The update on trading for the year ended 31 May 2024 also revealed that the firm’s bank debt has been reduced to c. £40 million as at 31 May 2024, ahead of stated target of £55.0m.

Revenue is expected to be c. £266m (2023: £332.1m), reflecting challenging conditions experienced within the housing market.

Springfield’s total owned land bank is currently at c. 5,600 plots, c. 88% with planning permission, and strategic options over a further c. 3,150 acres, equating to c. 31,500 plots, c. 3,915 of which already have planning, which makes this one of the largest land banks in Scotland.

Looking ahead, the firm is on track to meet market expectations for FY 2025, with revenue remaining stable year-on-year. During the year to 31 May 2024, market conditions were challenging with subdued homebuyer confidence and reduced affordable housing activity. The group’s key focus during the period was reducing its debt to its stated target of £55m. An important element of this was the active pursuit of land sales to accelerate cash realisation from its large land bank.

During the year, the group completed land sales of £28m of sites that do not affect the group’s near-term development pipeline. This, combined with the group’s sustained focus on cost control and carefully managing working capital, enabled a significant reduction in bank debt to c. £40m as at 31 May 2024 (31 May 2023: £61.8m), c. 27% ahead of the group’s target originally outlined in the FY 2023 results announced in September 2023.

The group said it expects to report revenue of approximately £266m for the 12 months ended 31 May 2024 (2023: £332.1m), with total completions of c. 870 (2023: 1,301). Profit before tax is expected to be slightly ahead of market expectations due to good profits being realised on the land sales.

Springfield Properties expects to report private housing revenue for FY 2024 of c. £185m (2023: £253.4m), reflecting the impact of the market conditions. In line with industry trends, the reduced homebuyer confidence resulted in the group entering the new financial year with a lower forward order book than at the same point of the prior year.

As previously noted, after a subdued start the group experienced a recovery in private housing demand from January 2024 and it continues to experience a steady level of reservations with selling prices also being maintained. Accordingly, the group remains on track to deliver private housing revenue for FY 2025 in line with market expectations.

Springfield Properties expects to report affordable housing revenue of c. £46.5m (2023: £53.9m). This reflects the group’s decision in FY 2023 to pause entering new affordable-only contracts until the economics became more attractive. During the year to 31 May 2024, the group recommenced actively engaging with affordable housing providers and signed affordable housing contracts totalling over £50m for delivery during FY 2024 and beyond. Looking to FY 2025, the group continues to expect to report revenue in affordable housing in line with market expectations, representing growth of approximately 40%.

Innes Smith, CEO of Springfield Properties, said: “A key priority for the year was reducing our debt, and we’re pleased that we have exceeded our target. This was achieved through securing profitable land sales, which, alongside continued cost control, has enabled us to deliver better-than-expected profit. While the challenging market conditions impacted revenue for the year and our private housing forward order book, we are cautiously optimistic about the year ahead.

“Many fundamentals that underpin homebuyer confidence are set to strengthen, including a new UK government, decreasing inflation and an anticipated interest rate reduction. Alongside this, we remain on track to deliver strong growth in FY 2025 in affordable housing, offsetting the expected small decline in our private sales.

“Looking forward, we trust that the Scottish Government will take action to address Scotland’s housing emergency, which must include the removal of the rent cap barriers to attract PRS investment north of the border. With one of the largest land banks in Scotland, and with a high proportion of sites already having planning in place, we are well-positioned to benefit from any resumption in PRS activity, which would represent an upside to our forecasts. In addition, thanks to our land holdings in the Highlands, we are set to benefit from the expected sharp increase in housing demand around the Inverness and Cromarty Firth Green Freeport.

“Accordingly, while the market currently remains subdued, we are trading in line with our expectations and are encouraged by the signs for optimism. In addition, with the strengthening of our balance sheet, we are well-positioned to be able to capitalise on the pent-up demand for high-quality, energy efficient housing as market conditions improve.”