1st Quarter Results

Workspace Group PLC
13 August 2001

                               WORKSPACE MAKES

                           STRONG START TO THE YEAR

                          AS RENTAL GROWTH ADVANCES

Workspace Group PLC ('Workspace'), today announces its results for the first
quarter to 30 June 2001. Workspace is the leading provider of flexible
business accommodation to small and medium size enterprises ('SMEs') in London
and the South East.

      - Pre-tax profits up 29% to £2.9million (2000: £2.2million)

      - Earnings per share up 27% to 13.1p (2000: 10.3p)

      - Turnover up 17% to £10 million (2000: £8.5 million)

      - Sale of Midlands portfolio for £42.3 million

      - Annual rent roll during quarter up to £25.57 million (31March 2001: 
        £24.94 million)

      - Net asset value per share up to £12.06 (31 March 2001: £11.93)

Commenting on the results, Harry Platt, Chief Executive, said,

' Workspace has made an excellent start to the year. Demand for our type of
space and services remains high. Our accommodation is very flexible and
appeals to a wide range of small businesses. Our market place of SMEs has
considerable depth and many of our customers are robust second-generation
operations. Core occupancy has remained stable at 89%, while rents have risen
by £0.5 million.

' The sale of the Midlands portfolio for £42.3 million gives us significant
firepower to re-invest in opportunities in our core markets of London and the
South East.

' Our digital services initiative, Vylan, was launched on 25 June. This is an
initiative to provide broadband connectivity and related services to customers
at our business centres. Sales progress to date is ahead of plan and future
prospects are encouraging.

' The future for the business remains positive. Enquiry levels are encouraging
and our rent review programme continues to produce good results.'

                                    -ends-

Date: 13 August 2001

For further information please contact:

Harry Platt, Chief Executive               Simon Courtenay

Mark Taylor, Finance Director              Ed Senior

Workspace Group PLC                        City Profile Group

020-7247-7614                              020-7726-8588

e-mail: [e-mail]          e-mail:[e-mail]

web: www.workspacegroup.co.uk



Operating and Financial Review

Review of Activities

This has been another quarter of intense activity, with continued good
progress resulting in pre-tax profits of £2.9 million for the quarter, 29% up
on the same period last year.

A highlight of the quarter was the sale of the Midlands portfolio for £42.3
million, representing 11% by value of the Group's total portfolio at 31 March
2001, as the Group focused its expansion on the London and the South East
market.

Throughout the quarter core occupancy has remained stable at around 89%.
Lettings and renewals activity has continued in a setting of consistent
demand. Average rents of the core London and South East portfolio have
increased by 3.3% in the first quarter alone. Excluding the Midlands
portfolio, the rent roll has increased by £0.63 million or 2.5% to £25.57
million (from £24.94 million at 31 March). Of this change £0.11 million
reflects the net effect of acquisitions/disposals, whilst £0.52 million
reflects underlying rental growth.

Two property acquisitions were contracted during the period whilst, in
addition to the Midlands disposal, one other estate was sold. Following the
quarter end, contracts were exchanged for the disposal of a further estate.
Both of the estates sold were of older style industrial accommodation with
limited longer term potential, and have a combined exit yield of 6.0%.

Our new digital services initiative, Vylan, was launched on 25 June. This is a
pilot initiative to provide broadband connectivity and related services to
tenants at our business centres. Sales progress to date is ahead of plan and
future prospects encouraging.

Acquisitions and Disposals

On 15 June the Group sold its entire Midlands portfolio. The Group's London
and South East properties have consistently outperformed those in the
Midlands. Furthermore, economic activity in its principal customer group, the
small to medium-sized enterprises (SME) sector, has been and continues to be,
focused more actively in the South East. The Group decided therefore that it
should increase its holdings and leadership position in this area through this
disposal to provide funds for reinvestment in London and the South East. One
further disposal was also made during the quarter, Ashburton Trading Estate,
which is situated on the site of the proposed new ground for the Arsenal
Football Club.

During the quarter the Group completed the purchase of Harlow Enterprise
Centre, Harlow, for £3.6 million, and exchanged contracts (with completion
following the quarter end) on a further property, Quality Court, London WC2
for £4.22 million. Refurbishment works on the latter are scheduled to commence
in September.

The table below shows the main details of acquisitions and disposals in the
first quarter:

   Name of Property              Description            Acquisition/   Annual
                                                         Sale Price    Income
    Acquisitions:

  Harlow Enterprise    Single storey estate; 28 units      £3.6m      £344,325
   Centre, Harlow,            in 51,851 sq. ft

    Quality Court,         24,102 sq. ft - vacant          £4.22m        Nil
     London, WC2          subject to refurbishment


      Disposals

  Midlands portfolio   26 multi-let estates; in total      £42.3m   £4,361,240
                             1.22 million sq. ft                      

  Ashburton Trading     Single Storey Estate; 5 units      £2.8m      £230,000
  Estate, London N7           in 63,065 sq. ft

Following the quarter end agreements were exchanged for the sale of Arklow
Road Trading Estate, London SE14, for £2.9 million. This estate has been sold
to an owner occupier at 21% surplus to book value at 31 March 2001. With its
relatively low level of gearing at 60.5% at 30 June 2001, the Group has
substantial capacity to make further acquisitions in London and the South
East.

Cash Flow and Financing

There was a net cash inflow of £0.98 million (2000: £1.8 million) during the
period. Net cash flow from operating activities was an inflow of £5.1 million
for the quarter (2000: £6.3 million). Capital expenditure in the quarter of 
£5.9 million was offset by disposal proceeds of £44.8 million (2000: net £5.5
expenditure). At the quarter end gearing stood at 60.5% (2000: 104.6%).

Occupancy and Trading Statistics

The Group's key statistics relating to its trading operations are given in the
table below. Since the Midlands portfolio was sold during the quarter, opening
values at 31 March 2001 have been restated to exclude the properties sold.

                                                         30 June       31 March
                                                            2001           2001

Number of estates                                             78             78

Total floorspace at end of period (sq.ft.)             4,529,740      4,525,030
of which:

London and South East (sq.ft.)                         4,127,378

Three Mills and developments (sq.ft.)                    402,362

Lettable floorspace of core portfolio (sq.ft.)         4,075,527      4,062,033

Lettable units (number)                                    3,521          3,507

Annual rent roll of occupied units                   £25,570,817    £24,941,423

Average rent (£/sq ft)                                     £6.71          £6.39

Average rent of core portfolio (£/sq ft)                   £6.87          £6.65

Occupancy overall                                          84.2%          86.2%

Occupancy of core portfolio                                88.6%          89.8%


Comparisons of overall occupancy and rent roll are distorted by acquisitions,
disposals and transfers. The 'core portfolio' is defined as those properties,
excluding Three Mills (which due to the short term nature of lettings of
studio space has a volatile occupancy rate which can obscure overall
patterns), that have been held throughout the year to date and which are not
subject to refurbishment/redevelopment programmes.

Current Trading

Compared with this time last year, enquiry levels continue at good rates and
the rent review programme continues to produce good results. We are monitoring
carefully the current uncertainties in the wider economy. To date, the
prospects in our market place remain strong and good progress has been made in
achieving our targets for the year. We continue to follow a large number of
potential acquisitions but will only conclude those which we are confident
will yield long term value for our shareholders.

Unaudited Consolidated Profit and Loss Account
for the 3 months ended 30 June 2001
                                                        3 months ended 30 June
                                                            2001           2000

                                                            £000           £000
                       ________________________________________________________
Turnover - continuing operations                          10,013          8,547
Rent payable and direct costs                            (2,705)        (2,304)
                       ________________________________________________________
Gross profit                                               7,308          6,243
Administrative expenses                                  (1,401)        (1,179)
                       ________________________________________________________
Operating profit - continuing operations                   5,907          5,064
Profit/(Loss) on Disposal of investment property               3           (12)
Interest receivable                                           85            115
Interest payable and similar charges                     (3,131)        (2,946)
                       ________________________________________________________
Profit on ordinary activities before taxation              2,864          2,221
Taxation on profit on ordinary activities                  (772)          (600)
                       ________________________________________________________
Profit attributable to shareholders                        2,092          1,621
Dividends                                                      -              -
                       ________________________________________________________
Retained for the period                                    2,092          1,621
                       ________________________________________________________
Earnings per shares (basic)                                13.1p          10.3p
Diluted earnings per share                                 12.7p          10.1p

(Other than the profit for the period there were no other recognised gains or
losses during the period (2000: Nil)



Consolidated Balance Sheet
                                                        Unaudited       Audited
                                                     30 June 2001 31 March 2001
                                                             £000          £000
                       ________________________________________________________
Fixed assets
Tangible assets
Investment properties                                     327,254       366,525
Other fixed assets                                          1,547           999
Investment in own shares                                    1,015         1,015
                       ________________________________________________________
                                                          329,816       368,539
                       ________________________________________________________
Current Assets
Debtors                                                     6,716         5,844
Investments                                                22,383         5,373
Cash at bank and in hand                                      296           206
                       ________________________________________________________
                                                           29,395        11,423
Creditors: amounts falling due within one year
Loans and overdrafts                                      (3,505)       (4,355)
Others                                                   (25,769)      (25,658)

                      ________________________________________________________
Net current assets/(liabilities)                              121      (18,590)
                       ________________________________________________________
Total assets less current liabilities                     329,937       349,949
Creditors: amounts falling due after more than one
year loans (including Convertible Loan Stock)           (136,263)     (158,371)
                       ________________________________________________________
                                                          193,674       191,578
                       ________________________________________________________
Capital and reserves
Called up share capital                                     1,618         1,618
Share premium account                                      40,670        40,666
Revaluation reserve                                       118,529       122,739
Profit and loss account                                    32,857        26,555
                       ________________________________________________________
Shareholders' funds - equity interests                    193,674       191,578
                       ________________________________________________________
Net asset value per share                                  £12.06        £11.93
                       ________________________________________________________
Movement in shareholders' fund
Profit for the financial period                             2,092        13,222
Dividends                                                       -       (3,723)
                       ________________________________________________________
                                                            2,092         9,499
Issue of Shares                                                 -            27
Share premium account                                           4           871
Revaluation reserve - increase                                  -        38,673
Taxation on valuation surpluses realised on sale of             -         (510)
properties
                       ________________________________________________________
Net movement in shareholders' fund for the                  2,096        48,560
financial period
Shareholders' funds as at 1 April 2001/2000               191,578       143,018
                       ________________________________________________________
Shareholders' fund as at 30 June 2001/31 March 2001       193,674       191,578
                       ________________________________________________________





Unaudited Consolidated Cash Flow Statement
for the 3 months ended 30 June 2001
                                                         3 months ended 30 June
                                                               2001        2000

                                                               £000        £000
                       ________________________________________________________
Net cash inflow from operating activities                     5,137       6,301
Return on investment and servicing of finance               (2,674)     (3,187)
Taxation                                                    (1,200)       (335)
Capital proceeds/(expenditure) - net                         38,916     (5,496)
Equity dividends paid                                             -           -
                       ________________________________________________________
Net cash inflow/(outflow) before use of liquid resources     40,179     (2,717)
and financing
Management of liquid resources                             (17,009)         871
Financing                                                  (22,195)       3,615
                       ________________________________________________________
Net cash inflow                                                 975       1,769
                       ________________________________________________________
Reconciliation of net cash flow to movement in net debt
Increase in cash                                                975       1,769
Increase/(Decrease) in liquid resources                      17,009       (871)
Inflow/(outflow) from movements in debt financing            22,073     (3,541)
                       ________________________________________________________
Changes in debt resulting from cash flows                    40,057     (2,643)
                       ________________________________________________________
Net debt at 1 April                                        (157,147)   (148,731)
Net debt at 30 June                                        (117,090)   (151,374)
                       ________________________________________________________



Notes to the Quarterly Results

1. Basis of Preparation

The unaudited financial information contained in this quarterly report does
not comprise statutory accounts within the meaning of Section 240 of the
Companies Act 1985. The statutory accounts for the year ended 31 March 2001
included an unqualified report of the auditors. The Group's unaudited
quarterly accounts for the period ended 30 June 2001 have been prepared on the
basis of the accounting policies set out in the Annual Report and Accounts for
the year ended 31 March 2001.

2. Segmental Analysis                                   3 months ended 30 June
                                                        2001               2000

                                                        £000               £000
                       ________________________________________________________
Rental Income                                          7,982              6,677
Service charge and other recoveries                    1,715              1,477
Fees, commissions, and sundry income                     316                393
                       ________________________________________________________
                                                      10,013              8,547
                       ________________________________________________________

3. Interest Payable                                     3 months ended 30 June
                                                        2001               2000

                                                        £000               £000
                       ________________________________________________________

Convertible loan stock and debenture stock interest      662                662
Mortgage and bank loan interest                        2,445              2,608
Bank and other interest                                   24                 23
Net development interest capitalised                       -              (347)
                       ________________________________________________________
Charged to profit and loss account                     3,131              2,946
                       ________________________________________________________



4. Taxation

The taxation charge for the three months ended 30 June 2001 is based on the
estimated effective tax rate for the year ending 31 March 2002 of 27% (2001
estimated: 27%).

5. Earnings Per Share and Net Assets Per Share

Earnings per share have been calculated by dividing the profit after tax for
each period attributable to shareholders by the weighted average number of
ordinary shares in issue during the period less investment in own shares of
200,000 (15,979,652 shares). Net assets per share have been calculated by
dividing net assets at the end of each period less investment in own shares by
the number of shares in issue at that time less 200,000 (15,980,682 shares).

6. Valuation

No valuation of investment properties has been carried out at 30 June 2001.
The valuation shown in the unaudited accounts is based on the independent
valuation at 31 March 2001, plus additions at cost less disposals at book
value.

7. Creditors

Creditors falling due within one year include tenants' deposits of £2.99
million (31 March 2001: £3.26 million) and deferred rental and service charges
of £4.30 million (31 March 2001: £4.95 million).

8. Financial Instruments

In accordance with the requirements of FRS 13, an assessment of the fair value
of the Group's financial instruments held for financing purposes has been
undertaken as at 30 June 2001. The results are summarised as follows:

                                                   Book       Fair    Difference
                                                  Value      Value
                                              £ Million   £Million     £ Million

                                                      
                       ________________________________________________________

Short term borrowings and current part of long    (3.5)      (3.5)           -
term borrowings

Long term borrowings                            (136.3)    (142.4)        (6.1)

Financial Assets                                   22.4       22.4            -

Interest rate Cap / Collar                          0.3          -        (0.3)
                       ________________________________________________________
                                                (117.1)    (123.5)        (6.4)
                       ________________________________________________________

This represents 40 pence per issued ordinary share and if applied to net asset
value per share at 30 June 2001 would reduce the latter to £11.66. On a
diluted basis, allowing for conversion of the Group's convertible loan stock,
this adjustment reduces to 18 pence per share. However, the Group has no
obligation or present intention to repay its Debenture and Convertible
borrowings other than at maturity, when they will be repaid at par. Cash
outflows arising from these borrowings will be limited to the future fixed
interest payments and redemption at par. These outflows are unaffected by the
notional market or fair values referred to above.

9. Interim Statement

Copies of this statement will be dispatched to shareholders on Monday 13
August 2001 and will be available from the Group's registered office at
Magenta House, 85 Whitechapel Road, London, E1 1DU from 9.00am on that day.