BRU2 Bruntwood Bd 6%

TIDMBRU2

Bruntwood Bond 2 PLC

15 April 2020

15 April 2020

BRUNTWOOD GROUP LIMITED

BRUNTWOOD INVESTMENTS PLC

BRUNTWOOD BOND 2 PLC

STATEMENT ON COVID-19

Bruntwood Group Limited ("Bruntwood") today updates the market on the impact of the Covid-19 pandemic on its business.

Chris Oglesby, CEO of Bruntwood, said

"Our primary focus is the health, safety and well-being of our employees, whilst working hard to support our customers and other business partners during this challenging period. The Bruntwood team is operational, working at home, with full access to our central systems and communications network.

Financial Position

Following the issue of the Bruntwood Bond 2 plc retail eligible bond in February 2020, there are current cash reserves in excess of GBP25m and undrawn committed available debt facilities of GBP50m. On repayment of the balance of the Bruntwood Investments plc 2013 retail bond in July 2020, we will have an additional estimated GBP68m of unencumbered assets released from security arrangements against which Bruntwood expects to be able to raise additional finance as and when market conditions permit.

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. Valuations would need to fall in excess of 30% and net income by 50% before any covenants are breached. The earliest major bank facility maturity is not until March 2022.

Impact on Operations

Bruntwood benefits from a diverse customer base across a variety of sectors. We appreciate that current circumstances are putting pressure on the cash flows of some of our customers. Where Bruntwood itself is making savings that directly relate to customer space (for example in the running of service charge) we will pass these savings on to our customers. We will also work with customers to help with their cash flow while they are waiting for government payments, predominantly through the deferral of rent or the provision of an incentive on entering new lease terms. We will look at each customer's request for help on a case by case basis, but we do anticipate those larger customers with strong balance sheets and the ability to pay, to continue to pay their rent rather than seeking to pass their rental liabilities on to the landlord.

As at 9th April 2020, 67% of March quarter rents due had been collected compared to 75% at the same date in 2019. We have engaged with almost the entire customer base and to date have received requests for support from customers representing less than 10% of the overall portfolio. The majority of requests relate to the deferral of rent rather than the waiver of liabilities. We are working closely with these customers to reach an agreement, and will continue to closely monitor rent receipts over the coming quarter.

We are continuing with our fully funded pre-let or predominantly pre-let constructions. Major projects at Circle Square and Booths Park continue to progress whilst complying with guidance around social distancing. Work at Citylabs 2 had been paused for two weeks following a national policy decision by the main contractor to shut down work, but it has now been agreed that the development will resume imminently. There are some shortages of materials on site but contractors remain confident that they continue to make progress to resolve such issues.

In order to control costs at a time of uncertain income, the Board has taken active measures to ensure business continuity in the near term. 490 colleagues have been furloughed from a total workforce of 867. The Board has also cancelled all non-essential overhead expenditure and deferred all capital expenditure unless already linked with a committed customer transaction. All dividend payments have been cancelled until the market returns to a more settled state.

Assisting our local communities

Alderley Park is now operating as one of the national Covid-19 testing hubs staffed by medical professionals and volunteers. Universities, research institutes and companies are lending testing equipment to the new laboratory. Samples will be delivered to the hub laboratories from across the country for analysis and we are proud to be working together with the wider science community on such a vitally important project.

We are working with the NHS to provide free access to parking at our sites and we have handed over part of Citylabs on the Manchester Foundation Trust Campus for NHS use supported by Bruntwood colleagues.

We are liaising with our local community partners across the business to develop volunteering opportunities for furloughed staff during the crisis and are constantly reviewing opportunities for further support in the coming months.

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 
 

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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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