Annual Financial Report

Bruntwood Bond 2 PLC

02 February 2024

 

2 February 2024

BRUNTWOOD GROUP LIMITED

BRUNTWOOD INVESTMENTS PLC

BRUNTWOOD BOND 2 PLC

STATEMENT ON 2023 ANNUAL RESULTS

Bruntwood Group Limited ("Bruntwood") today announces the publication of its 2023 financial statements and a summary of the latest rent collection position. The results cover the year and two days ended 2 October 2023 (the "Relevant Period"), (pre-dating new investment into the Bruntwood SciTech platform (Project Quantum) announced in  October 2023)

Highlights

●    Reported Group operating profit of £48.9m (2022: £31.1m)

●    Shareholders' Funds £453.4m (2022: £671.5m)

●    Further investment of £19.1m of capital

●    Revaluation losses of £(199)m (2022: £35.76m gain)

●    Loss for the year of £(218.5)m (2022: £72.88m profit)

●    Compliant with all loan covenants.

Underlying performance for the Relevant Period was strong with operating profit rising from £31.1m in 2022 to £48.9m for 2023. Bruntwood benefited from high levels of occupancy with rent collection in line with previous years.

However, our bottom line reflected unrealised losses as a result of the revaluation of our portfolio which, under our accounting policy, requires to take any change in valuation to the Profit and Loss Account. Given the economic backdrop and the sharp increase in interest rates, valuation yields have come under unprecedented pressure. Our average valuation yield has moved from 6.74 % to 7.92% which, all other factors being equal, would give rise to a 19% reduction in value. Our portfolio has, however, seen a 17% decrease, with positive movements driven by our activity in increasing rental levels and reducing vacancy.

Chris Oglesby, CEO of Bruntwood, commented

"These numbers are a snapshot of UK commercial real estate for one of its most difficult years in recent memory. Despite us seeing a paper loss created by some sizable valuation shifts, the performance of our portfolio didn't waver, with our operating profit performance pointing to the continuing appeal of our modern, world-class, specialist workspaces for science, tech and innovation-led companies of all sizes.

As a long-term, patient capital operator we have never judged the success of our business over a 12 month accounting period, but instead the impact of our investments into the cities we are part of over many years."

Financial Position

The Group filed its annual accounts for the period ending October 2nd 2023. The full financial statements can be found at:

https://bruntwood.co.uk/our-performance/disclaimer/retail-bond-2025/

Post Balance Sheet Events

On 16^th October 2023, we announced the new investment in the Bruntwood SciTech platform (Project Quantum ) which saw Greater Manchester Pension Fund and Legal and General inject £320m of new equity, alongside increased investment from Bruntwood by way of asset transfer. The deal also facilitated significant de-gearing of the 100% owned group.

As of 31st January 2024, the Group has successfully refinanced its principal loan within Bruntwood SciTech,  providing an additional £100m of capital to fund its capital commitments. The refinancing will enable £26m of deferred consideration on Project Quantum to be paid to Bruntwood Ltd.

Following completion of Project Quantum, Bruntwood Limited reduced its outstanding debt from £615m to £188m. £49m of this debt is entirely secured against Bruntwood's interests in joint ventures with local authorities. Of the remaining debt, £91m relates to the unsecured retail bond due in February 2025 and a £48m three year,  bank club loan which is secured against Property totalling £260m in value. This facility contains an accordion feature which, if exercised, would provide Bruntwood with the ability to refinance the outstanding retail bond at maturity.

As at 31 January 2024 the Group has £11.3m of cash reserves (31 January 2023: £16m), and £2.5m of available undrawn committed facilities (31 January 2023: £40m). In addition, the £26m of deferred Project Quantum funds are due to be received imminently. The retail bond covenants have been tested and met as at September 2023. The covenant testing and compliance certificate can be found on the Bruntwood website (link as above).

ENDS

For further information, please see Bruntwood's website at https://bruntwood.co.uk/or

contact:

Kevin Crotty (Chief Financial Officer) [phone]

Sean Davies (Director of Financing & Investment) [phone]

Patrick King, (Singer Capital Markets)

Mark Glowrey (Allia C&C)

 

END