finance

Leading housebuilder sees its profits hit by Covid as handovers are delayed by lockdown



Leading Scottish housebuilder Springfield Properties reported profits before tax of £10.2m – down from £16.5m – in its full year to 31 May.

The Elgin-based housebuilder reported revenues of £144.4m, down from £190.8m previously, while its operating profit of £12.1m was down from £17.6m.

The group which builds private and affordable homes said its results were impacted by property handovers scheduled for May and April being delayed by the Covid-19 lockdown.

In the previous two years, these months had accounted for 30% of the group’s annual revenue.

The group said that with the sales contracted under the Scottish missive system, the revenue anticipated for the last two months of 2019-20 was expected to be realised in the first half of the current year.

Despite this, Springfield achieved an improvement in gross margin to 18.9% from 18.0% previously.

The housebuilder has secured an additional £18m bank term loan facility to provide sufficient capital in case of a 12-month lockdown to protect the business and supply chain.

It said it had reacted “decisively and effectively” to the challenges of the COVID-19 pandemic, with its priority being the health and safety of its workforce, customers and local communities

It temporarily closed all operations on 24 March 2020 and implemented a series of cost mitigation measures.

It had achieved total house completions of 727 in the year, compared to 952 in the previous year.

It said it had expanded its geographical presence with strategic land buys in Inverness and that the proportion of its land bank with planning permission rose to 49.7% from 28.4% in the period to 31 May 2019.

Springfield chief executive Innes Smith said: “During the year, ahead of the COVID-19 pandemic, we were delivering on our strategy, with notable successes across the business.

“We progressed the development of our large, high-quality land bank and expanded geographically. “We continued to deliver great places to live against a backdrop of sustained demand for housing in Scotland.

“As a result of the lockdown, the completion of homes scheduled to take place in April and May 2020 was postponed into 2020/21, however, with these sales under contract, we were able to complete the homes for handover to our customers early in the current financial year.

“Since resuming operations, we have seen a strong increase in demand, with private reservations 24% above the same period last year.

“This reflects both the pent up demand and the increasing desire for buyers to move out of city centres and into larger homes with gardens, which is the type of home that Springfield offers.

“We are delivering on a solid pipeline in affordable housing, with £38.8m of contracted revenue. “We are in a strong financial position, having increased our credit facility during the year, and as we have recommenced handovers post period end, our net debt position has reduced. Consequently, we look to the future with confidence.”



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