Springfield Properties exceeds targets and resumes dividend payments

With the announcement of the results for the 2024 financial year (as of May 31), the Group confirmed that it is on track to deliver results for the 2025 financial year in line with market expectations.

Springfield said the company enters the new fiscal year with a stronger balance sheet, an improved private market environment and a larger backlog in the affordable housing sector.

Adjusted profit before tax is £10.6 million (2023: £16.0 million), above management’s original expectations due to strong gains on land disposals. Springfield Properties also achieved the key objective of significantly reducing net bank debt, exceeding the £55.0 million target with net bank debt of £39.9 million (31 May 2023: £61.8 million).

The company achieved a lucrative land sale valued at £28.1 million and completed 878 new homes – a decrease from the 1,301 homes completed in 2023. However, the company stressed that this was in line with market expectations and reflected the difficult market conditions in the housing industry.

Springfield Properties reported private housing revenues of £184.7m (2023: £253.4m) as demand in the year was impacted by high interest rates, affordable mortgages, the cost of living crisis and reduced homebuyer confidence. The company also reported affordable housing revenues of £47.0m (2023: £53.9m), reflecting the group’s decision in the previous year to suspend the writing of new fixed price affordable housing contracts.

During the year, Springfield Properties resumed active engagement with affordable housing providers following the introduction of the Scottish Government’s new benchmark, with contracts valued at over £50 million signed during the year, to be delivered in financial year 2024 and beyond.

Since year end the Group has begun to see signs of recovery, with reservation rates above those of the same period last year. The Company’s total land holdings comprise 5,593 plots, 88% of which have planning permission secured at an attractive price per plot, as well as a strategic land holding of a further 3,147 acres, representing 31,471 plots. This is one of the largest land holdings in Scotland, including significant holdings in the north of the country, where the Group will benefit from the expected strong increase in demand for housing to support the delivery of the Inverness and Cromarty Firth Green Freeport and significant improvements to the electricity network.

Springfield Properties also announced the resumption of its dividend payment to shareholders, declaring a total dividend for the year of 1 pence per share (2023: nil).

Innes Smith, CEO of Springfield Properties, said: “Despite a challenging market environment, we successfully achieved our targets for the year. One of the key priorities was to reduce our debt and we are very pleased to have exceeded our target. This was achieved through decisive action to reduce costs, manage working capital and secure profitable land sales from sites that do not impact our short-term development pipeline. We are now in a strong position to deliver future growth when more favourable economic and trading conditions return.

“We are also encouraged by early signs of improving conditions. Many of the key factors underpinning homebuyer confidence are strengthening, including falling inflation and the Bank of England’s first interest rate cut in over four years. Although it is still early, we are pleased to see an improvement in private housing demand since year-end – reservation rates are higher than at the same time last year. As we have actively started to sign affordable contracts again, the affordable housing backlog at year-end was also higher than at the same time last year.

“We continue to have one of the largest land reserves in Scotland, with planning already in place for a large proportion of the land. We are particularly excited about the upcoming investment in Scotland with the creation of the Inverness and Cromarty Firth Green Freeport and the development of Scottish & Southern Energy Networks’ new power lines to supply the UK with renewable energy, which will require the construction of thousands of new homes. We have worked in the North of Scotland for decades and are passionate about growth and development in the region. With significant land holdings in Moray and the Highlands, we are uniquely placed to capitalise on this opportunity as the property market recovers.

“We therefore look to the future with growing confidence and are pleased to be able to pay dividends again earlier than originally planned. We thank our shareholders for their continued support and look forward to keeping them updated on our progress.”