Springfield Properties agrees additional £18m loan facility as sites remain closed
Springfield Properties has agreed an additional £18 million loan facility with Bank of Scotland as it prepares to navigate the uncertainty surrounding the current lockdown.
The housebuilder said the additional support gives the group “sufficient headroom, should it be necessary, to withstand even the most unlikely event of a 12-month shutdown”.
The newly agreed 12-month term loan facility has been agreed on similar terms to the existing credit facility, which has been increased to £85m.
In accordance with Scottish Government guidance, Springfield temporarily closed down all of its sites under construction and its kit factory on March 24, as well as closing its sales and administrative offices to the public with employees working from home wherever possible.
And today the firm admitted that until there is clarity on the duration and severity of these events it is “not possible” to know when operations will recommence.
The company said: “The board modelled several cash flow scenarios that assumed different lengths of shutdown as well as the adoption of various mitigating actions.”
It added: “Beyond continued liquidity, the fundamental basis of the models was the punctual payment of Springfield’s employees, suppliers and sub-contractors throughout the period.
“The board is satisfied that the group is in a strong financial position and able to operate within its new facilities even under the most extreme of these highly stressed scenarios: a full year shutdown.”
To further preserve its cash position, the group announced the cancellation of the interim dividend last month and has furloughed over 90% of its workforce.
In addition, of the core team still working, executive and non-executive directors have agreed to a voluntary 50% reduction in base salary until further notice, and at least until sales recommence, with 30% deferred and 20% forgone. All senior managers still working have agreed to a 20% voluntary reduction in base salary over the same period.
Additional measures that significantly reduce the group’s monthly running costs include the delay or cancellation of future land purchases, postponement of office rental and financial lease payments, and curtailment of all non-essential spend.
Springfield said it is too early to estimate with accuracy the potential impact on its financial results but added that “the board believes the group is in a strong position to withstand the impact of COVID-19 and once a return to work is permitted (with the necessary health and safety measures in place), Springfield will continue to deliver against its strong order book”.
Innes Smith, CEO of Springfield, said: “Throughout the COVID-19 pandemic our first priority has always been the health and safety of our workforce and the wider community and I am proud of the response of our employees to the crisis. Thanks to their support for our actions, the enhanced facility from the Bank of Scotland puts us in a strong financial position for the time when it is safe, once again, to resume business.
“We are also working to maintain strength in our supply chain, hence our commitment to paying all of our contractors and sub-contractors in full and with minimum delay. While the impact of the disruption is still unknown, Scotland will continue to need more good quality housing to address its housing shortage and I believe that Springfield is in a very strong position to meet this demand once our business can restart.”
Contracted revenues from private and affordable housing currently stand at over £110m. This includes £44m of largely constructed private housing, much of which would have handed over to clients in April and May 2020. These homes are contracted under the Scottish missive system and are underpinned by the banks’ three-month extension to mortgage offers. The affordable housing element consists of £66m of affordable housing revenue from construction contracts already underway.
The group’s position is further strengthened by a significant volume of private house reservations on which the group continues to work, with customers, to secure a missive (contract). In addition, Springfield is in possession of, what the directors’ believe to be, the largest land bank in Scotland.
- Read all of our articles relating to COVID-19 here.