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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Workspace Group Plc | LSE:WKP | London | Ordinary Share | GB00B67G5X01 | ORD GBP1 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 538.00 | 538.00 | 540.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Real Estate Investment Trust | 174.2M | -37.8M | -0.1970 | -27.41 | 1.04B |
From May 2019 to May 2024
TIDMWKP
RNS Number : 6784O
Workspace Group PLC
09 November 2016
HALF YEAR RESULTS
9 November 2016
WORKSPACE GROUP PLC
INTERIM RESULTS
WORKSPACE GROUP PLC
STRONG CUSTOMER DEMAND CONTINUES TO DRIVE INCOME GROWTH
40% INCREASE IN INTERIM DIVID
Highlights
Financial Performance
Hot Features
Premium
-- Net rental income up 6% to GBP38.0m (30 September 2015:
GBP35.9m)
-- Adjusted trading profit after interest up 16% to GBP23.6m
(30 September 2015: GBP20.4m)
-- Adjusted underlying earnings per share up 15.2% to 14.4p
(30 September 2015: 12.5p)
-- Interim dividend per share increased by 40% to 6.80p (30
September 2015: 4.86p)
-- Profit before tax of GBP7.1m (30 September 2015: GBP163.4m)
-- EPRA net asset value per share down 0.9% to GBP9.15 (31
March 2016: GBP9.23)
Operating Performance
-- Total rent roll up 8.4% in the six months to GBP84.8m (31
March 2016: GBP78.2m)
-- Like-for-like rent roll up 5.5% to GBP51.5m (31 March 2016:
GBP48.8m)
-- Like-for-like rent per sq. ft. up 4.5% to GBP24.93 (31 March
2016: GBP23.86)
-- Like-for-like occupancy at 90.3% (31 March 2016: 90%)
-- Rent roll at completed projects up 46% to GBP13.4m (31 March
2016: GBP9.2m)
Property Valuation
-- Property portfolio valued at GBP1,780m (31 March 2016: GBP1,779m)
down 0.9% (GBP16m) on an underlying basis
-- Like-for-like capital value per sq. ft. down 0.5% to GBP374
(31 March 2016: GBP376)
-- Like-for-like initial yield of 5.3% (31 March 2016: 5.0%)
and equivalent yield of 6.6% (31 March 2016: 6.4%)
Active Asset Management
-- Planning consents achieved for two refurbishments in Hackney
and Ladbroke Grove and a mixed-use redevelopment in Stratford
-- Sale of three residential redevelopments agreed in October
2016, at a premium to 31 March 2016 valuation
-- Remaining eight properties in the BlackRock Workspace Property
Trust ("BWPT") sold in May and June 2016
Financing
-- Bank revolver facility extended by 12 months to June 2021
-- Undrawn bank facilities and cash of GBP122m (31 March 2016:
GBP134m)
-- Average interest cost 5.5% (31 March 2016: 5.1%), expected
to reduce in second half following repayment of GBP45m of
term debt in September 2016
-- Loan to value at 14% (31 March 2016: 16%)
Commenting on the results, Jamie Hopkins, Chief Executive Officer said:
"Workspace has delivered another half of good like-for-like rental growth as demand for our space remains strong. In addition, our completed refurbishments and redevelopments are attracting very strong customer demand, with overall rent roll at these properties increasing by 46% in the six months. As London continues to change and more traditional businesses are embracing new ways of working, Workspace's high quality office space in well-connected locations, flexible terms and facilities to support business growth have never been more relevant.
We have made good progress on our project pipeline with three planning consents achieved in areas of high customer demand across London. We were also delighted to exchange on the sale of three residential redevelopments in October 2016. Our balance sheet remains strong with loan to value at only 14% and we continue to actively pursue acquisition opportunities that meet our investment criteria.
The strong operating momentum, alongside our extensive pipeline of refurbishment and redevelopment projects, has given the Board the confidence to propose a 40% increase to the interim dividend, very much reiterating our progressive dividend policy.
As we look forward to the second half of the year, we remain alert to the potential challenges of operating in uncertain economic conditions and times of political change. However, we remain confident in the resilience of our customer base and are committed to our strategy of driving income growth and enhancing shareholder value over the long-term."
For media and investor enquiries, please contact:
Workspace Group PLC Jamie Hopkins, Chief Executive Officer Graham Clemett, Chief Financial Officer 020 7138 Clare Dundas, Head of Corporate Communications 3300 Bell Pottinger Victoria Geoghegan Nick Lambert 020 3772 Elizabeth Snow 2562
Note
The highlights include GAAP and non-GAAP performance measures. The performance indicators we report are those which are used to monitor and manage the business. Reconciliation of the non-GAAP measures is detailed within the business review and notes to the financial statements.
Notes to Editors
About Workspace Group PLC:
-- Workspace is a FTSE250 Property Company and
has been listed on the London Stock Exchange
since 1993
-- Workspace provides the right properties to
attract its customers and the right services
to retain them and help them grow their businesses
-- Workspace has a unique business model, maintaining
direct relationships with customers and managing
all of its operational activity - from marketing,
viewings, lettings and lease renewals - in-house
-- Workspace is growing through deep market knowledge,
operational excellence and strong customer
relationships
-- Workspace is a member of the European Public
Real Estate Association
-- For more information on Workspace, please
visit www.workspace.co.uk
Details of results presentation
There will be a results presentation to analysts and investors hosted by the Workspace Executive Team on Wednesday 9th November 2016 at 9.30am. The venue for the presentation is The London Stock Exchange, 10 Paternoster Square, London, EC4M 7LS. There is also a webcast and conference call facility in conjunction with the presentation.
Webcast: The live webcast will be available here: https://secure.emincote.com/client/workspace/workspace006
Conference call details:
+44 20 3059
Dial in: 8125
BUSINESS REVIEW
RENT ROLL PERFORMANCE
Total cash rent roll is up 8.4% (GBP6.6m) in the six months to 30 September 2016 as detailed below.
GBPm
----------------------------------- -----
Rent roll at 31 March 2016 78.2
Growth at like-for-like properties 2.7
Increase at completed projects 4.2
Reduction at current projects (1.8)
Increase at acquired properties 1.5
Rent roll at 30 September 2016 84.8
----------------------------------- -----
Like-for-Like Portfolio
The like-for-like portfolio represents 61% of the Group's total rent roll as at 30 September 2016. It comprises properties with stabilised occupancy over the previous twelve months, excluding those impacted by recent significant refurbishment or redevelopment activity. Prior quarter comparatives are restated as properties are transferred to and from the refurbishment and redevelopment categories.
The like-for-like rent roll has continued to grow, up 2.6% (GBP1.3m) in the second quarter and up 5.5% (GBP2.7m) in the six months to GBP51.5m. Like-for-like rent per sq. ft. is up 4.5% to GBP24.93 in the six months to 30 September 2016 and like-for-like occupancy has increased by 0.3% to 90.3%.
Like-for-like 30 Sep 30 Jun 31 Mar 31 Dec 30 Sep properties 2016 2016 2016 2015 2015 --------------------- -------- -------- -------- -------- -------- Number of properties 35 35 35 35 35 Occupancy 90.3% 89.6% 90.0% 90.6% 90.4% Rent roll GBP51.5m GBP50.2m GBP48.8m GBP46.7m GBP45.6m Rent per sq. ft. GBP24.93 GBP24.57 GBP23.86 GBP22.92 GBP22.49 ERV GBP65.0m - GBP62.8m - GBP54.8m --------------------- -------- -------- -------- -------- --------
At the estimated rental values at 30 September 2016 and assuming 90% occupancy, the rent roll would be GBP58.5m, GBP7.0m higher than the 30 September 2016 rent roll.
Completed Projects
Our properties are designed to meet our customers' evolving needs and include secure, business grade connectivity, breakout space, on-site cafes, meeting rooms, showers and cycle storage. Metal Box Factory on the Southbank has been rated Wired Certified Platinum by WiredScore, the highest achievable rating, and has attracted some of London's most digitally disruptive, fast-growing businesses. Recent lettings include Mozilla, creator of the Firefox web browser.
The strong demand for the space at these completed schemes has resulted in the rent roll increasing by 46% (GBP4.2m) over the last six months to GBP13.4m and occupancy reaching 83% (31 March 2016: 72%).
Rent increase Occupancy
in six at 30 September
Launched months 2016
----------- -------------- ----------------
Metal Box Factory, January
Southbank 2015 GBP0.9m 91%
The Light Bulb, Wandsworth March 2015 GBP0.2m 95%
January
Vox Studios, Vauxhall 2016 GBP1.4m 84%
January
The Print Rooms, Southbank 2016 GBP0.5m 85%
Grand Union Studios,
Ladbroke Grove March 2016 GBP1.2m 55%
--------------- ----------------
Total GBP4.2m 83%
------------- ----------------
If all five buildings were at 90% occupancy at the estimated rental values at 30 September 2016, the rent roll would be GBP16.4m, GBP3.0m higher than the 30 September 2016 rent roll.
Current Projects
There was a reduction of GBP1.3m in rent roll to GBP10.9m at 30 September 2016 at properties being refurbished. The most significant reduction in rent roll of GBP0.7m was at Cremer Business Centre, Hoxton where we have obtained vacant possession ahead of demolition of the existing building. The short-term reduction in rent and occupancy during refurbishment at these properties will be replaced in due course by an uplift in income as the projects complete.
There was a reduction of GBP0.5m in rent roll to GBP2.7m at 30 September 2016 at properties in the redevelopment category. This includes a GBP0.4m reduction in rent roll at Lombard Business Centre, Croydon where we obtained vacant possession in the first half prior to its sale in October 2016 for residential redevelopment.
Acquisitions
Acquisitions are held separately from our like-for-like category until we have at least twelve months of stabilised occupancy following any upgrade and refurbishment works. There was a net increase of GBP1.5m in rent roll in the first half to GBP6.3m at 30 September 2016. The increase in rent roll includes:
-- GBP0.7m uplift at the former Mecca bingo building on Garratt Lane in Earlsfield which we have let to a trampoline operator while we progress discussions with Wandsworth Borough Council for a major mixed-use redevelopment
-- GBP0.4m uplift at 160 Fleet Street, Midtown following completion of the upgrade works with occupancy reaching 91% by the end of September 2016
-- GBP0.3m uplift at Cannon Wharf, Surrey Quays which opened in December 2015 with occupancy at 61% by the end of September 2016.
Enquiries and lettings
Enquiry levels have averaged 1,025 per month in the six months to 30 September 2016 with good levels of demand through the second quarter of the year and continued strong letting activity.
Quarter Ended
------------ ------------------------------------
Average number 30 Sept 2016 30 Jun 31 Mar 2016 31 Dec 30 Sept
per month 2016 2015 2015
--------------- ------------ ------ ----------- ------ -------
Enquiries 999 1,050 1,070 994 1,034
Lettings 103 106 116 73 108
--------------- ------------ ------ ----------- ------ -------
The healthy level of demand has continued into the second half of the current financial year with 1,108 enquiries in October 2016.
PROFIT PERFORMANCE
Adjusted trading profit after interest for the six months (which includes our share of the trading profit of joint ventures) is GBP23.6m, up 16% compared to the prior year.
30 Sept 30 Sept
GBPm 2016 2015
--------------------------------------- ------- -------
Net rental income 38.0 35.9
Joint venture income 0.3 0.5
Administrative expenses - underlying (6.5) (5.7)
Administrative expenses - share (0.9) (1.9)
related incentives
Net finance costs* (7.3) (8.4)
--------------------------------------- ------- -------
Adjusted trading profit after interest 23.6 20.4
--------------------------------------- ------- -------
* excluding exceptional finance costs
Net rental income increased by 6% to GBP38.0m compared to the prior year despite a reduction in rental income of GBP2.3m from disposals, with the growth by property type detailed below:
30 Sept 30 Sept
GBPm 2016 2015
------------------------- ------- -------
Like-for-like properties 23.8 21.2
Completed projects 5.5 2.9
Current projects 6.3 7.5
Acquisitions 2.4 2.0
Disposals - 2.3
------------------------- ------- -------
Total net rental income 38.0 35.9
------------------------- ------- -------
Joint venture income represents our share of net rental income less associated administrative expenses, primarily from the BlackRock Workspace Property Trust (BWPT) which concluded in June 2016.
Total administration costs are down 2.6% (GBP0.2m) in the six months, although underlying costs (excluding share based costs) are up 14% (GBP0.8m) to GBP6.5m. The year-on-year increase in underlying costs includes an additional eight headcount across our project management, marketing and new business development teams alongside salary increases averaging 4% and inflationary cost increases. Share based costs are reduced by 53% (GBP1.0m) to GBP0.9m, due to the decline in share price.
Net finance costs have reduced by GBP1.1m (13.1%) in the year. Average borrowings over the period were GBP52m lower than in the prior year following the disposals completed in the first six months of the calendar year, although the average interest rate increased from 5.1% to 5.5% as a result of the costs associated with the undrawn bank revolver facility.
In September 2016, GBP45m of term debt maturing in 2022/23 with a current interest rate of 4% was cancelled early at a total cost of GBP1.4m. This was funded from surplus cash and the revolver facility at a marginal cost of 2%. As a result the average interest rate in the second half of the year, excluding the impact of acquisitions and disposals, should reduce to around 5%.
Total profit before tax for the six months is GBP7.1m compared to a profit of GBP163.4m in the prior year as detailed below:
30 September 30 September
GBPm 2016 2015
----------------------------------- ------------ ------------
Adjusted trading profit after
interest 23.6 20.4
Change in fair value of investment
properties (14.6) 137.9
Exceptional interest expense (1.4) -
Other items (0.5) 5.1
----------------------------------- ------------ ------------
Profit before tax 7.1 163.4
----------------------------------- ------------ ------------
Adjusted underlying earnings per
share 14.4p 12.5p
----------------------------------- ------------ ------------
The change in fair value of investment properties of GBP14.6m reflects the underlying decrease in the CBRE property valuation in the first half of GBP15.8m, adjusted for the change in fair value of overage which is classified in the accounts as deferred consideration.
The exceptional finance cost of GBP1.4m relates to the early repayment of GBP45m of term debt in September 2016 with break costs of GBP0.9m and the release of unamortised arrangement costs of GBP0.5m.
DIVID
Our dividend policy is based on the growth in trading profits taking into account our investment and acquisition plans and the distribution requirements that we have as a Real Estate Investment Trust (REIT). We have seen a substantial growth in trading profits in recent years and the Board has taken the opportunity this year to increase the interim dividend by 40% to 6.80p per share (2015: 4.86p).
The intention is to grow the dividend on a covered trading profit basis, with a target of maintaining cover of at least 1.3 times adjusted underlying earnings per share. The interim dividend will be paid on 7 February 2017 as a REIT Property Income Distribution to shareholders on the register at 12 January 2017.
PROPERTY VALUATION
At 30 September 2016, the wholly owned portfolio was independently valued by CBRE at GBP1,780m, an underlying decrease of 0.9% (GBP16m) in the six months. The main movements in the valuation over the six months are set out below:
GBPm
------------------------------- -----
Valuation at 31 March 2016 1,779
Revaluation deficit (16)
Capital expenditure 30
Capital receipts (13)
------------------------------- -----
Valuation at 30 September 2016 1,780
------------------------------- -----
Set out below are the revaluation movements in the six months and valuations at 30 September 2016 by property type:
No of Revaluation
Properties Uplift
GBPm / (deficit) Valuation
------------------------- ----------- ------------ ---------
Like-for-like Properties 35 (7) 856
Completed Projects 5 13 269
Current Refurbishments 10 (12) 273
Current Redevelopments 11 4 192
Acquisitions 8 (14) 177
Overage - - 13
Total 69 (16) 1,780
------------------------- ----------- ------------ ---------
Like-For-Like Properties
The 0.8% (GBP7m) decrease in value of the like-for-like properties came from an outward shift in yield reducing the valuation by GBP51m (based on net initial yield) mitigated by the uplift in rental pricing levels increasing the valuation by GBP44m.
30 September 31 March
2016 2016 Change
----------------------------- ------------ -------- --------
Estimated Rental Value (ERV)
per sq. ft. GBP28.38 GBP27.64 +2.7%
Rent per sq. ft. GBP24.93 GBP23.86 +4.5%
Out by
Equivalent Yield 6.6% 6.4% 0.2%
Out by
Net Initial Yield 5.3% 5.0% 0.3%
Capital Value per sq. ft. GBP374 GBP376 -0.5%
----------------------------- ------------ -------- --------
Completed Projects
The uplift of 5% (GBP13m) in value of completed projects reflects the strong demand and higher than previously expected pricing levels that have been achieved at these properties. The largest increases in value over the six months have been at:
-- The Light Bulb, up GBP3m -- Metal Box Factory, up GBP3m -- Grand Union Studios, up GBP3m
The overall valuation metrics for completed projects are set out below:
30 September
2016
-------------------------- ------------
ERV per sq. ft. GBP50.88
Rent per sq. ft. GBP44.56
Equivalent Yield 6.4%
Net Initial Yield 4.8%
Capital Value per sq. ft. GBP715
-------------------------- ------------
Current Refurbishments
We have seen a decrease of 4% (GBP12m) in the value of refurbishments underway. The most significant reductions have been at:
-- The Leather Market, London Bridge (valuation down GBP5m) and Southbank House, Vauxhall (down GBP4m) where we are undertaking major upgrade and refurbishment works whilst continuing to operate them as business centres. This has obviously impacted on both rental levels and occupancy in the short-term.
-- Cremer Business Centre, Hoxton (down GBP2m) where we have planning consent for a new business centre and have recently obtained vacant possession ahead of demolition of the existing building.
Current Redevelopments
The uplift of 2% (GBP4m) in the value of redevelopment projects includes an uplift of GBP3m at the Arches, Southall where we exchanged sale for a residential redevelopment in October 2016.
Acquisitions
The reduction in value of acquisition properties of 7% (GBP14m) includes properties where we have, or will soon potentially be obtaining, void space in part or the whole of buildings ahead of planned upgrade and refurbishment works. At Edinburgh House, Vauxhall we obtained vacant possession of the entire building in March 2016 ahead of a planned major refurbishment and at Gray's Inn Road, Midtown and Angel House, Islington we are upgrading space on a floor-by-floor basis as space comes available.
ACQUISITION ACTIVITY
We continue to track acquisition opportunities across London where we believe we can add value and leverage our operating platform. We have a disciplined approach with defined investment return criteria. While a number of opportunities were investigated in the first half, only one acquisition was completed.
In June 2016, we exchanged contracts to acquire 29,000 sq. ft. of commercial space at 175-179 Long Lane, SE1 for GBP9.5m (payable upon completion) at a capital value of GBP328 per sq. ft. This property is located adjacent to The Leather Market, our business centre near Borough High Street. The commercial space being acquired is part of a larger mixed-use development which is currently under construction and is expected to be completed in mid-2018.
DISPOSAL ACTIVITY
We completed the disposal of the remaining eight properties in Blackrock Workspace Property Trust ("BWPT") joint venture in May and June 2016 for GBP131m at a net initial yield of 4.7%. The disposals marked the conclusion of the joint venture with BlackRock in which Workspace made an initial investment of GBP20m in 2011. Based on the strong performance achieved over the five-year life of the joint venture, Workspace received a performance fee from BWPT of GBP25m.
In October 2016 we contracted to sell three mixed-use redevelopments:
-- Arches, Southall which has planning consent for 110 residential units, was sold for GBP13.0m which was a 52% premium to the 31 March 2016 valuation.
-- The second phase at The Light Bulb, Wandsworth comprising 77 residential units, was sold for GBP7.75m together with the return of 17,000 sq. ft. of new commercial space in line with the 31 March 2016 valuation.
-- Lombard Business Centre, Croydon which has planning consent for 96 residential units, was sold for GBP5.75m in line with the 31 March 2016 valuation.
REFURBISHMENT ACTIVITY
During the first half we obtained two planning permissions for the extension and upgrade of Pall Mall Deposit, Ladbroke Grove and Mare Street Studios, Hackney. They will provide 115,000 sq. ft. of new and upgraded space at an estimated cost of GBP27m.
A summary of the current status of the refurbishment pipeline is set out below:
Upgraded and
Capex Capex to new space
Projects Number spent spend (sq. ft.)
-------------- ------ ------ -------- ------------
Underway 6 GBP31m GBP65m 417k
With planning 4 - GBP40m 219k
Design stage 6 - GBP91m 363k
-------------- ------ ------ -------- ------------
Total 16 GBP31m GBP196m 999k
-------------- ------ ------ -------- ------------
We would expect the capital expenditure on the refurbishment projects detailed above to be incurred relatively evenly over the next four years (subject to obtaining planning consent on the design stage schemes).
REDEVELOPMENT ACTIVITY
Many of our properties are in areas where there is strong demand for mixed-use redevelopment. Our model is to use our expertise, knowledge and local relationships to obtain a mixed-use planning consent and then agree terms with a residential developer to undertake the redevelopment and construction at no cost or risk to Workspace. We receive back a combination of cash, new commercial space and overage in return for the sale of the residential component to the developer.
In September 2016 we received planning consent at Stratford Office Village for a mixed-use redevelopment comprising 101 residential units and 13,000 sq. ft. of new commercial space.
A summary of the current status of contracted redevelopments is set out below:
Estimated Commercial
Residential Cash Cash to overage space
Number units received come to come (sq. ft.)
---------- ------ ------------- --------- ------- --------- ----------
Completed 3 621 GBP30m GBP3m GBP11m 118k
Underway 4 1,278 GBP85m GBP5m GBP3m 84k
Total 7 1,899 GBP115m GBP8m GBP14m 202k
---------- ------ ------------- --------- ------- --------- ----------
We received overage of GBP13m from the residential redevelopment at The Lightbulb in April 2016, in line with the 31 March 2016 valuation. We expect to receive the majority of the remaining cash and overage on the contracted schemes over the next 18 months.
At 30 September 2016 there were a further eight schemes with mixed-use planning consents for 1,169 residential units and 185,000 sq. ft. of new business space. Three of these schemes were exchanged for sale in October 2016.
CASH FLOW
The Group generates strong operating cash flow in line with trading profit, with good levels of cash collection and bad debts low in the first half of the year at GBP0.1m (31 March 2016: GBP0.2m). A summary of the movements in cash flow are set out below:
GBPm
---------------------------------------- -----
Net cash from operations after interest 22
Dividends paid (15)
Capital expenditure (30)
Capital receipts 13
Distributions and proceeds from joint
ventures 46
Other items (3)
Net movement in year 33
Debt at 31 March 2016 (net of cash) (276)
---------------------------------------- -----
Debt at 30 September 2016 (net of cash) (243)
---------------------------------------- -----
FINANCING
The Group had GBP246m of drawn debt with GBP365m of committed, unsecured facilities as detailed below:
Drawn Amount Facility Maturity
----------------- ------------ --------- ------------
Private placement GBP148.5m
notes GBP148.5m June 2023
Private placement GBP9m
notes GBP9m June 2020
Retail bond GBP57.5m GBP57.5m October 2019
Bank facilities GBP31m GBP150m June 2021
----------------- ------------ --------- ------------
Total facilities GBP246m GBP365m
----------------- ------------ --------- ------------
The Private Placement notes comprise $100m (GBP64.5m) of US dollar ten year notes, GBP84m of Sterling ten year notes and GBP9m of seven year Sterling floating rate notes. The US dollar notes have been fully hedged against Sterling for ten years. The overall interest rate on the GBP148.5m ten year fixed rate notes is 5.6%. The GBP9m of Sterling Floating rate notes have a margin of 3.5% over Libor. A seven year GBP57.5m Retail Bond (listed on ORB) was issued in October 2012 and carries a coupon of 6.0%.
In June 2016 we exercised the option for the first extension of the maturity term of our GBP150m revolver facility by a year to June 2021. In September 2016 we repaid GBP45m of UK fund term debt incurring break costs of GBP0.9m.
At 30 September 2016, undrawn facilities (including cash) were GBP122m, loan to value was 14% (31 March 2016: 16%) and interest cover (based on net rental income) was 4.9 times, giving us good headroom on all of bank, placement notes and bond covenants. The average maturity of our facilities is 5.3 years (31 March 2016: 5.9 years).
NET ASSETS
EPRA net asset value per share at 30 September 2016 was GBP9.15 (31 March 2016: GBP9.23), a reduction of 0.9% over the six months.
GBP
------------------------------ ------
At 31 March 2016 9.23
Property valuation deficit (0.10)
Trading profit after interest 0.14
Dividends paid (0.10)
Other (0.02)
------------------------------ ------
At 30 September 2016 9.15
------------------------------ ------
Key property statistics
Quarter Quarter Quarter Quarter Quarter
ended ended ended ended ended
30 Sept 30 Jun 31 March 31 Dec 30 Sept
2016 2016 2016 2015 2015
--------------------------- --------- -------- --------- -------- ---------
Workspace Group Portfolio
Property valuation GBP1,780m - GBP1,779m - GBP1,631m
Number of estates 69 69 69 77 75
Lettable floorspace
(million sq. ft.) 3.7 3.7 3.8 4.2 4.2
Number of lettable
units 4,521 4,513 4,554 4,725 4,663
Cash rent roll of occupied
units GBP84.8m GBP82.0m GBP78.2m GBP80.8m GBP79.0m
Average rent per sq.
ft. GBP26.86 GBP26.06 GBP24.32 GBP22.39 GBP21.11
Overall occupancy 84.2% 84.5% 85.8% 85.8% 89.8%
Like-for-like lettable
floor space (million
sq. ft.) 2.3 2.3 2.3 2.3 2.3
Like-for-like cash
rent roll GBP51.5m GBP50.2m GBP48.8m GBP46.6m GBP45.6m
Like-for-like average
rent per sq. ft. GBP24.93 GBP24.57 GBP23.86 GBP22.92 GBP22.49
Like-for-like occupancy 90.3% 89.6% 90.0% 90.6% 90.4%
--------------------------- --------- -------- --------- -------- ---------
Note:
The like-for-like category has been restated in the first half of 2016/17 for the following:
-- The exclusion of Pall Mall Deposit, Ladbroke Grove and Southbank House, Vauxhall and the Chocolate Factory, Wood Green which are subject to major refurbishment activity.
-- The inclusion of Cargo Works, Southbank and Peer House, Midtown which have reached stabilised occupancy levels over the last 12 months, post refurbishment and acquisition respectively.
CONSOLIDATED INCOME STATEMENT
FOR THE Six MonthsED 30 september 2016
Unaudited Unaudited
6 months 6 months Audited
ended ended Year ended
30 September 30 September 31 March
2016 2015 2016
Notes GBPm GBPm GBPm
----------------------------------- ----- ------------- ------------- -----------
Revenue 1 53.4 49.3 101.2
Direct costs 1 (15.4) (13.4) (27.1)
----------------------------------- ----- ------------- ------------- -----------
Net rental income 1 38.0 35.9 74.1
Administrative expenses (7.4) (7.6) (14.6)
----------------------------------- ----- ------------- ------------- -----------
Trading profit excluding share
of joint ventures 30.6 28.3 59.5
(Loss) / profit on disposal
of investment properties 2(a) (0.1) 0.1 8.1
Loss on disposal of joint ventures 2(b) (0.1) (0.1) (0.1)
Other income 2(c) 1.1 2.2 39.0
Other expenses 2(c) (1.2) - -
Change in fair value of investment
properties 8 (14.6) 137.9 296.6
----------------------------------- ----- ------------- ------------- -----------
Operating profit 2 15.7 168.4 403.1
Finance income 3 0.1 0.1 0.1
Finance costs 3 (7.4) (8.5) (17.0)
Exceptional finance costs 3 (1.4) - -
Change in fair value of derivative
financial instruments 13(f) - 0.9 0.9
Gains from share in joint ventures 12(a) 0.1 2.5 4.2
----------------------------------- ----- ------------- ------------- -----------
Profit before tax 7.1 163.4 391.3
Taxation 4 - - (2.4)
----------------------------------- ----- ------------- ------------- -----------
Profit for the period after
tax 7.1 163.4 388.9
----------------------------------- ----- ------------- ------------- -----------
Basic earnings per share (pence) 6 4.4p 101.2p 240.3p
Diluted earnings per share
(pence) 6 4.3p 99.8p 237.3p
----------------------------------- ----- ------------- ------------- -----------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE six monthsED 30 september 2016
Unaudited Unaudited
6 months 6 months Audited
ended ended Year ended
30 September 30 September 31 March
2016 2015 2016
Notes GBPm GBPm GBPm
----------------------------------- ----- ------------- ------------- -----------
Profit for the period 7.1 163.4 388.9
Other comprehensive income:
Items that may be classified
subsequently to profit or loss:
Change in fair value of derivative
financial instruments (cash
flow hedge) 13(f) 4.6 1.4 1.4
----------------------------------- ----- ------------- ------------- -----------
Total comprehensive income
for the period 11.7 164.8 390.3
----------------------------------- ----- ------------- ------------- -----------
CONSOLIDATED BALANCE SHEET
AS AT 30 september 2016
Unaudited Audited Unaudited
30 September 31 March 30 September
2016 2016 2015
Notes GBPm GBPm GBPm
--------------------------------- ------ ------------- --------- -------------
Non-current assets
Investment properties 8 1,764.8 1,749.4 1,614.4
Intangible assets 0.6 0.6 0.5
Property, plant and equipment 2.5 2.0 2.0
Investment in joint ventures 9 0.2 22.3 21.2
Other investments 3.0 4.2 1.0
Trade and other receivables 10 6.4 14.2 11.2
13(e)
Derivative financial instruments & (f) 11.2 3.9 0.1
--------------------------------- ------ ------------- --------- -------------
1,788.7 1,796.6 1,650.4
--------------------------------- ------ ------------- --------- -------------
Current assets
Trade and other receivables 10 28.4 52.0 23.6
Cash and cash equivalents 11 6.5 27.8 8.6
34.9 79.8 32.2
--------------------------------- ------ ------------- --------- -------------
Total assets 1,823.6 1,876.4 1,682.6
--------------------------------- ------ ------------- --------- -------------
Current liabilities
Trade and other payables 12 (50.4) (48.4) (45.2)
Deferred tax (1.1) (1.1) -
--------------------------------- ------ ------------- --------- -------------
(51.5) (49.5) (45.2)
--------------------------------- ------ ------------- --------- -------------
Non-current liabilities
Borrowings 13(a) (258.4) (309.3) (338.3)
(258.4) (309.3) (338.3)
--------------------------------- ------ ------------- --------- -------------
Total liabilities (309.9) (358.8) (383.5)
--------------------------------- ------ ------------- --------- -------------
Net assets 1,513.7 1,517.6 1,299.1
--------------------------------- ------ ------------- --------- -------------
Shareholders' equity
Share capital 163.2 162.4 162.1
Share premium 135.4 135.9 136.1
Investment in own shares (8.9) (8.9) (8.9)
Other reserves 24.4 19.0 18.2
Retained earnings 1,199.6 1,209.2 991.6
--------------------------------- ------ ------------- --------- -------------
Total shareholders' equity 1,513.7 1,517.6 1,299.1
EPRA net asset value per share 7 GBP9.15 GBP9.23 GBP7.92
--------------------------------- ------ ------------- --------- -------------
Consolidated Statement of Changes in Equity
FOR THE periodED 30 september 2016
Attributable to owners
of the Parent
----------------------------------------------------
Investment
in Total
Share Share own Other Retained Share-holders' Total
capital premium shares reserves earnings equity equity
Notes GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------- ----- -------- -------- ---------- --------- --------- --------------- -------
Balance at 1
April 2016 162.4 135.9 (8.9) 19.0 1,209.2 1,517.6 1,517.6
---------------------- ----- -------- -------- ---------- --------- --------- --------------- -------
Profit for the
period - - - - 7.1 7.1 7.1
Change in fair
value of derivatives - - - 4.6 - 4.6 4.6
---------------------- ----- -------- -------- ---------- --------- --------- --------------- -------
Total comprehensive
income - - - 4.6 7.1 11.7 11.7
---------------------- ----- -------- -------- ---------- --------- --------- --------------- -------
Transactions
with owners:
Share issues 0.8 (0.5) - - (0.2) 0.1 0.1
Dividends paid 5 - - - - (16.5) (16.5) (16.5)
Share based payments - - - 0.8 - 0.8 0.8
---------------------- ----- -------- -------- ---------- --------- --------- --------------- -------
Balance at 30
September 2016 163.2 135.4 (8.9) 24.4 1,199.6 1,513.7 1,513.7
---------------------- ----- -------- -------- ---------- --------- --------- --------------- -------
Balance at 1
April 2015 161.1 130.8 (8.8) 15.7 841.5 1,146.3 1,146.3
---------------------- ----- -------- -------- ---------- --------- --------- --------------- -------
Profit for the
year - - - - 163.4 163.4 163.4
Change in fair
value of derivatives - - - 1.4 - (1.4) (1.4)
---------------------- ----- -------- -------- ---------- --------- --------- --------------- -------
Total comprehensive
income - - - 1.4 163.4 164.8 164.8
---------------------- ----- -------- -------- ---------- --------- --------- --------------- -------
Transactions
with owners:
Share issues 1.0 (0.7) - - (0.1) 0.2 0.2
Dividends paid 5 - - - - (13.2) (13.2) (13.2)
Reclassification - - - - - - 11.0
Own shares purchase - - (0.1) - - (0.1) (0.1)
Share based payments - - - 1.1 - 1.1 1.1
---------------------- ----- -------- -------- ---------- --------- --------- --------------- -------
Balance at 30
September 2015 162.1 136.1 (8.9) 18.2 991.6 1,299.1 1,299.1
---------------------- ----- -------- -------- ---------- --------- --------- --------------- -------
Balance at 1
April 2015 161.1 136.8 (8.8) 15.7 841.5 1,146.3 1,146.3
---------------------- ----- -------- -------- ---------- --------- --------- --------------- -------
Profit for the
year - - - - 388.9 388.9 388.9
Change in fair
value of derivatives - - - 1.4 - 1.4 1.4
---------------------- ----- -------- -------- ---------- --------- --------- --------------- -------
Total comprehensive
income - - - 1.4 388.9 390.3 390.3
---------------------- ----- -------- -------- ---------- --------- --------- --------------- -------
Transactions
with owners:
Share issues 1.3 (0.9) - - (0.1) 0.3 0.3
Own shares purchase
(net) - - (0.1) - - (0.1) (0.1)
Dividends paid 5 - - - - (21.1) (21.1) (21.1)
Share based payments - - - 1.9 - 1.9 1.9
---------------------- ----- -------- -------- ---------- --------- --------- --------------- -------
Balance at 31
March 2016 162.4 135.9 (8.9) 19.0 1,209.2 1,517.6 1,517.6
---------------------- ----- -------- -------- ---------- --------- --------- --------------- -------
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD 30 SEPTEMBER 2016
Unaudited Unaudited
6 months 6 months Audited
ended ended Year ended
30 September 30 September 31 March
2016 2015 2016
Notes GBPm GBPm GBPm
------------------------------------- ----- ------------- ------------- -----------
Cash flows from operating activities
Cash generated from operations 14 30.2 27.5 67.6
Interest received 0.1 0.1 0.1
Interest paid (8.1) (9.2) (17.9)
Net cash inflow from operating
activities 22.2 18.4 49.8
Cash flows from investing activities
Purchase of investment properties - (57.9) (107.4)
Capital expenditure on investment
properties (29.0) (26.6) (55.4)
Proceeds from disposal of investment
properties (net of sale costs) - 13.6 123.0
Purchase of intangible assets (0.3) (0.1) (0.4)
Purchase of property, plant
and equipment (0.5) (0.3) (0.8)
Capital distributions from
joint ventures 2.7 6.3 6.3
Proceeds from disposal of joint
ventures 17.7 3.1 3.1
Other income (overage receipts) 12.8 0.8 0.7
Purchase of investments - - (1.7)
Performance fee from joint
venture 24.5 - -
Movement in funding balances
with joint ventures (0.3) 0.2 0.2 Income distributions from joint ventures 0.8 0.6 1.2 ------------------------------------- ----- ------------- ------------- ----------- Net cash outflow from investing activities 28.4 (60.3) (31.2) Cash flows from financing activities Proceeds from issue of ordinary share capital 0.1 0.2 0.3 Finance costs for new/amended borrowing facilities (0.8) (1.0) (1.0) Exceptional finance costs (1.4) - - Settlement and re-couponing of derivative financial instruments - (1.7) (1.7) Repayment of bank borrowings 13(b) (54.0) 23.0 (10.0) Own shares purchase (net) - (0.1) (0.1) Dividends paid 5 (15.8) (12.5) (20.9) ------------------------------------- ----- ------------- ------------- ----------- Net cash (outflow) / inflow from financing activities (71.9) 7.9 (33.4) ------------------------------------- ----- ------------- ------------- ----------- Net decrease in cash and cash equivalents (21.3) (34.0) (14.8) ------------------------------------- ----- ------------- ------------- ----------- Cash and cash equivalents at start of period 11 27.8 42.6 42.6 Cash and cash equivalents at end of period 11 6.5 8.6 27.8 ------------------------------------- ----- ------------- ------------- -----------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE periodED 30 september 2016
The half year report has been prepared in accordance with the Disclosure and Transparency Rules and with IAS34 'Interim Financial Reporting' as adopted by the European Union. The half year report should be read in conjunction with the annual financial statements for the year ended 31 March 2016, which have been prepared in accordance with IFRSs as adopted by the European Union.
The condensed financial statements in the half year report are unaudited and do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The Annual Report and Accounts for the year to 31 March 2016, which were prepared under IFRS have been delivered to the Registrar of Companies. The auditors' opinion on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement made under Section 498 of the Companies Act 2006.
The Group's financial performance does not suffer materially from seasonal fluctuations. There have been no changes in estimates of amounts reported in prior periods which have a material impact on the current half year period.
The directors are satisfied that the Group has adequate resources, and sufficient headroom on its bank facilities to cover current liabilities, in order to continue in operational existence for a period of at least twelve months from the date of signing this report and for this reason the half year report is prepared on a going concern basis.
This report was approved by the Board on 9 November 2016.
The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 March 2016, as described in those annual financial statements, except that taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected annual earnings.
1. Analysis of net rental income and segmental information
Unaudited 6 Unaudited 6
months ended months ended
30 September 30 September
2016 2015
------------------------ ------------------------
Net Net
Direct rental Direct rental
Revenue costs income Revenue costs income
GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- ------- ------ ------- ------- ------ -------
Rental income 41.6 (1.0) 40.6 38.3 (0.8) 37.5
Service charges 8.0 (9.6) (1.6) 8.2 (9.1) (0.9)
Empty rates and other
non recoverables 0.1 (2.1) (2.0) - (2.0) (2.0)
Services, fees, commissions
and sundry income 3.7 (2.7) 1.0 2.8 (1.5) 1.3
---------------------------- ------- ------ ------- ------- ------ -------
53.4 (15.4) 38.0 49.3 (13.4) 35.9
---------------------------- ------- ------ ------- ------- ------ -------
Audited Year
ended 31 March
2016
------------------------
Net
Direct rental
Revenue costs income
GBPm GBPm GBPm
---------------------------- ------- ------ -------
Rental income 79.6 (1.9) 77.1
Service charges 16.3 (18.5) (2.2)
Empty rates and other
non recoverables - (3.6) (3.6)
Services, fees, commissions
and sundry income 5.3 (3.1) 2.2
---------------------------------- ------- ------ -------
101.2 (27.1) 74.1
------------------------------- ------- ------ -------
All of the properties within the portfolio are geographically close to each other and have similar economic features and risks and all information provided to the Executive Committee is aggregated and reviewed in total as one portfolio. As a result management have determined that the Group operates a single operating segment providing business space for rent in London.
2(a). Profit on disposal of investment properties
6 months 6 months
ended ended Year ended
30 September 30 September 31 March
2016 2015 2016
GBPm GBPm GBPm
-------------------------------------- ------------- ------------- ----------
Proceeds from sale of investment
properties (net of sale costs) (0.2) 13.0 122.7
Book value at time of sale (including
assets held for sale) - (13.3) (115.0)
-------------------------------------- ------------- ------------- ----------
Profit on disposal (0.2) (0.3) 7.7
Realisation of profits on sale
of properties out of joint ventures
(note a) 0.1 0.4 0.4
-------------------------------------- ------------- ------------- ----------
(0.1) 0.1 8.1
-------------------------------------- ------------- ------------- ----------
GBP0.1m (2015: GBP0.4) above relates to previously unrealised profits from the sale of property by the Group to joint ventures.
2(b). Loss on disposal of joint ventures
6 months 6 months
ended ended Year ended
30 September 30 September 31 March
2016 2015 2016
GBPm GBPm GBPm
----------------------------------- ------------- ------------- ----------
Proceeds from disposal of joint
ventures 18.7 3.1 3.1
Carrying value at time of disposal
(note 9) (18.8) (3.2) (3.2)
----------------------------------- ------------- ------------- ----------
Loss on disposal (0.1) (0.1) (0.1)
----------------------------------- ------------- ------------- ----------
The BlackRock Workspace Property Trust joint venture was sold in June 2016. Proceeds of GBP18.7m represents the 20.1% share of the closing net assets of the Trust at the date of disposal (less fees).
2(c). Other income and expenses
Other income
6 months 6 months
ended ended Year ended
30 September 30 September 31 March
2016 2015 2016
GBPm GBPm GBPm
--------------------------------- ------------- ------------- ----------
Joint venture performance fee 0.4 - 24.1
Change in fair value of deferred
consideration (1.3) 2.2 9.5
Rights of light compensation 2.0 - -
Lease surrender premium - - 5.4
--------------------------------- ------------- ------------- ----------
1.1 2.2 39.0
--------------------------------- ------------- ------------- ----------
The Group as property manager to the BlackRock Workspace Property Trust joint venture was paid a performance fee based on the returns achieved over the five year term of the fund. The five year term came to an end in February 2016 and the joint venture was sold in June 2016. Based on the returns achieved over the life of the fund and the valuation at 31 March 2016 a fee was estimated at GBP24.1m. Subsequent to the sale of the joint venture an additional fee of GBP0.4m has been recognised and the total amount was settled in July 2016.
The value of deferred consideration (cash and overage) from the sale of investment properties has been re-valued by CBRE Limited at 30 September 2016. The amounts receivable are included in the Consolidated balance sheet under non-current and current trade and other receivables (note 10).
Other expenses
6 months 6 months
ended ended Year ended
30 September 30 September 31 March
2016 2015 2016
GBPm GBPm GBPm
-------------------------------- ------------- ------------- ----------
Impairment of other investments (1.2) - -
(1.2) - -
-------------------------------- ------------- ------------- ----------
The Group has provided 100% against its 9% investment in Mailstorage Ltd, resulting in a charge of GBP1.2m in the six months.
3. Finance income and costs
6 months 6 months
ended ended Year ended
30 September 30 September 31 March
2016 2015 2016
GBPm GBPm GBPm
------------------------------------- ------------- ------------- ----------
Interest income on bank deposits 0.1 0.1 0.1
------------------------------------- ------------- ------------- ----------
Finance income 0.1 0.1 0.1
------------------------------------- ------------- ------------- ----------
Interest payable on bank loans
and overdrafts (0.6) (1.3) (2.7)
Interest payable on other borrowings (6.8) (7.0) (13.9)
Amortisation of issue costs of
borrowings (0.4) (0.4) (0.8)
Interest payable on finance leases (0.2) (0.2) (0.5)
Interest capitalised on property
refurbishments (note 10) 0.6 0.4 0.9
Foreign exchange gains/(losses)
on financing activities 2.6 1.5 (2.2)
Cash flow hedge - transfer from
equity (2.6) (1.5) 2.2
------------------------------------- ------------- ------------- ----------
Finance costs (7.4) (8.5) (17.0)
------------------------------------- ------------- ------------- ----------
Change in fair value of financial
instruments through the income
statement - 0.9 0.9
Exceptional finance costs (1.4) - -
Total finance costs (8.8) (7.5) (16.0)
------------------------------------- ------------- ------------- ----------
Exceptional finance costs of GBP1.4m were incurred upon repayment of the GBP45m UK Fund Debt in September 2016. The costs include the GBP0.9m break fee payment and GBP0.5m of unamortised finance costs and legal fees relating to this debt.
4. Taxation
6 months 6 months
ended ended Year ended
30 September 30 September 31 March
2016 2015 2016
GBPm GBPm GBPm
--------------------------------- ------------- ------------- ----------
Current tax:
UK corporation tax - - 1.3
Adjustments to tax in respect of - -
previous periods -
--------------------------------- ------------- ------------- ----------
- - 1.3
Deferred tax:
On origination and reversal of
temporary differences - - 1.1
--------------------------------- ------------- ------------- ----------
- - 1.1
--------------------------------- ------------- ------------- ----------
Total taxation charge - - 2.4
--------------------------------- ------------- ------------- ----------
The Group is a Real Estate Investment Trust (REIT). The Group's UK property rental business (both income and capital gains) is exempt from tax. The Group's other income is subject to corporation tax. No tax charge has arisen on this other income for the half year (30 September 2015: GBPnil). The tax charge at 31 March 2016 arose due to the performance fee receivable from the BlackRock Workspace Property Trust joint venture (note 2c).
5. Dividends
6 months 6 months
ended ended Year ended
30 September 30 September 31 March
Ordinary dividends Payment Per 2016 2015 2016
paid date share GBPm GBPm GBPm
------------------- --------- ------ -------------
For the year ended
31 March 2015:
August
Final dividend 2015 8.15p - 13.2 13.2
For the year ended
31 March 2016:
February
Interim dividend 2016 4.86p - - 7.9
August
Final dividend 2016 10.19p 16.5 - -
Dividends for
the period 16.5 13.2 21.1
Timing difference
on payment of
withholding tax (0.7) (0.7) (0.2)
------------------------------ ------ ------------- ------------- ----------
Dividends cash
paid 15.8 12.5 20.9
------------------------------ ------ ------------- ------------- ----------
In addition the Directors are proposing an interim dividend in respect of the financial year ending 31 March 2017 of 6.80 pence per ordinary share which will absorb an estimated GBP11.1m of revenue reserves and cash. The dividend will be paid on 7 February 2017 to shareholders who are on the register of members on 12 January 2017. The dividend will be paid as a REIT Property Income Distribution (PID) net of withholding tax where appropriate.
6. Earnings per share
6 months 6 months
ended ended Year ended
30 September 30 September 31 March
Earnings used for calculating earnings 2016 2015 2016
per share: GBPm GBPm GBPm
----------------------------------------- ------------- ------------- ----------
Basic and diluted earnings (attributable
to owners of the parent) 7.1 163.4 388.9
Change in fair value of investment
properties 14.6 (137.9) (296.6)
Profit on disposal of investment
properties 0.1 (0.1) (8.1)
Loss on disposal of joint ventures 0.1 0.1 0.1
Movement in fair value of derivative
financial instruments - (0.9) (0.9)
Group's share of EPRA adjustments
of joint ventures (0.1) (3.5) (5.6)
----------------------------------------- ------------- ------------- ----------
EPRA adjusted earnings 21.8 21.1 77.8
----------------------------------------- ------------- ------------- ---------- Adjustment for non-trading items: Group's share of joint ventures other expenses 0.3 1.5 2.7 Other income (note 2(c)) (1.1) (2.2) (39.0) Exceptional finance cost 1.4 - - Other expense (note 2(c)) 1.2 - - Taxation - - 2.4 ----------------------------------------- ------------- ------------- ---------- Adjusted underlying earnings 23.6 20.4 43.9 ----------------------------------------- ------------- ------------- ----------
Earnings have been adjusted and calculated on a diluted basis to derive an earnings per share measure as defined by the European Public Real Estate Association (EPRA) and an underlying earnings measure. Adjusted underlying earnings represents trading profits after interest, including trading profits of joint ventures.
30 September 30 September Year ended
Number of shares used for calculating 2016 2015 31 March
earnings per share: 2016
-------------------------------------- ------------ ------------ -----------
Weighted average number of shares
(excluding own shares held in trust) 162,598,961 161,503,118 161,843,774
Dilution due to share option schemes 1,576,312 2,349,850 2,018,833
-------------------------------------- ------------ ------------ -----------
Weighted average number of shares
for diluted earnings per share 164,175,273 163,852,968 163,862,607
-------------------------------------- ------------ ------------ -----------
30 September 30 September Year ended
2016 2015 31 March
In pence: 2016
--------------------------------- ------------ ------------ ----------
Basic earnings per share 4.4p 101.2p 240.3p
Diluted earnings per share 4.3p 99.8p 237.3p
EPRA earnings per share(1) 13.0p 12.9p 47.5p
Adjusted underlying earnings per
share(1) 14.4p 12.5p 26.8p
--------------------------------- ------------ ------------ ----------
1. EPRA earnings per share and adjusted underlying earnings per share are calculated on a diluted basis.
7. Net assets per share
30 September 31 March 30 September
Net assets used for calculating 2016 2016 2015
net assets per share: GBPm GBPm GBPm
---------------------------------- ------------ -------- ------------
Net assets at end of year (basic) 1,513.7 1,517.6 1,299.1
Derivative financial instruments
at fair value (11.2) (3.9) (0.1)
---------------------------------- ------------ -------- ------------
EPRA net assets 1,502.5 1,513.7 1,299.0
---------------------------------- ------------ -------- ------------
September March September
Number of shares used for calculating 2016 2016 2015
net assets per share: Number Number Number
-------------------------------------- ----------- ----------- -----------
Shares in issue at year-end 163,195,611 162,404,600 162,123,295
Less own shares held in trust at
year-end (122,362) (122,362) (125,770)
-------------------------------------- ----------- ----------- -----------
Number of shares for calculating
basic net assets per share 163,073,249 162,282,238 161,997,525
Dilution due to share option schemes 1,197,807 1,673,407 2,021,231
-------------------------------------- ----------- ----------- -----------
Number of shares for calculating
diluted adjusted net assets per
share 164,271,056 163,955,645 164,018,756
-------------------------------------- ----------- ----------- -----------
30 September 31 March 30 September
2016 2016 2015
GBPm
------------------------- ------------ -------- ------------
EPRA net assets per share GBP9.15 GBP9.23 GBP7.92
------------------------- ------------ -------- ------------
Net assets have been adjusted and calculated on a diluted basis to derive a net asset per share measure as defined by the European Public Real Estate Association (EPRA).
8. Investment Properties
30 September 31 March 30 September
2016 2016 2015
GBPm GBPm GBPm
--------------------------------------- ------------ -------- ------------
Balance at 1 April 1,749.4 1,408.9 1,408.9
Purchase of investment properties - 107.4 54.1
Acquisition of finance leases - - -
Capital expenditure 29.4 54.3 26.1
Capitalised interest on refurbishments
(note 3) 0.6 0.9 0.4
Disposals during the year - (114.7) (13.0)
Change in fair value of investment
properties (14.6) 296.6 137.9
--------------------------------------- ------------ -------- ------------
Balance at end of period 1,764.8 1,753.4 1,614.4
--------------------------------------- ------------ -------- ------------
Less: reclassified as trade and
other receivables - (4.0) -
--------------------------------------- ------------ -------- ------------
Total investment properties 1,764.8 1,749.4 1,614.4
--------------------------------------- ------------ -------- ------------
Investment properties represent a single class of property being business accommodation for rent in London.
Capitalised interest is included at a rate of capitalisation of 5.2% (2016: 4.8%). The total amount of capitalised interest included in investment properties is GBP7.3m (2016: GBP6.7m).
The change in fair value of investment properties is recognised in the Consolidated income statement.
Valuation
The Group's investment properties are held at fair value and were revalued at 30 September 2016 by the external valuer, CBRE Limited, a firm of independent qualified valuers in accordance with the Royal Institution of Chartered Surveyors Valuation - Professional Standards 2014. All the properties are revalued at period end regardless of the date of acquisition. This includes a physical inspection of all properties, at least once a year. In line with IFRS 13, all investment properties are valued on the basis of their highest and best use. For like-for-like properties their current use equates to the highest and best use. For properties undergoing refurbishment or redevelopment, most of these are currently being used for business accommodation in their current state. However, the valuation is based on the current valuation at the balance sheet date including the impact of the potential refurbishment and redevelopment as this represents the highest and best use.
The Executive Committee and the Board both conduct a detailed review of each property valuation to ensure appropriate assumptions have been applied. Meetings are held with the valuers to review and challenge the valuations, ensuring they have considered all relevant information, and rigorous reviews are performed to ensure valuations are sensible.
The valuation of like-for-like properties (which are not subject to refurbishment or redevelopment) is based on the income capitalisation method which applies market-based yields to the Estimated Rental Values (ERVs) of each of the properties. Yields are based on current market expectations depending on the location and use of the property. ERVs are based on estimated rental potential considering current rental streams, market comparatives, occupancy and timing of rent reviews. Whilst there is market evidence for these inputs and recent transaction prices for similar properties, there is still a significant element of estimation and judgement. As a result of adjustments made to market observable data, the significant inputs are deemed unobservable under IFRS 13.
When valuing properties being refurbished by Workspace, the residual value method is used. The completed value of the refurbishment is determined as for like-for-like properties above. Capital expenditure required to complete the building is then deducted and a discount factor is applied to reflect the time period to complete construction and allowance made for construction and market risk to arrive at the residual value of the property.
The discount factor used is the property yield that is also applied to the Estimated Rental Value to determine the value of the completed building. Other risks such as unexpected time delays relating to planned capital expenditure are assessed on a project-by-project basis, looking at market comparable data where possible and the complexity of the proposed scheme.
Redevelopment properties are also valued using the residual value method. The completed proposed redevelopment which would be undertaken by a residential developer is valued based on the market value for similar sites and then adjusted for costs to complete, developer's profit margin and a time discount factor. Allowance is also made for planning and construction risk depending on the stage of the redevelopment. If a contract is agreed for the sale/redevelopment of the site, the property is valued based on agreed consideration.
For all methods the valuers are provided with information on tenure, letting, town planning and the repair of the buildings and sites.
An increase/decrease to ERVs will increase/decrease valuations respectively, while an increase/decrease to yields will decrease/increase valuations respectively. There are interrelationships between these inputs as they are partially determined by market conditions.
An increase/decrease in costs to complete and the discount factor will decrease/increase valuations respectively.
The reconciliation of the valuation report total to the amount shown in the Consolidated balance sheet as non-current assets, investment properties, is as follows:
30 September 31 March 30 September
2016 2016 2015
GBPm GBPm GBPm
-------------------------------- ------------ -------- ------------
Total per CBRE valuation report 1,779.8 1,778.6 1,630.9
Deferred consideration on sale
of property (22.2) (36.3) (23.6)
Head leases treated as finance
leases under IAS 17 7.1 7.1 7.1
-------------------------------- ------------ -------- ------------
Total investment properties per
balance sheet 1,764.8 1,749.4 1,614.4
-------------------------------- ------------ -------- ------------
The Group's Investment properties are carried at fair value and under IFRS 13 are required to be analysed by level depending on the valuation method adopted. The different valuation methods are as follows:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2 - Use of a model with inputs (other than quoted prices included in Level 1) that are directly or indirectly observable market data.
Level 3 - Use of a model with inputs that are not based on observable market data.
Property valuations are complex and involve data which is not publicly available and involves a degree of judgement. All the investment properties are classified as Level 3, due to the fact that one or more significant inputs to the valuation are not based on observable market data. If the degree of subjectivity or nature of the measurement inputs changes then there could be a transfer between Levels 2 and 3 of classification. No changes requiring a transfer have occurred during the current or previous year.
The following table summarises the valuation techniques and inputs used in the determination of the property valuation.
Key unobservable inputs:
ERVs - per sq.
ft. Equivalent yields
----------------------- ---------------------
Valuation Valuation Weighted Weighted
Property category GBPm technique Range average Range average
------------------- --------- ---------- ------------- -------- ----------- --------
Like-for-like 856 1 GBP7 - GBP83 GBP29 5.0% - 8.5% 6.7%
Completed projects 269 1 GBP31 - GBP70 GBP51 5.2% - 6.6% 6.3%
Refurbishments 273 2 GBP16 - GBP59 GBP38 5.3% - 7.2% 5.7%
Redevelopments 183 2 GBP17 - GBP35 GBP23 5.4% - 7.3% 6.8%
Other 177 1 GBP16 - GBP55 GBP38 2.0% - 7.0% 5.3%
Head leases 7 n/a
------------------- --------- ---------- ------------- -------- ----------- --------
Total 1,765
------------------- --------- ---------- ------------- -------- ----------- --------
1 = Income capitalisation method.
2 = Residual value method.
9. Investment in joint ventures
The Group's investment in joint ventures represents:
30 September 31 March 30 September
2016 2016 2015
GBPm GBPm GBPm
------------------------------------- ------------ -------- ------------
Balance at 1 April 22.3 28.6 28.6
Capital distributions received (2.7) (6.3) (6.3)
Repayment loans to joint ventures - (0.2) (0.2)
Share of gains 0.1 4.2 2.5
Income distributions received (0.8) (1.2) (0.6)
Disposal of joint ventures (note
2(b)) (18.8) (3.2) (3.2)
Realisation of profits on sale
of properties out of joint ventures
(note 2(a)) 0.1 0.4 0.4
------------------------------------- ------------ -------- ------------
Balance at end of period 0.2 22.3 21.2
------------------------------------- ------------ -------- ------------
Capital distributions are from proceeds on disposal of investment properties. Income distributions are from trading profits.
The Group has the following joint ventures during the period:
Measurement
Partner Established Ownership Method
---------------------------- ----------------- ----------- --------- -----------
BlackRock Workspace Property BlackRock UK February
Trust* Property Fund 2011 20.1% Equity
Whitebox Creative February
Generate Studio Limited Limited 2014 50% Equity
---------------------------- ----------------- ----------- --------- -----------
*The Company sold its share in this joint venture in June 2016, resulting in a loss on disposal of GBP0.1m (note 2(b)).
Generate Studio Limited is engaged in the design and project management of office fit outs and workplace consultancy both for Group properties and third parties.
The Group has no funding commitments relating to its joint venture.
10. Trade and other receivables
30 September 31 March 30 September
2016 2016 2015
Non-current trade and other receivables GBPm GBPm GBPm
---------------------------------------- ------------ -------- ------------
Prepayments and accrued income - 7.2 8.7
Deferred consideration on sale
of investment properties 6.4 7.0 1.6
6.4 14.2 11.2
---------------------------------------- ------------ -------- ------------
30 September 31 March 30 September
Deferred consideration on sale 2016 2016 2015
of investment properties: GBPm GBPm GBPm
---------------------------------------- ------------ -------- ------------
Balance at 1 April 7.0 8.7 8.7
Additions (cash receivable) - 1.6 0.3
Less: classified as current - (12.8) -
Change in fair value (note 2(c)) (0.6) 9.5 2.2
---------------------------------------- ------------ -------- ------------
Balance at end of period 6.4 7.0 11.2
---------------------------------------- ------------ -------- ------------
The deferred consideration arising on the sale of investment properties relates to cash and overage. The conditional value of the portion of the receivable that relates to overage is held at fair value through profit and loss - GBP3.9m (2016: GBP4.0m). It has been fair valued by CBRE Limited on the basis of residual value, using appropriate discount rates, and will be revalued on a regular basis. This is a Level 3 valuation of a financial asset, as defined by IFRS 13. The methodology and significant assumptions used in the valuation are consistent with those disclosed in note 8. The change in fair value recorded in the Consolidated income statement was a loss of GBP0.6m (31 March 2016: gain of GBP9.5m) (note 2(c)).
30 September 31 March 30 September
2016 2016 2015
Current trade and other receivables GBPm GBPm GBPm
------------------------------------ ------------ -------- ------------
Trade receivables 4.4 3.4 2.9
Less provision for impairment of
receivables (0.3) (0.4) (0.4)
------------------------------------ ------------ -------- ------------
Trade receivables - net 4.1 3.0 2.5
Prepayments and accrued income 8.5 19.7 5.0
Other receivables - - 3.7
Deferred consideration on sale
of investment properties 15.8 29.3 12.4
------------------------------------ ------------ -------- ------------
28.4 52.0 23.6
------------------------------------ ------------ -------- ------------
Receivables at fair value:
Included within deferred consideration on sale of investment properties is GBP15.8m (2016: GBP29.3m) of overage which is held at fair value through profit and loss. The amount is receivable within the following 12 months and has therefore been classified as current receivables.
Receivables at amortised cost:
The remaining receivables are held at amortised cost. There is no material difference between the above amounts and their fair values due to the short-term nature of the receivables. Trade receivables are impaired when there is evidence that the amounts may not be collectable under the original terms of the receivable. All the Group's trade and other receivables are denominated in Sterling.
11. Cash and cash equivalents
30 September 31 March 30 September
2016 2016 2015
GBPm GBPm GBPm
----------------------------------- ------------ -------- ------------
Cash at bank and in hand 3.0 24.5 6.0
Restricted cash - tenants' deposit
deeds 3.5 3.3 2.6
----------------------------------- ------------ -------- ------------
6.5 27.8 8.6
----------------------------------- ------------ -------- ------------
Tenants' deposit deeds represent returnable cash security deposits received from tenants and are ring-fenced under the terms of the individual lease contracts.
12. Trade and other payables
30 September 31 March 30 September
2016 2016 2015
GBPm GBPm GBPm
-------------------------------------- ------------ -------- ------------
Trade payables 5.0 3.7 4.2
Other tax and social security payable 3.2 0.5 2.5
Corporation tax payable - 1.3 -
Tenants' deposit deeds (note 14) 3.5 3.3 2.6
Tenants' deposits 17.1 16.0 15.4
Accrued expenses 18.1 20.3 16.8
Amounts due to related parties - 0.4 0.4
Deferred income - rent and service
charges 3.5 2.9 3.3
-------------------------------------- ------------ -------- ------------
50.4 48.4 45.2
-------------------------------------- ------------ -------- ------------
There is no material difference between the above amounts and their fair values due to the short-term nature of the payables.
13. Borrowings
(a) Balances
30 September 31 March 30 September
2016 2016 2015
GBPm GBPm GBPm
------------------------------------ ------------ -------- ------------
Non-current
Bank loans (unsecured) 29.2 38.3 71.0
6% Retail Bond (unsecured) 57.0 56.9 56.9
5.6% Senior US Dollar Notes 2023
(unsecured) 72.3 69.7 66.1
5.53% Senior Notes 2023 (unsecured) 83.8 83.8 83.8
Senior Floating Rate Notes 2020
(unsecured) 9.0 9.0 9.0
Other term loan (unsecured) - 44.5 44.4
Finance lease obligations 7.1 7.1 7.1
------------------------------------ ------------ -------- ------------
258.4 309.3 338.3
------------------------------------ ------------ -------- ------------
(b) Net Debt
30 September 31 March 30 September
2016 2016 2015
GBPm GBPm GBPm
------------------------------- ------------ -------- ------------
Borrowings per (a) above 258.4 309.3 338.3
Adjust for:
Finance leases (7.1) (7.1) (7.1)
Cost of raising finance 2.7 3.2 3.6
Foreign exchange differences (8.0) (5.4) (1.8)
------------------------------- ------------ -------- ------------
246.0 300.0 333.0
Cash at bank and in hand (note
14) (3.0) (24.5) (6.0)
------------------------------- ------------ -------- ------------
Net Debt 243.0 275.5 327.0
------------------------------- ------------ -------- ------------
At 30 September 2016 the Group had GBP119m (31 March 2016: GBP110m) of undrawn bank facilities and GBP3.0m of unrestricted cash (31 March 2016: GBP24.5m).
(c) Maturity
30 September 31 March 30 September
2016 2016 2015
GBPm GBPm GBPm
---------------------------------- ------------ -------- ------------
Repayable between three years and
four years 57.5 57.5 -
Repayable between four years and
five years - 49.0 139.5
Repayable in five years or more 188.5 193.5 193.5
---------------------------------- ------------ -------- ------------
246.0 300.0 333.0
Cost of raising finance (2.7) (3.2) (3.6)
Foreign exchange differences 8.0 5.4 1.8
---------------------------------- ------------ -------- ------------
251.3 302.2 331.2
Finance leases
Repayable in five years or more 7.1 7.1 7.1
---------------------------------- ------------ -------- ------------
258.4 309.3 338.3
---------------------------------- ------------ -------- ------------
(d) Interest rate and repayment profile
Principal
at
period
end Interest Interest
GBPm rate payable Repayable
============================== ========= ============ =========== ============
Current
------------------------------ --------- ------------ ----------- ------------
Bank overdraft due within one
year or on demand - Base +2.25% Variable On demand
------------------------------ --------- ------------ ----------- ------------
Non-current
------------------------------ --------- ------------ ----------- ------------
Private Placement Notes:
------------------------------ --------- ------------ ----------- ------------
5.6% Senior US Dollar Notes 64.5 5.6% Half Yearly June 2023
------------------------------ --------- ------------ ----------- ------------
5.53% Senior Notes 84.0 5.53% Half Yearly June 2023
------------------------------ --------- ------------ ----------- ------------
Senior Floating Rate Notes 9.0 LIBOR +3.5% Half Yearly June 2020
------------------------------ --------- ------------ ----------- ------------
Revolver loan 31.0 LIBOR +1.65% Monthly June 2021
------------------------------ --------- ------------ ----------- ------------
6% Retail Bond 57.5 6.0% Half Yearly October 2019
------------------------------ --------- ------------ ----------- ------------
246.0
------------------------------ --------- ------------ ----------- ------------
In June 2016 we extended our revolver loan term by twelve months taking the maturity date to June 2021. In September 2016 we repaid GBP45m UK Fund debt incurring break costs of GBP0.9m.
(e) Derivative financial instruments
The following derivative financial instruments are held:
Rate payable
Amount (%) Term/expiry
----------------------- -------------- ------------ -----------
Cash flow hedge - cross
currency swap $100m/GBP64.5m 5.66% June 2023
----------------------- -------------- ------------ -----------
The above instrument represents a cross currency swap to ensure the US Dollar liability streams generated from the US Dollar Notes are fully hedged into Sterling for the life of the transaction. Through entering into the cross currency swap the Group has created a synthetic Sterling fixed rate liability totalling GBP64.5m. This swap has been designated as a cash flow hedge with changes in fair value dealt with in other comprehensive income.
(f) Financial instruments and fair values
30 September 31 30
2016 March September
Book 2016 2015
Value Fair Book Fair Book Fair
GBPm Value Value Value Value Value
GBPm GBPm GBPm GBPm GBPm
---------------------------------- ------------ ------ ------ ------ ---------- ------
Financial liabilities held
at amortised cost
Bank loans 29.2 29.2 38.3 38.3 71.0 71.0
6% Retail Bond 57.0 61.7 56.9 59.7 56.9 60.1
Private Placement Notes 165.1 165.1 162.5 162.5 158.9 158.9
Other term loan - - 44.5 44.5 44.4 44.4
Finance lease obligations 7.1 7.1 7.1 7.1 7.1 7.1
---------------------------------- ------------ ------ ------ ------ ---------- ------
258.4 263.1 309.3 312.1 338.3 341.5
---------------------------------- ------------ ------ ------ ------ ---------- ------
Financial liabilities at fair
value through profit or loss
Derivative financial instruments:
Interest rate swaps - - - - - -
---------------------------------- ------------ ------ ------ ------ ---------- ------
Financial (assets)/liabilities
at fair value through other
comprehensive income
Derivative financial instruments:
Cash flow hedge - derivatives
used for hedging (11.2) (11.2) (3.9) (3.9) (0.1) (0.1)
---------------------------------- ------------ ------ ------ ------ ---------- ------
(11.2) (11.2) (3.9) (3.9) (0.1) (0.1)
---------------------------------- ------------ ------ ------ ------ ---------- ------
Financial assets at fair value
through profit or loss
Deferred consideration 22.2 22.2 33.3 33.3 21.8 21.8
---------------------------------- ------------ ------ ------ ------ ---------- ------
The fair value of the Retail Bond has been established from the quoted market price at 30 September 2016 and is thus a Level 1 valuation as defined by IFRS 13.
In accordance with IFRS 13 disclosure is required for financial instruments that are carried in the financial statements at fair value. The fair values of all the Group's financial derivatives have been determined by reference to market prices and discounted expected cash flows at prevailing interest rates and are Level 2 valuations. There have been no transfers between levels in the year.
The different levels of valuation hierarchy as defined by IFRS 13 are set out in note 8.
The total change in fair value of derivative financial instruments recorded in the income statement was GBPnil (2016: profit of GBP0.9m).
The total change in fair value of derivative financial instruments recorded in other comprehensive income was a GBP4.6m profit (2016: profit of GBP1.4m).
14. Notes to cash flow statement
Reconciliation of profit for the year to cash generated from operations:
6 months 6 months
ended ended Year ended
30 September 30 September 31 March
2016 2015 2016
GBPm GBPm GBPm
---------------------------------------- ------------- ------------- ----------
Profit before tax 7.1 163.4 391.3
Depreciation 0.3 0.3 0.8
Amortisation of intangibles 0.1 0.1 0.3
Loss/(Profit) on disposal of investment
properties 0.2 (0.1) (8.1)
Loss on disposal of joint ventures - 0.1 0.1
Other income/expense 2.4 (2.2) (33.6)
Net gain from change in fair value
of investment property 14.6 (137.9) (296.6)
Equity settled share based payments 0.8 1.1 1.9
Change in fair value of financial
instruments - (0.9) (0.9)
Finance income - (0.1) (0.1)
Finance expense 7.4 8.5 17.0
Exceptional finance cost 1.4 - -
Gains from share in joint ventures (0.1) (2.5) (4.2)
Changes in working capital:
Increase in trade and other receivables (7.3) (2.5) (0.5)
Increase in trade and other payables 3.3 0.2 0.2
---------------------------------------- ------------- ------------- ----------
Cash generated from operations 30.2 27.5 67.6
---------------------------------------- ------------- ------------- ----------
For the purposes of the cash flow statement, cash and cash equivalents comprise the following:
30 September 31 March 30 September
2016 2016 2015
GBPm GBPm GBPm
----------------------------------- ------------ -------- ------------
Cash at bank and in hand 3.0 24.5 6.0
Restricted cash - tenants' deposit
deeds 3.5 3.3 2.6
----------------------------------- ------------ -------- ------------
6.5 27.8 8.6
----------------------------------- ------------ -------- ------------
15. Capital commitments
At the period end the estimated amounts of contractual commitments for future capital expenditure not provided for were:
30 September 31 March 30 September
2016 2016 2015
GBPm GBPm GBPm
---------------------------------- ------------ -------- ------------
Construction or redevelopment of
investment property 31.6 18.8 32.0
---------------------------------- ------------ -------- ------------
Purchase of Investment Properties 9.5 - 36.5
---------------------------------- ------------ -------- ------------
16. Post balance sheet events
In October 2016 we exchanged contracts on the disposal of three residential redevelopments at Arches Business Centre, Phase 2 of The Light Bulb, Wandsworth and Lombard Business Centre. These are being sold for cash proceeds of GBP25.6m together with 17,000 sq. ft. of new business space.
17. Principal Risks and uncertainties
The Board continuously assesses and monitors the key risks of the business. The key risks that could affect the Group's medium-term performance and the factors which mitigate these risks, have not materially changed from those set out in the Group's Annual Report and Accounts 2016 and have been assessed in line with the requirements of the 2014 UK Corporate Governance Code. They are reproduced below. The Board is satisfied that we continue to operate within our risk profile.
Risk Area Detail Mitigating Activities
and Actions
--------------- ------------------------------------------- --------------------------------------------------------
Financing Reduced availability We regularly review
and cost of bank funding requirements
financing resulting for business plans
in inability to and ensure we
meet business have a wide range
plans or satisfy of options available
liabilities. for alternative
sources of funding.
We have a broad
range of funding
relationships
in place and regularly
review our refinancing
strategy.
We have also fixed
or hedged 50%
of our loan facilities
so that our interest
payment profile
is stable.
--------------- ------------------------------------------- --------------------------------------------------------
Property Value of our properties Market-related
Valuation declining as a valuation risk
result of macroeconomic is largely dependent
environment, external on external factors
market, or internal which we cannot
management factors influence. However,
we do the following
to ensure we are
aware of any market
changes, and are
generating the
maximum value
from our portfolio:
* Monitor the investment market mood.
* Monitor market yields and pricing of property
transactions across the London market.
* Alternative use opportunities pursued across the
portfolio and progress made in achieving planning
consent for mixed-use development.
--------------- ------------------------------------------- --------------------------------------------------------
Customer Demand by businesses Every week the
for our accommodation Executive Committee
declining as a meet with Senior
result of social, Management to
economic or competitive monitor occupancy
factors. levels, pricing,
demand levels
and reasons for
customers vacating.
This ensures we
react quickly
to changes in
any of these indicators.
Our extensive
marketing programme
ensures that we
are in control
of our own leads
and pipeline of
deals to business
centres. Our use
of social media,
backed up by a
busy events programme,
has further helped
us to engage with
customers, differentiating
us as providing
not only space
but also an opportunity
to network with
other businesses
based in our portfolio.
--------------- ------------------------------------------- --------------------------------------------------------
Development Impact to underlying For every development
income and capital scheme we work
performance due hard to gain a
to: thorough understanding
of the planning
* Adverse planning rulings environment and
ensure we seek
counsel from appropriate
* Construction cost and timing overrun advisers.
We undertake a
* Lack of demand for developments. detailed development
analysis and appraisal
prior to commencing
a development
scheme. Investment
Committee approval
and sign-off is
required for every
project.
Every month, a
detailed review
of progress against
plans is presented
to the Board,
including post-project
completion reviews.
--------------- ------------------------------------------- --------------------------------------------------------
London Changes in the We regularly monitor
political, infrastructure the London economy
and environmental and commission
dynamics of London. research reports.
We also hold regular
meetings with
the GLA and the
councils in the
London boroughs
in which we operate
to ensure we're
aware of any changes
coming through
ahead of time.
---------------------- -------------------------------------------- ---------------------------
Investment Underperformance Regular monitoring
due to: of asset performance
* Poor timing of disposals and positioning
of our portfolio.
* Poor timing of acquisitions Thorough due diligence
and detailed appraisals
undertaken on
* Failure to achieve expected returns. all acquisitions
prior to purchase.
Close monitoring
of acquisition
performance against
target returns.
---------------------- -------------------------------------------- ---------------------------
Regulatory Failure to meet REIT conditions
regulatory requirements are monitored
leading to fines and tested on
or penalties or a regular basis
the introduction and reported to
of new requirements the Board.
that inhibit activity.
Close working
relationship maintained
with appropriate
authorities and
all relevant issues
openly disclosed.
Advisers engaged
to support best
practice operation.
The Risk Committee
provides regular
updates to the
Board on emerging
risks and issues.
The Group's Health
and Safety Manager
meets regularly
with the CEO.
---------------------- -------------------------------------------- ---------------------------
Business Interruption Major external Monitoring security
events result threat/target
in Workspace being information.
unable to carry
out its business Business continuity
for a sustained plans and procedures
period. are in place and
are regularly
tested and updated.
IT controls and
safeguards are
in place across
all our systems,
including a data
centre back-up.
---------------------- -------------------------------------------- ---------------------------
Brand Failure to meet To ensure we understand
customer and external our customers
stakeholder expectations. and their ever
evolving requirements
we undertake twice-yearly
customer surveys
and have a system
of real-time feedback
in place. We have
also recently
developed a customer
engagement plan
to ensure we are
interacting with
our customers
in a variety of
ways, including
the use of social
media.
We maintain regular
communication
with all stakeholders,
key shareholders
and hold InvestorDay
presentations
and roadshows.
---------------------- -------------------------------------------- ---------------------------
Directors' Responsibility Statement
The Directors confirm that this consolidated interim financial information has been prepared in accordance with IAS 34 as adopted by the European Union, and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8 namely:
-- An indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
-- Material related party transactions in the first six months and any material changes in the related party transactions described in the last Annual Report and Accounts.
The Directors of Workspace Group PLC are listed in the Workspace Group PLC Annual Report and Accounts for 31 March 2016. A list of current Directors is maintained on the Workspace Group website: www.workspace.co.uk.
Approved by the Board on 9 November 2016 and signed on its behalf by
J Hopkins
G Clemett
Directors
INDEPENT REVIEW REPORT TO WORKSPACE GROUP PLC
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Workspace Group PLC's condensed consolidated interim financial statements (the "interim financial statements") in the half-year report of Workspace Group PLC for the 6 month period ended 30 September 2016. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Rules and Transparency Rules of the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the Consolidated Balance Sheet as at 30 September 2016;
-- the Consolidated Income Statement and Consolidated Statement of Comprehensive Income for the period then ended;
-- the Consolidated Statement of Cash Flows for the period then ended; -- the Consolidated Statement of Changes in Equity for the period then ended; and -- the explanatory notes to the interim financial statements.
The interim financial statements included in the half-year report have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Rules and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in the notes to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The half-year report, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-year report in accordance with the Disclosure Rules and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim financial statements in the half-year report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Rules and Transparency Rules of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the half-year report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
9 November 2016
a) The maintenance and integrity of the Workspace Group PLC website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim financial statements since they were initially presented on the website.
b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FSFFAAFMSEIF
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