Further Update on COVID-19

RNS Number : 8812K

Springfield Properties PLC

27 April 2020

 

27 April 2020

Springfield Properties plc

("Springfield" or the "Group")

Further Update on COVID-19

Additional £18m facility agreed with Bank of Scotland  

Further to the Group's announcement on 24 March 2020, Springfield Properties plc (AIM: SPR), a leading housebuilder in Scotland offering private and affordable housing, provides the following update regarding COVID-19.

Since the start of the outbreak, the Health and Safety of Springfield employees, customers and the communities in which the Group operates has been of paramount importance. Consequently, in accordance with Scottish Government guidance, on 24 March 2020 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, it is not possible to know when operations will recommence.

Enhanced £85m banking facility

In light of the current situation, the Group is pleased to confirm that it has agreed an additional £18m, 12-month, term loan facility with Bank of Scotland, increasing the total credit facility to £85m. 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. The Board modelled several cash flow scenarios that assumed different lengths of shutdown as well as the adoption of various mitigating actions. These actions are described below. 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.

Further mitigating actions taken

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.

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."

Enquiries

Springfield Properties
Sandy Adam, Executive Chairman Innes Smith, Chief Executive Officer	[phone]
N+1 Singer
Shaun Dobson, James Moat (Corporate Finance) Rachel Hayes (Corporate Broking)	[phone]
Luther Pendragon
Harry Chathli, Claire Norbury, Alexis Gore, Joe Quinlan	[phone]

 

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