U And I Group PLC slides as it swings to loss amid triple whammy of market

U&I Group PLC () shares turned down on Wednesday as the urban regeneration firm swung to a full-year loss blaming “market disruption” caused by Brexit, the 2019 UK election and the coronavirus pandemic which has resulted in delays to delivery timings and decision making from third parties, hitting its development and trading gains hard.

For the year ended March 31, 2020, the group reported a pre-tax loss of £58.6mln, swinging from a £6.3mln profit in the prior year, while the company’s development and trading gains fell sharply to £11mln from £42.8mln, well short of its target for the year of between £35mln-£45mln.

READ: U and I Group warns as coronavirus stalls development process

The company said the loss was mainly comprised of revaluations to its investment portfolio as well as provisions on historical projects at Bromley and 399 Edgware Road.

U&I also reported that its basic net asset value (NAV) had fallen to £289.6mln, or 232p per share, from £360.1mln, or 289p, in 2019.

Despite the “challenging year”, the company said its outlook was positive and it was “well placed to take advantage of new opportunities in the post [coronavirus] recovery”.

“London City Region, Manchester and Dublin are expected to be major beneficiaries of accelerated structural demand for mixed-use regeneration. There is strong political leverage for consented schemes that can meet demand for more agile environments and new behavioural needs”, U&I said in the results statement.

U&I added that there was “significant shareholder value to come” with a £10.8bn pipeline of mixed-use regeneration schemes to be unlocked as well as a resolution to grant planning or planning consent in place for over 6mln square feet across its portfolio.

“The last twelve months have been challenging, to say the least, and this is reflected in our results. Confidence briefly returned to the market in early 2020 with strong interest in commercial and residential space following the General Election.  However, the onset of [coronavirus] caused most decision-making and development progress to grind to a halt. The socio-economic impact of [coronavirus] will continue, at least for the short-term, driving new trends and behaviours”, U&I chief executive Matthew Weiner said.

“However, the challenges of [coronavirus] bring about real opportunities for companies like ours as they accelerate the structural need for inspiring, affordable, convenient mixed-use spaces where communities can thrive.  Our business model, centred on regenerating underestimated sites, often too complex for others, means we are particularly well-placed to benefit from this demand, as – more than ever – the public and private sector rely on trusted partners to help them to unlock value from their existing assets”, he added.

In a note, analysts at U&I’s ‘house’ broker Liberum Capital cut their target price to 135p from 180p to reflect the decline in the company’s NAV but retained their ‘buy’ rating on the stock.

The analysts said there was still “growing, long-term demand” for the company’s product and longer-term market growth is “underpinned by increasing economic, political and social demand for better utilising the UK’s limited space, of which public bodies own a large proportion”.

“With public purses in many areas empty or running low, there is an opportunity for U+I to work with the public sector to deliver schemes in areas that are fundamentally under-supplied, transforming them into vibrant urban communities for mixed-uses. The scale and complexity of mixed-use regeneration projects create a high barrier to entry. U+I has the ability to secure funding for its [public private partnership] projects, and has relationships with relevant partners that give it a…