REG - Springfield Props. - Trading Update

Springfield PropertiesAnnouncement

12/12/2022 07:00

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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                                         +44 1343 552550

 Innes Smith, Chief Executive Officer

 Singer Capital Markets
 Shaun Dobson, James Moat, Rachel Hayes (Investment Banking)  +44 20 7496 3000

 Gracechurch Group
 Harry Chathli, Claire Norbury                                +44 20 4582 3500

 

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