Springfield Properties reports increased profits amid market challenges

ELGIN - Springfield Properties (LON:SPRSP) (AIM: SPR), a prominent Scottish housebuilder, has released its interim results for the six months ending November 30, 2024, revealing a profit increase despite a decrease in overall revenue.

The company's revenue fell by 13% to £105.6 million from £121.7 million in the previous year. This decline was attributed to a 18% decrease in private housing revenue and a 20% drop in affordable housing revenue. However, contract housing revenue saw a significant increase of 216%.

Springfield's gross margin improved from 14.7% to 17.7%, a 300 basis point increase, primarily due to profitable land sales and the completion of legacy affordable contracts. The company's operating profit rose by 27% to £6.1 million, with adjusted operating profit up by 14% to £6.4 million.

Profit before tax saw a substantial increase of 192% to £3.5 million, and adjusted profit before tax rose by 90% to £3.8 million. Basic earnings per share increased by 127% to 2.27 pence, and adjusted basic earnings per share went up by 55% to 2.46 pence.

A significant reduction in net bank debt was reported, from £93.4 million to £62.9 million, due to strategic actions taken in the previous fiscal year, including land sales and cost control measures.

Springfield reported total completions of 361 homes, in line with management expectations and reflecting market conditions. Private housing reservations in H1 2025 showed a slight increase over the previous year.

The company also noted delays in the commencement of certain affordable housing contracts due to uncertainties around Scottish Government funding. However, activity has increased following the Scottish Budget in December 2024, with two new contracts signed that will commence in the current year.

Furthermore, Springfield entered a post-period agreement with Barratt for the sale of 2,480 plots of undeveloped land in Central Scotland for £64.2 million in cash. This land sale is expected to significantly reduce the Group's bank debt and support strategic growth opportunities in the North of Scotland.

Despite the subdued economy affecting private housing reservation rates from mid-December, Springfield has seen signs of increased confidence following recent interest rate cuts.

Looking ahead, Springfield expects to report profit for FY 2025 significantly ahead of market expectations and achieve a net cash position by the end of FY 2027.

The Board has not declared an interim dividend but remains committed to declaring a final dividend for FY 2025. The company's strategic focus will be on capitalizing on the demand for housing in the North of Scotland, particularly in the Highlands and Moray, due to the development of the Inverness and Cromarty Firth Green Freeport and upgrades to the power network.

This article is based on a press release statement from Springfield Properties plc.

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