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Workspace Group PLC Dividend up 20%

Workspace Group PLC (LON: WKP) has today announced its Full Year Results for the year ended 31 March 2019. The comments in this announcement refer to the period from 1 April 2018 to 31 March 2019 unless otherwise stated.

Workspace’s differentiated business model, which combines property ownership, inspiring flexible work spaces and direct customer relationships, has delivered a strong performance as set out below:

Financial highlights

· Net rental income up 16% to £111.0m

· Trading profit after interest up 19% to £72.4m

· Profit before tax £137.3m (2018: £170.4m) with strong increase in trading profit offset by lower uplift in property valuation and lower disposal profits than prior year

· Underlying increase of 2.7% in property valuation to £2,604m

· EPRA net asset value per share up 4.7% to £10.86

· 20% increase in total dividend to 32.87p reflecting the strong financial performance and positive outlook

· Total accounting return of 7.5%

· Loan to value stable at 22% with £127m of undrawn facilities

Operating performance in the year

· Good customer demand with enquiries averaging 1,048 per month (2018: 1,016)

· Total rent roll up 12.9% to £127.5m

· Like-for-like rent roll up 2.2% to £76.0m

· Like-for-like occupancy at 90.9%, down 0.9% in the year impacted by new building launches

· Rent per sq. ft. up 3.8% to £39.80

Strategic progress and business update

· Three acquisitions totalling £213m completed in the year

· Three small office buildings sold for £52m, 23% above book value at 31 March 2018

· Two redevelopments exchanged for sale for £26m in cash and the return of a new 39,000 sq. ft. business centre

· Eight projects, totalling 341,000 sq. ft. successfully completed, launched and letting up well

Commenting on the results, Graham Clemett, Workspace Group PLC Interim Chief Executive Officer said:

“It’s been another busy year for Workspace with an impressive 19% growth in trading profit, on the back of which we are increasing the dividend by 20%. Our continuing success is a credit to the efforts of all our staff and is reflected in a near trebling of our dividend over the last five years.

Focus on the flexible space market is growing, with interest from an increasing range of companies. Our strong performance is testament to the fact that our differentiated model continues to appeal. We provide inspiring, well connected buildings and an offering that gives customers flexibility both in terms of lease length and how they use their space.

We have made good progress over the year in upgrading and expanding our property footprint across London. We completed eight refurbishments which have been met with very strong demand and acquired two well located properties in Camden and Shepherd’s Bush.

While businesses are inevitably cautious in light of the continuing political uncertainty, we are still seeing good customer demand for space. We believe our distinctive approach to the flexible office market is the right one and will continue to deliver value for shareholders.”

Summary results

March 2019March2018Change
Financial performance

Net rental income£111.0m£95.6m+16%
Profit before tax£137.3m£170.4m-19%
Trading profit after interest(1)£72.4m£60.7m+19%
EPRA net asset value per share(1)£10.86£10.37+4.7%
Final dividend per share22.26p18.55p+20%
Total dividend per share32.87p27.39p+20%
Property valuation

CBRE property valuation(2)£2,604m£2,280m+2.7%**

Loan to value22%23%-1%*
Undrawn bank facilities and cash£127m£148m-£21m*

 * absolute change

** underlying change

(1) Adjusted performance measures are used by Workspace to assess and explain its performance but are not defined under IFRS.

–       Trading profit after interest is net rental income, less administrative expenses and net finance costs (excluding exceptional finance costs).

–       EPRA net asset value represents net assets after excluding mark to market adjustments of effective cash flow hedges (financial derivatives) and deferred tax relating to revaluation movements, capital allowances and derivatives.

 (2) Refer to note 10 of the accounts for the reconciliation of the CBRE property valuation to Investment Properties as per the balance sheet.