) (1,278)
------------------ ------------ ------------- ----------
Profit for the year
and total comprehensive
income 7,919 (558) 7,361 5,413
================== ============ ============= ==========
Profit for the year
and total comprehensive
income is attributable
to:
-Owners of the parent
company 7,911 (558) 7,353 5,359
-Non-controlling interests 8 - 8 54
------------------ ------------ ------------- ----------
7,919 (558) 7,361 5,413
================== ============ ============= ==========
Earnings per share
Basic earnings, on
profit for the year
(pence per share) 6 10.78p (0.76)p 10.02p 9.18p
Diluted earnings,
on profit for the
year (pence per share) 6 10.75p (0.76)p 9.99p 9.18p
The Group has no items of other comprehensive income.
These financial statements were approved by the Board of
Directors on 17 September 2018
Signed on behalf of the Board by:
Mr Sandy Adam
Chairman Company number: SC031286
The accompanying notes on pages form an integral part of these
financial statements.
Consolidated BALANCE SHEET
AS AT 31 May 2018
2018 2017
Note GBP000 GBP000
------ -------- -------
Non-current assets
Property, plant and equipment 4,492 2,803
Intangible assets 600 -
Investments 1,018 -
Accounts receivable 870 488
6,980 3,291
-------- -------
Current assets
Inventories and work in progress 105,630 81,800
Accounts receivable 19,104 6,447
Cash and cash equivalents 12,015 8,335
-------- -------
136,749 96,582
-------- -------
Total assets 143,729 99,873
Current liabilities
Accounts payable 33,910 25,050
Short-term obligations under
finance lease 1,020 500
Corporation tax 1,139 874
-------- -------
36,069 26,424
-------- -------
Non-current liabilities
Long-term borrowings 25,000 40,429
Long-term obligations under
finance lease 1,254 588
Provisions 2,394 45
-------- -------
28,648 41,062
-------- -------
Total liabilities 64,717 67,486
-------- -------
Net assets 79,012 32,387
======== =======
Equity
Share capital 120 73
Share premium 50,105 10,285
Retained earnings 28,767 22,017
-------- -------
Equity attributable to owners
of the parent company 78,992 32,375
Non-controlling interests 20 12
-------- -------
79,012 32,387
======== =======
The accompanying notes on pages form an integral part of these
financial statements.
consolidated Statement of Changes in Equity
FOR THE YEARED 31 MAY 2018
Share capital Share premium Retained Non-controlling Total
earnings interest
Notes GBP000 GBP000 GBP000 GBP000 GBP000
1 June 2016 73 10,177 18,995 - 29,245
Share issue - 108 - - 108
Total comprehensive
income for the
year - - 5,359 54 5,413
Acquisition of
minority interest - - - (42) (42)
Dividends - - (2,337) - (2,337)
-------------- -------------- ---------- ---------------- --------
31 May 2017 73 10,285 22,017 12 32,387
Share issue 47 39,820 - - 39,867
Total comprehensive
income for the
year - - 7,353 8 7,361
Share option reserves - 218 - 218
Dividends 5 - - (821) - (821)
-------------- -------------- ---------- ---------------- --------
31 May 2018 120 50,105 28,767 20 79,012
============== ============== ========== ================ ========
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.
Retained earnings represents accumulated profits less losses,
and distributions. Retained earnings also includes share option
reserves.
The accompanying notes on pages form an integral part of these
financial statements.
Consolidated Statement of Cash Flows
year to 31 May 2018
2018 2017
Operating activities Note GBP000 GBP000
----- --------- --------
Profit for the year after taxation 7,919 5,413
Adjusted for:
Taxation charged 1,854 1,278
Finance costs 1,039 1,145
Interest receivable and similar
income (147) (4)
Exceptional items 4 (558) -
Gain on disposal of tangible fixed
assets (45) (146)
Share option employment costs 218 -
Share of joint venture profit (21) -
Depreciation and impairment of tangible
fixed assets 1,088 772
Operating cash flows before movements
in working capital 11,347 8,458
Decrease/(Increase) in inventory 6,230 (7,963)
Increase in accounts and other receivables (7,314) (2,345)
Increase in accounts and other payables 4,166 5,000
Net cash generated from operations 14,430 3,150
Income taxes paid (1,714) (1,126)
Net cash inflow from operating activities 12,716 2,024
--------- --------
Investing activities
Payments to acquire intangible assets (600) -
Purchase of property, plant and
equipment (752) (843)
Proceeds on disposal of property,
plant and equipment 62 526
Net purchase of subsidiary company (14,719) (42)
Interest received and similar income 19 4
Net cash used in investing activities (15,990) (355)
--------- --------
Financing activities
Proceeds from issue of shares 42,180 108
Cost from issue of shares (2,312) -
Proceeds from bank loans - 10,000
Repayment of bank loans (22,500) -
Proceeds paid to related parties (4,647) -
Proceeds from other borrowings - 1,375
Repayment of other borrowings (2,929) (453)
Payment of finance leases obligations (849) (460)
Dividends paid (821) (2,337)
Interest paid (1,168) (1,145)
Net cash inflow from financing activities 6,954 7,088
--------- --------
Net increase in cash and cash equivalents 3,680 8,757
Cash and cash equivalents at beginning
of year 8,335 (422)
Cash and cash equivalents at end
of year 12,015 8,335
========= ========
The accompanying notes on pages form an integral part of these
financial statements.
Notes to the Financial Statements
FOR THE YEARED 31 May 2018
1. Summary of significant accounting policies
The principal accounting policies adopted and applied in the
preparation of the financial statements are set out below.
These have been consistently applied to all the years presented
unless otherwise stated.
1.1. Basis of accounting
The financial statements of Springfield Properties PLC have been
prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted for use in the European Union ("EU")
applied in accordance with the provisions of the Companies Act
2006.
The Group has adopted all the standards and amendments to
existing standards which are mandatory for accounting periods
beginning on 1 June 2017. The Group has not early adopted any other
standard, interpretation or amendment that has been issued but is
not yet effective.
At 31 May 2018 the following new and revised IFRSs relevant to
the Group are issued but are not yet effective:
Effective
date
IFRS 9 Financial Instruments 1 January
2018
IFRS 15 Revenue from Contracts with Customers 1 January
2018
IFRS 16 Leases 1 January
2019
-- IFRS 9 will impact both the measurement and disclosures of
financial instruments. The Group have assessed the impact of the
revisions on the group's and company's results and financial
position and have concluded there will not be a material impact to
the financial statements.
-- IFRS 15 'Revenue from Contracts with Customers'. It is
expected that this standard will result in some changes for
construction companies, however, our preliminary assessment is that
there will not be a material impact to the financial
statements.
-- IFRS 16 'Leases'. IFRS 16 requires lessees to recognise a
lease liability reflecting future lease payments and a 'right of
use asset' for virtually all lease contracts. This is effective for
the period beginning on 1 June 2019, with earlier adoption
permitted if IFRS 15 'Revenue from contracts with customers' is
also applied. The group has not yet assessed the full effect of
this standard.
Of the other IFRSs and IFRICs, none are expected to have a
material effect on the financial statements.
The financial statements have been prepared under the historical
cost convention.
1.2. Basis of consolidation
The consolidated financial statements incorporate those of
Springfield Properties PLC and its subsidiaries (ie entities that
the group controls through its power to govern the financial and
operating policies so as to obtain economic benefits) and jointly
controlled entities.
Springfield Properties PLC and Glassgreen Hire Limited's
financial statements are made up to 31 May 2018. All other
subsidiaries and jointly associated entity's financial statements
are made up to 31 January 2018.
The consolidated accounts for the Group include the assets,
liabilities and result of the Company and subsidiaries in which
Springfield Properties PLC have controlling interest, using
accounts drawn up to 31 May except where entities do not have
coterminous year ends. In such cases, the information is based on
the accounting period of these entities and is adjusted for
material changes up to 31 May. Accordingly, the information
consolidated is deemed to cover the same period for all entities
throughout the Group.
The jointly owned entity is accounted for using the equity
method.
All intra-group transactions, balances and unrealised gains on
transactions between group companies are eliminated on
consolidation.
1.3. Functional and presentation currencies
The financial statements are presented in Pound Sterling (GBP),
rounded to the nearest GBP000, which is also the currency of the
primary economic environment in which the group operates (its
functional currency).
1.4. Going concern
Any consideration of the foreseeable future involves making a
judgement, at a particular point in time, about future events which
are inherently uncertain.
At the time of approving the financial statements, the directors
have a reasonable expectation that the group has adequate resources
to continue in operational existence for the foreseeable future.
Thus the directors continue to adopt the going concern basis of
accounting in preparing the financial statements.
1.5. Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable net of VAT and trade discounts.
Private house sales
Revenue on private house sales is recognised when the
significant risks and rewards of ownership have been transferred to
the purchaser which will normally occur at handover / legal
completion.
Revenue is recognised at the fair value of the consideration
received or receivable on legal completion.
Construction contracts
Revenue from construction contracts is generated from affordable
housing contracts and is recognised based on the measured value of
work completed as construction progresses. The measured value of
work is based on certified valuations which consider the stage of
completion of contracts.
Contract expenses are recognised as incurred unless they create
an asset related to future contract activity. An expected loss on a
contract is recognised immediately in the profit and loss
account.
Revenues derived from variations on contracts are recognised
only when they have been accepted by the customer.
Where the outcome of a construction contract cannot be estimated
reliably, contract costs are recognised as expenses in the period
in which they are incurred and contract revenue is recognised to
the extent of contract costs incurred where it is probable that
they will be recoverable.
1.6. Employee benefits
The costs of short-term employee benefits are recognised as a
liability and an expense in the period in which the services are
received, unless those costs are required to be recognised as part
of the cost of stock.
The cost of any unused holiday entitlement is recognised in the
period in which the employee's services are received.
Termination benefits are recognised immediately as an expense
when the group is demonstrably committed to terminate the
employment of an employee or to provide termination benefits.
1.7. Retirement benefits
Payments to defined contribution retirement benefit schemes are
charged as an expense as they fall due.
1.8. Borrowing costs
Borrowing costs relating to qualifying assets are capitalised.
All other borrowing costs are recognised as an expense in the
profit and loss account as they are incurred.
1.9. Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
profit and loss account because it excludes items of income or
expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible. The
group's liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the reporting
end date.
Deferred tax
Deferred tax is provided using the liability method on temporary
differences between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes at the
reporting date.
Deferred tax is not recognised on temporary differences arising
from the initial recognition of goodwill or other assets and
liabilities in a transaction that affects neither the tax profit
nor the accounting profit.
Deferred tax is measured on a non-discounted basis using the tax
rates and laws that have then been enacted or substantively enacted
by the balance sheet date.
The carrying amount of deferred tax assets is reviewed at each
reporting end date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered. Deferred tax is
calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised.
Deferred tax is charged or credited in the profit and loss account,
except when it relates to items charged or credited directly to
equity, in which case the deferred tax is also dealt with in
equity. Deferred tax assets and liabilities are offset when the
company has a legally enforceable right to offset current tax
assets and liabilities and the deferred tax assets and liabilities
relate to taxes levied by the same tax authority. Deferred tax has
been recognised on the fair value adjustment of the investment in
Dawn Homes.
1.10. Exceptional Items
Exceptional items are those material items which, by virtue of
their size or incidence, are presented separately in the profit and
loss account to enable a full understanding of the Company's
financial performance.
Transactions that may give rise to exceptional items include
transactions relating to acquisitions and costs relating to changes
in share capital structure.
1.11. Property, plant and equipment
Tangible fixed assets are initially measured at cost and
subsequently measured at cost net of depreciation and any
impairment losses. Depreciation is recognised so as to write off
the cost of assets less their residual values over their useful
lives on the following bases:
Buildings - 2% and 5% straight line
Plant and machinery - 20% and 25% straight line
Fixtures, fittings & equipment - 20% and 25% straight line
Motor vehicles - 20% and 25% straight line
Land is not depreciated.
The gain or loss arising on the disposal of an asset is
determined as the difference between the sale proceeds and the
carrying value of the asset, and is credited or charged to the
profit and loss account.
1.12. Intangible Fixed Assets
Intangible assets comprise of market related assets (e.g.
trademarks, imprints & brands). Market-related assets are
expected to have an infinite useful life, however, impairment
reviews are performed annually. Any impairment losses or reversals
of impairment losses are recognised immediately in the profit and
loss account.
1.13. Fixed asset investments
Interests in subsidiaries and jointly owned entities are
initially measured at cost and subsequently measured at cost less
any accumulated impairment losses. The investments are assessed for
impairment at each reporting date and any impairment losses or
reversals of impairment losses are recognised immediately in the
profit and loss account. Costs associated with the acquisition of
subsidiaries and jointly owned entities are recognised in the
profit and loss account as an exceptional item.
Jointly owned entities are accounted using the equity method of
accounting. The Group's investment includes the share of
profit/losses.
A subsidiary is an entity controlled by the company. Control is
the power to govern the financial and operating policies of the
entity so as to obtain benefits from its activities.
Entities in which the group has a long term interest and shared
control under a contractual arrangement are classified as jointly
controlled entities
1.14. Impairment of fixed assets
At each reporting end date, the group reviews the carrying
amounts of its tangible fixed assets to determine whether there is
any indication that those assets have suffered an impairment loss.
If any such indication exists, the recoverable amount of the asset
is estimated in order to determine the extent of the impairment
loss (if any). Where it is not possible to estimate the recoverable
amount of an individual asset, the group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to
sell and value-in-use. Any impairment loss and reversal of losses
are recognised in the profit and loss account.
1.15. Inventory
Property, including land held under development, acquired or
being constructed for sale in the ordinary course of business,
rather than to be held for rental or capital appreciation, is held
as stock and is measured at the lower of cost and net realisable
value.
Cost comprises of the invoiced value of the goods purchased and
includes attributable direct costs, labour and production
overheads.
Net realisable value is the estimated selling price in the
ordinary course of the business, based on market prices at the
reporting date and discounted for the time value of money if
material, less estimated costs of completion and the estimated
costs necessary to make the sale. Any excess of the carrying amount
of stocks over its net realisable value is recognised as an
impairment loss in the profit and loss account.
At each reporting date, an assessment is made for impairment.
Any excess of the carrying amount of stocks over its estimated
selling price less costs to complete and sell is recognised as an
impairment loss in the income profit and loss account.
Where sites are 'secured' via option agreements, these sites are
only included as stock when the agreement becomes
unconditional.
Options included as part of stock are stated at the lower of
cost and net realisable value.
1.16. Construction contracts
Where the outcome of a construction contract can be estimated
reliably, revenue and costs are recognised by reference to the
measured valuation of work of the contract activity at the
reporting end date. Variations in contract work, claims and
incentive payments are included to the extent that the amount can
be measured reliably and its receipt is considered probable.
When it is probable that total contract costs will exceed
contract turnover, the expected loss is recognised as an expense
immediately.
Where the outcome of a construction contract cannot be estimated
reliably, contract costs are recognised as expenses in the period
in which they are incurred and contract revenue is recognised to
the extent of the contract costs incurred where it is probable that
they will be recovered.
The "percentage of completion method" is used to determine the
appropriate amount to recognise in a given period. The stage of
completion is measured by the proportion of contract costs incurred
for work performed to date compared to the estimated total contract
costs.
1.17. Financial instruments
Financial instruments are recognised in the balance sheet when
the group becomes party to the contractual provisions of the
instrument.
Financial assets and liabilities are offset, with the net
amounts presented in the financial statements, when there is a
legally enforceable right to set off the recognised amounts and
there is an intention to settle on a net basis or to realise the
asset and settle the liability simultaneously.
Loans and receivables
The group's financial assets fall into loans and receivables
category.
Loans and receivables are financial assets with fixed or
determinable payments that are not quoted in an active market.
Financial assets included in loans and receivables are recognised
initially at cost. Subsequent to initial recognition they are
measured at amortised cost using the effective interest rate
method, less any impairment losses.
Loans outside the group are valued at amortised cost and
discounted at 6%. The discount is being spread over the development
the loan is financing.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at
each reporting date.
A provision for impairment is made when there is objective
evidence that, as a result of one or more events that occurred
after the initial recognition of the financial asset, the estimated
future cash flows have been affected.
Impaired debts are derecognised when they are assessed as
uncollectible.
Derecognition of financial assets
Financial assets are derecognised only when the contractual
rights to the cash flows from the asset expire or are settled, or
when the group transfers the financial asset and substantially all
the risks and rewards of ownership to another entity, or if some
significant risks and rewards of ownership are retained but control
of the asset has transferred to another party that is able to sell
the asset in its entirety to an unrelated third party.
Financial liabilities
All of the group's financial liabilities other than trade
payables which are measured at historic cost fall into the other
financial liabilities category.
Other financial liabilities
Other non-derivative financial liabilities are initially
measured at historical cost less any directly attributable
transaction costs. Subsequent to initial recognition, these
liabilities are measured at amortised cost using the effective
interest method.
The effective interest method is a method of calculating the
amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash payments
through the expected life of the financial liability to the net
carrying amount on initial recognition.
Derecognition of other financial liabilities
Financial liabilities are derecognised when the group's
contractual obligations expire or are discharged or cancelled.
1.18. Provision
Deferred consideration payment is valued based on the
probability-weighted average of the economic outflow of payment. An
annual review will be performed on the deferred consideration.
1.19. Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at
call with banks and bank overdrafts. Bank overdrafts are shown
within borrowings in current liabilities.
1.20. Dividends
Dividends are recognised as liabilities in the period in which
the dividends are approved and once they are no longer at the
discretion of the company.
1.21. Leases
A lease is classified at the inception date as a finance lease
or an operating lease.
Leases are classified as finance leases whenever the terms of
the lease transfer substantially all the risks and rewards of
ownership to the lessees. All other leases are classified as
operating leases.
Finance leases are capitalised at the commencement of the lease
at the inception date fair value of the leased property or, if
lower, at the present value of the minimum lease payments.
Lease payments are apportioned between the finance charges and
the reduction of the lease liability so as to achieve a constant
rate of interest on the remaining balance of the liability.
Finance charges are charged to the profit and loss account.
Operating lease payments, including any lease incentives
received, are recognised in the profit and loss account on a
straight-line basis over the term of the lease except where another
more systematic basis is more representative of the time pattern in
which economic benefits from the lease asset are consumed.
1.22. Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of a group after deducting all of its
liabilities. Equity instruments issued by the group are recorded at
the proceeds received net of direct issue costs.
Share capital represents the amount subscribed for shares at
nominal value.
The share premium account represents premiums received on the
initial issuing of the share capital. Any transaction costs
associated with the issuing of shares are deducted from share
premium, net of any related income tax benefits. Any bonus issues
are also deducted from share premium.
Retained earnings include all current and prior period results
as disclosed in the profit and loss account.
1.23. Share-based payments
Equity-settled share-based payments are measured at fair value
at the date of grant and recognised as an expense over the vesting
period. The amount recognised as an expense is adjusted for leavers
to the scheme. Fair value is measured by use of a relevant pricing
model.
2. Segmental Reporting
A segment is a distinguishable component of the Group's
activities from which it may earn revenues and incur expenses,
whose operating results are regularly reviewed by the Group's chief
operational decision makers to make decisions about the allocation
of resources and assessment of performance and about which discrete
financial information is available. In identifying its operating
segments, management generally follows the Group's service line
which represent the main products and services provided by the
Group. The Directors believe that the Group operates in 2
segments:
-- Private,
-- Affordable
As the Group operates solely in the United Kingdom segment
reporting by geographical region is not required.
2018 2017
Revenue GBP000 GBP000
Private residential properties 101,867 86,367
Affordable housing 37,272 23,250
Other 1,584 972
--------- --------
Total Revenue 140,723 110,589
Private residential properties 15,508 13,301
Affordable housing 6,403 3,385
Other 232 (2)
--------- --------
Gross Profit 22,143 16,684
Administrative expenses (11,625) (8,945)
Operating Income 126 93
Profit after tax from JV 21 -
Finance income 147 4
Finance expenses (1,039) (1,145)
Exceptional items (558) -
--------- --------
Profit before tax 9,215 6,691
Taxation (1,854) (1,278)
--------- --------
Profit for the period 7,361 5,413
========= ========
3. Taxation
2018 2017
GBP000 GBP000
------- -------
Current tax
UK corporation tax on profits for the
current period 1,872 1,337
Adjustments in respect of prior periods (27) (46)
------- -------
1,845 1,291
------- -------
Deferred tax
Origination and reversal of timing differences 23 (4)
Adjustments in respect of prior periods (14) -
Effect of changes in tax rates - (9)
9 (13)
------- -------
1,854 1,278
======= =======
The charge for the year can be reconciled to the profit per the
income statement as follows:
2018 2017
GBP000 GBP000
Profit before tax 9,215 6,691
======= =======
Tax at the UK corporation tax rate of
19% (2017- 19.83%) 1,751 1,327
Effects of:
Tax effect of expenses that are not deductible
in determining taxable profit 31 19
Exceptional allowances - no deductions 106 -
Adjustments in respect of prior years (27) (46)
Depreciation on assets not qualifying
for tax allowances 4 (2)
Deferred tax adjustments in respect of
prior years (14) -
Land remediation relief (6) (12)
Adjust deferred tax to closing average
rate 9 (8)
------- -------
Tax charge for period 1,854 1,278
======= =======
4. Exceptional Items
2018 2017
GBP000 GBP000
Acquisition and other transaction
related costs (1) 255 -
Existing share capital conversion
to AIM (2) 303 -
558 -
======= =======
(1) Acquisition and other transactions related costs relate to
the costs incurred relating to the work undertake for the
acquisition of DHomes 2014 Holdings Limited and its subsidiaries
and jointly owned companies.
(2) Existing share capital conversion to AIM relates to costs
incurred relating to the work undertaken for the Initial Public
Ordering (IPO) for existing ordinary shares.
5. Dividends
2018 As restated
2017
GBP000 GBP000
----------- ------------
Total dividend payment 821 2,337
Weighted average number of ordinary shares
in issue 82,083,642 58,423,264
----------- ------------
Dividend per share (pence per share) 1.00 4.00
=========== ============
During the year, the nominal value of shares was split from 1p
to 0.125p. The weighted average number of ordinary shares in issue
for 2017 has been recalculated based on this split. This has
resulted in the dividend per share decreasing from 32.02p to
4.00p.
6. Earnings per share
The basic earnings per share is based on the profit for the year
divided by the weighted average number of shares in issue during
the year. The weighted average number of ordinary shares for the
year ended 31 May 2018 assumes that all shares have been included
in the computation based on the weighted average number of days
since issue.
The weighted average is calculated by adjusting for all
outstanding share options that are potentially dilutive (i.e. where
the exercise price is less than the average market price of the
shares during the year).
2018 As restated
2017
GBP000 GBP000
Profit for the year attributable to owners
of the Company 7,353 5,359
Adjusted for the impact of exceptional 558 -
costs in the year
----------- ------------
Normalised earnings 7,911 5,359
=========== ============
Weighted average number of ordinary shares
for the purpose of basic earnings per
share 73,412,651 58,403,264
Effect of dilutive potential shares: 201,061 -
share option
----------- ------------
Weighted average number of ordinary shares
for the purpose of diluted earnings per
share 73,613,712 58,403,264
=========== ============
Earnings per ordinary shares
Basic earnings per share (pence per share) 10.02 9.18
Diluted earnings per share (pence per
share) 9.99 9.18
Underlying earnings per ordinary shares
(1)
Basic earnings per share (pence per share) 10.78 9.18
Diluted earnings per share (pence per
share) 10.75 9.18
(1) Underlying earnings is presented as an additional
performance measure and is stated before exceptional items.
During the year, the nominal value of shares was split from 1p
to 0.125p. The weighted average number of ordinary shares in issue
for 2017 has been recalculated based on this split. This has
resulted in the basic and diluted earnings per share decreasing
from 73.42p to 9.18p.
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 or visit www.rns.com.
END
FR FKODDBBKBOCD
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