The firm which launched the regeneration of Newcastle’s Stephenson Quarter has posted a boost in operating profits and turnover as it bounces back from the pandemic.
Clouston Group started the multimillion-pound drive to develop the derelict patch of land behind Central Station, leading to the creation of the Crowne Plaza Hotel, the Boiler Shop event space and Rocket office scheme and car park and the UTC, all of which are now operated through group subsidiaries. In June 2018 Newcastle City Council ended its contract with Clouston and a joint venture is now developing the next phase of the development, which will include new modern offices the Pattern Shop and The Pioneer.
Accounts for Clouston Group covering 2021 have now been published, in which turnover more than doubled from £3.4m to £7.6m, while the previous year’s operating loss of £1.99m was converted to profit of £446,929.The overall loss for the year was narrowed from £4.1m to £1.75m.
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The accounts report details how each of the group’s businesses were impacted during the Covid-19 lockdowns
It said its 251-bed Crowne Plaza hotel, now managed by Interstate, had seen improved trading performance but the pandemic had a major detrimental impact on the business, with a 74% reduction in revenue to £2.8m for 2020. However, business picked up in the latter stages of 2021, with the firm saying “Performance for the remainder of the year was encouraging, with revenue increasing to £6.2m which was in excess of initial expectations and was aided by a significant rise in domestic tourism as a result of families forgoing overseas holidays and remaining in the UK.
“Whilst not yet back to previously achieved levels, the business also saw significant gross margin improvement, from a break even level in 2020 to £2.9m.”
Its events space Boiler Shop also saw a significant reduction in revenue in 2020 as a result of lockdowns, but it reopened for socially distanced events when restrictions were relaxed in May 2021, operating with a reduced capacity until restrictions were lifted in July. Since then, while it has traded well it has been impacted by inflation. It generated revenues of £1.1m during the year, up from £300,000 and incurred a net loss of £0.1m.
In the report, directors said: “Trading performance to the end of the year was encouraging although inflationary pressures have arisen since the year end which persist at the date of approval of these financial statements and which present further potential challenges for the business as the Boiler Shop relies for part of its income on bar sales, which could be impacted by the current cost of living crisis.
“However, because this is an arts and meetings venue it does not appear to be adversely affected in the way that bars and pubs are reporting. The venue operates ticketed events and to date the directors have not seen a fall off in sales. In addition to the arts, it will now start to build the daytime meetings and events business working with its sister company, Stephenson Hotel Limited, to add value to both businesses.”
Meanwhile, the Stephenson Quarter car park is set to be handed to the council. Clouston has operated the 357 space multi-storey car park with rent payable to Newcastle City Council, but has said that it has not been able to reach its full potential for a numbe of factors. It said the council “have entered into an agreement to develop the remaining areas of the Stephenson Quarter and require full control of the car park to support the development of offices and reduce building costs.”
Following publication of the accounts, the group said: “The multi-storey car park was an investment required by Newcastle City Council to stabilise the Metro line and create parking to serve the Stephenson Quarter office development and job creation programme. Thus far, trading losses have been incurred through a combination of factors: the pandemic, as yet incomplete development of Stephenson Quarter, and being prevented from appointing industry leaders as operational managers who would have installed number plate recognition, parking apps and charging points.
“However, the losses must be seen in context and offset against the potential saving of circa £16,000,000, which would otherwise have to be spent to provide parking underneath office development in future phases, and the value as essential infrastructure holding up the southwest corner of Stephenson Quarter. We welcome the surrender of our sublease and wish Newcastle City Council well with its management.”
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