The developer involved in the £1.4bn regeneration of Manchester’s Mayfield depot is to restructure after posting a £50m loss for the six months ended 30 September 2020. Chief executive Matthew Weiner has stood down with immediate effect.
Weiner, who said he leaves “to pursue other opportunities”, has been replaced by Richard Upton, currently chief development officer, who assumes his new role with immediate effect. Upton was the founder and chief executive of developer Cathedral Group, which U+I acquired in May 2014.
As his first task in the role, Upton has commenced a 100-day review of the business to cut costs and refocus the company’s activities solely on regeneration projects. The findings of the review are to be announced in the full-year results on 26 May.
The loss was attributed largely to £25m of trading and development losses, a reduction in its investment portfolio valuations leading to a £10.3m deficit, and a rise in net operating costs to £14.9m.
The loss was more than double that reported for the same period of 2019, when it was £23.9m.
Net debt stood at £110.5m compared to £154.1m for the year-earlier period and net asset value fell to £240.5m from £327m the previous year.
The 100-day review will split U+I’s development and trading portfolio into two areas – core assets, including regeneration schemes such as Mayfield, and non-core assets in its investment portfolio, of which it will aim to dispose in the next two years “to generate cash and pay down debt”, according to today’s filing.
A disposals programme would seek to deliver proceeds of around £50m in the full year 2021 and more than £80m in the full year 2022.
U+I added that it has already taken action to cut costs and strengthen its budget by slashing its workforce by 41% from full-year 2020 levels – a programme set to complete by June 2021 – and reducing overheads by 25% from £21.2m to a targeted £16m for the full year 2021. It hopes to further reduce overhead costs to £12m by the end of the FY2023 (a 43% reduction over three years).
U+I has also proposed a reduction in discretionary third-party costs and a relocation to a smaller London office – the marketing of its lease at Howick Place has begun.
The company is also reviewing its dividend policy “to align with the strategic direction of the business”.
Meanwhile, U+I noted the benefits of a £23m Government grant it secured for Mayfield last August, which will support delivery of the civic park element of phase one of the scheme.
Chief executive Upton said: “The last six months has been an incredibly challenging period for the company as we, alongside the real estate sector, have been dealing with the impacts of the wider health crisis and consequent economic uncertainty.
“While we have been agile in changing the way that we work and improving our processes, we recognise the need to make pivotal changes and improve our performance to respond better to external pressures.
“We have taken immediate steps to reduce our recurring costs…and have taken difficult decisions to exit legacy and non-core assets…paving the way for a strong, clean platform for growth.
“We have immediately commenced a 100-day review of our portfolio to make our business simpler, more agile and more efficient. This review will focus on our strengths in value-add complex, mixed-use regeneration, while delivering more predictable, consistent returns as we leverage the opportunity to reveal the full potential of the business.
“It is clear that demand for inspiring, sustainable places that revive communities, create jobs and boost local economies has never been more relevant than now.”
Wiener is to remain on U+I’s board as an executive director until the end of May “to provide continuity and a smooth transition”, the company said.
Upton will be supported in his new role by the company’s four-strong senior management team comprising development director Mike Hood, creative director Martyn Evans, director of delivery Mark Richardson, and planning director Malcolm Hockaday.
Meanwhile, chief finance and operating officer Marcus Shepherd will also step down from the board after completing results for the year ending 31 March 2021. A search for his replacement will begin immediately, the company said.
U+I chairman Peter Williams said: “Over the last six months, the company has taken several decisive steps in response to the challenges it has faced, which have strengthened the business significantly for the future.
“With this initial phase now completed, the conditions are right for Matthew and the company to move forward independently.”
Weiner added: “I was more than proud to be the first chief executive of the merged U+I Group and, over the ensuing six years, to lead an extraordinary and dedicated team that has established the group as one of the pre-eminent regeneration and development businesses in the UK.
“However, having completed 20 years of service…I believe that now is an appropriate time for me to pursue new opportunities. Regeneration will be one of the major themes for the next decade and I want to be part of that journey, at a project creation level rather than in the role of general business management.”
U+I’s share price dropped 10% on Tuesday morning.