Resilient year at Bruntwood as underlying performance strengthens in 2020
Bruntwood has reported strong underlying performance in its latest financial year.
The company recorded a growth in its operating profits on an adjusted basis to £40.1m (2019: £38.9m)* while bolstering its cash reserves to £26.3m (2019: £17.1m) and having undrawn facilities of £50m.
Turnover declined year on year to £135.0m (2019: £160.1m) - 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 its 100% owned Bruntwood Works portfolio remained consistent year-on-year at £973.1m with a £21.2m valuation loss recorded as it invested capital to maintain its portfolio’s value position against a backdrop of declining commercial property values.
This accounting loss, together with similar revaluation movements in its Joint Ventures and a prudent increase in its provisioning to safeguard the business from future economic disruption, led the group to post a pre-tax loss of £18.9m (2019: Pre-tax profit of £51.8m).
Rental income continued to perform strongly throughout the months of the pandemic in 2020 and grew overall by 2% during the financial year.
Net asset value decreased to £589m (2019: £614m) as the effects of the pandemic weighed on commercial property values and as Bruntwood continued to progress with its long-term investment into new developments and the transformation of its existing portfolio.
This on-going programme saw it reach several milestones within its Bruntwood SciTech business, a 50/50 joint venture with Legal & General that remains the UK’s largest property platform dedicated to the growth of the science and technology sector, and its Bruntwood Works division.
Bruntwood SciTech’s nationwide portfolio of innovation districts increased in value by £88.6m to £526.8m and turnover grew to £40.1m (2019: £29.8m).
The ongoing expansion and evolution of Alderley Park continued at pace, with the UK’s largest single-site life science campus being selected as the location for one of the Lighthouse Lab national Covid-19 testing centres.
Elsewhere in the North West, Bruntwood SciTech took a 25% stake in Sciontec Liverpool, the public-private partnership supporting the growth of the city’s science and technology sector within Liverpool’s £2bn Knowledge Quarter.
At Manchester Science Park, its Citylabs 2.0 building reached practical completion while work began on the £21m redevelopment of the Base building.
Bruntwood SciTech partnered with the University of Birmingham to develop the new £210m, 675,000 sq ft Birmingham Health Innovation Campus and achieved planning permission for the £33m Enterprise Wharf, which is a new 120,000 sq ft building for its Innovation Birmingham campus.
Within Bruntwood Works, the £50m Pioneer investment programme continued to gather pace with Blackfriars House opening in Manchester in March, and with the city’s first smart-enabled building, 111 Piccadilly, nearing completion.
Pioneer aims to create workspaces that support organisations in their efforts to improve employee wellbeing, social connection and collaboration, and the sustainability of their operations – strategic business priorities that the pandemic has served to accelerate.
In Leeds, Bruntwood Works secured the city’s largest leasing transaction of the year at its West Gate scheme with US customer experience specialist, TTEC. Construction began at Booths Park, Knutsford, for a new 65,000 sq ft home for the cyber security business, PortSwigger and in Birmingham the £1.3m refurbishment of the Grade II listed Cornwall Buildings completed.
Bruntwood Works is also behind the group’s increasing focus on suburban town centre regeneration.
In October 2019, in the latest step in its longstanding partnership with Trafford Borough Council, Bruntwood Works acquired Stretford Mall and Stamford Quarter in Altrincham for £50m.
Bruntwood Works secured planning permission for the new Lumina Village neighbourhood in September 2020. The 12-acre site encompassing the former Kellogg’s headquarters will deliver 750 new homes, 200,000 sq ft of office space and a new hotel.
Commenting on the results, Chris Oglesby, CEO of Bruntwood, said: “The nature of our business means we do not measure success over annual accounting periods but over much longer time-horizons. But despite this, we showed great strength and resilience in 2020, with the underlying performance of Bruntwood improving during the UK’s greatest economic crisis of modern times.
“As the pandemic struck, we worked quickly to deliver a new strategy - stabilise operations, support customers, and manage costs. We accelerated the Works and SciTech propositions to support crucial areas of the economy. We got closer to customers, deepening relationships and navigated the pandemic together.”
The current financial year began with the launch of three new businesses – Unify, Unify Energy and CubicWorks – that effectively in-source the facilities management, fit-out and utilities services Bruntwood can offer to its 2,600 customers.
As part of its strategic partnership with Manchester University NHS Foundation Trust, the city council and Manchester Health and Care Commissioning, Bruntwood began consultations on plans for two new transformational projects at hospital sites in North Manchester and Wythenshawe in December.
In January 2021, Bruntwood Works, in partnership with Trafford Borough Council, unveiled its multi-million pound masterplan for Stretford Mall and town centre that will include reinstating the King Street high street, a village-like mix of open spaces, a ‘Makers Yard’ hub for small independents, waterfront bars, restaurants and new housing.
Bruntwood SciTech plans to expand its asset base to £1.2bn by 2025. Spearheading this growth will be a new chief executive, Kate Lawlor, formerly finance director, who succeeded Phil Kemp in January 2021.
Oglesby continued: “Looking ahead to the rest of this year and beyond the pandemic, we are confident that our business model is perfectly aligned to meet the future needs of our towns, cities and the wider UK economy.
“Over the last 12 months, the science and technology sector has shown its enormous value not just to UK plc but to the global effort to beat the virus. We are excited about announcing SciTech’s on-going expansion into new geographies this year.
“The value of our NHS has also been brought into sharper focus and we’re privileged to be helping create a vision for both a new sustainable health campus in North Manchester and a community healthcare campus at Wythenshawe. Both are exciting opportunities to reimagine how health services are delivered and accessed.
“Within Bruntwood Works – home to our core workspace offering – its forward-thinking Pioneer programme will take in new buildings and new cities. The office needs to become a place that people want to go to in a future where they will no longer have to, and this has long been part of our thinking.
“The pandemic has also seen a renaissance in localism that will endure as working patterns settle into a blend of office and home working. Not only will this create new opportunities to reimagine a new future for our high streets but also bring high quality jobs into suburban locations. Our goal, through our work in areas like Trafford, is to help them become complementary satellites to our thriving city centres.”
* Operating profits are reported on adjusted basis to account for an increase in provisioning to safeguard the business from future economic disruption.