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Regeneration developer Urban Splash fell to a pre-tax loss of 拢3.4m in the year to 30 September 2019 after demerging its modular housing business without receiving payment.

The loss, from turnover of 拢30.5m, compares to profit for the previous year of 拢21.2m on turnover of 拢36.3m.

The losses at the high-profile Manchester-based developer of schemes such as Park Hill in Sheffield (pictured) and Northstowe in Cambridgeshire cover the period prior to the covid crisis, so don鈥檛 take account of the impact of the closure of development sites during lockdown.

The loss follows Urban Splash鈥檚 deal in April last year with Japanese modular housing giant Sekisui House and housing quango Homes England which saw 拢55m invested in its modular housing business.

In a strategic review published alongside the accounts, Urban Splash鈥檚 directors made clear the modular business was 鈥渄emerged鈥� from Urban Splash as part of the deal and that 鈥渘o consideration was received鈥� for the parts of the business sold. This led Urban Splash to record a paper loss of 拢5.2m on the deal.

However, the review also said the deal resulted in new equity investment of 拢27.5m in the modular business, and provision of a new 拢26.75m revolving credit facility, providing 鈥渃apital to fund the growth ambitions of that business and accelerate housing delivery in the UK鈥�.

In the previous year, the modular business had accounted for the majority of Urban Splash鈥檚 turnover 鈥� 拢23.1m out of 拢36.m. The review said: 鈥淎 consequence of the demerger is that property development within the group will reduce in future years below historic levels.鈥�

The accounts, published at Companies House, also revealed that the shareholders in the company, who include the founder and chairman Tom Bloxham, wrote off 拢23.4m of 鈥渋rrecoverable鈥� loans to the company in the period, giving it a much-improved balance sheet.

The firm also said it had now adopted a 鈥渞educed risk appetite鈥� regarding future investments in the business given 鈥渦nprecedented levels of uncertainty and the prospect of a lasting downturn鈥�. This was the result of continued uncertainty over the UK鈥檚 future relationship with the EU as well as the extent of long-lasting effects from the covid crisis.