SPRINGFIELD Properties has shrugged of the fall-out from the pandemic, including pressure from supply chain disruption, to report a big leap in profits in its latest financial year.
The Elgin-based housebuilder hiked turnover to above £200 million for the first time as it flagged the benefit of completing homes originally scheduled to have been finished the previous year, as well as higher demand for larger houses with greenspace as people continue to work from home. Profits surged by 81.4 per cent to £18.5 million as revenue increased by 51% to £216.7m in the year ended May 31.
The results were driven by an increase in home completions to 973 from 727. The company said the realisation of work in progress along with the sale of land to two national housebuilders helped it to cut net debt to £20.8m from £70.9m.
Chief executive Innes Smith said the performance had been impressive amid the many challenges arising from the pandemic, which effectively meant the financial year spanned just 11 months because lockdown had closed construction sites for several weeks in Scotland last year.
Mr Smith said: “It has been really good to see the market recover as quickly from what it had to face up to. We’re sitting here with record sales and profits. It has been difficult at times, clearly. But we seem to be managing our way through it. [We are] very positive with how things are just now.”
Mr Smith commented on the well-documented interruptions to the supply chain, which the company said have been exacerbated by the pandemic, Brexit and the “huge demand” from builders and from individual households carrying out their own renovation projects. He said Springfield has been able to mitigate the pressure by virtue of having its own timber kit factory, which allows it to buy in bulk, and moving materials between sites. It benefited from having paid key suppliers up front at the start of the pandemic, Mr Smith said.
The company noted it has been able to overcome labour shortages caused by Brexit due to its “strong, established relationships with sub-contractors, together with its large directly employed workforce.”
Mr Smith said: “We’re kind of hopeful that we have seen the worse of it and it is going to get better as time goes on, but it hasn’t been plain sailing by any means.”
Springfield said it built more homes in both its private and affordable housing divisions. Turnover from private homes increased by 46.2% to £144.6m as 593 units were completed, while the affordable division saw sales grow by 29.7% to £55.1m through the completion of 380 homes.
Commenting on the commitment from the Scottish Government to build 110,000 new affordable homes in the next 10 years, Mr Smith said: “We’re in a good place to help them out with those numbers.”
He also said Springfield was well positioned as the pandemic continues to drive demand from buyers for bigger houses and gardens.
“With people working from home more, they are probably prepared to live further away from the workplace,” he told The Herald. “I think there has been a shift in where people want to live, and the space they actually live in. How long that stays, I don’t know.
“I think we’ve always built houses with a bit more space, a bit more garden, and a bit more space out in the development.
“With Covid, the market has moved towards what we produce, so that has been to our advantage.”
The company, meanwhile, has also started to build the first homes in the private rental sector through its partnership with Sigma Capital Group– its first move into the PRS market. It is building scores of family homes in the suburban Bertha Park village development near Perth, which after they are handed over will be owned, let and managed by Sigma.
The Springfield board recommended a total dividend of 5.75p per share, up from 2p last year.
Mulling the outlook, Mr Smith said the company was “cautiously optimistic” about the current year.
Springfield said in its results statement that it is likely to report “strong growth… in line with market expectations” this year. It added that its forecasts are supported by “excellent visibility” on revenue, as well as “significantly increased sales of affordable housing, the first contribution from PRS housing and sustained delivery in private housing.”
Mr Smith added: “It is hard not to feel positive after the last year and a half we have had. You are seeing people with smiles on their faces and you are not just seeing masks. The world is starting to come back.”
Shares dipped 1p to close at 151p.