Elgin-based Springfield Properties, which is building a number of new communities throughout Scotland, said in a Covid-19 update on Monday it has agreed an additional £18 million, 12-month term loan facility with Bank of Scotland.
This increases Springfield Properties’ total credit facility to £85 million and the term loan has been agreed on similar terms to the existing credit facility.
“Financial modelling has demonstrated to the board that this additional support gives Springfield sufficient headroom, should it be necessary, to withstand even the most unlikely event of a 12-month shutdown,” said Springfield Properties.
“The board modelled several cash flow scenarios that assumed different lengths of shutdown as well as the adoption of various mitigating actions …
“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.”
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 where possible.
Springfield added: “The group has taken a number of actions in order to preserve its cash position during this period.
“Cancellation of the interim dividend was notified on 24 March 2020.
“Over 90% of the group’s workforce has been furloughed under the UK Government’s Job Retention Scheme.
“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.
“It is too early to estimate with accuracy the potential impact on the group’s financial results.
“However, 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.
“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.”
Springfield CEO Innes Smith said: “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.”