Interim Results
Workspace Group PLC
27 November 2000
Workspace Group PLC
WORKSPACE GROWTH ACCELERATES
Workspace Group PLC ('Workspace'), today announces its results for the six
months to 30 September 2000. Workspace provides approximately 6 million sq.
ft of flexible accommodation to over 3,000 small and medium sized enterprises
('SMEs') in London, the South East and the Midlands.
* Pre-tax profits up 62.4% to £4.3 million (30 September 1999: £2.6
million)
* Basic earnings per share up 21.3% to 19.4p (30 September 1999: 16.0p)
* Net asset value per share at 30 September 2000 up 22.1% to £11.04
(31 March 2000: £9.04; 30 September 1999: £7.65)
* Turnover at £16.9 million for the half year, up 32.6%
* Annual rent roll increased by £1.26 million to £27.1 million
(up 4.9% since 31 March 2000)
* Acquisition of estates in Harrow and Maidenhead for £6.2 million and
disposal of Ensign Court, E1, for £4.65 million
* Interim dividend up 8.3% to 6.5p (1999: 6.0p)
Harry Platt, Chief Executive, commenting on the results, said,
' This is another excellent set of results for the Group. On all measures,
Workspace is performing extremely well. The management team remains focused
on developing and adding value to the Group's properties either through its
active management or through the identification of alternative use potential.
' The rental performance of the Tonex portfolio acquired last year has been
very good and is reflected in the interim valuation. Overall, the rent roll
has increased by £1.1 million over the first half year.
' The SME sector is doing well. The economy is healthy and the climate is
supportive of small business start ups and development. These dynamics
coupled with the Group's active management approach are driving our business
forward. The strong demand for our product is reflected in its rental growth
and, in turn, the value of our properties.
' At many of our sites there is significant regeneration potential. We are
exploring actively how we can achieve maximum value from these opportunities.
During the first half, we exchanged contracts with Copthorn Homes for a major
live/work scheme. Meanwhile, our office development at Union Street, SE1, is
now occupied by J Sainsbury, and the investment is now being marketed.
' The proceeds from disposals will be re-invested in properties with growth
potential. The Group is looking at a number of acquisition opportunities in
its core areas, including sites identified under our recent co-operation
agreement with the Greater London Enterprise.
' Looking forward, the business is well positioned to continue its growth.'
For further information contact:
Harry Platt, Chief Executive Simon Courtenay
Mark Taylor, Finance Director City Profile Group
Workspace Group PLC 020-7726-8588
020-7247-7614
e-mail: info@workspacegroup.co.uk e-mail: sc@profilecomms.co.uk
Web: www.workspacegroup.co.uk
Operating and Financial Review
Review of Activities
Demand for space remains high supporting increasing rentals. As a result of
this and expansion of the portfolio, pre-tax profits are up 62.4% to £4.3
million for the half year. Excluding property sales and exceptional costs,
profits are up 17.8% on last year.
Over the first half the rent roll increased by £1.26 million to £27.11
million, whilst the average rent (per square foot) increased from £5.21 to
£5.42 (up 3.2%). The Estimated Rental Value of the portfolio (excluding Union
Street) now stands at £34.4 million.
The Group's properties were valued by Insignia Richard Ellis at 30 September
2000 at £348.5 million yielding a surplus of £31.8 million, an uplift of
10.0% on the portfolio valuation at 31 March 2000 (as adjusted for subsequent
additions and disposals). This has been incorporated in the interim accounts.
As a result the net asset value per share has increased to £11.04, compared to
£9.04 at 31 March 2000 and £7.65 at 30 September 1999 (an uplift of 22.1% for
the half year and 44.2% year on year).
Following the completion of the refurbishment of 169 Union Street and its
occupation by J Sainsbury, the property now appears in the accounts at
valuation (contributing £9.2 million to the valuation surplus reported for the
half year). It is likely that the building will be sold in the current
financial year.
Acquisitions and Disposals
The Group is keen to expand the property portfolio. We target under-managed
business centres in good locations which we believe will benefit from our
intensive management skills.
Three acquisitions were concluded in the first half year at Harrow, Maidenhead
and on Whitechapel Road, London E1 for a total of £6.61 million. In
addition, following the period end, one small acquisition adjacent to an
existing landholding and for a value of £0.29 million has been made.
In May 2000 we entered a co-operation agreement with the Greater London
Enterprise (GLE). This agreement will enable the Group to source new sites
and opportunities. The opportunity to work together with local authorities
to stimulate local business creation is massive. We aim to use the agreement
to continue to grow the provision of good quality, flexible business space
and ancillary services to SME's. We are delighted to report that contracts
have been exchanged with GLE for the first acquisition being the
Wandsworth Business Village in South West London, for £6.94 million.
The sale of Ensign Court for £4.65 million was concluded in the second
quarter, yielding a surplus of £0.05 million on the book value at 31 March
2000 and some £2.27 million over cost. Following the period end contracts
have been exchanged for the sale of Phoenix Business Centre, Bow Common Lane,
E3 for £1.5 million, a £0.6 million surplus over book value at 31 March 2000.
The table below shows the main details of acquisitions and disposals in the
second quarter.
Name of Description Acquisition/sale Annual
Property Price Income
Acquisitions:
Barratt Way, 49,296 sq. ft
Harrow multi-let
industrial £3.21m £262,826
Clyde House, 30,156 sq. ft
Maidenhead of industrial
and offices £3.0m £298,610
57/59
Whitechapel Retail and
Road, E1 offices £0.4m £30,000
Disposal:
Ensign Court, 19,552 sq. ft
London, E1 let to Oddbins
and News
International £4.65m £411,000
Cash Flow and Financing
There was a net cash inflow of £2.02 million (1999: £1.81 million outflow)
during the half year. Net cash flow from operating activities was an inflow of
£8.16 million for the half year (1999: £7.96 million). Capital expenditure in
the half year, net of disposal proceeds, totalled £10.18 million (1999:
£82.47 million). At the quarter end gearing stood at 89% (1999: 124%); with
interest cover at 1.75 times (1999: 1.91 times).
Occupancy and Trading Statistics
The Group's key statistics relating to its trading operations are given in the
table below.
30 September 30 June 31 March
2000 2000 2000
______________________________________________________________________
Number of estates 93 90 94
Total floorspace at end of 5,723,014 5,649,753 5,677,521
period
of which:
Available for
letting 5,627,733 5,554,472
Undergoing
development/
refurbishment 95,281 95,281
Lettable floorspace of
core portfolio 5,548,312 5,554,472 5,539,351
Lettable units (number) 3,568 3,546 3,523
Annual rent roll of
occupied units 27,114,761 26,077,673 25,855,226
Average rent (£/sq ft) 5.42 5.30 5.21
Average rent of core
portfolio (£/sq ft) 5.42 5.29 5.22
Occupancy overall 87.38% 87.04% 87.35%
Occupancy of core
portfolio 86.98% 86.77% 86.99%
Comparisons of overall occupancy and rent roll are distorted by acquisitions,
disposals and transfers. The 'core portfolio' is defined as those properties
that have been held throughout the year to date and which are not subject to
refurbishment/redevelopment programmes. The rent on Union Street (£2 million
per annum commencing 25 March 2001) is excluded from the above figures.
Current Trading
The rent roll improvements recorded over the first half of the year have
continued since 30 September 2000. Many estates are at occupancy rates in
excess of 90% with good and continuing demand from new or existing customers
seeking to expand. This, together with the favourable economic environment,
particularly in London and the South East, is enabling good rental growth.
The co-operation agreement with GLE referred to earlier is particularly
exciting. Together we have a platform to pursue a range of opportunities in
regeneration. Workspace has the capacity for future growth and we are
confident that this association will contribute to this.
Meanwhile, we continue to secure significant value from our disposal, 'added
value' and partnership programme, and to target new acquisitions particularly
in the London area.
Interim Dividend
The Board has declared an interim dividend in respect of the six months ended
30 September 2000 of 6.5p per ordinary share payable on 1 February 2001 to
shareholders on the register at 8 January 2001. This compares with an interim
dividend of 6.0p per ordinary share paid for the same period in 1999 and is an
increase of 0.5p or 8.3%.
Unaudited Consolidated Profit and Loss Account
for the 3 months ended 30 September 2000
3 months ended 6 months ended
30 September 30 September
Trading Other
Operations Items Total
2000 1999 2000 1999
£000 £000 £000 £000 £000 £000
___________________________________________________________________________
Turnover - continuing
operations 8,386 7,166 16,933 - 16,933 12,767
Rent payable and
direct costs (2,325) (1,843) (4,629) - (4,629) (3,330)
---------------------------------------------------------------------------
Gross profit 6,061 5,323 12,304 - 12,304 9,437
Administrative
expenses (1,246) (1,204) (2,425) - (2,425) (2,129)
---------------------------------------------------------------------------
Operating profit -
continuing operations 4,815 4,119 9,879 - 9,879 7,308
Profit/(Loss) on
Disposal of
investment property 74 (1) - 62 62 (5)
Interest receivable 142 34 257 - 257 60
Interest payable and
similar charges (2,991) (3,340) (5,937) - (5,937) (4,739)
___________________________________________________________________________
Profit on ordinary
activities before
taxation 2,040 812 4,199 62 4,261 2,624
Taxation on profit on
ordinary activities (551) (282) (1,134) (17) (1,151) (735)
___________________________________________________________________________
Profit attributable
to shareholders 1,489 530 3,065 45 3,110 1,889
Dividends (1,070) (941) (1,070) - (1,070) (941)
---------------------------------------------------------------------------
Retained for the
period 419 (411) 1,995 45 2,040 948
---------------------------------------------------------------------------
Earnings per shares
(basic) 9.4p 3.4p 19.4p 0.3p 19.7p 12.0p
Diluted earnings per
share 9.3p 3.7p 19.4p 12.3p
Statement of Total Recognised Gains and Losses
6 months ended 30 September
2000 1999
£000 £000
___________________________________________________________________________
Profit for the financial period 3,110 1,889
Unrealised surplus on revaluation of
investment properties 31,768 10,491
Taxation on revaluation surpluses realised on
sale of properties (510) -
---------------------------------------------------------------------------
Total gains relating to the financial period 34,368 12,380
Consolidated Balance Sheet
Unaudited Audited
30 September 31 March
2000 2000
£000 £000
_______________________________________________________________
Fixed assets
Tangible assets
Investment properties 348,225 304,248
Other fixed assets 1,013 1,117
Investment in own shares 1,015 1,015
_______________________________________________________________
350,253 306,380
_______________________________________________________________
Current Assets
Debtors 7,418 5,236
Investments 5,201 11,424
Cash at bank and in hand 223 201
_______________________________________________________________
12,842 16,861
_______________________________________________________________
Creditors: amounts falling due
within one year
loans and overdrafts (3,930) (5,511)
others (22,245) (19,867)
_______________________________________________________________
Net current liabilities (26,175) (25,378)
_______________________________________________________________
Total assets less current
liabilities 336,920 297,863
Creditors: amounts falling due
after more than one year
loans (including Convertible
Loan Stock) (159,827) (154,845)
_______________________________________________________________
177,093 143,018
_______________________________________________________________
Capital and reserves
Called up share capital 1,614 1,591
Share premium account 40,549 39,795
Revaluation reserve 115,777 86,412
Profit and loss account 19,153 15,220
_______________________________________________________________
Shareholders' funds - equity
interests 177,093 143,018
_______________________________________________________________
Net asset value per share £11.04 £9.04
_______________________________________________________________
Movement in shareholders' fund
Profit for the financial period 3,110 6,523
Dividends (1,070) (3,298)
_______________________________________________________________
2,040 3,225
Issue of Shares 23 3
Share premium account 754 127
Revaluation reserve - increase 31,768 31,209
Taxation on valuation surpluses
realised on sale of properties (510) -
_______________________________________________________________
Net movement in shareholders' fund
for the financial period 34,075 34,564
Shareholders' funds as at 1 April
2000/1999 143,018 108,454
_______________________________________________________________
Shareholders' fund as at 30
September 2000/31 March 2000 177,093 143,018
_______________________________________________________________
Unaudited Consolidated Cash Flow Statement
for the six months ended 30 September 2000
6 months ended 30
September
2000 1999
£000 £000
_______________________________________________________________
Net cash inflow from operating 8,155 7,963
activities
Return on investment and servicing (6,196) (3,575)
of finance
Taxation Refund/(Payment) 287 (218)
Capital expenditure (net) (10,180) (82,474)
Equity dividends paid (2,391) (2,116)
_______________________________________________________________
Net cash outflow before use of
liquid resources and financing (10,325) (80,420)
Management of liquid resources 6,223 (3,299)
Financing 6,122 81,910
_______________________________________________________________
Net cash inflow/(outflow) 2,020 (1,809)
_______________________________________________________________
Reconciliation of net cash flow to
movement in net debt
Increase/(decrease) in cash 2,020 (1,809)
(Decrease)/Increase in liquid (6,223) 3,299
resources
Cash inflow from increase in debt (5,399) (81,893)
_______________________________________________________________
Changes in debt resulting from cash
flows (9,602) (80,403)
_______________________________________________________________
Net debt at 1 April (148,731) (68,457)
Net debt at 30 September (158,333) (148,860)
_______________________________________________________________
Notes to the Quarterly Results
1. Basis of Preparation
The unaudited financial information contained in this quarterly report does
not comprise statutory accounts within the meaning of Section 240 of the
Companies Act 1985. The statutory accounts for the year ended 31 March 2000
included an unqualified report of the auditors. The Group's unaudited
quarterly accounts for the period ended 30 September 2000 have been prepared
on the basis of the accounting policies set out in the Annual Report and
Accounts for the year ended 31 March 2000.
2. Segmental Analysis 3 months ended 30 6 months ended 30
September September
2000 1999 2000 1999
£000 £000 £000 £000
_______________________________________________________________
Rental Income 6,636 5,911 13,313 10,375
Service charge and
other recoveries 1,480 937 2,957 1,871
Fees, commissions, and
sundry income 270 318 663 521
_______________________________________________________________
8,386 7,166 16,933 12,767
_______________________________________________________________
3. Interest Payable 3 months ended 30 6 months ended 30
September September
2000 1999 2000 1999
£000 £000 £000 £000
_______________________________________________________________
Convertible loan stock
and debenture
stock interest 662 662 1,324 1,324
Mortgage interest 2,732 1,874 5,340 2,662
Bank and other
interest 19 37 42 134
Net development
interest capitalised (422) (170) (769) (318)
Loan breakage costs - 937 - 937
_______________________________________________________________
Charged to profit and
loss account 2,991 3,340 5,937 4,739
_______________________________________________________________
4. Taxation
The taxation charge for the three months ended 30 September 2000 is based on
the estimated effective tax rate for the year ending 31 March 2001 of 27%
(2000 estimated: 28%).
5. Earnings Per Share and Net Assets Per Share
Earnings per share have been calculated by dividing the profit after tax for
each period attributable to shareholders by the weighted average number of
ordinary shares in issue during the period less investment in own shares of
200,000 (15,826,293 shares). Net assets per share have been calculated
by dividing net assets at the end of each period less investment in own
shares by the number of shares in issue at that time less 200,000
(15,942,393 shares).
6. Valuation
The Group's investment properties were valued by Insignia Richard Ellis at 30
September 2000 on an open market existing use basis in accordance with the
guidance notes issued by the Royal Institute of Chartered Surveyors.
7. Creditors
Creditors falling due within one year include tenants' deposits of £2.82
million (31 March 2000: £2.60 million) and deferred rental and service charges
of £4.68 million (31 March 2000: £4.29 million).
8. Financial Instruments
In accordance with the requirements of FRS 13, an assessment of the fair value
of the Group's financial instruments held for financing purposes has been
undertaken as at 30 September 2000. The results are summarised as follows:
Book Fair Difference
Value Value
£Million £Million £Million
__________________________________________________________________
Short term borrowings and current
part of long term borrowings (3.9) (3.9) -
Long term borrowings (159.8) (165.4) (5.6)
Financial Assets 5.4 5.4 -
Interest rate Cap / Collar 0.3 (0.5) (0.8)
__________________________________________________________________
(158.0) (164.4) (6.4)
__________________________________________________________________
This represents 40 pence per issued ordinary share and if applied to net asset
value per share at 30 September 2000 would reduce the latter to £10.64.
However, the Group has no obligation or present intention to repay its
Debenture and Convertible borrowings other than at maturity, when they will be
repaid at par. Cash outflows arising from these borrowings will be limited to
the future fixed interest payments and redemption at par. These outflows
are unaffected by the notional market or fair values referred to above.
9. Interim Statement
Copies of this statement will be dispatched to shareholders on Monday 27
November 2000 and will be available from the Group's registered office at
Magenta House, 85 Whitechapel Road, London, E1 1DU from 9.00am on that day.