3rd Quarter & 9 Months Results
Workspace Group PLC
14 February 2000
WORKSPACE GROUP PLC
WORKSPACE REPORTS STRONG DEMAND
FOR BUSINESS SPACE AS
NEW PORTFOLIO PERFORMS WELL
Workspace Group PLC ('Workspace'), today announces its third quarter results
for the nine months ended 31 December 1999. Workspace provides 5.7 million
sq. ft of flexible accommodation to over 3000 small and medium sized
enterprises ('SMEs') in London, the South East and the Midlands.
* Pre-tax profits up 40% to £2.7 million for the quarter (1998 Q3: £1.9
million)
- up 25% to £6.3 million for the nine month period *
* Earnings per share up 24.2% to 28.7p for the nine month period *
* Turnover increased 46% to £8.6 million (1998 Q3: £5.9m)
* Net Asset Value per share rose to £7.68 (30 September 1999: £7.65)
* Rent roll increased by 44% to £25.01million (31 March 1999: £17.4m)
* £81m Tonex portfolio acquired in July performing very well
* Refinancing and securitisation programme on track
* Dr Chris Pieroni appointed as non-executive director
* excluding profits arising on sale of properties and exceptional
financing costs
Harry Platt, Chief Executive of Workspace, commented;
' The 2 million sq. ft property portfolio that we acquired in July is bedding
down well. We have integrated the 23 business centres and estates with our
existing properties. This creates a strong branded network of Workspace sites
throughout London and the South East. The new portfolio is responding ahead of
our expectations owing to our hands-on management style. We are achieving some
excellent new lettings and we are seeing rental growth.
' Occupancy of our core portfolio remains high at over 90%. Demand for space
continues to be good, with an encouraging flow of new enquires. We are
confident that the product and services that we offer our customers, provides
them with a business environment in which they can flourish.
' Looking to the future, we are strengthening our links with local
authorities. We have formed successful joint ventures to create high quality
business space for SMEs. We are keen to extend our activities in this area.
' The business is continuing to perform well and we remain cautiously
optimistic about our future prospects.'
Date: 14th February 2000
For further information contact:
Harry Platt, Chief Executive, Workspace Group PLC 0207 247 7614
Mark Taylor, Finance Director, Workspace Group PLC 0207 247 7614
Jonathan Gillen, City Profile Group 0207 726 8588
Simon Courtenay, City Profile Group 0207 726 8588
Operating and Financial Review
Review of Activities
Good progress continues to be made with pre-tax profits for the quarter
increasing by 40% to £2.7 million and earnings per share by 39.4% to 12.4p
(excluding profits arising on the sale of properties and exceptional
costs). For the three-quarter period similar pre-tax profits grew by 25%
to £6.3 million and earnings per share by 24.2% to 28.7p. Published pre-tax
profits for the three-quarter period including £0.35 million profits
arising on the sale of properties and £0.94 million exceptional financing
costs, was £5.7 million.
Integration of the Tonex portfolio, comprising 23 estates with over 2
million sq. ft. acquired on 23 July 1999, continued during the quarter and
is now complete. A marketing and management programme has been implemented
for those properties which are intended to be held long term. A number
of lettings have been achieved at rentals in excess of those anticipated
at the time of acquisition. Disposal of certain smaller estates, either with
limited long term prospects or which have potential for change of use has
begun. Two disposals (one of which is referred to below) have already been
agreed at values in excess of book value.
Good progress continues to be made on the core portfolio. Occupancy
has been maintained at over 91% whilst rentals continue to improve. Overall,
including new acquisitions and major refurbishment/development schemes,
occupancy now stands at 87.62% with a rent roll of £25.01 million, up nearly
1% in the third quarter alone and 44% during the nine month period.
Disposals
One disposal was concluded in the quarter at a surplus of £120,000 on the
March 1999 valuation: -
Name of Description Sale Annual
Property Price Income
------------------------------------------------------------------------------
Malham Road Single storey £1.1m £106,000
Industrial light industrial
Estate, estate: 23 units;
London, SE23 21,794 sq. ft
In addition Tysoe Studios, London EC1, which was recently acquired as part of
the Tonex portfolio, was sold after the quarter end for £1.33 million, an
exit yield of 6% and some £480,000 above book value. Heads of Terms have
been agreed on a further disposal of a small property acquired as part of
the Tonex portfolio.
Ferry Lane
The Group has previously reported that its property at Ferry Lane, Rainham
was destroyed by fire in July 1999. Settlement terms have now been agreed
with the insurers. The Group is currently reviewing all options for the
future of the site including rebuilding, or outright sale of the land
comprising some 1.5 acres.
Helix Business Park, Camberley
The development of the Group's small unit industrial estate, undertaken
jointly with Surrey Heath District Council, was completed in January 2000.
This estate provides 20,000 square feet of accommodation in 20 units in a
location that has been under provided with starter accommodation. We are
looking currently for further opportunities to provide space for Small and
Medium sized Enterprises. We are confident that we can strengthen our links
with local authorities to help us achieve our aims.
Cash Flow and Financing
During the quarter the Group secured the transfer of its principal debt
facility of £122 million (obtained earlier in the year to finance the
acquisition of the Tonex portfolio and refinance certain other debt) into
a commercial paper programme administered by WestLB, at an interest rate
saving of 0.15% per annum.
There was a net cash inflow of £0.09 million during the quarter (1998 outflow
of £0.07 million). For the year to date there was an outflow of £1.72 million
(1998: £1.79 million inflow). Capital expenditure for the year to date
was £83.30 million (1998 £3.16 million). At the quarter end gearing stood
at 122% (1998 77.7%) and interest cover for the year to date was 2.03 times
(1998 2.2).
Occupancy and Trading Statistics
The Group's key statistics relating to its trading operations are given in
the table below:-
31 30 30 31
December September June March
1999 1999 1999 1999
------------------------------------------------------------------------------
Number of Estates 95 96 73 73
------------------------------------------------------------------------------
Total Floorspace at end of
period 5,720,600 5,733,122 3,851,622 3,824,913
------------------------------------------------------------------------------
of which:
Available for letting 4,726,204 4,743,613 2,862,312
Undergoing development
/refurbishment 994,396 989,512 989,512
------------------------------------------------------------------------------
Lettable Floorspace of core
portfolio (sq ft) 2,819,913 2,817,766 2,817,400 2,818,312
------------------------------------------------------------------------------
Lettable Units (number) 3,492 3,514 2,717 2,682
------------------------------------------------------------------------------
Annual Rent Roll of Occupied
Units (£) 25,014,216 24,788,742 17,777,821 17,361,828
------------------------------------------------------------------------------
Average Rent (£/sq. ft) 4.99 4.88 5.34 5.20
------------------------------------------------------------------------------
Average Rent of Core
Portfolio (£/Sq. ft) 6.37 6.24 6.20 6.00
------------------------------------------------------------------------------
Occupancy: overall 87.62% 88.55% 86.45% 87.31%
------------------------------------------------------------------------------
Occupancy of Core Portfolio 91.15% 91.83% 91.12% 92.33%
------------------------------------------------------------------------------
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 and which are not subject to
major refurbishment/development programmes (the properties subject to such
programmes in the year were Three Mills, Kingsland Viaduct, 1-10 Union
Street and Wilton Road Camberley).
Contracted future rentals not included in the current annual rent roll
include £2 million commencing on 31.3.2001 for 1-10 Union Street.
Current Trading
There continues to be a good flow of new enquiries for space, and improvements
in headline rents. This continues the good underlying progress seen
throughout 1999. With its strong London and South East representation
and the benefit of income reversions from the Tonex portfolio, the underlying
prospects for the Group in the year ahead remain strong.
New Non-Executive Director
On 17 January 2000, Dr Christopher Pieroni was appointed as a non-executive
director of the Company and a member of the Audit, Remuneration and
Nominations Committees. Aged 41 he is currently Chief Operating Officer
of Colliers, Erdman Lewis, the property surveying firm. Following this
appointment the Board considers that the constitution of the Board complies
fully with the 'Combined Code' on the Principles of Governance and Code of
Best Practice.
Unaudited Consolidated Profit and Loss Account for the 3 and 9 months ended 31
December 1999
9 months
ended 31 December
3 months ended Trading Other
31 December Operations Items Total
1999 1998 1999 1998 1999 1998
£000 £000 £000 £000 £000 £000
------------------------------------------------------------------------------
Turnover - continuing
operations 8,627 5,897 21,394 - 21,394 16,824
Rent payable and direct
costs (2,263) (1,505) (5,593) (5,593) (4,338)
------------------------------------------------------------------------------
Gross profit 6,364 4,392 15,801 15,801 12,486
Administrative expenses (1,004) (873) (3,133) (3,133) (2,488)
------------------------------------------------------------------------------
Operating profit -
continuing operations 5,360 3,519 12,668 12,668 9,998
Profit on Disposal
of Investment
Property 356 919 351 351 1,122
Interest receivable 62 12 122 122 116
Interest payable and
similar charges (2,731) (1,606) (6,533) (937)(7,470) (5,090)
------------------------------------------------------------------------------
Profit on ordinary
activities before
taxation 3,047 2,844 6,257 (586) 5,671 6,146
Taxation on profit on
ordinary activities (853) (768) (1,752) 164 (1,588) (1,659)
------------------------------------------------------------------------------
Profit attributable to
shareholders 2,194 2,076 4,505 (422) 4,083 4,487
Dividends - - (941) - (941) (873)
------------------------------------------------------------------------------
Retained for the
period 2,194 2,076 3,564 (422) 3,142 3,614
==============================================================================
Earnings per share
(basic) 14.0p 13.1p 28.7p (2.7)p 26.0p 28.3p
Diluted earnings
per share 13.9p 13.0p 25.8p 28.2p
Statement of Total Recognised Gains and Losses
9 months ended 31 December
1999 1998
£000s £000s
------------------------------------------------------------------------------
Profit for the financial period 4,083 4,487
Unrealised surplus on revaluation
of investment properties 10,371 4,365
==============================================================================
Total gains relating to the financial period 14,454 8,852
Consolidated Balance Sheet
Unaudited Audited
31 December 1999 31 March 1999
£000 £000
------------------------------------------------------------------------------
Fixed assets
Tangible assets
Investment properties 279,889 185,978
Other fixed assets 1,089 1,179
Investment in own shares 999 1,024
------------------------------------------------------------------------------
281,977 188,181
------------------------------------------------------------------------------
Current assets
Debtors 7,547 2,514
Investments 6,802 2,332
Cash at bank and in hand 74 2
------------------------------------------------------------------------------
Creditors: amounts falling due within one year
loans and overdrafts (2,517) (4,726)
others (20,277) (13,983)
------------------------------------------------------------------------------
Net current liabilities (8,371) (13,861)
------------------------------------------------------------------------------
Total assets less current liabilities 273,606 174,320
Creditors: amounts falling
due after more than one year (151,614) (65,866)
------------------------------------------------------------------------------
121,992 108,454
==============================================================================
Capital and reserves
Called up share capital 1,588 1,588
Share premium account 39,693 39,668
Revaluation reserve 66,414 56,043
Profit and loss account 14,297 11,155
------------------------------------------------------------------------------
Shareholders' funds - equity interests 121,992 108,454
==============================================================================
Net asset value per share £7.68 £6.83
==============================================================================
Movement in shareholders' funds
Profit for the financial period 4,083 6,536
Dividends (941) (2,989)
------------------------------------------------------------------------------
3,142 3,547
Issue of Shares - 2
Share premium account 25 17
Revaluation reserve - increase 10,371 21,843
------------------------------------------------------------------------------
Net movement in shareholders' funds for the
financial period 13,538 25,409
Shareholders' funds as at 1 April 1999/1998 108,454 83,045
------------------------------------------------------------------------------
Shareholders' funds as at 31 December
1999/31 March 1999 121,992 108,454
==============================================================================
Unaudited Cash Flow Statement
for the nine months ended 31 December 1999
9 months ended 31 December
1999 1998
£000 £000
------------------------------------------------------------------------------
Net cash inflow from operating activities 12,821 11,006
Return on investment and servicing of
finance (6,600) (4,986)
Taxation (2,372) (1,257)
Capital expenditure (net) (83,304) (3,155)
Equity dividends paid (2,116) (1,904)
------------------------------------------------------------------------------
Net cash outflow before use of
liquid resources and financing (81,571) (296)
Management of liquid resources (4,471) 2,640
Financing 84,323 (558)
------------------------------------------------------------------------------
Net cash outflow/inflow (1,719) 1,786
------------------------------------------------------------------------------
Reconciliation of net cash flow to movement
in net debt (Decrease)/Increase in cash (1,719) 1,786
Increase/(decrease) in liquid resources 4,471 (2,640)
Cash inflow from (increase)/decrease in debt (84,297) 557
------------------------------------------------------------------------------
Changes in net debt resulting from cash flows (81,545) (297)
------------------------------------------------------------------------------
Net debt at 1 April (68,457) (70,436)
Net debt at 31 December (150,002) (70,733)
==============================================================================
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 1999 included an unqualified report of the
auditors. The Group's unaudited accounts for the
period to 31 December 1999 have been prepared on the
basis of the accounting policies set out in the Annual
Report and Accounts for the year ended 31 March 1999.
2. Segmental Analysis
3 months ended 9 months ended
31 December 31 December
1999 1998 1999 1998
£000s £000s £000s £000s
------------------------------------------------------------------------------
Rental income 6,563 4,790 16,938 13,543
Service charge and other
recoveries 1,628 906 3,499 2,729
Fees, commissions, and sundry
income 436 201 957 552
------------------------------------------------------------------------------
8,627 5,897 21,394 16,824
==============================================================================
3. Interest Payable
3 months ended 9 months ended
31 December 31 December
1999 1998 1999 1998
£000s £000s £000s £000s
------------------------------------------------------------------------------
Convertible loan stock and
debenture stock interest 663 663 1,987 1,987
Mortgage interest 2,132 1,067 4,794 3,432
Bank and other interest 108 25 242 131
Net development interest
capitalised (172) (149) (490) (460)
Loan Breakage Costs - - 937 -
------------------------------------------------------------------------------
Charged to profit and loss
account 2,731 1,606 7,470 5,090
==============================================================================
4. Taxation
The taxation charge for the nine months ended 31
December 1999 is based on the estimated effective tax
rate for the year ending 31 March 2000 of 28%
(1998:27%). The charge has increased from the
effective tax rate of 23.8%, excluding property
disposals, for the year ended 31 March 1999 because
the benefits of the recovery of ACT previously
written off have come to an end.
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 (of
15,679,800 shares on an undiluted basis and 15,808,175
on a diluted basis). Net assets per shares have been
calculated by dividing net assets at the end of each
period by the number of ordinary shares in issue at
that time (of 15,883,815 shares).
6. Valuation
The valuation of investment properties at 31 December
1999 is based on the independent valuation by Richard
Ellis St Quintin at 30 September 1999 net of
subsequent additions and disposals.
7. Creditors
Creditors falling due within one year include tenants'
deposits of £2.21million (31 March 1999:£1.66 million)
and deferred rental and service charges of £4.23
million (31 March 1999: £2.34 million).
8. Financial Instruments
Book Value Fair Value Difference
£ Million £ Million £ Million
------------------------------------------------------------------------------
Short term borrowings and
current part of long term
borrowings (2.5) (2.5) -
Long term borrowings (151.6) (161.8) (10.2)
------------------------------------------------------------------------------
(154.1) (164.3) (10.2)
==============================================================================
This represents 64 pence per issued ordinary share and if
applied to net asset value per share at 31 December 1999
would reduce the latter to £7.04. 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 14 February 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.
Latest directors dealings
- 17 minutes ago Galliford Try
- 22 minutes ago Galliford Try
- 22 minutes ago Centrica
- 1 hour ago Smith & Nephew
- 1 hour ago Greencoat UK Wind