Strong delivery against cash generation targets
Springfield’s year-end trading update confirms a positive conclusion to FY24 with profit and cash generation both ahead of forecast despite the challenging market backdrop. The key focus for the year was debt reduction and Springfield has once again proven its ability to reduce debt rapidly in response to changing market conditions. Bank debt reduced by over £20m during the year to c.£40m, well below management’s original £55m target. Current trading is steady, and Springfield is well positioned to capitalise on any improvement in market conditions.Full year revenue is expected to be c.£266m, a 20% reduction year on year, reflecting challenging market conditions as well as Springfield’s decision to pause new affordable-only contracts during FY23. Revenue is therefore c.7% lower than forecast, but the impact has been more than fully offset by profitable land sales completed during the period.
We make no notable changes to our FY25 forecasts, which were already conservatively positioned and assume only modest revenue growth year-on-year.
We note that Springfield continues to trade at a marked discount to sector peers, notably a c.33% discount on a P/Book basis. We reiterate our Fair Value / share estimate of 140p, which equates to FY’25 P/E rating of 17.5x and P/Book of 1.0x.
Springfield Properties is engaged in developing a mix of private and affordable housing in Scotland. Co. operates through two divisions: Private Housing and Affordable. The Private Housing division develops smaller to medium sized developments in Scotland, as well as a small number of larger sites. The Affordable division's operations focus on the development of land into stand-alone sites which consist entirely of affordable homes.
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