Bank deal lays foundations for Springfield growth

The Elgin-based builder is eyeing land acquisitions across the country after securing a £17.5 million financing package from Bank of Scotland.

Springfield plans to buy as many as 6,000 plots within the next three years, leading to what managing director Innes Smith described as a “dramatic increase” in the firm’s land bank.

The new revolving credit and overdraft facilities have been put in place amid improving activity across the housing market, and particularly at Springfield.

“We have seen a big increase in sales over the past five years, and part of that is from us increasing our market share, plus improvements across the market generally,” Smith said.

“I get the feeling things are better, because there are less materials and people available, but whether that will continue, who knows?”

Sales in Springfield’s current financial year, which started on 1 June, are up 59 per cent on the same period in 2012, with that performance expected to be sustained through 2014.

The company is on course to sell about 500 homes this year, rising to more than 600 thereafter. Smith predicts turnover will increase to more than £75m for the full 12 months as further support for the market comes into play.

“We are preparing for demand to increase again when the Scottish Government-backed ‘Help to Buy’ scheme is introduced next month,” he said.

“In response to demand we opened four sites last year. The new funding will assist us with our aim to seek out new opportunities in land acquisition and also provide us with scope to expand our geography.”

Some of the funding will go towards securing planning permission needed to get building started on sites such as An Camas More, a new community of up to 1,500 homes near Aviemore.

Proposed developments in Banff and Elgin are also in the final stages of planning.

First set up in 1956, Springfield expanded from the north into the Central Belt with the acquisition of larger rival Redrow’s Scottish operations in 2011. Owned by chairman Sandy Adam, the company has spent the past few years laying the foundations for further growth when markets improve.

In its latest full-year results released last month, Springfield posted a profit of £3.5m on sales of £47m.

Both figures were down slightly on the previous year, when the company benefited from accounting gains linked to the Redrow deal.

Springfield has continuously traded profitably for more than 20 years, and has traditionally kept its borrowings to a minimum.

Graham Fiddes, a director at Bank of Scotland, described it as “an exceptional business” operating in a sector vital to the Scottish economy.