Scottish housebuilder Springfield Properties (SPR) put in a more resilient showing than most of its peers south of the border in its financial year to May, as house price growth outpaced build cost inflation. Together with the completion of all but one of its legacy developments and the acquisition of Edinburgh-based Walker Group and West Scotland-focused Dawn Homes, that meant the gross margin jumped to 18 per cent, from 15.7 per cent a year ago.
Those acquisitions also meant the level of private completions rose by more than a third, outpacing affordable housing completions, which were up just 4 per cent. However, chief executive Innes Smith said Walker’s land bank included 346 plots to be taken forward as affordable homes, while the total affordable land bank has expanded by almost a fifth, comprising just over a quarter of the group total.
With an average private selling price of £227,000, the group targets the mid-market, thereby avoiding competition with larger housebuilders such as Persimmon (PSN) and Barratt Developments (BDEV), who are “better at building smaller houses than us”, according to Mr Smith. Equally encouraging, just 17 per cent of Springfield's customers used the government’s help-to-buy scheme in the period, which reduces the risk of any abrupt drop in demand if the programme is scrapped in 2023.
Analysts at Peel Hunt forecast adjusted pre-tax profits of £18.4m and EPS of 15.3p for the year to May 2020, rising to £19.5m and 16.2p in FY2021.
| SPRINGFIELD PROPERTIES (SPR) | ||||
| ORD PRICE: | 111p | MARKET VALUE: | £107m | |
| TOUCH: | 108-114p | 12-MONTH HIGH: | 125p | LOW: 98p |
| DIVIDEND YIELD: | 4.0% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 92p | NET DEBT: | 33% | |
| Year to 31 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017* | 111 | 6.69 | 9.18 | nil |
| 2018 | 141 | 9.22 | 10.0 | 3.7 |
| 2019 | 191 | 16.0 | 13.3 | 4.4 |
| % change | +36 | +73 | +33 | +19 |
| Ex-div: | 31 Oct | |||
| Payment: | 18 Nov | |||
| *Pre-IPO | ||||
