Housebuilder, Springfield has agreed an additional £18m loan facility with the Bank of Scotland to support its workforce as sites remain shut amid Covid-19
On 24 March Springfield temporarily closed down all of its sites under construction and its kit factory, as well as closing its sales and administrative offices to the public with employees working from home wherever possible.
The Covid-19 situation continues to evolve and until there is clarity on the duration and severity of these events, Springfield says it is not possible to know when operations will recommence.
Financial modelling
The housebuilder has agreed an additional £18m, 12-month, term loan facility with Bank of Scotland, increasing the total credit facility to £85m.
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.
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 prompt payment of Springfield’s employees, suppliers and subcontractors throughout the period.
The housebuilder’s board has said it 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 scenarios: a full year shutdown.
Further action taken
Springfield 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.
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 subcontractors 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.”
