The listed developer, part of the consortium delivering Manchester’s £1.4bn Mayfield regeneration, said it would spend the next year “resetting the business” after reporting an £86m loss last month.
“I am targeting returning to growth in full-year 2023, with an upward trajectory from then onwards,” U+I’s chief executive Richard Upton wrote in the company’s 2021 annual report published today.
“In the meantime, I’m asking our shareholders to be patient and confident,” he added. “We have already delivered on many of the targets we set out at our interim results in January – exceeding our disposals and efficiencies targets and outlining our [ESG] programme.
“We will spend the next twelve months resetting the business and proving our simplified business model works.
“By the end of FY2022, we will have the foundations in place to enter a growth phase where we can put ourselves in a position to consistently achieve our longer-term ambition to be the best in regeneration, delivering significant shareholder value.”
London-headquartered U+I is part of the Mayfield Partnership, a public-private venture that also comprises Manchester City Council, Transport for Greater Manchester and developer LCR.
The consortium is still looking for lenders to back the first phase of the city centre scheme including offices and car park, U+I said in April, as it reported a widened pre-tax loss of £86.7m in the year to April, compared to a £58.6m loss the year before and a £50m loss for the six months to last September.
U+I has attributed the disappointing results to trading and development losses, a reduction in its investment portfolio valuations and a rise in net operating costs, compounded by project delays and other impacts from the Covid-19 pandemic.
Former chief executive Matthew Weiner stood down in January to be replaced by Upton, who was previously chief development officer and is now commandeering a 100-day review of the business to cut costs and refocus its activities solely on regeneration projects.
As part of the review, U+I is aiming to dispose of non-core assets in its investment portfolio over the next two years – a move it says would deliver proceeds of around £50m in the full year 2021 and more than £80m in 2022. The company has already cut its workforce by almost 50% from 2020 levels.
Upton said in today’s annual report: “We’ve talked a lot about the initial 100-day plan but this is part of a wider 400-day campaign that takes us to 31 March 2022.
“[The past year] has been an opportunity to take stock, improve our business fundamentals and emerge hungrier and leaner than before…We have a clear purpose, an empowered team, an enviable pipeline of regeneration projects that will shape and benefit communities, and there is a growing and urgent need for thoughtful mixed-use schemes like ours.
The London Stock Exchange-listed developer’s share price was down 1% as of this morning.
Meanwhile work is pressing on at the former Mayfield depot close to Manchester’s Piccadilly station. Construction firm PP O’Connor Group has been on site since December carrying out remediation work at the site and the next task will be to start uncovering the subterranean River Medlock to create the 6.5-acre Mayfield Park, the city’s first public park in a century.
The first phase also includes 320,000 sq ft of offices and a 581-space multistorey car park – but funding needs to be secured before these components can be built.
Mayfield will eventually see the creation of 1,500 homes, 1.6m sq ft of commercial space, 300,000 sq ft of retail and leisure facilities and 14 acres of public realm, under current plans.