Elgin-based house builder Springfield Properties plc said it will resume dividend payments “earlier than initially anticipated” after slashing its debt in the year to May 31, 2024.
Springfield reported profitable land sales of £28.1 million and adjusted profit before tax of £10.6 million (2023: £16.0m), ahead of management’s original expectations.
“Delivered key objective of significantly reducing net bank debt, exceeding target of £55.0m with net bank debt of £39.9m (31 May 2023: £61.8m),” said Springfield.
“Decisive action taken to reduce costs and manage working capital across the business …”
Revenue fell 19.8% to £266.5 million.
Springfield declared a total dividend for the year of 1p per share (2023: nil).
The firm reported total completions of 878 (2023: 1,301), “in line with market expectations, reflecting challenging market conditions in the housing industry.”
It reported private housing revenue of £184.7 million (2023: £253.4m) “as demand in the year was impacted by high interest rates, mortgage affordability, the cost-of-living crisis and reduced homebuyer confidence.”
However, Springfield said: “Since year end, the group is experiencing initial signs of recovery, with reservation rates ahead of the same period last year.”
Affordable housing revenue fell to £47 million from £53.9 million “reflecting the group’s decision in the prior year to pause entering into new affordable-only fixed price contracts.”
Springfield added: “During the year, the group recommenced actively engaging with affordable housing providers following the introduction of the new Scottish Government benchmark – with contracts worth over £50m signed in the year for delivery during FY 2024 and beyond.
“Total owned land bank of 5,593 plots, 88% with planning permission, secured at an attractive cost per plot, and a strategic land bank of a further 3,147 acres, equating to 31,471 plots.
“One of the largest land banks in Scotland, including significant holdings in the North of the country 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.”
On “Current Trading and Outlook for FY 2025” the firm said: “Entered the new financial year in a better position than the same point of the previous year – with a stronger balance sheet, improving private market backdrop and larger contracted order book in affordable housing.
“Recovery being experienced in private housing – reservation rate for 1 June 2024 to date ahead of same period last year.
“Substantial proportion of forecast FY 2025 revenue for affordable housing is already contracted with the balance under negotiation – strong year-on-year revenue growth and significant improvement in gross margin expected.
“On track to report results for FY 2025 in line with market expectations, with total revenue remaining level and profitability growing over FY 2024.”
Springfield Properties CEO Innes Smith said: “Against a challenging market backdrop, we successfully delivered our objectives for the year. A key priority was reducing our debt, and we’re very pleased that we have exceeded our target.
“This was achieved through taking decisive action to reduce costs, manage working capital and secure profitable land sales of sites that do not impact on our near-term development pipeline. We are now in a strong position to deliver future growth as more favourable economic and trading conditions return.
“We are also encouraged by early indications for an improving backdrop. Many of the key elements that underpin homebuyer confidence are strengthening, including decreasing inflation and the first Bank of England interest rate reduction in over four years.
“While it remains early days, we are pleased we have started to see an improvement in private housing demand since year end – with reservation rates being ahead of the same time last year. Similarly, having actively recommenced signing affordable contracts, contracted order book in affordable housing at year end was also ahead of where it was at the same point in the previous year.
“We continue to have one of the largest owned land banks in Scotland, with a high proportion of sites having planning already in place.
“We are particularly excited about the forthcoming investment in Scotland with the creation of the Inverness and Cromarty Firth Green Freeport and the development of Scottish & Southern Energy Networks’ new powerlines to provide the UK with renewable energy, which will require the building of thousands of new homes.
“We have worked across the North of Scotland for decades and are passionate about growth and development for the region. With significant land holdings in Moray and the Highlands, we are uniquely placed to help deliver this opportunity as the housing market recovers.
“As a result, we look to the future with increasing confidence and, accordingly, we are pleased to be able to return to making dividend payments earlier than initially anticipated. We thank our shareholders for their continued support and look forward to updating them on our progress.”