Final Results

Workspace Group PLC
25 June 2001

PART 1

                             WORKSPACE ROCKETS AS

                           SME GROWTH REMAINS HIGH

Workspace Group PLC ('Workspace'), today announces its preliminary results for
the year ended 31 March 2001. Workspace now provides approximately 4.6 million
sq.ft of flexible business accommodation to nearly 3,200 small and medium size
enterprises ('SME's') in London and the South East.

  * Profits before tax up 123% to £19.5 million (2000: £8.8 million)
  * Profit before tax on trading activities up 13.6% to £9.5 million (2000:
    £8.3 million)
  * Annual rent roll at year end up 13% to £29.2 million
  * Turnover up 23.6% to £36.2 million (2000: £29.3 million)
  * Earnings per share on trading activities up 8.7% to 43.7p (2000: 40.2p)
  * Ordinary dividend up 10% to 23.1p (2000: 21p)
  * Net asset value per share up 32.0% to £11.93 (2000: £9.04)

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

' These are really encouraging results. Our strategy is simple, we invest in
properties with long-term potential for SMEs and where we can achieve
significant income and capital growth. We then manage the properties actively,
providing our customers with exactly the right product and services. We have
today extended our added-value services on some of our estates with the launch
of Vylan, which provides digital services. We also continue to unlock
considerable alternative use value from our portfolio, as the success of our
Union Street development has demonstrated.

' The level of enquiries continues to increase as the strength of the
Workspace brand grows. Entrepreneurial spirit especially in our core areas of
London and the South East continues to gather momentum. The Government is
committed to encouraging this growth. This bodes well for the Company's
future.

' We acquired the Tonex portfolio two years ago. It has proved to be an
excellent purchase and we are now the leading provider of accommodation for
SMEs in London.

' Following the disposal of our Midlands portfolio, we now have significant
firepower of over £100 million available to invest in acquisitions in London
and the South East. As always, we will assess each opportunity carefully
before committing. Current trading is good and looking to the future, we are
confident that the outlook for the Group is very positive.'

                                    -ends-

Date: 25 June 2001

For further information:

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



Chairman's Statement

Workspace Group's consistent strategy of providing space to small and medium
sized enterprises in London and the South East has extended its market
leadership and produced another set of outstanding results. A compound annual
growth in earnings per share of 31.3% and in net asset value per share of
28.2% over the last five years places our performance amongst the best in the
sector.

Results

I am able to present the seventh successive year of record financial results.
Rental income for 2000/2001 was £28.5m, up 22.0% on the previous year, whilst
turnover was up 23.6% to £36.2 million. These increases were attributable
primarily to rental growth. Profit before tax from trading operations
increased by 13.6% to £9.5 million as the Tonex portfolio acquired last year
was refocused on improving long term returns. Supplemented by surpluses on
disposals of investment properties of £10.1 million earnings per share grew by
100% to 83.2p.

The value of the Group's portfolio increased by £62.3 million following £33.2
million of acquisitions, £35.6 million of disposals and increases on valuation
of £38.7 million. This has resulted in an increase in net asset value per
share of 32% to £11.93.

The Group's performance has been compared to the external yardstick of the
Investment Property Databank (IPD). This shows an ungeared total return for
our portfolio for the year of 22.8% against the IPD All-Fund performance of
11.5%. Again, this maintains Workspace's record of outperformance with top and
first percentile ranking when viewed over one, three and five years.

Dividend

A final dividend payment of 16.6p, making 23.1p for the year, an increase of
10.0% over last year, is recommended by the Board. It is the Board's intention
to continue to increase dividends by 10% per year.

The Business Year

The Group's intensive management skills enable it to identify and respond to
the changing nature and needs of its market place and its customers. The small
and medium sized enterprise (SME) business sector has continued both to thrive
and receive increasing acknowledgement and support from the Government. The
Group's success in providing accommodation and services to this sector is
evident from the consistently high occupancy levels and the premium rentals
that it achieves.

The attraction of the Workspace offering to this market is more than just
space, it is the short leases, fast entry, flexible interesting accommodation,
on site support and additional business services - insurance, energy,
telecommunications and now internet and e-commerce facilities. This
comprehensive and developing package keeps Workspace Group at the forefront of
the provision of business space to the dynamic SME market. Maintaining the
relevance and attractiveness of this offer in changing environments is a
crucial part of our strategy.

Bringing this customer focused approach to property investment, particularly
the types of interesting but under managed and under developed buildings that
Workspace specialises in, continues to bring excellent rewards to our
shareholders. Our property investment activities have identified and completed
some £33.2 million of acquisitions this year, building on the £77.0 million in
the previous year. All of these offer opportunities in increased occupancy,
rental income and capital values by applying the Workspace property management
and marketing approach. Sourcing such opportunities in a competitive market
place is a key skill, with several acquisitions coming from off market deals
or from long term associations. The Operating Review reports in more detail on
all of the Group's property transactions.

Also central to our strategy is making the best use of our portfolio and
applying a broad vision of its potential in a changing property market. This
is particularly appropriate to our strong presence in London where the wealth
effect is rippling out from the centre, population decline has reversed and
government attitudes have moved towards increasing density and mixed use of
developed space. The Group's long experience in regeneration and the recycling
of older buildings is proving very valuable in today's climate. It has an
extensive programme of initiatives to release the maximum value from our
properties and, in this dynamic environment, one that is kept under constant
review.

Where properties do not meet the Group's criteria for growth in rental or
capital values then it will seek to realise its investment and recycle the
cash into better opportunities for the future. This strategy led it to sell
Union Street and Ensign Court in the year following very successful
re-developments and long term lets, making substantial capital gains over the
original investments. Total property disposals amounted to £35.6 million in
the year and these proceeds are being reinvested through our acquisition
programme. Applying similar growth criteria also led to the decision to sell
our Midlands portfolio, a transaction which was completed in June. It is the
Board's intention to invest the £42.0 million proceeds into the better
performing London and the South East markets.

The last year was another one of great activity for Workspace Group in
pursuing its successful strategy. The Group is dependent on its staff team for
its continued success and my thanks are due to everyone for their efforts and
enthusiasm.

Prospects

The year under review has seen excellent progress for Workspace Group. The
results reflect this, but much of what has been achieved will benefit future
years too. The pace of activity has continued into the new financial year with
its clear focus on the South East, further acquisitions and an encouraging
start to letting and rental review activity. With our clear and focused
strategy we are confident that we will continue to add value for our
shareholders.



Operating Review - Adding Value

'Occupancy has remained high throughout the period, providing a platform for
good rental growth as well as a strong cash flow. Increasing demand driven by
an increasing population and continuing concentration of economic activity in
London is creating exciting development opportunities. By increasing site
densities and mixing uses the Group will work its capital even harder'. Harry
Platt, Chief Executive

Key Events

The Group's portfolio performed well during the year with increasing rentals
improving profitability and improving ERV's (estimated rental values) creating
the platform for growth in the future. It is this strong and consistent base
that gives the Group the foundation upon which to develop.

The Group has continued its pattern of consistent growth and improvement.
Having absorbed the £75 million acquisition of the Tonex portfolio, purchased
in July 1999, and brought down gearing levels immediately post this
transaction it has been active again in expanding its portfolio. During the
year 12 purchases totalling £33.2 million were made, the majority occurring in
the second half. These and the Group's earlier acquisitions have performed
well lifting profits before tax to £19.52 million, helped by profits on
disposal of investment properties of £10.06 million, and yielding a valuation
surplus of £38.67 million or 243 pence per share, an increase of 11.8%. Over
the year the portfolio rental grew by £3.48 million to £29.23 million; £2.00
million arising from net acquisitions and £1.48 million from reviews, renewals
and letting of space.

The Group has continued to demonstrate the exciting characteristics of its
portfolio. With 1.8 million square feet, and increasing, within 5 miles of the
Houses of Parliament, the opportunity to generate premium values by the
transformation of properties, illustrated by its schemes at Ensign Court and
Union Street, offers the prospect of continued increasing shareholder value.

At 31 March 2001 the Tonex portfolio had been held for 20 months. This
portfolio comprised, on acquisition, slightly in excess of 2 million square
feet in 800 lettable units at 23 properties, mainly in London. Part of the
acquisition was deferred until January 2001. During the period that it has
been held five properties and part of a further property have been disposed of
realising £6.7 million, a profit on acquisition cost of £1.61 million
(31.85%). At 31 March 2001, the remaining properties, whose original cost was
£78.34 million, were valued at £104.48 million, a surplus of 33.37%. Over the
period the properties have shown an average income return of 9.6% on
acquisition cost. At 31 March 2001 the average rent for the Tonex properties
was £4.74 per square foot, compared with an average of £4.13 per square foot
at the time of acquisition, up 14.8%. This has been a successful acquisition,
and with its average rentals still standing at a substantial discount to
comparable values it continues to offer exciting potential. With the disposal
of a number of properties and the acquisition of others adjacent to original
Tonex properties the mix of the portfolio has changed. In future therefore,
the Tonex results will not be reported separately.



During the year the Group disposed of five properties. Included in these were
Ensign Court and Union Street. Hitherto disposals have generally been of
ex-growth properties, which have limited potential in their current use or any
alternative use, or of properties to developers where an alternative use
significantly exceeded the value, both current and prospective, of their
current use. These two properties differed in that the Group capitalised on
its ownership of the property and interest from major occupiers to undertake a
refurbishment. In both cases, armed with institutional long-term lettings, the
properties post refurbishment no longer fitted the profile of the Group's
typical investment but did show values substantially higher than their book
cost. They were therefore sold to recycle the funds back into the Group's core
activities. As described later the Group is not a property developer, but it
will, where added value may be secured without taking full development risk,
undertake development to generate enhanced returns for re-investment in its
core business.

The Group's core activity remains the provision of small unit accommodation to
SME's and so development activities will always be ancillary to this activity.
However it is by focusing on the core business that the opportunity for such
activities will emerge from time to time and by expanding this core their
scope increases correspondingly.

During the year the Board took the decision to re-focus its activities around
its London and South East portfolio. At the end of the year this portfolio
comprised 88.6% by value of the Group's total portfolio. In its acquisitions
over the last two years the Group has found it increasingly difficult to
justify investment outside of London and South East, given the relative
returns available from properties in this location by comparison with
elsewhere. At the same time the Group has seen excellent growth in value from
its London and South East properties, a performance that has not been mirrored
elsewhere. Also its London and South East properties are regarded as holding
far greater latent potential for further growth in value arising from changes
in use or redevelopment to an increased density than elsewhere.

Following a careful review of options, it was decided to dispose of the
Midlands portfolio and in June 2001 it was sold to Northern Trust. The funds
realised from this sale will be reinvested in London and the South East
enabling the Group to strengthen further its dominant position in this market.
The Group's customers are mainly locally based and so a wider regional
presence is of marginal benefit to them, whereas an increased focus on a more
tightly defined region, one in which (following the Midlands disposal) 33.4%
of SME's are based and the most economically active area for SME's, gives the
Group and its customers greater opportunity.

Our Market Place

At the year end the Group provided accommodation for 3,883 customers. With the
Midlands disposal this has reduced to 3,062 a relatively small proportion of
the 440,000 businesses in London and South East. Clearly, there is enormous
potential for Workspace Group to continue to acquire more properties and
tenants without even beginning to approach saturation point.

Our new customers are often people looking to move from a home-based
environment to more formal business premises. Many of them will, in time,
relocate within our portfolio as their need for space increases. Churn - the
formation, expansion, reduction and closure of business - is an important
aspect of the SME market - it provides new tenants, relocates others, and
creates a continuing opportunity to review and increase rents.

Our property management operations - letting, estate management, credit
control - are all undertaken in-house and are attuned to the flexibility
needed in this market place. This enables us to foster close contact with our
tenants, to monitor changes in the market, and to maintain exacting standards.
We try to work closely with our tenants; to understand and be responsive to
their needs. This is reflected in our flexible leasing approach and through a
combination of entry and exit interviews and active centre management.

During the year under review 4,038 enquiries for space were received in London
and 855 in the Midlands. These yielded 714 new lettings. The principal
generators of enquiries continued to be estate signboards and referrals from
existing tenants. These enquiries are valuable, not only as a source of
lettings but also as indicators of levels of activity within the SME sector
and industry sub-sectors, essential for the effective focusing of the Group's
offering to target emerging 'value-adding' businesses - those best able to pay
improving rents.

Occupancy, Turnover and Rent

Occupancy of core properties (those held throughout the year and not subject
to redevelopment) remained steady at around 89% which the Group regards as
effective full occupancy. Low vacancy rates and continuing high levels of
enquiries have aided rental review programmes and improved rentals on
re-lettings (approximately 40% of the Group's portfolio is subject to rental
review or re-letting each year).

With the progress in letting up space at properties subject to development,
principally Helix Business Park, Camberley, the overall occupancy levels in
London and the South East improved from 86.1% to 86.4% (92.5% for core
properties). Occupancy levels in the Midlands fell from 94.2% to 92.3% with
those on the Tonex portfolio remaining at 85% (the level at the time of
acquisition). This latter statistic disguises the real level of activity in
these properties where as a result of tenant churn not only has the quality of
the income stream improved but also an uplift of 12.2% (on a like-for-like
basis) in Tonex rentals was achieved over the year.

Rents have again increased strongly throughout the year. Average rentals of
the core portfolio held at 31 March 2001 increased by 15.3% (2000: 8.3%)
during the year, from £5.22 per sq. ft to £6.02. The principal increases
continued to be in London and the South East where the average rent per sq. ft
of the core portfolio rose by 22.3% (2000: 12.5%) from £6.33 to £7.74. The
rolling rent review and lease renewal programme continued and in 2000-2001
impacted on 9.7% of the opening rent roll. The uplift achieved during the year
of £0.88 million on reviews and renewals represents a 35.1% increase on
previous passing levels. High levels of occupancy, improvements in average
rent and the increase in size of the portfolio have all contributed to the
23.6% increase in turnover during the year.



Acquisitions

The Group is the largest supplier of space for SME's in London and the South
East. Even so it has a relatively small share of the potential customers. Its
aim is to secure representation wherever SME's are most active within London
and the South East to extend its service offering to all; to take the
Workspace formula and apply it to previously under-managed space thereby
enhancing returns.

During the year the Group acquired 12 properties for a total consideration of
£33.24 million and disposed of properties totalling £35.59 million (including
£27.75 million at Union Street). In the first half, as planned, the Group
focused on driving forward performance from the Tonex portfolio, acquired in
the previous year. Consequently just three purchases were made.

Barratt Way Industrial Estate, Harrow, is an industrial estate in a location
in which the Group has long sought an increased presence but where there is a
shortage of supply. Clyde House, Maidenhead is an office and industrial
building close to the town centre. The property has potential for improvement
as a business centre, with the opportunity to work with the local authority
which owns adjacent properties. 57/59 Whitechapel Road is a small retail and
office building immediately adjacent to the Group's Whitechapel Business
Centre. This is an important strategic acquisition enabling, at some stage,
the redevelopment of the whole site, to a much greater density.

In the second half the pace of acquisitions quickened with nine purchases
completed (including the deferred acquisition of Tower Bridge Business
Complex, Block F, part of the Tonex portfolio). At the end of the year the
purchase of one property was in solicitors hands.

During the year the Group announced an association with Greater London
Enterprise (GLE), an enterprise vehicle co-owned by the London Boroughs and
the City of London. The objectives of the association were, for GLE, to find
an investment partner to take over completed small unit scheme developments
and for Workspace to source new product. Jointly the parties present an
attractive formula to local authorities for delivery of new projects in their
districts. Two of the acquisitions, Wandsworth Business Village and Kingsmill
Business Park, Kingston-upon-Thames were acquired under this initiative. Both
are in locations where the Group has been keen to increase its presence.
Wandsworth Business Village is an existing business centre, where GLE had
obtained consent for further development. Kingsmill Business Park has been
procured under a forward purchase agreement under which the completed building
will be acquired in January 2002 once its construction is complete.

Bounds Green Industrial Estate is located in N11 immediately adjacent to the
North Circular Road. It was acquired from the local authority and offers
potential both from application of the Group's management formula and for
future development. The Ivories is located near Essex Road in Islington, not
far from the Group's existing Aberdeen Centre and Leroy House properties.
Again this is an area in which the Group has been keen to expand. Redbridge
Enterprise Centre, Ilford is a small industrial estate conveniently located by
the town centre and near the North Circular Road. Parma House was purchased at
auction. It sits alongside the Group's 'Chocolate Factory' property in the
Haringey Heartlands development zone.

All these properties were income producing. The total investment showed an
initial return of 7.70% with the prospect of rising to in excess of 9.0% in
the immediate future, without taking account of the ongoing potential under
the Group's management.

Disposals

During the year five disposals were made yielding a total surplus of £10.1
million. Disposals are made either where the property is considered to be
ex-growth in a location where there is little immediate prospect for growth,
where development or refurbishment has created a more institutional investment
package or where change of use will yield substantially improved value.

The most significant disposals in the year were Ensign Court and Union Street.
Ensign Court was acquired as part of the original portfolio from the London
Residuary Body in 1987. In 1998 its sole occupant, News International,
vacated. At that time the property was valued at £1.1 million. The building
was refurbished at a cost of £1.2 million and let to Oddbins and News
International at a total rent of £0.4 million. The property was sold for £4.65
million. Union Street was similar. The property, acquired vacant for
refurbishment as a business centre, was pre-let to J Sainsbury and following a
major redevelopment programme sold for £27.75 million, realising £9.5 million
profit.

As an investor and manager of property Workspace does not engage ordinarily in
development, other than in small scale upgrades and improvements. Where major
or speculative development is undertaken it is usually in partnership with a
developer with recognised expertise in the relevant field. In the case of
Union Street this was not possible due to the very tight timescales upon which
J Sainsbury wished to secure occupation. As a result Workspace financed the
works (to a capped limit of £11 million) with J Sainsbury taking the role of
developer. By this means and with a linked financing structure the Group was
able to ringfence and limit its liabilities.

In addition to these disposals the Group also sold part of its estate at
Westminster Business Square. An option has also been granted for some vacant
land adjacent to the building, held at negligible cost, for a price of £0.5
million. A further property, acquired as part of the Tonex portfolio, Phoenix
Business Centre, was sold for £1.5 million. This property was valued at £0.91
million at 31 March 2000.

Finally, the land at Ferry Lane, held following a fire which totally destroyed
the premises in July 2000, was sold at slightly above book value.

As noted earlier, following the year end the Group disposed of its Midlands
portfolio to enable an increased focus on London and the South East. The Group
has also disposed of its Ashburton Road property which sits on the site of the
proposed new ground for Arsenal F.C. The £45.1 million proceeds from these
disposals will, when added to the Group's existing capacity, facilitate an
investment programme going forward of up to £100 million.


Acquisitions in 2000 - 2001
                     Description                           Purchase    Initial
                                                              Price     Annual

                                                                        Income
                                                                  £          £

57/59 Whitechapel    Freehold 3379 sq. ft, Retail unit
Road, London E1      with offices above adjacent to
                     Whitechapel Technology Centre          400,000     29,800

Barratt Way, Harrow, Freehold, 49,265 sq. ft industrial   3,210,000    250,300
Middlesex            estate

Clyde House,         Long leasehold, 30,156 sq. ft        3,000,000    312,600
Maidenhead           business centre

Lea Road, Waltham    Freehold, 6479 sq. ft industrial       290,000     30,500
Abbey, Essex         unit adjacent to existing property

Block F, Tower       Freehold 141,881 sq. ft deferred     6,500,000    355,000
Bridge Business      purchase of Tonex property
Complex, London SE16

Bounds Green,        Freehold 140,003 sq. ft industrial   5,100,000    449,000
London, N11          estate

The Ivories,         Freehold, 24,802 sq. ft business     4,000,000    350,100
Islington, London,   centre
N1

Wandsworth Business  Freehold 88,540 sq. ft business      7,340,000    544,000
Village, London,     centre
SW18

Redbridge Enterprise Freehold, 20,080 sq. ft small unit   1,500,000    146,400
Centre, Ilford       industrial estate

Parma House, London, Freehold 36,509 sq. ft business      1,600,000     50,700
N22                  centre adjacent to Chocolate
                     Factory

5 Payne Road,        Freehold 3,307 sq. ft industrial       300,000     25,000
London, E3           unit adjacent to existing property

Kingsmill Business   Purchase agreement for 42,000 sq.          N/A        N/A
Centre, Kingston     ft business centre (under
                     development)
                                                          _________  _________
                                                         33,240,000  2,543,400

Disposals in 2000 - 2001

                                          Disposal Price    Exit Annual Income

Ensign Court,                                  4,650,000               411,000
London, E1

1-10 Union Street,                            27,750,000       (Nil at time of
London SE1                                                    disposal, agreed
                                                                 future rent £
                                                                    2,000,000)

South Block,                                   1,235,000                82,500
Westminster Business
Square, London SE1

Phoenix Business                               1,500,000                41,300
Centre, London E3

Ferry Lane, Rainham,                             458,000                     -
Essex

                                               _________              ________
Total                                         35,593,000             2,534,800




Development and Refurbishment

The Group's core activity is investment in and letting of small unit
accommodation. As such it is not a property development company but will when
appropriate engage in development activities to improve the quality of the
assets it holds, and hence the return from these assets.

The Group's major project at Union Street was completed in September 2000.
Details of this development are given above. The three plots of land facing
the property on Union Street, secured as part of the original acquisition,
have been retained. Development opportunities for this land are under
consideration both directly and jointly with others.

During the year initiatives for the extension of a number of properties were
commenced. Planning consent has been obtained for the construction of a
further floor on two of the blocks at the Leathermarket. Proposals are in hand
for similar extensions at Leroy House and Westminster Business Square.
Discussions are in progress with the London Borough of Hounslow for a joint
development at the Barley Mow Centre, Chiswick. This scheme would replace
their existing library with a new facility together with workspace constructed
over the library.

A joint venture with Copthorn Homes Ltd (part of Countryside Properties PLC)
was entered into in July 2000 for the development of some vacant land at the
Group's 3 Mills, Stratford property. The proposal is for the development of
approximately 50 residential units together with a Waterways Discovery Centre.
The site is well located on the River Lea, immediately adjacent to the tidal
mill and related museum and heritage area. Planning approval for the scheme
has been applied for. Whilst satisfying the need for residential units it will
result in no loss of business space at 3 Mills and will be sympathetic to the
adjacent heritage site.

The Group has identified a number of similar opportunities and anticipates
announcing its plans for these over future periods. These mixed development
schemes are particularly interesting from a risk management viewpoint, since
rather than increasing its investment in the property, as is customarily the
case with development, the Group is generally able to retain its business
space on the site whilst reducing its cash investment through disposal of the
new development.

During the year the Government released its white paper entitled 'Our Towns
and Cities: The Future'. The new Mayor of London, Ken Livingstone, also
launched the draft 'London Plan'. The consistent theme in these documents is
the recycling of land and increasing of density of urban developed space.
There is particular emphasis on 'mixed use' schemes. Alongside this there
appears to be a major and continuing change in the demographic profile of the
communities in the Group's principal area of operation, London. Following many
years of decline in population the trend has reversed and London is set to
increase its population steadily over future periods. This will increase the
pressure for more recycling of space with higher density mixed use schemes.
With its substantial holding of 1.8 million sq. ft within 5 miles of Central
London the Group is positioned well to respond to this challenge.

A number of smaller schemes subdividing and improving space at other Group
properties were completed during the year.

The investment portfolio

At 31 March 2001 the Group owned 104 estates: some 5.79 million sq. ft of
accommodation in 4330 lettable units. 87.8% of the portfolio by valuation, and
79.4% by space is in London and the South East, with the rest in the Midlands.
Subsequent to the year end the Midlands portfolio was sold.

Portfolio Valuation

At 31 March 2001 Insignia Richard Ellis valued the Group's portfolio at £366.9
million showing a surplus (for accounts purposes) of £38.7 million an increase
of 11.8%.

For accounts purposes, the Group's properties are valued at £366.5 million, as
shown below.


Analysis of valuation at 31.3.2001
                              Valuation           Adjustment          Financial

                                     £m                   £m           Accounts

                                                                             £m

Freehold                          313.6                    -              313.6
Long Leasehold                     52.9                    -               52.9
Short Leasehold                     0.4                (0.4)                  -
Total                             366.9                (0.4)              366.5

The short leasehold Alpha Business Centre, valued at £0.35 million, is
included in the accounts at a nominal £1.

The valuation was conducted in compliance with the Practice Statements
contained in the Appraisal and Valuation Manual prepared by the Royal
Institution of Chartered Surveyors on the basis of open market valuation as
defined in Statement 4.

For properties held throughout the year (comparing their value at 31 March
2000, plus additions and improvements at cost, with that at 31 March 2001) the
uplift was £37.96 million or 12.95%. A further uplift of £0.71m million or
2.1% arose from acquisitions (most of which occurred late in the year).



Again the Group commissioned the Investment Property Databank (IPD) to compare
its portfolio's ungeared performance with the All-Fund (All-Property)
benchmark over one, three and five calendar years. The Group's performance
exceeded the All-Fund benchmark by a wide margin in all these periods and
achieved top percentile last year with first percentile performance when
measured over the three and five year period.

                                      One Year      Three Years      Five Years
Workspace Group                          22.8%            23.3%           22.2%
IPD All Fund                             11.5%            13.0%           13.5%
Workspace Group Percentile Rank            top              1st             1st

Improvements in valuation arise partly from market movements but also as a
result of value adding activity through acquisition, management and
refurbishment/ redevelopment. Comparison against indices such as these
segregates simple market movement from value-adding activity. With its
top-ranking performance the Group has demonstrated its consistent ability to
generate enhanced returns from its investments.

Services

The Group has for a number of years extended its service offering beyond
accommodation alone. On a number of estates it has provided gas and
electricity, now to 1100 customers, and its business insurance programme now
has 500 customers. This latter programme has won two awards; The British
Insurance Awards, 'Broker Initiative of the Year' (1999) and the Insurance Age
'Awards 2000' for its risk management programme. Many of the Group's customers
have benefited from the programme; many by the attractive pricing and extended
range of cover, some by obtaining cover where other insurers had refused the
risk. Some simply benefit by being able to negotiate better terms from their
existing insurer.

Last year in setting our priorities for 2000/01 the Group targeted to extend
this offer. In doing so it recognised that by aggregating customers and bulk
buying services it could obtain a pricing advantage to be shared with its
customers together with service level commitments that they would not be able
to secure individually. It also offers the Group's customers the benefit of
trading with a carefully selected supplier, committed to the provision of a
quality service. During the year the Group launched one new initiative and
another was launched shortly after the year end.



A pilot project selling telephone services to the Group's customers in
partnership with Future Integrated Telephony PLC, trading as FIT4 Business,
was launched at a number of the Group's estates. This pilot has been very
successful with good take-up rates to date. In view of the success of the
initial pilot exercise the programme has been extended to the Group's entire
Midlands portfolio. It is intended that the offer will be extended to the
Group's remaining London properties.

The second initiative targets the Group's London Business Centres. The Group
recognises that increasingly its customers in these centres require connection
to the various digital highways. It also recognises that the provision of
digital services is a good candidate for cost efficiencies through aggregation
of supplies. It has studied the offerings being made by others and is
concerned to secure a formula that retains its control over its properties.
Its plans involve the creation of a cabling infrastructure that will not just
provide connectivity but will encourage the use of digital services over the
network.

Following the year end the Group announced the establishment of a joint
venture, Vylan, with Trams and iRevolution Group for the creation of a digital
network. A pilot project involving the network cabling of three properties,
has commenced. These properties are to be interlinked, with connections to the
internet and a data services centre in London's Docklands. The completed
infrastructure will deliver broadband, internet, local network, data hosting
and application service provision (ASP) to the Group's customers located at
these properties. Our partners bring their digital services, networking, data
management and ASP experience respectively to the venture. Many of the Group's
customers already have internet, some broadband, connections. However, by
aggregating these supplies and presenting them across a resilient network the
Group is able to offer these services at more competitive rates.

It is anticipated that, following the successful completion of the pilot
project, these services will be extended to all the Group's London centres. In
due course as Voice over Internet Protocol (VoIP) supply becomes more
resilient the Group will deliver telephony services to its customers through
this network. In the short term its business centre customers will be offered
the FIT4 Business package, alongside the digital services.

The Group is examining the provision of other standard small business
requirements such as office equipment, stationery etc. In particular, it is
examining how its existing website which already features a tenants' directory
established to help tenants inter-trade could be linked to these other
products to create a form of portal for SME's



FINANCIAL REVIEW

Profits

Profits before tax at £19.52 million are 123% ahead of last year, helped
largely by profits on disposal of investment properties of £10.06 million
(2000: £1.43 million). Despite an increased taxation charge, earnings per
share increased by 100% to 83.2p. For trading operations (i.e. excluding
profits and losses on disposals together with other one-off costs) profits
before tax were 13.6% and earnings per share 8.7% ahead of last year. The
valuation surplus of £38.67 million represents £2.43 per share, taking the net
asset value at 31 March 2001 to £11.93 per share (2000: £9.04), an increase of
32.0%. This continues the unbroken pattern of growth delivered by the Group
since its flotation in December 1993.

                                  2000/      1998/1999   Compound growth 1996 -
                                   2001         growth                     2001

Improvement in Trading PBT        13.6%          19.5%                    17.9%
Improvement in EPS               100.0%           1.0%                    31.3%
Improvement in dividends per      10.0%          10.5%                    12.2%
share
Improvement in NAV                32.0%          32.4%                    28.2%

Overheads (excluding other items) have fallen as a percentage of turnover from
14.5% to 13.8%. Net interest increased during the year by £1.40 million. The
increase in interest costs was attributable to the full year cost in 2000/01
of borrowings incurred on the £74.7 million Tonex acquisition made in July
1999 offset to a degree by interest rate reductions. Interest costs of £1.14
million (2000: £0.74 million) were capitalised during the year. These relate
to interest charges on developments at 3 Mills Studios, Helix Business Park,
Ensign Court, and 1-10 Union Street. The Group considers that with its careful
focus on asset values underpinned by six-monthly independent valuations, its
policy of capitalising interest presents no risk of overstatement of asset
values.

Taxation

The effective rate of Corporation Tax in 2001 was 32.3% (2000: 25.5%). After
allowing for a prior year adjustment of £0.1m the rate was 31.9%. The
effective rate excluding surpluses on property disposals was 25.7% (2000:
24.3%). The increase at trading level is due mainly to lower availability of
industrial building allowances on new acquisitions compared with disposals. It
is anticipated that the rate will stabilise at approximately 27%.

Dividend

A final dividend of 16.6p per share is proposed. The interim dividend was 6.5p
per share, and so the total dividend proposed for the year is 23.1p (an
increase of 10%). The dividends are covered 3.55 times by earnings (1.87 times
if based on trading income only).



Internal performance measures

Internal benchmark comparison shows:

Performance measures                                2001  2000  1999  1998  1997
Turnover per member of staff (£000)                  272   277   277   247   231
Year-end investment in property 
per member of staff (£000)                         2,581 2,340 2,268 1,967 1,610
Administration costs as a percentage of revenue    13.8% 14.5% 15.1% 14.2% 14.6%
Total return on equity                             40.7% 36.9% 36.3% 32.5% 27.5%

Return on equity is computed by reference to pre-tax profits plus valuation
surpluses/deficits divided by opening shareholders' funds (allowing for share
capital increases during the year). Our target is to achieve over a 20% return
on equity year on year, and in due course (with expansion of the portfolio),
to maintain administration costs as a percentage of revenue at below 12%

Financing

The Group again increased and extended its revolving property loan facility
with National Westminster Bank from £23 million to £33 million with a maturity
of 5 years at an interest rate margin of 1.1% over LIBOR. The Group also holds
a £2.5 million overdraft facility with National Westminster Bank on which
during the year the interest rate was reduced to 1.1% over base.

During the year, following the sale of 1-10 Union Street, the Group repaid the
project finance loan negotiated to finance this development.

At the year end the Group's facilities and drawings thereon were:

                                         Facility Agreement      Drawn        %

                                                         £m         £m
Debenture Stock                                        19.5       19.5      12%
Convertible Loan Stock                                  4.0        4.0       3%
WestLB Loan                                           122.0      117.7      75%
NatWest Property Loan                                  33.0      115.9      74%
NatWest Overdraft                                       2.5       21.5      14%

Deposits                                                  -      (5.6)     (4%)

                                                      181.0      157.1     100%

With the planned investment programme it is anticipated that additional
facilities of approximately £70 million will be sought in 2001/02.

Borrowings over recent years        2001  2000     1999        1998        1997

% Fixed/hedged                       89%   93%      93%         59%         81%
Average interest rates             6.99% 8.48%    8.91%       9.56%       9.11%
Interest cover                      2.70  1.87     2.32        1.98        2.07
Year-end gearing                     82%  104%      63%         85%         83%


Year-end gearing at 82% was reduced from 104%, principally due to the
substantial inflows arising from the sales of Union Street and Ensign Court
(total proceeds £32.4 million) and increasing property values. Over the
20-month period from the acquisition of the Tonex portfolio, at which time
gearing peaked at 148%, it has been progressively reduced to the current
level. With the anticipated investment programme, and related borrowings, it
will rise again to approximately 115% based upon current shareholders funds.
Interest cover at 2.70 times is significantly higher than last year due
principally to the profits on disposal of investments. Interest cover on
trading operations was 1.82 (2000: 1.91). Both gearing and interest cover
levels are within the levels historically set by the Board of 120% and 1.5
times.

The Board again examined the possibility of redeeming or replacing its
original £19.5 million Debenture Stock, which carries historically high
coupons averaging 11.30%. This initiative was not pursued due to the
potentially high cost of redemption. The Debenture and Convertible Loan Stock
represent just 15% of total borrowings. As at 31 March 2001 the total Group
indebtedness (bank borrowings net of cash in hand and at bank) amounted to £
157.1 million (2000: £148.7 million). The maturity of net debt and the Group's
borrowings by source at 31 March 2001 are shown below:-

Maturity of net debt                                                          %

Under 12 months                                                               -
1 - 5 years                                                                 23%
5 - 10 years                                                                29%
10 years +                                                                  48%


Total                                                                      100%


At 31 March 2001 the average cost of floating rate funds was a margin of 1.02%
over LIBOR or base rate (2000:1.03%). At 31 March 2001 the secured borrowings
were covered 2.05 times by the value of charged property (with a further £41.4
million uncharged giving an overall cover of 2.31 times).

The market price of the Company's ordinary shares is above the conversion
price of £5.00 for the Company's £4.04 million of Convertible Loan Stock. The
Directors believe that most stockholders, who receive interest at 11% on their
investment, will wish to retain their stock for the time being because of its
superior income yield.

 Balance Sheet and Cash Flow

The Group's net current liabilities at 31 March 2001 were £18.59 million
(2000: £8.52 million). The increase during the year has arisen principally due
to reduced cash investments at the year end (down by £6.1 million) and an
increase in taxation creditor (up by £3.7 million) due in turn largely to
significantly increased profits on investment disposals. Current liabilities
include tenants' deposits in the form of advance rent payments and quarterly
and monthly rents and service charge payments in advance amounting in
aggregate to £8.2 million (2000: £6.9 million). The Directors consider that in
the normal course of business these liabilities are unlikely to require
payment and properly form part of the working capital of the Group. Net cash
inflow for operating activities at £22.8 million (2000: £20.2 million)
improved, principally due to the contribution from the newly acquired
properties together with increased profitability from existing properties.



CONSOLIDATED PROFIT AND LOSS ACCOUNT

for the year ended 31 March 2001
                                         2001                    2000
                          Notes   Trading   Other   Total   Trading Other  Total

                               Operations   Items        Operations Items
                                     £000    £000    £000      £000  £000   £000

Turnover - continuing       2      36,222       -  36,222    29,317     - 29,317
operations

Rent payable and direct     2    (10,258)       -(10,258)   (7,609)     -(7,609)
costs
                                 ________ _______ _______ __________ ____ ______
                      
Gross profit                       25,964       -  25,964    21,708     - 21,708

Administrative expenses           (4,988)       - (4,988)   (4,255)     -(4,255)

                                 ________ _______ _______ __________ ____ ______

Operating profit                   20,976       -  20,976    17,453     - 17,453


Surplus on disposal of      3           -  10,063  10,063         - 1,429  1,429
investment properties
Interest receivable         4         418       -     418       245     -    245
Interest payable            5    (11,934)       -(11,934)  (9,373) (993)(10,366)
                                 ________ _______ _______ __________ ____ ______


Profit on ordinary                  9,460  10,063  19,523     8,325   436  8,761
activities before
taxation

Taxation on profit on             (2,510) (3,791) (6,301)   (2,019) (219)(2,238)
ordinary activities
                                 ________ _______ _______ __________ ____ ______


Profit on ordinary                  6,950   6,272  13,222     6,306   217  6,523
activities after taxation
                                 ________ _______ _______ __________ ____ ______

Profit attributable to              6,950   6,272  13,222     6,306   217  6,523
shareholders

Dividends                         (3,723)       - (3,723)   (3,298)     -(3,298)
                                 ________ _______ _______ __________ ____ ______

Retained for the year               3,227   6,272   9,499     3,008   217  3,225
                                 ________ _______ _______ __________ ____ ______


Basic earnings per share    8       43.7p   39.5p   83.2p     40.2p  1.4p  41.6p

Diluted earnings per        8       42.9p   37.0p   79.9p     39.7p  1.3p  41.0p
share

Statement of total recognised                                        2001   2000
gains and losses
                                                                     £000   £000
Profit for the financial period                                    13,222  6,523
Unrealised surplus on                                              38,673 31,209
revaluation of investment
properties
Taxation on valuation surpluses                                     (510)      -
realised on sale of properties
                                                                   ______ ______
Total recognised gains relating                                    51,385 37,732
to the financial period
                                                                   _______ _____

Note of historical cost profits                                      2001   2000
and losses
                                                                     £000   £000
Reported profits on ordinary
activities
before taxation                                                    19,523  8,761

Realisation of property
revaluation gains/
(losses) of previous years                                          2,346    840

Taxation on valuation surpluses                                     (510)      -
realised on sale of properties
                                                                   _______ _____
Historical cost profit on
ordinary
activities before taxation                                         21,359  9,601
                                                                   _______ _____
Historical cost profit for the
year
retained after taxation and                                        11,335  4,065
dividends
                                                                   _______ _____



    BALANCE SHEETS

    As at 31 March 2001

                                                Group   Group Company   Company
                                                              
                                                 2001    2000    2001      2000
                                        Notes    £000    £000    £000      £000
 Fixed assets
 Tangible assets
 Investment properties                    9   366,525 304,248 44,585    42,795

 Other fixed assets                              999   1,117     207       246
 Shares in subsidiary undertakings                  -      -      23        23
 Investment in own shares                      1,015   1,015   1,015     1,015
                                                                       
                                              ________ ______ ________ ________
                                              368,539 306,380  45,830   44,079

 Current assets
 Debtors                                 10    5,844   5,236  125,781  119,711
 Investments                             11    5,373  11,424        -    1,991
 Cash at bank and in hand                        206     201        -        -
                                              ________ ______ ________ ________
                                              11,423  16,861  125,781  121,702

 Creditors: amounts falling due within   12 (30,013)(25,378) (35,711) (48,644)
 one year
                                              ________ ______ ________ ________

 Net current (liabilities)/assets           (18,590) (8,517)   90,070   73,058

                                              ________ ______ ________ ________
 Total assets less current liabilities       349,949 297,863  135,900  117,137


 Creditors: 
 amounts falling due after          13/14  (158,371)(154,845)(45,040) (35,806)
 more than one year (including
Convertible Loan Stock)
                                            ________ ______ ________ ________

                                             191,578 143,018   90,860   81,331

                                              ________ ______ ________ ________

 Capital and reserves
 Called up share capital                       1,618   1,591    1,618    1,591
 Share premium account                        40,666  39,795   40,666   39,795
 Revaluation reserve                         122,739  86,412   15,703   11,792

 Profit and loss account                      26,555  15,220   32,873   28,153
                                              ________ ______ ________ ________
 Shareholders' funds - equity interests      191,578 143,018   90,860   81,331

                                              ________ ______ ________ ________
 Net asset value per share                8   £11.93   £9.04




CASH FLOW STATEMENT

for the year ended 31 March 2001
                                               Notes To      2001          2000
                                               Cashflow      £000          £000

Net cash inflow from operating activities             1    22,793        20,183
Returns on investments and servicing of               2  (12,371)      (11,655)
finance
Taxation                                                  (3,085)       (2,778)

Capital expenditure                                   2  (12,994)      (85,025)
Equity Dividends paid                                     (3,428)       (3,057)

                                                          _______       _______
Net cash outflow before use of liquid
resources and financing                                   (9,085)      (82,332)

Management of liquid resources                        2     6,051       (9,092)
Financing                                             2     4,517        93,027
                                                          _______       _______
Net cash inflow                                       3     1,483         1,603
                                                          _______       _______
Reconciliation of net cash flow to
movement in net debt

Increase in cash                                            1,483         1,603
(Decrease)/Increase in liquid resources                   (6,051)         9,092

Outflow from movements in debt financing                  (3,848)      (90,969)
                                                          _______       _______
Changes in net debt resulting from cash               3   (8,416)      (80,274)
flows
Net debt at 1 April 2000                                (148,731)      (68,457)
Net debt at 31 March 2001                               (157,147)     (148,731)
                                                          _______       _______





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