The Manchester-based developer and asset manager posted a pre-tax loss of £18.9m for the year ended 30 September 2020, “against a backdrop of declining commercial property values”.
Bruntwood said the value of its 100%-owned Bruntwood Works portfolio remained consistent year-on-year at £973.1m, but it recorded a £21.2m valuation loss as it invested capital to maintain its portfolio’s value as commercial property values declined during the Covid-19 pandemic.
“This accounting loss, together with similar revaluation movements in 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,” the group said in a statement.
Turnover declined 16% year-on-year to £135m due to fewer external consulting and contracting works taking place during the pandemic, Bruntwood added. The decline also reflected the “one-off nature” of the ‘develop to sell’ car park and hotel at Circle Square in Manchester in 2019.
Net asset value dipped slightly to £589m from £614m in the same period of 2019, also attributed to the effects of the pandemic, which “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”.
Bruntwood said that its latest financial results show a “strong underlying performance”, with a 3% uptick in operating profit to £40m and 2% growth in rental income across the portfolio despite the ongoing challenges of last year.
The company said it reports operating profits on an adjusted basis “to account for an increase in provisioning to safeguard the business from future economic disruption”.
Meanwhile, Bruntwood bolstered its cash reserves to £26.3m, from £17.1m in 2019, and has undrawn facilities of £50m, according to the statement.
Growth in operating profit was driven in large part due to a sharp increase in turnover from the Bruntwood SciTech 50:50 joint venture with Legal & General, to £40.1m from £29.8m in 2019, and £88.6m growth in the value of the JV’s portfolio of innovation districts to £526.8m.
The company continues to expand the SciTech network, getting involved in building transformation, town centre regeneration and strategic healthcare property projects across the country.
The ongoing expansion of Alderley Park science campus in Cheshire continued last year, while 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, the Citylabs 2.0 building reached practical completion while work began on the £21m redevelopment of the Base building.
This year’s results also include the acquisition by Bruntwood Works and Trafford Council of Stretford Mall – plans for which were unveiled this month – and the Stamford Quarter in Altrincham for £50m in October 2019.
Chris Oglesby, chief executive 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, based on stabilising operations, supporting customers and managing 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.”
Bruntwood also launched three new businesses during this financial year – Unify, Unify Energy and CubicWorks – that effectively in-source the facilities management, fit-out and utilities services the group can offer to its 2,600 customers.
The group saw its pre-tax profits fall by more than 55% in 2019, its previous financial year, following a profit spike the previous year when it formed the joint venture with Legal & General.