This week, I was delighted to announce the results of our annual accounts which show a £99m increase in turnover and a return to profit (I wish we could have worked a bit harder to make it to £100m!). Below you can read the full Chairman’s Statement from the accounts as well as some of the press coverage we’ve received about them in the past few days…
The Architects’ Journal
Manchester Evening News
The Business Desk
Full Chairman’s Statement:
Even for an eternal optimist like me, in recent years writing my statement in these accounts has at times been difficult, due the problems suffered by the business as a result of the financial crisis which seemed never ending. It is therefore very pleasing to say that the last 18 months has been one of the most important in the group’s recent history, and one which has hopefully put the group on a sound platform for future growth as well as finding a solution to the problems associated with the large debt burden which has beset us since the onset of the financial crisis in late 2008.
In July 2013 and after 18 months of hard work with our banks, the Homes and Communities Agency and the team of advisers, we successfully concluded a fundamental restructure and refinance of the group which has addressed the legacy debt position of the group and created a new corporate structure enabling the business to grow, start new development projects and form new joint venture relationships which we believe will be key to the future success of the business.
At the same time we completed the sale of £77.7 million of residential property to Places for People retaining the ongoing management of the portfolio. This enabled the group to repay the majority of its facilities with the Homes and Communities Agency and a substantial amount of bilateral bank facilities. This sale was the start of a long term successful partnership with Places for People, one of the country’s biggest property management, development and regeneration companies. In February this year, we established a joint venture with Places for People to develop property across the UK. We are delighted that our first project together, the construction of 182 apartments in the second phase of Park Hill, Sheffield is currently on site with other schemes hopefully starting in the near future.
The restructure in the summer of 2013 did not at the time address our remaining legacy debt facilities, our syndicated £113m commercial property loan. The final piece of the restructuring jigsaw was put into place when in April of this year, we cancelled our swap arrangements and working in partnership with The Pears Group reached agreement with our banking syndicate to refinance the debt. We have also formed another joint venture with Pears which we look forward to developing over the coming years.
Perhaps even more pleasing and despite the restructure and refinance absorbing a huge amount of management time, much has been achieved across the business in a number of areas. We have continued to deliver award-winning buildings, we were nominated for the prestigious Stirling Prize for our Park Hill development and we have won 46 more awards, taking our total to 363.
I am also delighted to report that during the last 18 months, we completed construction of our schemes at Lakeshore in Bristol, the first phase of Park Hill in Sheffield, one of the country’s most ambitious regeneration projects and New Cooperage at the Royal William Yard in Plymouth. All of these schemes are either fully let or sold and each scheme has already won several awards.
We continue to spend much time and hard work developing our commercial investment portfolio and the residential portfolios that we manage for Places for People and others. This has allowed us to increase our annualised investment income overall to £14.7 million (£22.1 million for the 18 months to 30 September 2013), up £0.8 million. We believe our buildings are exceptionally well designed and both residential and commercial tenants appreciate the quality design and service Urban Splash is able to offer. We believe this sets us apart from the competition.
Turning to the figures, turnover has increased to £132.6 million from £33.7 million, principally as a result of the residential sale to Places for People of £77.7m. However, it’s worth noting this is the Group’s largest ever recorded turnover. We also recorded our first profit for a financial period since 2008 of £0.05m improved from the loss of £15.4 million in the previous year. A revaluation of our commercial properties at 30th September 2013 has shown a reduction in value of £16.3 million (2012: reduction of £6.9 million) reflecting the fact that values of regional commercial property portfolios remain depressed.
Despite the difficulties faced over the last 5 years, Urban Splash has maintained its reputation as one of the country’s leading regeneration companies. With our restructure and refinance behind us I believe that together with our new partners and our established brand, we are in a position to respond to the many opportunities now presented by the property market in the UK - we have lots of new ideas and we hope to be announcing some of them soon.
Looking forward, in the last few months both the economy and particularly the UK regional property market has shown real signs of growth. The country continues to suffer from the severe shortage of housing particularly affordable housing and all the major political parties appear united in trying to find a solution.
I hope having survived the worst economic downturn I can remember, restructured our business and formed new joint ventures with some very significant and substantial partners, we will be well placed to continue delivering award winning regeneration schemes and much needed new homes and work spaces up and down the country.
As ever, my thanks go to all our public and private sector partners and above all my colleagues. I am hopeful that the past is behind us and I am very much looking forward to driving this great business onward and bringing new exciting, innovative and amazing regeneration projects to the market.