TIDMSPR
RNS Number : 6234T
Springfield Properties PLC
16 October 2017
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF
AMERICA (THE "UNITED STATES") (INCLUDING ITS TERRITORIES AND
POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF
COLUMBIA), AUSTRALIA, CANADA, JAPAN OR ANY OTHER JURISDICTION WHERE
IT IS UNLAWFUL TO DISTRIBUTE THIS ANNOUNCEMENT.
16 October 2017
Springfield Properties plc
("Springfield", the "Company" or the "Group")
Admission to AIM and First Day of Dealings
Springfield Properties, a leading housebuilder in Scotland
offering private and affordable housing, is pleased to announce
that trading in its shares commenced at 8.00am BST today on AIM.
The Group has successfully raised GBP25.0 million before costs and
expenses through the placing of 23,584,906 new shares at a price of
106 pence per share, capitalising Springfield at GBP87.0 million.
The Group is trading under the ticker "SPR" and ISIN number
GB00BF1QPG26.
Admission and Placing Statistics
Placing Price
106 pence
Number of Existing Ordinary Shares in issue at the date of the
Admission Document 58,498,736
Number of New Ordinary Shares being issued pursuant to the
Placing 23,584,906
Number of Ordinary Shares in issue immediately following
Admission 82,083,642
Placing Shares as a percentage of the Enlarged Share Capital
28.7 per cent.
Market capitalisation of the Company at the Placing Price on
Admission GBP87.0 million
Gross proceeds of the Placing
GBP25.0 million
Number of options over Ordinary Shares to be issued immediately
following
Admission pursuant to the CSOP and ESOP 1,332,325
Sandy Adam, Executive Chairman of Springfield, said: "I am
delighted that we have been able to bring GBP25m of investment into
Scotland. This will support an increase in the number of homes we
build and create new jobs. The level of support shown by our new
investors on our admission to AIM is gratifying. It is a real
endorsement of the work our employees have put into building a
strong and growing business. I would like to thank our new
investors for their faith in our company and its staff.
"Springfield is poised to play a significant part in the
delivery of the many new homes needed across Scotland. Our
investment in the infrastructure of new Villages will accelerate
our building of new homes, private and affordable, in new
communities. The Scottish Government's aim of building 50,000
affordable homes by 2021 has created an opportunity which underpins
the growth of our affordable housing business. We welcome our new
shareholders, and look forward to updating them and the wider
market as we develop our pipeline of projects and position
Springfield as a leading housebuilder in Scotland."
Nplus1 Singer Advisory LLP ("N+1 Singer") is acting as Nominated
Adviser and Broker to the Group in relation to Admission.
Certain capitalised terms are as defined in the Group's
Admission Document. A copy of the Group's Admission Document (dated
10 October 2017) is available on the Springfield Properties plc
website (www.springfield.co.uk).
Enquiries
Springfield Properties
-------------------------------- -----------------
Sandy Adam, Executive Chairman
Innes Smith, Chief Executive
Officer +44 1343 552550
-------------------------------- -----------------
N+1 Singer
-------------------------------- -----------------
Shaun Dobson, James White +44 20 7496 3000
-------------------------------- -----------------
Luther Pendragon
-------------------------------- -----------------
Harry Chathli, Claire Norbury,
Alexis Gore +44 20 7618 9100
-------------------------------- -----------------
Notes to Editor
Business overview
Established in Elgin in 1956, the Company changed its primary
operations to the development and construction of housing in 1988.
Since then the Group has grown organically and through strategic
acquisitions to become an award winning housebuilder, completing
620 homes in the year to 31 May 2017.
The Group's business model focusses on securing land for
residential use which often requires considerable remediation works
and significant investment in infrastructure prior to commencing
development of private or affordable houses. As at 31 August 2017
the Group had a land bank of 10,453 plots, with a GDV of GBP1.8
billion, of which 41.4 per cent. had planning permission, equating
to approximately 17 years of development at current levels of
activity. The total land bank increases to 12,058 plots with a GDV
of over GBP2 billion when the Group's unallocated land bank is
included.
The Group offers both private and affordable housing, through
its two operating divisions. In addition to developing affordable
housing on new private developments under Section 75 agreements,
the Affordable division also includes developments which consist
entirely of affordable housing using a proven business model. The
Directors believe that the combination of the Group's Affordable
and Private Housing divisions produce two distinct revenue streams
which reduces the Group's exposure to the Scottish private housing
market cycle. The Directors believe that the combination of the two
divisions is key to long term growth, with the Private Housing
division producing higher margins and the Affordable division
providing income and cash flow visibility.
The Group also undertakes construction-only projects. These
projects typically entail the construction of homes on land that is
not owned or controlled by the Group for which the Group receives
fees for its design and construction work on a "cost plus" basis
where the gross margin to be received by Springfield is effectively
fixed. In the year to 31 May 2017 this represented 4.6 per cent. of
revenue. The Group evaluates on an ongoing basis material
construction-only opportunities with reference to expected margins
and the available resources of the Group.
Land acquisition
The Group benefits from an experienced land and planning team
who focus on sites with development potential, which may or may not
be on the open market and which could be considered complex to
develop. They are supported by in-house engineers and architects,
who can identify site issues requiring remediation and estimate the
costs of their rectification so that expected costs can be factored
into purchase agreements. The land and planning team is well placed
to deal with sites with several owners.
The Directors believe that this approach helps to generate
better margins for the Group than would be the case if it instead
focused on sites that are on the open market and/or sites which are
ready for housing to be built on.
By specialising in land that is not on the open market or which
could be considered complex to develop, the Directors believe that
the Group has been able to build a significant land bank at
attractive prices which it intends to develop over the coming
years.
The Group typically undertakes extensive due diligence prior to
entering into any legal commitment relating to the acquisition of
land, taking into account the site's planning history and legal
status, an analysis of adjacent sites and desktop reviews of
engineering issues, ecology, archaeology, landscape, roads and
services. The site acquisition approval process involves
consideration of various factors relating to the proposed
development, including the underlying assumptions related to value,
risk, scale, costs and sales rates, as well as the overall design,
quality, location and scale of the project.
The Group typically sources land through option agreements or
conditional contracts in order to maintain capital efficiency and
operational flexibility. Approximately 70.4 per cent. of the
Group's land bank is secured by way of conditional contracts or by
way of option agreements.
Under an option agreement, the Group acquires an exclusive
option to purchase land during an agreed period of time. Option
agreements typically include obligations for the Group to endeavour
to secure planning permission at its cost, and the land is often
acquired and/or paid for in stages as it is developed. Planning
permission is usually granted within 18 months, at which time the
Group will agree the market value of the land with the seller, or,
in cases where agreement cannot be reached, the parties will
appoint a third-party expert to determine a valuation. Option
agreements provide for the Group to purchase land, at discount
against the open market value, and may include the opportunity for
costs incurred in obtaining planning permission to be deducted from
the purchase price to reflect the Group's efforts in securing
planning permission. The Group will generally seek to negotiate to
acquire the land in phases, or to pay the purchase price in
instalments.
Under a conditional contract, the Group agrees to acquire land
subject to the satisfaction of certain conditions precedent, such
as the securing of satisfactory planning permission, securing
control of the other sites required to implement the masterplan of
the development and/or the obtaining of satisfactory ground
investigation surveys. In the event the suspensive conditions are
satisfied, unlike an option agreement the Group is required to
acquire the land at a pre-agreed value formula at a certain point
in time, which may be adjusted depending on the type of planning
permission obtained.
In order to avoid the risks attached to holding speculative
unzoned land, the Group has occasionally purchased zoned land from
an investment vehicle, Moray Land Farming Partnership, which is a
related party. Moray Land Farming Partnership purchases unzoned
land considered to be highly speculative and the Group promotes
these sites for zoning. Once the site has been zoned, the Group
will enter into a conditional contract or option agreement to
purchase the land, typically at 85 per cent. of its Market Value
before the reimbursement of third party costs. In the absence of
agreement between the parties on the Market Value of the land, its
value shall be determined by an independent expert. These contracts
require the Group to acquire the site subject to the satisfaction
of securing satisfactory planning permission.
Both option agreements and conditional contracts allow the Group
to effectively control land prior to its acquisition with minimal
impact on its balance sheet, providing visibility on future revenue
and profits. For land subject to option agreements, until it has
exercised its option, the Group holds the land on its balance sheet
at the cost of the option. Land subject to conditional contracts is
not recognised on the Group's balance sheet until the contract has
become unconditional. Once owned, land is recognised at cost on the
Group's balance sheet.
Typically there are a number of consents and third party
agreements which are outside of the Group's direct control that are
required to facilitate the ultimate end development of a particular
site.
These consents and agreements typically include, amongst
others:
-- planning consent;
-- roads construction consent;
-- planning obligations including Section 75 agreements;
-- Scottish Water consent to the Group's proposed water and drainage infrastructure; and
-- consent from the Scottish Environmental Protection Agency to development proposals.
Prior to entering into a contractual obligation to purchase a
site, the Group will take into account the conditions attaching to
the proposed purchase and the anticipated contracts and agreements
that will be required to develop the site in question, as well as
the timing, quantum and obligations for payment when deciding if
entering into the contract is in the best interests of the
Group.
Selected historical financial information on the Company
The table below sets out the Company's summary financial
information for each of the past three financial years ended 31 May
2015, 31 May 2016 and 31 May 2017.
Year ended Year Year
31 May ended ended
2017 31 May 31 May
2016 2015
Number of completions 620 495 478
Revenue (GBPm) 110.6 90.8 84.3
Gross profit (GBPm) 16.7 13.8 10.8
Adjusted Profit/(loss)
before tax* (GBPm) 6.7 5.1 3.1
* Excluding an exceptional cost charged in the year to 31 May
2015
This information is provided by RNS
The company news service from the London Stock Exchange
END
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