Workspace Group PLC (LON:WKP), London’s leading provider of sustainable, flexible work space, has today announced its results for the half year to the 30th September 2022.
Financial highlights: Strong increase in trading profit and dividend
| ● | Trading profit after interest† up 33.5% to £29.1m (30 September 2021: £21.8m) driven by 36.8% (£15.1m) increase in net rental income to £56.1m |
| ● | Profit before tax of £35.8m (30 September 2021: £3.4m) after exceptional costs of £2.9m which include the integration of McKay |
| ● | Interim dividend up 20% to 8.4p per share (30 September 2021: 7.0p) |
| ● | Property valuation stable at £2,863m, an underlying increase** of 0.3% (£8m) from 31 March 2022 |
| ● | EPRA net tangible assets per share down 1.4% from 31 March 2022 to £9.74 |
| ● | Robust balance sheet with £263m of cash and undrawn facilities and LTV of 33% (31 March 2022: 23%) |
| ● | Average cost of debt of 3.5% with 71% at fixed rates (at current debt levels) and a weighted average drawn debt maturity of 4.1 years |
Customer activity: Stable occupancy and improving pricing
| ● | Continued resilient levels of customer demand and letting activity highlighting the appeal of our flexible offer |
| ● | Like-for-like rent roll up by 3.6% to £94.5m in the six months to 30 September 2022 |
| ● | Like-for-like occupancy stable at 89.6% with rent per sq. ft. up 4.0% in the half year to £38.59 |
| ● | Strong demand at recently completed projects with occupancy up 6.7% in the first half to 76.7% |
Portfolio activity: McKay integration complete and active capital recycling
| ● | Operational integration of McKay complete and McKay debt facilities amended |
| ● | Expect to complete the sale of the residential component of our mixed-use redevelopment at Riverside, Wandsworth for £55m in January 2023 |
| ● | Completed the sale of a medical centre in Newbury from the McKay portfolio for £7.25m |
| ● | Progressing with the planned disposal of other McKay non-core assets, with timing dependent on market conditions |
Sustainability: A differentiated model
| ● | An inherently green property portfolio with energy intensity already 30% lower than industry best practice standard |
| ● | Targeting a 5% reduction in operational energy and scope one gas emissions in the year |
| ● | On track to increase the percentage of EPC A and B rated space by 10% in the year |
Commenting on the results, Graham Clemett, Workspace Group Chief Executive Officer said:
“Having delivered a rapid recovery from the challenges of the Covid period, I am delighted with our continued progress. Occupancy has now stabilised, pricing is steadily increasing, new space is letting up well and we have completed the integration of the McKay business. This robust operational performance has driven the strong financial results we are reporting for the first half.
We are clearly in a period of economic uncertainty with elevated inflation. We are mindful of this in the way we actively manage our relationships with customers and business partners and the support we provide to our staff. We are also focused on tightly controlling our own costs and prudently managing our balance sheet.
Our customers are innovative and agile SMEs operating across a diverse range of sectors and industries and the way they want to use their space reflects this diversity. Their space is an integral part of their business, and they want choice and control over how they fit it out. We provide our customers with a blank canvas and over half use their space in a non-traditional way – work space, not office space. This is true flexibility and is what continues to set us apart in the expanding flexible market.
Despite the current economic challenges, we are well placed to deliver a strong trading performance for the full year. We have good momentum from the rental growth in the first half and we are seeing resilient customer demand into the second half of the year. We will continue to pursue our disposal programme where the reduction in income from disposals will be offset by a similar level of interest cost saving.
As the pioneers of flex in London, we have a long track record of success and a clear plan to realise our growth potential. By owning great buildings, upgrading them to meet our customers’ needs, recycling capital into new opportunities and delivering our project pipeline, we can capture more of the significant market opportunity ahead of us and deliver sustainable long term growth.”
Summary Results
| September2022 | September2021 | Change | |
| Financial performance | |||
| Net rental income | £56.1m | £41.0m | +36.8% |
| Trading profit after interest† | £29.1m | £21.8m | +33.5% |
| Profit before tax | £35.8m | £3.4m | |
| Interim dividend per share | 8.4p | 7.0p | +20% |
| September2022 | March2022 | Change | |
| Valuation | |||
| EPRA net tangible assets per share† | £9.74 | £9.88 | -1.4% |
| Property valuation† | £2,863m | £2,402m | +0.3%** |
| Financing | |||
| Loan to value | 33% | 23% | +10%* |
| Undrawn bank facilities and cash | £263m | £442m | -£179m |
† Alternative performance measure (APM). The Group uses a number of financial measures to assess and explain its performance. Some of these which are not defined within IFRS are considered APMs. For further details see Notes to the Financial Statements.
* absolute change
** underlying change excluding capital expenditure and disposals and including McKay at acquisition value
