Scottish developer, Springfield Properties, has seen its turnover and profit drop in its half-year trading update.
Turnover fell by 25% to £121.7million in the six months 30 November 2023, while pre-tax profit fell dramatically by 80% to £1.2million.
The housebuilder also saw its completions dip to 432 from 673 in the same period the year before, a decrease of 55%.
Springfield’s net bank debt rose by 38% year-on-year to £93.4million, but the developer says that it will reduce this to around £55million through land sales.
The housebuilder remains upbeat, however, as it sees positive numbers of private housing reservations and signs of buyer confidence returning to the market.
Chief executive of Springfield Properties, Innes Smith, said: “Trading for the first half of the year was in line with our expectations and reflects the challenging market conditions experienced across the industry. To mitigate the impacts of the downturn and ensure we are in a stronger position for when trading conditions recover, we took decisive actions to maximise cash generation and reduce our debt by year-end. A key element of this was actively pursuing profitable land sales. We are pleased to have agreed sales worth £18million so far and we expect to conclude negotiations for further sales in the near term.”
“Looking ahead, we are encouraged by the improvement in private housing reservations that we have experienced in recent weeks and the signs of increasing homebuyer confidence, as has been reported by other housebuilders. We are receiving strong demand in affordable housing and have already signed contracts worth c. £40million since 31 May 2023. We are also hopeful that the ending of the Scottish government’s emergency rent cap in April 2024 will enable a return of PRS [private rented sector] activity. Alongside this, build cost inflation is continuing to reduce and is expected to stabilise at low levels. We are on track to meet our year-end target for net bank debt, which will continue to reduce in the next financial year.”
“The fundamentals of our business and our position within the Scottish housing market remain strong. We have one of the largest land banks in Scotland with over 6,421 owned plots, 86% of which has planning permission, and a further 3,217 acres of strategic land. We have an excellent reputation of offering high-quality, energy-efficient homes in desirable locations in key housing markets, and a track record of delivering developments exclusively for affordable housing. In addition, there is an undersupply of housing of all tenures, which can only be addressed through building new homes. As a result, while there remains uncertainty in the near term, with our position having been strengthened through the decisive action that we have taken, we remain confident in Springfield’s prospects.”
