SPRINGFIELD Properties has announced its interim results for the six months ended 30 November 2023, in which the housebuilder has reported a 25% dip in revenue compared with the same period 12 month prior (from £161.9 million to £121.7 million).
Private housing revenue is down 26% compared with the first half of 2023, while affordable housing revenue has dropped 9%. Operating profit is down 37% to £4.8 million and net bank debt is up 38% to £93.4 million.
Total housing completion for the first half of the financial year were 432, compared with 673 for the same period 12 months earlier. This was described as being ‘in line with management expectations’ reflecting entering the year with a lower forward order book due to ‘challenging’ market conditions.
Springfield explained that private housing demand continued to be impacted by high interest rates, mortgage affordability and reduced homebuyer confidence.Â
The housebuilder has recommenced engaging with affordable housing providers following the Scottish Government increasing the affordable housing investment benchmarks, with affordable housing contracts totalling around £40 million having been signed since 31 May 2023 for delivery in the second half of 2024 and beyond.
In response to market conditions, the Springfield board adopted a strategy focusing on ‘maximising cash generation’ to reduce the group’s debt by year end.
The business added that it is on track to report results for the full financial year in line with market expectations, including meeting its target to reduce net bank debt to around £55 million by 31 May 2024.
Private housing reservation rates in 2024 are described as showing ‘initial signs of recovery’, while demand remains ‘strong’ in affordable housing, with the group confident of signing further contracts in the near term.
Innes Smith, CEO of Springfield Properties, said, “Trading for the first half of the year was in line with our expectations, and reflects the challenging market conditions experienced across the industry. To mitigate the impacts of the downturn and ensure we are in a stronger position for when trading conditions recover, we took decisive actions to maximise cash generation and reduce our debt by year end.
“A key element of this was actively pursuing profitable land sales. We are pleased to have agreed sales worth £18 million so far and we expect to conclude negotiations for further sales in the near term. Looking ahead, we are encouraged by the improvement in private housing reservations that we have experienced in recent weeks and the signs of increasing homebuyer confidence, as has been reported by other housebuilders.
“We are receiving strong demand in affordable housing – and have already signed contracts worth c. £40 million since 31 May 2023. We are also hopeful that the ending of the Scottish Government’s emergency rent cap in April 2024 will enable a return of PRS activity. Alongside this, build cost inflation is continuing to reduce and is expected to stabilise at low levels. We are on track to meet our year-end target for net bank debt, which will continue to reduce in the next financial year.
“The fundamentals of our business and our position within the Scottish housing market remain strong. We have one of the largest land banks in Scotland with over 6,421 owned plots, 86% of which has planning permission, and a further 3,217 acres of strategic land. We have an excellent reputation of offering high quality, energy efficient homes in desirable locations in key housing markets, and a track record of delivering developments exclusively for affordable housing.
“In addition, there is an undersupply of housing of all tenures, which can only be addressed through building new homes. As a result, while there remains uncertainty in the near term, with our position having been strengthened through the decisive action that we have taken, we remain confident in Springfield’s prospects.”
