SPRINGFIELD Properties has signed an agreement with BDW Trading Limited, the principal operating subsidiary of Barratt Redrow plc, for the profitable sale of 2,480 plots of undeveloped land with planning consent across six sites for £64.2 million.
Proceeds from the sale will be received over four years and will be used to accelerate the removal of the group’s bank debt and capitalise on growth opportunities in the north of Scotland.
In addition, the group and Barratt have entered into non-binding discussions regarding the possible sale of additional future land holdings on a number of other sites.
The land and the prospective land is from Springfield’s future land pipeline and primarily located across central Scotland. Following the land sale, the group said it will continue to have a ‘large high quality land bank’, providing over nine years of activity, and will continue to operate in central Scotland, including delivering homes at the Bertha Park and Dykes of Gray villages.
The land sale only entails the transfer of undeveloped land. Springfield stated that no employees or other assets are being transferred as a result of the deal.
The group’s strategic growth focus will be on opportunities in the north, where it aims to capitalise on the need for new housing to cater for the high population and economic growth expectations in the region. This is being driven by green infrastructure development. Scottish and Southern Electricity Networks are investing £31 billion into upgrading the electricity network in the region, while the Inverness and Cromarty Firth Green Freeport is expected to create more than 10,000 jobs locally with new investment of over £3 billion.
Springfield directors believe the business is ‘uniquely placed’ to capitalise on these opportunities thanks to its large land bank across the Highlands and Moray, with a majority of plots already having planning in place.
CEO Innes Smith said, “This profitable land sale will enable us to realise the value of our assets, accelerate our plans to remove bank debt and focus on the significant opportunity in the north of Scotland where we are uniquely positioned to excel. New housing is required to cater for the thousands of workers needed to deliver the substantial green infrastructure development coming to the region and the ongoing population growth as result of the economic stimulus these projects will bring.”
Meanwhile, Springfield Properties has reported a 13% dip in revenue to £105.6 million in its interim results for the for the six months ended 30 November 2024, compared with the same period 12 months earlier (H1, 2024: £121.7 million). Adjusted profit before tax increased by 90% to £3.8 million for the same period.
Total housing completions of 361 (H1, 2024: 432), are said to be ‘in line with management expectations’, reflecting market conditions.
Gross margin increased by 300 bps to 17.7%, which was attributed to profitable land sales and completion of legacy affordable contracts at the end of the prior financial year.
Springfield also reported a ‘substantial’ reduction in net bank debt to £62.9 million (30 November 2024: £93.4 million) as a result of action taken in FY 2024, including profitable land sales and a ‘sustained focus’ on cost control.
The group added there has been a ‘slight increase’ in private housing reservations in H1, 2025 over H1, 2024.
The board has not declared an interim dividend and remains committed to declaring a final dividend for FY 2025.
In terms of current trading and outlook, Springfield said the private housing reservation rate reduced from mid-December, reflecting a ‘subdued’ economy, but is currently experiencing signs of increased confidence following interest rate cuts. Since the Scottish Budget in December, affordable housing providers’ confidence has improved and two new contracts have been signed that will start in the current year.
Springfield expects to report profit for FY 2025 ‘significantly ahead’ of market expectations and achieve a net cash position, with no bank debt, by the end of FY 2027.
Innes Smith said, “Trading for the first half of the year was in line with our expectations. The strategic action taken in the previous year to reduce our debt, along with sustained cost control in the period and further profitable land sales, delivered a substantial reduction in our net bank debt compared with the prior year. We also significantly improved our gross margin and achieved a strong increase in profit.
“While we are disappointed that some of our affordable housing projects were delayed due to uncertainty over availability of public funding, we are encouraged by the increase in activity in this area following the Scottish Budget in December. The housing market continues to be influenced by the wider economy and subdued confidence resulted in a dip in reservation rates from mid-December. However, we are currently seeing an increase in visitor levels, bolstered by the reduction in interest rates earlier this month, giving us optimism that reservation rates will recover in the near term.”
