‘Hardest year’ for highly geared Urban Splash
URBAN SPLASH, the developer of two of the West Midlands’ most iconic buildings saw losses wipe out nearly half of its net asset value last year.
In an annual report founder and chairman Tom Bloxham said it had been the “hardest year” during his time in business.
The company, which specialises in regeneration schemes such as Birmingham’s Fort Dunlop and the Rotunda, was forced to shed around 100 of its 250 staff last year as the sector was hit by falling values, waning confidence and a lack of mortgage availability.
In 12 months to March 31, 2009, Urban Splash’s net asset value fell from £92.7m to £45.5m. Sales fell 33% to £49.9m and the company recorded a pre-tax loss of £39.2m, compared with a £3.1m profit in 2008.
After stripping out non-recurring exceptional costs of £31m the pre-tax loss came in at £8.2m. Rental income from commercial property grew 13% to £9.1m and residential income increased 50% to £1.4m.
In his report Mr Bloxham concedes that the Manchester-based business is highly geared and that many other companies in a similar situation “gave up the fight”. Urban Splash agreed a three-year renewal of a £101m HSBC facility last year. Another facility worth £125m, provided by HSBC, the Royal Bank of Scotland and The Co-operative Bank, was agreed in 2008.
The company responded to the downturn by cutting costs, renting more properties and “sweating” its commercial portfolio. During the year it completed schemes in Salford, Stalybridge, Manchester, Birmingham and Plymouth.
Mr Bloxham said: “These figures are humbling and have taught us all some valuable lessons. I am please to say that the current year is looking a lot better and that things have, and are, beginning to improve.”
He added: “This has been the hardest year in my business life, at times we were battling for our very survival but I firmly believe Urban Splash was a great company, and still is a great company, working in a very hard environment.
“The figures are bad but we still demonstrate in our underlying business that we can outperform the market, our investment property valuations are down just 8% compared to drops of up to 50% elsewhere and we doubled our rental portfolio during the financial year from 158 to 299 homes and successfully let these out.”
