Figures are ‘uncomfortable reading’ for Splash chairman

Michael Hunt

Tom Bloxham, chairman of Urban Splash, has said the company has seen nearly half the value of its net assets wiped out during the twelve months to March 2009, from £92.7m to £45.5m.

Within Urban Splash's annual report and financial statement for the year ended 31 March 2009, Bloxham said it had been "been the hardest year in my business life" and that the results made "uncomfortable reading".

He said the company's turnover was £49.9m, down 33% from last year, with a loss after tax of £39.2m. Bloxham added the loss was "affected by a number of exceptional costs and write downs which are not expected to re-occur. Excluding these exceptional costs of £31m, the actual loss was £7.3m".

Bloxham was buoyant over the rise of commercial property income, however, saying it had risen to £9.1m, which was a 13% increase on the previous year. Residential income had also increased to £1.4m up by 50%.

Urban Splash had also agreed a £125m, five year, banking agreement in June 2008 with the HSBC, Co-operative Bank and RBS and a further three year £101.2m facility with the HSBC in October 2009.

Bloxham said: "It would be fair to say that 2009 has not been a good year. The credit crisis claimed many victims, property companies were no exception and our 2009 results reflect the world we now live in. After year upon year of consecutive growth building Urban Splash up and increasing the value of the company, it gives me no pleasure to report losses wiping off nearly half of our net asset value. These figures are humbling and have taught us all some valuable lessons. I am pleased to say that the current year is looking a lot better and that things have, and are, beginning to improve.

"Urban Splash always was, and will remain, an entrepreneurial property company, at the cutting edge of residential markets delivering ground breaking regeneration projects underpinned by a healthy investment portfolio. Our private capital structure has meant that all this has been achieved with relatively high levels of gearing. Many companies in similar situations gave up the fight and unfortunately went under. I am clearly pleased and proud to say we have survived with thanks due in no small part to the pragmatic support of our principle bankers HSBC. I believe the fight we have come through has made us a better, stronger company, though we have had to lose some close colleagues – some who had been with us from the start – in a round of incredibly tough decisions."

Bloxham mentioned that the company had responded to the downturn by reducing its overhead and development expenditure, concentrating on renting as well as selling residential property and "sweating" over its commercial portfolio. Urban Splash leased off the Midland Hotel in Morecambe in order to, Bloxham said, "concentrate on our core, traditional business".

He added: "These changes not only allowed us to survive, and keep the confidence of our bankers and public sector partners, but also allowed us to grow our investment portfolio and total annualised rent by 12% from 31 March 2008 to 31 March 2009. We have successfully worked with the HCA and other public sector partners, promoting affordable housing schemes like First Time Buyers' Initiative, HomeBuy Direct and Rent to HomeBuy."

Urban Splash had also completed schemes including Chimney Pot Park in Salford and 3Towers in Manchester.

In summary, Bloxham said: "The figures are bad but we still demonstrate in our underlying business that we can out perform the market, our investment property valuations are down just 8% (on a like for like basis) 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.

"Our total annualised rental income has increased by 8% to £12,661,713 as at 30 November 2009. All this has been achieved whilst keeping within budget.

"I started out in the property business in the last recession and in the years since have grown this business. We've sustained a big blow this year but I believe that the last few months have seen notable improvement. I believe the new decade will bring great opportunities for entrepreneurial property companies like Urban Splash.

"I also believe that now more than ever the country is in need of the urban regeneration skills and beautiful new homes Urban Splash has proved it is capable of delivering, even in these difficult economic times.

"My thanks go out this year more than ever to our talented staff, understanding suppliers, banks and public and private sector partners. Without them none of this would have been possible."

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