Shares of Elgin-based Springfield Properties, which is building a number of new communities throughout Scotland, fell about 9% after it announced it will not make dividend payments until its bank debt is “materially reduced.”

Springfield also said it is pausing all speculative private housing development and it is “actively pursuing land sales.”

That’s despite the firm reporting that its revenue increased 29.2% to £332.1 million in the year ended May 31, 2023, “driven by the acquisitions of Tulloch Homes in December 2021 and Mactaggart & Mickel Homes in June 2022, reflecting their first full 12-month contributions.”

In its current trading and outlook, the company reported: “Significantly lower levels of reservations in private housing due to demand being impacted by continued high interest rates, mortgage affordability and reduced homebuyer confidence, which the board does not expect to materially improve before Spring 2024 …

“Secured additional £18.0m term loan and 12-month extension to overdraft facility to ensure sufficient headroom in the short-term …

“The board has accordingly adopted a strategy focusing on maximising cash generation in order to reduce the group’s debt …”

Springfield Properties CEO Innes Smith said: “Against a challenging market backdrop, we delivered our highest level of annual completions and revenue.

“We brought another premium brand into the group through the acquisition of Mactaggart & Mickel Homes, and on favourable payment terms.

“While we were significantly impacted by the build cost inflation, particularly in affordable housing, we took decisive action to address this, resulting in annualised cost savings of £4.0m.

“Trading conditions have remained tough into the new financial year as private housing reservations continue to be impacted by reduced homebuyer confidence.

“We do not expect to see any material improvement in homebuyer confidence before next Spring. Our priority is to maximise cash generation to reduce our debt to ensure that we maintain the value of our business.

“Accordingly, we are pausing all speculative private housing development. We will build based on sales and not sell based on build.

“We are actively pursuing land sales and will further reduce our cost base where necessary. We are also encouraged by the negotiations we are now having in affordable housing, which has strong cash flow dynamics.

“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 6,700 owned plots, 83% of which has planning permission, and a further 3,255 acres, equating to c. 33,000 plots, of strategic land.

“This is particularly valuable given the current planning difficulties being faced in Scotland.

“We have an excellent reputation of offering high quality, energy efficient homes in desirable locations in key housing markets.

“In addition, there is an undersupply of housing of all tenures, which is being exacerbated by the current conditions, and which can only be addressed through building new homes.

“The stability in house prices and the affordability in Scotland underpin the opportunities for medium-term growth.”