3rd Quarter Results
Workspace Group PLC
23 February 2004
WORKSPACE EYES CONFIDENT FUTURE
AS Q3 RESULTS SHOW PROGRESS
Workspace Group PLC ('Workspace'), the leading provider of flexible business
accommodation to small and medium sized enterprises ('SMEs') in London and the
South East today announces its financial results for the third quarter and nine
months ended 31 December 2003.
Highlights:
• Pre-tax profits on trading operations up 14% to £10.26 million (2002:
£9.0 million)
• Pre-tax profits up 46.7% to £10.97 million (2002: £7.48 million)
• Turnover £13.21 million for the quarter, up by 16.4%, and for the nine
month period £37.23 million, up by 13.8%
• Overall occupancy stable at 83%; excluding developments, occupancy 87%
• Basic earnings per share 47.8p, up 44.4% (31 December 2002: 33.1p)
• Net Asset Value per share at 31 December 2003 £16.25, up 13.6% over the
twelve months, (31 December 2002: £14.31)
• Two acquisitions, value £16.7m, in the quarter and disposal of Kingsland
Viaduct for £8.25m. Other acquisitions and disposals targeted in the fourth
quarter
Commenting on the results, Harry Platt, Chief Executive said,
' Workspace has continued its consistent progress during the quarter.
' Our programme to maximise value from our estates is very active, with a number
of properties affected by refurbishment and planned disposal. This has a
short-term impact on occupancy and rents due to voids but in time will deliver
significant value enhancement through increases in rent and improved asset
values.
' Enquiries are buoyant and we are encouraged by reports of improved business
confidence. The Group's key strength is the robustness of our business model and
the stability of the SME sector. During 2004, we plan to extend our position as
the market leader in flexible accommodation for SMEs in London and the South
East. We are targeting a further £60m in acquisitions and are confident of
reporting another year of earnings and NAV growth.'
- ends -
Date: 23 February 2004
For further information contact:
Workspace Group PLC City Profile
Harry Platt, Chief Executive Simon Courtenay
Mark Taylor, Finance Director Chris Lane
020-7247-7614 020-7448-3244
e-mail: info@workspacegroup.co.uk
Web: www.workspacegroup.co.uk
Operating & Financial Review
Chairman's Statement
These are good third quarter results against a subdued market background
throughout 2003. Trading profits for the nine months are up 14% on the same
period last year, basic trading earnings per share are up 12.9% and net asset
value per share is up 13.6%.
We are already the market leader in the provision of space to SMEs in London and
the South East - and plan to strengthen this position through our target of a
further £60 million acquisitions in 2004.
It is only a few weeks until the financial year end and the Group is confident
of reporting a year of continued growth in both earnings and net assets per
share. At the same time, with the benefit of our new investments, the completion
of refurbishment schemes, and with improvements in the economy, our platform for
growth in future years looks promising.
Following the Chancellor's pre-budget statement last November there has been
much speculation on the opportunity that the introduction of REITs presents to
the property sector. We look forward to the further guidance promised in the
forthcoming budget.
Chief Executive's Statement
Overall occupancy has remained stable in the quarter at 83%. On a like for like
basis, excluding development sites and new acquisitions, occupancy was 87% at
31st December 2003. Given the challenging economic background over recent
periods these are good occupancy levels demonstrating the robustness of both the
SME sector in general, and our business model in particular. With a
strengthening economy and through the re-letting of space currently being
refurbished, we expect occupancy levels to improve, albeit slowly, towards 90%
by the Spring of 2005. Each 1% improvement in occupancy should give rise to
almost £0.4 million p.a. extra income.
Average rents have also remained broadly stable throughout the period and are
now £8.36 per sq. ft. These are affordable rent levels for our small and medium
sized business customers in the Greater London area. We anticipate that
significant improvements in average rents will arise again once like for like
occupancy levels regain the 90% level, which is unlikely to be before 2005/06.
The total rent roll now stands at £36.8 million. This is some 2.5% up on the
rent roll at the start of this year, but £0.2 million down on the figure at the
end of the last quarter. Acquisitions, net of disposals, contributed an increase
of £0.26 million in the quarter. Against this, reductions in the rent roll,
mainly at estates where we are targeting disposals (Hooley Lane, Thurston Road,
Wharf Road) or where refurbishment schemes are in progress or planned (Barley
Mow, Enterprise House, Europa, Quality Court and Clerkenwell), totalled £0.46
million. The market value of the vacant space (assuming letting to a 90%
occupancy level) on refurbishment projects totals £2.4 million which provides
ample scope for growth in rents going forward in future periods.
Portfolio
The table below shows the main details of acquisitions and disposals during the
quarter.
Name of Description Acquisition Initial Market
Property /Disposal Annual Rent at
Price Income 31/12/03
Acquisitions
Atlas Business Office and £12.65m £1.14m £1.32m
Centre, industrial estate,
Staples comprising 115 units
Corner, in 153,800 sq. ft
London
NW2
National Modern industrial £4.00m £0.32m £0.39m
Works, estate, comprising
Hounslow 40 units in 48,000
sq. ft
Disposals
Kingsland Railway Arches ) £8.25m £1.2m
Viaduct (before ground rent)
Union Walk Railway Arches )
Both of the acquisitions had been monitored for a long time. The Atlas Business
Centre is located well at Staples Corner, London NW2, and complements the
Group's other estates along the North Circular Road; both to the West (Acton
Business Centre, Park Royal) and to the East (Bounds Green, Haringey). National
Works is in Hounslow, a part of London in which the Group has been keen to
increase its representation for some time. The two acquisitions give a combined
initial income yield of 8.77%, with an underlying capital value of £83 per sq.
ft. The Group is confident that it will be able to improve the performance at
these estates by the application of its marketing and management methods.
Since the quarter end the Group has acquired Linton House for £8.5 million.
Again, this shows a good initial income yield, of 9%, and is located in a part
of Southwark that the Group knows well.
The disposal of the Group's leasehold interests in Kingsland Viaduct and Union
Walk to London Underground has paved the way for the proposed East London Line
Extension. The Group acquired the leasehold interests in this mile long length
of railway arches in 1996 and has undertaken an extensive programme to refurbish
a number of arches, which in turn has encouraged a wider programme of urban
regeneration in the area.
We anticipate announcing further acquisitions and disposals before the year end.
Progress continues to be made on the Group's refurbishment schemes. Works at
Europa House are complete with 12 lettings in place. Quality Court was completed
in November 2003 and is now 20% let, and a further 8,500 sq. ft is now available
at Enterprise House. Work at the Leathermarket and Barley Mow will be complete
in the Spring with the space available for letting in the next financial year.
Phase 2 of the works at Enterprise House, together with the refurbishment of
Clerkenwell Workshops are programmed for 2004/05.
The portfolio statistics, and progress through the year to date, may be
summarised as follows:
31 December 30 September 30 June 31 March
2003 2003 2003 2003
Number of 101 101 92 92
estates
Total
floorspace at 5,277,250 5,363,701 5,103,237 5,104,519
end of period
(sq.ft.)
of which:
Like for like 4,294,051 4,298,980 4,324,984 4,326,717
portfolio
(sq. ft.)
Net 461,245 542,226 269,529 269,529
Acquisitions/
Disposals
(sq. ft.)
Three Mills 521,954 522,495 508,724 508,273
and developments
(sq. ft.)
Lettable 4,502 4,454 4,228 4,190
units (number)
Annual rent
roll of 36,757,994 37,002,573 35,429,332 35,906,404
occupied
units (£)
Average rent 8.40 8.28 8.37 8.21
(£/sq. ft)
Average rent 8.36 8.30 8.44 8.32
of like-for-like
portfolio (£/sq. ft)
Occupancy 82.9% 83.3% 83.0% 85.7%
overall
Occupancy of 87.0% 88.0% 87.9% 90.0%
like-for-like
portfolio
Comparisons of overall occupancy and rent roll are distorted by acquisitions,
disposals and transfers. The 'like-for-like 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.
Financial Review
Earnings growth at 14% continues to be good, despite the reduction in occupancy
during the year. This growth has been assisted by the contribution from
acquisitions both in the current year and through the full year effect of prior
year acquisitions. Further assistance was obtained from the £0.4 million
settlement of compensation claims on the disposal of Kingsland Viaduct which was
the subject of a Compulsory Purchase Order.
Growth in earnings on trading operations is likely to be slower next year as the
impact of the reduction in occupancy is absorbed and repaired through the
re-letting of space in what appears now to be a more confident customer
marketplace. Headline or basic earnings are expected however to benefit from
targeted disposals.
Once again, the Group has disposed of investment property at a profit of £0.7
million continuing the uninterrupted pattern over 6 years of disposals.
Acquisitions during the year to date have averaged a capital cost of £121 per
square foot and the portfolio at 31 December 2003 averaged £109 per square foot,
both of which are low values particularly given investment interest of late.
In the Balance Sheet properties held for sale have increased during the year
following the agreement of terms for the disposal of the Group's interests at
Payne Road, land at Canalot Studios and Thurston Road.
Net cash inflow from operating activities was £23.02 million (2002: £20.16
million). Following a net capital expenditure outflow of £59.08 million (2002:
£48.79 million) and financing inflows of £50.72 million (2002: £42.48 million)
the net cash outflow for the period was £0.66 million (2002: £2.35 million
inflow). Net debt at the end of the period was £295.4 million (31 December 2002:
£220.0 million, 31 March 2003: £242.4 million) taking the Group's gearing to
111%. Of the Group's debt at 31 December, 61% was either fixed or the subject of
hedging arrangements. The average cost of funds (based on 31 December LIBOR
rates) was 5.71%. Interest cover over the period was 1.97 times. With cover at
this level the Group is comfortably able to service its debts. At the period end
the Group had committed but undrawn loan facilities of £29.0 million, sufficient
to cover its immediate investment plans, together with uncharged assets
available to collateralise future borrowings.
Key financial statistics and indicators may be summarised as follows: -
9 Months to 6 Months to Year to 9 Months to
31/12/2003 30/09/2003 31/03/2003 31/12/2002
------------------- --------- --------- ---------- ----------
Gross profit: turnover 73% 72% 71% 71%
Operating profit:turnover 58% 58% 57% 57%
PBT: turnover 29% 28% 30% 23%
EPS per share (pence) 47.8 28.9 64.3 33.1
NAV per share (£) 16.25 16.15 15.10 14.31
Interest cover 1.97 1.90 *2.18 *1.98
Trading interest cover 1.91 1.90 *1.97 *1.95
Gearing 111% 108% 98% 94%
Available facilities (£m) 29.0 30.0 75.0 45.0
------------------- --------- --------- ---------- ----------
* Excludes non cash refinancing costs in 2002/3 (none in 2003/4)
Taxation
Tax has been provided at the rate of 30% (2002/3: 30%) being the estimated rate
of tax on ordinary activities for the year as a whole. It should be noted that
the full year tax charge on total profits on ordinary activities will be
affected by the timing and extent of disposals
Prospects
There are signs of improved business confidence in our customer base and
enquiries are buoyant. This, together with the anticipated letting of recently
refurbished space gives us confidence that occupancy levels should start to
improve in the next financial year fuelling rental income growth.
Investment sentiment for our sector remains good, yielding the prospect of
further good capital growth in our asset values.
Consolidated Profit and Loss Account
for the 9 months ended 31 December 2003
Audited Unaudited Unaudited 9 months ended 31 December
year ended 3 months ended
31 March 31 December
Trading Other Total Total
Operations Items
------- -------------------- ------ ------ ------- -------- ------ ------- ------
2003 Notes 2003 2002 2003 2002
£000 £000 £000 £000 £000 £000 £000
------- -------------------- ------ ------ ------- -------- ------ ------- ------
44,965 Turnover - 2 13,213 11,354 37,227 - 37,227 32,721
continuing
operations
(12,944) Rent payable and (3,486) (3,243) (10,140) - (10,140) (9,457)
direct costs
------- -------------------- ------ ------ ------- -------- ------ ------- ------
32,021 Gross profit 9,727 8,111 27,087 - 27,087 23,264
(6,554) Administrative (2,091) (1,482) (5,498) - (5,498) (4,746)
expenses
------- -------------------- ------ ------ ------- -------- ------ ------- ------
25,467 Operating profit - 7,636 6,629 21,589 21,589 18,518
continuing
operations
2,766 Surplus on disposal 3 673 25 - 705 705 338
of investment
property
173 Interest 4 22 10 40 - 40 104
receivable
(14,993) Interest payable and 5 (4,003) (3,483) (11,367) - (11,367) (11,483)
similar charges
------- -------------------- ------ ------ ------- -------- ------ ------- ------
13,413 Profit on ordinary 4,328 3,181 10,262 705 10,967 7,477
activities before
taxation
(3,046) Taxation on profit 6 (1,298) (934) (3,106) (210) (3,316) (2,216)
on ordinary
activities
------- -------------------- ------ ------ ------- -------- ------ ------- ------
10,367 Profit on ordinary 3,030 2,247 7,156 495 7,651 5,261
activities after
taxation
- Equity minority 20 - - - - - -
interests
------- -------------------- ------ ------ ------- -------- ------ ------- ------
10,367 Profit attributable 3,030 2,247 7,156 495 7,651 5,261
to shareholders
(4,471) Dividends 7 (1) - (1) - (1,659) (1,179)
------- -------------------- ------ ------ ------- -------- ------ ------- ------
5,896 Retained for the 3,029 2,247 7,155 495 5,992 4,082
period
------- -------------------- ------ ------ ------- -------- ------ ------- ------
64.3p Basic earnings per 8 18.9p 14.1p 44.7p 3.1p 47.8p 33.1p
share
62.8p Diluted earnings per 8 18.3p 13.8p 46.6p 32.6p
share
Statement of Total Recognised Gains and Losses
-------- ------------------------------- ------- --------------
Audited Notes Unaudited
year ended 9 months ended 31
31 March December
-------- ------------------------------- ------- --------- -------
2003 2003 2002
£000 £000 £000
-------- ------------------------------- ------- --------- -------
10,367 Profit for the financial period 7,651 5,261
19,701 Unrealised surplus on 3 14,109 8,091
revaluation of investment
properties
- Taxation on valuation surpluses (968) -
realised on sale of
properties
-------- ------------------------------- ------- --------- -------
30,068 Total recognised gains relating 20,792 13,352
to the financial period
-------- ------------------------------- ------- --------- -------
Note of Historical Cost Profits and Losses
Audited Unaudited
year ended 9 months ended 31
31 March December
-------- ---------------------------------- ------------------
2003 2003 2002
£000 £000 £000
-------- ---------------------------------- ---------- ----------
13,413 Reported profits on ordinary 10,967 7,477
activities before taxation
15 Realisation of property 3,673 (87)
revaluation gains/(losses) of
previous years
- Taxation on valuation surpluses (968) -
realised on sale of properties
-------- ---------------------------------- ---------- ----------
13,428 Historical cost profit on ordinary 13,672 7,390
activities before taxation
-------- ---------------------------------- ---------- ----------
5,911 Historical cost profit for the 8,697 3,995
period retained after taxation and
dividends
-------- ---------------------------------- ---------- ----------
Consolidated Balance Sheet
as at 31 December 2003
Audited Unaudited 31 December
31 March
2003 Notes 2003 2002
£000 £000 £000
---------- -------------------------- ------- -------- ---------
Fixed Assets
Tangible assets
505,490 Investment properties 9 570,639 464,622
3,866 Other fixed assets 3,662 3,913
6,234 Investment in own shares 10 6,206 6,249
---------- -------------------------- ------- -------- ---------
515,590 580,507 474,784
---------- -------------------------- ------- -------- ---------
Current Assets
- Stock: properties for sale 10,711 150
7,386 Debtors 11 6,579 5,617
3,109 Investments 12 1,423 1,960
456 Cash at bank and in hand 109 162
---------- -------------------------- ------- -------- ---------
10,951 18,822 7,889
(28,835) Creditors: amounts falling 13 (30,905) (22,912)
due within one year
---------- -------------------------- ------- -------- ---------
(17,884) Net current liabilities (12,083) (15,023)
---------- -------------------------- ------- -------- ---------
497,706 Total assets less current 568,424 459,761
liabilities
Creditors: amounts falling
due after more than one year
(245,990) (including Convertible
Loan Stock) 14 (296,666) (221,904)
(4,107) Provision for liabilities 16 (4,796) (3,909)
and charges
---------- -------------------------- ------- -------- ---------
247,609 266,962 233,948
---------- -------------------------- ------- -------- ---------
Capital and reserves
1,668 Called up share capital 17 1,673 1,661
42,697 Share premium account 18 42,912 42,467
164,274 Revaluation reserve 18 174,710 152,766
38,970 Profit and loss account 18 47,667 37,054
---------- -------------------------- ------- -------- ---------
247,609 Shareholders' funds - 266,962 233,948
equity interests
- Equity minority interests 20 - -
---------- -------------------------- ------- -------- ---------
247,609 Capital Employed 19 266,962 233,948
---------- -------------------------- ------- -------- ---------
£15.10 Net asset value per share 8 £16.25 £14.31
---------- -------------------------- ------- -------- ---------
Consolidated Cash Flow Statement
for the 9 months ended 31 December 2003
Audited year Unaudited
ended 31 March 9 months ended 31 December
2003 Notes to 2003 2002
£000 Cash Flow £000 £000
---------- --------------------------- --------- ----------------
29,112 Net cash inflow from 1 23,021 20,163
operating activities
(13,454) Return on investments and 2 (10,955) (9,584)
servicing of finance
(2,372) Taxation (2,750) (2,360)
(75,225) Capital (expenditure)/ 2 (59,079) (48,794)
proceeds - net
(4,227) Equity dividends paid (3,299) (3,035)
---------- --------------------------- -------- ---------- ---------
(66,166) Net cash outflow before use (53,062) (43,610)
of liquid
resources and financing
2,334 Management of liquid 2 1,686 3,483
resources
66,715 Financing 2 50,720 42,478
---------- --------------------------- -------- ---------- ---------
2,883 Net cash (outflow)/inflow 3 (656) 2,351
---------- --------------------------- -------- ---------- ---------
Reconciliation of net cash
flow to movement in net
debt
2,883 (Decrease)/increase in (656) 2,351
cash
(2,334) Decrease in liquid (1,686) (3,483)
resources
(66,907) Outflow from movements in (50,676) (42,822)
debt financing
---------- --------------------------- -------- ---------- ---------
(66,358) Changes in net debt 3 (53,018) (43,954)
resulting from cash flows
---------- --------------------------- -------- ---------- ---------
(176,067) Net debt at beginning of (242,425) (176,067)
period
(242,425) Net debt at period end (295,443) (220,021)
---------- --------------------------- -------- ---------- ---------
Notes to the cash flow statement
for the 9 months ended 31 December 2003
1. Reconciliation of operating profit to operating cash flows
------------ -------------------- ----------------
Audited year Unaudited
ended 31 March 9 months ended 31 December
------------ -------------------- ----------------
2003 2003 2002
£000 £000 £000
------------ -------------------- ---------- --------
25,467 Operating profit 21,589 18,518
742 Depreciation charges 420 568
(3) Profit on sale of tangible - -
fixed assets
1,339 (Increase)/decrease in (462) 1,091
debtors
1,567 Increase/(decrease) in 1,474 (14)
creditors
------------ -------------------- ---------- --------
29,112 23,021 20,163
------------ -------------------- ---------- --------
2. Analysis of cash flow
Audited year Unaudited
ended 31 March 9 months ended 31
December
---------- ---------------------- -------- ----------------
2003 Notes 2003 2002
£000 to cash flow £000 £000
---------- ---------------------- -------- ----------------
Returns on investments
and servicing of
finance
191 Interest received 41 122
(13,645) Interest paid (10,996) (9,706)
(including financing
costs)
---------- ----------------------- -------- --------- --------
(13,454) Net cash outflow (10,955) (9,584)
---------- ----------------------- -------- --------- --------
Capital expenditure
(73,192) Purchase of tangible (67,973) (49,559)
fixed assets
(5,219) Net distribution/ 28 -
(purchase) of own
shares
3,037 Sale of tangible fixed 8,866 726
assets
149 Grants received - 39
---------- ----------------------- -------- --------- -------
(75,225) Net cash outflow (59,079) (48,794)
---------- ----------------------- -------- --------- -------
Management of liquid
resources
2,334 Decrease in short-term 3 1,686 3,483
deposits
---------- ----------------------- -------- --------- -------
2,334 Net cash inflow 1,686 3,483
---------- ----------------------- -------- --------- -------
Financing
687 Issue of ordinary share 220 450
capital
180,500 Drawdown of bank 3 50,500 156,500
loans
(114,472) Repayment of 3 - (114,472)
securitised loan
---------- ----------------------- -------- --------- -------
66,715 Net cash inflow 50,720 42,478
---------- ----------------------- -------- --------- -------
3. Analysis of net debt
Audited year ended 31 March 2003 Unaudited 9 months ended 31 December
------- ------ ------- ------------- ------ ------ ------- ------ ------ ------
At Cash flow At At Cash flow At At Cash At
01/04/02 31/03/03 01/04/03 31/12/03 01/04/02 flow 31/12/02
£000 £000 £000 £000 £000 £000 £000 £000 £000
------- ------ ------- ------------- ------ ------ ------- ------ ------ ------
340 116 456 Cash at bank 456 (347) 109 340 (178) 162
and in hand
(2,767) 2,767 - Bank overdrafts - (309) (309) (2,767) 2,529 (238)
------- ------ ------- ------------- ------ ------ ------- ------ ------ ------
(2,427) 2,883 456 456 (656) (200) (2,427) 2,351 (76)
------- ------ ------- ------------- ------ ------ ------- ------ ------ ------
Debt due
within one year:
(3,660) 3,660 - Securitised loan - - - (3,660) 3,660 -
307 (307)* - Less cost of - - - 307 (307)* -
raising finance
Debt due
after one year:
(2,900) - (2,900) 11% Convertible (2,900) - (2,900) (2,900) - (2,900)
Loan Stock
(12,500) - (12,500) 11.125% First (12,500) - (12,500) (12,500) - (12,500)
Mortgage
Debenture
(7,000) - (7,000) 11.625% First (7,000) - (7,000) (7,000) - (7,000)
Mortgage
Debenture
(110,812) 110,812 - Securitised loan - - (110,812) 110,812 -
(44,500) (180,500) (225,000) Bank loans (225,000) (50,500) (275,500) (44,500) (156,500) (201,000)
1,982 (572)* 1,410 Less cost of 1,410 (176)* 1,234 1,982 (487)* 1,495
raising of
finance
------- ------ ------- ------------- ------ ------ ------- ------ ------ ------
(179,083) (66,907) (245,990) (245,990) (50,676) (296,666) (179,083) (42,822) (221,905)
------- ------ ------- ------------- ------ ------ ------- ------ ------ ------
5,443 (2,334) 3,109 Short-term 3,109 (1,686) 1,423 5,443 (3,483) 1,960
deposits
------- ------ ------- ------------- ------ ------ ------- ------ ------ ------
(176,067) (66,358) (242,425) Total (242,425) (53,018) (295,443) (176,067) (43,954) (220,021)
------- ------ ------- ------------- ------ ------ ------- ------ ------ ------
* Includes non-cash write-downs of financing costs.
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 2003 included an
unqualified report of the auditors. The Group's unaudited accounts for the
period ended 31 December 2003 have been prepared on the basis of the accounting
policies set out in the Annual Report and Accounts for the year ended 31 March
2003. The full accounts for the year ended 31 March 2003 have been filed with
the Registrar of Companies.
2. Segmental Analysis
Audited Year Unaudited Unaudited
ended 31 March 3 months ended 9 months ended
31 December 31 December
2003 2003 2002 2003 2002
£000 £000 £000 £000 £000
---------- ------ ----- ------ ------
35,667 Rental Income 9,958 8,993 29,044 25,962
7,410 Service charge 2,299 1,861 6,440 5,445
and other
recoveries
1,888 Services fees, 956 500 1,743 1,314
commissions,
and sundry
income
---------- ------ ----- ------ ------
44,965 13,213 11,354 37,227 32,721
---------- ------ ----- ------ ------
3. Surplus on Disposal of Investment Property
The profit arising on the sale of properties is calculated by reference to the
valuation as at 31 March 2003 plus additions at cost since that date.
Revaluation surpluses identified since the 31 March are disregarded in this
calculation and the unrealised surplus on revaluation of investment properties
is adjusted accordingly. Movements in total recognised gains during the period
were as follows: -
Unaudited Unaudited Unaudited
6 months ended 3 Months ended 9 Months ended
30 September 31 December 31 December
2003 2003 2003
£000 £000 £000
Trading profit on
ordinary activities
(after tax) 4,599 2,557 7,156
Other items (after
tax) 22 473 495
------------------ ------------- ----------- --------------
Profit on ordinary
activities for
financial period
(after tax) 4,621 3,030 7,651
Movement in
unrealised surplus
on revaluation of
investment
properties 14,398 (289) 14,109
Taxation on
valuation surpluses
realised on sale of
properties - (968) (968)
------------------ ------------- ----------- --------------
Total recognised
gains relating to
the financial period 19,019 1,773 20,792
------------------ ------------- ----------- --------------
4. Interest receivable
Audited Year Unaudited Unaudited
ended 31 March 3 months ended 9 months ended
31 December 31 December
---------- --------------------- --------------- --------------
2003 The following amounts 2003 2002 2003 2002
were earned during
the year
£000 £000 £000 £000 £000
---------- --------------------- ------- ------ ------ ------
106 Short-term deposits 8 6 26 100
67 Other 14 4 14 4
---------- --------------------- ------- ------ ------ ------
173 22 10 40 104
---------- --------------------- ------- ------ ------ ------
5. Interest payable and similar charges
Audited Year Unaudited Unaudited
ended 31 March 3 months ended 9 months ended
31 December 31 December
---------- --------------------- --------------- --------------
2003 2003 2002 2003 2002
£000 £000 £000 £000 £000
---------- --------------------- ------- ------ ------ ------
361 11% Convertible Loan 80 80 239 239
Stock 2011
1,391 11.125% First 348 348 1,043 1,043
Mortgage Debenture
Stock 2007
814 11.625% First 203 203 611 611
Mortgage Debenture
Stock 2007
1,884 Mortgage interest on - - - 1,884
securitised loan not
wholly repayable
within five years*
9,241 Bank and other 3,685 2,954 10,227 6,252
interest on amounts
wholly repayable
within five years*
1,861 Finance costs written - - 1,861
off
---------- --------------------- ------- ------ ------ ------
15,552 4,316 3,585 12,120 11,890
(559) Interest capitalised (313) (102) (753) (407)
on development
properties
---------- --------------------- ------- ------ ------ ------
14,993 Charged to profit and 4,003 3,483 11,367 11,483
loss account
---------- --------------------- ------- ------ ------ ------
* includes amortisation of cost of raising finance
6. Taxation
Audited Year Unaudited Unaudited
ended 31 March 3 months ended 9 months ended
31 December 31 December
---------- --------------------- --------------- --------------
2003 2003 2002 2003 2002
£000 £000 £000 £000 £000
---------- --------------------- ------- ------ ------ ------
Current tax:
3,225 UK corporation tax on 1,004 767 2,627 1,672
profit for the year
(921) Prior year - - - -
adjustments
---------- --------------------- ------- ------ ------ ------
2,304 Total current tax 1,004 767 2,627 1,672
---------- --------------------- ------- ------ ------ ------
Deferred tax:
742 Origination and 294 167 689 544
reversal of timing
differences
---------- --------------------- ------- ------ ------ ------
3,046 Tax on profit on 1,298 934 3,316 2,216
ordinary activities
---------- --------------------- ------- ------ ------ ------
Timing differences are mainly in respect of capital and industrial building
allowances and capitalised interest.
7. Dividends
Audited Unaudited Unaudited
year ended 3 months ended 9 months ended
31 March 31 December 31 December
2003 2003 2002 2003 2002
£000 £000 £000 £000 £000
------- --------------------- --------- ------- ------- ---------
1,193 Interim dividend per - - 1,652 1,193
ordinary share 10.3p
(2002: 7.5p)
3,292 Final dividend per - - - -
ordinary share (2002:
20.6p)
(14) Under/(over) 1 - 7 (14)
provision in prior
period
------- --------------------- --------- ------- ------- ---------
4,471 1 - 1,659 1,179
------- --------------------- --------- ------- ------- ---------
8. Earnings per share and net assets per share
The following table shows a reconciliation of profits used in calculating
earnings per share.
Audited year Unaudited 9 months ended 31 December
ended 31 March
------ ------- ----------------------- ------- ------- ------- --------
Profit Earnings Profit Profit Earnings Earnings
per share per share per share
2003 2003 2003 2002 2003 2002
£000 Pence £000 £000 Pence Pence
------ ------- ----------------------- ------- ------- ------- --------
10,367 64.3 Profit for the period 7,651 5,261 47.8 33.1
attributable to
shareholders
(671) (4.2) Other items (495) 1,039 (3.1) 6.5
------ ------- ----------------------- ------- ------- ------- --------
9,696 60.1 Profit for the period 7,156 6,300 44.7 39.6
attributable to
shareholders used for
calculating earnings per
share excluding other
items
Reconciliation of profit used in calculating diluted earnings per share
Audited year Unaudited 9 months ended 31 December
ended 31 March
------ ------- ----------------------- ------- ------- ------- --------
Profit Earnings Profit Profit Earnings Earnings
per share per share per share
2003 2003 2003 2002 2003 2002
£000 Pence £000 £000 Pence Pence
------ ------- ----------------------- ------- ------- ------- --------
10,367 Profit for the period 7,651 5,261
attributable to
shareholders used for
calculating basic earnings
per share
223 Interest saving net of 168 168
taxation on 11%
Convertible Loan Stock
------ ------- ----------------------- ------- ------- ------- --------
10,590 62.8 Profit for the period 7,819 5,429 46.6 32.6
attributable to
shareholders used in
calculating the underlying
diluted earnings per
share
(671) (4.0) Other items (495) 1,039 (3.0) 6.2
------ ------- ----------------------- ------- ------- ------- --------
9,919 58.8 Profit for the period 7,324 6,468 43.6 38.8
attributable to
shareholders used in
calculating the diluted
earnings per share
excluding other items
The following table shows a reconciliation of the weighted average number of shares used for
calculating the basic and diluted earnings per share
Audited year 9 months ended 31 December
ended 31 March
2003 2003 2002
-------- -------- ------------------------------ ------------- ------------
16,119,277 Used for calculating basic 16,013,956 15,879,438
earnings per share
158,075 Dilution due to Share Option 187,960 213,292
Scheme
580,000 Dilution due to Convertible 580,000 580,000
Loan Stock
-------- -------- ---------- --- ------------ ------------- ------------
16,857,352 Used for calculating diluted 16,781,916 16,672,730
earnings per share
Net assets per share have been calculated by dividing net assets of £266,962,000 (2002: £233,948,000)
less investment in own shares of £6,205,600 (2002: £6,249,150) by 16,044,145 (2002:,15,906,795 ) being
the number of shares in issue at 31 December 2003 less investment in own shares of 689,666 (2002:
699,190).
9. Investment properties
Unaudited 31
December
Audited Freehold Mainly Freehold Long leasehold Short leasehold Total Total
31 March 2003 2003 2002
£000 £000 £000 £000 £000 £000 £000
-------- ---------------- -------- ------- -------- -------- ------- ------
414,707 Balance at 1 377,935 71,060 56,495 - 505,490 414,707
April 2003/
2002
73,680 Additions during 46,899 4,581 16,519 - 67,999 42,222
the period
(2,598) Disposals during - - (6,890) - (6,890) (398)
the period
- Reclassification 589 53 - - 642 -
from other
fixed
assets
- Reclassification (10,711) - - - (10,711) -
to current
assets
19,701 Revaluation 9,651 3,400 1,058 - 14,109 8,091
during the
period
-------- ---------------- -------- ------- -------- -------- ------- ------
505,490 Balance at 424,363 79,094 67,182 - 570,639 464,622
period end
-------- ---------------- -------- ------- -------- -------- ------- ------
The historical
cost of
investment
properties
-------- ---------------- -------- ------- -------- -------- ------- ------
340,472 Balance at 288,945 53,243 58,936 7 401,131 311,183
period end
-------- ---------------- -------- ------- -------- -------- ------- ------
Valuation
The Group's investment properties were valued by CB Richard Ellis, Chartered
Surveyors, at 30 September 2003 on the basis of open market existing use value
and in accordance with the guidance notes issued by the Royal Institution of
Chartered Surveyors. The valuation shown in the unaudited accounts is based on
the independent valuation at 30 September 2003 plus additions at cost less
disposals at book value.
10. Investment in own shares
The Company has established an Employee Share Ownership Trust (ESOT) to purchase
shares in the market for distribution at a later date in accordance with the
terms of the 1993 and 2000 Share Option Schemes. The shares are held by an
independent trustee and the rights to dividend on the shares have been waived.
At 31 December 2003, the number of shares held by the Trust totalled 689,666
shares (2002: 699,190) with a nominal value of £68,967 (2002: £69,919) and the
book value of the shares amounted to £6,206,000 (2002: £6,249,000). The shares,
whilst legally not the property of the Company, have been included in fixed
asset investments. At 31 December 2003 the market value of the shares held by
the Trust was £9,827,740. 688,530 shares held by the Trust are subject to option
awards.
11. Debtors
Audited Unaudited 31
31 March December
2003 2003 2002
£000 £000 £000
---------- --------------------------- ---------- ---------
Amounts falling due within one year:
6,294 Trade debtors 4,533 3,299
37 Taxation and social security 42 11
1,055 Prepayments and accrued income 2,004 2,190
---------- --------------------------- ---------- ---------
7,386 6,579 5,500
---------- --------------------------- ---------- ---------
Amounts falling due after one year:
- Advance commissions - 117
---------- --------------------------- ---------- ---------
7,386 Total debtors 6,579 5,617
---------- --------------------------- ---------- ---------
12. Investments
Investments of £1,423,000 (2002: £1,960,000) comprise short-term deposits with
an original maturity date of less than three months and rental deposits.
13. Creditors: Amounts falling due within one year
Audited 31 Unaudited 31
March December
2003 2003 2002
£000 £000 £000
---------- ----------------------------- ---------- ---------
- Bank overdraft (secured) 309 238
3,026 Trade creditors 3,296 1,456
1,925 Corporation tax payable 2,770 1,304
1,946 Taxation and social security 1,774 1,440
5,154 Tenants' deposits 5,143 4,721
8,231 Accruals 10,462 7,358
5,261 Deferred income - rent and service 5,498 5,202
charges
3,292 Dividends 1,653 1,193
---------- ----------------------------- ---------- ---------
28,835 30,905 22,912
---------- ----------------------------- ---------- ---------
14. Creditors: Amounts falling due after more than one year
Audited 31 Unaudited 31
March December
2003 2003 2002
£000 £000 £000
---------- ----------------------------- ---------- ---------
Long-term borrowings consist of:
Unsecured:
2,900 11% Convertible Loan Stock 2011 2,900 2,900
Secured:
12,500 11.125% First Mortgage Debenture Stock 12,500 12,500
2007
7,000 11.625% First Mortgage Debenture Stock 7,000 7,000
2007
223,590 Other secured loans 274,266 199,504
---------- ----------------------------- ---------- ---------
245,990 296,666 221,904
---------- ----------------------------- ---------- ---------
15. Borrowings and financial instruments
i Maturity of financial liabilities
A maturity analysis of loans is shown below:
Audited 31 Unaudited 31
March December
2003 2003 2002
£000 £000 £000
---------- ----------------------------- --------- ---------
- Less than one year 309 238
- Between three years and four years 295,000 -
244,500 Between four years and five years - 220,500
2,900 In five years and more 2,900 2,900
---------- ----------------------------- --------- ---------
247,400 298,209 223,638
(1,410) Less cost of raising finance (1,234) (1,496)
---------- ----------------------------- --------- ---------
245,990 296,975 222,142
---------- ----------------------------- --------- ---------
ii Fair value of financial assets and liabilities
Book and fair values of financial assets and liabilities are:
Audited 31 March Unaudited 31 December
Book value Fair value
2003 2003 Book value Fair value Book value Fair value
£000 £000 2003 2003 2002 2002
£000 £000 £000 £000
------------- --------- ------------- --------- ---------- -------- ----------
Primary
financial
instruments
- - Short-term (309) (309) (238) (238)
liabilities
(245,990) (251,093) Long-term (296,666) (302,496) (221,904) (227,076)
borrowing
3,565 3,565 Financial 1,532 1,532 2,122 2,122
assets
Derivative
financial
instruments
244 (6,724) Interest rate 215 (3,105) 254 (4,638)
collars
------------- --------- ------------- --------- ---------- -------- ----------
(242,181) (254,252) (295,228) (304,378) (219,766) (229,830)
------------- --------- ------------- --------- ---------- -------- ----------
The fair value of the interest rate collars has been determined by reference to
market prices and discounted expected cash flows at prevailing interest rates.
All other fair values have been calculated by discounting expected cash flows at
prevailing interest rates. The total fair value adjustment equates to 57.0p per
share (32.9p based on diluted share capital).
16. Provision for liabilities and charges
Audited 31 Unaudited 31
March December
2003 2003 2002
£000 £000 £000
---------- ----------------------------- --------- ---------
Deferred taxation:
3,365 Balance at 1 April 2003/ 4,107 3,365
2002
742 Deferred tax charge for the 689 544
period
----------- -------------------------- ---------- ----------
4,107 Balance at period end 4,796 3,909
----------- -------------------------- ---------- ----------
If the investment properties were sold for their revalued amount there
would be a potential liability for corporation tax of £41,712,000 (31
March 2003: £39,986,000, 31 December 2002: £39,464,000). In accordance
with FRS 19 no provision has been made for these amounts.
17. Share capital
Audited 31 Unaudited 31 December
March 2003 2003 2002
Number Number Number
----------- -------------------------- --------- ----------
Authorised:
21,500,000 Ordinary shares of 10p each 21,500,000 21,500,000
----------- -------------------------- --------- ----------
2003 2003 2002
£ £ £
----------- -------------------------- --------- ----------
Issued:
1,667,808 Fully paid ordinary shares of 1,673,381 1,660,599
10p each
----------- -------------------------- --------- ----------
18. Other reserves
Audited 31 Unaudited 31
March December
------- -------------------------- --------- -------
2003 2003 2002
£000 £000 £000
(a) Share premium account
42,030 Balance at 1 April 2003/2002 42,697 42,030
667 Additions 215 437
------- -------------------------- --------- -------
42,697 Balance at period end 42,912 42,467
------- -------------------------- --------- -------
(b) Revaluation reserve
Property valuation surplus:
144,588 Balance at 1 April 2003/2002 164,274 144,588
(15) Disposals during the period (3,673) 87
19,701 Revaluation adjustment 14,109 8,091
------- -------------------------- --------- -------
164,274 Balance at period end 174,710 152,766
------- -------------------------- --------- -------
(c) Profit and loss account
33,059 Balance at 1 April 2003/2002 38,970 33,059
5,896 Retained profit for the period 5,992 4,082
15 Transfer from revaluation reserve 3,673 (87)
- Taxation on valuation surpluses (968) -
realised on sale of properties
------- -------------------------- --------- -------
38,970 Balance at period end 47,667 37,054
------- -------------------------- --------- -------
19. Reconciliation of movements in equity shareholders' funds
Audited 31 Unaudited 31
March December
2003 2003 2002
£000 £000 £000
------- -------------------------- --------- -------
10,367 Profits for the financial period 7,651 5,261
(4,471) Dividends (1,659) (1,179)
19,701 Unrealised surplus on revaluation of 14,109 8,091
properties
- Taxation on valuation surpluses (968) -
realised on sale of properties
687 Issue of shares 220 450
------- -------------------------- --------- -------
26,284 Net addition to equity shareholders' 19,353 12,623
funds
221,325 Opening equity shareholders' funds 247,609 221,325
------- -------------------------- --------- -------
247,609 Closing equity shareholders' funds 266,962 233,948
20. Equity minority interests
Audited 31 Unaudited 31
March December
2003 2003 2002
£000 £000 £000
74 Share of loss of subsidiary undertaking - 54
(74) Provision against losses of subsidiary - (54)
undertaking
- - -
£nil has been appropriated to minority interests in all periods shown in this
statement. In October 2003 the Company acquired the minority interest in Vylan
Limited.
21. Capital commitments
At the period end the estimated amounts of commitments for future capital
expenditure not provided for were:
Audited 31 Unaudited 31
March December
2003 2003 2002
£000 £000 £000
8,038 Under contract 1,463 1,575
2,913 Board authorised but not contracted 2,246 2,420
22. Subsequent events
Following the period end the Group has purchased a property, Linton House, for a
cash consideration of £8.5 million.
23. Proposal to establish Executive Co-investment Plan
Workspace also announces today that it has posted to shareholders a proposal to
establish an Executive Co-investment plan. The Extraordinary Meeting to
consider the proposal is to be held at the offices of Norton Rose, Kempson House
, Camomile Street, London, EC3A 7AN on the 16 March 2004 at 3.00pm.
24. Quarterly statement
This statement was approved by the Board on 20 February 2004. Copies of this
statement will be dispatched to shareholders on Monday 23 February 2004 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.
This information is provided by RNS
The company news service from the London Stock Exchange
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