Bruntwood Bd 6% Regulatory News (BRU2)

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 £40.1m (2019: £38.8m) and cash reserves increased to £26.3m (2019: £17.1m).

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 £26.1m of cash reserves, £40m of undrawn committed available facilities and £68m 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 £68m 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

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.