Coronavirus Update

Workspace Group Plc - Full Year Results

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WORKSPACE GROUP PLC

FULL YEAR RESULTS

RESILIENT PERFORMANCE AND IMPROVING MOMENTUM

Workspace Group PLC ("Workspace") is pleased to announce its Full Year Results for the year

ended 31 March 2021. The comments in this announcement refer to the period from 1 April 2020 to 31 March 2021 unless otherwise stated.

Financial performance: adversely impacted by Covid-19

·   Trading profit after interest down 52% to £38.7m from a 33% (£40.5m) decrease in net rental income to £81.5m, which includes £19.9m of rent discounts given to customers

·     Total dividend of 17.75p per share (2020: 36.16p)

·     Property valuation of £2,324m, an underlying reduction of £258m (10.0%) from 31 March 2020, driven by a fall in estimated rental values, with property yields stable

·     EPRA net tangible assets per share down 13.8% to £9.38

· £300 million Green Bond issued in March 2021 with a seven-year term and interest rate of 2.25% pa

·     Exceptional finance costs of £16.4m on early repayment in April 2021, of £148.5m of private placement notes due June 2023 that carried an interest rate of 5.6% pa

·   Loan to value of 24% (2020: 21%) with £434m of undrawn facilities and cash at 31 March 2021, reducing to £269m on a proforma basis following the repayment of private placement notes

·   Loss before tax of £235.7m (2020: £72.5m profit), reflecting the fall in trading profit after interest, reduction in the property valuation and exceptional finance costs

Customer activity: positive signs as restrictions eased

· Significant improvement in enquiries, viewings and lettings in recent months, now reaching pre-Covid levels

·   Occupancy and rent roll adversely impacted over the year by customers leaving, existing customer activity and pricing on new lettings

· Like-for-like occupancy down 11.7% to 81.6%, stabilising in the fourth quarter

· Like-for-like rent per sq. ft. down by 12.9% to £36.57 and like-for-like rent roll down 23.9% to £85.1m

· Strong levels of rent collection, with 95% of rents due for the year (net of discounts and deferrals) received

ESG: a long-term sustainable model

· Committed to being a net zero carbon business by 2030

· Green bond issued to finance and refinance green building projects

· Project pipeline delivering employment-led regeneration of local communities

Portfolio activity: actively managing for growth

·     Two new business centres opened in the first half, and two projects completed in the second half

·     Obtained planning consent in May 2021 at Kennington Park Business Centre for 200,000 sq. ft. of new office space

·   Healthy pipeline of refurbishment and redevelopment activity, projected to deliver 1.4m sq. ft. of new and upgraded space over the next five years

·     One property disposal completed for £11m at 30 March 2020 valuation

Commenting on the results, Graham Clemett, Chief Executive Officer said:

" This has been an incredibly challenging year for the entire country, and we have seen first-hand the impact of Covid-19 on many of our customers. Despite the unprecedented circumstances, we have delivered a resilient performance which underlines the strength of our model, prudence of our financial strategy and enduring appeal of our flexible offer.

Our focus throughout the pandemic has been on our customers, and we are pleased that so many of them have decided that Workspace will continue to be their home as they look ahead to the post-pandemic recovery. The role of the office in our working lives is being re-examined and all the signs highlight flexibility, quality and wellbeing becoming more important for businesses and their people. We are perfectly positioned to benefit from this accelerated shift in attitudes by offering businesses a home they can grow in, without having to compromise their unique identity in a furnished or serviced office, or put up with the constraints of more traditionally leased offices.

We are seeing encouraging signs of recovery in customer demand and we have a lot to be optimistic about in the next year and beyond. We see significant opportunities for organic and inorganic growth as the economy comes back to life, whilst delivering on our commitment to becoming a net zero carbon business by 2030, and continuing to drive employment-led regeneration across the capital. After an incredibly challenging year, we are confident that our customer-focused strategy will enable us to take a leadership position and seize the significant market opportunity in front of us."