SPRINGFIELD Properties has provided a trading update for the year ended 31 May 2020, highlighting the impact of Covid-19 on the business.
The housebuilder previously announced it entered the second half of 2019/20 with a ‘strong’ order book of contracted revenue for the period and was experiencing ‘good growth across the business’ prior to the pandemic. However, as a result of the lockdown, Springfield was unable to complete the delivery of homes scheduled to take place in April and May, which for the previous two years accounted for 30% of annual revenue. Consequently, the majority of private completions anticipated for Q4 2019/2020 were postponed into the new financial year.
Springfield added that, notwithstanding the lack of sales in the last two months of the year, the group was able to achieve the same level of revenue in affordable housing as the prior year. Overall, the group now expects to report revenue for full year 2019/20 of approximately £144 million, down from £190.8 million in the previous 12 months.
The group expects to report an improvement in gross margin for 2019/20 over the prior year and profit before tax of at least £9 million (2018/19: £16 million).
Springfield revealed construction activity has now resumed on every site. Sales offices are also back up and running, with safe working protocols in place. The housebuilder said the number of reservations received in the first week following the reopening was the highest the business has ever recorded in a one-week period – and ‘substantially higher’ than normal for this time of year. The group has also started handing over homes that were nearing completion prior to lockdown. As a result, Q1 2020/21 sales are tipped to be ‘significantly higher’ than the equivalent period last year.
The firm’s order book of contracted revenue currently stands at over £110 million, including £44 million of largely constructed private housing, much of which was due to be handed over in April and May. These homes are contracted under the Scottish missive system and the group has only had one cancellation since lockdown. The affordable housing element consists of £66 million from construction contracts already underway.
Whilst the group said it anticipates ‘robust’ sales for Q1 2020/21, and is experiencing a ‘strong increase in demand’, performance for the remainder of the year is reliant upon operations remaining open with no further Covid-19 disruption.
Innes Smith, CEO of Springfield said. “Our priority has always been – and remains – the health and safety of our workforce and customers, and we have taken important measures to protect this. Nonetheless, after several months of closure, we are delighted to have reopened to a record week of reservations – reflecting pent up demand and increased desirability for the type of private housing Springfield offers.
“Multiple industry reports have commented on the shifting interests of homeowners as a result of lockdown, with people wanting larger homes, with gardens, located within commuting distance of cities, which is the kind of developments we create. At the same time, the shortage of affordable housing in Scotland has become even more acute and, thanks to the strength of our partnerships, we are well-positioned to help provide new homes to meet this demand.
“As we now focus on delivering our strong order book of contracted revenue, while also expanding our sales pipeline, I would like to thank our workforce and customers for their support during this time and we look forward to continuing to provide great places for people to live.”
The group’s full year results announcement is expected to be issued in October.