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Workspace Group PLC

Workspace Group PLC Strong performance driven by customer demand

Workspace Group PLC (LON:WKP) today announced results for the six months ended 30 September 2018. The comments in this announcement refer to the period from 1 April 2018 to 30 September 2018 unless otherwise stated.

Financial highlights

· Strong growth in net rental income, up 17% year on year to £54.1m, resulting in 20% growth in adjusted trading profit after interest to £35.4m

· Reported profit before tax of £101.6m (September 2017: £123.7m), with growth in trading profit offset by a lower increase in property valuation and reduced disposal profits

· Underlying increase of 2.6% (£62m) in the property valuation (September 2017: £72m)

· EPRA net asset value per share up 3.7% to £10.75

· 9.96% equity placing completed in June 2018, raising gross proceeds of £179m

· Loan to value of 18% at 30 September 2018 increasing to 22% on a proforma basis following the acquisition of The Shepherds Building, Shepherd’s Bush, in October 2018

· A 20% increase in the interim dividend to 10.61p reflecting the strong financial performance and positive outlook

· Workspace assigned a BBB (stable) rating by S&P

Operating performance in the period

· Total rent roll up 1.9% to £115.0m (31 March 2018: £112.9m)

· Like-for-like rent roll up 2.7% to £76.8m (31 March 2018: £74.8m)

· Like-for-like rent per sq. ft. up 2.8% to £38.88 and occupancy stable at 91.8% at 30 September 2018

· Good level of customer demand with enquiries averaging 1,020 per month (2017/18: 1,016 per month) and lettings averaging 92 per month (2017/18: 93 per month)

Strategic progress and business update in the period

· Two acquisitions completed for £89m, with a further £125m acquisition in October 2018

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

· One mixed-use redevelopment exchanged for sale for £15m in cash and the return of a new 39,000 sq. ft. business centre

· Three refurbishments completed and two new buildings received back from our redevelopment projects

· Expect to complete a further five projects in the second half of the year

Commenting on the results, Jamie Hopkins, Chief Executive Officer of Workspace said:

“We have been extremely active across our portfolio during the first half of the year and I am encouraged by the good like-for-like performance, alongside delivery of our project pipeline and the acquisition and integration of some exciting new properties.

“The new and upgraded business centres that we have launched over the last six months are already letting up well and, with a healthy pipeline of further refurbishment and redevelopment projects underway, we are confident that our product is meeting the ongoing customer demand for high quality space.

“Despite the uncertain political and economic environment, we believe that we have the right strategy – owning and actively managing our assets alongside building direct relationships with customers – and a strong balance sheet to take advantage of opportunities and deliver value for shareholders. The 20% increase in the interim dividend we’ve announced today is a reflection of the strong growth in trading profit and our outlook for the future.”

Summary results

September 2018




Financial performance

Net rental income




Profit before tax




Adjusted trading profit after interest(1)




Interim dividend per share




September 2018




Property valuation

CBRE property valuation(2)




Like-for-like capital value per sq. ft.




Like-for-like initial yield




Like-for-like equivalent yield




EPRA net asset value per share(1)





Loan to value




Undrawn bank facilities and cash




 * absolute change

** underlying change which excludes capital expenditure, acquisitions and disposals

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

–       Adjusted trading profit after interest is net rental income and joint venture trading, less administrative expenses and net finance costs and 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 9 of the financial statements for the reconciliation of the CBRE property valuation to Investment Properties as per the balance sheet.


Definitions of other performance measures included in the results are consistent with those in the glossary contained in the Annual Report and Accounts for the year ended 31 March 2018.