TIDMWKP
RNS Number : 9775I
Workspace Group PLC
07 April 2020
London, 7 April 2020
WORKSPACE(R) GROUP PLC
UPDATE ON THE IMPACT OF THE CORONAVIRUS PANDEMIC
Workspace Group PLC ("Workspace" or the "Company"), one of
London's leading providers of flexible office space, today provides
an update on the impact of the Coronavirus pandemic on its
business.
Summary
-- Trading profit for the year to 31 March 2020 expected to be
in line with market expectations.
-- Centres remain open to support essential business activity in
line with Government guidelines.
-- Approximately 50 per cent. of rents due at end March 2020
received in cash to date. Customer discussions on rent deferrals
continuing on a case by case basis.
-- Cost reduction measures implemented and capital expenditure minimised.
-- Strong financial position with c.GBP70m cash, GBP96m in
undrawn revolving credit facilities, and pro forma LTV(1) of 21 per
cent. as at 31 March 2020, with good headroom on covenants.
-- In line with usual practice, the Board will consider any
final dividend payment in the context of the full year results and
the prevailing circumstances at the time.
-- Well-positioned for a market recovery, due to our leading
market position and attractive, flexible customer offer.
Graham Clemett, Chief Executive Officer, commented:
"In the face of the systemic risk of the Coronavirus pandemic,
the Board is focused on balancing the interests of stakeholders and
shareholders and the long-term sustainability of our business. We
are making every effort to support our employees, suppliers and
customers in these difficult times. In particular, we recognise
that our continued success depends on the ability of customers to
emerge from the Coronavirus pandemic in good financial shape, and
we are working with them to achieve this.
"We are taking prudent steps to mitigate the impact of rent
deferrals by implementing cost reduction measures and minimising
capital expenditure. We have a strong balance sheet, good access to
liquidity and significant headroom against our debt covenants. Our
model of freehold ownership of our properties gives us the
flexibility and control to respond quickly to developments in the
current uncertain environment.
"Workspace is a strong and resilient business, with a leading
market position in the London flexible office market. The swift
actions we have taken will ensure that we are well-positioned for
the eventual market recovery."
Current Trading
We saw strong levels of customer enquiries and lettings in the
fourth quarter and expect our trading profit for the financial year
ended 31 March 2020 to be in line with market expectations. The
Government restrictions on public movements began to impact
enquiries and lettings in late March, and we have seen a material
slowdown in activity since then.
Financial position
Our financial position remains strong as at 31 March 2020, with
c.GBP70m in cash, undrawn revolving credit facilities of GBP96m and
no material debt maturities until June 2022.
As at 31 March 2020, our pro forma LTV ratio(1) was 21 per
cent., with substantial headroom to all our financial covenants,
which are tested on a rolling twelve-month basis. We estimate that
we could withstand a reduction in net rental income of 61 per
cent.(2) or a fall in asset valuation of 63 per cent.(2) before any
debt covenants are breached.
Our model of freehold property ownership gives us a significant
degree of operating leverage and control over costs. We have
therefore been able to act swiftly to implement cost reduction
measures and minimise capital expenditure. There are no major
projects underway, and we have postponed the planned launch of our
two new centres: Mare Street Studios, Hackney and Lock Studios,
Bow.
Customer Engagement
Our buildings remain open for all customers who still require
access, but with a significantly reduced service, in line with
Government guidelines. A number of our customers are key workers
who continue to provide essential services during the
lock-down.
Our customer base comprises over 3,000 businesses, highly
diversified both by size and by sector, most of whom pay rent on a
monthly basis. We have received a large number of requests for
various forms of rent relief for the duration of the current
Government restrictions on movement. Accordingly, we expect a
significantly lower level of cash rental income in the short term,
with approximately 50% of monthly and quarterly rent due at the end
of March 2020 received in cash to date. We want to thank our teams
who are working tirelessly to address individual customer requests,
and we hope to agree appropriate solutions with customers in due
course.
Outlook and Dividend
The uncertainty caused by the Coronavirus pandemic and the
related Government restrictions on movement make it difficult to
provide financial guidance in the short term. In light of this
uncertainty, we will reflect, at the appropriate time, with the
best available information, whether it is appropriate to recommend
a final dividend. We will provide a further update on trading and
the business environment at the time of our Preliminary Results
Announcement in early June, subject to any further guidance from
the FCA and FRC.
(1) LTV ("Loan to Value") based on net debt at 31 March 2020
compared to valuation as at 30 September 2019, being the most
recent valuation date, as adjusted for subsequent disposals and
capital expenditure.
(2) As at most recent covenant testing date of 30 September
2019.
--ENDS--
For further information, please contact:
Workspace Group PLC
Graham Clemett, Chief Executive Officer
Dave Benson, Chief Financial Officer +44 (0)7970 846
Cynthia Alers, Interim Head of Investor 041
Relations +44 (0)20 7369 2384
+44 (0)7715 375
Edelman 443
John Kiely
Rob Yates
Notes to Editors
About Workspace Group PLC:
Established in 1987, and listed on the London Stock Exchange
since 1993, Workspace owns and manages some 4 million sq. ft. of
business space in London. We are home to thousands of businesses,
including fast growing and established brands across a wide range
of sectors.
Workspace is geared towards helping businesses perform at their
very best. We provide inspiring, flexible workspaces in dynamic
London locations.
Workspace (WKP) is a FTSE 250 listed Real Estate Investment
Trust (REIT) and a member of the European Public Real Estate
Association (EPRA).
Workspace(R) is a registered trademark of Workspace Group PLC,
London, United Kingdom
LEI: 2138003GUZRFIN3UT430
For more information on Workspace, please visit
www.workspace.co.uk.
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END
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