Springfield Properties PLC Trading Update (3481J)
December 12 2022 - 2:00AM
UK Regulatory
TIDMSPR
RNS Number : 3481J
Springfield Properties PLC
12 December 2022
12 December 2022
Springfield Properties plc
("Springfield", the "Company", the "Group" or the "Springfield
Group")
Trading Update
Springfield Properties (AIM: SPR), a leading housebuilder in
Scotland focused on delivering private and affordable housing,
provides the following update on trading, ahead of announcing its
interim results for the six months ended 30 November 2022.
As noted in the Group's final results announcement of 20
September 2022, Springfield entered the 2023 financial year with a
strong order book and sustained demand in private housing, but
against a challenging market backdrop. Since then, the rise in
interest rates and broader economic uncertainty have impacted
reservations for the Group's private housing .
The Group's revenues for this current financial year are largely
protected by the Scottish missive system, which ensures that
customers are contracted into the purchase much earlier in the
build programme. As a result, the Group expects to report a strong
increase in revenue for H1 2023 and remains on track for good
revenue growth for FY 2023. However, cognisant of the continued
market uncertainty, the Board is taking a cautious approach to
expectations of future sales rates.
The industry-wide inflationary pressures in materials and labour
have become more acute as supply chain disruption has persisted and
7.5% inflation has been prudently applied to the Group's future
costs for H2. Private house price growth is no longer anticipated
in the short term rendering the increase in build costs more
difficult to mitigate. The Group's affordable housing business
continues to be impacted due to the industry's model of fixed price
contracts and with the Scottish Government yet to review its
affordable housing investment benchmark. The Group therefore
continues to hold off from entering into long-term fixed price
contracts in affordable housing. In addition, the Group's plans to
deliver homes for the private rented sector (PRS) are unlikely to
come forward in the next couple of years following the Scottish
Government's introduction of a temporary rent freeze. These factors
are expected to combine to impact the Group's margin and, as a
result, the Group now expects to report profit before tax for FY
2023 below that of FY 2022.
The Board continues to believe that the fundamentals of the
business and of the housing market in Scotland remain strong. There
is an undersupply of housing across all tenures, and the Group
offers high quality, energy efficient homes in popular locations
across the country - with greater affordability in Scotland
compared with the UK as whole. The Scottish Government maintains
its commitment to investing in the delivery of more affordable
homes and the Group's strategic land bank provides opportunities
for land sales in the short term.
The Group is focused on maintaining tight cost control during
this volatile period, whilst the historic investment in the land
bank, half of which has planning permission already granted,
provides the Group with visibility and an excellent platform from
which to take advantage of the next upturn in the market cycle.
The Group will provide further details in its interim results
announcement, currently expected to be published in February
2023.
Enquiries:
Springfield Properties
Sandy Adam, Chairman
Innes Smith, Chief Executive Officer +44 1343 552550
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Singer Capital Markets
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Shaun Dobson, James Moat, Rachel
Hayes (Investment Banking) +44 20 7496 3000
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Gracechurch Group
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Harry Chathli, Claire Norbury +44 20 4582 3500
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END
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