By Scott Wright
THE boss of Springfield Properties has declared the housebuilding sector no longer needs Government support as the Scottish firm reported strong profits and revenue growth in its interim results.
Innes Smith, chief executive of the Elgin-based group, told The Herald that the record profits being made by housebuilders show the industry does not need help at state-level to boost sales. He argues support should be given to sectors which are more in need.
Mr Smith’s comments came as Springfield reported a 42.9 per cent rise in adjusted pre-tax profits to £9 million for the six months ended November 30. Turnover grew by 18.3% to £94.4m as the firm took advantage of “pent-up” demand that built up during the first lockdown. A total of 443 homes were completed, up from 438.
Mr Smith said he does not expect Springfield to be unduly affected by the Help to Buy scheme and Land and Buildings Transaction Tax relief coming to an end in Scotland. Sales through Help to Buy accounted for around five per cent of Springfield’s total.
Mr Smith said: “That is not going to have a significant impact on us. The First Home Fund is in place. Maybe it is time for government assistance, [when] housebuilders are getting record profits and record turnover, to ease up a bit. I am quite confident we can see through this.”
He added: “ I think the Government could be helping out other areas just now. There is more needy than us at this point in time.”
Springfield recommenced building operations in June following a three-month hiatus, and activity has been uninterrupted since.
The firm made around 60 people redundant in the wake of the pandemic taking hold, which represented around 10% of its workforce. That came as it consolidated two offices into one, albeit the remaining office continues to be closed. However, Mr Smith said Springfield has begun hiring again.
“There are job adverts out there,” he said. “We want to continue our growth. We are looking for opportunities just now because we have a positive feeling about the market.”
Springfield has made two acquisitions since listing on the stock market in 2017, with the purchase of Dawn Homes in 2018, and Walker Homes the following year. Mr Smith said acquisitions continue to form part of its strategy.
“It has been throughout,” he said. “If we see something that is the right price, adds value and is earnings accretive we would absolutely go forward to our investors and say: what do you think of this?”
Springfield has seen the momentum built up in the first half of its financial year continue, noting that industry figures for the last 13 weeks are comparable with the same period the year before.
He said: “When you consider last year didn’t have Covid and they didn’t have three weeks of horrendous snow and they didn’t have the lockdown, to be on a par with that just shows the strength of the market.
“I think it is all down to [the fact] we don’t have enough houses coming on to the market.”
Noting that demand is continuing to outstrip supply, he highlighted the ability of Springfield to help fill the gap. He added: “The houses that Springfield offer are larger than the industry average, and the villages have their own communities and facilities.
“They are proving [to be] very popular in the current environment for sales.”
Springfield announced yesterday that work would begin next month on the construction of 75 family rental homes at Bertha Park on the outskirts of Perth, in partnership with Sigma, the residential development and urban regeneration specialist.
It marks the first project of its kind in Scotland, and Mr Smith is hopeful the private rental sector (PRS) model can be “duplicated” for single family homes elsewhere in the country.
He sees no reason why the success of the PRS model in England cannot be replicated in Scotland.
The new homes will form part of the Bertha Park village development Springfield has been constructing.
The company proposed an interim dividend of 1.3p per share.
Shares closed up 5p, or 3.3%, at 155p.
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