TIDMWKP
RNS Number : 0543P
Workspace Group PLC
05 June 2020
5 June 2020
WORKSPACE GROUP PLC
FULL YEAR RESULTS
WELL POSITIONED TO NAVIGATE THE CHALLENGES AHEAD
Workspace Group PLC ("Workspace") is pleased to announce its
Full Year Results for the year
ended 31 March 2020. The comments in this announcement refer to
the period from 1 April 2019 to 31 March 2020 unless otherwise
stated.
Financial highlights
-- Trading profit after interest up 12% to GBP81.0m driven by a
10% increase in net rental income to GBP122.0m
-- Total dividend up 10% to 36.16p per share (2019: 32.87p),
with a final dividend of 24.49p per share
-- Profit before tax at GBP72.5m (2019: GBP137.3m), with a small
reduction in underlying property valuation of 0.3% (GBP8m) compared
to a GBP61m increase in the prior year
-- EPRA net asset value per share up 0.3% to GBP10.89
-- Loan to value of 21% (2019: 22%) with GBP166m of undrawn facilities and cash
Operating performance
-- Strong customer demand with enquiries averaging 1,087 per
month (2019: 1,048) and lettings averaging 121 per month (2019:
103)
-- Total rent roll up 4.2% to GBP132.8m
-- Like-for-like rent roll up 1.9% to GBP90.4m with occupancy up
2.6% to 93.1%, offset by 0.7% fall in rent per sq. ft. to
GBP43.32
-- Successful letting-up of new space adding GBP7.8m to rent roll
Portfolio activity
-- Four property sales completed for GBP65m at a 21% premium to 31 March 2019 valuation
-- Four projects delivering 200,000 sq. ft. completed in first
half and letting up well, with two new buildings comprising a
further 94,000 sq. ft due to open shortly
-- A healthy pipeline of refurbishment and redevelopment
activity, projected to deliver 1.1m sq. ft. of new and upgraded
space over the next five years
Covid-19 update
-- Significant slowdown in enquiries from the end of March 2020
-- Majority of customers (c.75% by rent) benefitting from 50%
rent reduction offer until end of June 2020, as well as rent
deferrals on a case by case basis
-- Overall cash collection (net of discounts and deferrals) running at c.70% in the quarter
-- Extensive social distancing and hygiene measures being implemented at all business centres
-- Actively engaged with customers as they increasingly plan their return to work
Commenting on the results, Graham Clemett, Chief Executive
Officer said:
"Over the past year, my first as Chief Executive, Workspace has
had to deal with the uncertainty caused by Brexit and the General
Election. However, that has now been eclipsed by the dramatic
impact of the Covid-19 pandemic. I want to thank our teams across
Workspace for their efforts during this time. They have been
working flat out, many of them working remotely, keeping the
business running, our centres open and engaging with customers.
As a Company, we felt it was important to support customers
where we could and hope that the 50% rent reduction and deferral
agreements we have offered to the majority of our customers have
gone some way to lessen the burden of this crisis. We have been
readying our business centres for the increasing return of
customers, putting in place extensive measures to enable social
distancing and promote good hygiene. Freehold ownership of our
properties means we can quickly adapt them to cater for these new
requirements.
Against this backdrop, the business has delivered a strong
trading performance in the year to March 2020, with trading profit
up 12% to GBP81m, driven by a 10% increase in net rental income. We
have a strong balance sheet, prudent funding liquidity and
substantial headroom on our covenants, which has meant we have not
seen the need to take Government financial support. On this basis,
the Board is proposing a 10% increase in the final dividend
payment, a total dividend payment for the year of 36.16p per
share.
Looking forward, we will undoubtedly see subdued levels of
operational performance in the short term with a reduction in
rental income. However, we expect that the structural shift in the
office market towards flexibility will now accelerate more broadly.
We believe that, with our well established flexible offer and the
quality of our space and services, Workspace is ideally positioned
to benefit as London recovers from the impact of the Covid-19
pandemic."
Summary Results
March March Change
2020 2019
Financial performance
---------- ---------- ---------
Net rental income GBP122.0m GBP111.0m +10%
---------- ---------- ---------
Trading profit after interest GBP81.0m GBP72.4m +12%
---------- ---------- ---------
Profit before tax GBP72.5m GBP137.3m -47%
---------- ---------- ---------
Total dividend per share 36.16p 32.87p +10%
---------- ---------- ---------
Valuation
---------- ---------- ---------
EPRA net asset value per share GBP10.89 GBP10.86 +0.3%
---------- ---------- ---------
CBRE property valuation GBP2,574m GBP2,604m -0.3%**
---------- ---------- ---------
Financing
---------- ---------- ---------
Loan to value 21% 22% -1%*
---------- ---------- ---------
Undrawn bank facilities and cash GBP166m GBP127m +GBP39m*
---------- ---------- ---------
Alternative performance measure (APM). The Group uses a number
of financial measures to assess and explain its performance. Some
of these which are not defined within IFRS are considered APMs. For
further details see Notes to the Financial Statements.
* absolute change
** underlying change
For media and investor enquiries, please contact:
Workspace Group PLC
Graham Clemett, Chief Executive Officer
Dave Benson, Chief Financial Officer
Clare Marland, Head of Corporate Communications 020 7138 3300
Edelman
John Kiely 020 3047 2546
Rob Yates 07715 375 443
Details of results presentation
A presentation for analysts and investors will be held by
webcast and conference call on Friday 5 June 2020 at 9.30am
followed by Q&A. Questions can be submitted either online via
the webcast or to the operator on the conference call.
Webcast: The live webcast will be available here:
https://secure.emincote.com/client/workspace/workspace014
Conference call: In order to dial in to the presentation via
phone, please register at the following link and you will be
provided with dial-in details and a unique access code:
https://secure.emincote.com/client/workspace/workspace014/vip_connect
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 work spaces 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).
LEI: 2138003GUZRFIN3UT430
For more information on Workspace, visit www.workspace.co.uk
CEO's statement
Workspace has delivered a strong set of trading results for the
past year, although obviously this has been overshadowed by the
dramatic impact of the Covid-19 pandemic.
Results and Dividend
Starting with our operating performance for the year, we saw
good growth in net rental income, up 10%, with a particularly
strong contribution from recently launched buildings. This income
uplift has delivered a 12% increase in trading profit after
interest to GBP81m, a tremendous performance given the continuing
backdrop of Brexit uncertainty. We did see an upturn in business
confidence and enquiries after the General Election in December but
by March 2020 this had been negated by the onset of the Covid-19
lockdown.
There was a slight fall of 0.3% over the year in our underlying
property valuation, with our valuers taking a naturally cautious
view of property values at the year-end in the light of Covid-19.
During the year, we continued with some judicious pruning of our
property portfolio selling four of our smaller buildings for a
total of GBP65m, 21% above their March 2019 valuation. Overall,
there was a small increase in our EPRA net asset value of 0.3% to
GBP10.89.
There has been much debate on dividend distributions at this
difficult time and this has been discussed extensively by the
Board. Driving operating performance to deliver income growth is a
key focus for the Company, and we have a proud and consistent
record of dividend distribution. Taking into account our prudent
funding position, with significant headroom on our facilities and
covenants, which has meant that we have not needed to take any
Government financial support, we are proposing a final dividend of
24.49p per share. This meets our distribution requirement as a Real
Estate Investment Trust and also reflects the Board's confidence in
the long-term prospects of the Company. Together with our interim
dividend, this represents a total dividend in the year of 36.16p
per share, an increase of 10% on the prior year.
Covid-19 Update
The immediate impact of the lockdown announced on 23 March 2020
was that the majority of our customers moved to work from home in
line with Government guidance. Our business centres remained open
with a number of key worker customers still in occupation and other
customers visiting on an essential needs basis.
Given the impact that the lockdown was having on our customers
and their cashflows, we took the immediate decision to offer the
opportunity to defer rental payments for up to three months. We
have also given the majority of our business centre customers an
absolute rent reduction of 50% for the three months to the end of
June 2020. We believed it was only fair to offer this rent
reduction to customers irrespective of their size.
Since the Government announced the gradual relaxation of
lockdown measures in England, we have taken action to ensure that
our business centres are safe for the increasing number of
customers returning to work. These extensive measures, in line with
Government guidelines, include signage to promote social
distancing, screens, hand sanitiser dispensers, one-way systems,
restrictions on use of communal areas and increased daily cleaning
of the common areas in our business centres. We are also supplying
additional information and resources to help our customers on our
website.
We are fortunate that our buildings are low-rise so the severe
lift restrictions that need to be put in place have limited impact.
We are also looking at the opportunity to increase the amount of
cycle storage at centres where possible.
I am pleased to say that our rent collection rates have been
robust. The majority of rent is collected monthly in advance and
taking account of the agreed rent discounts and deferrals we have
received c.70% of the net rent due for the first quarter.
We are maintaining a tight focus on operating costs, minimising
all non-essential spend but ensuring we don't compromise on health
and safety issues. Likewise, we are controlling our capital
expenditure commitments to ensure we can maintain prudent liquidity
and headroom levels. We currently have no major capital projects
underway or due to start over the next six months.
ESG Priorities
Despite the current challenging economic conditions, our ESG
priorities and targets remain hugely relevant, with our focus on
the long-term employment-led regeneration of London. Our priorities
cover multiple aspects of day-to-day business activity,
including:
-- Setting and delivering on science-based targets to achieve net zero carbon emissions by 2050;
-- Creating environmentally friendly, sustainable and energy efficient buildings;
-- Treating all our stakeholders with respect, from customers
through to our staff and suppliers, and ensuring an open and
regular two-way dialogue;
-- A focus on the health and wellbeing of our employees through
regular engagement, mental health training and an annual staff
survey; and
-- An active Doing the Right Thing committee run by our staff
supporting local initiatives across a wide range of schools,
community groups and charities
Our People
A huge strength of Workspace is the depth of operational
experience across the company. The knowledge gained by our people
from working though previous downturns and recessions is more
relevant than ever. This has been supplemented by two recent
external Executive appointments, Dave Benson joining as CFO and
Will Abbott in the new role of Chief Customer Officer. They bring
broader commercial and marketing expertise that will be hugely
important as we navigate through the challenges ahead.
Workspace has a vibrant and inclusive culture and this has been
particularly evident throughout the lockdown period. I'd like to
thank all our employees for their incredible efforts during this
time. Despite working remotely, I have been impressed by how we
have come together to keep the business running effectively and to
maintain regular engagement with our customers. Our purpose, to
give businesses the freedom to grow, and a clear set of corporate
values have underpinned the actions we have taken to support our
customers at this difficult time.
As previously announced, our Chairman, Danny Kitchen, will be
stepping down from his role after nine years. Danny has made a huge
contribution to the business, providing wise counsel and challenge
to both the Board and Executive Committee. I am delighted that
Stephen Hubbard, one of our current Non-Executive Directors with
extensive property experience, has agreed to take over as Chairman
following the AGM in July.
Chris Pieroni, Operations Director, will be retiring at the end
of June. Chris has been an integral part of the success and growth
of Workspace over the last 12 years. We will miss him both as a
colleague and friend and wish him all the very best for his
retirement.
Strategy
We have always been very clear about the attractions offered by
our flexible model. For many years we were seen as a successful but
alternative property play. In more recent years, our model has
become increasingly mainstream as customer demand for flexibility
has grown, with many new and existing competitors now in the
market. These competitors have varying financial and operating
models and I remain confident that we continue to have an
industry-leading proposition. The key elements of our model
are:
-- A flexible space and lease offer;
-- Scalable marketing and operating platform;
-- A customer-centric culture;
-- Well located, distinctive buildings;
-- High quality fit-out and services; and
-- Freehold property ownership.
Our strength and success have come as a result of bringing all
these elements together into a compelling offer for customers.
Outlook
It is not possible at this time to give a near-term view for
trading performance. We will undoubtedly see subdued operational
performance and a reduction in rental income in the current year.
For many of our existing customers there is a difficult period
ahead as they look to rebuild their businesses. Some businesses
will want to downsize, some will decide to continue working
remotely, some may fail while others will recover quickly.
Workspace is well positioned to provide them with the support they
will need, and I believe the majority will see the value of
retaining their Workspace office. Equally I believe our flexible
offer will continue to attract new customers. This includes
businesses reflecting on their property requirements following
their experience operating remotely through the lockdown
period.
I have been delighted with the success of our recently opened
buildings and we have an extensive pipeline of refurbishment and
redevelopment activity to deliver over the coming years. We will
shortly be opening two buildings in Hackney and Bow that were
completed just as the lockdown was announced. We are also
continuing to track acquisition opportunities across London.
Despite the near-term uncertainty, I am confident that Workspace
has a huge opportunity for growth in the medium and long term. The
commercial property market is being redefined around fast-changing
customer requirements, with lease and space flexibility becoming
increasingly important. These are factors which play directly into
the compelling offer we can provide.
BUSINESS REVIEW
ENQUIRIES AND LETTINGS
We saw strong levels of demand over the year with enquiries
averaging 1,087 per month (2019: 1,048) and lettings averaging 121
per month (2019: 103). The Government restrictions on public
movement began to impact enquiries and lettings in late March 2020,
and we have seen a significant slowdown in activity since then.
Prior to this enquiries and lettings in the fourth quarter were
very strong with a high of 1,430 enquiries in January 2020.
Quarter Ended
-----------------------------------------------
Average number 31 Mar 31 Dec 30 Sept 30 Jun 31 Mar 31 Dec
per month 2020 2019 2019 2019 2019 2018
--------------- ------ ------ ------- ------ ------ ------
Enquiries 1,128 1,001 1,158 1,060 1,244 907
Lettings 117 113 134 121 130 98
--------------- ------ ------ ------- ------ ------ ------
RENT ROLL
Total rent roll, representing the total annualised net rental
income at a given date, was up 4.2% to GBP132.8m at March 2020 as
detailed below:
Rent Roll GBPm
----------------------------------- -----
At 31 March 2019 127.5
Like-for-like portfolio 1.7
Completed projects 7.8
Projects underway and design stage (1.0)
Disposals / other (3.2)
----------------------------------- -----
At 31 March 2020 132.8
----------------------------------- -----
The total estimated rental value (ERV) of the portfolio,
comprising the ERV of the like-for-like portfolio, and those
properties currently undergoing refurbishment or redevelopment (but
only including properties at the design stage or being sold at
their current rent roll and occupancy) is GBP165.8m.
Like-for-like Portfolio
The like-for-like portfolio represents 68% of the total rent
roll as at 31 March 2020. It comprises 29 properties with
stabilised occupancy, excluding buildings impacted by significant
refurbishment or redevelopment activity or contracted for sale.
This category includes the prior year acquisitions of Centro
Buildings and The Shepherds Building. Like-for-like trends reported
for previous financial years are not restated for the property
transfers made in the current financial year.
The like-for-like rent roll has increased by 1.9% (GBP1.7m) in
the year to GBP90.4m. The growth over the twelve months has come
from a 2.6% increase in occupancy from 90.5% to an all-time high of
93.1% offset by a 0.7% decrease in rent per sq. ft. to GBP43.32,
reflecting some moderation in pricing levels in the first half of
the year.
If all the like-for-like properties were at the current
occupancy level of 93.1% at the CBRE estimated rental values at 31
March 2020, the rent roll would be GBP99.2m, GBP8.8m higher than
the actual cash rent roll at 31 March 2020.
Completed Projects
There are now a total of thirteen projects in the completed
projects category, with rent roll increasing by 43% (GBP7.8m) in
the year to GBP26.1m and overall occupancy at 87%.
If the buildings in this category were all at 90% occupancy at
the CBRE estimated rental values at 31 March 2020, the rent roll
would be GBP31.2m, an uplift of GBP5.1m.
Projects Underway - Refurbishments
We are currently underway on five refurbishment projects that
will deliver 214,000 sq. ft. of new and upgraded space. As at 31
March 2020, rent roll was GBP2.2m, down GBP0.1m in the year. We
expect to complete four of these refurbishments during the current
year delivering 148,000 sq. ft. of new space.
Assuming 90% occupancy at the CBRE estimated rental values at 31
March 2020, the rent roll at these five buildings once they are
completed would be GBP7.2m, an uplift of GBP5.0m.
Projects Underway - Redevelopments
There are currently three mixed-use redevelopment projects
underway. At all of these sites, new business centres built at no
cost to Workspace, will be delivered providing 98,000 sq. ft. of
net lettable space.
Assuming 90% occupancy at the CBRE estimated rental values at 31
March 2020, the rent roll at the three new business centres would
be GBP2.2m.
Projects at Design Stage
These are properties where we are planning a refurbishment or
redevelopment that has not yet commenced. In a number of cases this
is because we are awaiting planning consent. The rent roll at these
properties at 31 March 2020 was GBP14.1m, down GBP0.9m in the
year.
PROFIT PERFORMANCE
Trading profit after interest for the year is up 11.9% (GBP8.6m)
on the prior year to GBP81.0m.
31 Mar 31 Mar
GBPm 2020 2019
--------------------------------------------- ------ ------
Net rental income 122.0 111.0
Administrative expenses - underlying (15.1) (14.9)
Administrative expenses - share based costs* (2.6) (2.2)
Net finance costs (23.3) (21.5)
--------------------------------------------- ------ ------
Trading profit after interest 81.0 72.4
--------------------------------------------- ------ ------
* These relate to both cash and equity settled costs
Net rental income was up 9.9% (GBP11.0m) in total to GBP122.0m,
as detailed below:
31 Mar 31 Mar
GBPm 2020 2019
----------------------------- ------ ------
Underlying net rental income 103.9 97.5
Acquisitions 16.0 9.9
Disposals 2.1 3.6
122.0 111.0
------ ------
There was a GBP6.4m (6.6%) increase in underlying net rental
income, largely driven by the successful letting up of recently
completed projects . The income from acquisitions relates to the
Centro Buildings and The Shepherds Building acquired in the last
financial year; while disposals include both sales in the last
financial year and the current financial year.
Underlying administrative expenses increased by 1.3% (GBP0.2m)
to GBP15.1m from inflationary pay rises and cost increases, offset
by a short-term saving in Executive costs following Jamie Hopkins
stepping down as CEO in May 2019.
Net finance costs increased by 8.4% (GBP1.8m) in the year. The
average net debt balance over the year was GBP40.0m higher than the
prior year, whilst the average interest rate was stable at 3.7%.
This interest rate includes the commitment fee on the undrawn
portion of the revolver facility. The marginal cost of the undrawn
revolver facility is 1.5% over LIBOR.
Profit before tax decreased to GBP72.5m with an adverse movement
year-on-year in the property revaluation from a surplus of GBP60.8m
in the prior year to a deficit of GBP7.5m in the current year.
31 March 31 March
GBPm 2020 2019
------------------------------------------------- -------- --------
Trading profit after interest 81.0 72.4
Change in fair value of investment properties (7.5) 60.8
(Loss) / profit on sale of investment properties (0.8) 8.3
Exceptional finance costs - (3.1)
Other items (0.2) (1.1)
------------------------------------------------- -------- --------
Profit before tax 72.5 137.3
------------------------------------------------- -------- --------
Adjusted underlying earnings per share 44.6p 40.6p
------------------------------------------------- -------- --------
The small loss on sale of investment properties relates to sales
costs associated with four disposals completed in the second half
of the year which were calculated by reference to the September
2019 CBRE valuation. The sales were made at a premium of 21%
relative to the March 2019 valuation.
Adjusted underlying earnings per share, based on EPRA earnings
adjusted for non-trading items and calculated on a diluted share
basis, is up 9.9% to 44.6p. T he 12% growth in trading profit after
interest is reduced by the impact of an increase of 9.96% in the
number of shares in issue following the share placement in June
2018.
DIVID
Our dividend policy is based on trading profit after interest,
taking into account our investment and acquisition plans and the
distribution requirements that we have as a REIT, with our aim
being to ensure the dividend per share is covered at least 1.2
times by adjusted underlying earnings per share. We believe that
the strong trading performance for the year to 31 March 2020
combined with our business model and robust financial position
leave us well positioned to address the challenges caused by the
Covid-19 pandemic.
The Board is therefore recommending a final dividend of 24.49p
per share (2019: 22.26p) to be paid on 7 August 2020 to
shareholders on the register at 3 July 2020. The dividend will be
paid as a Property Income Distribution and fully meets the REIT
distribution requirement for the year to 31 March 2020, with a
dividend cover at 1.23 times adjusted underlying earnings per
share.
PROPERTY VALUATION
At 31 March 2020, our property portfolio was independently
valued by CBRE at GBP2,574m, an underlying decrease of 0.3% (GBP8m)
in the year. The main movements in the valuation over the year are
set out below:
GBPm
------------------------------------------------ -----
Valuation at 31 March 2019 2,604
Revaluation uplift - 6 months to September 2019 59
Revaluation deficit - 6 months to March 2020 (67)
Capital expenditure 55
Capital receipts (12)
Disposals (65)
------------------------------------------------ -----
Valuation at 31 March 2020 2,574
------------------------------------------------ -----
There was a revaluation decrease of 2.5% (GBP67m) in the second
half of the year compared to an increase of 2.2% (GBP59m) in the
first half. The reduction in the second half of the year includes a
capital deduction by CBRE of GBP32m reflecting their assessment of
the deduction a buyer might expect to allow for the risk of
increased customer defaults and non-payment of rent. The external
valuation of our portfolio at 31 March 2020 contains a material
uncertainty clause from CBRE, which is in line with the RICS
guidance to valuers and reflects the difficulty in determining
asset values when few comparable transactions have occurred in the
current trading environment.
A summary of the full year valuation and revaluation movement by
property type is set out below:
GBPm Valuation Uplift / deficit
------------------------- --------- ----------------
Like-for-like Properties 1,540 (27)
Completed Projects 547 4
Refurbishments 331 8
Redevelopments 145 (2)
Disposals - exchanged 11 (1)
Disposals - completed - 10
Total 2,574 (8)
------------------------- --------- ----------------
Like-for-like Properties
There was a 1.7% (GBP27m) underlying decrease in the valuation
of like-for-like properties to GBP1,540m, largely reflecting the
capital deduction made by CBRE in respect of Covid-19.
31 March 31 March
2020 2019 Change
-------------------------- -------- -------- --------
ERV per sq. ft. GBP47.54 GBP48.11 -1.2%
Rent per sq. ft. GBP43.32 GBP43.64 -0.7%
Equivalent Yield 5.9% 6.0% -0.1%
Net Initial Yield 5.2% 5.1% +0.1%
Capital Value per sq. ft. GBP687 GBP691 -0.5%
-------------------------- -------- -------- --------
The fall in CBRE's ERV estimate reflects reductions in pricing
across the like-for-like portfolio, primarily in the first half of
the year.
Completed Projects
There was an underlying uplift of 0.7% (GBP4m) in the value of
the thirteen completed projects to GBP547m. The overall valuation
metrics for completed projects are set out below:
31 March
2020
-------------------------- --------
ERV per sq. ft. GBP45.76
Rent per sq. ft. GBP39.67
Equivalent Yield 5.6%
Net Initial Yield 4.4%
Capital Value per sq. ft. GBP723
-------------------------- --------
Current Refurbishments and Redevelopments
There was an underlying uplift of 2.5% (GBP8m) in the value of
our current refurbishments to GBP331m and a reduction of 1.4%
(GBP2m) in the value of our current redevelopments to GBP145m.
REFURBISHMENT ACTIVITY
In April 2019, we completed the refurbishment of The Light Box,
Chiswick which now provides 78,000 sq. ft. of net lettable space,
following a roof extension and significant upgrade to the common
areas.
In June 2019, we completed two new buildings:
-- Brickfields, adjacent to Hoxton Rail Station, provides 57,000
sq. ft. of net lettable space. The industrial design of the
building features a steel-frame interior and a large central
atrium.
-- Ink Rooms, a former printing ink factory in Clerkenwell, has
been converted and extended to provide 22,000 sq. ft. of net
lettable space.
In September 2019, we completed the refurbishment of 338 Goswell
Road, Angel, comprising 43,000 sq. ft. of upgraded space.
The major re-build of Mare Street Studios, Hackney, providing
55,000 sq. ft. of new business space completed in April 2020 and we
plan to launch this building shortly.
A summary of the status of the refurbishment pipeline at 31
March 2020 is set out below:
Projects Number Capex spent Capex Upgraded
to spend and new space
(sq. ft.)
--------------------------------- ------- ------------ ---------- ---------------
Underway 5 GBP36m GBP15m 214,000
Design stage 6 - GBP90m 437,000
Design stage (without planning) 1 - GBP60m 155,000
--------------------------------- ------- ------------ ---------- ---------------
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 and limited
risk to Workspace. We receive back a combination of cash, new
commercial space and overage in return for the sale of the
residential scheme to the developer.
A summary of the status of the redevelopment pipeline at 31
March 2020 is set out below:
No. of Residential Cash Cash/ New commercial
properties units received overage space (sq.
to come ft.)
----------------------- ------------ ------------ ---------- --------- ---------------
Underway 3 407 GBP25m GBP4m 98,000
Design stage 4 783 - - 115,000
Design stage (without
planning) 1 402 - - 171,000
----------------------- ------------ ------------ ---------- --------- ---------------
The sale of the residential schemes at the three redevelopment
schemes underway is expected to deliver GBP29m in cash (of which
GBP25m has already been received) and three new commercial
buildings.
The third and final phase of the Bow Enterprise Park
redevelopment scheme has been completed with a new 39,000 sq. ft.
business centre delivered to us by the developer. We plan to launch
this building, called Lock Studios, shortly.
There are four schemes at the design stage that have obtained
mixed-use planning consents but are not yet contracted for
sale.
Discussions with the planners for the re-designation of land use
for a significant mixed-use redevelopment scheme in Wandsworth are
progressing well and we hope to obtain planning consent
shortly.
DISPOSALS
Four properties have been exchanged and sold in the year for a
total of GBP65m at a premium of 21% (GBP10m) to the 31 March 2019
valuation:
-- In September 2019, we exchanged contracts for the sale of
Alexandra House, Wood Green for GBP15.5m. The sale completed in
March 2020 at a net initial yield of 4.1% and a capital value of
GBP283 per sq. ft. The premium achieved is well ahead of the
returns we expected to achieve from the planned repositioning of
this building.
-- In September 2019, we also exchanged contracts for the sale
of Vestry Street Studios, near Old Street for GBP19.25m. The sale
of this small office building completed in October 2019 at a net
initial yield of 4.3% and a capital value of GBP847 per sq. ft.
-- In October 2019, we exchanged and completed on the sale of
12-13 and 14 Greville Street, Farringdon for GBP14.75m. This
represents a net initial yield of 1.3% and a capital value of
GBP1,000 per sq. ft. In June 2018 we obtained planning consent for
a refurbishment project. However, the premium to book value
achieved on the sale exceeds the return anticipated from this
planned project.
-- In November 2019, we exchanged contracts for the sale of
Quality Court, Holborn for GBP15.8m. The sale completed in January
2020 at a net initial yield of 4.3% and a capital value of GBP930
per sq. ft.
CASH FLOW
The Group generates strong operating cash flow in line with
trading profit, with good levels of cash collection. Bad debts
remained low over the year at GBP0.4m (March 2019: GBP0.2m). A
summary of the movements in cash flow are set out below:
31 March 31 March
GBPm 2020 2019
---------------------------------------- -------- --------
Net cash from operations after interest 85 76
Dividends paid (61) (52)
Capital expenditure (62) (87)
Purchase of investment properties - (221)
Property disposals and cash receipts 65 51
Capital receipts 12 6
Share placement proceeds - 176
Other - (12)
Net movement 39 (63)
Opening debt (net of cash) (580) (517)
---------------------------------------- -------- --------
Closing debt (net of cash) (541) (580)
---------------------------------------- -------- --------
There is a reconciliation of net debt in note 13(b) to the
financial statements.
FINANCING
As at 31 March 2020, the Group had GBP70.3m of cash and GBP96.0m
of undrawn facilities:
Drawn amount Facility Maturity
----------------------- ------------ --------- ---------
Private Placement Notes GBP457.5m GBP457.5m 2020-2029
Bank facilities GBP154.0m GBP250.0m 2022
------------ ---------
Total GBP611.5m GBP707.5m
------------ ---------
All facilities are provided on an unsecured basis with an
average maturity of 4.5 years (31 March 2019: 5.6 years).
The average interest cost of our fixed rate private placement
notes is 4.0%. Our revolver bank facilities are provided at a
floating rate of 1.65% over LIBOR. At 31 March 2020, 63% of our
facilities are at fixed rates, representing 73% of our borrowings
on a drawn basis.
At 31 March 2020, loan to value (LTV) was 21% (31 March 2019:
22%) and interest cover (based on net rental income) was 5.2 times
(31 March 2019: 5.2), providing good headroom on all facility
covenants. We estimate that we could withstand a reduction in net
rental income of 62% or a fall in asset valuation of 65% before any
debt covenants are breached.
NET ASSETS
Net assets increased in the year by GBP17m to GBP1,998m. EPRA
net asset value (NAV) per share at 31 March 2020 was up 0.3%
(GBP0.03) to GBP10.89:
GBP
--------------------------------------- --------
At 31 March 2019 10.86
Adjusted trading profit after interest 0.45
Property valuation surplus / (deficit) (0.04)
Dividends paid (0.34)
Other (0.04)
--------------------------------------- --------
At 31 March 2020 GBP10.89
--------------------------------------- --------
The calculation of EPRA NAV per share is set out in note 8 of
the financial statements.
outlook for the year to 31 March 2021
The results for the first quarter will be impacted by rent
discounts, partially offset by cost savings. We have offered
customers in our business centres affected by the Government
restrictions a rent reduction of 50% initially for the lockdown
period and now extended until the end of June 2020. We have also ,
on a case by case basis, offered customers the opportunity to defer
a proportion of their rental payments. The rent discount is only
available to customers who continue to pay their rent or have a
deferred payment agreement.
Overall, we have given rent reductions to around 75% of our
customers (by rent), which represents a reduction in rent of
c.GBP15m in the quarter. We have agreed to defer around 15% of the
discounted rent amounts due from these customers.
Of the total rent (net of discounts and deferrals) that we
expected to collect for the first quarter, we have so far collected
approximately 70% and continue to work with customers on the
remaining rent due.
Whilst our centres have remained open during the lockdown period
and our teams have continued to support customers remotely, the
significant temporary decrease in the number of people using our
centres has allowed us to reduce service costs, although these are
partially offset by higher costs in areas such as security.
Government restrictions on public movement began to impact
enquiries and lettings in late March 2020 and we have seen a
significant slowdown in enquiries and letting activity since then,
with enquiries falling to a low of around 50 per week in early
April. Whilst it is it is too soon to draw any conclusions, we have
seen enquiry levels start to pick up again in May, albeit still
significantly below normal levels.
Our customer base comprises over 3,000 businesses, highly
diversified both by size and by sector, with those customers in
sectors most directly impacted by Covid-19, including retail,
travel, hospitality, events and leisure, accounting for less than
15% of total rent roll. Despite this diversity and our best efforts
to support them, not all customers' businesses will survive. The
key test will come over the next few months as lockdown eases,
Government support is reduced and our customers assess the
prospects for their businesses.
Whilst the risk of material bad debts is largely mitigated by
the rent deposits we hold, the space vacated, combined with that
released by customers downsizing, will put downward pressure on
occupancy. Our focus will be on retaining existing customers as
best we can, alongside capturing the demand from new customers. As
the structural shift towards flexible working continues, we do
believe we will see ongoing demand from a broad range of businesses
for the space and services Workspace provides.
It is too soon to see any clear trends or predict exactly the
extent to which the factors above will impact the results for the
year to March 2021. We have, however, modelled a number of
scenarios to better understand the wide spread of potential
outcomes and to ensure the robustness of the business as a going
concern. The key variables for our operating performance are
occupancy and pricing, with a 5% change in occupancy or rent per
sq. ft. having an impact of approximately GBP7m on total rent roll.
For reference, during the Global Financial Crisis, we saw
like-for-like occupancy drop by 7% to 83% at its lowest point and
rent per sq. ft. drop by 6%.
Whilst the results for the year to 31 March 2021 will be
impacted by the rent reductions we have given our customers in the
first quarter and any short-term pressure on occupancy, our
experience from previous economic downturns has shown that our
dynamic operating model and flexible offer allow us to adapt
quickly to capture demand and achieve good occupancy levels in any
market conditions.
KEY property statistics
Half Year ended
------------------------------------------
31 March 30 Sept 31 March 30 Sept
2020 2019 2019 2018
-------------------------------------- --------- --------- --------- ---------
Workspace Group Portfolio
CBRE property valuation GBP2,574m GBP2,682m GBP2,604m GBP2,435m
Number of locations 59 64 64 64
Lettable floorspace (million sq.
ft.) 3.9 4.0 3.9 3.8
Number of lettable units 4,009 4,969 4,796 4,709
Rent roll of occupied units GBP132.8m GBP130.4m GBP127.5m GBP115.0m
Average rent per sq. ft. GBP39.18 GBP38.06 GBP38.45 GBP36.66
Overall occupancy 87.0% 86.3% 84.8% 82.4%
Like-for-like number of properties 29 28 30 30
Like-for-like lettable floor space
(million sq. ft.) 2.2 2.2 2.1 2.1
Like-for-like rent roll growth 1.2% 0.7% (0.4)% 2.6%
Like-for-like rent per sq. ft. growth 0.3% (1.0)% 1.0% 2.8%
Like-for-like occupancy movement 0.9% 1.7% (0.7)% (0.2)%
-------------------------------------- --------- --------- --------- ---------
1) The like-for-like category has been restated in the current financial year for the following:
-- The transfer in of Centro Buildings, Camden, and The
Shepherds Building, Shepherd's Bush, from the acquisitions
category
-- The transfer in of The Record Hall, Hatton Garden, Cocoa
Studios at The Biscuit Factory, Bermondsey, and Vox Studios (phase
2), Vauxhall, from the completed projects category
-- The transfer out of Canalot Studios, Ladbroke Grove, Parkhall
Business Centre, Dulwich, and Havelock Terrace, Battersea, to the
refurbishment projects category
-- The transfer out of Vestry Street Studios, Old Street, and
Quality Court, Holborn, to the disposals category
2) Like-for-like statistics for prior years are not restated for
the changes made to the like-for-like property portfolio in the
current financial year.
3) Overall rent per sq. ft. and occupancy statistics include the
lettable area at like-for-like properties and all refurbishment and
redevelopment projects, including those projects recently completed
and also properties where we are in the process of obtaining vacant
possession.
Consolidated income statement
For the year ended 31 March 2020
2020 2019
Notes GBPm GBPm
----------------------------------------------------- ----- ------ ------
Revenue 1 161.4 149.4
----------------------------------------------------- ----- ------ ------
Direct costs 1 (39.4) (38.4)
----------------------------------------------------- ----- ------ ------
Net rental income 1 122.0 111.0
----------------------------------------------------- ----- ------ ------
Administrative expenses 2 (17.7) (17.1)
----------------------------------------------------- ----- ------ ------
Trading profit 104.3 93.9
----------------------------------------------------- ----- ------ ------
(Loss) / profit on disposal of investment properties 3(a) (0.8) 8.3
----------------------------------------------------- ----- ------ ------
Other expenses 3(b) (0.2) (1.1)
----------------------------------------------------- ----- ------ ------
Change in fair value of investment properties 10 (7.5) 60.8
----------------------------------------------------- ----- ------ ------
Operating profit 2 95.8 161.9
----------------------------------------------------- ----- ------ ------
Finance costs 4 (23.3) (21.5)
----------------------------------------------------- ----- ------ ------
Exceptional finance costs 4 - (3.1)
----------------------------------------------------- ----- ------ ------
Profit before tax 72.5 137.3
----------------------------------------------------- ----- ------ ------
Taxation 6 (0.4) -
----------------------------------------------------- ----- ------ ------
Profit for the financial year after tax 72.1 137.3
----------------------------------------------------- ----- ------ ------
Basic earnings per share 8 40.0p 78.9p
----------------------------------------------------- ----- ------ ------
Diluted earnings per share 8 39.7p 78.3p
----------------------------------------------------- ----- ------ ------
Consolidated statement of other comprehensive income
For the year ended 31 March 2020
2020 2019
GBPm GBPm
------------------------------------------------------------- ----- -----
Profit for the financial year 72.1 137.3
------------------------------------------------------------- ----- -----
Other comprehensive income:
------------------------------------------------------------- ----- -----
Items that may be classified subsequently to profit or loss:
------------------------------------------------------------- ----- -----
Change in fair value of other investments (1.9) 4.0
------------------------------------------------------------- ----- -----
Cash flow hedge - transfer to income statement (4.2) (5.5)
------------------------------------------------------------- ----- -----
Cash flow hedge - change in fair value 8.3 7.6
------------------------------------------------------------- ----- -----
Total comprehensive income for the year 74.3 143.4
------------------------------------------------------------- ----- -----
Consolidated balance sheet
As at 31 March 2020
2020 2019
Notes GBPm GBPm
--------------------------------- ------ -------- --------
Non-current assets
--------------------------------- ------ -------- --------
Investment properties 10 2,586.3 2,591.4
--------------------------------- ------ -------- --------
Intangible assets 2.0 1.6
--------------------------------- ------ -------- --------
Property, plant and equipment 11 4.8 3.4
--------------------------------- ------ -------- --------
Other investments 12 7.9 9.8
--------------------------------- ------ -------- --------
16(e)
Derivative financial instruments & (f) 18.5 10.1
--------------------------------- ------ -------- --------
Deferred tax 6 0.6 -
--------------------------------- ------ -------- --------
2,620.1 2,616.3
--------------------------------- ------ -------- --------
Current assets
--------------------------------- ------ -------- --------
Trade and other receivables 13 25.2 13.7
--------------------------------- ------ -------- --------
Assets held for sale 10 11.0 25.5
--------------------------------- ------ -------- --------
Cash and cash equivalents 14 79.2 26.7
--------------------------------- ------ -------- --------
115.4 65.9
--------------------------------- ------ -------- --------
Total assets 2,735.5 2,682.2
--------------------------------- ------ -------- --------
Current liabilities
--------------------------------- ------ -------- --------
Trade and other payables 15 (83.1) (77.0)
--------------------------------- ------ -------- --------
Borrowings 16(a) (9.0) -
--------------------------------- ------ -------- --------
(92.1) (77.0)
--------------------------------- ------ -------- --------
Non-current liabilities
--------------------------------- ------ -------- --------
Borrowings 16(a) (645.4) (623.2)
--------------------------------- ------ -------- --------
(645.4) (623.2)
--------------------------------- ------ -------- --------
Total liabilities (737.5) (700.2)
--------------------------------- ------ -------- --------
Net assets 1,998.0 1,982.0
--------------------------------- ------ -------- --------
Shareholders' equity
--------------------------------- ------ -------- --------
Share capital 18 180.7 180.4
--------------------------------- ------ -------- --------
Share premium 18 295.4 295.1
--------------------------------- ------ -------- --------
Investment in own shares (9.6) (9.3)
--------------------------------- ------ -------- --------
Other reserves 19 32.2 27.4
--------------------------------- ------ -------- --------
Retained earnings 1,499.3 1,488.4
--------------------------------- ------ -------- --------
Total shareholders' equity 1,998.0 1,982.0
--------------------------------- ------ -------- --------
EPRA net asset value per share 9 GBP10.89 GBP10.86
--------------------------------- ------ -------- --------
Consolidated statement of changes in equity
For the year ended 31 March 2020
Attributable to owners of the parent
-----------------------------------------------------------
Investment Total
Share Share in own Other Retained Share-holders'
capital premium shares reserves earnings equity
Notes GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- ----- -------- -------- ---------- --------- --------- ---------------
Balance at 31 March 2018 163.8 135.3 (9.3) 19.4 1,403.7 1,712.9
--------------------------- ----- -------- -------- ---------- --------- --------- ---------------
Profit for the financial
year - - - - 137.3 137.3
--------------------------- ----- -------- -------- ---------- --------- --------- ---------------
Other comprehensive income
for the year 19 - - - 6.1 - 6.1
--------------------------- ----- -------- -------- ---------- --------- --------- ---------------
Total comprehensive income - - - 6.1 137.3 143.4
--------------------------- ----- -------- -------- ---------- --------- --------- ---------------
Transactions with owners:
--------------------------- ----- -------- -------- ---------- --------- --------- ---------------
Share issues 18 16.6 159.8 - - - 176.4
--------------------------- ----- -------- -------- ---------- --------- --------- ---------------
Dividends paid 7 - - - - (52.6) (52.6)
--------------------------- ----- -------- -------- ---------- --------- --------- ---------------
Share based payments - - - 1.9 - 1.9
--------------------------- ----- -------- -------- ---------- --------- --------- ---------------
Balance at 31 March 2019 180.4 295.1 (9.3) 27.4 1,488.4 1,982.0
--------------------------- ----- -------- -------- ---------- --------- --------- ---------------
Profit for the financial
year - - - - 72.1 72.1
--------------------------- ----- -------- -------- ---------- --------- --------- ---------------
Other comprehensive income
for the year 19 - - - 2.2 - 2.2
--------------------------- ----- -------- -------- ---------- --------- --------- ---------------
Total comprehensive income - - - 2.2 72.1 74.3
--------------------------- ----- -------- -------- ---------- --------- --------- ---------------
Transactions with owners:
--------------------------- ----- -------- -------- ---------- --------- --------- ---------------
Share issues 18 0.3 0.3 (0.3) - - 0.3
--------------------------- ----- -------- -------- ---------- --------- --------- ---------------
Dividends paid 7 - - - - (61.2) (61.2)
--------------------------- ----- -------- -------- ---------- --------- --------- ---------------
Share based payments - - - 2.6 - 2.6
--------------------------- ----- -------- -------- ---------- --------- --------- ---------------
Balance at 31 March 2020 180.7 295.4 (9.6) 32.2 1,499.3 1,998.0
--------------------------- ----- -------- -------- ---------- --------- --------- ---------------
Consolidated statement of cash flows
For the year ended 31 March 2020
2020 2019
Notes GBPm GBPm
------------------------------------------------------ ----- ------ -------
Cash flows from operating activities
------------------------------------------------------ ----- ------ -------
Cash generated from operations 17 108.7 99.8
------------------------------------------------------ ----- ------ -------
Interest paid (24.1) (23.7)
------------------------------------------------------ ----- ------ -------
Tax receipt 0.1 -
------------------------------------------------------ ----- ------ -------
Net cash inflow from operating activities 84.7 76.1
------------------------------------------------------ ----- ------ -------
Cash flows from investing activities
------------------------------------------------------ ----- ------ -------
Purchase of investment properties - (220.8)
------------------------------------------------------ ----- ------ -------
Capital expenditure on investment properties (59.7) (86.7)
------------------------------------------------------ ----- ------ -------
Proceeds from disposal of investment properties (net
of sale costs) 75.0 50.8
------------------------------------------------------ ----- ------ -------
Purchase of intangible assets (0.9) (0.6)
------------------------------------------------------ ----- ------ -------
Purchase of property, plant and equipment (2.3) (1.5)
------------------------------------------------------ ----- ------ -------
Other income (overage receipts) 2.0 5.8
------------------------------------------------------ ----- ------ -------
Purchase of investments 0.5 (1.5)
------------------------------------------------------ ----- ------ -------
Income distributions from joint ventures - 0.1
------------------------------------------------------ ----- ------ -------
Net cash inflow / (outflow) from investing activities 14.6 (254.4)
------------------------------------------------------ ----- ------ -------
Cash flows from financing activities
------------------------------------------------------ ----- ------ -------
Proceeds from issue of ordinary share capital 18 0.6 176.4
------------------------------------------------------ ----- ------ -------
Finance costs for new/amended borrowing facilities - (0.7)
------------------------------------------------------ ----- ------ -------
Exceptional finance costs - (2.9)
------------------------------------------------------ ----- ------ -------
Settlement and re-couponing of derivative financial
instruments - (0.2)
------------------------------------------------------ ----- ------ -------
Repayment of bank borrowings and Retail Bond 16(b) (90.1) (343.5)
------------------------------------------------------ ----- ------ -------
Draw down of bank borrowings and Private Placement
Notes 16(b) 104.0 410.0
------------------------------------------------------ ----- ------ -------
Own shares purchase (net) (0.3) -
------------------------------------------------------ ----- ------ -------
Dividends paid 7 (61.0) (52.1)
------------------------------------------------------ ----- ------ -------
Net cash (outflow) / inflow from financing activities (46.8) 187.0
------------------------------------------------------ ----- ------ -------
Net increase in cash and cash equivalents 52.5 8.7
------------------------------------------------------ ----- ------ -------
Cash and cash equivalents at start of year 17 26.7 18.0
------------------------------------------------------ ----- ------ -------
Cash and cash equivalents at end of year 17 79.2 26.7
------------------------------------------------------ ----- ------ -------
Notes to the financial statements
For the year ended 31 March 2020
The financial information set out above does not constitute the
company's statutory accounts for the years ended 31 March 2020 or
2019 but is derived from those accounts. Statutory accounts for
2019 have been delivered to the registrar of companies, and those
for 2020 will be delivered in due course. The auditor has reported
on those accounts; their reports were i) unqualified ii) did
include an emphasis of matter regarding uncertain valuation of
investment property without qualifying their report and iii) did
not contain a statement under section 498 (2) or (3) of the
Companies Act 2006. The accounting policies are consistent with
those contained in the Group's last annual report and accounts for
the year ended 31 March 2019, with exception of the following:
Basis of preparation
These financial statements are presented in Sterling, which is
the Company's functional currency and the Group's presentation
currency and have been prepared on a going concern basis, in
accordance with International Financial Reporting Standards
('IFRS') and IFRS IC interpretations as adopted by the European
Union and with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS.
The potential impact of the Covid-19 pandemic on the operations
of the Group has been a key consideration when assessing the
appropriateness of applying the going concern basis in the
preparation of the financial statements. There is still significant
uncertainty as to how our customers, and the economy more widely,
will respond to the current challenge and how our business will be
impacted as a result. We have therefore modelled a number of
different scenarios considering a period of 12 months from the date
of signing of these financial statements. These scenarios include a
severe, but realistically possible, scenario which assumes a
lock-down period of six months with an economic slowdown. Key
assumptions in this scenario include:
- 90% of customers receive a 50% discount and 80% of the
discounted rent is deferred for 12 months after lockdown ends.
- A reduction of 30% in occupancy and 20% in pricing. These
reductions are more severe than that experienced during the global
financial crisis.
- A gradual recovery in occupancy to 90% over a period of 23
months.
- An expansion in investment yields of 350bps.
The appropriateness of the going concern basis is reliant on the
continued availability of borrowings and compliance with loan
covenants. The group has a fully unsecured loan portfolio of
GBP611.5m requiring compliance with LTV and Interest Cover
covenants. As at the tightest test date the group could withstand a
reduction in net rental income of 61 percent and a fall in the
asset valuation of 61 per cent compared to 31 March 2020 values
before these covenants are breached, assuming no mitigating actions
are taken. As at 31 March 2020, the company had significant
headroom on its facilities with GBP70m of cash and undrawn
facilities of GBP96m. Other than Private Placement notes of GBP9m,
no debt is due to be refinanced until June 2022. For the full
period of the scenario tested, the Group maintains sufficient
headroom in its cash and loan facilities and loan covenants are
met.
Based on these factors, and the outcome of their review, the
Directors have a reasonable expectation that the Group and the
Company have adequate resources and sufficient loan facility
headroom to continue as a going concern.
New accounting standards, amendments and guidance
a) During the year to 31 March 2020 the Group adopted the
following accounting standards and guidance:
IFRS 9 (amended) Prepayment Features with Negative
Compensation and modifications of
financial liabilities
---------------- -----------------------------------------
IFRS 16 Leases
---------------- -----------------------------------------
IAS 19 (amended) Plan Amendment, Curtailment or Settlement
---------------- -----------------------------------------
IAS 19 (amended) Plan Amendment, Curtailment or Settlement
---------------- -----------------------------------------
IFRIC 23 Uncertainty over Income Tax Treatments
---------------- -----------------------------------------
The Group had to update its accounting policies and disclosures
in relation to IFRS 16, but there were no impacts from other
accounting standard amendments.
IFRS 16 - Leases
This new standard requires that for all leases in excess of one
year, must recognise a right-of-use asset and a related lease
liability representing the obligation to make lease payments. The
Group has a number of property head leases which are already
accounted for as investment properties held under leases in
accordance with IAS 40 and have therefore been grossed up on the
balance sheet. Lessor accounting is substantially unchanged from
current accounting. Hence, this standard does not impact the
Group's financial statements.
b) The following accounting standards and guidance are not yet
effective but are not expected to have a significant impact on the
Group's financial statements or will result in changes to
presentation and disclosure only. They have not been adopted early
by the Group:
IFRS Standards Amendments to References to the Conceptual
Framework in IFRS Standards
-------------------------------- ------------------------------------------
IFRS 3 (amended) Definition of a Business
-------------------------------- ------------------------------------------
IAS 1 and IAS 8 (amended) Definition of Material
-------------------------------- ------------------------------------------
IFRS 9, IAS 39, IFRS 7 (amended) Interest Rate Benchmark Reform
-------------------------------- ------------------------------------------
IAS 1 (amended) Classification of Liabilities as Current
or Non-Current
-------------------------------- ------------------------------------------
The Covid-19 pandemic has caused disrupted activity in real
estate markets creating heightened valuation uncertainty for the
Group's valuers. Consequently, the valuation report contains a
material uncertainty clause. Details of this along with the
valuation methodology and key assumptions are given in note 10.
1. Analysis of net rental income and segmental information
2020 2019
--------------------------- ---------------------------
Direct Net rental Direct Net rental
Revenue costs income Revenue costs income
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------------- ------- ------ ---------- ------- ------ ----------
Rental income 132.7 (2.2) 130.5 123.7 (3.8) 119.9
--------------------------------------- ------- ------ ---------- ------- ------ ----------
Service charges 21.8 (25.5) (3.7) 19.3 (24.6) (5.3)
--------------------------------------- ------- ------ ---------- ------- ------ ----------
Empty rates and other non-recoverables - (6.3) (6.3) - (5.3) (5.3)
--------------------------------------- ------- ------ ---------- ------- ------ ----------
Services, fees, commissions and
sundry income 6.9 (5.4) 1.5 6.4 (4.7) 1.7
--------------------------------------- ------- ------ ---------- ------- ------ ----------
161.4 (39.4) 122.0 149.4 (38.4) 111.0
--------------------------------------- ------- ------ ---------- ------- ------ ----------
All of the properties within the portfolio are geographically
close to each other and have similar economic features and risks.
Management information utilised by the Executive Committee to
monitor and review performance is reviewed as one portfolio. As a
result, management have determined that the Group operates a single
operating segment providing business accommodation for rent in
London.
2. Operating profit
The following items have been charged in arriving at operating
profit:
2020 2019
GBPm GBPm
------------------------------------------------------------- ----- -----
Depreciation(1) 0.9 1.0
------------------------------------------------------------- ----- -----
Staff costs (including share based costs)(1) (note 5) 18.7 18.8
------------------------------------------------------------- ----- -----
Repairs and maintenance expenditure on investment properties 2.4 3.7
------------------------------------------------------------- ----- -----
Trade receivables impairment (note 13) 0.8 0.7
------------------------------------------------------------- ----- -----
Amortisation of intangibles 0.5 0.4
------------------------------------------------------------- ----- -----
Audit fees payable to the Company's Auditor 0.2 0.2
------------------------------------------------------------- ----- -----
1. Charged to direct costs and administrative expenses based on
the underlying nature of the expenses.
Auditor's remuneration: Services provided by the Company's 2020 2019
Auditor and its associates GBP000 GBP000
-------------------------------------------------------------- ------- -------
Audit fees:
-------------------------------------------------------------- ------- -------
Audit of Parent Company and consolidated financial statements 178 154
-------------------------------------------------------------- ------- -------
Audit of subsidiary financial statements 31 27
-------------------------------------------------------------- ------- -------
209 181
-------------------------------------------------------------- ------- -------
Fees for other services:
-------------------------------------------------------------- ------- -------
Audit-related assurance services 31 31
-------------------------------------------------------------- ------- -------
Total fees payable to Auditor 240 212
-------------------------------------------------------------- ------- -------
2020 2019
GBPm GBPm
-------------------------------------------------- ----- -----
Total administrative expenses are analysed below:
-------------------------------------------------- ----- -----
Staff costs 9.8 9.6
-------------------------------------------------- ----- -----
Cash settled share based costs - 0.3
-------------------------------------------------- ----- -----
Equity settled share based costs 2.6 1.9
-------------------------------------------------- ----- -----
Other 5.3 5.3
-------------------------------------------------- ----- -----
17.7 17.1
-------------------------------------------------- ----- -----
3(a). Profit on disposal of investment properties
2020 2019
GBPm GBPm
--------------------------------------------------------- ------ ------
Proceeds from sale of investment properties (net of sale
costs) 79.5 50.8
--------------------------------------------------------- ------ ------
Book value at time of sale (80.3) (42.5)
--------------------------------------------------------- ------ ------
(Loss) / profit on disposal (0.8) 8.3
--------------------------------------------------------- ------ ------
During the year, the sale of the Marshgate site completed.
Workspace received proceeds of GBP15m, of which GBP10.5m was
received in cash in August 2019. The remaining balance of GBP4.5m
is payable upon transfer of the leasehold element and is being held
on the balance sheet as deferred consideration (Note 10). As part
of the sale, Workspace will also be receiving new commercial space,
the value of which is held as investment property on the balance
sheet.
3(b). Other expenses
2020 2019
GBPm GBPm
----------------------------------------------- ----- -----
Change in fair value of deferred consideration 0.2 1.1
----------------------------------------------- ----- -----
0.2 1.1
----------------------------------------------- ----- -----
The value of deferred consideration (cash and overage) from the
sale of investment properties has been revalued by CBRE Limited at
31 March 2020 and 31 March 2019. This resulted in a reduction in
the fair value of deferred consideration of GBP0.2m at 31 March
2020 (31 March 2019: decrease of GBP1.1m). The amounts receivable
are included in the Consolidated balance sheet under current trade
and other receivables (note 13).
4. Finance costs
2020 2019
GBPm GBPm
---------------------------------------------------------- ------ ------
Interest payable on bank loans and overdrafts (4.1) (4.7)
---------------------------------------------------------- ------ ------
Interest payable on other borrowings (18.6) (17.3)
---------------------------------------------------------- ------ ------
Amortisation of issue costs of borrowings (0.7) (1.3)
---------------------------------------------------------- ------ ------
Interest payable on finance leases (1.7) (0.9)
---------------------------------------------------------- ------ ------
Interest capitalised on property refurbishments (note 10) 1.8 2.7
---------------------------------------------------------- ------ ------
Foreign exchange gains/(losses) on financing activities 4.2 5.5
---------------------------------------------------------- ------ ------
Cash flow hedge - transfer (to)/from equity (4.2) (5.5)
---------------------------------------------------------- ------ ------
Finance costs (23.3) (21.5)
---------------------------------------------------------- ------ ------
Exceptional finance costs - (3.1)
---------------------------------------------------------- ------ ------
Total finance costs (23.3) (24.6)
---------------------------------------------------------- ------ ------
Prior year exceptional finance costs of GBP3.1m were incurred
upon repayment of the GBP57.5m 6% Retail Bond in September 2018.
The costs included a GBP2.9m premium on redemption and GBP0.2m of
unamortised finance costs and legal fees relating to this debt.
5. Employees and Directors
2020 2019
Staff costs for the Group during the year were: GBPm GBPm
------------------------------------------------ ----- -----
Wages and salaries 15.3 15.8
------------------------------------------------ ----- -----
Social security costs 1.8 1.9
------------------------------------------------ ----- -----
Other pension costs (note 26) 0.7 0.8
------------------------------------------------ ----- -----
Cash settled share based costs (note 22) - 0.3
------------------------------------------------ ----- -----
Equity settled share based costs (note 22) 2.6 1.9
------------------------------------------------ ----- -----
20.4 20.7
------------------------------------------------ ----- -----
Less costs capitalised (1.7) (1.9)
------------------------------------------------ ----- -----
18.7 18.8
------------------------------------------------ ----- -----
The monthly average number of people employed during the 2020 2019
year was: Number Number
--------------------------------------------------------- ------- -------
Head office staff (including Directors) 117 110
--------------------------------------------------------- ------- -------
Estates and property management staff 118 110
--------------------------------------------------------- ------- -------
235 220
--------------------------------------------------------- ------- -------
The emoluments and pension benefits of the Directors are
determined by the Remuneration Committee of the Board and are set
out in detail in the Directors' Remuneration Report on pages 127 to
154. These form part of the financial statements.
Total Directors' emoluments for the financial year were GBP2.9m
(2019: GBP3.2m), comprising of GBP1.4m (2019: GBP2.2m) of
Directors' remuneration, GBP1.4m (2019: GBP0.9m) gain on exercise
of share options and GBP0.1m (2019: GBP0.1m) of cash contributions
in lieu of pension in respect of two Directors (2019: two).
6. Taxation
2020 2019
GBPm GBPm
----------------------------------------------------- ----- -----
Current tax:
----------------------------------------------------- ----- -----
UK corporation tax 0.8 -
----------------------------------------------------- ----- -----
Deferred tax:
----------------------------------------------------- ----- -----
On origination and reversal of temporary differences (0.4) -
----------------------------------------------------- ----- -----
Total taxation charge 0.4 -
----------------------------------------------------- ----- -----
Taxation chargeable in the year relates to income from non-REIT
activities such as overage, meeting room income and utilities
recharges. The tax on the Group's profit for the year differs from
the standard applicable corporation tax rate in the UK of 19%
(2019: 19%). The differences are explained below:
2020 2019
GBPm GBPm
----------------------------------------------------- ------ ------
Profit before taxation 72.5 137.3
----------------------------------------------------- ------ ------
Tax at standard rate of corporation tax in the UK of
19% (2019: 19%) 13.8 26.0
----------------------------------------------------- ------ ------
Effects of:
----------------------------------------------------- ------ ------
REIT exempt income (14.3) (15.1)
----------------------------------------------------- ------ ------
Changes in fair value not subject to tax as a REIT 1.4 (11.5)
----------------------------------------------------- ------ ------
Share based payment adjustments - 0.1
----------------------------------------------------- ------ ------
Overage income subject to tax when received (0.1) -
----------------------------------------------------- ------ ------
Losses carried forward previously unrecognised - 0.6
----------------------------------------------------- ------ ------
Utilisation of losses unrecognised brought forward (0.4) -
----------------------------------------------------- ------ ------
Other non-taxable expenses - (0.1)
----------------------------------------------------- ------ ------
Total taxation charge 0.4 -
----------------------------------------------------- ------ ------
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 estimates that as the majority of its
future profits will be exempt from tax, future tax charges are
likely to be low.
A UK corporation rate of 19% (effective 1 April 2020) was
substantively enacted on 17 March 2020, reversing the previously
enacted reduction in the rate from 19% to 17%. This will increase
the company's future current tax charge accordingly. The deferred
tax asset at balance sheet date has been calculated at 19% (2019:
17%)
The Group currently has an unrecognised asset in relation to tax
losses carried forward of GBP1.3m (2019: GBP0.8m) calculated at a
corporation tax rate of 19% (2019: 19%).
2020 2019
GBPm GBPm
------------------------------------------------------------ ----- -----
Deferred tax assets:
------------------------------------------------------------ ----- -----
- Deferred tax to be recovered within 12 months 0.8 0.6
------------------------------------------------------------ ----- -----
Deferred tax liabilities:
------------------------------------------------------------ ----- -----
- Deferred tax liabilities to be recovered within 12 months (0.2) (0.6)
------------------------------------------------------------ ----- -----
Deferred tax Assets (net) 0.6 -
------------------------------------------------------------ ----- -----
The movement in deferred tax assets and liabilities during the
year, without taking into consideration the offsetting of balances
within the same tax jurisdiction, is as follows:
Other
income
(overage
receipts) Total
Deferred tax liabilities GBPm GBPm
----------------------------- ---------- -----
At 1 April 2018 0.8 0.8
----------------------------- ---------- -----
Credited to income statement (0.2) (0.2)
----------------------------- ---------- -----
At 31 March 2019 0.6 0.6
----------------------------- ---------- -----
Credited to income statement (0.4) (0.4)
----------------------------- ---------- -----
At 31 March 2020 0.2 0.2
----------------------------- ---------- -----
Expenses
(share
based Tax
payment) losses Total
Deferred tax assets GBPm GBPm GBPm
---------------------------- --------- ------- -------
At 1 April 2018 (0.8) - (0.8)
---------------------------- --------- ------- -------
Charged to income statement 0.2 (0.2) -
---------------------------- --------- ------- -------
At 31 March 2019 (0.6) (0.2) (0.8)
---------------------------- --------- ------- -------
Charged to income statement - - -
---------------------------- --------- ------- -------
At 31 March 2020 (0.6) (0.2) (0.8)
---------------------------- --------- ------- -------
7. Dividends
Payment Per 2020 2019
date share GBPm GBPm
-------------------------------------------- ------------ ------ ----- -----
For the year ended 31 March 2018:
-------------------------------------------- ------------ ------ ----- -----
Final dividend August 2018 18.55p - 33.4
-------------------------------------------- ------------ ------ ----- -----
For the year ended 31 March 2019:
-------------------------------------------- ------------ ------ ----- -----
February
Interim dividend 2019 10.61p - 19.2
-------------------------------------------- ------------ ------ ----- -----
Final dividend August 2019 22.26p 40.1 -
-------------------------------------------- ------------ ------ ----- -----
For the year ended 31 March 2020:
-------------------------------------------- ------------ ------ ----- -----
February
Interim dividend 2020 11.67p 21.1 -
-------------------------------------------- ------------ ------ ----- -----
Dividends for the year 61.2 52.6
---------------------------------------------------------- ------ ----- -----
Timing difference on payment of withholding
tax (0.2) (0.5)
---------------------------------------------------------- ------ ----- -----
Dividends cash paid 61.0 52.1
---------------------------------------------------------- ------ ----- -----
In addition, the Directors are proposing a final dividend in
respect of the financial year ended 31 March 2020 of 24.49 pence
per ordinary share which will absorb an estimated GBP44.3m of
revenue reserves and cash. If approved by the Shareholders at the
AGM, it will be paid on 7 August 2020 to Shareholders who are on
the register of members on 3 July 2020. The dividend will be paid
as a REIT Property Income Distribution ('PID') net of withholding
tax where appropriate.
8. Earnings per share
2020 2019
Earnings used for calculating earnings per share: GBPm GBPm
-------------------------------------------------- ----- ------
Basic and diluted earnings 72.1 137.3
-------------------------------------------------- ----- ------
Change in fair value of investment properties 7.5 (60.8)
-------------------------------------------------- ----- ------
Exceptional finance costs - 3.1
-------------------------------------------------- ----- ------
Profit on disposal of investment properties 0.8 (8.3)
-------------------------------------------------- ----- ------
EPRA earnings 80.4 71.3
-------------------------------------------------- ----- ------
Adjustment for non-trading items:
-------------------------------------------------- ----- ------
Other income/(expenses) 0.2 1.1
-------------------------------------------------- ----- ------
Taxation 0.4 -
-------------------------------------------------- ----- ------
Trading profit after interest 81.0 72.4
-------------------------------------------------- ----- ------
Earnings have been adjusted to derive an earnings per share
measure as defined by the European Public Real Estate Association
('EPRA') and an adjusted underlying earnings per share measure.
Number of shares used for calculating earnings 2020 2019
per share: Number Number
----------------------------------------------- ----------- -----------
Weighted average number of shares (excluding
own shares held in trust) 180,465,649 177,138,144
----------------------------------------------- ----------- -----------
Dilution due to share option schemes 981,867 1,258,651
----------------------------------------------- ----------- -----------
Weighted average number of shares for diluted
earnings per share 181,447,516 178,396,795
----------------------------------------------- ----------- -----------
In pence: 2020 2019
------------------------------------------ ----- -----
Basic earnings per share 40.0p 77.5p
------------------------------------------ ----- -----
Diluted earnings per share 39.7p 77.0p
------------------------------------------ ----- -----
EPRA earnings per share 44.5p 40.3p
------------------------------------------ ----- -----
Adjusted underlying earnings per share(1) 44.6p 40.6p
------------------------------------------ ----- -----
1. Adjusted underlying earnings per share is calculated by
trading profit after interest on a diluted basis.
9. Net assets per share and total accounting return
Net assets used for calculating net assets 2020 2019
per share: GBPm GBPm
------------------------------------------- ------- -------
Net assets at end of year (basic) 1,998.0 1,982.0
------------------------------------------- ------- -------
Derivative financial instruments at fair
value (18.5) (10.1)
------------------------------------------- ------- -------
EPRA net assets 1,979.5 1,971.9
------------------------------------------- ------- -------
Number of shares used for calculating net 2020 2019
assets per share: Number Number
------------------------------------------ ----------- -----------
Shares in issue at year-end 180,747,868 180,385,498
------------------------------------------ ----------- -----------
Less own shares held in trust at year-end (174,719) (135,946)
------------------------------------------ ----------- -----------
Dilution due to share option schemes 1,232,747 1,267,169
------------------------------------------ ----------- -----------
Number of shares for calculating diluted
adjusted net assets per share 181,805,896 181,516,721
------------------------------------------ ----------- -----------
2020 2019
---------------------------- -------- --------
EPRA net assets per share GBP10.89 GBP10.86
---------------------------- -------- --------
Basic net assets per share GBP11.07 GBP11.00
---------------------------- -------- --------
Diluted net assets per Share GBP10.99 GBP10.91
---------------------------- -------- --------
Net assets have been adjusted and calculated on a diluted basis
to derive a net asset per share measure as defined by EPRA.
2020 2019
Total Accounting Return GBP GBP
-------------------------------------- ----- -----
Opening EPRA net assets per share (A) 10.86 10.37
-------------------------------------- ----- -----
Closing EPRA net assets per share 10.89 10.86
-------------------------------------- ----- -----
Increase in EPRA net assets per share 0.03 0.49
-------------------------------------- ----- -----
Ordinary dividends paid in the year 0.34 0.29
-------------------------------------- ----- -----
Total return (B) 0.37 0.78
-------------------------------------- ----- -----
Total accounting return (B/A) 3.4% 7.5%
-------------------------------------- ----- -----
The total accounting return for the year comprises the growth in
absolute EPRA net asset per share plus dividends paid in the year
as a percentage of the opening EPRA net asset value per share. The
total return for the year ended 31 March 2020 was 3.4% (31 March
2019: 7.5%).
EPRA Net Asset Value Metrics
EPRA published updated best practice reporting guidance in
October 2019, which included 3 new Net Asset Valuation metrics;
EPRA Net Reinstatement Value (NRV), EPRA Net Tangible Assets (NTA)
and EPRA Net Disposal Value (NDV). This new set of EPRA NAVs
metrics will come into full effect for accounting periods starting
from 1 January 2020, but are presented below for comparison to the
current EPRA NAV metric.
March 2020 March 2019
---------------------------- ----------------------------
EPRA NRV EPRA NTA EPRA NDV EPRA NRV EPRA NTA EPRA NDV
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------- -------- -------- -------- -------- -------- --------
IFRS Equity attributable
to shareholders 1,998.0 1,998.0 1,998.0 1,982.0 1,982.0 1,982.0
----------------------------- -------- -------- -------- -------- -------- --------
Fair Value of Derivative
Financial Instruments (18.5) (18.5) - (10.1) (10.1) -
----------------------------- -------- -------- -------- -------- -------- --------
Intangibles per IFRS balance
sheet - (2.0) - - (1.6) -
----------------------------- -------- -------- -------- -------- -------- --------
Excess of fair value of
debt over book value - - 11.98 - - 10.7
----------------------------- -------- -------- -------- -------- -------- --------
Purchasers costs 187.8 - 190.0 - -
----------------------------- -------- -------- -------- -------- -------- --------
New EPRA measure 2,167.3 1,977.5 2,009.9 2,161.9 1,970.3 1,992.7
----------------------------- -------- -------- -------- -------- -------- --------
New EPRA measure per share GBP11.92 GBP10.88 GBP11.06 GBP11.91 GBP10.85 GBP10.98
----------------------------- -------- -------- -------- -------- -------- --------
Reconciliation to previously reported EPRA NAV
March 2020 March 2019
---------------------------- ----------------------------
EPRA NRV EPRA NTA EPRA NDV EPRA NRV EPRA NTA EPRA NDV
GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------------- -------- -------- -------- -------- -------- --------
EPRA NAV 1,979.5 1,979.5 1,979.5 1,971.9 1,971.9 1,971.9
---------------------------------- -------- -------- -------- -------- -------- --------
Include Fair value of
Derivative financial instruments - - 18.5 - - 10.1
---------------------------------- -------- -------- -------- -------- -------- --------
Exclude Intangibles per
IFRS balance sheet - (2.0) - - (1.6) -
---------------------------------- -------- -------- -------- -------- -------- --------
Excess of fair value of
debt over book value - - 11.9 - - 10.7
---------------------------------- -------- -------- -------- -------- -------- --------
Purchasers costs 187.8 - - 190.0 - -
---------------------------------- -------- -------- -------- -------- -------- --------
New EPRA measure 2,167.3 1,977.5 2,009.9 2,161.9 1,970.3 1,992.7
---------------------------------- -------- -------- -------- -------- -------- --------
10. Investment properties
2020 2019
GBPm GBPm
---------------------------------------------- ------- -------
Balance at 1 April 2,591.4 2,288.7
---------------------------------------------- ------- -------
Purchase of investment properties - 221.8
---------------------------------------------- ------- -------
Capital expenditure 53.5 88.6
---------------------------------------------- ------- -------
Change in value of finance lease 12.4 (0.3)
---------------------------------------------- ------- -------
Capitalised interest on refurbishments
(note 4) 1.8 2.7
---------------------------------------------- ------- -------
Disposals during the year (65.3) (42.5)
---------------------------------------------- ------- -------
Change in fair value of investment properties (7.5) 60.8
---------------------------------------------- ------- -------
Less: Reclassified as deferred consideration - (2.9)
---------------------------------------------- ------- -------
Less: Classified as assets held for sale - (25.5)
---------------------------------------------- ------- -------
Balance at 31 March 2,586.3 2,591.4
---------------------------------------------- ------- -------
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
4.0% (2019: 4.3%). The total amount of capitalised interest
included in investment properties is GBP14.1m (2019: GBP12.3m).
The change in fair value of investment properties is recognised
in the consolidated income statement.
Investment properties include buildings with a carrying amount
of GBP305m (2019: GBP300m) held under finance leases
with a carrying amount of GBP28.2m (2019: GBP15.8m). Investment
property finance lease commitment details are shown in note
16(h).
Valuation
The Group's investment properties are held at fair value and
were revalued at 31 March 2020 by the external valuer, CBRE
Limited, a firm of independent qualified valuers in accordance with
the Royal Institution of Chartered Surveyors Valuation - Global
Standards current at this balance sheet date. 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.
For the 31 March 2020 valuation, the outbreak of Covid-19 has
had a significant impact on real estate activity causing some
uncertainty for property valuations. Consequently, the valuers have
included a material valuation uncertainty clause in their valuation
report which states:
As at the valuation date, we consider that we can attach less
weight to previous market evidence for comparison purposes, to
inform opinions of value. Indeed, the current response to Covid-19
means that we are faced with an unprecedented set of circumstances
on which to base a judgement. Our valuations are therefore reported
as being subject to 'material valuation uncertainty' as set out in
VPS 3 and VPGA 10 of the RICS Valuation - Global Standards.
Consequently, less certainty - and a higher degree of caution -
should be attached to our valuations than would normally be the
case. Given the unknown future impact that Covid-19 might have on
the real estate market, we recommend that you keep the valuation of
the properties under frequent review.
For the avoidance of doubt, the inclusion of the 'material
valuation uncertainty' declaration above does not mean that the
valuation cannot be relied upon. Rather, the declaration has been
included to ensure transparency of the fact that - in the current
extraordinary circumstances - less certainty can be attached to the
valuation than would otherwise be the case. The material
uncertainty clause is to serve as a precaution and does not
invalidate the valuation.
To allow for the immediate impact of the pandemic, the valuers
have reflected in their assessment a GBP32m deduction a buyer might
expect to allow for the risk of increased customer defaults and
non-payment of rent. The Executive Committee and the Board both
conduct a detailed review of each property valuation to review
appropriate assumptions have been applied. Meetings are held with
the valuers to review and challenge the valuations, to confirm that
they have considered all relevant information, and rigorous reviews
are performed to check that valuations are sensible. In particular,
they discussed the impact on the valuation of the Covid-19 rent
reduction. They are satisfied with the valuers conclusions.
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.
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:
2020 2019
GBPm GBPm
---------------------------------------------------- ------- -------
Total per CBRE valuation report 2,574.4 2,604.0
---------------------------------------------------- ------- -------
Deferred consideration on sale of property (5.3) (2.9)
---------------------------------------------------- ------- -------
Head leases treated as finance leases under IFRS 16 28.2 15.8
---------------------------------------------------- ------- -------
Less: Reclassified as assets held for sale (11.0) (25.5)
---------------------------------------------------- ------- -------
Total investment properties per balance sheet 2,586.3 2,591.4
---------------------------------------------------- ------- -------
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.
As noted in the Significant judgements, key assumptions and
estimates section, 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 1,539.6 A GBP12-GBP79 GBP47 4.1%-7.0% 5.9%
------------------- --------- ---------- ----------- -------- --------- --------
Completed projects 547.4 A GBP20-GBP69 GBP46 4.9%-7.2% 5.6%
------------------- --------- ---------- ----------- -------- --------- --------
Refurbishments 331.3 A/B GBP19-GBP70 GBP35 4.3%-6.4% 5.2%
------------------- --------- ---------- ----------- -------- --------- --------
Redevelopments 139.8 A/B GBP16-GBP35 GBP21 3.5%-6.8% 5.4%
------------------- --------- ---------- ----------- -------- --------- --------
Head leases 28.2 n/a - - - -
------------------- --------- ---------- ----------- -------- --------- --------
Total 2,586.3
------------------- --------- ---------- ----------- -------- --------- --------
A = Income capitalisation method.
B = Residual value method.
A key unobservable input for redevelopments at planning stage
and refurbishments is developer's profit. The range is 15%-19% with
a weighted average of 17%.
Costs to complete is a key unobservable input for redevelopments
at planning stage with a range of GBP213-GBP240 per sq. ft. and a
weighted average of GBP229 per sq. ft.
Costs to complete are not considered to be a significant
unobservable input for refurbishments due to the high percentage of
costs that are fixed.
Sensitivity analysis:
A +/- 10% movement in ERVs or a +/- 25 basis points movement in
yields would result in the following increase/decrease in the
valuation.
GBPm +/- 10% in ERVs +/- 25 bps in yields
------------------- --------------- --------------------
Like-for-like +154/-154 -63/+68
------------------- --------------- --------------------
Completed projects +55/-55 -23/26
------------------- --------------- --------------------
Refurbishments +39/-39 -18/+24
------------------- --------------- --------------------
Redevelopments +11/-11 -5/+6
------------------- --------------- --------------------
11. Property, plant and equipment
Equipment
and fixtures
Cost or valuation GBPm
--------------------------------- -------------
1 April 2018 7.2
--------------------------------- -------------
Additions during the year 1.5
--------------------------------- -------------
Balance at 31 March 2019 8.7
--------------------------------- -------------
Additions during the year 2.3
--------------------------------- -------------
Balance at 31 March 2020 11.0
--------------------------------- -------------
Accumulated depreciation
--------------------------------- -------------
1 April 2018 4.3
--------------------------------- -------------
Charge for the year 1.0
--------------------------------- -------------
Balance at 31 March 2019 5.3
--------------------------------- -------------
Charge for the year 0.9
--------------------------------- -------------
Balance at 31 March 2020 6.2
--------------------------------- -------------
Net book amount at 31 March 2020 4.8
--------------------------------- -------------
Net book amount at 31 March 2019 3.4
--------------------------------- -------------
12. Other Investments
The Group holds the following investment:
2020 2019
GBPm GBPm
----------------------------------------------------------- ----- -----
15% of share capital of Excell Holdings Limited (2019:15%) 7.9 9.8
----------------------------------------------------------- ----- -----
7.9 9.8
----------------------------------------------------------- ----- -----
In accordance with IFRS 9 the valuation of the share in Excell
Holdings has been adjusted to fair value, resulting in a reduction
of GBP1.9m in the financial year, recognised in the Consolidated
statement of other comprehensive income.
13. Trade and other receivables
2020 2019
Current trade and other receivables GBPm GBPm
-------------------------------------------------------- ----- -----
Trade receivables 11.1 5.0
-------------------------------------------------------- ----- -----
Less provision for impairment of receivables (1.1) (0.7)
-------------------------------------------------------- ----- -----
Trade receivables - net 10.0 4.3
-------------------------------------------------------- ----- -----
Prepayments, other receivables and accrued income 9.9 6.5
-------------------------------------------------------- ----- -----
Deferred consideration on sale of investment properties 5.3 2.9
-------------------------------------------------------- ----- -----
25.2 13.7
-------------------------------------------------------- ----- -----
Receivables at fair value:
Included within deferred consideration on sale of investment
properties is GBP0.8m (2019: GBP2.9m) of overage which is held at
fair value through profit and loss. In the current year, as the
amounts receivable are expected within the following 12 months it
has been classified as current receivables.
The deferred consideration arising on the sale of investment
properties relates to cash and overage. The overage has been fair
valued by CBRE Limited 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 change in fair value
recorded in the consolidated income statement, including both
current and non-current elements, was a loss of GBP0.2m (31 March
2019: GBP1.1m loss) (note 3(c)).
2020 2019
GBPm GBPm
--------------------------------------------------------- ----- -----
Deferred consideration on sale of investment properties:
--------------------------------------------------------- ----- -----
Balance at 1 April 2.9 7.0
--------------------------------------------------------- ----- -----
Cash received (1.9) (5.8)
--------------------------------------------------------- ----- -----
Additions/reclassifications 4.5 2.8
--------------------------------------------------------- ----- -----
Change in fair value (0.2) (1.1)
--------------------------------------------------------- ----- -----
Balance at 31 March 5.3 2.9
--------------------------------------------------------- ----- -----
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.
Movements on the provision for impairment of trade receivables
are shown below:
2020 2019
GBPm GBPm
---------------------------------------------------------- ----- -----
Balance at 1 April 0.7 0.6
---------------------------------------------------------- ----- -----
Increase in provision for impairment of trade receivables 0.8 0.3
---------------------------------------------------------- ----- -----
Receivables written off during the year (0.4) (0.2)
---------------------------------------------------------- ----- -----
Balance at 31 March 1.1 0.7
---------------------------------------------------------- ----- -----
14. Cash and cash equivalents
2020 2019
GBPm GBPm
----------------------------------------- ----- -----
Cash at bank and in hand 70.3 17.3
----------------------------------------- ----- -----
Restricted cash - tenants' deposit deeds 8.9 9.4
----------------------------------------- ----- -----
79.2 26.7
----------------------------------------- ----- -----
Tenants' deposit deeds represent returnable cash security
deposits received from tenants and are held in ring-fenced bank
accounts in accordance with the terms of the individual lease
contracts.
15. Trade and other payables
2020 2019
GBPm GBPm
------------------------------------------- ----- -----
Trade payables 4.8 5.7
------------------------------------------- ----- -----
Other tax and social security payable 5.6 0.4
------------------------------------------- ----- -----
Corporation tax payable 0.8 -
------------------------------------------- ----- -----
Tenants' deposit deeds (note 14) 8.9 9.4
------------------------------------------- ----- -----
Tenants' deposits 25.6 21.2
------------------------------------------- ----- -----
Accrued expenses 26.6 28.7
------------------------------------------- ----- -----
Deferred income - rent and service charges 10.8 11.6
------------------------------------------- ----- -----
83.1 77.0
------------------------------------------- ----- -----
There is no material difference between the above amounts and
their fair values due to the short-term nature of the payables.
16. Borrowings
(a) Balances
2020 2019
GBPm GBPm
--------------------------------------------- ----- -----
Current
--------------------------------------------- ----- -----
Senior Floating Rate Notes 2020 (unsecured) 9.0 -
--------------------------------------------- ----- -----
Non-current
--------------------------------------------- ----- -----
Bank loans (unsecured) 153.0 138.5
--------------------------------------------- ----- -----
5.6% Senior US Dollar Notes 2023 (unsecured) 81.0 76.9
--------------------------------------------- ----- -----
5.53% Senior Notes 2023 (unsecured) 83.9 83.8
--------------------------------------------- ----- -----
Senior Floating Rate Notes 2020 (unsecured) - 9.0
--------------------------------------------- ----- -----
3.07% Senior Notes (unsecured) 79.8 79.7
--------------------------------------------- ----- -----
3.19% Senior Notes (unsecured) 119.7 119.7
--------------------------------------------- ----- -----
3.6% Senior Notes (unsecured) 99.8 99.8
--------------------------------------------- ----- -----
Finance lease obligations 28.2 15.8
--------------------------------------------- ----- -----
654.4 623.2
--------------------------------------------- ----- -----
(b) Net Debt
2020 2019
GBPm GBPm
----------------------------------- ------ ------
Borrowings per (a) above 654.4 623.2
----------------------------------- ------ ------
Adjust for:
----------------------------------- ------ ------
Finance leases (28.2) (15.8)
----------------------------------- ------ ------
Cost of raising finance 1.9 2.6
----------------------------------- ------ ------
Foreign exchange differences (16.6) (12.5)
----------------------------------- ------ ------
611.5 597.5
----------------------------------- ------ ------
Cash at bank and in hand (note 14) (70.3) (17.3)
----------------------------------- ------ ------
Net Debt 541.2 580.2
----------------------------------- ------ ------
At 31 March 2020 the Group had GBP96m (2019: GBP110m) of undrawn
bank facilities, a GBP2m overdraft facility (2019: GBP2m) and
GBP70.3m of unrestricted cash (2019: GBP17.3m).
Net debt represents borrowing facilities drawn, less cash at
bank and in hand. It excludes impacts of foreign exchange
differences as these are fixed via swaps, finance leases and any
cost of raising finance as they have no future cash flows.
(c) Maturity
2020 2019
GBPm GBPm
--------------------------------------------- ----- -----
Repayable within one year 9.0 -
--------------------------------------------- ----- -----
Repayable between one year and two years - 9.0
--------------------------------------------- ----- -----
Repayable between two years and three years 154.0 -
--------------------------------------------- ----- -----
Repayable between three years and four years 148.5 140.0
--------------------------------------------- ----- -----
Repayable between four years and five years - 148.5
--------------------------------------------- ----- -----
Repayable in five years or more 300.0 300.0
--------------------------------------------- ----- -----
611.5 597.5
--------------------------------------------- ----- -----
Cost of raising finance (1.9) (2.6)
--------------------------------------------- ----- -----
Foreign exchange differences 16.6 12.5
--------------------------------------------- ----- -----
626.2 607.4
--------------------------------------------- ----- -----
Finance leases:
--------------------------------------------- ----- -----
Repayable in five years or more 28.2 15.8
--------------------------------------------- ----- -----
654.4 623.2
--------------------------------------------- ----- -----
(d) Interest rate and repayment profile
Principal at
period end Interest Interest
GBPm rate payable Repayable
---------------------- ------------ ----------- ----------- ------------
Current
---------------------- ------------ ----------- ----------- ------------
Bank overdraft due - Base+2.25% Variable On demand
within one year or
on demand
---------------------- ------------ ----------- ----------- ------------
Private Placement
Notes:
---------------------- ------------ ----------- ----------- ------------
Senior Floating 9.0 LIBOR+3.5% Half yearly June 2020
Rate Notes
---------------------- ------------ ----------- ----------- ------------
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
---------------------- ------------ ----------- ----------- ------------
3.07% Senior Notes 80.0 3.07% Half yearly August 2025
---------------------- ------------ ----------- ----------- ------------
3.19% Senior Notes 120.0 3.19% Half yearly August 2027
---------------------- ------------ ----------- ----------- ------------
3.6% Senior Notes 100.0 3.6% Half yearly January 2029
---------------------- ------------ ----------- ----------- ------------
Bank loan 154.0 LIBOR+1.65% Monthly June 2022
---------------------- ------------ ----------- ----------- ------------
611.5
---------------------- ------------ ----------- ----------- ------------
(e) Derivative financial instruments
The Group has cross currency swaps 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 cross currency swaps the Group has created a
synthetic Sterling fixed rate liability totalling GBP64.5m.
These swaps have been designated as a cash flow hedge with
changes in fair value dealt with in other comprehensive income. The
Group has elected to continue applying hedge accounting as set out
in IAS 39 to these swaps as permitted by IFRS 9.
Hedge effectiveness is determined at the inception of the hedge
relationship, and through periodic prospective effectiveness
assessments to ensure that an economic relationship exists between
the hedged item and hedging instrument. The critical terms of this
hedging relationship perfectly matched at origination, so for the
prospective assessment of effectiveness a qualitative assessment
was performed. Quantitative retrospective effectiveness tests using
the hypothetical derivative method are performed at each period end
to determine the continuing effectiveness of the relationship.
Sources of hedge ineffectiveness include credit risk or changes
made to the critical terms of the hedged item or the hedged
instrument.
The effects of the cash flow US Dollar swap hedging relationship
is as follows:
2020 2019
------------------------------------------- --------- ---------
Carrying amount of derivative 18.5 10.1
------------------------------------------- --------- ---------
Change in fair value of designated hedging
instrument 8.3 7.6
------------------------------------------- --------- ---------
Change in fair value of designated hedged
item (4.2) (5.4)
------------------------------------------- --------- ---------
Notional amount GBPm 64.5 64.5
------------------------------------------- --------- ---------
Notional amount ($m) 100 100
------------------------------------------- --------- ---------
Rate payable (%) 5.66% 5.66%
------------------------------------------- --------- ---------
Maturity June 2023 June 2023
------------------------------------------- --------- ---------
Hedge ratio 1:1 1:1
------------------------------------------- --------- ---------
(f) Financial instruments and fair values
2020 2020 2019 2019
Book Fair Book Fair
value value value value
GBPm GBPm GBPm GBPm
----------------------------------------------- ------ ------ ------ ------
Financial liabilities held at amortised cost
----------------------------------------------- ------ ------ ------ ------
Bank loans 153.0 154.0 138.5 140.0
----------------------------------------------- ------ ------ ------ ------
Private Placement Notes 473.2 484.1 468.9 478.1
----------------------------------------------- ------ ------ ------ ------
Finance lease obligations 28.2 28.2 15.8 15.8
----------------------------------------------- ------ ------ ------ ------
654.4 666.3 623.2 633.9
----------------------------------------------- ------ ------ ------ ------
Financial assets at fair value through other
comprehensive income
----------------------------------------------- ------ ------ ------ ------
Derivative financial instruments:
----------------------------------------------- ------ ------ ------ ------
Cash flow hedge - derivatives used for hedging (18.5) (18.5) (10.1) (10.1)
----------------------------------------------- ------ ------ ------ ------
Other investments (6.9) (6.9) (9.8) (9.8)
----------------------------------------------- ------ ------ ------ ------
(25.4) (25.4) (19.9) (19.9)
----------------------------------------------- ------ ------ ------ ------
Financial assets at fair value through profit
or loss
----------------------------------------------- ------ ------ ------ ------
Deferred consideration (overage) 5.3 5.3 2.9 2.9
----------------------------------------------- ------ ------ ------ ------
5.3 5.3 2.9 2.9
----------------------------------------------- ------ ------ ------ ------
In accordance with IFRS 13 disclosure is required for financial
instruments that are carried or disclosed in the financial
statements at fair value. The fair values of all the Group's
financial derivatives, bank loans and Private Placement Notes, 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 10.
(g) Financial instruments by category
2020 2019
Assets GBPm GBPm
------------------------------------------------------ ----- -----
a) Assets at value through profit or loss
------------------------------------------------------ ----- -----
Deferred consideration (overage) 5.3 2.9
------------------------------------------------------ ----- -----
5.3 2.9
------------------------------------------------------ ----- -----
b) Loans and receivables
------------------------------------------------------ ----- -----
Cash and cash equivalents 79.2 26.7
------------------------------------------------------ ----- -----
Trade and other receivables excluding prepayments(1) 11.7 5.7
------------------------------------------------------ ----- -----
90.9 32.4
------------------------------------------------------ ----- -----
c) Assets at value through other comprehensive income
------------------------------------------------------ ----- -----
Other investments 6.9 9.8
------------------------------------------------------ ----- -----
6.9 9.8
------------------------------------------------------ ----- -----
Total 103.1 45.1
------------------------------------------------------ ----- -----
2020 2019
Liabilities GBPm GBPm
---------------------------------------------------------------- ----- -----
Other financial liabilities at amortised cost
---------------------------------------------------------------- ----- -----
Borrowings (excluding finance leases) 626.2 607.4
---------------------------------------------------------------- ----- -----
Finance lease liabilities 28.2 15.8
---------------------------------------------------------------- ----- -----
Trade and other payables excluding non-financial liabilities(2) 65.9 65.0
---------------------------------------------------------------- ----- -----
720.3 688.2
---------------------------------------------------------------- ----- -----
1. Trade and other receivables exclude prepayments of GBP8.2 m
(2019: GBP5.1m) and non-cash deferred consideration of GBP5.3 m
(2019: GBP2.9m).
2. Trade and other payables exclude other tax and social
security of GBP5.6m (2019: GBP0.4m), corporation tax of GBP0.8m
(2019: nil) and deferred income of GBP10.8m (2019: GBP11.6m).
(h) Finance leases
Finance lease liabilities are in respect of leased investment
property.
Minimum lease payments under finance leases fall due as
follows:
2020 2019
GBPm GBPm
------------------------------------------- ------- ------
Within one year 1.7 1.0
------------------------------------------- ------- ------
Between two and five years 6.8 3.9
------------------------------------------- ------- ------
Beyond five years 159.3 93.0
------------------------------------------- ------- ------
167.8 97.9
------------------------------------------- ------- ------
Future finance charges on finance leases (139.6) (82.1)
------------------------------------------- ------- ------
Present value of finance lease liabilities 28.2 15.8
------------------------------------------- ------- ------
(i) Changes in liabilities from financing activities
Bank Finance Derivatives
loans lease used
and borrowings liabilities for hedging-assets
GBPm GBPm GBPm
---------------------------------------------------------- --------------- ------------ -------------------
Balance at 1 April 607.4 15.8 10.1
---------------------------------------------------------- --------------- ------------ -------------------
Changes from financing cash flows:
---------------------------------------------------------- --------------- ------------ -------------------
Proceeds from bank borrowings and Private Placement
Notes 104.0 - -
---------------------------------------------------------- --------------- ------------ -------------------
Repayment of bank borrowings (90.1) - -
---------------------------------------------------------- --------------- ------------ -------------------
Finance costs for new/amended borrowing facilities - -
---------------------------------------------------------- --------------- ------------ -------------------
Total changes from cash flows 13.9 - -
---------------------------------------------------------- --------------- ------------ -------------------
Changes in fair value of derivative financial instruments - - 8.4
---------------------------------------------------------- --------------- ------------ -------------------
Foreign exchange differences 4.2 - -
---------------------------------------------------------- --------------- ------------ -------------------
Amortisation of issue costs of borrowing 0.7 - -
---------------------------------------------------------- --------------- ------------ -------------------
Changes in finance leases - 12.4 -
---------------------------------------------------------- --------------- ------------ -------------------
Interest payable 22.7 1.4 -
---------------------------------------------------------- --------------- ------------ -------------------
Interest paid (22.7) (1.4) -
---------------------------------------------------------- --------------- ------------ -------------------
Total other changes 4.9 12.4 8.4
---------------------------------------------------------- --------------- ------------ -------------------
Balance at 31 March 2020 626.2 28.2 18.5
---------------------------------------------------------- --------------- ------------ -------------------
17. Notes to cash flow statement
Reconciliation of profit for the year to cash generated from
operations:
2020 2019
GBPm GBPm
---------------------------------------------------------- ----- ------
Profit before tax 72.5 137.3
---------------------------------------------------------- ----- ------
Depreciation 0.9 1.0
---------------------------------------------------------- ----- ------
Amortisation of intangibles 0.5 0.4
---------------------------------------------------------- ----- ------
Loss / (profit) on disposal of investment properties 0.8 (8.3)
---------------------------------------------------------- ----- ------
Other expenses 0.2 1.1
---------------------------------------------------------- ----- ------
Net loss / (gain) from change in fair value of investment
property 7.5 (60.8)
---------------------------------------------------------- ----- ------
Equity settled share based payments 2.6 1.9
---------------------------------------------------------- ----- ------
Finance costs 23.0 21.5
---------------------------------------------------------- ----- ------
Exceptional finance costs - 3.1
---------------------------------------------------------- ----- ------
Changes in working capital:
---------------------------------------------------------- ----- ------
(Increase) / decrease in trade and other receivables (9.5) 1.8
---------------------------------------------------------- ----- ------
Increase in trade and other payables 10.2 0.8
---------------------------------------------------------- ----- ------
Cash generated from operations 108.7 99.8
---------------------------------------------------------- ----- ------
For the purposes of the cash flow statement, cash and cash
equivalents comprise the following:
2020 2019
GBPm GBPm
----------------------------------------- ----- -----
Cash at bank and in hand 70.3 17.3
----------------------------------------- ----- -----
Restricted cash - tenants' deposit deeds 8.9 9.4
----------------------------------------- ----- -----
79.2 26.7
----------------------------------------- ----- -----
18. Share capital and share premium
2020 2019
GBPm GBPm
------------------------------------------------ ----- -----
Issued: Fully paid ordinary shares of GBP1 each 180.7 180.4
------------------------------------------------ ----- -----
2020 2019
Movements in share capital were as follows: Number Number
-------------------------------------------- ----------- -----------
Number of shares at 1 April 180,385,498 163,806,591
-------------------------------------------- ----------- -----------
Issue of shares 362,370 16,578,907
-------------------------------------------- ----------- -----------
Number of shares at 31 March 180,747,868 180,385,498
-------------------------------------------- ----------- -----------
The Group issued 362,370 shares (2019: 258,845 shares) during
the year to satisfy the exercise of share options with net proceeds
of GBP0.7m (2019: GBP0.3m). In the prior year the Group raised net
proceeds of GBP176.4m via the issue of 16.3m Ordinary Shares, to
assist funding of our acquisition and refurbishment plans.
Share Capital Share Premium
--------------- ---------------
2020 2019 2020 2019
GBPm GBPm GBPm GBPm
-------------------- ------- ------ ------- ------
Balance at 1 April 180.4 163.8 295.1 135.3
-------------------- ------- ------ ------- ------
Issue of shares 0.3 16.6 0.3 159.8
-------------------- ------- ------ ------- ------
Balance at 31 March 180.7 180.4 295.4 295.1
-------------------- ------- ------ ------- ------
19. Other reserves
Equity
settled
Other share
Investment based Merger Hedging
Reserve payments reserve reserve Total
GBPm GBPm GBPm GBPm GBPm
--------------------------------------------- ----------- --------- -------- -------- -----
Balance at 1 April 2018 - 15.7 8.7 (5.0) 19.4
--------------------------------------------- ----------- --------- -------- -------- -----
Share based payments - 1.9 - - 1.9
--------------------------------------------- ----------- --------- -------- -------- -----
Change in fair value of other investments
(note 12) 4.0 - - - 4.0
--------------------------------------------- ----------- --------- -------- -------- -----
Change in fair value of derivative financial
instruments
(cash flow hedge) - - - 2.1 2.1
--------------------------------------------- ----------- --------- -------- -------- -----
Balance at 31 March 2019 4.0 17.6 8.7 (2.9) 27.4
--------------------------------------------- ----------- --------- -------- -------- -----
Share based payments - 2.6 - - 2.6
--------------------------------------------- ----------- --------- -------- -------- -----
Change in fair value of other investments
(note 12) (1.9) - - - (1.9)
--------------------------------------------- ----------- --------- -------- -------- -----
Change in fair value of derivative financial
instruments
(cash flow hedge) - - - 4.1 4.1
--------------------------------------------- ----------- --------- -------- -------- -----
Balance at 31 March 2020 2.1 20.2 8.7 1.2 32.2
--------------------------------------------- ----------- --------- -------- -------- -----
20. Capital commitments
At the year end the estimated amounts of contractual commitments
for future capital expenditure not provided for were:
2020 2019
GBPm GBPm
--------------------------------- ----- -----
Investment property construction 4.3 16.1
--------------------------------- ----- -----
21. Responsibility Statement
The 2020 Annual Report, which will be issued on 8(th) June 2020,
contains a responsibility statement which states that on 4 June
2020, the date of approval of the Annual Report, the Directors
confirm that, to the best of their knowledge:
-- The Group financial statements, which have been prepared in
accordance with IFRS as adopted by the EU, give a true and fair
view of the assets, liabilities, financial position and profit of
the Group.
-- The Business Review contained within the Annual Report,
includes as fair review of the developments and performance of the
business, and the position of the Group, with a description of the
principle risks and uncertainties that the Group faces included in
a separate section.
-- The Annual Report and financial statements, taken as a whole,
are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company's performance,
business model and strategy.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR FIMJTMTTMTBM
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