Springfield Properties has announced that it has signed an agreement with Barratt Redrow to sell 2,480 plots of undeveloped land across six sites for £64.2million.
Proceeds from the sale will be received over four years and will be used to accelerate the removal of the Group’s outstanding bank debt and to capitalise on the significant growth opportunities emerging in the North of Scotland.
Springfield and Barratt have also held discussions regarding the possible sale of additional future land holdings. The initial land sale is expected to be completed by 31 May 2025.
Following the sale, Springfield says it will focus on growth opportunities in the North of Scotland to address the need for new housing in a region which has a high population and strong economic growth expectations. The region has seen UK Government-financed green infrastructure development, while Scottish and Southern Electricity Networks are investing £31billion to upgrade the electricity network in the North, which will create around 5,000 jobs. The creation of the Inverness and Cromarty Firth Green Freeport is also expected to generate over 10,000 jobs locally and Springfield is already holding discussions with key stakeholders about meeting the demand for the new housing required.
Innes Smith, chief executive officer of Springfield Properties, 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 a result of the economic stimulus these projects will bring. With significant land holdings across the Highlands and Moray and an established presence, we are excellently positioned to capitalise on this opportunity. In addition, we continue to have a large high-quality land bank, with this deal demonstrating the long-term value of that asset. Accordingly, and with a significantly strengthened balance sheet, we continue to look to the future with confidence.”
Springfield has also released its half-year results for the six months to 30 November 2024, with the company’s pre-tax profit close to trebling from £1.2million to £3.5million compared to the previous year. The housebuilder said that the increase was a result of an improving gross margin on affordable housing, with its cost control measures and land sales also having a positive impact.
The improved profit comes despite the group’s turnover falling 13% to £105.6million from £121.7million the previous year. Springfield also completed fewer homes year-on-year, down to 361 from 432. The housebuilder said that this was due to the group entering the period with a lower private housing forward order book year-on-year.
The group did however say that private housing reservations had grown in the first six months of the year as confidence returned to the market, although with a “backdrop of continued subdued economy.”
Springfield’s affordable home completions also fell during the period, with 95 completed compared to 144 the previous year.
The statement also said that it had reduced its net bank debt to £62.9million from £93.4million, saying that reducing its debt further “remains an area of focus”.
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.”
