£SPR......Nicola and Coronavirus made for a difficult last two months. However sales have shifted to FY2021.

Yesterday, Scotland’s only quoted housebuilder reported FY 2020 results, to 31/5. SPR completed on 727 homes in the period, down from 952 in 2018/19. The company activities were hit by Queen Nicola closing the Scottish building industry for 4 months because of covid transmission concerns and the last two months of SPR’s 2020 FY results were affected. For the past two years the last 2 months of the financial year was responsible for 30% of annual revenues, being the spring selling period. However, unlike the English system of house buying, when a Scottish home purchase contract is made, a legal missive is signed (part one of the deal, completion is later) which is legally binding on the parties. Thus, the contracted last 2 months of FY20 sales will fall into FY21 and the sale not lost. That said one deal was cancelled due to family circumstances. The FY was looking so good for them when I saw them in February at the interims in London.

Last night I spoke to Innes Smith, the CEO as he drove home from the Elgin based HQ.

The CEO seemed very relaxed and taking the long-term view because of the good structural demand in Scotland (with Government social housing a priority) and recent private sector demand. Innes said he has three years of revenue visibility, so he was able to give a FY forecast, which the brokers released. The last three months of sales have been encouraging and he is sold out of homes for the next 8-9 months. Q1 reservations were up 24%. The post CV-19 depressed share price (however up 10% on small volume on yesterday’s news) is something that he can park. He sees ‘controlled growth’ ahead for the PLC. Shares were recently issued at 120p to pay for an acquisition.

The FY 20 revenue was £145m, down from £19m with margins at 18.9% (18% prior) helped by the office merger benefits from Walker acquisition and their product mix. Gross profits were £27m, down from £34m. PBT was £10.2m. EPS was 8.33p (14p prior) and the dividend reduced to 2p (4.4p). YE debt was £68m. Coronavirus caused £60m of missed home sales and if added to the FY would have meant a good year for the plc. All suppliers have been paid…

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