Springfield has announced interim results, which are in line with expectations.
The more significant news is a profitable land sale, with the Group selling 2,480 plots to Barratt Redrow for £64.2m. This triggers a material upgrade to revenue and profit expectations in the current year and will eliminate net debt in FY27, as proceeds are received in four instalments.
The land sale will complete by 31 May 2025, with the cash consideration of £64.2m being paid in four tranches over the next four years, with approximately 50% being received in the current financial year.
Springfield will retain a large landbank with 9 years’ visibility at current build rates, with a more focused strategy to capitalise, in particular, on the significant opportunity in the North of Scotland. We believe the deal makes excellent strategic sense, whilst proving the value of the Groups’ substantial land holdings.
Whilst excellent progress has been made on cash generation in recent periods, we believe that the Group’s relatively high debt level has been a factor in the Group’s persistent valuation discount (currently c.15% discount to peers on P/Book basis). Today’s deal should remove any concerns on that front and validate Springfield’s net asset value.
We increase our Fair Value estimate to 150p per share (from 140p), conservatively based on 1x P/Book (FY25E).
