TIDMBRU2
Bruntwood Bond 2 PLC
29 January 2021
29th January 2021
BRUNTWOOD GROUP LIMITED
BRUNTWOOD INVESTMENTS PLC
BRUNTWOOD BOND 2 PLC
UPDATE STATEMENT ON COVID-19 RENT COLLECTION AND ANNUAL
RESULTS
Bruntwood Group Limited ("Bruntwood") today updates the market
on the impact of the Covid-19 pandemic on its business, including
the publication of the 2020 financial statements and a summary of
the latest rent collection position.
Chris Oglesby, CEO of Bruntwood, said
"Footfall in our buildings continued to increase steadily in the
autumn of 2020 as our "return to the workplace" programme and
assurance assessment from the British Safety Council gave people
the confidence they needed to come to our COVID secure spaces. Our
customers and colleagues repeatedly informed us how beneficial the
opportunity had been to supporting their collaboration, creativity
and cultures. Most went back to remote working during the November
national lockdown though footfall returned strongly again when we
returned to the regional tiering system. Since the start of
January's national lockdown we and most of our customers are
largely operating remotely although our buildings remain open to
support those who cannot work from home. We're confident that we'll
once again see large numbers return to our workspaces once lockdown
restrictions ease and as the vaccination programme continues its
encouraging progress. Our experiences over the summer and autumn of
2020 means we can help our customers to scale-up safely once
again."
Financial Position
Today, the Group filed its annual accounts for the year ending
September 30th 2020. Despite the challenges presented by the
pandemic, underlying performance improved year-on-year. Key
highlights include:
Operating profit on an adjusted basis - excluding the impact of
an increase in debtor provisioning - grew to GBP40.1m (2019:
GBP38.8m) and cash reserves increased to GBP26.3m (2019:
GBP17.1m).
Turnover declined year on year to GBP135m (2019: GBP160.1m)
reflective of the one-off nature of the 'develop to sell' car park
and hotel at Circle Square in 2019 and fewer external consulting
and contracting works taking place in the pandemic
The value of the Group's 100% owned Bruntwood Works portfolio
remained consistent year-on-year at GBP973.1m with a GBP21.2m
valuation loss recorded as capital was invested to maintain the
portfolio's value position against a backdrop of declining
commercial property values.
This accounting loss, together with similar revaluation
movements in our Joint Ventures and the prudent increase in debtor
provisioning, led the Group to post a pre-tax loss of GBP18.9m
(2019: Pre-tax profit of GBP51.8m).
Net asset value decreased to GBP589m (2019: GBP614m) as the
effects of the pandemic weighed on commercial property values and
as we continued to progress with our long-term investment into new
developments and the transformation of our existing portfolio.
The full financial statements can be found at:
https://bruntwood.co.uk/our-performance/disclaimer/retail-bond-2025/
As of 20th January, the Group has GBP26.1m of cash reserves,
GBP40m of undrawn committed available facilities and GBP68m of
unencumbered assets upon which further finance could be
secured.
The Board has modelled various scenarios including reviewing
estimated customer default rates, lower retention rates, higher
concessions and valuation yield movement. Based on the output of
these models, The Board considers there to be sufficient income and
valuation headroom across Bruntwood's debt facilities and does not
expect Bruntwood to breach any terms relating to them. We have
modelled the forecast covenant performance on each loan facility.
Valuation covenant headroom is in excess of 35% on the majority of
our facilities and in excess of 25% on our NatWest Club facility.
Income would have to fall by over 35% on all of our facilities
before any interest cover covenants are breached. In addition, we
would expect that the existence of GBP68m of unencumbered assets
would provide the resources to remedy any breaches in such
circumstances. The earliest major bank facility maturity is not
until March 2022.
The 2025 bond covenants have been tested as at September 2020
and are met with significant headroom. The covenant testing and
certificate are reported on the Bruntwood website (link as
above).
Impact on Operations
As of 20th January 2021, 93% of June quarter rents and 95% of
September rents were collected with the balance being on payment
plans or being actively pursued at the date of this announcement.
If we exclude retail customers, the relevant metrics increase to
96% of June rent and 96% of September.
As at 26th January 2021, 83% of December quarter rents had been
collected (85% excluding retail). This is ahead of the March / June
quarters at a comparable point but behind the 87% collected at the
same date for the September quarter. We continue to speak with all
our customers on a regular basis and work with every customer to
support them as far as possible through these challenging times. We
will continue to work closely with all customers and where support
is required we will seek to reach a fair solution for everyone.
Strong cash collection and a focus on controlling non-essential
expenditure has ensured that the business continues to run cash
positive before capital outlay is taken into account. Retention
levels remain strong and vacancy levels have increased slightly
during the December quarter period to an average of 9.3% compared
to 8.5% for the September quarter, still below the long term target
of 10%.
The 400,000 square foot first commercial phase of Circle Square
(part of the SciTech JV with Legal and General) is expected to
reach practical completion in February 2021. The timing has been
delayed by 3 months due to the impact of Covid on the construction
teams. The majority of space is prelet. Future phases and further
development schemes will only proceed based on the achievement of
pre-let hurdles or equivalent de-risking mechanisms. All of our
current major development schemes are pre-funded with any equity
requirement having already been injected.
Bruntwood has engaged Peel Hunt and Allia C&C to organise a
series of bondholder update calls in February 2021 to update
bondholders on the Group's results and trading performance.
Interested parties should contact Patrick King at Peel Hunt and
Mark Glowrey at Allia C&C on the contact details given below. A
copy of the presentation for bondholders will be made available on
Bruntwood's website ahead of time.
ENDS
For further information, please see Bruntwood's website at
https://bruntwood.co.uk/ or contact:
Kevin Crotty (Chief Financial Officer) +44 (0) 161 212 2222
Sean Davies (Director of Financing
& Investment) +44 (0) 161 212 2222
Patrick King (Peel Hunt) +44 (0) 203 597 8622
Mark Glowery (Allia C&C) +44 (0) 203 039 3465
Forward-Looking Statements: This announcement contains certain
forward-looking statements with respect to Bruntwood's expectations
and plans, strategy, management objectives, future developments and
performances, costs, revenues and other trend information. These
statements are subject to assumptions, risk and uncertainty. Many
of these assumptions, risks and uncertainties relate to factors
that are beyond Bruntwood's ability to control or estimate
precisely and which could cause actual results or developments to
differ materially from those expressed or implied by these
forward-looking statements. Certain statements have been made with
reference to forecast process changes, economic conditions and the
current regulatory environment. Any forward-looking statements made
by or on behalf of Bruntwood are based upon the knowledge and
information available to Directors on the date of this
announcement. Accordingly, no assurance can be given that any
particular expectation will be met and Bruntwood's bondholders are
cautioned not to place undue reliance on the forward-looking
statements. Additionally, forward-looking statements regarding past
trends or activities should not be taken as a representation that
such trends or activities will continue in the future. Other than
in accordance with its legal or regulatory obligations (including
under the UK Listing Rules and the Disclosure Guidance and
Transparency Rules of the Financial Conduct Authority), Bruntwood
does not undertake to update forward-looking statements to reflect
any changes in events, conditions or circumstances on which any
such statement is based. Past bond performance cannot be relied on
as a guide to future performance. Nothing in this announcement
should be construed as a profit forecast. The information in this
announcement does not constitute an offer to sell or an invitation
to buy securities in Bruntwood or an invitation or inducement to
engage in any other investment activities.
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END
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