Scottish housebuilder Springfield Properties furloughs majority of workforce and extends banking facility

Housebuilder Springfield Properties has agreed an additional £18 million of financing as it awaits a decision on when it can reopen its sites in Scotland.

Innes Smith is the chief executive of Scottish housebuilding group Springfield Properties.

The group said in a coronavirus-related trading update that in light of the current situation it had sealed an extra £18m under its lending facility with Bank of Scotland. It increases the total credit facility to £85m.

The firm told investors: “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 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.”

Non-essential building work was suspended north of the Border last month on guidance from the Scottish Government, though several major housebuilders have announced plans to recommence work in other parts of the UK in the coming days having pledged to maintain physical distancing measures.

Springfield said it had 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.

I added: “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.”

The group, which has already opted to cancel its interim dividend, said more than 90 per cent of its workforce had 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 per cent reduction in base salary until further notice.

Chief executive Innes Smith 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.”

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