Final Results

Workspace Group PLC
14 June 2004



                        WORKSPACE REPORTS RECORD RESULTS

Workspace Group PLC ('Workspace') today announces its preliminary results for
the year ended 31 March 2004. Workspace provides approximately 5.3 million sq.
ft of flexible business accommodation for almost 3,800 small and medium size
enterprises (SMEs') in London and the South East.


   • Turnover up 13.6% to £51.1 million (2003: £45.0 million)
   • Pre-tax profits up 12.7% to £15.1 million (2003: £13.4 million)
   • Trading pre-tax profits up 12.8% to £14.1 million (2003: £12.5 million)
   • Final dividend of 20.7p - total dividend up 10.3% to 31.0p (2003: 28.1p)
   • Net asset value per share up 22.1% to £18.43 (31 March 2003: £15.10)
   • Earnings per share up 2.2% to 65.7p (2003: 64.3p)
   • Trading earnings per share up 2.0% to 61.3p (2003: 60.1p)
   • Annual rent roll £38.1 million (31 March 2003: £35.9 million)
   • Average rent at £8.55 per sq. ft
   • Like for like occupancy 88%
   • Leading IPD performance continues

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

' Workspace continues to demonstrate its ability to deliver strong growth. Our
business model is robust and, even during a period when some of our customers
have found trading more challenging, we have continued to make excellent
progress. Our portfolio of accommodation for small businesses is now valued at
£628 million and we still see major growth opportunities in our market place.

' The Workspace team has worked hard to improve both the range and style of
accommodation that we offer. Our space remains very affordable and as London's
economy improves, and properties we are refurbishing come back on stream, we
expect improvements in occupancy and subsequently the return of rental growth.

' We are at the heart of London's vibrant SME economy, being the capital's
largest small business landlord. Recent research shows that many of our
customers are reporting improvements in confidence. This bodes well for the
future.'

                                     -ends-

Date: 14 June 2004
For further information:

Workspace Group PLC                              City Profile Group
Harry Platt, Chief Executive                     Simon Courtenay
Mark Taylor, Finance Director                    Chris Lane
020-7247-7614                                    020-7448-3244
web: www.workspacegroup.co.uk



Chairman's Statement

During my time as Chairman of your Company, I have visited many of its
properties and met with many of its customers and staff. In these visits and
meetings I have found the spirit of enterprise blossoming despite the
challenging economic circumstances that have provided the backdrop for much of
this period. Our customers are diverse and dynamic. It has been particularly
interesting to see how these businesses have developed and adapted to the
ever-changing fast-moving markets of the twenty-first century.

It has been a challenging time for Workspace too. For a large part of the year
rents moved sideways and occupancy dipped slightly. Occupancy bounced back and
grew in the final quarter as business confidence recovered. Against this
backdrop it is satisfying to present another set of excellent results.

Results

Yet again, Workspace has delivered record results. Year-end rent roll increased
to £38.1m, an increase of 6.1% over the year. Like-for-like occupancy was
broadly stable and, at the year end, was a healthy 88%. Profit before tax from
trading operations was £14.1m, with earnings per share from trading operations
61.3p, increases of 12.8% and 2.0% respectively. Growth in earnings per share
was depressed by an exceptionally low tax charge that arose last year. Two
properties were sold, generating an exceptional profit before tax of £1.0m. Net
profit before tax for the year was £15.1m, up 12.7% on the year.

I am pleased to report that our focus on managed 'workspace' properties has
continued to generate capital growth, with net asset per share rising 333p or
22.1% to £18.43. This is despite the recent dull period for rental growth and is
attributable to the renewed interest of late in property as an investment asset
class. Against the Investment Property Databank (IPD) - the standard industry
benchmark covering all property - we have continued to perform very well. This
benchmark shows us just outside the top decile in the current year (a period
when retail property has continued to dominate the investment market) with top
percentile performance when measured over a longer 5 or 10 year horizon.
Finally, in terms of the results, I am pleased to report that on the key measure
of total shareholder return (TSR) we have outperformed the FTSE Small Cap Index
by a wide margin over the last five years.

Strategy

Our consistent strategy is to invest in property that can provide good value
small-unit accommodation on flexible terms, where initial yields are attractive
and where there is scope for the Group to improve value using its intensive
management, proven systems and modest capital investment. This drives growth in
earnings and asset values, creating shareholder value. Longer term, the Group
seeks to maximise value through redevelopment and regeneration. We have almost
3,800 customers, representing every sector of enterprise, both profit and
non-profit. We have a particularly high number of customers from the 'creative'
sector, a vibrant part of the London community. We diversify operational risk by
the sheer number of different customers and their wide range of activities.

Customers are the heart of our business and, during the year, we have adjusted
the organisation of the Operations Team to be more aligned to our expanding
customer base. We have responded to the more challenging market conditions with
a number of marketing campaigns to build brand awareness and generate enquiries.

Governance

We have reviewed in detail our governance processes in the light of the new
(2003) Combined Code. The Group consistently aims to operate to high standards
of governance and a detailed compliance report is now on our website. The Group
also seeks to be an excellent employer and has clear corporate social
responsibility and environmental policies.

REITs

We have monitored developments over the possible introduction of Real Estate
Investment Trusts (REITs), noting the Chancellor's consultation on PIFs launched
in his Budget this year. We await the detail of the Government's proposals.

People

This is the last report in which Alan Cherry, Deputy Chairman, will feature as a
member of the Board. Alan is the longest serving non-executive director of the
Company - having provided 12 years' sterling service. He will retire at the AGM
to be held in July 2004. Alan had planned to retire last year but stayed on for
a further year, at the request of the Board, to provide an element of continuity
at a time when Philip Rhodes, the previous Chairman, retired and Bernard Cragg
and I joined the Board. He has through this time, as he did through all the
years before, enriched the Company with his contribution.

I am delighted to welcome John Bywater as a non-executive director of the
Company. John, a chartered surveyor by profession, brings a broad-based
knowledge of the property market and is currently Managing Director of Hammerson
UK PLC.

I must also thank the management and staff of the Group led by Harry Platt. This
has been a challenging period - a time when their resourcefulness has been put
to the test. The Group's results are a testimony to the manner in which they
rose to this challenge.

Current Trading and Prospects

Enquiry levels and conversions to lettings continue at good levels and there is
evidence, through the faster rate of progress of lettings, of increasing
customer confidence. Occupancy should improve from its current 88% level
(excluding developments) to 90% during the year, creating the platform for
renewed rental growth going forward. Earnings growth will be tempered this year
- due to the run-through of the occupancy reductions during 2003/04,
particularly in those properties which we are refurbishing - before returning to
more normal patterns of growth in the following year. Against this, with the
current strong demand for investment property and the anticipated growth in our
rentals as occupancy is rebuilt and refurbished space let, there remains the
prospect of good asset performance.

Dividend

The Board recommends a final dividend payment of 20.7p making 31.0p for the
year, an increase of 10.3% over last year and making 16% compound growth over 10
years. The proposed dividend will be payable on 2 August 2004 to shareholders on
the register on 2 July 2004.




Operating Review

The Group has continued its pattern of strong growth. Over the last ten years
the Group has increased profits and asset values (shareholder value) by five
times or more. In Summer 2001, following the sale of the Midlands portfolio, the
Group presented plans to double the value of its portfolio through organic
growth over a five-year period. By September 2003 (after only two and a half
years) the target had been 70% achieved. We have therefore set ourselves a new
target, based on the same assumptions, of doubling again over the five years to
September 2008. This last year has been challenging for many of our customers -
even so, the Group's results show its resilience in these economic circumstances
and that it is on track to meet its strategic objectives.

Key Results

Once again, we are able to report growth in profits (trading profit before tax
up 12.8%), net asset value per share (up 22.1% to £18.43), earnings per share
(up 2.2% to 65.7 pence) and dividends (up 10.3% to 31.0p per share). A
contribution of £1.0m before tax (4.4 pence per share) has also been secured
from property disposals. This has been achieved in the context of a more
challenging trading environment.

The total value of the Group's properties at 31 March 2004 was £628.5m. For
properties held throughout the year (comparing this value at 31 March 2003, plus
additions and improvements at cost, with that of March 2004) the uplift was
£49.9m or 9.6%.

Trading Review

This was a year of contrasts. Over the first nine months occupancy declined
slightly partly due to some customers who found trading more difficult at this
time and partly due to others who took the advantage of low interest rates to
move to owner occupied accommodation. This decline was exacerbated to a degree
by our securing the vacation of space in certain properties either to prepare
them for disposal (for redevelopment) or so that we could implement our
refurbishment plans in the properties. In the final quarter, these patterns
changed, with occupancy and, as a result, rent roll (on a like-for-like basis)
stabilising and starting to grow again. Since the year end, this pattern appears
to have continued. Our experience reflects the pattern of market research and
comment on the London economy, with a number of researchers noting an uplift of
confidence particularly in the small and medium-sized enterprises (SME) sector
since Christmas.

We are often questioned about the vulnerability of our business and its customer
base at the weaker stages of the economic cycle. Early in 2003, post-Enron and
with uncertainty over Iraq, business confidence was weak. It is pleasing to note
therefore that at this time there was little more than a 3% drop in
like-for-like occupancy over the first nine month period and that over one-third
of this was recovered in the following quarter.

In this more challenging market it has not been possible to grow rents (in terms
of average rent per square foot) during the year. Good rental growth occurs when
the portfolio is effectively 'fully occupied' - which we regard as the 90%
occupancy level. In the circumstances, we consider that the standstill
performance (average like-for-like rent increased by 0.6% over the year) was
creditable, since it demonstrated that the price levels at which space was let
were robust, supporting the ERVs (market rentals) that we target to reach over
time.

Going forward, our immediate challenge is to build on the performance in the
fourth quarter, taking occupancy back to the 90% level at which time we
anticipate renewed rental growth. At the same time, we should see rental
contributions start to flow from current refurbishment projects.

The quieter period in 2003/04 will have a dampening impact on earnings growth in
2004/05. However, with the continuing strength of the investment market, it is
anticipated that asset growth, in terms of net asset value per share, will
continue to be good through this period.

Our Market Place

The Group's business model is simple. We are a property-based business providing
a variety of accommodation for SMEs in London and the South East. In this region
we are by far the largest provider of such space, with 3,773 customers over 101
estates, in 5.32m sq ft of accommodation.

There are 3.7m businesses in the UK, of which 1.1m employ between one and twenty
people. Of these 35% are based in London and the South East, with, in turn, over
half in London itself. London alone accounts for 20% of business start-ups and
closures in the UK each year and sees the greatest growth in higher
'added-value' sectors. This is a huge market place and our market penetration
remains low. There is therefore considerable scope for us to grow. To achieve
this we currently monitor over 200 properties in London worth in excess of £500m
and most of our acquisitions are drawn from this pool.

Our core product is an affordable, flexible lease which allows our customers to
move in quickly and to expand or contract as their circumstances dictate. In
many respects we are an hotelier of space for small businesses, focused on
providing good customer service. With average rents of just £8.55 per sq ft and
an average unit size of 1,169 sq ft, the 'average' customer in London pays less
than £10,000 per annum - which we believe should be readily affordable for small
businesses operating in one of the best markets in the UK, if not the world.

Our new customers are often second stage businesses looking to move from a home
environment to more formal business premises. Many of them will, in time,
relocate within our portfolio as their need for space changes. Churn - the
formation, expansion, reduction and closure of businesses - is a key
characteristic of the SME market and source of opportunity for us. It provides
us both with new customers and the opportunity to relocate others, each allowing
us to review and increase rents.

Finally, the Group is very well placed to take advantage of current trends for
the growth of London (in population and employment) and the call in the Mayor's
London Plan for more intensive and mixed use of sites. Our assets are valued at
a comparatively low level of £108 per sq ft, given that 51% by value is within
five miles of the centre of London (89% inside the M25). They are not intensely
developed and so, in the medium term, the potential for alternative use and
intensification of use of our assets remains considerable.

Our Business

During the year under review we received 6,052 enquiries which yielded 1,060 new
lettings. The principal generators of enquiries continued to be estate
signboards, internet references and referrals from existing customers. These
enquiries are crucial to the Group's success: not only do they provide new
lettings but they are also an indication of levels of activity within the SME
sector and industry sub-sectors, enabling us to focus our offer effectively on
emerging 'value-adding' businesses - those best able to pay improving rents.

We are pleased to note that the lettings level for the year was broadly in line
with the previous year. This supports the Group's long-held view that there are
always new customers to be won at any stage of the economic cycle. The reduction
in occupancy during early 2003/04 arose, therefore, not as a result of a
shortage of lettings, but was attributable, rather, to increased levels of
departure during the first part of the year - a factor which stabilised in the
final quarter. Customers were also slower in making their leasing decisions in
the earlier part of the year, a characteristic which changed with the rising
confidence in the new calendar year.

Our marketing activities have been supported by a number of initiatives to
promote the Group's brand during the year, including a poster campaign and the
publication of two self-help guides for SME's (copies of which can be found on
our website). In addition, the Tenant Directory segment of the Group's website
(a 'yellow pages' type directory) has been extended by providing search engine
links to our customers' services. This resulted in a significant increase in the
number of website hits at a relatively low cost and has helped to extend brand
awareness.

With its in-house management operations - lettings, estate management and credit
control - the Group is attuned to the flexibility needed by the SME marketplace.
This enables us to foster close contact with our customers, to monitor changes
in the market and to maintain exacting standards. We try to work closely with
our customers and 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. To continue an earlier
analogy, the Group's operations are comparable in many respects with those of an
hotelier: from the pricing of our product, the focus on occupancy and actual
achieved rates for rentals, to the 'front of house' management (easy-in-easy-out
lettings and on-site management) and the provision of 'add-on' services.

Our intensive management skills have been essential in a year which brought many
challenges to our customers. We have been able to maintain like-for-like
occupancy in the 87% to 90% range, although the decline in occupancy in the
first nine months of the year reduced the Group's capacity to grow rents. On a
like-for-like basis, the increase in average rent over the year was 0.6% (2003:
7.4%) from £8.32 to £8.37 per sq ft. Occupancy also impacted on the rolling rent
review and lease renewal programme, which in the year extended to 11.3% of the
opening rent roll. The uplift achieved of £0.47m through rent reviews and lease
renewals represents a 11.6% increase on previous passing levels for these
tenancies. We anticipate that growth will return to more customary levels in
2005/06 as full occupancy is restored in the current year, 2004/05.

The Group has continued with and extended its association with Kingston
University through the year, taking on a post-graduate researcher under the
Government's TCS programme to work jointly on marketing research. Further
updating research work by Kingston has been lodged in the Investor Relations
section of the Group's website.

Portfolio

The cornerstone of the Group's target of doubling the value of its portfolio
over a five year period is its plan to acquire £50m - £60m of property each
year, and to extract value from these and its existing holdings through its 
active management. During the year the Group acquired £60.2m (excluding costs) 
of property and disposed of property for a total consideration of £11.0m.

Valuation

The total value of the Group's properties was £628.5m, an increase of £120.8m
over the year. The average value of the Group's property was £108 per sq ft,
with an immediate income yield on current rents passing of 6.37% and a yield at
estimated current market rental values of 8.64%. We consider these to be robust
values with continuing scope and opportunity for growth.

As a short leasehold asset, the Alpha Business Centre is included in the
accounts at cost (cost £1, value £0.4m). Further, property used for Group
occupation (Magenta House, value £2.0m) is reported as a fixed asset. Adjusting
for these, the net value of the Group's portfolio for accounts purposes was
£626.1m.

The valuation was conducted by CB Richard Ellis 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 2003
plus additions and improvements at cost, with that at 31 March 2004) the uplift
was £49.6m or 9.6% . Of this total, £5.56m relates to properties of total value
£43.8m that have been earmarked for sale following value added activities, an
uplift of 14.5%. Acquisitions during the year showed a surplus on valuation of
£0.3m (0.5%).

At the start of the year, the Chancellor announced the exemption from stamp duty
of transfers of property in certain areas. 55% of the Group's properties (by
value) were located in these areas. Analysis of the valuation and markets
suggest that this factor contributed approximately £10.0m towards the Group's
valuation surplus for the year.

Again, the Group's performance exceeded the IPD (Investment Property Databank)
March Universe 2004 benchmark. In some years such as this, the performance of
the Group's portfolio might be lower than other sectors (this year, retail/
retail warehousing), but it is still ahead of the Universe. More importantly,
the ungeared performance of our portfolio, when compared with IPD over the
longer 5 and 10 year periods, has always been in the top percentiles. The table
below illustrates not only the Group's substantial outperformance of sector
averages, but also the lower levels of volatility in our particular sector
compared with commercial property more generally.


Total Return (p.a.)                    One         Three       Five        Ten
                                      Year         Years      Years      Years
--------------------------------------------------------------------------------
Workspace Group                       16.2%         14.9%      18.4%      17.8%
IPD March Universe                    12.6%          9.4%      10.5%      10.5%
Workspace Group Percentile Rank       11th           3rd        top        top


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 our value-adding activity. With its top-ranking
performance the Group has demonstrated its consistent ability to generate
enhanced returns from its investments.

Acquisitions

Poplar Business Park sits at the gateway to Docklands close to Canary Wharf. As
such, it is almost uniquely positioned to service those businesses which need
immediate access to the Docklands area but do not require prime Docklands space.
It is a modern industrial/warehousing park which was constructed in the late
1980's and has featured on our target list of acquisitions for a number of
years.

The acquisition of Progress Way, Croydon, has allowed the Group to secure a
presence in an area in which it was not previously represented. Progress Way
runs behind the major A23, Purley Way thoroughfare. It therefore has potential
not just in its own right but, in time, through linkage to the major Purley Way
market.

The Lambeth portfolio (comprising the Ellerslie Square, Hardess Street, Hamilton
Road, Mahatma Gandhi, Michael Manley, Zennor Road industrial estates and Rudolf
Place) was acquired from Lambeth Borough Council. This portfolio of properties
fits well with the Group's existing holdings increasing its representation in
the area between its existing Westminster Business Square property and those at 
Pensbury and Glenville Mews. On acquisition the average rental values on the 
Lambeth properties were lower than those at the Group's immediately adjacent 
holdings indicating the scope for growth over time.

The Atlas Business Centre is located at Staples Corner on the North Circular
Road, adjacent to the A5 and the start of the M1 motorway. It gives the Group a
presence on the North Circular at a location which is almost equidistant between
its existing properties at Bounds Green (to the east) and Acton (to the South)
and in an area where it had no presence previously. It is within an active
trading estate and should provide the platform for expansion in this significant
part of north west London.

National Works is a medium sized unit industrial estate located near the A4,
Bath Road, midway between Hounslow and Heathrow Airport. It also provides the
Group with a presence in a location in which it has sought property and fits
well with the Group's other holdings.

Linton House Business Centre is located on the Southbank close to No 1 Union
Street, which the Group successfully refurbished and sold 3 years ago and its
retained land holdings which, as is noted below, were sold for development after
the year end. It is also close to two of the Group's other properties, the Great
Guildford Business Centre and Surrey House. The Group has therefore a strong
track record in this area. The centre has potential for expansion in time.

Disposals

Once again, headline profits have been assisted by profits of £1.0m realised on
disposal of properties. Two disposals were completed during the year and two
others contracted for sale with completion occurring shortly after the year end
(so that they will be accounted for in the accounts for the year to 31 March
2005).

The Group's interests in Kingsland Viaduct and Union Walk were sold to London
Underground, its immediate landlord. These properties had been acquired in 1994
and 1996 under formulae by which the Group refurbished the railway arch
accommodation in return for a share of the rental income that the properties
generated. The Group spent £3.5m in total on these works and has had good income
returns. London Underground had planned for the routing of its ELLX extension
over the Viaduct. A change of plan to extend its use to regional as well as
local passenger services resulted in the issue of a Compulsory Purchase Order
(CPO) on the Viaduct to facilitate the major works necessary. Terms were agreed
with London Underground for a sale of the properties which avoided the need for
implementation of the CPO, but preserved the payment of compensation for the
blight that the order had caused. The Group received £8.25m, £7.82m of which was
in consideration for its property interests and reinvestment costs, the
remainder of £0.43m being allocated to rental blight compensation which was
taken to trading profit. The sale at £7.82m showed a £0.53m profit over book
value and £4.2m surplus on original cost. The pre tax internal rate of return
(IRR) over the holding period was 38%.

The other sale completed in the year was of a plot of land acquired as part of
the Group's Canalot Studios acquisition, made in January 2003. Under the terms
of this acquisition the Group was not obliged to pay the £1.5m consideration for
the land until January 2004. During the year the land was marketed and a deal
concluded with Octavia Housing Association in February 2004 under the terms of
which the land was sold on for £2.79m. This yielded £0.45m profit over book
value at that stage, showing a surplus of £1.19m on original cost over the 39
day financial holding period.

Shortly after the year end the Group disposed of its land at Hooley Lane,
Redhill to Wimpey Homes for £10m. This land had been purchased at auction in
1997 for £0.96m and an overage payment obligation relating to development of the
site was subsequently bought in 2001 for £1.3m. The original investment, which
was let providing open storage space, showed a healthy return on cost rising
from 13% on acquisition to in excess of 20%. Whilst managing the property and
generating these returns the Group advanced proposals for the redevelopment of
the land, securing a planning consent for residential accommodation. The
property was valued at £9.9m in the Group's books at 31 March 2004 and so the
sale will show a margin on book value of £0.1m, a surplus on cost of £7.27m and
an IRR (pre tax) of 49%.

The other post-balance sheet disposal was of the Group's land holdings in Union
Street, Southwark (referred to in Acquisitions) which were retained following
the successful sale of No 1 Union Street in December 2000. With a value of
£0.65m attributed to them on acquisition, they have been sold for £1.88m (book
value, £1.88m). This disposal, which shows a pre-tax IRR of 23%, will also be
accounted for in the year to 31 March 2005.

The option granted in respect of the Group's Payne Road properties was extended
during the year. It is likely that these properties will be sold in the current
year.

Adding Value

The Group's core activity is investment in, and the letting of, small-unit
accommodation. As such, it is not a property development company but will, when
appropriate, engage and work with partners in development activities to create
additional value.

During the year refurbishment projects were completed at Quality Court, Europa
House and parts of Enterprise and the Leathermarket, with works at Barley Mow
completing shortly after the year end in May. Works are continuing at the
remainder of Enterprise and on a further extension at The Leathermarket with
others due to start during the current year at Clerkenwell Workshops. In
addition to these schemes proposals for alternative and mixed used schemes are
being developed for the Group's Thurston Road, Greenheath, Wharf Road and
Aberdeen Studios properties.

At Quality Court, the Group refurbished the former Patent Office, which had been
occupied latterly by the London School of Economics, to provide an 18,000 sq ft
business centre targeted at providing small-unit space for smaller legal
practices. The work was completed in October 2003 and, in a difficult market,
was 15% let at 31 March 2004 (now 30% let).

The internal areas of Europa were upgraded to provide more vibrant attractive
'funky' space. The project was very successful and immediately attracted
significant tenant interest. It was completed in November 2003 and was 67% let
by the year end.

The first two stages of the Enterprise refurbishment (the works at Hatfield
House and 52/54 Stamford Street) were completed in December 2003. The project
has now progressed to 1/2 Hatfields where a reorganisation of the entrance areas
and refurbishment of other areas is underway.

At The Leathermarket a single storey extension of the Lafone House building has
been completed (providing 3,300 sq ft) and a similar extension of Trowbridge
House is in progress (providing a further 2,700 sq ft).

At Barley Mow, a refurbishment of approximately 50% of the internal areas has
been completed, including remodelling the reception and cafe. This will
reinforce the centre as the premier business centre servicing the small business
community in this part of West London. It will, through the internal
reorganisation, provide a more attractive range of accommodation to customers.

The Clerkenwell project again involves the refurbishment of the entire building
and reconfiguration of internal areas. The property was purchased in a run-down
state. These works will bring the standard of accommodation alongside those in
the Group's other properties, providing an attractive offer to its SME
customers. A one year programme of works is scheduled to commence in July 2004.

Progress at Thurston Road has been slowed by the changing attitude of the
planning authority. Planning consent has now been received for a mixed retail
warehouse development/housing use of the site. However, the Council is now
looking for an even more intensive use of the site. Whilst frustrating due to
the delays it is causing, this should serve to enhance the value that the Group
will finally extract from this site.


Other mixed use redevelopment schemes are under consideration at Greenheath,
Wharf Road and Aberdeen Studios. Each comprises the demolition of the existing
properties to allow for a more intensive development of the site with a similar
level of business space being supplemented by residential developments. In each
case the Group anticipates securing new space in place of its older buildings
together with cash consideration for the land released for residential
development. In all these cases our proposals are under discussion with the
respective planning authorities.

Services

The Group has continued its services offering to its customers through the year.
These provide a useful supplement to core earnings, but their principal
objective is to increase the attractiveness of the Workspace offering and
maintain high levels of occupancy and rental income.

At 31 March 2004 the Group supplied gas and electricity to customers at 993
units and had 688 business insurance customers. Energy turnover totalled £0.96m
and insurance commission £0.40m in the year.

During the year the Group negotiated arrangements for the transfer of its Vylan
activity to a new joint venture with Centric Telecom Ltd. This move was
precipitated by a change of ownership in Trams, the Group's previous partner in
Vylan. However, it offered the Group the opportunity of linking up with Centric,
whose core activity is to provide services similar to those provided by Vylan
with the economies of scale afforded by linking networks. Customer take up
increased through the year reaching 198 by 31 March 2004 (31 March 2003: 153).


Acquisitions and Disposals 2003/2004


Acquisitions 2003/2004
--------------------------------------------------------------------------------
Name of           Description          Purchase    Initial Actual    Market rent 
Property                                  Price            Income    at 31/03/04
                                           £000              £000           £000
--------------------------------------------------------------------------------
Poplar Business   75,000 sq ft, 
Park, London E14  33 unit B1 estate      16,100             1,134          1,120
--------------------------------------------------------------------------------
Progress Way,     31,000 sq ft 
Croydon           19 unit B1 estate       3,380               260            277
--------------------------------------------------------------------------------
Lambeth Portfolio 169,460 sq ft,         15,530             1,056          1,314
(comprising       109 units in 7
Ellerslie Square, properties mainly
Hardess Street,   single storey light
Hamilton Road,    industrial 
Mahatma Gandhi,   buildings
Michael Manley,
Rudolf Place 
and Zennor Road)
--------------------------------------------------------------------------------
Atlas Business     153,800 sq ft 115     12,650             1,140          1,154
Centre,            unit office and
Staples Corner,    industrial
London             estate
NW2                                 
--------------------------------------------------------------------------------
National          48,000 sq ft 40         4,000               320            391
Works,            unit modern 
Hounslow          industrial estate
Linton House,     35,000 sq ft 4         18,500               769            789
London SE1        unit business           
                  centre
--------------------------------------------------------------------------------

Total                                    60,160             4,679          5,045

Disposals 2003/2004
--------------------------------------------------------------------------------
Name of Property                                  Disposal Price     Exit Annual
                                                                          Income
                                                            £000            £000
--------------------------------------------------------------------------------
Kingsland Viaduct/Union Walk E2                           *8,250         **1,221
--------------------------------------------------------------------------------
Canalot Land, W10                                          2,790               -
--------------------------------------------------------------------------------

Total                                                     11,040           1,221

Notes

* Of the total consideration of £8.25m, £430,000 of compensation was allocated
against rental losses suffered due to a compulsory purchase order. This has been
treated as trading income.

** The ownership structure for Kingsland Viaduct and Union Walk
involved the pay away of approximately 45% of the gross income shown by way of
ground rents.





Financial Review

Profits

Trading profits before tax at £14.11m are 12.8% ahead of last year. In addition,
profits on disposals yielded £1.01m (2003: £2.77m). Trading earnings per share
increased by 2.0% to 61.3p. This improvement in earnings was dampened by an
increased tax charge to normal levels after an exceptionally low charge reported
last year. Elimination of the tax adjustment in respect of provisions for
previous years made last year would have resulted in a higher, 29.5%, tax rate,
which when applied to earnings would have resulted in trading earnings per share
of 55p per share (making the increase to 61.3p this year an 11.5% uplift). The
valuation surplus of £49.70m represents £3.10 per share, taking the net asset
value at 31 March 2004 to £18.43 per share (2003: £15.10), an increase of 22.1%.
This continues the unbroken pattern of growth delivered by the Group since its
flotation in December 1993.


--------------------------------------------------------------------------------
                            2003/2004         2002/2003          Compound annual
                               growth            growth            growth 1999 -
                                                                          2004
--------------------------------------------------------------------------------

Improvement in
 Trading PBT                      12.8%              9.1%                  15.2%
Improvement in
 Trading EPS                       2.0%             13.8%                  12.9%
Improvement in
 dividends per
  share                           10.3%             10.2%                  10.3%
Improvement in
 NAV                              22.1%             11.6%                  21.9%


Overheads have reduced again as a percentage of turnover from 14.6% to 13.9%
(2002: 15.3%). Net interest increased during the year by £2.52m. This increase
was attributable to the borrowings arising from the acquisition and capital
expenditure programme of £70m (net). Interest costs of £1.11m (2003: £0.56m)
were capitalised during the year on properties in process of development. 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 2004 was 30.3% (2003: 22.7%). The
effective rate excluding surpluses on property disposals was 30.4% (2003:
22.5%). Last year's charge was reduced by an adjustment to prior year tax
provisions of £0.92m arising from the settlement of tax liabilities in previous
years. Leaving aside disposals, the tax rate next year should remain in the
order of 30%.

Dividend

A final dividend of 20.7p per share is proposed. The interim dividend was 10.3p
per share, and so the total dividend proposed for the year is 31.0p (an increase
of 10.3%). The dividends are covered 2.11 times (2003: 2.32 times ) by earnings,
1.97 times (2003: 2.17 times) if based on trading earnings only.




Internal performance measures

Internal benchmark comparison shows:

Performance measures                        2004    2003    2002    2001    2000
--------------------------------------------------------------------------------
Turnover per member of staff (£000)         332     314     294     272     277
Year-end investment in property per
 member of staff (£000)                   4,092   3,261   2,984   2,581   2,340
Administration costs as a percentage
 of revenue                                13.9%   14.6%   15.3%   13.8%   14.5%
Total return on equity                     26.2%   15.0%   20.6%   40.7%   36.9%

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 a strong double
digit 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

Following the debt refinancing in 2002/3, the Group opened the year with £81m of
undrawn committed facilities. During the year the Group's investment programme 
(£70m net expenditure) has been financed using these facilities. Negotiations 
for the next round of financing have started. It is proposed that the existing 
facility with National Westminster Bank (NatWest) be extended from £100m to 
£150m with the term of the entire facility being refreshed to a new five year 
period. The terms of this facility (principally a margin of 0.95% over LIBOR) 
and of the related overdraft facility (1.1% over base) remain unchanged. 
Preliminary discussions have been held with the Group's other lender, 
Bradford and Bingley Plc, with a view to a similar extension of its facility 
once the NatWest facility is utilised. This pattern of extending and renewing 
five-year term loans was described in last year's review. Through this approach,
the Board considers the Group can access competitively priced funding on a 
flexible basis to match its cash demands for expansion. With regular reviews and
renewals the maturity of these loans can be maintained in the 3 - 5 year range 
leaving flexibility should markets and circumstances change. The weighted 
average life of the Group's debt at 31 March 2004 was 3.2 years.

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

                                   2004       2004             2004       2003
                        Facility Amount      Drawn        % of Debt      Drawn

                                     £m         £m                          £m
Debenture stock                    19.5       19.5                6%      19.5
Convertible loan stock              2.9        2.9                1%       2.9
Bradford & Bingley loan           200.0      200.0               65%     160.0
NatWest property loan             100.0       84.5               28%      65.0
NatWest overdraft                   2.5        1.3                -          -
Deposits                              -       (1.3)               -       (3.6)
-------------------------------------------------------------------------------

                                  324.9      306.9              100%     243.8
===============================================================================


The available resources of approximately £18m are equivalent to 3 months spend
at the capital investment rate for 2003/04. However, immediately following the
year end sales realising a further £12m were completed with others in the
pipeline.

Borrowings over recent years       2004     2003     2002     2001     2000
-------------------------------------------------------------------------------
% Fixed/hedged                       59%      75%      77%      89%      93%
Average interest rate (year end)    5.8%     5.8%     5.8%     7.0%     8.5%
Interest cover                     1.97     2.04     2.15     2.70     1.87
Trading Interest Cover             1.91     1.72     2.09     1.82     1.72
Year-end gearing %                  101%      98%      81%      83%     104%
Debt: Portfolio Value                49%      48%      43%      43%      49%

Year end gearing increased marginally to 101% due to investment during the year,
reduced by valuation surpluses. Both gearing and interest cover levels are
within the levels historically set by the Board of 120% and 1.5 times.

The debenture and convertible loan stock, which attract an average 11.3%
interest charge, represent just 7% of total borrowings. The maturity of net debt
at 31 March 2004 is shown below: -

                                     2004              2003              2002
-------------------------------------------------------------------------------
Maturity of net debt                    %                 %                 %
-------------------------------------------------------------------------------
Under 12 months                         -                 -                 1%
1 - 5 years                            99%               99%               34%
5 - 10 years                            1%                1%               65%
10 years +                              -                 -                 -
-------------------------------------------------------------------------------

                     Total            100%              100%              100%
-------------------------------------------------------------------------------

At 31 March 2004 the average cost of floating rate funds was a margin of 0.94%
over LIBOR or base rate (2003:0.94%). At 31 March 2004 secured borrowings were
covered 1.83 times by the value of charged property (with a further £68.7m
uncharged giving an overall cover of 2.06 times). Further details of debt
facilities and borrowing policies are given in note 16 to the accounts.

Balance Sheet and Cash Flow

The principal changes in the balance sheet over the year arise from the Group's
continued investment programme and the improved values of its assets. Investment
properties totalled £626.06m (2003: £505.49m). This increase of £120.57m arose
principally from the net investment of £70.15m during the year and the valuation
surplus of £49.70m recorded at the end of the year. The new investment was
financed principally by the increase in borrowings over the year of £63.1m; the
balance arising from cash generated from operations.

The Group's net current liabilities at 31 March 2004 were £22.82m (2003:
£17.88m). 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 £10.5m (2003: £10.4m). The directors consider
that in the normal course of business the majority of these liabilities are
unlikely to require payment and properly form part of the working capital of the
Group. Net cash inflow from operating activities at £31.6m (2003: £29.1m)
improved, principally due to the contribution from newly acquired properties
together with increased profitability from existing properties.

International Financial Reporting Standards (IFRS)

The Company will be obliged to report using IFRS for the financial year ending
31 March 2006, with its first IFRS based statements being for the quarter ending
30 June 2005. A conversion programme has been established and initial studies
concerning this major change to financial reporting completed. Illustrative
unaudited accounts have been prepared by reference to the principal standards
giving rise to the most significant changes in the reporting of the Company's
performance, your Board believes that, whilst publication of these draft
unaudited statements alongside the current financial statements prepared under
current UK GAAP (generally accepted accounting principles) may be misleading, it
should provide some guidance on the impact of IFRS. It will therefore include
these statements as part of its briefings to analysts and investors (details of
which can be found on the Group's website www.workspacegroup.co.uk).





Consolidated Profit and Loss Account

for the year ended 31 March 2004

                             2004          2004        2004        2003     2003          2003
               Notes      Trading         Other       Total     Trading    Other         Total
                       Operations         Items              Operations    Items 
                             £000          £000        £000        £000     £000          £000

Turnover -
 continuing
  operations       2       51,068             -     51,068       44,965        -        44,965
Rent payable
 and direct
  costs            2      (14,229)            -    (14,229)     (12,944)       -       (12,944)
----------------------------------------------------------------------------------------------

Gross profit               36,839             -     36,839       32,021        -        32,021
Administrative
 expenses                   (7,145)           -     (7,145)      (6,554)       -        (6,554)
----------------------------------------------------------------------------------------------
Operating
 profit                    29,694             -     29,694       25,467        -        25,467

Surplus on
 disposal of
  investment
   properties      3            -         1,009      1,009            -    2,766         2,766
Interest
 receivable        4           45             -         45          173        -           173
Interest
 payable and
  similar
   charges         5      (15,628)            -    (15,628)     (13,132)  (1,861)      (14,993)
----------------------------------------------------------------------------------------------
Profit on
 ordinary
  activities
   before
    taxation               14,111         1,009     15,120       12,508      905        13,413

Taxation on
profit on
ordinary
activities         6       (4,284)         (303)    (4,587)      (2,812)    (234)       (3,046)
----------------------------------------------------------------------------------------------
Profit on
 ordinary
  activities
   after taxation           9,827           706     10,533        9,696      671        10,367

Equity
 minority                   
   interests                    -             -          -            -        -             -
----------------------------------------------------------------------------------------------
Profit for the
 financial year             9,827           706     10,533        9,696      671        10,367

Dividends          7       (4,981)            -     (4,981)      (4,471)       -        (4,471)
----------------------------------------------------------------------------------------------
Retained
 profit for the
  year                      4,846           706      5,552        5,225      671         5,896
----------------------------------------------------------------------------------------------
Basic earnings
 per share         8         61.3p          4.4p      65.7p        60.1p     4.2p         64.3p

Diluted
 earnings per
  share            8         59.7p          4.2p      63.9p        58.8p     4.0p         62.8p




Statement of total recognised gains and losses        2004                                2003
for the yearended 31 March 2004                       £000                                £000

Profit for the financial year                       10,533                              10,367
Unrealised surplus on revaluation of
 investment properties                              49,699                              19,701

Taxation on valuation surpluses
 realised on sale of properties                    (1,215)                                   -
----------------------------------------------------------------------------------------------
Total recognised gains relating to the
 financial year                                     59,017                              30,068
==============================================================================================

Note of historical cost profits and losses            2004                                2003
for the year ended 31 March 2004                      £000                                £000

Reported profits on ordinary activities
 before taxation                                    15,120                              13,413

Realisation of property revaluation
gains/(losses) of previous years                     4,408                                  15

Taxation on valuation surpluses
realised on sale of properties                     (1,215)                                  -
----------------------------------------------------------------------------------------------

Historical cost profit on ordinary
 activities before taxation                        18,313                              13,428
==============================================================================================


Historical cost profit for the year
retained after taxation and dividends               8,745                               5,911 
==============================================================================================

Profit and earnings per share on trading operations are stated before profit on property
disposals and other non-recurring items.






BALANCE SHEETS
As at 31 March 2004

                                        Group      Group     Company     Company
                                         2004       2003        2004        2003
                             Notes       £000       £000        £000        £000

Fixed assets

Tangible assets
Investment properties            9     626,060    505,490     18,355      13,535
Other fixed assets              10       3,654      3,866        217         197
Shares in subsidiary undertakings            -          -         24          24
Investment in own shares        11       6,206      6,234      6,206       6,234
--------------------------------------------------------------------------------
                                       635,920    515,590     24,802      19,990
                             
Current assets

Debtors                         12       6,795      7,386    207,494     194,915
Investments                     13       1,150      3,109          -           -
Cash at bank and in hand                   181        456          -           -
--------------------------------------------------------------------------------
                                         8,126     10,951    207,494     194,915
Creditors: amounts falling 
due within one year             14     (30,942)   (28,835)   (96,367)    (85,125)
Net current 
 (liabilities)/assets                  (22,816)   (17,884)   111,127     109,790
--------------------------------------------------------------------------------
Total assets less 
 current liabilities                   613,104    497,706    135,929     129,780

Creditors: amounts 
 falling due after
   more than one year 
   (including Convertible
     Loan Stock)             15/16    (305,756)   (245,990)  (22,400)    (22,400)

Provision for liabilities 
 and charges                    17      (5,483)     (4,107)   (1,263)     (1,086)
--------------------------------------------------------------------------------
                                       301,865     247,609   112,266     106,294

================================================================================

Capital and reserves

Called up share capital                 1,673       1,668      1,673       1,668
Share premium account                  42,912      42,697     42,912      42,697
Revaluation reserve                   209,565     164,274      4,336       1,115
Profit and loss account                47,715      38,970     63,345      60,814
Shareholders' funds - 
 equity interests                     301,865     247,609    112,266     106,294
Equity minority interests                   -           -          -           -
--------------------------------------------------------------------------------
Capital employed                      301,865      247,609   112,266     106,294
================================================================================

Net asset value per share        8    £18.43       £15.10
Diluted net asset 
 value per share                 8    £17.72       £14.61



The financial statements were approved by the Board of Directors on 11 June 2004

H Platt
R M Taylor
Directors




CASH FLOW STATEMENT
for the year ended 31 March 2004
                                              Notes           2004          2003
                                        To Cashflow           £000          £000

Net cash inflow from operating activities         1         31,615        29,112
Returns on investments and servicing of finance   2        (15,692)      (13,454)
Taxation                                                    (4,110)       (2,372)
Net capital expenditure                           2        (70,155)      (75,225)
Equity dividends paid                                       (4,952)       (4,227)
--------------------------------------------------------------------------------
Net cash outflow before use of liquid
 resources and financing                                   (63,294)      (66,166)

Management of liquid resources                    2          1,959         2,334
Financing                                         2         59,720        66,715
--------------------------------------------------------------------------------
Net cash (outflow)/inflow                         3         (1,615)        2,883
================================================================================
Reconciliation of net cash flow to 
 movement in net debt
(Decrease)/increase in cash                                 (1,615)        2,883
Decrease in liquid resources                                (1,959)       (2,334)
Outflow from movements in debt financing                   (59,766)      (66,907)
--------------------------------------------------------------------------------
Changes in net debt resulting from cash flows     3        (63,340)      (66,358)
Net debt at 1 April 2003                                  (242,425)     (176,067)
--------------------------------------------------------------------------------
Net debt at 31 March 2004                                 (305,765)     (242,425)
================================================================================



Notes to the Cash Flow Statement

for the year ended 31 March 2004                              2004          2003
                                                              £000          £000

1. Reconciliation of operating profit 
 to operating cash flows

Operating profit                                            29,694        25,467
Depreciation charges                                           585           742
Profit on sale of tangible fixed assets                          -            (3)
Decrease in debtors                                             56         1,339
Increase in creditors                                        1,280         1,567
--------------------------------------------------------------------------------
                                                            31,615        29,112
================================================================================



2. Analysis of cash flow:                     Notes          2004           2003
                                        To cashflow          £000           £000

Returns on investments and 
 servicing of finance

Interest received                                             45             191
Interest paid (including financing costs)                (15,737)        (13,645)
--------------------------------------------------------------------------------
Net cash outflow                                         (15,692)        (13,454)
================================================================================

Capital expenditure

Purchase of tangible fixed assets                        (81,934)        (73,192)
Net distribution/(purchase) of own shares                     28          (5,219)
Sale of tangible fixed assets                             11,751           3,037
Grants received                                                -             149
--------------------------------------------------------------------------------
Net cash outflow                                         (70,155)        (75,225)
================================================================================
Management of liquid resources
Decrease in short term deposits                 3          1,959           2,334
--------------------------------------------------------------------------------
Net cash inflow                                            1,959           2,334
================================================================================
Financing

Issue of ordinary share capital                             220              687
Drawdown of Bank Loans                          3        59,500          180,500
Repayment of securitised loan                                 -         (114,472)
--------------------------------------------------------------------------------
Net cash inflow                                          59,720           66,715
================================================================================



3. Analysis of Net Debt

                              At 1.4.03   Cash Flow   Non-cash Items  At 31.3.04
                                   £000        £000            £000         £000

Cash at bank and in hand            456        (275)              -          181
Bank overdrafts                       -      (1,340)              -       (1,340)
--------------------------------------------------------------------------------
                                    456      (1,615)              -       (1,159)
--------------------------------------------------------------------------------
Debt due after one year:
11% Convertible Loan
 Stock                           (2,900)          -               -       (2,900)
11.125% First Mortgage
 Debenture                      (12,500)          -               -      (12,500)
11.625% First Mortgage
 Debenture                       (7,000)          -               -       (7,000)
Bank loans                     (225,000)    (59,500)              -     (284,500)
Less cost of raising
 finance                          1,410         *94            (360)       1,144
--------------------------------------------------------------------------------
                               (245,990)    (59,406)           (360)    (305,756)
--------------------------------------------------------------------------------

Short term deposits               3,109      (1,959)              -        1,150
--------------------------------------------------------------------------------
Total                         (242,425)     (62,980)           (360)    (305,765)
================================================================================

* Included within interest paid



Notes to the Financial Statements
for the year ended 31 March 2004

1. Basis of Preparation

The audited financial information contained in this preliminary announcement
report does not comprise statutory accounts within the meaning of Section 240 of
the Companies Act 1985.

The figures in this preliminary announcement have been prepared under generally
accepted accounting policies in the United Kingdom. The accounting policies
adopted are those set out in the Annual Report and Accounts for the year ended
31 March 2003.

2. Segmental Analysis                      2004                              2003
                                                   Gross                             Gross
                             Turnover    Costs    Profit       Turnover    Costs    Profit
                                 £000     £000      £000           £000     £000      £000

Rental income                  39,504     (800)   38,704         35,667     (934)   34,733
Service charges and 
 other recoveries               9,059  (13,033)   (3,974)         7,410  (11,311)   (3,901)
Services, fees, commissions 
 and sundry income              2,505     (396)    2,109          1,888     (699)    1,189
------------------------------------------------------------------------------------------
                               51,068  (14,229)   36,839         44,965  (12,944)   32,021
------------------------------------------------------------------------------------------

The Group operates a single business which is continuing and occurs wholly in
the United Kingdom.

3. Surplus on Disposal of Investment Properties

The profit arising on the sale of properties is calculated by reference to the
book value at the date of sale. Book value comprises the valuation as at 31
March 2003 plus additions at cost since that date. Proceeds from the sale of
investment properties totalled £10,637,000. Book value of these assets plus
costs of sale totalled £9,628,000 yielding a surplus of £1,009,000.

During the year the Group disposed of its interests in Kingsland Viaduct and
Union Walk which were subject to a compulsory purchase order (CPO). The
consideration received of £8.25m included £0.78m in respect of compensation for
blight (loss of income due to the CPO) and reinvestment compensation. Of this
sum £0.35m has been treated as reinvestment compensation and added to the £7.47m
consideration for the land interests (and included in the £10,637,000 referred
to above). The remaining £0.43m has been treated as trading income, being
compensation for income that might otherwise have been received.

4. Interest Receivable

The following amounts were earned during the year:              2004        2003
                                                                £000        £000

Short term deposits                                               30         106
Other                                                             15          67
--------------------------------------------------------------------------------
                                                                  45         173
================================================================================


5. Interest Payable and Similar Charges

The following amounts were payable during the year:             2004        2003
                                                                £000        £000

11% Convertible Loan Stock 2011                                  319         361
11.125% First Mortgage Debenture Stock 2007                    1,391       1,391
11.625% First Mortgage Debenture Stock 2007                      814         814
Mortgage interest on securitised loan not 
 wholly repayable within five years*                               -       1,884
Bank and other interest on amounts wholly 
 repayable within five years*                                 14,210       9,241
Finance costs written off                                          -       1,861
--------------------------------------------------------------------------------
                                                              16,734      15,552
Interest capitalised on development properties                (1,106)       (559)
--------------------------------------------------------------------------------
Charged to profit and loss account                            15,628      14,993
================================================================================

*Includes amortisation of cost of raising 
 finance £359,700 (2003: £343,100)

                                                               

6. Taxation
                                                               2004         2003
                                                               £000         £000
Current tax:
UK corporation tax on profit for the year                     3,534        3,225
Adjustment in respect of previous periods                      (323)        (921)
--------------------------------------------------------------------------------
Total current tax                                             3,211        2,304

Deferred tax:
Origination and reversal of timing differences                1,376          742
--------------------------------------------------------------------------------
Taxation on profit on ordinary activities                     4,587        3,046
================================================================================

Timing differences are mainly in respect of capital and industrial building
allowances and capitalised interest. Of the total charge for the year £303,000
(2003: £792,300) related to exceptional items (arising from profits on property
sales) as disclosed on the face of the Profit and Loss Account.

The tax assessed for the period is lower than the standard rate of corporation
tax in the UK. The differences are explained below: -




                                                                   2004     2003
                                                                   £000     £000

Profit on ordinary activities before taxation                    15,120   13,413
--------------------------------------------------------------------------------

Profit on ordinary activities at standard rate of corporation
tax in the UK of 30% (2003: 30%)                                  4,536    4,024

Capital allowances in excess of depreciation                       (746)    (485)
Expenses not deductible for tax purposes                             26       17
Interest capitalised                                               (332)    (178)
Other timing differences                                             61     (107)
Capital gains adjustments                                         1,215      (46)
Capital gains charged direct to reserves                         (1,215)       -
Reductions due to application of small companies rate               (11)       -
Adjustment in respect of previous periods                          (323)    (921)
--------------------------------------------------------------------------------
                                                                  3,211    2,304
================================================================================

7. Dividends
                                                                   2004     2003
                                                                   £000     £000

Interim dividend of 10.3p (2003 - 7.5p) 
 per Ordinary Share                                               1,653    1,193

Proposed final dividend of 20.7p (2003 - 20.6p) 
 per Ordinary Share                                               3,321    3,292

Under/(Over) provision in prior year                                  7      (14)
--------------------------------------------------------------------------------
                                                                  4,981    4,471

The interim dividend was paid on 2 February 2004 and the proposed final dividend
is payable on 2 August 2004 to shareholders on the register at the close of
business on 2 July 2004.


8. Earnings Per Share and Net Assets Per Share
The following table shows a reconciliation of profit used in calculating
earnings per share:

                                          Profit              Earnings per share
                                     2004      2003              2004       2003
                                     £000      £000             pence      pence

Profit for the year attributable 
 to shareholders                   10,533    10,367             65.7        64.3
Non trading other items              (706)     (671)            (4.4)       (4.2)
--------------------------------------------------------------------------------
Profit for the year attributable 
 to shareholders used for 
  calculating trading earnings 
    per share                        9,827    9,696             61.3        60.1
================================================================================


Reconciliation of profit used in calculating diluted earnings per share:

                                          Profit              Earnings per share
                                     2004      2003              2004       2003
                                     £000      £000             pence      pence
Profit for the year 
 attributable to shareholders
  used for calculating basic 
    earnings per share             10,533    10,367

Interest saving net of 
 taxation on 11% Convertible 
  Loan Stock                          223       223
--------------------------------------------------------------------------------
Profit for the year attributable 
 to shareholders used in 
  calculating the underlying 
   diluted earnings per share     10,756     10,590              63.9       62.8

Non trading other items             (706)      (671)             (4.2)      (4.0)
Profit for the year attributable 
 to shareholders used in 
   calculating the diluted 
     trading earnings per share   10,050      9,919              59.7       58.8


The following table shows a reconciliation of the weighted average number of
shares used for calculating the basic and diluted earnings per share:



                                                             2004           2003

Used for calculating basic earnings per share          16,021,462     16,119,277
 (excludes 689,666 held in the ESOT)
Dilution due to Share Option Scheme                       227,276        158,075
Dilution due to Convertible Loan Stock                    580,000        580,000
Used for calculating diluted earnings per share        16,828,738     16,857,352

Net assets per share have been calculated by dividing net assets of £301,865,000
(2003: £247,609,000) less investment in own shares of £6,205,600 by 16,044,145
(2003: 15,982,233) being the number of shares in issue at 31st March 2004 less
investment in own shares of 689,666 (2003: 695,842). Non-trading other items in
both years comprise profits on disposal of investment properties less (in 2003)
previously capitalised finance charges written off on refinancing loans.

Diluted net assets per share have been calculated by dividing net assets less
investment in own shares (as above) plus £2,900,000 (2003: £2,900,000) for the
conversion of the Convertible Loan Stock by the number of shares as below:

                                                           2004             2003

Shares in issue at year-end                          16,733,811       16,678,075
Less ESOT shares                                       (689,666)        (695,842)
Dilution due to Convertible Loan Stock                  580,000          580,000
Dilution due to Share Option Scheme                     227,276          158,075
--------------------------------------------------------------------------------
                                                     16,851,421       16,720,308
================================================================================

9(a) Investment Properties-Group

                                                    Mainly       Long      Short
                                      Freehold    Freehold  Leasehold  Leasehold    Total
                                          £000        £000       £000       £000     £000

Balance at 1 April 2003                377,935      71,060     56,495          -  505,490
Additions during the year               58,302       4,841     16,583          -   79,726
Disposals during the year               (2,313)          -     (7,184)         -   (9,497)
Reclassification from other fixed assets   589          53          -          -      642
Revaluation during the year             34,797       9,921      4,981          -   49,699
-----------------------------------------------------------------------------------------
Balance at 31 March 2004               469,310      85,875     70,875          -  626,060
=========================================================================================

The historical cost of investment properties:

Balance at 31 March 2003              249,443       48,605     42,417          7  340,472
=========================================================================================
Balance at 31 March 2004              307,040       53,503     55,489          7  416,039
=========================================================================================

The directors are advised that the value of the properties at 31 March 2004 was
not less than their book cost (see Note 9(b)).

Properties classified as Mainly Freehold are those where the majority of the
estate is owned freehold but where an element of the Group's interest is held
leasehold.

Additions during the year are stated net of grants receivable - £nil (2003 -
£139,800) and include capitalised interest, gross of tax element, of £1,106,000
(2003: £559,000).

9 (b) Valuation

The Group's investment properties were valued by CB Richard Ellis, Chartered
Surveyors, at 31 March 2004 on the basis of open market value and in accordance
with the guidance notes issued by the Royal Institution of Chartered Surveyors.
The valuation at that date amounted to £628,485,000 (2003 - £507,690,000). This
included £400,000 (2003: £300,000) in respect of the Company's short leasehold
interest (expiring 11 February 2011) in the Alpha Business Centre, Walthamstow.
For accounts purposes, as the unexpired term of the leasehold interest in Alpha
Business Centre is less than 20 years, the valuation of the property has been
retained at a nominal £1. The adjustment from the valuation total to the
accounts total may be reconciled as follows: -

                                                            2004            2003
                                                            £000            £000

Total per CBRE valuation report                          628,485         507,690
Alpha                                                       (400)           (300)
Magenta House (Fixed Asset)                               (2,025)         (1,900)
--------------------------------------------------------------------------------
Total per Accounts                                       626,060         505,490
================================================================================


10. Other Fixed Assets - Group
                                           Freehold       Motor       Equipment
                                           Property    Vehicles    and Fixtures    Total

Cost                                           £000        £000            £000     £000

Balance at 1 April 2003                       2,146          20           4,620    6,786
Additions during the year                       189          14             812    1,015
Disposals during the year                         -          (9)              -       (9)
Reclassifications                                13           -            (977)    (964)
----------------------------------------------------------------------------------------
Balance at 31 March 2004                      2,348          25            4,455   6,828
========================================================================================

Depreciation

Balance at 1 April 2003                          33          20            2,867   2,920
Charged during the year                          36           1              548     585
Disposals during the year                         -          (9)               -      (9)
Reclassifications                                 -           -             (322)   (322)
----------------------------------------------------------------------------------------
Balance at 31 March 2004                         69          12            3,093   3,174
========================================================================================
Net book value 31 March 2004                  2,279          13            1,362   3,654
========================================================================================
Net book value 31 March 2003                  2,113           -            1,753   3,866
========================================================================================

The reclassifications are to investment properties and freehold property.

Included in freehold property is land at cost of £500,000 (2003: £500,000)

11. 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 Executive Share Option Schemes. The shares are held
by an independent trustee and the rights to dividend on the shares have been
waived. During the year the Trust transferred 6,176 shares to employees on
exercise of options. At 31 March 2004, the number of shares held by the Trust
totalled 689,666 (2003: 695,842) with a nominal value of £68,967 (2003: £69,584)
and the book value of the shares amounted to £6,205,600 (2003: £6,233,500). The
shares, whilst legally not the property of the Company, have been included in
fixed asset investments. At 31 March 2004 the market value of the shares held by
the Trust was £10,879,481. 688,530 shares held by the trust are subject to
option awards.

12. Debtors

                                                  Group             Company
                                               2004     2003      2004      2003
                                               £000     £000      £000      £000

Amounts falling due within one year:
Trade debtors                                 4,765    6,294         -         -
Amounts owned by subsidiary undertakings          -        -   201,997   193,616
Deposits on investment acquisitions             464        -         -         -
Taxation and social security                      4       37         -         -
Corporation tax - payment on account              -        -     5,497     1,299
Prepayments and accrued income                1,562    1,055         -         -
--------------------------------------------------------------------------------
                                              6,795    7,386   207,494   194,915
================================================================================

13. Investments

Investments of £1,150,000 (2003 - £3,109,000) comprise short-term deposits of
£nil (2003: £2,000,000) with an original maturity date of less than three months
and other deposits, being tenants security deposits, of £1,150,000 (2003:
£1,109,000).

14. Creditors: Amounts falling due within one year

                                                  Group              Company
                                               2004       2003     2004     2003
                                               £000       £000     £000     £000

Bank loan and overdraft (secured)             1,340          -        -        -
Trade creditors                               1,902      3,026        -        -
Amounts owed to subsidiary undertakings         -          -     92,966   81,696
Corporation tax payable                       2,242      1,925        -        -
Taxation and social security                  1,757      1,946        -        -
Tenants' deposits                             5,461      5,154        -        -
Accruals                                      9,884      8,231       80      137
Deferred income-rent and service charges      5,035      5,261        -        -
Dividends                                     3,321      3,292    3,321    3,292
--------------------------------------------------------------------------------
                                             30,942     28,835   96,367   85,125
================================================================================

15. Creditors: Amounts falling due after more than one year
                                                  Group              Company
                                               2004       2003     2004     2003
Long-term borrowings consist of:               £000       £000     £000     £000
 
Unsecured:
11% Convertible Loan Stock 2011               2,900      2,900    2,900    2,900
Secured:
11.125% First Mortgage Debenture Stock 2007  12,500     12,500   12,500   12,500
11.625% First Mortgage Debenture Stock 2007   7,000      7,000    7,000    7,000
Other secured loans                         283,356    223,590        -        -
--------------------------------------------------------------------------------
                                            305,756    245,990   22,400   22,400
================================================================================

The secured loans are secured on properties with values totalling £559,755,000.
Interest on the Debenture Stocks is payable on 31 March and 30 September each
year. Interest on the 11% Convertible Unsecured Loan Stock 2011 is payable on 30
June and 31 December each year. Other secured loans include a loan of
£200,000,000 carrying an interest rate of 0.94% over LIBOR and repayable in July
2007 and a loan totalling £84,500,000 carrying an interest rate margin of 0.95%
over LIBOR repayable in March 2007. Workspace Holdings Ltd holds an interest
rate collar on £107.9m which has a cap of 8% and a floor of 4.5% each until 15
July 2009. Workspace 2 Ltd holds an interest rate collar on £50m which has a cap
of 7.5% and a floor of 4.55% each until April 2007.

The 11% Convertible Unsecured Loan Stock 2011 holders have the option to convert
in each year on the basis of one ordinary share for every £5 of stock held.

Loans totalling £2,900,000 (2003: £2,900,000) have a maturity of five years or
more (see note 16).


16. Borrowings and Financial Instruments

(i) Policies

The Group finances its operations through a mixture of retained profits and
borrowings. The Group borrows at both fixed and floating rates of interest and
then uses interest rate swaps and caps to generate the desired interest and risk
profile. Details of the interest rate collars held by the Group to manage
interest rate exposures are given in note 15. No premium payment was made for
either of these collars. However, the £107.9m collar is financed by a 0.22%
adjustment to the interest rate margin paid on the borrowings.

The Group's policy is to fix or cap interest rates on at least 50% of its
borrowings. At the year-end 7% (2003: 9%) of the Group's borrowings were fixed
with a further 52% (2003: 66%) subject to a collar.

Last year the Board reviewed the Group's policy with regard to maturity of its
debt. It was recognised that over recent years its bank loan facilities, whilst
of a longer term, invariably did not run for the full term. It was agreed
therefore that on re-negotiating these facilities a shorter five year term was
appropriate. It is anticipated that these facilities will be renewed during this
term, increasing the facility amount and renewing the facility period. At 31
March 2004 the weighted average life of the Group's bank loan facilities was 3.2
years and 99% of the Group's total debt had a maturity of 1 - 5 years.

The Group has taken advantage of the exemption for disclosure of short-term
debtor and creditor balances.

(ii) Financial Assets
All of the Group's financial assets are denominated in sterling. The interest
rate profile at 31 March 2004 was:

                                                               2004         2003
                                                               £000         £000
Cash at bank and in hand (no interest)                          181          456
Fixed rate short term deposits                                    -        2,000
Floating rate short term deposits                             1,150        1,109
--------------------------------------------------------------------------------
                                                              1,331        3,565
================================================================================



(iii) Financial Liabilities

All of the Group's financial liabilities are denominated in sterling. The
interest rate profile of the Group's financial liabilities at 31 March 2004 was:

                                                               2004         2003
                                                               £000         £000
Floating rate financial instruments                         285,840      225,000
Fixed rate financial liabilities                             22,400       22,400 
--------------------------------------------------------------------------------
                                                            308,240      247,400
================================================================================


As noted above (note 15) the Group has the benefit of interest rate collars
operating in respect of each of its principal bank loan facilities.

For its fixed rate financial liabilities:

Weighted average interest rate 11.3%
Weighted average period fixed 3.5 years

Floating rate financial liabilities comprise bank loans that bear interest at
rates based upon 1, 3, 6 or 12 month LIBOR. The average margin on these
borrowings at 31 March 2004 was 0.94%.


(iv)  Maturity of Financial Liabilities

A maturity analysis of loans is shown below:              Group       Company
                                                     2004    2003   2004     2003
                                                     £000    £000   £000     £000

Less than one year                                  1,340       -      -        -
Between one year and two years                          -       -      -        -
Between two years and three years                       -       -      -        -
Between three years and four years                304,000       - 19,500        -
Between four years and five years                       - 244,500      -   19,500
In five years and more                              2,900   2,900  2,900    2,900
---------------------------------------------------------------------------------
                                                  308,240 247,400 22,400   22,400
=================================================================================
Less cost of raising finance                       (1,144) (1,410)     -        -

                                                  307,096 245,990 22,400   22,400
=================================================================================
Cost of raising finance is being amortised over 5 years.

(v) Borrowing Facilities

At 31 March 2004 the Group had undrawn borrowing facilities of £16,841,700
(2003: £42,200,000) which conditions precedent had been met. Of the total
undrawn facilities £1,341,700 (2003: £2,500,000) had a maturity of less than 12
months with the remainder having a maturity of in excess of two years.

(vi) Fair Value of Financial Assets and Liabilities

Book and fair values of financial assets and liabilities are:
                                                     2004        2003         2004        2003
                                               Book Value  Fair Value   Book Value  Fair Value
                                                     £000        £000         £000        £000

Primary Financial Instruments
Short term liabilities                             (1,340)     (1,340)           -           -
Long term borrowing                              (305,756)   (312,196)    (245,990)   (251,093)
Financial assets                                    1,331       1,331        3,565       3,565

Derivative Financial Instruments
Interest rate cap/collar/swaps                        206      (2,639)         244      (6,724)
----------------------------------------------------------------------------------------------
                                                 (305,559)   (314,844)    (242,181)   (254,252)
==============================================================================================


The fair value of the interest rate cap/collar/swaps have 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 57.9p per share (2003: 75.5p) (30.2p (2003: 59.3p) based
on diluted share capital).

17. Provision for Liabilities and Charges

                                                  Group            Company
                                               2004      2003    2004    2003
                                               £000      £000    £000    £000
Deferred Taxation:
Balance at 1 April 2003                       4,107     3,365   1,086   1,252
Deferred tax charge/(credit) for the year     1,376       742     177    (166)
--------------------------------------------------------------------------------
Balance at 31 March 2004                      5,483     4,107   1,263   1,086
================================================================================

The provision for deferred tax comprises:
Accelerated capital allowances                4,763     3,677     985     806
Capitalised interest                            777       474     296     296
Other short term timing differences             (57)      (44)    (18)    (16)
-----------------------------------------------------------------===============
                                              5,483     4,107   1,263   1,086
================================================================================

If the investment properties were sold for their revalued amounts there would be
a potential liability to corporation tax of £51,293,000 (2003: £39,986,000). In
accordance with FRS 19 no provision has been made for these amounts.

18. Post Balance Sheet Events

Following the year end the sales of Hooley Lane, Redhill and the Union Street
sites were completed for consideration of £10.0m and £1.88m respectively.

On 7 April 2004 the Group completed the purchase of the Quadrangle, a 26,000 sq
ft business centre located in Fulham SW6 for a consideration of £4.64m.




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