3rd Quarter Results
Workspace Group PLC
24 February 2003
WORKSPACE DELIVERS ROBUST PERFORMANCE
AS SME SECTOR DEMONSTRATES RESILIENCE
Workspace Group PLC ('Workspace'), the leading provider of flexible business
accommodation to small and medium sized enterprises ('SMEs') in London and the
South East today announces its financial results for the third quarter and nine
months ended 31 December 2002.
• Pre-tax trading profits for the quarter up 7.1% to £3.18 million (2001:
£2.93 million)
(Nine month period up 5.5 % to £9.0 million (2001: £7.48 million))
• Trading earnings per share at 39.6p for the nine month period up 2.3%
before property sales (31 December 2001: 38.7p).
• Turnover £11.35 million for the quarter, up by 19.3% and for the
nine-month period up by 13.1% to £32.72 million.
• Annual rent roll up £0.49 million to £33.92 million over the quarter (and
£4.36 million (14.8%) over nine months).
• Average like-for-like rent up 7.1% in three-quarter period to £7.88 per
sq. ft.
• Net Asset Value per share at 31 December 2002 £14.31, up 11.7% over twelve
months (31 December 2001: £12.81).
• Gearing 94%
Commenting, Chief Executive Harry Platt said:
' These results demonstrate the continued resilience and the consistent growth
of our SME market. Enquiries continue to be at good levels and occupancy remains
stable at high levels. Workspace is on target to meet expectations for the year.
' The Group has a number of acquisitions under negotiation as we pursue our
long-term strategy of being the dominant provider of space for small businesses
in London and the South East.'
-ends-
Date: 24 February 2003
For further information:
Workspace Group PLC City Profile Group
Harry Platt, Chief Executive Simon Courtenay
Mark Taylor, Finance Director Ed Senior
020-7247-7614 020-7448-3244
e-mail: info@workspacegroup.co.uk e-mail: simon.courtenay@city-profile.com
Web: www.workspacegroup.co.uk
Operating & Financial Review
Trading Review
The pattern of progress established in the first half has continued during the
third quarter. The like-for-like rent roll has improved again by £0.49m during
the quarter whilst occupancy levels have remained high at 87%. Average rents on
a like-for-like basis have now increased by 7.1% in the three-quarter period to
£7.88 per sq. ft. The rent roll, including acquisitions, now stands at £33.92
million compared with £29.56 million at 1 April 2002.
Pre-tax profits in the third quarter were £3.18 million, up 7.1% on the same
period last year. For the nine-month period trading pre-tax profits were £9.00
million up 5.5% on the same period last year. London and the South East remains
the foremost region of the UK for small and medium sized enterprises (SMEs),
supporting the decision last year by the Company to refocus its activities into
this region by disposing of its Midlands portfolio. Our property stock, being
flexible, affordable and located in areas where SMEs are most active continues
to appeal to them.
At the headline level, profits before tax of £7.48 million include an
exceptional £1.86 million charge arising from the refinancing of the Group's
securitised facility by a new loan with Bradford & Bingley, offering greater
funding flexibility.
Whilst no acquisitions were completed in the quarter itself, one was contracted
and completed after the quarter end. Others are under active negotiation. By the
year end, the Group also hopes to report further progress on its programme to
add value to certain properties through extension and change in use.
Portfolio
During the nine months the annual rent roll of occupied units increased by £4.36
million or 14.8% to £33.92 million. Like-for-like rentals grew by 1.68% over the
quarter and 7.1% over the year to date to £7.88 per sq. ft average. High
occupancy levels at 87.00% were maintained throughout the quarter and are
continuing.
No acquisitions or disposals were made in the quarter. However, contracts were
exchanged for the acquisition of Canalot Studios (completed on 13 January 2003).
This 55,600 square feet business centre with 100 lettable units is located in
Ladbroke Grove close to 5 other centres owned by the Group. It will complement,
both in terms of unit size and accommodation type, these other properties.
Negotiations on three other purchases are currently underway, with one or more
due to be completed before the year end. All are small unit industrial estates
in London servicing their local markets and with scope for improvement under our
management.
The portfolio statistics and progress through the year to date, may be
summarised as follows: -
31 30 30 31
December September June March
2002 2002 2002 2002
Number of estates 90 90 88 87
Total floorspace at end of period (sq. ft.) 5,062,256 5,011,204 4,870,735 4,849,758
of which:
Like for like portfolio (sq. ft) 4,433,209 4,431,036 4,428,604 4,427,872
Net Acquisitions/(Disposals) (sq. ft) 222,639 170,693 29,364 -
Three Mills and development (sq. ft) 406,408 409,475 412,767 421,886
Lettable units (number) 4,002 3,943 3,707 3,726
Annual rent roll of occupied units (£) 33,924,953 33,439,357 30,419,208 29,560,157
Average rent (£/sq. ft) 8.24 8.03 7.39 7.20
Average rent of like-for-like portfolio (£/sq. ft) 7.88 7.75 7.44 7.36
Occupancy overall 83.33% 83.15% 84.52% 84.67%
Occupancy of like-for-like portfolio 87.00% 87.15% 89.30% 89.15%
Comparisons of overall occupancy and rent roll are distorted by acquisitions,
disposals and transfers. The 'like-for-like portfolio' is defined as those
properties, excluding Three Mills (which due to the short term nature of
lettings of studio space has a volatile occupancy rate which can obscure overall
patterns), that have been held throughout the year to date and which are not
subject to refurbishment/redevelopment programmes.
Financial Review
With turnover up 19.3%, pre-tax trading profits up 7.1%, and net asset value per
share up 11.7% over the comparable period quarter last year the Group has
continued the progress made over the first half of the year.
As referred to in the Trading Review, a £1.86m write-off was charged to the P&L
account in the first half as a result of the refinancing of the Group's
principal debt facility. This was not a cash breakage cost but arose as a result
of writing off previously capitalised expenditure incurred on raising the
original facility with WestLB. The new loan offers greater availability of
finance in terms of the total facility. At the same time the funds immediately
drawable, based on the security provided, increased also. Both this and the
NatWest facility secured earlier in 2002 are priced at a margin slightly below
1% over LIBOR, reflecting the progress that the Group has made over recent
periods in pushing down borrowing costs.
At the period end gearing stood at 94%, with trading interest cover of 1.95.
Following the refinancing referred to above the Group had at 31 December over
£45 million of facilities available for immediate drawdown, together with a
further £40m of currently uncharged investment property available to secure
further borrowings.
Current Trading
Enquiries continue to be at good levels despite the current uncertainties in the
wider economic environment. Occupancy remains stable at high levels and we are
on target to meet our expectations for the year. Meanwhile, the Group has a
number of acquisitions under negotiation as we pursue our consistent long-term
strategy of being the dominant provider of space for small businesses in London
and the South East.
Unaudited Consolidated Profit and Loss Account
for the 9 months ended 31 December 2002
Audited Unaudited Unaudited
year ended 3 months ended 9 months ended
31 March 31 December 31 December
Trading Other Total
Operations Items
2002 2002 2001 2002 2001
(restated) £000 £000 (restated)
£000 £000 £000 £000 £000
________ ________ ________ ________ ________ ________ ________
39,083 Turnover - continuing operations 11,354 9,518 32,721 - 32,721 28,926
(11,172) Rent payable and direct costs (3,243) (2,870) (9,457) - (9,457) (8,367)
________ ________ ________ ________ ________ ________ ________
27,911 Gross profit 8,111 6,648 23,264 - 23,264 20,559
(5,964) Administrative expenses (1,482) (1,373) (4,746) - (4,746) (4,215)
________ ________ ________ ________ ________ ________ ________
21,947 Operating profit - continuing 6,629 5,275 18,518 - 18,518 16,344
operations
567 Surplus on disposal of investment 25 (16) - 338 338 361
property
333 Interest receivable 10 53 104 - 104 282
(10,819) Interest payable and similar charges (3,483) (2,380) (9,622) (1,861) (11,483) (8,094)
________ ________ ________ ________ ________ ________ ________
12,028 Profit on ordinary activities before 3,181 2,932 9,000 (1,523) 7,477 8,893
taxation
(3,068) Taxation on profit on ordinary (934) (863) (2,700) 484 (2,216) (2,526)
activities
________ ________ ________ ________ ________ ________ ________
8,960 Profit on ordinary activities after 2,247 2,069 6,300 (1,039) 5,261 6,367
taxation
- Equity minority interests - - - - - -
________ ________ ________ ________ ________ ________ ________
8,960 Profit attributable to shareholders 2,247 2,069 6,300 (1,039) 5,261 6,367
(4,192) Dividends - - (1,179) - (1,179) (1,143)
________ ________ ________ ________ ________ ________ ________
4,768 Retained for the period 2,247 2,069 5,121 (1,039) 4,082 5,224
________ ________ ________ ________ ________ ________ ________
55.4p Basic earnings per share 14.1p 12.8p 39.6p (6.5)p 33.1p 39.5p
54.2p Diluted earnings per share 13.8p 12.5p 32.6p 38.7p
________ ________ ________ ________ ________ ________ ________
Statement of Total Recognised Gains and Losses
Audited Unaudited
year ended 9 months ended
31 March 31 December
2002 2002 2001
(restated)
£000 £000 £000
________ ________ ________
8,960 Profit for the financial period 5,261 6,367
26,863 Unrealised surplus on revaluation of investment properties 8,091 14,389
(150) Taxation on revaluation surpluses realised on sale of properties - (150)
________ ________ ________
35,673 Total recognised gains relating to the financial period 13,352 20,606
(3,128) Prior year adjustment - (3,128)
________ ________ ________
32,545 Total gains recognised since last financial statements 13,352 17,478
________ ________ ________
Note of Historical Cost Profits and Losses
Audited Unaudited
year ended 9 months ended
31 March 31 December
2002 2002 2001
(restated)
£000 £000 £000
________ ________ ________
12,028 Reported profits on ordinary activities before taxation 7,477 8,893
5,014 Realisation of property revaluation (losses)/gains of previous years (87) 4,770
(150) Taxation on valuation surpluses realised on sale of properties - (150)
________ ________ ________
16,892 Historical cost profit on ordinary activities before taxation 7,390 13,513
9,632 Historical cost profit for the period retained after taxation and 3,995 9,844
dividends
________ ________ ________
Unaudited Consolidated Balance Sheet
as at 31 December 2002
Audited Unaudited
31 March 31 December
2002 2002 2001
(restated)
£000 £000 £000
________ ________ ________
Fixed Assets
Tangible assets
414,707 Investment properties 464,622 382,876
3,540 Other fixed assets 3,913 1,538
1,015 Investment in own shares 6,249 1,015
________ ________ ________
419,262 474,784 385,429
________ ________ ________
Current Assets
150 Stock: properties for sale 150 -
6,189 Debtors 5,617 6,950
5,443 Investments 1,960 6,100
340 Cash at bank and in hand 162 14
________ ________ ________
12,122 7,889 13,064
(30,964) Creditors: amounts falling due within one year (22,912) (25,847)
________ ________ ________
(18,842) Net current liabilities (15,023) (12,783)
________ ________ ________
400,420 Total assets less current liabilities 459,761 372,646
(175,730) Creditors: amounts falling due after more than one year (221,904) (160,148)
(including Convertible Loan Stock)
(3,365) Provision for liabilities and charges (3,909) (3,315)
________ ________ ________
221,325 233,948 209,183
________ ________ ________
Capital and reserves
1,648 Called up share capital 1,661 1,644
42,030 Share premium account 42,467 41,910
144,588 Revaluation reserve 152,766 132,358
33,059 Profit and loss account 37,054 33,271
________ ________ ________
221,325 Shareholders' funds - equity interests 233,948 209,183
- Equity minority interests - -
________ ________ ________
221,325 Capital Employed 233,948 209,183
________ ________ ________
£13.53 Net asset value per share £14.31 £12.81
________ ________ ________
Movement in Shareholders' Funds
8,960 Profit for the financial period 5,261 6,367
(4,192) Dividends (1,179) (1,143)
________ ________ ________
4,768 4,082 5,224
30 Issue of shares 13 26
1,364 Share premium account 437 1,244
26,863 Revaluation reserve - increase 8,091 14,389
(150) Taxation on valuation surpluses realised on sale of - (150)
properties
________ ________ ________
32,875 Net addition to shareholders' funds 12,623 20,733
188,450 Opening shareholders' funds 221,325 188,450
________ ________ ________
221,325 Closing shareholders' funds 233,948 209,183
________ ________ ________
Unaudited Consolidated Cash Flow Statement
for the 9 months ended 31 December 2002
Audited year ended Unaudited 9 months ended 31 December
31 March
2002 2002 2001
£000 £000 £000
________ ________ ________
23,429 Net cash inflow from operating activities 20,163 16,913
(11,261) Return on investments and servicing of finance (9,584) (7,623)
(5,564) Taxation (2,360) (4,780)
(23,278) Capital expenditure- net (48,794) (4,052)
(3,796) Equity dividends paid (3,035) (2,659)
________ ________ ________
(20,470) Net cash outflow before use of liquid (43,610) (2,201)
resources and financing
(70) Management of liquid resources 4,358 (727)
19,751 Financing 42,478 3,749
________ ________ ________
(789) Net cash inflow/(outflow) 3,226 821
________ ________ ________
Reconciliation of net cash flow to movement in net debt
(789) Increase/(decrease) in cash 3,226 821
70 (Decrease)/increase in liquid resources (4,358) 727
(18,201) Outflow from movements in debt financing (42,822) (2,662)
________ ________ ________
(18,920) Changes in net debt resulting from cash flows (43,954) (1,114)
________ ________ ________
(157,147) Net debt at beginning of period (176,067) (157,147)
(176,067) Net debt at period end (220,021) (158,261)
________ ________ ________
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 2002 included an
unqualified report of the auditors. The Group's unaudited accounts for the
period ended 31 December 2002 have been prepared on the basis of the accounting
policies set out in the Annual Report and Accounts for the year ended 31 March
2002. The full accounts for the year ended 31 March 2002 have been filed with
the Registrar of Companies. 2001 comparatives have been restated due to the
application of FRS 19 (deferred tax).
2. Segmental Analysis
Audited Unaudited Unaudited
Year ended 3 months ended 9 months ended
31 March 31 December 31 December
2002 2002 2001 2002 2001
£000 £000 £000 £000 £000
________ ________ _______ _______ ______
30,864 Rental Income 8,993 7,517 25,962 22,939
6,877 Service charge and other 1,861 1,612 5,445 5,006
recoveries
1,342 Services fees, commissions, 500 389 1,314 981
and sundry income
________ ________ _______ _______ ______
39,083 11,354 9,518 32,721 28,926
________ ________ _______ _______ ______
3. Interest payable and similar charges
Audited Unaudited Unaudited
Year ended 3 months ended 9 months ended
31 March 31 December 31 December
2002 2002 2001 2002 2001
£000 £000 £000 £000 £000
________ ________ _______ _______ _______
361 11% Convertible Loan Stock 79 79 239 281
2011
1,391 11.125% First Mortgage 348 348 1,043 1,043
Debenture Stock 2007
814 11.625% First Mortgage 204 204 611 611
Debenture Stock 2007
7,486 Mortgage interest on - 1,731 1,884 5,778
securitised loan not wholly
repayable within five years
1,007 Bank and other interest on 2,954 83 6,252 516
amounts wholly repayable
within five years
- Finance costs written off - - 1,861 -
________ ________ _______ _______ _______
11,059 3,585 2,445 11,890 8,229
(240) Interest capitalised on (102) (65) (407) (135)
development properties
________ ________ _______ _______ _______
10,819 Charged to profit and loss 3,483 2,380 11,483 8,094
account
________ ________ _______ _______ _______
4. Taxation
The taxation charge, excluding tax on property disposals, for the nine months
ended 31 December 2002 is based on the estimated effective tax rate for the year
ending 31 March 2003 of 30% (due provision being made for both current and
deferred taxation liabilities). For comparative purposes the taxation charge for
the 9 months ended 31 December 2001 has been restated (30%).
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
699,190 (15,879,438 shares). Net assets per share have been calculated by
dividing net assets at the end of each period by the number of shares in
issue at that time less investment in own shares of 699,190 (15,906,795
shares).
6. Valuation
The Group's investment properties were valued by Insignia Richard Ellis at
30 September 2002 on the basis of open market existing use value and in
accordance with the guidance notes issued by the Royal Institution of
Chartered Surveyors. The valuation shown in the unaudited accounts is based
on the independent valuation at 30 September 2002 plus additions at cost
less disposals at book value.
7. Creditors
Creditors falling due within one year include tenants' deposits of £4.72
million (31 March 2002: £4.2 million) and deferred rental and service
charges of £5.2 million (31 March 2002: £5.1 million).
8. Fair Value of Financial Liabilities
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 31 December 2002. The results are summarised as
follows: -
Audited 31 March Unaudited 31 December
2002 Book value Fair value Book Value Fair value
2002 2002 2001 2001
£000 £000 £000 £000 £000
________ ________ ________ ________ ________ ________
Book Value Fair Value
Primary financial instruments
(6,120) (6,120) Short-term liabilities (238) (238) (4,227) (4,227)
(175,730) (181,293) Long-term borrowing (221,904) (227,076) (160,148) (165,648)
5,783 5,783 Financial assets 2,122 2,122 6,114 6,114
Derivative financial
instruments
283 (2,298) Interest rate collars 254 (4,638) 293 (2,306)
________ ________ ________ ________ ________ ________
(175,784) (183,928) (219,766) (229,830) (157,968) (166,067)
________ ________ ________ ________ ________ ________
This represents 63.3pence per issued ordinary share and if applied to net
asset value per share at 31 December 2002 would reduce the latter to £13.68.
On a diluted basis, allowing for conversion of the Group's convertible loan
stock, this adjustment reduces to 47.0 pence per share. 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. Quarterly Statement
Copies of this statement will be despatched to shareholders on Monday 24
February 2003 and will be available from the Group's registered office at
Magenta House, 85 Whitechapel Road, London E1 1DU from 9.00am that day.
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 1 hour ago CleanTech Lithium
- 1 hour ago Sovereign Metals Limited NPV (DI)
- 1 hour ago Devolver Digital, Inc. (DI) Reg S Cat 3/144A
- 1 hour ago Big Technologies
- 1 hour ago Bango