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(Sharecast News) - Springfield Properties said on Thursday that it had eliminated its bank debt at year-end, significantly ahead of market expectations, as the Scottish housebuilder reported trading in line with forecasts for the year ended 31 May.
The AIM-traded group said it had a net bank cash position of around 1m at the end of May, compared with market expectations for net bank debt of 10m.
It said the result marked a substantial reduction from its highest reported net bank debt of 93.4m in November 2023 and reflected its focus on cost discipline and working capital control.
Springfield said the stronger balance sheet would give it greater financial flexibility to capitalise on investment opportunities in the 2027 and 2028 financial years.
The group expected to report revenue and adjusted profit before tax in line with market expectations, with total revenue for the year of about 245m.
Private housing revenue grew year on year, supported by a stronger second half, normal seasonality, higher average selling prices and a changing housing mix.
Affordable housing revenue also increased as the group delivered against its order book and secured new contracts.
Springfield said it had made "excellent progress" in implementing its strategy to focus on the North of Scotland, where demand is being driven by housing requirements linked to energy security infrastructure and renewable development.
During the year, the group signed an initial agreement with SSEN Transmission to begin delivering almost 300 homes in the region as part of SSEN Transmission's programme to upgrade the national electricity transmission grid.
Springfield said initial funding received under the agreement had allowed construction to progress on multiple sites, with build-and-lease contracts for the first phase at an advanced stage of negotiation.
The company also continued to strengthen its land bank in the North of Scotland, including through the promotion of additional sites under emerging Local Development Plans.
It said Highland Council's Masterplan Consent Areas were accelerating the planning process for 800 plots across two key sites.
Springfield said it was receiving increasing interest from major infrastructure providers seeking accommodation for workers, and currently expected house price inflation from increased demand to mitigate cost pressures linked to the crisis in the Middle East.
The group said fundamentals in Scotland's housing market remained strong, citing a critical undersupply of housing across all tenures and the Scottish Government's renewed focus on housing, including 4.9bn of investment for affordable housing and 10,000 interest-free shared equity loans for first-time buyers over the parliamentary term.
Chief executive Innes Smith said Springfield was "delighted" to have achieved the elimination of bank debt at year-end, which he said was "significantly ahead of market expectations" and compared with peak reported net bank debt of more than 93m in November 2023.
"This achievement provides further evidence of disciplined cost control and strengthens our ability to capitalise on the substantial growth opportunities in the North of Scotland," he said.
Smith said the group had made strong progress on its North of Scotland strategy, adding that the region was seeing "unprecedented demand for housing" in response to major investment in energy security and renewable infrastructure.
"Our underlying business remains strong, with the achievement of year-on-year growth in private and affordable housing," he said.
"We also continue to hold significant landholdings in areas of high demand."
At 1206 BST, shares in Springfield Properties were up 5.23% at 98.39p.
Reporting by Josh White for Sharecast.com.
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