HOUSEBUILDER Springfield Properties has announced a 29% increase in revenue to £332.1 million for the year ended May 31, following a record year of completions.
Pre-tax profit is down 22% to £15.3 million, while gross margin was 14.5%.
Housing completions over the year increased from 1,242 to 1,301, with the business boosted by ‘strong growth’ in private housing, reflecting its acquisitions of Tulloch Homes and Mactaggart & Mickel Homes.
Springfield cited ‘significant impact’ from build cost inflation, particularly on fixed-price contracts in affordable housing, which affected margins.
In terms of current trading and outlook, Springfield revealed ‘significantly lower levels of reservations’ in private housing due to demand being impacted by high interest rates, mortgage affordability and reduced homebuyer confidence, which the board does not expect to materially improve before spring 2024.
For financial year 2024, the group expects to report adjusted profit before tax of c. £10m-£14 million and is planning to reduce net debt from £67.7 million to c. £55 million by 31 May 2024.
Innes Smith, CEO of Springfield Properties, 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 million.
“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.”