Exclusive: Downturn sees profit take a tumble at Sanderson

Pre-tax profit for the year to the end of April 2011 was £700,000 compared to £1.5m the previous year. Turnover went down by 10 per cent from £14.6m to £13.1m.

The company, which is headquartered in Leeds and has offices in Teesside, Newcastle, Manchester and London, provides services including valuations and rating, agency and investment, building consultancy, planning, asset management and landlord and tenant, corporate services and plant and machinery valuation and sales.

Between 2006 and 2009 turnover was stable at £18m but the company, along with other property firms, has felt the effect of the recession over the last two years.

Finance director Martin Archer said: “We had established a very firm pattern of trading but over the last two years the recession has bitten into our business.

“Development projects tend to work on a longer timescale and in terms of bank lending, banks over the course of the last two years have continued to be cautious as to what they put into new projects, which knocks into the valuation and agency sides of our business, which are massively down in volume.”

He added: “While on paper the recession has ended, what hasn’t ended is a lot of caution from the banks so there is less business around.”

While the business has continued to be successful in its “backbone” trade of asset management, the steady income stream has been hit by a number of client insolvencies, particularly in the North East.

Meanwhile, the agency, building surveying and valuation departments have found it difficult to maintain traditional levels of profitability due to the lack of transactions.

The corporate/insolvency team was the most successful department last year and rating surveyors have had a successful period in most areas too.

Mr Archer said the Leeds agency team has built up an “impressive” retail and commercial portfolio and is “poised” to take advantage of this as soon as confidence returns to the market.

Its portfolio includes City Square House adjacent to Leeds Train Station on Wellington Street, which aims to offer 174,000 sq ft of prime office accommodation in the heart of Leeds once it is built. Sanderson Weatherall is also signed up to No. 1 Riverside Way in Leeds, which plans to create a 60,000 sq ft office building. It is the third in a series of eight buildings within the Whitehall Riverside masterplan.

“There is no shortage of people wanting to do things,” said Mr Archer. “The book looks very strong, and once transaction timescales start to accelerate again we will return to full force.”

Mr Archer said Sanderson Weatherall, which employs 190 staff including 90 in Leeds, has taken a number of measures to remain competitive in the current market place, such as reducing the size of some of its offices, including Wellington Street in Leeds where it now occupies four floors of the building instead of five.

Two years ago the company reduced its workforce from 250 but it did not make any redundancies last year. “Last year we judged where the level of turnover would get to and we got it about right,” said Mr Archer.

Although Sanderson Weatherall struggles to compete against the major players in the London market, the regional offices remain profitable. Its mergers and business acquisitions arm is most active in Manchester and has expanded with the opening of a new asset based finance department.

Looking to the year ahead, Mr Archer said: “We are budgeting very cautiously indeed and we have taken the initial view that in 2011/12 the volume of trading will be the same as last year.

“The indications are that the market will be a little bit better but we are certainly not expecting or relying on anything like a quick recovery. If we do start to see a recovery in the year, it will come as a bonus.”

New head of leisure

Sanderson Weatherall has promoted Adam Burkinshaw to head of leisure.

Mr Burkinshaw’s appointment follows a number of leisure deals during 2010, including the sale of Southshore Holiday Park in Bridlington, three caravan parks in Lincolnshire, and the acquisition of a £10m Premier Inn by the London office.

Mr Burkinshaw said: “Despite a difficult time for all in property over the last two years we have benefited from our strong reputation amongst our established client base, providing professional strategic and advisory services across the sector. This and the resultant involvement in several high-value leisure transactions has prompted us to raise our profile, strategically growing the department so we can continue to offer our clients a first class service.”