Progressive Equity Research Limited

Springfield Properties plc

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Description

Springfield Properties is Scotland’s only quoted housebuilder. It was admitted to AIM in October 2017. We estimate it will sell almost 1,000 homes in FY 2019E (YE May), all north of the border, with further growth in FY 2020E and beyond driven by underlying market strength, the Walker Group acquisition and overall strategy.

Company Presentations

Progressive Presents the management team of Springfield Properties, Scotland’s only quoted housebuilder
Nov
 10

Progressive Presents the management team of Springfield Properties, Scotland’s only quoted housebuilder

Springfield offers both private and affordable housing in Scotland. It is known for its distinctive village communities, set in a rural context but close to fast growing cities.

Presenters:
Innes Smith, CEO
Michelle Motion, CFO

 

  • Overview of the business
  • Scottish housing – a favourable legal framework
  • Financial highlights
  • Environmental, Social & Governance (ESG)
  • Summary
  • It was good foresight to scale back in 2006 – 2008. What were the warning signs that made you nervous?
  • Do you see prospects for future consolidation in Scotland, either by Springfield or other Scottish or UK housebuilders?
  • How important do you think it is to reduce your level of debt, and what tools do you have?
  • Future land bank sites - you gave a number of 64. When is that likely?
  • Despite the falls in your share price, why have the Directors not bought any shares this year?
  • English housebuilders tend to have zero debt. You could sell land to Sigma to make it easier for analysts - are you tempted?
  • In more normalised times, what sort of growth and operating margin do you target?
  • Do you need more equity on the balance sheet to maintain your anticipated growth?
  • Were you happy with the Redrow purchase?
  • What do you think about the prospects for Scottish independence. Do you have any contingency plans?
  • I invested with you some time ago, and I’m still losing money. What do you think that the market is missing?
  • Has the coronavirus and new working practices changed your appetite to offsite manufacturing?
  • You mentioned the desire for greater liquidity. Is there any chance of the Chairman Sandy Adams selling some of his shares?!
    • Presentation Research

    Our view

    Springfield is targeting more rapid volume growth than a number of the UK-wide volume housebuilders, helped by the relative strength of the Scottish market and its distinctive model for delivering private and affordable housing. We additionally note that there may be further upside to our estimates of profitability if house price growth exceeds what we believe are conservative expectations.

    Recent Research

    15/12/2020

    Resurgent Scottish market fuels cash inflow

    30/11/2020

    Planning granted for first private rental homes

    29/09/2020

    Sales and cashflow rebound as lockdown lifts

    View all research for Springfield Properties plc

    Financial Summary

    Year end: May (£m unless shown)
    20192020202120222023
    Revenue190.8144.4178.0228.5248.4
    Fully Adj PBT16.510.215.119.623.9
    Fully Adj EPS (p)13.88.212.516.219.8
    Dividend per share (p)4.42.04.55.05.5

    Profit & Loss

    Year end: May (£m unless shown)
    20192020202120222023
    Revenue190.8144.4178.0228.5248.4
    Adj EBITDA18.613.618.923.427.8
    Adj EBIT17.011.316.621.10.0
    Reported PBT16.09.714.619.623.9
    Fully Adj PBT16.510.215.119.623.9
    NOPAT13.88.913.417.120.6
    Reported EPS (p)13.37.912.116.420.0
    Fully Adj EPS (p)13.88.212.516.219.8
    Dividend per share (p)4.42.04.55.05.5

    Cash Flow & Balance Sheet

    Year end: May (£m unless shown)
    20192020202120222023
    Operating cash flow16.0(26.6)31.419.420.8
    Free Cash flow10.7(31.8)26.513.513.9
    FCF per share (p)11.2(32.8)27.413.914.4
    Acquisitions(20.9)(3.2)0.0(2.0)0.0
    Disposals
    Shares issued
    Net cash flow(9.0)(1.5)23.16.98.9
    Overdrafts / borrowings32.670.347.647.647.6
    Cash & equivalents3.11.51.98.817.7
    Net (Debt)/Cash(29.6)(68.8)(45.7)(38.8)(29.9)

    Nav & Returns

    Year end: May (£m unless shown)
    20192020202120222023
    Net asset value88.595.9104.2115.4129.7
    NAV/share (p)91.998.0106.4118.0132.6
    Net Tangible Asset Value86.994.2102.5113.8128.1
    NTAV/share (p)90.296.3104.7116.3130.9
    Average equity83.892.2100.0109.8122.6
    Post-tax ROE (%)15.3%8.3%11.7%14.4%15.8%

    Metrics

    Year end: May (£m unless shown)
    20192020202120222023
    Revenue growth(24.3%)23.3%28.3%8.7%
    Adj EBITDA growth(26.9%)39.0%23.6%18.5%
    Adj EBIT growth(33.9%)47.3%27.0%(100.0%)
    Adj PBT growth(38.5%)48.4%29.7%22.2%
    Adj EPS growth51.3%29.7%22.2%
    Dividend growth(54.5%)125.0%11.1%10.0%
    Adj EBIT margins8.9%7.8%9.3%9.2%0.0%