Scottish housebuilder cashes in on expected housing demand from thousands of green infrastructure workers as it trebles profit
Springfield Properties has agreed to sell nearly 2,500 plots of land to Barratt Redrow for £64.2m.
The Scottish housebuilder said the proceeds from the sale will be used to more quickly pay down its outstanding bank debt, which stood at £62.9m as of 30 November.
It said the move will also capitalise on the “substantial need for new housing” expected in the north of Scotland due to anticipated growth in green infrastructure.
The housebuilder points out Scottish and Southern Electricity Networks is investing £31bn into upgrading the electricity network in the region and the project will require around 5,000 workers in 2027.
The Inverness and Cromarty Firth Green Freeport is also expected to create more than 10,000 jobs locally with new investment of over £3bn.
Springfield said its new projects and land purchasing will be focused on the north of Scotland region “where greater growth exists”, as opposed to central Scotland.
The announcement came as Springfield published its half-year results for the six months to 30 November, showing its pre-tax profit has nearly trebled from £1.2m to £3.5m year-on-year.
Springfield said the rise was due to an improvement in gross margins on affordable housing development, along with cost control and land sales.
The increase was despite turnover dropping 13%, from £121.7m to £105.6m, as it built 361 homes compared to 432 in the same period last year.
It said: “This was due to the group having entered the period with a lower private housing forward orderbook than at the same point in the previous year.”
It said however that private housing reservations have increased in the first half of this year “as homebuyer confidence grew, albeit against a backdrop of a continued subdued economy”.
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Springfield completed 95 affordable homes, down from 144 last year. Despite the drop in completions, the group’s gross margin from 14.7% to 17.7%, due to the completion of several-low margin legacy contracts in the previous year.
It also said that ahead of the Scottish Budget in December, there was “some hesitancy”” among affordable housing providers to commence new projects due to uncertainty around government funding.
However, it said activity has increased since Holyrood restored £200m to the affordable housing budget for 2025/26, taking it to £768m.
The group reduced its net bank date from £93.4m to £62.9m and said reducing debt further “remains an area of focus.”
Innes Smith, chief executive at Springfield Properties, 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.”
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