Profits charge ahead at acquisition-hungry Workspace

Workspace Group issued its full-year results for the year ended 31 March on Wednesday, reporting profit before tax of £170.4m - up from £88.8m - with “significant” increases in both trading profit and property valuation.

The FTSE 250 firm said it saw strong growth in net rental income, up 21% to £95.6m, which resulted in 20% growth in its adjusted trading profit after interest to £60.7m.

Its EPRA net asset value per share was ahead 8.8% at £10.37, while it also saw an underlying increase of 5.0% in its property valuation to £2.28bn.

The board confirmed a 30% increase in the total dividend to 27.39p, which it said reflected the “strong” financial performance and positive outlook.

Workspace’s loan-to-value ratio stood at 23% on 31 March, with £148m of undrawn facilities, although it increased to 25% on a proforma basis following the acquisition of Centro 1 & 2, Camden in April, with undrawn facilities reduced to £71m.

On the operational front, Workspace’s total rent roll rose 26.1% to £112.9m, with its like-for-like rent roll up 8.6% to £65.9m.

Like-for-like occupancy stood at 91.6%, up 0.8% in the year, with rent per square foot up 7.6% to £35.50.

The company reported a “robust” level of customer demand, with enquiries averaging 1,016 per month.

It made three major acquisitions totalling £382m during the year, with a further £77m acquisition just after year-end in April.

Two industrial estates and one small commercial building were sold for £84m, which was 38% above their book value at 31 March 2017.

Four residential redevelopments were also sold for £41m in cash, and two new commercial buildings were returned in due course.

A total of three refurbishment projects were completed, including The Record Hall - a new flagship business centre in Holborn.

“These strong results are further evidence of management successfully executing the right strategy,” said chief executive Jamie Hopkins.

“Flexible working continues to gain significant attention and our well-connected, inspiring spaces are driving strong customer demand.

“Our continued rental growth over the year reflects the resilient demand for the right type of space in London.”

Hopkins noted that adjusted trading profit increased by 20% to more than £60m on the back of a similar level of growth in rental income.

“We made a number of strategic acquisitions during the year as well as making excellent progress on our extensive refurbishments and redevelopments pipeline.

“This very positive trading performance and confident outlook underpins the Board's decision to increase the total dividend by 30%.”

The company’s property ownership model and “wealth of experience” in leasing flexible space directly to customers meant that it understood their needs and were well-positioned to capture opportunities in the “evolving” market, Hopkins added.

“. We remain excited that our strategy is the right one and confident in our ability to continue to deliver value for shareholders.”