Property group moves into the red
Pre-tax losses of £7.3m within the Beverley arm of property and investment group Wykeland have resulted in the firm moving into the red.
Property and investment company Wykeland Group has reported pre-tax losses of £3.9m for the year to March 2017, down from pre-tax profits of £4.2m in the previous year, with its Beverley property arm making the biggest losses – reporting a £7.3m pre-tax loss in 2017. The rest of the group’s portfolio made pre-tax profits of £4.1m.
Group turnover at the Hull-headquartered firm increased to £9.3m for the year ended March 31 2017, up from £8m in the same period in 2016.
The firm’s property portfolio includes the £120m Flemingate scheme in Beverley, and @TheDock – a major regeneration scheme in Hull’s Fruit Market district to create a new home for digital and technology businesses.
Wykeland said: “The Main Wykeland Group (excluding Wykeland Beverley) had a successful year. Turnover reduced as a resultsof one off sales in 2016, however underlying income grew by 1.5%. Profit before tax of £4.1m was £1.1m lower than 2016, again due to one off sales in the previous year. The portfolio (excluding Flemingate) is worth £57.4m, an increase of £1.4m on 2016.”
The firm said that it had invested £1.2m in @thedock and £1.1m in Bridgehead Business Park.
Of the Beverley arm of the business, Wykeland said it had predicated a challenging year, with interest charges outweighing income. It said: “What we did not predict were the major repercussions on the scheme following the June 2016 Brexit referendum vote. The current values of large retail/leisure assets, especially those located in the regions, have been negatively impacted by the market following the Brexit vote.”
The company said the valuation of the asset had been hit hard, adding: “A consequence of this fall in value has been that it has taken longer to engage with the banking sector and has delayed the refinancing of the scheme.”
2017 saw the firm’s first full year operating Flemingate, after it opened in 2016. Wykeland said occupancy was performing well, nearing 100%, with a 38% increase footfall on the previous year.
Since the end of the year, the company has entered negotiations to reorganise and refinance the borrowings on Flemingate – meaning that its high interest rates will be reduced.
The group is not anticipating paying any significant amounts of corporation tax on the results. A deferred tax credit of £800,000 has arisen as a result of continued indexation.
Wykeland, which is a Hull City of Culture sponsor, added: “The directors continue to approach the future with optimism and believe that the group’s ongoing development strategy, allied to the rental stream, will enable the group to grow its profitability and net worth in coming years.”
The latest figures were reported against a backdrop of the group making pre-tax profits of £4.2m in 2016; with the Beverley arm of the business reporting pre-tax losses of £865,000 and the remainder of the group reporting a pre-tax profit of £5.1m.
Ian Franks, Wykeland Group finance director, said: “The business has had a very good year across the board, as reflected in the performance of assets, continued major investments, strong cash balances – up to £14.1m at the end of March 2017 from £12.5m a year before – and the proposed dividend payment to shareholders.
“The accounts show a paper loss, due entirely to the impact of Brexit uncertainty on all large regional retail and leisure property assets, such as our Flemingate development. These conditions mean it is prudent for us to reduce the book value of this asset and have also resulted in interest charges being at a higher level than anticipated, in the short term.
“Flemingate is operationally profitable and growing strongly in occupancy and footfall. Together with our other assets and development portfolio, Flemingate will contribute to continuing growth in the profitability and value of the business in future years.”
