17 February
2025
Springfield Properties
plc
("Springfield", the
"Company", the "Group" or the "Springfield Group")
Interim Results
Springfield Properties (AIM: SPR),
a leading housebuilder in Scotland focused on
delivering private and affordable housing, announces
its interim results for the six months ended 30 November
2024.
Financial
Summary
|
|
H1 2025
£m
|
H1 2024
£m
|
Change
|
|
Revenue
|
105.6
|
121.7
|
(13)%
|
|
Private
housing revenue
|
72.1
|
87.7
|
(18)%
|
|
Affordable
housing revenue
|
20.4
|
25.4
|
(20)%
|
|
Contract
housing revenue
|
6.0
|
1.9
|
216%
|
|
Land
sales
|
5.1
|
5.6
|
(9)%
|
|
Other
revenue
|
2.0
|
1.1
|
82%
|
|
Gross margin (%)
|
17.7%
|
14.7%
|
300bps
|
|
Administrative expenses*
|
12.4
|
12.6
|
(2)%
|
|
Operating profit
|
6.1
|
4.8
|
27%
|
|
Adj. operating profit*
|
6.4
|
5.6
|
14%
|
|
Profit before tax
|
3.5
|
1.2
|
192%
|
|
Adj. profit before tax*
|
3.8
|
2.0
|
90%
|
|
Basic EPS (p)
|
2.27
|
1.00
|
127%
|
|
Adj. basic EPS* (p)
|
2.46
|
1.59
|
55%
|
|
Net bank debt
|
62.9
|
93.4
|
(33)%
|
* Adjusted to exclude exceptional costs of £0.3m (H1 2024:
£0.9m) (See the Financial Review for further
detail)
Highlights
·
Total completions of 361 (H1 2024: 432), in line
with management expectations, reflecting market
conditions
·
Gross margin increased by 300 bps to 17.7% (H1
2024: 14.7%), due to profitable land sales and completion of legacy
affordable contracts at the end of the prior financial
year
·
Adjusted profit before tax increased by 90% to
£3.8m (H1 2024: £2.0m), primarily reflecting the improvement in
affordable housing gross margin, sustained focus on cost control
and land sales
·
Substantial reduction in net bank debt to £62.9m
(30 November 2024: £93.4m) as a result of the strategic action
taken in FY 2024, including profitable land sales and a sustained
focus on cost control
·
Slight increase in private housing reservations
in H1 2025 over H1 2024
·
Commencement of delivery of certain affordable
housing contracts was delayed due to uncertainty around
availability of Scottish Government funding, however activity has
increased following the Scottish Budget in December 2024
·
Total owned land bank of 5,797 plots, 90% with
planning permission, and 6,305 plots under
contract
o A
large, high quality land bank, including significant holdings in
the Highlands and Moray where the Group will benefit from the
expected sharp increase in demand for housing to support the
delivery of the Inverness and Cromarty Firth Green Freeport and
substantial upgrades to the power network
·
Long-term fundamentals of the Scottish housing
market remain strong with the undersupply of housing across all
tenures becoming more acute and greater private housing
affordability than the UK as a whole
·
The Board has not declared an interim dividend
(interim dividend 2024: nil) and remains committed to declaring a
final dividend for FY 2025
Current Trading and Outlook for FY 2025
·
Private housing reservation rate reduced from
mid-December reflecting the subdued economy, but is currently
experiencing signs of increased confidence following interest rate
cuts
·
Since the Scottish Budget in December 2024,
affordable housing providers' confidence has improved and two new
contracts have been signed that will commence in the current
year
·
The Group entered an agreement, post period, with
BDW Trading Limited ("Barratt"), the principal operating subsidiary
of Barratt Redrow plc, for the profitable sale of 2,480 plots of
undeveloped land primarily in Central Scotland for £64.2m in
cash
o In addition, the parties are in non-binding discussions
regarding the sale by the Group of further future land holdings on
a number of sites
o The proceeds of the land sale, which will be received over
four years, will be used to accelerate the removal of the Group's
bank debt and to capitalise on the significant opportunities in the
North of Scotland
·
The Group expects to:
o report profit for FY 2025 significantly ahead of market
expectations
o achieve a net cash position, with no bank debt, by the end of
FY 2027
Innes Smith, Chief Executive Officer of 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.
"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.
"We are pleased to have signed this profitable
land sale agreement with Barratt, which demonstrates the value of
our large, high quality land bank. The proceeds will accelerate the
removal of our debt and support our strategic focus of capitalising
on the unprecedented growth opportunity in the North of Scotland.
The requirement for new housing in the Highlands and Moray is
substantial, driven by the need to house the increased population
resulting from the incoming green infrastructure and the economic
growth in the region. With significant land holdings across the
Highlands and Moray and an established presence, Springfield is
uniquely placed to deliver on this increased demand for
homes."
Enquiries
|
Springfield
Properties
|
|
|
Sandy Adam, Chairman
Innes Smith, Chief Executive
Officer
Iain Logan, Chief Financial Officer
|
+44 1343 552550
|
|
|
|
|
Singer
Capital Markets
|
|
|
Shaun Dobson, James Moat, Oliver
Platts
|
+44 20 7496 3000
|
|
|
|
|
Gracechurch
Group
|
|
|
Harry Chathli, Claire Norbury, Henry
Gamble
|
+44 20 4582 3500
|
Analyst
Research
Equity Development and Progressive Equity
produce freely available research on Springfield Properties plc,
including financial forecasts. This is available to view and
download here:
https://www.thespringfieldgroup.co.uk/news/updates-and-analyst-reports
Results
Investor Webinar
Innes Smith, Chief Executive
Officer, and Iain Logan, Chief Financial Officer, will be
presenting to investors, via a webinar hosted by Equity
Development, at 9.00am GMT on 19 February 2025. Investors can
register their attendance for the webinar here:
https://www.equitydevelopment.co.uk/news-and-events/spr-investor-presentation-19feb2025
Operational Review
In line with management
expectations, the Group completed a total of 361 homes
in the six months to 30 November 2024 (H1 2024: 432), generating
revenue of £105.6m (H1 2024: £121.7m). 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. The number
of private housing reservations secured in H1 2025 increased over
H1 2024 as homebuyer confidence grew, albeit against a backdrop of
a continued subdued economy. In affordable housing, while the Group
experienced some short-term delays ahead of the Scottish Budget,
completion of low margin legacy contracts in prior year supported a
significant improvement in gross margin, as expected. This,
combined with sustained cost control, enabled growth
in operating profit to £6.1m (H1 2024: £4.8m).
Following the Group's land sale agreement with
Barratt, as also announced today, the Group's strategic focus will
be on the North of Scotland where the Group is uniquely placed to
capitalise on the substantial need for new housing driven by the
high population and economic growth expectations in the region. The
proceeds of the sale will accelerate the removal of the Group's
bank debt, with the Group achieving a cash positive position by FY
2027, and enable the Group to capitalise on these
opportunities.
The Group continues to engage with key
stakeholders regarding the creation of the Inverness and
Cromarty Firth Green Freeport and upgraded powerlines in the North
of Scotland to supply the UK with renewable energy. With
significant land holdings across the Highlands and Moray and an
established presence, the Group is extremely well-placed to deliver
the new housing required for the development of this green
infrastructure.
Existing live private and
affordable sites in Central Scotland will be completed as planned,
and the Group will continue to operate in Central Scotland over the
longer term, primarily focused on its existing large developments,
including Dykes of Gray and Bertha Park.
Land Bank
The majority of Springfield's high-quality
land bank has been secured off market without planning, resulting
in a very low average cost per plot that enables the
Group to maximise the long-term value of its sites. With one
of the largest land banks in Scotland, in key locations across the
country, the Group has been focused in recent periods on realising
the value of its existing sites.
During the period, the Group completed
profitable land sales of £5.1m.
As at 30 November 2024, the Group had 5,797
owned plots (31 May 2024: 5,593), of which 90% had planning
permission (31 May 2024: 88%), and 6,305 contracted plots (31 May
2024: 6,866), of which 55% had planning permission. The owned and
contracted land bank equated to 14 years of activity and had a
gross development value at 30 November 2024 of £3.2bn (31 May 2024:
£3.1bn).
At period end, the Group was active on 40
developments (31 May 2024: 42) and during the period seven
developments were completed and five new developments became
active.
Agreement with Barratt
The Group has entered an agreement to sell to
Barratt undeveloped land equating to 2,480 plots across six sites
(the "Land Sale"). The Land Sale will complete in the current
financial year, with the Group receiving the cash payment of £64.2m
in four instalments over four years, with approximately 50% being
received in the Group's current financial year. The land is from the Group's future pipeline and is primarily
located across Central Scotland. In addition, the Group and Barratt
are in non-binding discussions regarding the sale by the Group of a
number of further future land holdings on a number of sites across
Central Scotland.
The land is being sold at a c.
1.3x book value. The proceeds of the profitable Land Sale will be
used to accelerate the removal of the Group's bank debt - becoming
net cash positive by FY 2027 - and to capitalise on the significant
opportunities that are emerging in the North of Scotland where the
Group is uniquely placed to benefit.
Following the completion of the
Land Sale, the Group will continue to have a large, high quality
land bank, comprising approximately 3,498 owned plots and 4,324
contracted plots. The owned and contracted land - of which c. 83%
and c. 39% respectively will have planning permission - will
provide nine years of activity at current sales rates. The gross
development value of the owned and contracted land will be
£1.9bn.
Strategic focus on the North of
Scotland
The Group's strategic focus going forward will
be on the North of Scotland where the Board believes the greater
growth opportunities exist. The Group will continue to build out
and sell its existing live private and affordable housing sites in
Central Scotland, which is expected to complete in c. 2-3 years,
and will maintain a long-term presence in the region through its
village developments in Dundee and Perth. New projects and land
purchasing will be focused on the North of Scotland.
Following the Land Sale, the Group's land bank
in Central Scotland will consist of 3,162 plots across 42 sites,
comprising 19 current sites and 23 future sites. The Group will
potentially sell further future sites to Barratt.
Ahead of the completion of the existing sites
in Central Scotland, there will not be any changes in the Group's
service provision, with its private and affordable housing
customers receiving the same high level of service they are
accustomed to, including continuing to have access to the Group's
after-sales service. In addition, all contracts with subcontractors
will be fulfilled and the supply chain secured to ensure delivery.
Private Housing
The number of private home completions in the
period was 230 (H1 2024: 279). The Group entered the period with a
lower forward orderbook than at the same point of the prior year,
reflecting market conditions. During the period, there was a slight
improvement in private housing reservation rates as homebuyer
confidence grew, resulting in an increased number of private
housing reservations being secured in H1 2025 compared with H1
2024. This was against a subdued economic backdrop, which, post
period from mid-December, resulted in a reduction in reservation
rate. The housing market
remains sensitive to the wider economy and mortgage rates, however
recent visitor levels, together with the cut in interest rate
earlier this month, give the Group optimism that the reservation
rate will recover in the near term.
The average selling price ("ASP") for private
housing during the period was £313k (H1 2024: £314k), reflecting
selling prices remaining resilient across the Group's
brands.
As at 30 November 2024, the Group was active
on 28 private housing developments (31 May 2024: 29), with five
active developments added during the period and six developments
completed. In total, as at 30 November 2024, the owned private
housing land bank consisted of 4,007 plots (31 May 2024: 3,837), of
which 90% had planning permission (31 May 2024: 87%).
Village
Developments
Springfield Villages are large, standalone
developments that will include up to 3,000 homes across tenures,
infrastructure and neighbourhood amenities, and with ample
greenspace. Further to the agreement with Barratt, which included
the sale of the outstanding plots at Durieshill, the Group's
Village developments comprise Bertha Park in Perth, Dykes of Gray
in Dundee and Elgin South in Elgin. These developments are all home
to growing communities with an aggregate total of 1,226 homes being
completed as at 30 November 2024.
During the period, construction and sales
started of a new phase at Bertha Park, with the first completions
expected in February 2025.
At Dykes of Gray, the community infrastructure
continued to strengthen with, post period, a local business taking
ownership of a further commercial unit, which will provide the
Village with its own dental practice in addition to the existing
grocery store.
Affordable Housing
During the period the Group continued to
deliver on the affordable housing contracts secured in the prior
year, completing 95 affordable homes in the period (H1 2024: 144).
This, combined with the Group having completed its legacy contracts
at the end of FY 2024, enabled a significant improvement in gross
margin, which returned to double-digits. The ASP in affordable
housing increased to £215k (H1 2024: £177k). This aligns with
increased pricing across the sector with the Scottish Government
making higher levels of grant subsidy available to affordable
housing providers in response to historic construction cost
inflation to make such projects commercially viable.
As previously noted, ahead of the announcement
of the Scottish Budget, there was some hesitancy among affordable
housing providers to commence new projects due to uncertainty
around availability of Scottish Government funding. With the
Scottish Budget, in December 2024, allocating £768m to affordable
housing supply for 2025/26 - an increase over the prior year -
Springfield has experienced an increase in activity in this area,
with its partners resuming discussions and two contracts having
been signed that will commence in the current year. As a result,
while some of the affordable housing projects in the Group's
pipeline will be initiated slightly later than previously
anticipated, the Group is pleased to note an increase in confidence
among affordable housing providers.
The number of active affordable housing
developments was nine at 30 November 2024 (31 May 2024: 10), with
one development having been completed during the period.
As at 30 November 2024, the total owned
affordable housing land bank consisted of 1,790 plots (31 May 2024:
1,756), of which 89% had planning permission (31 May 2024:
89%).
Contract Housing
In contract housing, the Group provides
development services to third party private organisations and
receives revenue based on costs incurred plus fixed mark up. To
date, this has largely consisted of services provided to Bertha
Park. At 30 November 2024, the contract housing land bank with
planning consent consisted of 528 plots (31 May 2024: 579). The 36
homes completed during the period (H1 2024: 9) comprised 19 private
homes and 17 affordable homes at Bertha Park.
Financial Review
|
Revenue
|
H1
2025
£'000
|
H1
2024
£'000
|
Change
|
|
Private housing
|
72,068
|
87,674
|
(17.8)%
|
|
Affordable housing
|
20,431
|
25,452
|
(19.7)%
|
|
Contract housing
|
6,012
|
1,862
|
222.9%
|
|
Land sales
|
5,065
|
5,554
|
(8.8)%
|
|
Other
|
2,064
|
1,143
|
80.6%
|
|
TOTAL
|
105,640
|
121,685
|
(13.2)%
|
For the six months ended 30 November 2024,
revenue was £105.6m (H1 2024: £121.7m), reflecting the reduction in
private and affordable housing revenue described above. Private
housing remained the largest contributor to Group revenue,
accounting for 68.2% of total sales (H1 2024: 72.1%), with
affordable housing contributing 19.3% (H1 2024: 20.9%), contracting
housing contributing 5.7% (H1 2024: 1.5%), land sales contributing
4.8% (H1 2024: 4.2%) and other revenue contributing 2.0% (H1 2024:
1.3%).
Gross margin improved to 17.7% (H1 2024:
14.7%). This primarily reflects the significant improvement in
gross margin in affordable housing following the completion of low
margin legacy contracts in the prior year as well as limited cost
inflation during the period. Gross profit for the period increased
to £18.7m (H1 2024: £17.9m) as a significant growth in gross profit
in affordable housing and from land sales more than offset the
reduction in private housing.
Administrative expenses, excluding exceptional
items, were £12.4m (H1 2024: £12.6m). This reflects sustained focus
on carefully managing costs and generating cost savings through
further rationalisation across the Group.
Exceptional items were £0.3m (H1 2024: £0.9m),
which mainly relates to restructuring costs.
Operating profit increased to £6.1m (H1 2024:
£4.8m), primarily due to the improved gross margin and sustained
focus on cost control. Excluding exceptional items, operating
profit was £6.4m (H1 2024:
£5.6m).
Finance costs were £2.7m (H1 2024:
£3.7m), with the reduction due to the lower bank debt
following actions taken in the prior year.
Statutory profit before tax increased to £3.5m
(H1 2024: £1.2m) and adjusted profit before tax and exceptional
items was £3.8m (H1 2024: £2.0m).
Basic earnings per share (excluding
exceptional items) were 2.46 pence (H1 2024: 1.59 pence). Statutory
basic earnings per share were 2.27 pence (H1 2024: 1.00
pence).
Net bank debt at 30 November 2024 was £62.9m
(30 November 2023: £93.4m; 31 May 2024: £39.9m). This primarily
reflects the strategic action undertaken in FY 2024 to reduce the
debt position, but also a sustained focus on carefully managing
costs and generating cost savings in H1 2025 through further
rationalisation across the Group. The increase in net bank debt
over the six-month period reflects the usual seasonal working
capital cycle, with work-in-progress at the end of the first half
that will unwind as houses complete and are sold in the second half
of the year.
During the period, the Group's revolving
credit facility of £87.5m that was initially due to
expire in January 2025 was extended for a further 12 months to
January 2026 and a £7.5m overdraft facility has also been
put in place for 12 months until September 2025.
Customer
Satisfaction
The Group achieved 97% customer satisfaction
from customers surveyed during the first half of the year - up from
96% for H1 2024. The Group remains committed to an aspirational
target of 100% customer satisfaction to demonstrate the Group's
focus on looking after customers and is pleased to be reporting
sustained progress towards this. In addition, during the period,
the Group was successfully re-certified for ISO 9001 (Quality
Management).
Build Quality
and Efficiencies
During the period, the Group submitted its
first planning application utilising its new house type
range. The new portfolio of house types includes a selection
of the most popular homes that are most efficient to build and
capable of accommodating future building standards to maximise
energy efficiency. The entire new range can be built with
greater efficiency from timber kits at the Group's own factories
and maximise the use of modern methods of construction on site. The
consistent build approaches will enable the Group to increase the
quality of its housing delivery.
Environment
& People - ESG
The Group continues to be a leader in the
industry on the delivery of homes without fossil fuels. The
Group first began utilising air source technology in 2009 and,
during the period, a milestone was reached with over half of the
homes completed utilising air source technology for heating as a
successful alternative to gas. With its two kit factories in Elgin
and outside Glasgow, Springfield also holds decades of experience
in off-site construction. All of the Group's highly insulated,
quality homes are constructed from timber frame. During the period,
the Group was successfully re-certified for ISO 14001
(Environmental Management).
The Group's efforts have continued in
Community Engagement during the period with support provided to
local groups and charities as new communities are created. Looking
after employees continues to be a priority, with uptake in free gym
memberships and private healthcare encouraging wellbeing and
provisions for mental health support and assistance being extended
in various forms. The Group's targets for training and
apprenticeships continue to be on track to support commitments to
developing future skills. In addition, during the period, the Group
became certified for ISO 45001 (Occupational Health & Safety
Management).
The Group's ESG Committee, chaired by
Springfield's Chief Executive Innes Smith, is overseeing the
delivery of objectives for the year, including projects on further
understanding customer experience, measuring biodiversity and
reducing waste.
Markets
The requirement for new housing in Scotland is
at an all-time high and drops in housing supply across the industry
further compound housing needs. The Scottish Government declared a
national housing emergency in May 2024. This has created impetus
for the Government to address barriers to new housing delivery,
including a review of private rented sector ("PRS") regulation. The
Scottish Government has recently announced that the temporary rent
cap, which has been in place since 2022, will be lifted on 31 March
2025. This has reinforced the commitments made by the Housing
Minister that new long-term rent cap legislation, coming forward in
2027, will take into account the needs of investors to allow them
to reinvest in PRS in Scotland and thereby enable growth in the
supply of new homes in the sector. This will create an opportunity
for the Group in the medium term. The scale of unmet demand
continues to underpin the fundamentals of the Group's
business.
In private housing, the Group is encouraged by
an improvement in the forward orderbook. While homebuyer confidence
remains sensitive to macroeconomic developments, aspirations for
the type of homes that the Group offers remain high. Across each of
Springfield's brands, the Group builds quality, spacious, energy
efficient homes in highly desirable areas with generous private
gardens and plenty of surrounding greenspace. Mortgage lenders are
keen to lend to buyers of energy efficient new build homes. There
continues to be greater affordability in Scotland compared with the
UK as a whole based on the ratio of average house price to annual
income. The Scottish missive system continues to give the Group
confidence in its sales, with the Group's customers contracted into
the purchase earlier in the build programme than in other parts of
the UK.
In affordable housing, the Scottish Budget,
announced in December 2024, allocated £768m to affordable
housing supply for 2025/26, which is substantially higher the
amount allocated for the current year. With housing receiving
political focus across the UK, there has been an increased urgency
in response from public and private sectors and an appetite for
collaboration to provide more homes across tenures and meet the
Scottish Government's long-standing commitment to deliver 110,000
affordable homes by 2032. As a member of the Scottish Government's
Housing Investment Task Force established in April 2024, the Group
is working closely with the Housing Minister and key stakeholders
from housing and finance to identify ways of attracting additional
investment into housing, including the unlocking of PRS investment
in Scotland.
Opportunities in the
North
The Group is particularly excited by the
opportunities offered by the incoming UK Government-financed green
infrastructure development in the North of Scotland, which is
expected to drive unprecedented growth in the region over the next
10-15 years. This will require new housing for the thousands of
additional workers that are needed to deliver and operate the green
infrastructure projects as well as the long-term growth in
population as a result of the economic stimulus to the
region.
The decarbonisation of the UK energy supply
involves a programme of investment in renewable generation in the
North of Scotland that requires transmission projects of a
significant scale. Scottish and Southern Electricity Networks
("SSEN") will be investing £31bn into upgrading the electricity
network in the region. This project will have one of the largest
construction workforces of all major infrastructure projects in the
UK and the remote nature and scale of the projects mean bringing in
a new workforce. SSEN estimates that their workforce will peak in
2027 at around 5,000 workers.
The Inverness and Cromarty Firth Green
Freeport is placing the Highlands and Moray at the heart of the
drive towards net-zero, and is expected to create more than 10,000
jobs locally with new investment of over £3bn. Sumitomo Electric has commenced construction of a
manufacturing facility to supply high voltage cables to the growing
offshore wind energy sector. Located adjacent to the Port of Nigg
in the Cromarty Firth, the project has an estimated investment
value of £350m, including up to £24.5m in public sector support.
Similarly, Cerulean Winds has selected the under-construction
Ardersier Energy Transition Facility as its chosen port for
the deployment of its offshore wind projects. Cerulean's commitment
to using the facility marks a major step toward realising the UK
and Scottish governments' vision of creating a world-leading
floating offshore wind industrial base.
The Group is in discussions with key
stakeholders about how to meet the demand for the new housing
required. The Highland Council is demonstrating its desire to
increase housing numbers to realise the potential from these
substantial investment opportunities. It has set a target of
doubling housing output over the next ten years to 24,000 homes,
made a call for new sites to be adopted in the Local Plan for
residential development and is the first council in Scotland to
commit to utilising new powers through Masterplan Consent Areas to
streamline the consents process for designated sites. With land
holdings across the North of Scotland, the Group is extremely
well-placed to assist and help realise the potential for economic
stimulus to these regions, with its ability to capitalise on the
opportunity having been strengthened following the agreement with
Barratt.
Outlook
The Group continues to navigate through
challenging macro conditions and position itself to deliver
positive momentum in H2 2025 and beyond.
Following a period of delay amongst affordable
housing providers due to uncertainties concerning public funding,
there has been an increase in activity since the Scottish Budget in
December 2024. The renewed confidence has enabled affordable
housing projects in the Group's pipeline to move forward, albeit
with a revised timeline for some initiatives that were anticipated
to begin in FY 2025, and which are now scheduled for the next
financial year.
In private housing, there has been a reduction
in reservation rate from mid-December, and a number of completions
that the Group had expected to occur in FY 2025 are now anticipated
to take place in FY 2026. However, the Group is encouraged by a
recent increase in visitor levels and mortgage rate reductions and
is optimistic that reservation rates will recover in the near
term.
The Group is particularly encouraged by the
unprecedented requirement for new housing in the North of Scotland,
a region that presents a significant opportunity for Springfield.
The proceeds from the Group's recent agreement with Barratt, signed
post period, will be strategically utilised to capitalise on this
opportunity and accelerate the removal of bank debt, with the Group
expecting to become net cash positive by FY 2027.
Overall, the Group anticipates reporting
profit that significantly exceeds market expectations for FY 2025.
Looking further ahead, with reaching a net cash position by FY 2027
and the significant growth opportunity in the North of Scotland,
the Board remains confident of delivering sustainable
shareholder value.
Notes to the Financial
Statements
FOR THE PERIOD ENDED 30 NOVEMBER
2024
1. Organisation and trading activities
Springfield Properties PLC ("the
Company") is incorporated and domiciled in Scotland as a public
limited company and operates from its registered office in
Alexander Fleming House, 8 Southfield Drive, Elgin, IV30
6GR.
The consolidated interim financial
statements for the Group for the six month period ended 30 November
2024 comprises the Company and its subsidiaries and jointly
controlled entities (the "Group"). The basis of preparation of the
consolidated interim financial statements is set out in Note 2
below.
The financial information for six
month period ended 30 November 2024 is unaudited. It does not
constitute statutory financial statements within the meaning of
Section 434 of the Companies Act 2006. The consolidated interim
financial statements should be read in conjunction with the
financial information for the year ended 31 May 2024, which has
been prepared in accordance with International Accounting Standards
in conformity with the requirements of the UK adopted international
accounting standards. The statutory financial statements for year
ended 31 May 2024 have been delivered to the Registrar of
Companies. The auditors' report on those financial statements was
unqualified, did not draw attention to any matters by way of
emphasis, and did not contain a statement under 498(2) or 498(3) of
the Companies Act 2006.
2. Basis of preparation
The interim financial statements
have been prepared in accordance with IAS 34 - Interim Financial
Reporting and in accordance with UK adopted international
accounting standards.
The interim financial statements
have been prepared on a going concern basis and under the
historical cost convention, except for contingent
consideration.
The preparation of financial
information requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. These are also
disclosed in the 31 May 2024 year-end financial statements and
there have not been any changes. Although these estimates are based
on management's best knowledge of the amounts, events or actions,
actual events may ultimately differ from those
estimates.
The interim financial statements do not include all financial risk
information and disclosures required in the annual financial
statements and they should be read in conjunction with the
financial information that is presented in the Group's audited
financial statements for the year ended 31 May 2024. There has been
no significant change in any risk management polices since the date
of the last audited financial statements.
Going concern
The Group's performance in the six
months to 30 November 2024 is in line with management expectations
and, as noted, following the agreement signed post period with
Barratt, the Group is on track to report results for the year to 31
May 2025 ahead of market expectations.
Net bank debt at 30 November 2024
was £62.9m (30 November 2023: £93.4m; 31 May 2024: £39.9m) and
reducing the debt position remains an area of focus.
The revolving credit facility of
£87.5m has an expiry date in January 2026 and the Group also has a
£7.5m overdraft facility in place until September 2025.
The Directors are confident that
the Group has adequate resources to continue in operational
existence for the foreseeable future. Accordingly, they continue to
adopt the going concern basis in preparing these interim financial
statements.
3. Accounting policies
The accounting policies used in
preparing these interim financial statements are the same as those
set out and used in preparing the Group's audited financial
statements for the year ended 31 May 2024.
Principal risks and uncertainties
As with any business, Springfield
Properties PLC faces a number of risks and uncertainties in the
course of its day-to-day operations.
The principal risks and
uncertainties facing the Group are outlined within its latest
annual financial statements for the year ended 31 May 2024. The
Directors have reviewed these risks and uncertainties, which remain
relevant for both the six months to 30 November 2024 and the full
financial year to 31 May 2025. The Group continues to manage and
mitigate these where relevant.
Exceptional items
Exceptional items are those
material items which, by virtue of their size or incidence, are
presented separately in the consolidated profit and loss account to
enable a full understanding of the Group's financial performance.
Transactions that may give rise to exceptional items include
transactions relating to acquisitions, costs relating to changes in
share capital structure and restructuring costs.
Restructuring costs relate to a
review of our business to identify areas for greater efficiency and
rationalisation.
4. Segmental analysis
A segment is a distinguishable
component of the Group's activities from which it may earn revenues
and incur expenses, whose operating results are regularly reviewed
by the Group's chief operational decision makers to make decisions
about the allocation of resources and assessment of performance and
about which discrete financial information is available.
In identifying its operating
segments, management generally follows the Group's service lines
that represent the main products and services provided by the
Group. The Directors believe that the Group operates in one
segment:
·
Housing building activity
As the Group operates solely in
the United Kingdom, segment reporting by geographical region is not
required.
|
|
Unaudited Period to 30 November
2024
|
|
Unaudited Period to 30 November
2023
|
|
Audited
Year to 31 May 2024
|
|
Revenue
|
£000
|
|
£000
|
|
£000
|
|
Private residential
properties
|
72,068
|
|
87,674
|
|
184,734
|
|
Affordable housing
|
20,431
|
|
25,452
|
|
46,975
|
|
Contracting
|
6,012
|
|
1,862
|
|
4,995
|
|
Land sales
|
5,065
|
|
5,554
|
|
28,055
|
|
Other
|
2,064
|
|
1,143
|
|
1,768
|
|
Total Revenue
|
105,640
|
|
121,685
|
|
266,527
|
|
Gross Profit
|
18,738
|
|
17,940
|
|
43,372
|
|
Administrative expenses
|
(12,437)
|
|
(12,618)
|
|
(26,485)
|
|
Exceptional items
|
(307)
|
|
(852)
|
|
(898)
|
|
Other operating income
|
122
|
|
302
|
|
1,021
|
|
Finance income
|
67
|
|
63
|
|
159
|
|
Finance expense
|
(2,655)
|
|
(3,665)
|
|
(7,501)
|
|
Profit before tax
|
3,528
|
|
1,170
|
|
9,668
|
|
Taxation
|
(832)
|
|
21
|
|
(2,120)
|
|
Profit for the period
|
2,696
|
|
1,191
|
|
7,548
|
5. Exceptional items
|
|
Unaudited Period to 30 November
2024
|
|
Unaudited Period to 30 November
2023
|
|
Audited
Year to 31 May 2024
|
|
|
£000
|
|
£000
|
|
£000
|
|
Restructuring costs
|
307
|
|
852
|
|
898
|
|
Exceptional items
|
307
|
|
852
|
|
898
|
|
|
|
|
|
|
| |
6. Taxation
The results for the six months to
30 November 2024 include a tax charge of 23.6% on profit before tax
(30 November 2023: tax credit of 1.8%; 31 May 2024: tax charge of
21.9%), representing the best estimate of the average annual
effective tax rate expected for the full year, applied to the
pre-tax income of the six-month period.
7. Earnings per share
The calculation of the basic (and
diluted) earnings per share is based on the following
data:
|
|
Unaudited Period to 30 November
2024
|
|
Unaudited Period to 30 November
2023
|
|
Audited
Year
to
31 May
2024
|
|
Earnings
|
£000
|
|
£000
|
|
£000
|
|
Profit for the period attributable
to owners of the company
|
2,696
|
|
1,191
|
|
7,548
|
|
Adjusted for the impact of tax
adjusted exceptional costs in the year
|
230
|
|
689
|
|
811
|
|
Adjusted earnings
|
2,926
|
|
1,880
|
|
8,359
|
|
Number of Shares
|
Unaudited Period to 30
November 2024
|
|
Unaudited Period to 30
November 2023
|
|
Audited
Year to 31 May
2024
|
|
Weighted average number of
ordinary shares for the purpose of basic earnings per
share
|
118,753,540
|
|
118,508,946
|
|
118,572,439
|
|
Effect of dilutive potential
ordinary shares: share options
|
5,301,265
|
|
4,148,351
|
|
4,830,426
|
|
Weighted average number of
ordinary shares for the purpose of diluted earnings per
share
|
124,054,805
|
|
122,657,297
|
|
123,402,865
|
|
|
|
|
|
|
| |
|
|
Unaudited Period to 30
November 2024
|
|
Unaudited Period to 30 November
2023
|
|
Audited
Year to 31 May
2024
|
|
Earnings per ordinary share
|
|
|
|
|
|
|
Basic earnings per
share
|
2.27p
|
|
1.00p
|
|
6.36p
|
|
Diluted earnings per
share
|
2.17p
|
|
0.97p
|
|
6.12p
|
|
|
|
|
|
|
|
|
Adjusted earnings per ordinary share
(1)
|
|
|
|
|
|
|
Basic earnings per
share
|
2.46p
|
|
1.59p
|
7.05p
|
|
Diluted earnings per
share
|
2.36p
|
|
1.53p
|
6.77p
|
|
|
|
|
|
|
| |
(1) Adjusted earnings
is presented as an additional performance measure and it stated
before exceptional items and is used in adjusted EPS
calculation.
8. Dividends
|
|
Unaudited Period to 30
November 2024
|
|
Unaudited Period to 30 November
2023
|
|
Audited
Year to 31 May
2024
|
|
|
£000
|
|
£000
|
|
£000
|
|
Final dividend - y/e 31 May
2024
|
1,188
|
|
-
|
|
-
|
|
|
1,188
|
|
-
|
|
-
|
The final dividend declared for
the year to 31 May 2024 was 1p per share amounting to £1,188,304.
This dividend was declared before 30 November 2024 and is included
within current liabilities at 30 November 2024. The dividend was
paid in December 2024.
9. Share capital
The Company has one class of
ordinary share which carries full voting rights but no right to
fixed income or repayment of capital. The share capital account
records the nominal value of shares issued. The share premium
account records the amount above the nominal value received for
shares sold, less share issue costs.
|
Ordinary shares of 0.125p -
allotted, called up and fully paid
|
Number of shares
|
|
Share capital
£000
|
|
Share Premium
£000
|
|
At 1 December 2023
|
118,583,309
|
|
148
|
|
78,744
|
|
Share issue
|
85,815
|
|
-
|
|
-
|
|
At
31 May 2024
|
118,669,124
|
|
148
|
|
78,744
|
|
Share issue
|
161,272
|
|
-
|
|
-
|
|
At
30 November 2024
|
118,830,396
|
|
148
|
|
78,744
|
During the period, 161,272 (30
November 2023: 87,308; 31 May 2024: 173,123) shares were issued in
satisfaction of share options exercised for a consideration of £202
(30 November 2023: £109; 31 May 2024: £26).
10.
Deferred consideration
As part of acquiring the business
of Mactaggart & Mickel Group Limited, there is a further
£30,781,108 of deferred consideration payable. This is payable
quarterly in arrears as homes are sold over 5 years, commencing
from September 2023. The outstanding discounted amount payable at
the period end is £22,284,727 (30 November 2023: £25,431,557; 31
May 2024: £24,462,203).
|
|
Unaudited Period to 30
November 2024
|
|
Unaudited Period to 30 November
2023
|
|
Audited
Year to 31 May
2024
|
|
|
£000
|
|
£000
|
|
£000
|
|
Deferred consideration < 1
year
|
7,404
|
|
3,752
|
|
7,339
|
|
Deferred consideration > 1
year
|
14,881
|
|
21,680
|
|
17,123
|
|
|
22,285
|
|
25,432
|
|
24,462
|
11.
Contingent consideration and contingent
liabilities
As part of the purchase agreement
of Dawn Homes Holdings Limited there is a further £2,500,000
payable for an area of land if (i) the Group makes a planning
application when it reasonably believes the council will recommend
approval; or (ii) it is zoned by the council. The Directors
have assessed the likelihood of the land being zoned and have
included provision of £2,000,000 based on 80% probability. The
outstanding amount payable at the period end included within
Provisions is £2,000,000 (30 November 2023: £2,000,000; 31 May
2024: £2,000,000).
The remaining £500,000 has been
treated as a contingent liability due to the uncertainty over the
future payment.
|
Contingent consideration
|
Unaudited Period to 30
November 2024
|
|
Unaudited Period to 30 November
2023
|
|
Audited
Year to 31 May
2024
|
|
|
£000
|
|
£000
|
|
£000
|
|
Dawn Homes Holdings
Limited
|
2,000
|
|
2,000
|
|
2,000
|
|
|
2,000
|
|
2,000
|
|
2,000
|
|
Contingent liabilities
|
Unaudited Period to 30
November 2024
|
|
Unaudited Period to 30 November
2023
|
|
|
Audited
Year to 31 May
2024
|
|
|
£000
|
|
£000
|
|
|
£000
|
|
Dawn Homes Holdings
Limited
|
500
|
|
500
|
|
|
500
|
|
|
500
|
|
500
|
|
|
500
|
|
|
|
|
|
|
|
| |
12.
Provisions
Dilapidation provisions are
included for all rented buildings within the Group. Maintenance
provisions relate to costs to come on developments where the final
homes have been handed over. In the prior period, an onerous lease
provision had been created due to the closure of the Walker Group
office in Livingston.
|
|
Unaudited Period to 30
November 2024
|
|
Unaudited Period to 30 November
2023
|
|
|
Audited
Year to 31 May
2024
|
|
|
£000
|
|
£000
|
|
|
£000
|
|
Dilapidation provision
|
115
|
|
179
|
|
|
113
|
|
Onerous contracts
provision
|
-
|
|
585
|
|
|
-
|
|
Maintenance provision
|
4,169
|
|
2,163
|
|
|
6,162
|
|
|
4,284
|
|
2,927
|
|
|
6,275
|
|
|
|
|
|
|
|
| |
|
|
Unaudited Period to 30
November 2024
|
|
Unaudited Period to 30 November
2023
|
|
|
Audited
Year to 31 May
2024
|
|
|
£000
|
|
£000
|
|
|
£000
|
|
Provisions < 1 year
|
1,390
|
|
721
|
|
|
2,018
|
|
Provisions > 1 year
|
2,894
|
|
2,206
|
|
|
4,257
|
|
|
4,284
|
|
2,927
|
|
|
6,275
|
|
|
|
|
|
|
|
| |
13.
Transactions with related parties
Other related parties include
transactions with a retirement scheme in which the Directors are
beneficiaries, and close family members of key management
personnel. During the period, dividends totalling £nil (30 November
2023: £nil; 31 May 2024: £nil) were paid to key management
personnel.
During the period the Group
entered into the following transactions with related
parties:
|
Sale of goods
|
Unaudited Period to 30 November
2024
|
|
Unaudited Period to 30 November
2023
|
|
Audited
Year to 31 May 2024
|
|
|
£000
|
|
£000
|
|
£000
|
|
Bertha Park Limited
(1)
|
6,131
|
|
1,907
|
|
4,906
|
|
Other entities which key management
personnel have control, significant influence or hold a material
interest in
|
27
|
|
19
|
|
41
|
|
Key management personnel
|
2
|
|
27
|
|
46
|
|
Other related parties
|
2
|
|
46
|
|
156
|
|
|
6,162
|
|
1,999
|
|
5,149
|
Sales to related parties represent
those undertaken in the ordinary course of business.
|
Purchase of goods
|
Unaudited Period to 30 November
2024
|
|
Unaudited Period to 30 November
2023
|
|
Audited
Year to 31 May 2024
|
|
|
£000
|
|
£000
|
|
£000
|
|
Bertha Park Limited
(1)
|
-
|
|
-
|
|
319
|
|
Entities which key management
personnel have control, significant influence or hold a material
interest in
|
10
|
|
10
|
|
20
|
|
Other related parties
|
2,506
|
|
314
|
|
2,016
|
|
|
2,516
|
|
324
|
|
2,355
|
|
|
Unaudited Period to 30
November 2024
|
|
Unaudited Period to 30
November 2023
|
|
Audited
Year to 31 May
2024
|
|
Rent paid to
|
£000
|
|
£000
|
|
£000
|
|
Entities which key management
personnel have control, significant influence or hold a material
interest in
|
93
|
|
81
|
|
80
|
|
Key management
personnel
|
-
|
|
-
|
|
-
|
|
Other related parties
|
55
|
|
50
|
|
64
|
|
|
148
|
|
131
|
|
144
|
|
|
Unaudited Period to 30
November 2024
|
|
Unaudited Period to 30
November 2023
|
|
Audited
Year to 31 May
2024
|
|
Interest received from
|
£000
|
|
£000
|
|
£000
|
|
Bertha Park Limited
(1)
|
63
|
|
63
|
|
125
|
|
|
63
|
|
63
|
|
125
|
The following amounts were outstanding at the
reporting end date:
|
|
Unaudited Period to 30
November 2024
|
|
Unaudited Period to 30
November 2023
|
|
Audited
Year to 31 May
2024
|
|
Amounts receivable
|
£000
|
|
£000
|
|
£000
|
|
Bertha Park Limited
(1)
|
9,566
|
|
6,804
|
|
7,259
|
|
Entities which key management
personnel have control, significant influence or hold a material
interest in
|
9
|
|
10
|
|
-
|
|
Key management
personnel
|
1
|
|
18
|
|
1
|
|
Other related parties
|
-
|
|
15
|
|
36
|
|
|
9,576
|
|
6,847
|
|
7,296
|
|
|
Unaudited Period to 30
November 2024
|
|
Unaudited Period to 30
November 2023
|
|
Audited
Year to 31 May
2024
|
|
Amounts payable
|
£000
|
|
£000
|
|
£000
|
|
Entities which key management
personnel have control, significant influence or hold a material
interest in
|
37
|
|
18
|
|
-
|
|
Other related parties
|
2,377
|
|
643
|
|
2,343
|
|
|
2,414
|
|
661
|
|
2,343
|
Amounts owed to/from related
parties are included within creditors and debtors respectively at
the period-end. No security has been provided on any
balances.
Transactions between Group
companies, which is a related party, have been eliminated on
consolidation and are not disclosed in this note.
(1) Bertha Park Limited, a company
in which Sandy Adam and Innes Smith are shareholders and
directors
14.
Analysis of net debt
|
Unaudited Period to 30
November 2024
|
|
Unaudited Period to 30
November 2023
|
|
Audited
Year to 31 May
2024
|
|
|
£000
|
|
£000
|
|
£000
|
|
Cash in hand and bank
|
9,409
|
|
10,097
|
|
14,935
|
|
Bank borrowings
|
(72,262)
|
|
(103,512)
|
|
(54,839)
|
|
Net bank debt
|
(62,853)
|
|
(93,415)
|
|
(39,904)
|
|
Lease
|
(5,178)
|
|
(5,266)
|
|
(5,538)
|
|
Net debt
|
(68,031)
|
|
(98,681)
|
|
(45,442)
|
|
Deferred consideration
|
(22,285)
|
|
(25,432)
|
|
(24,462)
|
|
|
(90,316)
|
|
(124,113)
|
|
(69,904)
|
Reconciliation of net cashflow to
movement in net debt is as follows:
|
|
At 1 June
2024
|
New Leases
|
Cashflow
|
Fair Value
|
At 30 November
2024
|
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
|
Cash in hand and bank
|
14,935
|
-
|
(5,526)
|
-
|
9,409
|
|
Bank borrowings
|
(54,839)
|
-
|
(17,423)
|
-
|
(72,262)
|
|
Net bank debt
|
(39,904)
|
-
|
(22,949)
|
-
|
(62,853)
|
|
Lease
|
(5,538)
|
(563)
|
1,111
|
(188)
|
(5,178)
|
|
Net debt
|
(45,442)
|
(563)
|
(21,838)
|
(188)
|
(68,031)
|
|
Deferred consideration
|
(24,462)
|
-
|
2,177
|
-
|
(22,285)
|
|
|
(69,904)
|
(563)
|
(19,661)
|
(188)
|
(90,316)
|
The Group has a revolving credit
facility of £87.5m with an expiry date of 31 January 2026. The
facility attracts an interest rate of 2.75% per annum above Bank of
England SONIA (Sterling overnight index average response
rate).
An overdraft facility of £7.5m is
in place until 30 September 2025 and attracts an interest rate of
3.0% per annum above Bank of England SONIA (Sterling overnight
index average response rate).
