Revenue and profits rise at Springfield Properties

Scotland-focussed housebuilder Springfield Properties reported an 18.3% improvement in revenue in its first half on Tuesday, to £94.4m, as its operating profit rocketed 42% to £9.8m.

The AIM-traded firm said its gross margin was 30 basis points lower year-on-year for the six month period ended 30 November, at 19.6%, although it still delivered a profit before tax of £9m, up 42.9%.

Its basic earnings per share were 43% firmer than the prior year at 7.55p, and the board declared an interim dividend of 1.3p, having made no distribution at the half-year in 2020.

On the operational front, Springfield said build and sales activity rebounded “strongly” following the resumption of operations from late June, reflecting a longer shutdown of construction sites in Scotland due to Covid-19 restrictions when compared to other parts of the UK.

The resumption of build work enabled the completion of homes scheduled for handover in April and May, with the company confirming that sites had remained open with no significant impact from subsequent lockdowns.

It said “robust” sales activity had strengthened its order book, providing substantial visibility over full-year forecasts.

The company managed a substantial reduction in net debt to £33.2m as at 30 November, from £68.8m on 31 May, as total completions increased to 443 homes from 438 in the first half of the 2020 financial year.

It reported “sustained progress” in advancing its land bank, with planning approval received for more than 450 homes during the period, and the proportion of land bank with planning permission increasing to 53.8% at period end, from 49.7% at the end of May.

Springfield’s total land bank stood at 15,029 plots, down from 15,882 at the start of the period, with its gross development value falling to £3.1bn from £3.3bn as a result.

The firm said it had strengthened its operations in the half-year with the implementation of efficiency and rationalisation measures to reduce costs by around £1m on an annualised basis.

Since the period ended, it had agreed to begin progressing first homes for the private rented sector at Bertha Park Village with Sigma Capital Group.

“This has been an excellent six months for Springfield. We safely and efficiently resumed construction to complete the homes that had been scheduled for handover at the end of the previous financial year,” saic chief executive officer Innes Smith.

“Our sales offices reopened to significant interest, reflecting pent-up demand and the increasing desirability for the type of housing Springfield provides with spacious homes with private gardens and easy access to plenty of green space.

“As a result, we were able to deliver significant revenue growth and substantially reduce our net debt position, reflecting the operational gearing of the business.”

Smith said Springfield had a “large, high-quality” land bank across almost all the key geographies in Scotland, which it continued to develop, receiving planning approval for more than 450 homes in the period.

“We strengthened our operations by implementing a number of efficiency and rationalisation measures that will reduce our cost base going forward.

“We are also pleased to have agreed, post period, with Sigma Capital that we will be progressing our first housing for the private rental sector at our Bertha Park Village.

“With substantial visibility over our private and affordable housing revenue for the full year, we look forward to delivering significant growth for the 2021 financial year, and expect to be slightly ahead of current market expectations.”

At 1242 GMT, shares in Springfield Properties were up 1.93% at 152.9p.