Annual Review 2012 by Bruntwood

Creating places for business success Annual Review 2012

Contents

3 Bruntwood at a glance an introduction to bruntwood and an overview of our portfolio

5 Trusted to deliver report from chief executive, chris oglesby

14 Performance across the business success in our existing markets and opportunities for future growth

45 Making a difference creating a positive impact within our cities, our communities and the wider environment

57 Our financial performance a summary of what weâ&#x20AC;&#x2122;ve achieved financially in the year to 30 september 2012

65 The long view a sense of perspective from chairman, michael oglesby

Exchange Court, Liverpool

City Tower, Manchester

Bruntwood at a glance

About us

110

Bruntwood is a family-owned and run property company that specialises in creating the right places for businesses to succeed. From a single desk for a day to a whole building for 25 years, we have solutions to suit a wide range of requirements.

TOTAL NUMBER OF PROPERTIES IN OUR PORTFOLIO

6.2m TOTAL OWNERSHIP IN SQ FT

2114 TOTAL NUMBER OF CUSTOMERS

With over 110 properties across four UK cities, we provide office space, serviced and virtual offices, meeting rooms and retail premises to companies across a range of different business sectors.

2033 TOTAL NUMBER OF SERVICED DESKS

We don’t see ourselves as a landlord but rather as our customers’ property partner, making sure that their choice of premises adds the best possible benefit to the way their business works.

200

Over our 36-year history, we have developed a proven business model based on an innovative approach to property development combined with a single-minded focus on the needs of the customer. We develop, let and manage all our own properties, allowing us to seamlessly control the whole experience to make sure it meets customers’ expectations at every stage.

TOTAL NUMBER OF RETAIL UNITS

78 TOTAL NUMBER OF MEETING ROOMS

The Plaza, Liverpool

Blackfriars, Manchester

Chief Executive’s Report: Trusted to deliver

Trust in your brand is one of the major factors that affects whether customers choose to do business with you. In the past, property decisions have been focussed around where a building was and how well it was presented. In the current climate, factors such as how well it is managed and how flexible the owner is likely to be with you as your needs change are just as important. Prospective customers are now asking questions, not just about the property, but about the people who own and run it.

Chris Oglesby, Chief Executive

It’s at times like these that the strength of the Bruntwood brand comes in to play. Our customers associate our brand with certainty, with confidence – they trust us to deliver. Across all walks of life, people want to have a better understanding of the companies they are doing business with. From funders and politicians to suppliers and customers, who you are and what you stand for are now just as important as the state of your balance sheet.

At Bruntwood, we don’t describe ourselves as a landlord, but as a company that ‘creates places for business success’. This signifies to both our customers and staff that the success of our business is entirely dependent on creating the right conditions for our customers to succeed. Everything we do is aligned to this goal.

Driving growth

The comfort and sense of certainty that Bruntwood provides has been a key driver behind what has been our strongest year for new lettings since 2007. This is against the backdrop of the market also having its best year since 2008, but our increase in market share proves the attractiveness of our brand offer within the marketplace.

Pictured: above left; Oxford Place, Manchester. Above right: Queens Buildings, Liverpool. Right: St James’, Oxford Street, Manchester

£950m VALUE OF FIXED ASSETS IN 2012

£105m TURNOVER FOR 2012

Our lettings performance and focus on driving greater efficiencies throughout the business are reflected in a 10% increase in the company’s profitability, an encouraging result against such a difficult economic backdrop and an indication that recovery could be on its way. With the Euro Crisis draining the confidence out of the market, we had a difficult start to the financial year, but a concerted focus on sales from the whole business enabled us to drive significant volume growth from January through to the end of September. This has continued through the end of the calendar year, providing a very positive beginning to 2013.

Despite an encouraging profitability performance our net worth is down by 5%. Rather than an accurate reflection of the marketplace, this is a knock-on effect of the negative perceptions resulting from so much air time and column inches devoted to telling us how bad things are. Negative sentiment has a major effect in the property world in the same way it does in any other investment market and, without a proper understanding of the dynamics of our regional economies, it is no wonder that the London-centric perceptions within our industry have resulted in the biggest difference between office yields in London and the regions that I have ever known.

Just as our customers are having to discount their services to get business, we have continued to find ways of saving costs and offering better value to achieve lettings in what remains a very competitive market. As the supply and demand picture in each of our markets is starting to stabilise, we expect to see margins and profitability improving with a reduction in the amount of discounting required to win new business.

And yet demand in the office markets of our major regional cities is undoubtedly greater than it has been for some time. We already have a very strong pipeline of new lettings for 2013 and half of our customers with approaching breaks or expiries are already secured on new leases. At the end of our financial year, our run rate was as high as it has ever been, giving us a head start for the year to come.

£12.4m PROFIT FOR 2012

£303m NET WORTH

+10% INCREASE IN PROFIT FOR 2012

In it for the long term

Securing the future

Our strategy of continuing to invest in our portfolio to ensure that it is at its operational and aesthetic best is a major differentiator and source of competitive advantage in the marketplace. Although it appears a contradiction to be talking about investment in a climate of austerity, we believe we continue to strike the right balance. We have focussed on reducing our operational expenditure to make sure we can offer our customers the cost-effective space they’re demanding from us, whilst at the same time continuing to invest through the downturn to be able to offer good quality product to the market. In the last financial year we have refurbished over 500,000 sq ft of space, repositioning a number of our major properties and, as a result, attracting significant numbers of new customers. As important as new lettings are, it’s the long-term relationships with our existing customers that are vital to the Bruntwood way of doing business. To us, a customer’s lease is with Bruntwood, not with a building, so that gives them the comfort of knowing they have the flexibility to grow and change as their business needs change.

Pictured below left: the newly-landscaped gardens at Riverside, Salford. Below right: the brand new reception area created for Weightmans at The Plaza in Liverpool. Right: the newly-refurbished Portland Tower, renamed as Manchester One

In the last financial year we have retained over 75% of our customers with a lease break or expiry, which is no mean feat in what has undoubtedly been a buyer’s market. Part of this success is down to our ability to offer our existing customers highly-attractive, newly-refurbished space to meet their changing requirements. Equally, the drive by our customer service teams to deliver better value and improved service levels in an environment where other landlords are cutting back has played a significant part in our customers choosing to stay with Bruntwood. It is also worth noting that in the last financial year we have only lost 1% of our customer base to bad debt whilst over 38% of the square footage we have let has been as a result of existing customer expansions. This is yet further evidence that the economies of our regional cities have proved significantly more resilient than media headlines would have us believe.

One of Bruntwood’s continuing strengths is its relationships with its lenders and the value of its brand in the financial markets. As a result of the continued support of our banks, we have been able to keep investing in our portfolio. We are very aware of the difficult position the banking industry finds itself in at present; whilst there is still significant liquidity in the markets, the terms on which that funding is available are tighter. Regulators are limiting the banks’ ability to lend whilst at the same time politicians are berating banks for not lending enough. There was an undoubted need for the sector to clean up its act, but market forces are doing this quite effectively. The time for further regulation will come, but restricting lending at a time when the economy is still fragile runs the risk of stifling growth and creating far more of a problem than the one that regulation is trying to prevent. Despite this, our positive discussions with existing and new financial partners have resulted in us securing the necessary long-term financing for our business. We have agreed a new £120m facility with Legal and General and have extended c£230m of our securitisation until 2016. In addition, we are in advanced discussions with our existing banking partners, RBS, HSBC and Barclays, who together are likely to refinance our remaining £240m of debt. This is another area where the strength of our brand comes to the fore. Funders are increasingly interested in the strength of the management and governance of the organisation they are lending to as much as they are in the property that the loan is secured upon. The strength of our team, our brand and our business model, coupled with our 36-year history of covenant compliance continues to be a major source of competitive advantage in funding our business – more so now than ever before.

402 NO OF PROJECTS IN 2012

£22m INVESTED IN THE PORTFOLIO IN 2012

The importance of the regions

From the evidence we’re seeing in Manchester, Liverpool, Leeds and Birmingham, there’s a much fairer wind blowing through the regional city economies than the media would have you believe. Manchester is the most notable indicator, with the city reinforcing its role as an economic powerhouse with a 20% population increase in the 2012 census, more than three times the national average. In Liverpool, we have more large enquiries than at any stage in our time in the city and this is matched by the strong demand we are starting to see in Birmingham and in Leeds. One significant factor influencing this trend is ‘onshoring’, where companies are bringing shared service centres back to the UK as a result of increasing costs and service concerns from overseas operations. Regional cities are cost-effective places to locate

The third influencer in the move to the regions is ‘City Appeal’ – cities are the places where people want to be. Manchester’s population growth is primarily coming from just the type of demographic that a thriving economy needs – graduates and young professionals. Businesses are therefore locating themselves in cities like Manchester because they want to be at the centre of the talent pool, which, in turn, means that cities offer better jobs and attract more talented people, thereby creating a virtuous circle. Even the type of people that companies want to attract is changing, as raw talent becomes a more important requirement than the traditional CV staples of a good degree and bluechip experience. For the creative and technological companies who will drive our future economic growth, the people they are looking for are more diverse, more personnally-motivated and more likely to be based in a regional city than in the increasingly-expensive South East. Our regional cities are also becoming more international. New foreign markets are driving growth in our domestic customer base, whilst foreign companies are realising that they don’t need to make London their main UK location: with a top tier airport like Manchester’s, they can have all the necessary global links they need.

and the availability of quality staff means that service standards – and the resulting customer satisfaction – can be improved. ‘Northshoring’ is another notable factor, with RBS moving a number of investment banking jobs from London to Manchester and Deutsche Bank following suit in Birmingham. Companies can still have a London presence, but locating much of their operation close to an accessible, lower-cost talent pool makes more financial sense.

Investment in the new northern rail hub will also extend that global connectivity to Leeds and Liverpool, putting all three cities within a half hour travel-time to Manchester Airport – no different to the journey to London on the Gatwick Express. Together, Manchester, Leeds and Liverpool can create an economic ‘supercity’ zone that is big enough to compete with any other economic area in Europe. In the last 20 years, our regional cities have had to completely restructure their economies. Having done so, they are now poised to become some of the best places in the UK to support the businesses of the future.

The key to our success Clearly recessions have major downsides, but there are some positives that can come out of them. Throughout the good times and bad it is the calibre of Bruntwood people that have been the key to our success. You can tell the strength of an organisation by how it responds when things get tough and the team at Bruntwood have risen to the challenge and delivered some remarkable results. Not only have we sharpened up our performance, we have continued to improve our organisational culture, embedding our brand in everything we do.

Our belief in good relationships, our strong financial discipline and our long-term strategic focus have stood us in good stead throughout our 36-year history and will undoubtedly carry us through the challenging times ahead Chris Oglesby, Chief Executive

Performance across the business In what is undoubtedly one of the most difficult market situations faced by the property sector in many years, Bruntwood has achieved one of its best-ever sales performances. Our highly-focussed approach to reducing our vacancy levels has delivered just over 600,000 sq ft of transactions in 2012, representing our best year since 2007. Our retention statistics have come in at over 75%, almost four times the industry average. With many deals still in the pipeline at year-end, we look forward to an encouraging start to the next financial year. Success across the business has come from a range of initiatives we have taken in 2012 to â&#x20AC;&#x2DC;fill the voidâ&#x20AC;&#x2122;, from the redevelopment and repositioning of parts of our portfolio, to the strategic development of new products targeted at customers in new markets. In this section we explore these in more detail, with some examples of our key success stories.

600,000 TOTAL SQ FT LET ACROSS THE PORTFOLIO IN 2012

173 NUMBER OF DEALS AGREED IN 2012

78 NUMBER OF CUSTOMER EXPANSIONS IN 2012

City Tower, Manchester

Success in sales and retention 2012 began with a relatively high level of vacancy in the business, a legacy of the loss of a number of public sector occupants in 2010 and 2011. We saw this as both a challenge and an opportunity.

Meeting our customers’ needs At Bruntwood, we develop, let and manage all our own properties, giving us the maximum control over both the quality of product and the quality of service our customers receive. This has provided us with the technical knowledge, the operational expertise and the depth of customer insight to create exactly the right sort of places to help businesses succeed. By always developing our buildings with the customers’ needs at the heart of what we do, we ensure we always have a supply of the right product to meet what the market demands.

The vacancy created in our portfolio in 2010 presented us with a number of ideal opportunities to redevelop and reposition certain key buildings. With that reinvention, we have attracted new customers and also created the right space to satisfy the changing requirements of existing customers as they come to lease break points or expiry. With a business-wide focus on delivering these redevelopments to time, to budget and to a reliably high-quality standard, we have ended the year with the majority of our significant voids now filled.

Investing in long-term relationships When we buy or develop a building we put down roots, seeing it as a long-term investment, rather than a short-term turnaround solution. A number of our properties are now being redeveloped and refurbished for the second time in our ownership history, as we recognise that they must continually evolve to meet the needs of the market place. We take the same view with our customers as we do with our buildings – we’re in the relationship for the long term. We make it as easy as possible for customers to move within our portfolio as

their needs change and therefore actively retain an amount of vacant space so that we have available capacity to move customers around to suit their individual requirements. We are constantly working to drive better value for our customers too, not by cutting back on services, but by investing in more efficient systems and better ways of operating. Our belief in treating our customers’ money as our own is one of the factors in our average service charge costs falling in real terms for the fourth year in a row.

An eye on the bigger picture Pictured: Bruntwood Front-of-house Supervisor Sergio Bastos with Gillian Nutt, Customer Service Manager at Amey, the public sector infrastructure services provider who moved into new offices at City Tower during 2012

In our view, successful place-making doesn’t just start and end at the front door of our buildings. The quality and amenity of the immediate environment has a major impact on customers choosing to occupy a Bruntwood building. That is why we have worked in partnership with public sector partners in projects such as the redevelopment of New York Street, where we completely transformed the streetscape in order to increase the appeal of our cluster of buildings in the immediate vicinity.

At Riverside, we have created new green walkways that connect the complex to the city centre and have also recently agreed the development of a new-build Hotel La Tour on adjacent land in order to enhance the local environment. At the heart of this is a belief that the performance of our business is inextricably linked to the success of not just our customers’ business, but to the success of our cities themselves. We will continue to work to ensure that everything we do is contributing to that success.

Performance across the portfolio Manchester city centre

Greater Manchester

Birmingham

Liverpool

Leeds

In our Manchester city centre portfolio we have seen lettings increase by 20% from 2011, giving us over 28% of deals done in the marketplace this year.

Our Greater Manchester portfolio has seen a significant uplift in activity in 2012, with a string of lettings putting our sales up 32% on 2011. Despite these markets becoming more competitive as businesses focus on driving better value from their office premises, the quality and flexibility we provide is winning through. Notable successes have included deals with Mastercard and Medline Industries at Knutsford, following our refurbishment of No.5 Booths Park. In Bolton we have had a run of deals at Atria, taking the building from 50% to full occupation within 12 months, all against the backdrop of a very challenging local market.

The major activity in our Liverpool portfolio has been the continuing success of our flagship building, The Plaza, and a spate of small suite deals, particularly at the recentlyrefurbished Oriel Chambers and Cotton House.

Our high occupancy rate in Leeds means that our main challenge is having the product to meet demand.

Our long term strategy of investing not just in our buildings but in the environment around them has paid dividends at recently redeveloped properties such as Riverside and City Tower, which have both seen deals amounting to over 100,000 sq ft in each individual building.

In Birmingham, the main story has been the acquisition of Centre City, a landmark office building next to New Street Station. With over £650m worth of investment planned in New Street in the near future, including a flagship £100m John Lewis store, Centre City could not be better placed to take advantage of the improved appeal of this part of the city.

Our redevelopments in the city centre have also been at the right scale to take advantage of the demand for larger floor plates from companies who are merging offices into one northern HQ with the right location and amenities to attract and retain a skilled staff base. With the redevelopment and relaunch of Portland Tower as Manchester One at the end of 2012, we should see our city centre lettings success continue into the next financial year.

+25% INCREASE IN LETTINGS FROM 2011

78 NUMBER OF CUSTOMER EXPANSIONS IN 2012

78% CUSTOMER RETENTION RATE

x 3.9 HOW WE OUTPERFORM THE NATIONAL AVERAGE FOR CUSTOMER RETENTION

3,030,500 TOTAL SQ FT IN PORTFOLIO

For 2013, we are looking at further refurbishment and expansion at Booths Park in order to meet the increasing demand for this self-contained business destination in the Cheshire countryside.

1,481,000 TOTAL SQ FT IN PORTFOLIO

NUMBER OF DEALS AGREED IN 2012

28% PROPORTION OF TOTAL DEALS DONE MANCHESTER CITY CENTRE IN 2012

28 NUMBER OF CUSTOMER EXPANSIONS IN 2012

+20%

+32%

INCREASE IN LETTINGS FROM 2011

Timing our refurbishment plans with upcoming lease breaks have allowed us to get ahead of the curve in attracting and retaining significant business at Centre City, from the 30,000 sq ft deal we have done to bring the national Tribunals Service to the building to the retention of Legal and General within the building by moving them into 50,000 sq ft of newly refurbished space. The appeal of Bruntwood’s product in the Birmingham market continues to grow as our brand becomes more established in the city.

445,000 TOTAL SQ FT IN PORTFOLIO

78% CUSTOMER RETENTION RATE IN BIRMINGHAM

£1.8m INVESTED IN PORTFOLIO IN 2012

160,000 SQ FT OF SPACE REFURBISHED IN 2012

The major let at The Plaza to Weightmans at the cusp of 2011/12 has seen us undertake a major refurbishment of part of the building to create the legal firm’s own self-contained part of the property, with a high-spec signature reception area. Elsewhere within the building, the ongoing rolling refurbishment of the office suites within The Plaza continues to attract new lettings from both new and existing customers, against the backdrop of a very tough marketplace within the city.

Our focus continues to be on bringing new product to market and we have acquired a new property adjacent to our highly popular West One building in the city’s West End. This has improved service levels for these new customers and increased the size of the estate by more than 35%, providing much-needed customer expansion space. Our major development project in the city is City House, a landmark building above Leeds main railway station. We are working with Network Rail in preparing a masterplan to transform this important gateway, combining our Grade A office plans with a new retail and leisure offer for the city.

Looking forward, the scale and scope of our portfolio in Liverpool gives us the right product to satisfy demand across all price points. With the growing reputation of our brand in the city we anticipate increased growth in 2013.

Another Leeds milestone in 2012 was the completed redevelopment of Hepworth Point into a new Premier Inn for Whitbread. We have since sold-on the property at a yield of 5.75%, releasing funds for further investment across the portfolio.

883,000 TOTAL SQ FT IN PORTFOLIO

34 NUMBER OF DEALS AGREED IN 2012

44% PROPORTION OF TOTAL DEALS DONE LIVERPOOL CITY CENTRE IN 2012

£3m INVESTED IN PORTFOLIO IN 2012

359,000 TOTAL SQ FT IN PORTFOLIO (INCLUDING CITY HOUSE)

£4.5m INVESTED IN PORTFOLIO IN 2012

133,000 SQ FT OF SPACE UNDER DEVELOPMENT

89% OCCUPANCY RATE OF LEEDS PORTFOLIO (EXCLUDING CITY HOUSE)

CASE STUDY: SUCCESS IN ATTRACTING NEW CUSTOMERS

Filling the void City Tower, Manchester

When Bruntwood bought City Tower in 2007, it was in the knowledge that fourteen floors of the building were due to become vacant with the planned relocation of a number of large public sector organisations. Rather then seeing this as a negative, it presented us with a major opportunity to give 120,000 sq ft of space a major overhaul, as Sales Director Andrew Butterworth explains. “The first thing we did was comprehensively redevelop the exterior and the common parts to a very high standard, which gave the building more of a ‘flagship’ status,” says Andrew. “That generated a real return in terms of new deals and increased interest in the property, but until the government departments finally vacated in 2010, we didn’t have the chance to get many of the office suites up to scratch. By the end of 2012, we’d refurbished just shy of 120,000 sq ft of space – and most importantly managed to let the vast majority of it as well.”

120,000 SQ FT OF REFURBISHED SPACE COMPLETED BY SEPTEMBER 2012 AT CITY TOWER Pictured: Bruntwood space planner, Damian Swift discusses the fit-out of a new customer office at City Tower

14 NUMBER OF DEALS COMPLETED IN 2012

In what is an unprecedented achievement, for the Bruntwood sales team, 14 deals have been achieved in one building in one year. “Having such a large amount of newly-refurbished space means that we have had the right product to facilitate the expansion of existing customers who have outgrown their current premises,” adds Andrew. “For example, Hempsons Solicitors has relocated to City Tower from space in Portland Tower (now Manchester One) which we originally let to them fifteen years’ ago.” The space vacated by our expanding customers, in turn, becomes ripe for refurbishment, creating a virtuous circle where properties are continually being updated to meet the evolving needs of businesses. “The concentration of our portfolio means that we can flex to meet customers’ needs as long as we have the quality space to move them into,” explains Andrew. “Moving one customer from a smaller space in Riverside to a larger one in City Tower has released a space that has allowed us to make a much bigger letting in Riverside. It’s a win-win situation.” And the secret of City Tower’s sales success? “The level of support we offer customers is a big factor,” says Andrew. “From making their first enquiry, to planning their office layout, to the completion of the finished fit-out, we are there for them every step of the way.”

105,000 SQ FT LET AT CITY TOWER IN 2012

95% OCCUPANCY RATE AT CITY TOWER AT END 2012

CASE STUDY: SUCCESS IN CUSTOMER RETENTION

A focus on flexibility Bosch Communications Center, The Plaza, Liverpool

The Plaza is one of Bruntwood’s most popular buildings in Liverpool and, after evaluating a myriad of other options, it was a logical choice for John.

With a growing business and a lease break on the horizon, existing Bruntwood customer, Bosch Communications Center decided to take a look around at what the marketplace had to offer. “Starting in 2011, we did a fairly intensive scour of what was available,” says Bosch General Manager John Milburn. “We knew what we wanted to achieve and, with the state of the market at that time, we had quite a lot of choice. We had been in our previous office accommodation at Cotton House since 2004, before Bruntwood took over that building. The space was tired, and because we knew we had a move coming up, we hadn’t really invested in it at all and it was priority for us to find somewhere that would give the right impression of Bosch as a company.”

+50% INCREASE IN BOSCH STAFF RETENTION RATES SINCE MOVING TO THE PLAZA

16 LANGUAGES SPOKEN BY ASSOCIATES AT THE BOSCH COMMUNICATIONS CENTER

“For us, it was all about flexibility – and Bruntwood provided that,” he explains. “Our business involves the provision of outsourced contact centres for customers, so it’s all about being able to meet the levels of service they require, sometimes at short notice. To do that, we need flexible people, flexible technology and flexibility within the space we occupy.” “Here at The Plaza, we’ve built in extra space over and above what we previously occupied, and we’ve also got agreements in place within the lease for us to take options above and beyond the current demise if we need it.” Another factor in John’s decision was the quality of the space on offer. “There’s been a big improvement in both staff and customer response to our office environment since our move to the Plaza,” he says. “And that’s not just anecdotal: since we moved in, our staff turnover rate has been 50% lower than the corresponding period last year. There’s no doubt that the move has had a very positive effect on the way we work.”

10,000 SQ FT OF SPACE OCCUPIED BY BOSCH AT COTTON HOUSE IN LIVERPOOL

17,000 TOTAL SQ FT OF NEW OFFICE SPACE OCCUPIED BY BOSCH AT THE PLAZA

Pictured above left: General Manager John Milburn at the Bosch Communications Center, at The Plaza, Liverpool 22

Success in development As well as diversifying into different market sectors, Bruntwood has also been busy expanding the scope of its development work. As a result, 2013 promises to be our biggest-ever year for new developments. From radical refurbishment to new-build At Bruntwood, our long-term approach to our property portfolio has allowed us to amass a wealth of in-house development expertise over our 36-year history. In the past, our knowledge has primarily been focussed on the transformation of existing commercial office stock but in 2009 we undertook our first-ever newbuild project at No. 1 New York Street. Our success in letting this property plus the quality of the finished product meant that the building very quickly attracted a buyer, allowing us to release funds to move on to further development projects. These have included the refurbishment of Riverside and City Tower, plus the

acquisition and redevelopment of Centre City in Birmingham and 100 Wellington Street in Leeds, the latter extending our West One property to 135,000 sq ft. 2013 will see three new projects in Manchester city centre totalling c200,000 sq ft – Manchester One, Bank Chambers and Overseas House. In Leeds, we’re working with Network Rail on the transformation of City House and in Birmingham our focus is the next development phase at Centre City. We are also in advanced negotiations for an exciting new-build office project in Leeds where we have been approached by a potential occupier to design, develop and manage a property for them.

Developing for different uses The skills we possess as developers don’t just apply to office properties. The demand for our expertise from other types of customer is leading to growth in exciting new sectors. Transforming Manchester’s former Royal Eye Hospital into a new biomedical facility, Citylabs, is one such example. Also in Corridor Manchester, we are working with the University of Manchester on a £80m scheme to redevelop the Manchester Business School campus. This will feature a new 334-bed 4 star hotel, an executive education facility and retail precinct, plus the refurbishment of the existing Business School. Pictured: Hepworth Point in Leeds, above right; Hotel La Tour, Riverside

At Abney Court in Cheadle, we are developing a scheme for an 80-bed care

facility with Care UK, who have in turn agreed to forward purchase the site. In similar deals in the hotel sector, we have worked up schemes at Kennedy Tower in Birmingham for an 210-bed Holiday Inn and for a new, 221-bed design led 4 star Hotel La Tour on land adjacent to our property at Riverside in Salford. We have recently completed the redevelopment of Hepworth Point in Leeds into an 132-bedroom Premier Inn for Whitbread, subsequently selling on at a 5.75% yield. 2013 will be one of our busiest years ever for with £12.9m of projects. All of these are driven by occupier demand and have been funded in a challenging market, a true testament to the creativity and expertise of our development team.

CASE STUDY: SUCCESS IN REDEVELOPMENT

Breathing new life into the marketplace Centre City, Birmingham

The demand for Bruntwood buildings in Birmingham has been growing in tandem with the company’s reputation. According to Development Director, Peter Crowther, there has been growing evidence of pent-up demand in the marketplace, despite there being a significant existing pipeline of previously refurbished space in the city. “From the success of our Mclaren property in Birmingham, we knew that there was a definite appetite for the Bruntwood way of doing business,” explains Peter. “The quality of the refurbishment and the level of service we offer are seen as key differentiators within the marketplace.” In 2012 Bruntwood acquired the £20m landmark Centre City building adjacent to New Street Station. Originally built as a theatre in the 1960s, the building was severely compromised when it was transformed into offices back in the 1990s, and the central atrium and entrances had never functioned effectively for the building’s occupiers. “The first thing we had to do was get Centre City working properly again,” explains Peter. “It’s an important building and we really wanted to give it back its

215,000 TOTAL SQ FT OF SPACE

-33% REDUCTION IN SERVICE CHARGE ACHIEVED

‘wow’ factor. The common areas have now been completely revamped, and we’ve undertaken a number of major suite refurbishments.” In addition, there have been significant improvements made to Centre City’s energy performance. With a smarter approach to upgrading the infrastructure and Bruntwood’s unique approach to building management, we have achieved a rise in EPC rating from F to C, as well as delivering a 33% reduction in service charge to occupiers. The work of Anna Stevens, our General Manager in Birmingham, and her team, has also significantly improved the level of customer service, resulting in a number of customers choosing to stay on at Centre City rather than move on as they come up to their lease breaks. “We’ve been able to give existing customers, such as Legal and General, the confidence to remain at the building, where, prior to our acquisition they were set on leaving,” says Peter. “We’ve also had some big new customer wins, with our 30,000 sq ft let to the Tribunals Service one of the biggest deals in the city this year. Looking forward, we definitely see Birmingham as a key expanding market for Bruntwood.”

£5m AMOUNT OF INVESTMENT IN REFURBISHMENT

F to C IMPROVED EPC RATING LEVEL ACHIEVED

CASE STUDY: SUCCESS IN REDEVELOPMENT

Creating a desirable business destination Riverside, Salford

The five buildings of Riverside have been an iconic architectural feature on the banks of the River Irwell since the early 1970s. Bruntwood took over this unique complex of properties in 1998, but, by 2011, Riverside needed a new vision to align it with the different needs of the marketplace. “Manchester has changed significantly since we first took over Riverside,” explains Director of Asset Management, Rob Yates. “The arrival of nearby Spinningfields, a new shopping and business destination, has created a different commercial focus, and the new Civil Justice Centre has also helped to connect this bank of the Irwell more effectively into the city centre.” “To take advantage of all the activity around us, we knew we needed to bring a higher quality design ethos to Riverside, improving the retail and reception areas, as well as making the estate easier to navigate. With its hidden courtyard, green spaces and water feature, Riverside was a bit of an unknown sanctuary at the heart of the city – we knew we had a hidden gem that we could make a lot more of.” The comprehensive redevelopment of Riverside has seen over £5m of investment, with floor plates upgraded

168,000 TOTAL SQ FT OF SPACE AT RIVERSIDE

64,000 SQ FT LET AT RIVERSIDE IN 2012

to open-plan suites specified at ‘new build’ standard. With the complex now 90% let, it’s a redevelopment approach that has really paid off. Outside Riverside, Bruntwood has worked hand-in-hand with the local authorities to make significant improvements to the buildings’ surroundings. “When we first bought Riverside, it was a development in isolation,” says Rob. “We then got involved with the bigger vision being developed by the local authorities to create an Irwell River Park connecting Manchester, Salford and Trafford. Right from the start of the project, we were one of their key private sector partners in the bid for funds.” Although the funding bid wasn’t initially successful, Bruntwood stuck with it, working with Salford Council to break the proposals down into manageable, achievable chunks. “We now have a new landscaped walkway that has created a new riverside route for pedestrians and cyclists,” adds Rob. “It’s all part of the bigger picture of using the river to make better connections between Manchester city centre and MediaCityUK – a really important factor in the region’s future economic development.”

£5m AMOUNT OF INVESTMENT IN REFURBISHMENT

18 NUMBER OF NEW DEALS DONE AT RIVERSIDE IN 2012

New market opportunities

Targeting the science and technology sectors As the balance of the UK economy changes, Bruntwood is evolving its product and service offer to meet the different needs of new growth sectors. Although our track record is based on creating successful places for corporate office customers, our expertise can just as easily be deployed in different marketplaces. On Manchester’s Oxford Road Corridor, in close proximity to the city’s universities and main teaching hospitals, we are developing new spaces that are specifically designed to meet the needs of scientific research and technological development businesses.

Even in turbulent economic times, at Bruntwood we are always looking for new opportunities on the horizon. From developing new product targeted at major growth sectors in the economy, to taking a stake in growing ventures, we always have an eye for how we can apply our skills and expertise to deliver even greater value.

The first of these, Citylabs, is a £28.5m redevelopment of the former Royal Eye Hospital, supported by Central Manchester University Hospitals Trust and Manchester City Council. With Citylabs already over 65% pre-let and completion due at the end of 2013, we are actively looking at additional projects targeted at this particular sector. As a result of the opportunities we see in this market place, Bruntwood has recently taken a controlling interest in Manchester

Science Parks Ltd (MSP). Originally formed by a partnership of universities and local authorities, the organisation has a 25-year track record of supporting innovative companies across sectors such as ICT, biotechnology, industrial technologies and digital media. As well as providing business accommodation for these knowledge-based businesses across four sites in Manchester and Salford, the company delivers high-level business support programmes to help these companies to achieve sustainable growth. The opportunity to buy into MSP has come at an ideal time for Bruntwood, as we seek to explore the opportunities available in the innovation sector. Key members of the Bruntwood team are transferring over to work with staff at MSP to create the optimum mix of innovation support and operational expertise for the businesses based there. Bruntwood’s Chief Operating Officer, Rowena Burns, has taken over as Chief Executive of the newly invigorated company and will be working closely with Bruntwood’s development team to create new growth opportunities for the sector.

Creating places for creativity As the success of MSP has proved, individual sector clusters work best with a tailored product and service offer combined with the right business support infrastructure. We are now looking to extend this successful model to the digital and creative businesses that are currently driving growth in the Manchester region. By starting to reposition certain properties within our portfolio, we are taking steps to maximise their appeal to creative businesses and shape our service provision to better suit their needs. This ranges from transforming some of our period properties into more interesting and characterful spaces to investing in the technology services that these datahungry businesses now require. Pictured: Newly-refurbished creative space at St James’ in Manchester

Blackfriars House is one such property. With many period features, its large floor plates have the potential to create distinctive, non-corporate

environments whilst still retaining the peace of mind and level of service that being in a Bruntwood building provides. The location of Blackfriars House on the banks of the River Irwell is already a good one for the creative sector and its appeal is soon to be enhanced with the introduction of the new River Taxi service to MediaCityUK. Bruntwood’s cluster of properties on Oxford Street and Portland Street in Manchester is taking on a new creative life too. Utilising the aesthetic appeal of their exposed brickwork and open roof beams, we are creating studio spaces that are soon to be paired with the added benefit of access to the biggest broadband pipe in the city. Businesses that would once have gravitated to the city’s Northern Quarter are finding that the cost/service equation of choosing a characterful Bruntwood building makes economic as well as creative sense.

New York Street, Manchester

Main picture: CGI of the completed Citylabs development. Inset right: Chief Executive of Manchester Science Parks, Rowena Burns, and Bruntwood Development Director, Chris Roberts check on construction work

CASE STUDY: SUCCESS IN EXPANDING INTO NEW SECTORS

Creating places for scientific success Citylabs, Oxford Rd Corridor, Manchester

Development Director Chris Roberts has known for some time that Corridor Manchester presents a great opportunity for Bruntwood.

“It’s unusual for biomedical companies to have a facility of this quality sited right on the campus of one of the largest teaching hospitals in Europe. The first customer we’ve signed up is a global biomedical services provider that is taking 40,000 sq ft. They could have chosen a location anywhere in Europe, but they wanted to be located on a hospital campus and Citylabs provides the exact combination of facility and location they need.”

According to Rowena Burns, the new CEO of Manchester Science Parks (MSP), if you add in the proximity of Citylabs to the University and to MSP, there’s a significant “This area is undoubtedly going to be the magnet to leverage in further investment. city’s next main economic generator,” he “The critical mass of facilities under explains. “The City Council, the universities development is creating a really exciting and the NHS Hospital Trust have got a melting pot for science and technology clear vision of the activity they want to businesses at all stages of the knowledge encourage here and we saw how we could economy supply chain,” she explains. play a significant part in delivering that.” “Citylabs has got even greater potential as a brand offer for both Bruntwood and Bruntwood’s Citylabs development on MSP, with opportunities for expansion not the site of the former Royal Eye Hospital just in Corridor Manchester but elsewhere. is targeted at a very different type of The success we have seen in targeting occupier than the traditional Bruntwood this sector has given us the confidence to customer. Consisting of 94,000 sq ft of look at other opportunities,” says Rowena. state-of-the-art, bespoke-built biomedical “And the good news is that success for facilities, Citylabs will provide a rare Bruntwood and MSP is also delivering business facility right at the centre of the success for the city.” city’s science and technology hub. According to Chris, there has been no shortage of interest. “The appeal of Citylabs is its location,” he comments.

£28.5m

94,000 TOTAL SQ FT OF LAB/TECH SPACE BEING CREATED

65,000 TOTAL SQ FT OF LAB SPACE ALREADY LET

AMOUNT OF INVESTMENT

2014

EXPECTED OPENING DATE SPRING 2014

CASE STUDY: SUCCESS IN EXPANDING INTO NEW SECTORS

Creating places for creative success Manchester International Festival, Blackfriars House, Manchester

to an operation of 100 plus people over the two year cycle between Festivals. Accommodating that is quite a challenge.” For Bruntwood, it meant finding a space that could be specifically tailored to the Festival’s unique needs.

As a sponsor of the Manchester International Festival (MIF) since its first incarnation back in 2007, Bruntwood has always shown its support of the Festival by providing the organisation with its office accommodation. For the world’s first festival of original new work, however, the right office accommodation needed to give the right message about both the Festival’s creativity and its ethos. According to the MIF Managing Director Christine Cort, Bruntwood was more than willing to work with the Festival to achieve just that. “The scope of the Festival and our changing requirements means that we need a space that is extremely flexible,” explains Christine. “We can change in size from a relatively small core team up

Pictured: Multi-purpose meeting, working and relaxing space at the offices of Manchester International Festival

“Bruntwood listened to us and worked with us to find the most suitable location,” says Christine. “The first job was to identify a space with the right potential and then to fit it out in a way that suited us perfectly. The result is something that reflects Manchester International Festival’s original spirit. Blackfriars is a great place to work.” The Festival has something else to look forward to at Blackfriars with the planned addition of a privately-accessed, landscaped roof garden to the building. Designed by award-winning architect Roger Stephenson, the garden will have panoramic views over the city, lawned breakout spaces, timber decking and over 30 freshly-planted trees. Suitable for informal meetings, pre-planned events or simply relaxing, the new outdoor space will provide an even more distinctive environment for creative businesses.

8,000 TOTAL SQ FT OF OFFICE SPACE REFITTED FOR MANCHESTER INTERNATIONAL FESTIVAL

Performance in our retail portfolio

A flexible approach Bruntwood’s retail units provide a unique ‘win-win’ proposition for our retail and leisure customers. For customers, the retail units in our properties provide high-quality, flexible spaces in locations where there is both significant footfall and a ready-made market of office occupiers. For Bruntwood, successful retail spaces add to both the appearance and amenity of our buildings, enlivening their ground floor aspect and

Despite the doom and gloom on the UK High Street, we have continued to develop strong partnerships with our retail customers, working with them to take advantage of the good locations and strong customer base we provide.

As it is in our best interest to have our retail spaces functioning well, we are willing to work with customers on issues such as payment term flexibility in order to help businesses in the current economic turbulence. We also work with retailers to market targeted promotions and discounts at our captive audience of over 45,000 office occupiers.

Building relationships Our belief in going the extra mile to support our retail customers has helped to create more extensive, longer-term relationships across our portfolio. Our long-standing relationship with the independent upmarket sandwich retailer Philpotts now encompasses four different outlets whilst, at the other end of the spectrum, Tesco has continued to grow its outlets within our portfolio with a new store opening as part of the redevelopment of Riverside. The bar and restaurant innovators, Living Ventures, are working with us in a number of retail properties in our drive to turn Manchester’s New York Street into a major leisure destination.

532,000 SQ FT OF RETAIL SPACE

200 NUMBER OF RETAIL UNITS

In 2012 we also welcomed a number of new customers to our retail portfolio. At South Central in Manchester, the rum specialist Revolucion de Cuba opened its first outlet in Manchester with a mammoth 16,000 sq ft space spread over two floors. At The Plaza in Liverpool, Barclays New Business of the Year, Salad Bowl, opened their very first outlet. The new High Street trend for pop-up shops also continued with Ryanair’s very first pop-up operation. Set up at 111 Piccadilly for six weeks only, the store was successfully used to promote the budget airline’s new routes from Manchester.

Independently-minded

95%

With the majority of our retail units occupied by independent operators, Bruntwood is attuned to the needs of alternative retailers.

OCCUPANCY RATE OF RETAIL PORTFOLIO

98% OCCUPATION RATE AT AFFLECKS

+16%

increasing the appeal of the property to our office customers.

Pictured: Salad Bowl, Barclays New Business of the Year, at The Plaza in Liverpool

We recognise and appreciate the unique contribution that independent businesses make to creating a distinctive sense of place. As owners and operators of Afflecks, Manchester’s world-renowned indie shopping emporium, we have over 75 individual independent traders operating under a weekly license agreement that provides

them with the low cost environment they need to get their businesses off the ground. With ongoing investment and targeted marketing, Afflecks has continued to increase its footfall, achieving a 16% increase in 2012. In addition, Afflecks recently received two major accolades: an award for Best Commercial Property from the Royal Institute of Chartered Surveyors and a coveted Manchester Tourism Award for Independent Retailer of the Year.

INCREASE IN FOOTFALL AT AFFLECKS IN 2012

CASE STUDY: SUCCESS IN BUILDING RETAIL RELATIONSHIPS

Creating places where people want to be Living Ventures Group, Manchester

For over 12 years, Tim Bacon and his partners in Living Ventures have been cutting a swathe through the bar and restaurant landscape of the North of England. The company’s constant inventiveness has been redefining the region’s drinking and dining experience with concepts such as The Oast House and Australasia leaving many rivals spinning as they try to keep up. Bruntwood’s relationship with Living Ventures started in 2010 when the company acquired a number of existing restaurants from Paul Heathcote, three of which happened to be in Bruntwood properties. According to Bruntwood’s Head of Retail, Toby Sproll, the benefits of working more closely with Living Ventures were immediately apparent.

York Street in its drive to create the right amenity and ambience for its portfolio of properties in the vicinity. “Our aim was to transform what was previously a neglected part of the city centre into a destination in its own right,” says Toby. “And finding the right retail offer for the street was a key part of that. With their range of different bar and restaurant brands we knew Living Ventures were the right people to approach.” For Tim Bacon, the vacant retail unit at No.1 New York Street made a logical next place to try out Living Ventures’ new Alchemist brand.

“Even in the current climate, the appetite of diners for good food in a relaxed environment is still growing,” explains Tim. “The Alchemist provides just that in “The company has a great reputation for an area that has currently very little supply. innovation in the bar and leisure market We have always found that clustering and we knew we could work well together”, our leisure brands together really helps explains Toby. “They took over what is now establish a destination, with the appeal The Grill on New York Street at City Tower, of each offering supporting the other. and soon started to attract new customers We’ve already got plans in the pipeline to to the area.” work with Bruntwood to expand our brand Over recent years Bruntwood has across their portfolio.” transformed the streetscape on New

16,000 TOTAL SQ FT OF SPACE OCCUPIED BY LIVING VENTURES’ BRANDS IN THE PORTFOLIO

4 NUMBER OF LIVING VENTURES’ BRANDS IN THE BRUNTWOOD PORTFOLIO Cornwall Buildings

8 TOTAL NUMBER OF BRANDS IN THE LIVING VENTURES BAR & RESTAURANT PORTFOLIO

4,000 AMOUNT OF ADDITIONAL SPACE TAKEN FOR THE ALCHEMIST IN 2012

Pictured: Bruntwood’s Head of Retail, Toby Sproll (left) and Living Ventures Managing Director, Tim Bacon (right) discuss new opportunities on New York Street 38

Success in serviced space and meeting rooms

Despite an increasingly competitive marketplace, the demand for Bruntwood’s serviced offices and meeting spaces continues to grow, as businesses look for the right combination of quality and flexibility.

The first steps to success For start-up businesses or those that are looking to expand rapidly, a serviced or virtual office provides a much more flexible and responsive solution to their premises needs. At Bruntwood we operate 14 different serviced office centres across our portfolio, providing over 2,000 desks in prestigious office buildings spread across the cities and locations where we operate. Unlike many of our competitors, our serviced office spaces occupy the same buildings as our regular office suites, which means that they provide a seamless path from serviced to individual office space as a business progresses. Serviced offices can be rented from one person upwards for as little as one day, and come complete with furniture, telephone, internet connection and

individual company answering services so that businesses can immediately present a professional image and environment without any up-front costs. Our virtual office product offers a postal address, professional call-answering and access to a range of administrative services without the expense of renting a physical office. Both of these products are designed to provide minimum cost and maximum flexibility, meaning that despite current market conditions, the demand for our serviced space continues to grow. To meet this demand we added an additional 70 serviced office desks during 2012, creating additional capacity in Leeds, Liverpool and Cheshire. We refurbished over 10,000 sq ft of existing serviced office space in order to meet customer demand and further expansion is planned for 2013.

Meeting a growing need Bruntwood’s extensive range of Red Rooms meeting spaces provide a range of different high quality facilities to meet a wide variety of meeting needs. Located in all the cities and regions where we operate, our Red Rooms meeting venues come in a wide selection of architectural styles, from the classic to the contemporary. From an oak-panelled board room to an exposed brick, multipurpose creative space, we can offer just the right ambience for a customer’s specific meeting requirements. Our Red Rooms provide a welcome alternative to traditional conference or hotel venues and, with all our meeting facilities located in established business

2033 TOTAL NUMBER OF SERVICED OFFICE DESKS

78 MEETING ROOMS IN THE PORTFOLIO

destinations they are all close to major transport links and amenities. Across the portfolio we have meeting rooms for 2-200 people which are available to hire from one hour through to a full day. As well as meetings, conferences, exhibitions and seminars, our Red Rooms venues are now being used for an increasingly wide range of events, including filming locations, press launches and examinations. The 2012 launch of our online booking system for Red Rooms means that customers can now obtain real-time availability information, allowing them to plan, book and manage their meetings seamlessly online.

30,000 SQ FT OF OFFICE SPACE TAKEN BY UPGRADING SERVICED OFFICE CUSTOMERS IN 2012

140 NUMBER OF NEW VIRTUAL OFFICE CUSTOMERS IN 2012

Success in environmental performance

As the north of England’s largest property company, we acknowledge our responsibility to build a more sustainable approach into every aspect of our operation. With a portfolio of over 100 buildings across four different cities, we are working hard to reduce our carbon emissions and improve the energy efficiency not just of our buildings but of the activities that go on inside them.

Recycling buildings Bruntwood’s business model is based around the principle of recycling buildings – a model that makes both economic and environmental sense. We are adept at breathing new life into buildings and our years of development experience means that we have an eye for the potential that exists in properties that others would be wary of taking on. Our expertise lies in retrofitting existing buildings to both increase their aesthetic appeal and to bring them up to a 21st century environmental standard.

We see any refurbishment work to our portfolio as an opportunity to improve the energy performance of that particular building. At two of our recent acquisitions, Centre City in Birmingham and 100 Wellington St, Leeds, we have made major improvements to both buildings’ aesthetic appearance whilst simultaneously improving their EPC rating by two levels. By optimising our redevelopment works in this way we are able to improve the property’s asset life and value whilst making it more operationally efficient and ‘fit for purpose’ for the future.

A focus on cost and value Although carbon emission reduction is an attractive goal, in the current economic climate, our customers’ focus is on how our environmental initiatives are reducing costs and increasing value. At The Plaza in Liverpool we replaced the air handling units throughout the property at the end of 2011, working sensitively with customers inside and outside their office suites to minimise any noise and disruption. The new air handling system

incorporates a comprehensive heat recovery system, and during the first year of operation we have already achieved an 82% reduction in gas consumption. Our ongoing maintenance programmes focus on the renewal of older, more inefficient plant in order to generate greater efficiencies. In addition, smart energy meters and a new online energy portal are helping our customers to identify the best ways to reduce their own energy consumption and costs.

Building resilience into our portfolio A large proportion of our portfolio consists of buildings that were constructed before the 1980s, which present their own particular challenges in making them more resilient to the forecasted changes in climate over the next 10-15 years. The high proportion of heritage and 1960s properties across our portfolio provides us with a unique opportunity to develop creative solutions to the environmental performance challenges of these particular buildings. Working with a range of building retrofit experts, we are

80% TARGET FOR WASTE REDUCTION 2014 – ACHIEVED BY END OF 2012

constantly looking for ways to improve the resilience of our assets to make them more capable of meeting future climate change challenges. From incremental reductions of our own operational carbon footprint to working more closely with our customers, we are exploring all potential ways of reducing the environmental impact of our buildings. Our investigations will provide valuable insights into the most cost effective ways of delivering environmental improvements, not just for Bruntwood, but for the property industry as a whole.

82% PROPORTION OF OUR PORTFOLIO ORIGINALLY CONSTRUCTED BEFORE 1980

CASE STUDY: SUCCESS IN ENVIRONMENTAL PERFORMANCE

Delivering better service and better value Creating an in-house HVAC team

Outsourcing has been the name of the game for most property companies in recent years, making the task of solving problems into somebody else’s problem. But in 2012 Bruntwood’s Building Services team took the radical step of bringing back in-house the task of servicing and fixing the heating, ventilation and airconditioning systems across the portfolio. For Head of Building Services, Shan Khambata, it’s been a goal he’s been working on for a while. “We have had one main HVAC supplier for the last five years,” explains Shan. “Over that period, we’ve become a lot more sophisticated in our understanding of the needs of both our buildings and our customers. As a service-focussed business we recognised that because the performance of our air conditioning systems was the most frequent cause of customer complaints, it made more sense for us to take more direct control over this really important area.” When the contract for these services came up for renewal, Shan and his team concluded that they could do a better job by bringing the services in-house.

Pictured: Bruntwood’s HVAC Team Supervisor Andy McKee inspects equipment at City Tower, Manchester

18 TOTAL NUMBER OF STAFF IN THE IN-HOUSE HVAC TEAM FROM 2012

The first logical step was to talk to the team of engineers who already had experience of working on the Bruntwood portfolio. Terms were agreed and the team officially transferred over from their previous employer to become Bruntwood employees from October 2012. According to HVAC supervisor Andy McKee, the move has simplified the whole process. “When we find a fault, we no longer have to wait for a quote to get it processed,” says Andy. “We can get straight on and fix it there and then, so from a customer’s point of view, it’s a much more reactive service.” His team mate, engineer Craig Thompson, agrees. “When you see something that needs doing, you can just get on and do it.” For Shan, the difference has been noticeable straight away. “It’s about a sense of ownership, both of the building’s infrastructure and of tackling the problems,” he says. “The team now feel more empowered and are putting forward suggestions as to how we can operate more effectively and pre-empt issues before they arise. Every day, we’re seeing real benefit for both Bruntwood and for our customers.”

£50m+ VALUE OF HVAC ASSETS WITHIN THE BRUNTWOOD PORTFOLIO

Making a difference

At Bruntwood we believe that by creating and maintaining strong relationships – with our customers, with our communities and with each other – we are much better placed to tackle the challenges and seize the opportunities that come our way. From the way we nurture and treat our staff to our active involvement in the life of our cities and communities, we have always set out to be a ‘good business’ in every aspect of our operation. By working to help the places where we operate thrive and blossom, we create the best possible environment for our business and our customers’ businesses to succeed.

We have always encouraged our employees to engage with the impact that our business has on the world around it. From our role in the civic and cultural life of our cities to the effect we have on the environment and the change in behaviours that we need to encourage, we are constantly challenging ourselves to do better.

TOTAL NUMBER OF BRUNTWOOD EMPLOYEES IN 2012

We all have a responsibility to make a difference.

TOTAL NUMBER OF BUILDING BASED CUSTOMER SERVICE STAFF

467 311 10% PERCENTAGE OF ANNUAL PROFITS GIVEN TO ARTS, CHARITY, CIVIC AND ENVIRONMENTAL CAUSES

Caption to go here

Pictured: Helping the young people of North Manchester reach greater heights at the Factory Youth Zone in Harpurhey

£1.2m APPROXIMATE VALUE OF FUNDRAISING, SPONSORSHIP & CHARITABLE ACTIVITIES IN 2012

Relationships matter As a relationship-based business, we know that our people are our biggest asset.

Making a difference through our people

When we recruit our people we do so for the long-term, ensuring that we select people who have a natural affinity to the strong set of values we live by as a company and who have the capability to develop in line with our ethos. As a customer-focussed business we frequently recruit from the hospitality and leisure industries in order to ensure that our customer service levels aspire to the highest possible standards. Many members of staff join us as graduates and grow into a range of specialised professions, ensuring an ongoing consistency of delivery of the Bruntwood experience across the business.

A good company to work for We understand that recruitment is a two-way process and that people need to feel that Bruntwood is the right choice for them.

Good relationships are the foundation of any good business and that’s where the calibre of our people counts. As we operate and manage all our own buildings, every person that a customer encounters, from the reception staff to the handyman that changes the light bulb, is a member of the Bruntwood team.

We train and nurture our people to embody our values-driven, customer-focussed way of doing business, providing them with a depth and breadth of experience that enables them to grow as people as well as developing their knowledge and skills. Individual personal development plans are used across the business to make sure that we make the most of the distinctive skills and talents of our diverse workforce. Staff are also encouraged to integrate with people from across different areas of the business through initiatives such as Bruntwood Clubs. Seed funding is provided for like-minded staff members to pursue their interests together, from boxing to book-clubs, swimming to salsa dancing.

Improving communication As any company grows, it has to work harder at keeping in touch with its people, ensuring it not only has the means of letting them know what’s going on but also a mechanism for real and genuine feedback on how we can operate better as a business.

4yrs 10m AVERAGE LENGTH OF SERVICE OF BRUNTWOOD STAFF

Moving forward, improving internal communication is going to be an important area of focus for us, as we strive to embed the Bruntwood brand into every area of our operation. From the redesign of our intranet to the relaunch of our inhouse magazine, we are looking at how best to make every member of our team feel valued for their contribution and integrally connected to the organisation’s future. After all, our people are the business.

TOTAL NUMBER OF LANGUAGES SPOKEN BY BRUNTWOOD STAFF

Making a difference in our communities

765

Being a family-owned and managed company brings with it many advantages. Not only can we think long-term in our business, we also make a long-term commitment to our communities too, supporting the cultural, charitable and environmental endeavours that are key to their ongoing success.

NUMBER OF HOURS VOLUNTEERED UNDER THE BRUNTWOOD CARES PROGRAMME

100+ NUMBER OF DELEGATES WHO ATTENDED THE ECOCITIES CONFERENCE IN 2012

Supporting sustainability Making a team effort

Investing in creativity

From cutting carbon emissions to making more of our green space and waterways, creating a more sustainable urban realm is key to the future economic growth of our cities.

Innovative, ambitious and distinctive cultural activity adds to the vibrancy of our cities, making them more attractive as places to live, to work and to do business.

Tackling the major environmental challenges that our cities now face is a task that requires effective partnerships between the public and private sectors. We are committed to playing a key role in many of the urban development bodies in the cities where we operate and in May 2012 we marked the conclusion of our Ecocities project with the University of Manchester. Over 100 delegates from across the UK attended Adapting the City, a conference to present the findings of the Ecocities research into the predicted impacts of climate change on our future urban environment and the challenges this presents. More specific environmental initiatives have included the creation of new public realm spaces in New York Street and the Irwell River Park and encouraging more sustainable transport with a new Cycle Hub facility at our City Tower building In Manchester city centre.

Pictured clockwise from top left: Bruntwood staff prepare for the 2012 Manchester 10k run; Bruntwood Chairman Michael Oglesby, Dame Nancy Rothwell from the University of Manchester and Manchester City Council Leader Sir Richard Leese at the Ecocities Conference in 2012; the newly-redeveloped Chethams School of Music; Bruntwood staff in Leeds celebrate reaching their fundraising target of £10,000 for Martin House Hospice

Involving Bruntwood staff in raising money for charity is a win-win situation for us as a business. From cake bakes to clothes swaps, 10ks to triathlons and curry quizzes to competitive moustache growing, it raises money for good causes whilst at the same time encouraging our people to have fun together. We select individual charities in each of our cities to act as a fundraising focus for staff activities. In Liverpool we raise money for Claire Hospice and in Manchester our efforts are focussed on the young people’s charity Onside and the Factory Youth Zone. The Prince’s Trust is the recipient for monies raised by our team in Birmingham and, in Leeds, the team has just succeeded in raising £10k over two years for Martins House hospice double their original target. Staff also get directly involved in supporting local communities through our Bruntwood Cares volunteering programme. Every employee is encouraged to take two days every year to volunteer in a range of community projects, from helping to plant flowerbeds at a community centre to helping young children develop their reading skills.

But that creativity doesn’t happen by chance, and at Bruntwood we believe in seeking out endeavours that push the boundaries, nurturing the type of creativity that just wouldn’t happen without support. Bruntwood was one of the first companies to sponsor the Manchester International Festival, the world’s first festival of original new work, when it began in 2007 and we continue to support MIF as a sponsor, as an active member of the Festival board and as the organisation’s property partner. Our ground-breaking partnership with the Royal Exchange has created the UK’s largest playwriting competition, The Bruntwood Prize – a major force for new writing across the national theatre scene. The 2013 competition is now open for entries with submissions expected in their thousands as budding playwrights compete for the £40,000 prize money. We also support organisations with more than investment. The leadership role of Bruntwood Chairman Michael Oglesby in the development of the architecturallystriking new extension to Chethams School of Music is one example of where Bruntwood also invests its enthusiasm and expertise into making a difference.

CASE STUDY: MAKING A DIFFERENCE TO OUR CULTURAL LIFE

Encouraging new talent to come forward The Bruntwood Prize for Playwriting, in conjunction with the Royal Exchange

For Bruntwood Prize-winning playwright Alistair McDowall, his success couldn’t have come at a more auspicious time. “After I’d finished my degree I had been trying to keep going with my writing but the challenge of earning a living at the same time as writing and producing plays was proving difficult,” says Alistair. “I saw a flyer for the Bruntwood Prize and decided to give it a go, but I was struggling to find enough time to write and something had to give. I literally ended up losing my job the night before I won the Prize!” The Bruntwood Prize has made a huge practical difference to Alistair. “Winning it meant that I could just concentrate on my writing for a year, which was great because I’m at the point in my career where I really needed to do that to move forward. I’m now working with the director Caroline Steinbeis who’s going to direct my play at the Royal Exchange, and then it’s moving on to the Live Theatre in Newcastle.”

2005

YEAR OF THE FIRST BRUNTWOOD PRIZE FOR PLAYWRITING

2,000+ Pictured: Alistair McDowall (left) and Suzanne Bell in the Royal Exchange’s Studio Theatre

RECORD NUMBER OF ENTRIES RECEIVED IN 2011

According to the Royal Exchange’s New Writing Associate, Suzanne Bell, the competition has done a great deal to raise the profile of playwriting as an art form. “We are constantly on the look-out for new and exciting voices in playwriting,” explains Suzanne. “The Bruntwood Prize has allowed us to expand that to a whole new level – it’s open to anyone, from anywhere in the country, so we can champion and support writers from a wide range of experiences, many of whom would never have considered writing professionally.” For Suzanne, the Bruntwood Prize has a wider impact too. “It’s so important for a theatre to have an open and engaged dialogue with the businesses in its local community. We want Bruntwood staff to feel an ownership of what they have helped to happen here. Alistair’s play Brilliant Adventures is funny, intelligent and moving – it will be an absolutely brilliant night at the theatre and I hope that many people will be genuinely excited by it.”

6,000 NEW PLAYS WRITTEN AS PART OF THE COMPETITION

£40,000 WINNERS FUND FOR THE 2011 BRUNTWOOD PRIZE

Pictured: Kate Vokes, Bruntwood Brand and People Director and Chair of the Factory Youth Zone chats to young art enthusiasts enjoying after-school activities

CASE STUDY: MAKING A DIFFERENCE IN OUR COMMUNITIES

Creating new opportunities for young people Factory Youth Zone, Harpurhey, North Manchester

Since 2010, Bruntwood’s fundraising efforts have been focussed on the young people’s charity, Onside, and in particular the Factory Youth Zone, a brand new centre for young people in Manchester. Onside has its roots in the model of the highly-successful Bolton Lads and Girls Club and Bruntwood got behind the new charity from the start, with Chris Oglesby becoming a founder member of the Onside board and his sister Kate Vokes taking on the role of Chair of the Factory Youth Zone. In addition, Bruntwood’s property expertise has been instrumental in getting the Youth Zone developments off the ground, with one of our experienced project managers, Adam Poyner, seconded to oversee the construction process. “It’s hugely rewarding to see the difference this project has made to the lives of local young people,” says Kate Vokes. “There was very little for them to do, so it was no wonder that anti-social behaviour was prevalent. Now, for a small membership fee they are made to feel welcome in a place where they have people they can

2012

YEAR OF OPENING

£5m COST OF NEW FACTORY YOUTH ZONE FACILITY

talk to, as well as 20 different activities to choose from every night.” The facilities at the Youth Zone range from sports, music and crafts sessions to cooking, dancing and trampolining. These can lead to life-changing opportunities for some. “One of the boys who was a regular at the Youth Zone cooking classes got so into it that when a part-time job came up in the kitchen, he applied and got taken on,” explains Kate. “It’s when you realise that he’s the first person in his family for three generations to take home a wage packet, that you understand the potential for change that the Youth Zone has.” For Kate, it has been a real opportunity to make a difference, both corporately and personally. “Having a focus for our staff fundraising efforts really helps them understand the difference that they can make,” she explains. “As well as fundraising, we also encourage them to get actively involved in volunteering at the Youth Zone, both for the richness of the experience and also to help the young members get the most out of what the Youth Zone has to offer. It’s definitely a win-win situation.”

£300,000 AMOUNT BRUNTWOOD STAFF HAVE PLEDGED TO RAISE OVER THREE YEARS

2,500+ ACTUAL NUMBER OF MEMBERSHIPS ACHIEVED COMPARED TO TARGET FIGURE OF 1,500

CASE STUDY: MAKING A DIFFERENCE IN OUR CITIES

Creating sustainable transport choices City Tower Cycle Hub, in partnership with Transport for Greater Manchester

For many people thinking of cycling to work it’s not the journey that’s offputting, it’s the facilities that you need to have when you get there. Bruntwood has made significant efforts to include cycle parking and shower facilities in many of its buildings to encourage staff and customers to consider cycling rather than driving to work, but in some locations that’s just not an option. That’s why when Transport for Greater Manchester were looking for a first location to try out their new Cycle Hub concept, Bruntwood was keen to take part. According to TfGM’s Transport Strategy Director, Dave Newton, finding the right location was key to the success of the concept. “We needed somewhere that had a significant working population close by,” says Dave. “Once you’ve cycled into work the last thing you want is a 10-minute walk on top. City Tower was an ideal location to test the concept as it’s at the centre of one of Manchester’s major business districts.”

£5m PLANNED INVESTMENT BY TFGM IN THE CYCLE COMMUTER PROJECT

For Bruntwood, offering up an unused basement space to such a positive use made a lot of sense, as Project Manager Fiona Lewis explains. “It’s been transformed from a redundant space to a high profile use, one that benefits not just Bruntwood staff and Bruntwood customers, but the wider city centre community as well. For a small monthly fee people can park their bike securely and for a little bit extra they can get unlimited access to the showers, secure lockers and changing facilities.” Access to the cycle hub is through a membership smart card and there’s even a branch of the bike retailer, the Edinburgh Bicycle Cooperative (EBC), on-site to give help and advice. “For people who are cycling regularly, it’s important to keep your bike well-maintained,” explains Dave. “EBC are offering training sessions in bike maintenance for members as well as having repair and servicing facilities on hand. Our aim is to make cycling to work a feasible choice for as many city centre workers as possible.”

196 NUMBER OF BIKES THAT CAN BE ACCOMMODATED AT CITY TOWER CYCLE HUB

Pictured: TfGM’s Transport Strategy Director, Dave Newton and Bruntwood Project Manager, Fiona Lewis, discuss the operation of the new City Tower Cycle Hub

Financial report

We have made some great progress in what has been another busy year for Bruntwood. Turnover is up 6% and net profit has improved by 10%, with our forward projections showing continued improvement.

I reported last year on our headway in reducing vacancy following a number of large exceptional vacations in the prior year and I am pleased to say that this progress has continued. At over 75%, our retention rates are running at more than twice the industry average and new lettings increased by a further 7% to 600,000 sq ft. Even more pleasing was the pipeline of deals carried over into the new year which indicates that 2013 should be even better. Not only has the reduction in vacancy had a knock-on effect on profitability, but more importantly, the underlying cash generation has significantly improved as rent free concessions unwind and empty property costs reduce. It is disappointing to report a 5% fall in net worth due to a 2% fall in fixed asset values, however, market values have fallen more markedly, and without Bruntwood’s asset management expertise, these falls would have been more dramatic. It is often the case that sentiment lags reality, and we would hope that values recover in the not too distant future to mirror the activity levels that we are seeing on the ground in our core cities. Interest Cover remains strong at 187% and 217% on passing rent and headline rent respectively. Although it is higher than we would like at 63.5%, our Loan to Value (LTV) level is about where we would expect it to be at this stage in the cycle, however, we are very mindful of our need to refinance approximately £570m of debt in 12 months’ time in a lending environment where LTV

at origination on senior debt has reduced following the economic crisis. With this in mind we have had to be more creative in adding value, disposing to acquire. During the year three of our buildings were sold, realising gross proceeds of £57m. In turn we invested £30m on acquisitions and a further £22m was invested in the portfolio. Our disposals were One New York Street Manchester and Hepworth Point, Leeds, both of which were sold at approximately 6% yields (the latter following our conversion to a hotel). Kennedy Tower in Birmingham was sold for a £1.2m profit having only acquired it vacant a few months before.

Kevin Crotty Chief Financial Officer

INCREASE IN TURNOVER IN 2012

187% INTEREST COVER (AVERAGE DURING YEAR)

In negotiating the extension to part of our CMBS, we are heartened to see that there is still strong demand in the market for bonds which are backed by a recognised sponsor, secured on a performing portfolio. Far from wanting to receive their money back, most noteholders were more interested in seeing the notes extended with a re-couponing to market levels over the extension period. The CMBS market could yet play a major part in addressing the property finance cliff.

“...we are heartened to see that there is still strong demand in the market for bonds which are backed by a recognised sponsor, secured on a performing portfolio.” Replacing the disposals we purchased the 215,000 sq ft Centre City in Birmingham, 100 Wellington Street in Leeds (34,500 sq ft) and a 50% controlling interest in Manchester Science Park (220,000 sq ft). Overall, headline rent on the acquisitions totalled £4.9m compared to £2.9m on the disposals. In addition we are progressing well with adding value to these buildings through securing and enhancing the income whilst investing in the fabric. The acquisition of the Science Park presents an exciting opportunity to diversify within our core city into the fast growing areas of Science and Technology.

satisfying – the company has taken the time to understand our business model and has agreed a facility that affords us the flexibility to manage our business in a customer-focused way.

At the end of 2013 both our £432m Commercial Mortgage Backed Securitisation (CMBS) and our £170m Medium Term Loan (MTL) facilities expire and it is good to report that we have made great progress in the refinancing of this debt. Since the year end we have agreed and drawn a ten-year £120m loan with Legal and General at 65% LTV and negotiations with our bond holders have resulted in an agreed extension of £229m of the CMBS until January 2016. Signing up to a long term partnership with Legal and General is particularly

The final part of our refinance jigsaw involves the increase and extension of our MTL facility. We are in discussions with, and continue to enjoy the very strong support of our main relationship banks (RBS, HSBC & Barclays) for which we are very grateful. Thanks are also due to Lloyds with whom we have agreed a £9.5m development facility to fund our Citylabs project on the site of the former Royal Eye Hospital. Although it is early days and it will be a long road to recovery, we are seeing the first indications that Europe has averted a major debt crisis and funding prospects appear to have improved. We have noted a general increase in liquidity from banks in recent months. Although we are in no doubt that further difficult times lie ahead, we look to the future with optimism

+10% INCREASE IN PROFIT IN 2012

Financial results £950m

£303m

VALUE OF FIXED ASSETS

NET WORTH

187%

63%

97%

INTEREST COVER

LOAN TO VALUE RATIO

£22m

CASH COLLECTED WITHIN ONE MONTH OF BILLING

INVESTED IN THE PORTFOLIO THIS YEAR

Profit before tax +10% to £12.4m

Turnover +6% to £105m

Fixed assets -2% to £950m

Net worth -5% to £303m

£15m

£100m

£1000m

£500m

£12m

£80m

£800m

£400m

£10m

£60m

£600m

£300m

£6m

£40m

£400m

£200m

£3m

£20m

£200m

£100m

£0

2008

2009

2010

2011

Analysis of profit and loss Turnover £105m

2012

£0

2008

2009

2010

2011

Analysis of balance sheet Fixed assets £950m

2012

£0

2008

2009

2010

2011

Ratio of rental income to interest £70.0m (231%) Rental income

2012

£0

2008

2009

2010

2011

2012

Ratio of borrowing to fixed assets £950m (63.5%) Fixed assets £604m Total borrowing

£30.3m Interest paid

Pre-tax profits 11.8% Cost of sales 46% Overheads 13.6% Loan interest 28.6%

Working capital 5.7% Bank loans 63.5% Reserves 30.8%

Profit and loss account

Year ended 30 September 2012

Turnover

Balance sheet

2011

£000

104,630

99,048

Fixed assets Tangible assets

Cost of sales

(48,290)

(42,697)

Gross profit

56,340

56,351

Net operating expenses

(14,263)

(14,661)

Operating profit

42,077

41,690

Profit on sale of investment property Interest receivable and similar income Interest payable and similar charges

Year ended 30 September 2012

2012

£000

Intangible assets and investments

577

2,894

2,051

(33,193)

(32,535)

12,355

£000

921,552

940,189

27,953

26,106

949,505

962,295

23,045

16,617

Debtors: amounts receivable after more than one year

14,536

12,281

126

3,242

17,397

9,670

55,104

41,810

(75,794)

(65,475)

Property held for resale

Creditors: amounts falling due within one year

-Corporation tax for the year

(668)

140

-Movement in deferred taxation

(715)

(1,274)

10,972

£0

Debtors: amounts receivable within one year

11,206

Tax on profit on ordinary activities

Profit on ordinary activities after tax

£000

2011

Current assets

Cash at bank and in-hand

Profit on ordinary activities before tax

2012

10,072

Net current liabilities

(20,690)

(23,665)

Total assets less current liabilities

928,815

942,630

Creditors: amounts falling due after more than one year

(603,633)

(604,766)

(22,588)

(21,009)

302,594

316,855

53,760

53,535

183,340

221,754

Profit and loss account

82,992

69,269

Other reserves

(27,703)

Shareholders’ funds

292,389

316,855

Provisions for liabilities

Capital and reserves Share capital Revaluation reserve

Minority interests – Bruntwood 2000 group

Total capital employed

10,205 302,594

316,855

These figures are taken from the consolidated audited accounts of Bruntwood Group Limited for the year ended 30 September 2012.

In good hands

One of the advantages of being family-owned and run is the strength and consistency of leadership over the company’s 36-year history. This has enabled us to take the long-term view in all our activities, both commercially and ethically. The company operates with a main board of twelve directors, with additional regional boards that oversee the operation of our business in our key regional markets. This structure ensures that the unique benefits of our business model and the high quality of our brand approach are delivered consistently in all the cities where we operate.

Michael Oglesby cbe dl

Chairman Michael founded Bruntwood in 1976 and handed over the day-to day running of the company to his son, Chris, at the end of 1999. He currently gives 20% of his time to his role as Executive Chairman of Bruntwood and the remainder is devoted to his extensive range of civic and charitable interests. Michael was awarded the CBE in 2011 for his services to industry and charity.

Chris Oglesby

Chief Executive Following his degree in Property Valuation and Finance Chris joined the investment team in the City of London Office of St Quintin (now CBRE), before returning north to work for Bruntwood in 1991. He qualified as a Chartered Surveyor in 1993 and set up Bruntwood’s Manchester city centre office, before taking over the reins of the company from his father in 1999.

Kate Vokes

Brand & People Director Following her studies at Leeds Business School, Kate Vokes (née Oglesby) worked for a number of blue-chip companies before completing her MBA at Manchester Business School in 1998. She joined the family business in 2000 and is responsible for the recruitment and development of Bruntwood people, as well as the management of the Bruntwood brand.

Rowena Burns

Chief Operating Officer Rowena joined Bruntwood in 2008, after ten years with the Manchester Airports Group. Her early career was spent in the public sector in a variety of transport and economic development roles. As Manchester Airport’s Group Commercial Director, her brief included airport acquisitions, economic regulation and overall business strategy. From 2013, Rowena will assume the role of Chief Executive at Manchester Science Parks Ltd.

Kevin Crotty

Peter Crowther

John Marland

Richard Burgess

Chief Financial Officer Kevin qualified as a Chartered Accountant with Deloitte, and joined Bruntwood in 2002, overseeing the company’s financing. He joined the board in 2007 as Banking Director and was promoted to CFO in 2011. Project Management Director John has worked at Bruntwood since graduating in 1991. He qualified as a Chartered building surveyor in 1997 and became a Board Director in 2004. John and his team manage the refurbishment of all vacated space and the delivery of bespoke fit-out projects for Bruntwood customers.

Andrew Butterworth

Sales Director Andrew joined Bruntwood in 1997, with a Masters in Commercial Property Management. He manages the in-house team of surveyors with responsibility for customer sales and retention across the portfolio.

Development Director Peter joined Bruntwood in 1997 with a degree in Urban Land Economics. He became Development Director in 2004 and takes the leading role in many of the company’s substantial development projects.

Chris Roberts

Development Director Chris joined Bruntwood in 1993 with a degree in Urban Estate Planning. He worked on both the development and sales sides of the business before becoming a Director in 2004. He is currently leading the development activity on Corridor Manchester.

Director of Facilities Management After a successful career in the hospitality and leisure sector, Richard joined Bruntwood in 2002 and has headed up the Facilities Management team since 2008. His role focusses on driving improvements in service levels whilst ensuring the effective management of service charges.

Iain Grant

Rob Yates

Colin Sinclair

Director of Asset Management A Chartered Surveyor with a 30-year track record, Rob joined Bruntwood in 1989 and became a main Board Director in 1995. He is responsible for the strategic and operational management of the portfolio, including all aspects of customer service.

Buildings Management Director A qualified Chartered Building Surveyor Iain joined Bruntwood in 1986 and became a Director in 1993. He is responsible for the operational performance of the company’s property assets, including environmental performance improvements. Director of Property Marketing Colin joined Bruntwood in 2010 after five years as the Chief Executive of the Greater Manchester inward investment agency, MIDAS. He is responsible for the marketing of the Bruntwood portfolio and of new opportunities in the technology, digital and creative sectors.

The long view: Michael Oglesby looks for the new opportunities to be found in the ongoing economic downturn

The economic picture remains difficult and uncertain. But difficult times produce new opportunities for those with the skill and ability to take advantage of them. As I put pen to paper for what is the 36th annual report commentary I have made since Bruntwood began, both of the themes I raised 12 months ago still hold true: the length and the depth of the economic recession we were experiencing and the opportunities this presents for companies willing and able to take them. The economic situation shows little signs of improvement. The European economy is still in a state of ongoing turbulence and the elections in the USA and China have done little to create clarity. Here at home, the government is indicating it will need a second term in office to see some real improvement in our current circumstances, so businesses must continue to keep their belts well and truly tightened. However, recessions are relative. The investment and infrastructure spend we are currently seeing in the regions is at far greater levels than has historically been the case at this stage in a recession. Two of the great drivers of the Manchester region’s economy – the airport and our great universities – are about to embark on unprecedented expenditure programs running into many hundreds of millions of pounds. Across the North of England, projected spend particularly on transport improvements to the rail and tram network continues at levels not seen for many years. In addition, regional cities are putting their weight behind strong public/private partnerships, creating a determination to work together for growth – all factors which will undoubtedly have a significant impact on our future prosperity.

For Bruntwood, we are seeing activity across a variety of new fields, from hotel developments and science parks to residential conversions. With the inherent and unrivalled skills we have within our business, we know that there is a wide variety of sectors and markets out there that we can successfully apply ourselves to, at a time when others are only able to batten down the hatches. It is the strength of our core business that allows us to take advantage of these new opportunities. Despite the difficult trading conditions, we have had one of our strongest years for customer retention and new business for quite some time. The debt refinancing we need to accomplish in 2014 will undoubtedly present a critical challenge, but the Bruntwood brand is held in high regard within the financial community and we are confident that we have a number of options available to us. It is in the certainty of that high regard that, after 35 years, my son Chris has taken a controlling interest in our group, a further step in a process of succession planning that has been underway since 2000. In the near future, I shall be handing over complete control of the group in the certain knowledge that it is in good hands to deal with the challenges and opportunities that lie ahead. Michael Oglesby CBE DL Chairman

Published February 2013 Bruntwood City Tower Piccadilly Plaza Manchester M1 4BT General enquiries: 0161 237 3883 Sales enquiries: 0800 731 0300 bruntwood.co.uk

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