REG - Springfield Props. - Interim Results
17/02/2025 07:15
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RNS Number : 3283X Springfield Properties PLC 17 February 2025
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 H1 2024 Change
£m £m
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 +44 1343 552550
Innes Smith, Chief Executive Officer
Iain Logan, Chief Financial Officer
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
(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
(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 H1 2024 Change
£'000 £'000
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.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE HALF YEAR ENDED 30 NOVEMBER 2024
Unaudited Unaudited Period to Audited Year to
Period to 30 November 2023 31 May 2024
30 November 2024
Note
£000 £000 £000
Revenue 4
105,640 121,685 266,527
Cost of sales
(86,902) (103,745) (223,155)
Gross profit 4
18,738 17,940 43,372
Administrative expenses before exceptional items
(12,437) (12,618) (26,485)
5 (307) (852) (898)
Exceptional items
Total administrative expenses (12,744) (13,470) (27,383)
Other operating income
122 302 1,021
Operating profit
6,116 4,772 17,010
Finance income
67 63 159
Finance costs
(2,655) (3,665) (7,501)
Profit before taxation
3,528 1,170 9,668
Taxation 6
(832) 21 (2,120)
Profit for the period and total comprehensive income 4
2,696 1,191 7,548
Profit for the period and total comprehensive income is attributable to:
- Owners of the parent
company
2,696 1,191 7,548
Earnings per share
Basic earnings per share 7
2.27p 1.00p 6.36p
Diluted earnings per share 7 2.17p 0.97p 6.12p
The Group has no items of other comprehensive income.
The accompanying notes form an integral part of these financial statements.
CONSOLIDATED BALANCE SHEET - AS AT 30 NOVEMBER 2024
Unaudited Unaudited Audited
30 November 2024 30 November 2023 31 May
2024
Non-current assets Note £000 £000 £000
Property, plant and equipment 6,659 7,010 7,184
Intangible assets 5,565 5,824 5,698
Deferred taxation 1,787 1,784 1,787
Trae and other receivables 5,000 5,000 5,000
19,011 19,618 19,669
Current assets
Inventories 260,368 276,783 244,297
Trade and other receivables 29,227 20,774 26,352
Cash and cash equivalents 9,409 10,097 14,935
299,004 307,654 285,584
Total assets 318,015 327,272 305,253
Current liabilities
Trade and other payables 48,635 33,797 49,632
Short-term bank borrowings 72,262 - 54,839
Deferred consideration 10 7,404 3,752 7,339
Short-term obligations under lease liabilities 1,317 1,776 1,567
Provisions 12 1,390 721 2,018
Corporation tax 775 89 1,342
Bank overdraft - 3,816 -
131,783 43,951 116,737
Non-current liabilities
Long-term bank borrowings - 99,696 -
Long-term obligations under lease liabilities 3,861 3,490 3,971
Deferred taxation 2,932 3,004 2,958
Deferred consideration 10 14,881 21,680 17,123
Contingent consideration 11 2,000 2,000 2,000
Provisions 12 2,894 2,206 4,257
26,568 132,076 30,309
Total liabilities 158,351 176,027 147,046
Net assets 159,664 151,245 158,207
Equity
Share capital 9 148 148 148
Share premium 9 78,744 78,744 78,744
Retained earnings 80,772 72,353 79,315
Equity attributable to owners of the parent company 159,664 151,245 158,207
The accompanying notes form an integral part of these financial statements.
CONSOLIDATED Statement of Changes in Equity
FOR THE PERIOD ENDED 30 NOVEMBER 2024
Share capital Share premium Retained earnings
Total
Note £000 £000 £000 £000
1 June 2023 148 78,744 71,741 150,633
Total comprehensive income for the period - - 1,191 1,191
Share-based payments - - (579) (579)
30 November 2023 148 78,744 72,353 151,245
Total comprehensive income for the period - - 6,357 6,357
Share-based payments - - 605 605
31 May 2024 148 78,744 79,315 158,207
Total comprehensive income for the period - - 2,696 2,696
Share-based payments - - (51) (51)
Dividends 8 - - (1,188) (1,188)
30 November 2024 148 78,744 80,772 159,664
The share capital accounts record the nominal value of shares issued.
The share premium account records the amount above the nominal value for
shares issued, less share issue costs.
Retained earnings represents accumulated profits less losses and
distributions. Retained earnings also includes share-based payments.
The accompanying notes form an integral part of these financial statements.
CONSOLIDATED Statement of Cash Flows
PERIOD to 30 NOVEMBER 2024
Unaudited Unaudited Audited
Period to 30 November 2024 Period to 30 November 2023 Year to 31 May
2024
Cash flows generated from operations £000 £000 £000
Profit for the period 2,696 1,191 7,548
Adjusted for:
Exceptional items 307 852 898
Taxation charged 832 (21) 2,120
Finance costs 2,655 3,665 7,501
Finance income (67) (63) (159)
Adjusted operating profit before working capital movement 6,423 5,624 17,908
Exceptional items (307) (852) (898)
Gain on disposal of tangible fixed assets (147) (103) (215)
Share-based payments (51) (579) 26
Amortisation of intangible fixed assets 133 130 259
Depreciation of tangible fixed assets 1,120 1,210 2,332
Operating cash flows before movements in working capital 7,171 5,430 19,412
(Increase)/decrease in inventory (16,071) 850 32,086
(Increase)/decrease in trade and other receivables (2,831) 1,858 (2,497)
Decrease in trade and other payables (4,171) (23,633) (4,496)
Net cash (used in)/generated from operations (15,902) (15,495) 44,505
Taxation paid (1,425) (863) (1,818)
Net cash (outflow)/inflow from operating activities (17,327) (16,358) 42,687
Investing activities
Purchase of property, plant and equipment (35) (91) (177)
Proceeds on disposal of property, plant and equipment 184 133 270
Purchase of intangible assets - - (4)
Interest received 4 1 155
Net cash generated from investing activities 153 43 244
Financing activities
Proceeds from bank loans 17,422 29,023 -
Repayment of bank loans - - (15,834)
Deferred consideration paid on acquisition of subsidiary (2,177) (10,692) (12,141)
Payment of lease liabilities (1,111) (1,185) (2,234)
Interest paid (2,486) (3,459) (6,696)
Net cash inflow/(outflow) from financing activities 11,648 13,687 (36,905)
Net (decrease)/increase in cash and cash equivalents (5,526) (2,628) 6,026
Cash and cash equivalents at beginning of period 14,935 8,909 8,909
Cash and cash equivalents at end of period 9,409 6,281 14,935
The accompanying notes form an integral part of these financial statements.
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
18,738 17,940 43,372
Gross Profit
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
Unaudited Period to 30 November 2024 Unaudited Period to 30 November 2023 Audited
Year to 31 May 2024
Number of Shares
Weighted average number of ordinary shares for the purpose of basic earnings 118,753,540 118,508,946 118,572,439
per share
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 124,054,805 122,657,297 123,402,865
per share
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 Share Premium
£000 £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 27 19 41
influence or hold a material interest in
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 10 10 20
hold a material interest in
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 30 November 2024
At 1 June 2024 New Leases Cashflow Fair Value
£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).
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