TIDMWKP
RNS Number : 6503A
Workspace Group PLC
03 June 2021
3 June 2021
WORKSPACE GROUP PLC
FULL YEAR RESULTS
RESILIENT PERFORMANCE AND IMPROVING MOMENTUM
Workspace Group PLC ("Workspace") is pleased to announce its
Full Year Results for the year
ended 31 March 2021. The comments in this announcement refer to
the period from 1 April 2020 to 31 March 2021 unless otherwise
stated.
Financial performance: adversely impacted by Covid-19
-- Trading profit after interest down 52% to GBP38.7m from a 33%
(GBP40.5m) decrease in net rental income to GBP81.5m, which
includes GBP19.9m of rent discounts given to customers
-- Total dividend of 17.75p per share (2020: 36.16p)
-- Property valuation of GBP2,324m, an underlying reduction of
GBP258m (10.0%) from 31 March 2020, driven by a fall in estimated
rental values, with property yields stable
-- EPRA net tangible assets per share down 13.8% to GBP9.38
-- GBP300 million Green Bond issued in March 2021 with a
seven-year term and interest rate of 2.25% pa
-- Exceptional finance costs of GBP16.4m on early repayment in
April 2021, of GBP148.5m of private placement notes due June 2023
that carried an interest rate of 5.6% pa
-- Loan to value of 24% (2020: 21%) with GBP434m of undrawn
facilities and cash at 31 March 2021, reducing to GBP269m on a
proforma basis following the repayment of private placement
notes
-- Loss before tax of GBP235.7m (2020: GBP72.5m profit),
reflecting the fall in trading profit after interest, reduction in
the property valuation and exceptional finance costs
Customer activity: positive signs as restrictions eased
-- Significant improvement in enquiries, viewings and lettings
in recent months, now reaching pre-Covid levels
-- Occupancy and rent roll adversely impacted over the year by
customers leaving, existing customer activity and pricing on new
lettings
-- Like-for-like occupancy down 11.7% to 81.6%, stabilising in the fourth quarter
-- Like-for-like rent per sq. ft. down by 12.9% to GBP36.57 and
like-for-like rent roll down 23.9% to GBP85.1m
-- Strong levels of rent collection, with 95% of rents due for
the year (net of discounts and deferrals) received
ESG: a long-term sustainable model
-- Committed to being a net zero carbon business by 2030
-- Green bond issued to finance and refinance green building projects
-- Project pipeline delivering employment-led regeneration of local communities
Portfolio activity: actively managing for growth
-- Two new business centres opened in the first half, and two
projects completed in the second half
-- Obtained planning consent in May 2021 at Kennington Park
Business Centre for 200,000 sq. ft. of new office space
-- Healthy pipeline of refurbishment and redevelopment activity,
projected to deliver 1.4m sq. ft. of new and upgraded space over
the next five years
-- One property disposal completed for GBP11m at 30 March 2020 valuation
Commenting on the results, Graham Clemett, Chief Executive
Officer said:
" This has been an incredibly challenging year for the entire
country, and we have seen first-hand the impact of Covid-19 on many
of our customers. Despite the unprecedented circumstances, we have
delivered a resilient performance which underlines the strength of
our model, prudence of our financial strategy and enduring appeal
of our flexible offer.
Our focus throughout the pandemic has been on our customers, and
we are pleased that so many of them have decided that Workspace
will continue to be their home as they look ahead to the
post-pandemic recovery. The role of the office in our working lives
is being re-examined and all the signs highlight flexibility,
quality and wellbeing becoming more important for businesses and
their people. We are perfectly positioned to benefit from this
accelerated shift in attitudes by offering businesses a home they
can grow in, without having to compromise their unique identity in
a furnished or serviced office, or put up with the constraints of
more traditionally leased offices.
We are seeing encouraging signs of recovery in customer demand
and we have a lot to be optimistic about in the next year and
beyond. We see significant opportunities for organic and inorganic
growth as the economy comes back to life, whilst delivering on our
commitment to becoming a net zero carbon business by 2030, and
continuing to drive employment-led regeneration across the capital.
After an incredibly challenging year, we are confident that our
customer-focused strategy will enable us to take a leadership
position and seize the significant market opportunity in front of
us."
Summary Results
March March Change
2021 2020
Financial performance
------------ ---------- ----------
Net rental income GBP81.5m GBP122.0m -33%
------------ ---------- ----------
Trading profit after interest GBP38.7m GBP81.0m -52%
------------ ---------- ----------
Profit / (loss) before tax GBP(235.7)m GBP72.5m -425%
------------ ---------- ----------
Total dividend per share 17.75p 36.16p -51%
------------ ---------- ----------
Valuation
------------ ---------- ----------
EPRA net tangible assets per
share GBP9.38 GBP10.88 -13.8%
------------ ---------- ----------
EPRA net reinstatement value
per share GBP10.26 GBP11.92 -13.9%
------------ ---------- ----------
CBRE property valuation GBP2,324m GBP2,574m -10.0%**
------------ ---------- ----------
Financing
------------ ---------- ----------
Loan to value 24% 21% 3%*
------------ ---------- ----------
Undrawn bank facilities and cash GBP434m GBP166m +GBP268m*
------------ ---------- ----------
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
Finsbury Glover Hering
James Bradley 07500 616161
Chris Ryall 07342 713748
Details of results presentation
The results presentation and Q&A will be streamed live at
8.45am at the following link:
https://secure.emincote.com/client/workspace/workspace017
Conference call: In order to join 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/workspace017/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
The past year has been one of the most challenging in
Workspace's history; with London effectively closed for much of it.
This is borne out in our results, which reflect the impact of the
pandemic on our customers. On a more positive note, we have seen
new customer demand pick up materially and footfall in our centres
improve as Government restrictions have eased, confirming the
appeal of our distinctive buildings and flexible offer.
Looking at the results for the year, net rental income fell 33%
to GBP81.5m, with GBP19.9m of rent discounts and deferrals offered
to customers, and more significantly the net loss of around 10% of
our customers. The decline in income resulted in a 52% fall in
trading profit after interest, to GBP38.7m. This fall and the
reduction in the property valuation were the main contributors to a
pre-tax loss of GBP235.7m.
We decided at the half year to defer a decision on the payment
of the dividend as the UK was entering another month of lockdown at
that time and there was heightened uncertainty. However, the
outcome of the year has been robust and so, with our committed
policy to pay dividends on a covered basis out of earnings, I am
delighted to say that we are now recommending a final dividend of
17.75p per share.
We saw a 10% decrease in the underlying property valuation to
GBP2,324m, resulting in a 14% decline in EPRA net tangible assets
per share to GBP9.38. The fall in the valuation reflected the
reduction we have seen in rental values, with property yields
stable. This fall in rental values was no surprise given that we
have been pricing our lettings through the year into a very thin
market of demand.
The support we have given our customers at the outset of the
pandemic and the ongoing interaction we have had with them to
ensure they have the right space for their business has not gone
unrewarded and we are delighted that the majority of our customers
stayed with us through this year. Like-for-like occupancy fell
11.7% to 81.6%, but we have seen that stabilise now and expect a
good recovery over the coming year. Our support and focus on
customer engagement also stood us in good stead for rent
collection, which has been robust.
Pricing has fallen in line with the weaker levels of customer
demand through the year and we expect it to remain subdued as we
focus on driving the recovery in occupancy. With our flexible
leases, however, pricing is extremely dynamic and this allows us to
capture reversion more quickly than a traditional lease as market
demand improves.
Despite the difficult environment we were operating in, we
continued to execute our project pipeline during the year and, in
fact, opened two new business centres in the summer of 2020. These
continue to let up, with Lock Studios in Bow particularly capturing
the imagination of businesses in that area. It is a true showcase
of the employment-led regeneration element of our Doing the Right
Thing ESG strategy, as we have created a vibrant hub for businesses
in a community that previously lacked quality commercial space.
Creating sustainable environments and mitigating the risk of
climate change is another strand of our Doing the Right Thing
commitments and this year, we published our detailed pathway to
becoming a net zero carbon business by 2030. This includes approved
science-based targets and a commitment to drive down emissions of
both operational and embodied carbon. A focus on sustainability is
not limited to development and asset management; we also published
a green finance framework during the year and successfully raised
GBP300m through a green bond to finance and refinance green
projects.
The third pillar of our Doing the Right Thing framework is
looking after our people. They are the true strength of this
business, a fact never more evident than in times of crisis. We
have a fantastic culture at Workspace and our clear purpose and the
values we adhere to have ensured that we have all been working
toward a common goal. I'd like to thank all our teams across
Workspace, and our partners, who have worked tirelessly both
remotely and in our centres to support customers during this
incredibly challenging year and keep the business on an even keel
as we emerge in good shape out of the pandemic.
Never before in our history has there been such a spotlight
shone on the office market as businesses all over the world
consider how to use office space in the future. We are taking this
opportunity to promote the Workspace offer as London reopens for
business over the coming months by launching a targeted advertising
campaign. We are highlighting the benefits of working from
Workspace, in inspiring spaces in iconic locations where businesses
can create their own identity and provide a home for their
teams.
Looking to the future, we have a very clear strategy. We believe
we can deliver superior value for all stakeholders through a focus
on customer-led growth, operational excellence and Doing the Right
Thing. We are confident in our product and see significant
opportunity to grow our business both organically and through
acquisitions.
BUSINESS REVIEW
CUSTOMER ACTIVITY
Covid-19 restrictions had a significant impact on new customer
activity during the year with enquiries averaging 739 per month
(2020: 1,087), viewings averaging 328 per month (2020: 675) and
lettings averaging 96 per month (2020: 121).
On a more positive note, new customer demand picked up strongly
through the fourth quarter, despite the third lockdown, reaching
1,172 enquiries and 150 lettings in March 2021.
Monthly Activity Monthly Average
-------------------------------------------
31 Mar 28 Feb 31 Jan Q4 Q3 Q2 Q1 FY
2021 2021 2021
20/21 20/21 20/21 20/21 19/20
------- ------- ------- ------- ------- ------- -------
Enquiries 1,172 839 720 910 672 869 506 1087
Viewings 535 404 300 413 322 435 142 675
Lettings 150 113 71 111 109 119 43 121
----------- ------- ------- ------- ------- ------- ------- ------- -------
Momentum has continued into the first quarter of the new
financial year with 939 enquiries and 612 viewings in April
2021.
As Government restrictions have eased, customer utilisation of
our business centres has also improved, reaching 20% of pre-Covid
levels by the end of March and 33% by the end of May.
RENT ROLL
Total rent roll, representing the total annualised net rental
income at a given date, was down 21.7% to GBP103.9m at March 2021,
with overall occupancy reducing from 87.0% to 77.8%.
Total Rent Roll GBPm
---------------------------------------------- ------
At 31 March 2020 132.8
New customers 7.2
Retained (renewals, expansions, contractions) (8.4)
Leavers (26.6)
Other (1.1)
---------------------------------------------- ------
At 31 March 2021 103.9
---------------------------------------------- ------
Over the past year, we have worked closely with our customers to
retain as many as possible, including resizing or relocating them
where appropriate. Unfortunately for some customers this was not
possible, and they chose to vacate. We also worked hard to capture
new demand with around 600 new customers joining us during the
year, adding GBP7.2m to the rent roll. Rent roll movement by
property category is summarised below.
Total Rent Roll GBPm
----------------------------------- ------
At 31 March 2020 132.8
Like-for-like portfolio (26.7)
Completed projects 0.4
Projects underway and design stage (2.2)
Disposals / other (0.4)
----------------------------------- ------
At 31 March 2021 103.9
----------------------------------- ------
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 at their current rent
roll and occupancy) is GBP151.7m.
Like-for-like Portfolio
The like-for-like portfolio represents 82% of the total rent
roll as at 31 March 2021. It comprises 38 properties with
stabilised occupancy, excluding buildings impacted by significant
refurbishment or redevelopment activity or contracted for sale.
Like-for-like trends reported for previous financial years are not
restated for the property transfers made in the current financial
year.
The net result of customers joining, resizing and leaving during
the year has been a 11.7% reduction in like-for-like occupancy to
81.6%. We have, however, seen a slowing decline in occupancy in
recent months with occupancy stabilising by the end of the fourth
quarter of the year.
Quarter Ended
----------------------------------------------
Like-for-like 31 Mar 21 31 Dec 20 30 Sep 20 30 Jun 20
------------------- ---------- ---------- ---------- ----------
Occupancy 81.6% 82.1% 85.5% 90.1%
Occupancy Change* (0.5)% (3.4)% (4.6)% (3.2)%
Rent per sq. ft. GBP36.57 GBP38.46 GBP40.61 GBP41.16
Rent per sq. ft.
change (4.9%) (5.3)% (1.3)% (2.0)%
Rent Roll GBP85.1m GBP89.8m GBP98.8m GBP105.8m
Rent Roll change (5.2)% (9.1)% (6.6)% (5.3)%
* absolute change
We continued to price our offer competitively to capture demand
including, on a case by case basis, offering short-term lease
incentives where customers are planning a delayed return to their
office. We saw a 12.9% decrease in rent per sq. ft. to GBP36.57
over the year. Around half the fall of 4.9% in the final quarter
results from short term lease incentives which will unwind in the
current financial year.
The combined impact of the reduction in like-for-like occupancy
and rent per sq. ft. in the year was a 23.9% fall in like-for-like
rent roll, to GBP85.1m.
If all the like-for-like properties were at 90% occupancy at the
CBRE estimated rental values at 31 March 2021, the rent roll would
be GBP107.9m, GBP22.8m higher than the actual cash rent roll at 31
March 2021.
Completed Projects
There are now a total of seven projects in the completed
projects category. Rent roll has remained broadly flat, decreasing
by just GBP0.1m in the year to GBP5.6m, with overall occupancy at
62.6%.
This category includes Mare Street, Hackney, and Lock Studios,
Bow, which both opened in June 2020 providing a combined 94,000 sq.
ft. of new space as well as Wenlock Studios, Old Street, which
completed in December 2020 providing 11,000 sq. ft. of upgraded
space and Parkhall Business Centre, Dulwich, which completed in
February 2021 providing 78,000 sq. ft. of upgraded space.
Excluding the most recently completed projects at Parkhall
Studios and Wenlock Studios, rent roll across the other completed
projects increased by GBP0.4m in the year with Lock Studios letting
up particularly well (over 50% let as at 31 March 2021).
If the buildings in this category were all at 90% occupancy at
the CBRE estimated rental values at 31 March 2021, the rent roll
would be GBP10.6m, an uplift of GBP5.0m.
Projects Underway - Refurbishments
We are currently underway on four refurbishment projects that
will deliver 214,000 sq. ft. of new and upgraded space. As at 31
March 2021, rent roll was GBP3.2m, down GBP2.1m in the year. We
expect the refurbishment of Pall Mall Deposit to complete during
the current year delivering 59,000 sq. ft. of new and upgraded
space.
Assuming 90% occupancy at the CBRE estimated rental values at 31
March 2021, the rent roll at these four buildings once they are
completed would be GBP7.6m, an uplift of GBP4.4m.
Projects Underway - Redevelopments
There are currently two mixed-use redevelopment projects
underway providing 58,000 sq. ft. of net lettable space, with the
first delivering 17,000 sq. ft. of additional space at The Light
Bulb, Wandsworth, completing in the first half of the current
financial year, followed by a new 41,000 sq. ft. business centre in
Stratford, to be named Mirror Works (formerly Marshgate) opening in
the second half of the year.
Assuming 90% occupancy at the CBRE estimated rental values at 31
March 2021, the rent roll at the two new business centres would be
GBP1.3m.
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 2021 was GBP10.1m, unchanged in the
year.
PROFIT PERFORMANCE
Trading profit after interest for the year is down 52.2%
(GBP42.3m) on the prior year to GBP38.7m.
31 March 31 March
GBPm 2021 2020
------------------------------ -------- --------
Net rental income 81.5 122.0
Administrative expenses (19.0 ) (17.7)
Net finance costs ( 23.8) (23.3)
------------------------------ -------- --------
Trading profit after interest 38.7 81.0
------------------------------ -------- --------
Net rental income was down 33.2% (GBP40.5m) in total to
GBP81.5m, as detailed below:
31 March 31 March
GBPm 2021 2020
----------------------------- -------- --------
Underlying net rental income 105.5 120.3
Rent discounts and waivers (19.9) -
Expected credit losses (4.2) (0.4)
Disposals 0 .1 2.1
----------------------------- -------- --------
Net rental income 81.5 122.0
----------------------------- -------- --------
Net rental income was significantly reduced by rent discounts
and waivers given to customers, predominantly in respect of the
first quarter when we offered a 50% discount to all our business
centre customers.
Although we hold rent deposits for the majority of our
customers, the extension of Government restrictions on rent
collection has impeded efforts to collect rent from a number of our
customers, resulting in a significant charge for expected credit
losses of GBP4.2m, an increase of GBP3.8m on the prior year.
There was a GBP14.8m (12.3%) decrease in underlying net rental
income to GBP105.5m, as detailed below:
31 March 31 March
GBPm 2021 2020
---------------------------------------------- -------- --------
Rental income 115.4 128.4
Unrecovered service charges (2.1) (3.3)
Empty rates and other non-recoverable costs (7.1) (6.3)
Services, fees, commissions and sundry income (0.7) 1.5
Underlying net rental income 105.5 120.3
---------------------------------------------- -------- --------
The reduction in rental income of GBP13.0m has been driven by
the fall in rent roll as noted above. Our focus on cost control and
reduced numbers of customers in our centres during the lockdown
periods have enabled us to reduce unrecovered service charges by
GBP1.2m. Lower average occupancy over the year has, however,
resulted in an increase in empty rates and non-recoverable costs of
GBP0.8m. Services, fees, commissions and sundry income have reduced
by GBP2.2m due to both the fall in occupancy and the lower
utilisation of our buildings, leading to a reduced ability to
generate ancillary income.
Administrative expenses increased by 7.3% (GBP1.3m) to GBP19.0m
reflecting a full year of our increased investment in our sales and
marketing capability. The prior year benefited from a short-term
saving in executive costs following the stepping down of the
previous CEO in May 2019. Discretionary costs and headcount remain
under tight control.
Net finance costs increased by 2.1% (GBP0.5m) in the year, with
a slight increase in the average interest rate from 3.7% to 3.8%,
reflecting a reduction in interest capitalisation due to a lower
level of refurbishment activity during the year.
Loss before tax was GBP235.7m compared to a profit before tax of
GBP72.5m in the prior year.
31 March 31 March
GBPm 2021 2020
---------------------------------------------- -------- --------
Trading profit after interest 38.7 81.0
Change in fair value of investment properties ( 257.7) (7.5)
Loss on sale of investment properties ( 0.1) (0.8)
Exceptional finance costs (16.4) -
Other items ( 0.2) (0.2)
---------------------------------------------- -------- --------
(Loss) / profit before tax (235.7) 72.5
---------------------------------------------- -------- --------
Adjusted underlying earnings per share 21.3p 44.6p
---------------------------------------------- -------- --------
The deficit in the property revaluation increased from GBP7.5m
in the prior year to a deficit of GBP257.7m in the current
year.
Exceptional finance costs relate to the refinancing of $100m and
GBP84m of private placement notes due 2030 which were repaid early
in April 2021 after notice was given in March 2021. The costs
included a GBP16.3m premium on redemption and GBP0.1m of
unamortised finance costs.
Adjusted underlying earnings per share, based on EPRA earnings
adjusted for non-trading items and calculated on a diluted share
basis, is down 52% to 21.3 p.
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.
At the half year we decided to defer a decision on the payment
of the dividend as the UK was entering another month of lockdown at
that time and there was heightened uncertainty. However, in line
with our policy, the Board is now recommending a final dividend of
17.75p per share (2020: 24.49p) to be paid on 6 August 2021 to
shareholders on the register at 2 July 2021. The dividend will be
paid as a Property Income Distribution and fully meets the REIT
distribution requirement for the year to 31 March 2021, with a
dividend cover at 1.2 times adjusted underlying earnings per
share.
PROPERTY VALUATION
At 31 March 2021, our property portfolio was independently
valued by CBRE at GBP2,324m, an underlying decrease of 10.0%
(GBP258m) in the year. The main movements in the valuation over the
year are set out below:
GBPm
--------------------------- -----
Valuation at 31 March 2020 2,574
Revaluation deficit (258)
Capital expenditure 24
Capital receipts (5)
Disposals (11)
--------------------------- -----
Valuation at 31 March 2021 2,324
--------------------------- -----
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 1,790 (205)
Completed Projects 181 (8)
Refurbishments 256 (41)
Redevelopments 97 (4)
Total 2,324 (258)
------------------------- --------- ----------------
Like-for-like Properties
There was a 10.3% (GBP205m) underlying decrease in the valuation
of like-for-like properties to GBP1,790m. This is driven by a 9.8%
decrease in ERV per sq. ft. reflecting price reductions we have
seen on lettings and renewals completed during the year. The
equivalent yield of the like-for-like portfolio is unchanged at
5.8%.
31 March 31 March
2021 2020 Change
-------------------------- -------- -------- --------
ERV per sq. ft. GBP42.07 GBP46.65 -9.8%
Rent per sq. ft. GBP36.57 GBP41.98 -12.9%
Equivalent Yield 5.8% 5.8% -
Net Initial Yield 4.2% 5.1% -0.9%
Capital Value per sq. ft. GBP628 GBP696 -9.8%
-------------------------- -------- -------- --------
Completed Projects
There was an underlying decrease of 4.2% (GBP8m) in the value of
the seven completed projects to GBP181m. The overall valuation
metrics for completed projects are set out below:
31 March
2021
-------------------------- --------
ERV per sq. ft. GBP30.55
Rent per sq. ft. GBP23.15
Equivalent Yield 5.7%
Net Initial Yield 2.8%
Capital Value per sq. ft. GBP469
-------------------------- --------
The major movements within this category were a decrease of
GBP5.2m at Mare Street Studios, Hackney, which is in the early
stages of letting up after being launched in June 2020 and a
decrease of GBP4.2m at 160 Fleet Street reflecting a reduction in
pricing expectations based on recent lettings.
Current Refurbishments and Redevelopments
There was an underlying reduction of 13.8% (GBP41m) in the value
of our current refurbishments to GBP256m and a reduction of 4.0%
(GBP4m) in the value of our current redevelopments to GBP97m.
The most significant movements in this category are a decrease
of GBP8.8m at Fitzroy Street, Fitzrovia, where the sole occupier,
as expected, has exercised their break ahead of our planned
extensive refurbishment, a decrease of GBP7.9m at Westbourne
Studios where, again as expected, a large customer has now vacated
ahead of refurbishment and a reduction of GBP7.7m at Biscuit
Factory (J Block), Bermondsey, reflecting lower occupancy and
income expectations.
REFURBISHMENT ACTIVITY
A summary of the status of the refurbishment pipeline at 31
March 2021 is set out below:
Projects Number Capex spent Capex to Upgraded and
spend new space (sq.
ft.)
----------------------- ------- ------------ --------- ----------------
Underway 4 GBP18m GBP14m 214,000
Design stage 5 - GBP165m 510,000
Design stage (without
planning) 2 - GBP130m 320,000
In May 2021, we received planning permission for the
re-designation of land use for a major scheme at Kennington Park.
The existing 91,000 sq. ft. of low-grade space situated to the
south and east of the Kennington Park campus will be replaced with
200,000 sq. ft. of high specification office space.
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 2021 is set out below:
No. of properties Residential units Cash received New commercial space (sq. ft.)
-------------- ------------------ ------------------ -------------- -------------------------------
Underway 2 277 GBP24m 58,000
Design stage 5 1,210 - 289,000
In return for the sale of the residential schemes at Marshgate,
Stratford, and Light Bulb (phase 2), Wandsworth, the two
redevelopment schemes underway, we have received GBP24m in cash and
two new commercial buildings, which will be delivered shortly. The
new building at Marshgate, a 41,000 sq. ft. business centre, will
be named Mirror Works.
In June 2020, we were granted planning consent for a significant
mixed-use redevelopment project in Wandsworth. The 5.4 acre
Riverside site currently comprises 145,000 sq. ft. of low quality
office, leisure and light industrial space, with a rent roll of
GBP2.0m. The planning consent is for a new 104,000 sq. ft. business
centre and 65,000 sq. ft. of new light industrial space, as well as
402 residential apartments, including 35% affordable housing.
There are now five schemes at the design stage that have
obtained mixed-use planning consents but are not yet contracted for
sale.
ACQUISITIONS AND DISPOSALS
No acquisitions were made in the year, however, we continue to
track opportunities across London and remain disciplined in our
returns criteria.
In September 2020, we completed the sale of Bow Exchange, Bow,
for GBP11.0m, in line with the 31 March 2020 valuation, at a
capital value of GBP298 per sq. ft.
CASH FLOW
The Group generates strong operating cash flow in line with
trading profit. A summary of cash flows in the half year are set
out below:
31 March 31 March
GBPm 2021 2020
----------------------------------------------------- -------- --------
Net cash from operations after interest 39 85
Dividends paid (46) (61)
Capital expenditure (26) (62)
Property disposals and cash receipts 11 65
Capital receipts - 12
Finance costs for new / amended borrowing facilities (2) -
Net movement (24) 39
Opening debt (net of cash) (541) (580)
----------------------------------------------------- -------- --------
Closing debt (net of cash) (565) (541)
----------------------------------------------------- -------- --------
There is a reconciliation of net debt in note 16(b) to the
financial statements.
Rent collection for the year was robust, despite the Government
restrictions on rent collection measures which have been in place.
Overall, 95% of rent due (after discounts and deferrals given to
customers largely in respect of the first quarter) has been
collected, including 93% of rent due for the fourth quarter of
2020/21 collected to date.
Q1 Q2 Q3 Q4 FY20/21
----------------------------- --- --- --- --- -------
Rent collected as proportion
of rent receivable after
discounts and deferrals 97% 98% 95% 93% 95%
Rent collected as proportion
of gross rents 48% 86% 94% 92% 79%
We have to date collected 91% of rent due for the first quarter
of 2021/22 which is ahead of the level of rents collected at the
same point in the fourth quarter of 2020/21.
The majority of the amounts still outstanding, which include
GBP1.1m of agreed rent deferrals, are covered by rent deposits or
by the provision for doubtful debts.
FINANCING
As at 31 March 2021, the Group had GBP183.6m of cash and
GBP250.0m of undrawn facilities:
Drawn amount Facility Maturity
----------------------- ------------ --------- ---------
Private Placement Notes GBP448.5m GBP448.5m 2023-2029
Green Bond GBP300.0m GBP300.0m 2028
Bank facilities - GBP250m 2022-2023
Total GBP748.5m GBP998.5m
------------ ---------
All facilities are provided on an unsecured basis with an
average maturity of 4.8 years (31 March 2020: 4.5 years).
In February 2021 we extended the term of GBP167m of our revolver
bank facilities by one year to June 2023.
In March 2021 we issued a sterling-denominated senior unsecured
guaranteed Green Bond in an aggregate principal amount of GBP300
million for a term of seven years, which bears interest at a rate
of 2.25 per cent per annum. The Green Bond was issued in connection
with the Company's new Green Finance Framework, in line with
Workspace's ESG 'Doing the Right Thing' strategy and our recently
published net zero carbon pathway.
At 31 March 2021, the average interest cost of our fixed rate
private placement notes was 4.1%. Our revolver bank facilities are
provided at a floating rate of 1.65% over LIBOR.
At 31 March 2021, loan to value (LTV) was 24% (31 March 2020:
21%) and interest cover, based on net rental income and interest
paid (excluding exceptional refinancing costs), was 3.8 times (31
March 2020: 5.2), providing good headroom on all facility
covenants.
In March 2021, we gave notice to prepay GBP148.5m of our fixed
rate private placement notes due June 2023 on 30 April 2021. The
refinancing reduces the average cost of debt to 3.1% and average
debt maturity increases to 5.3 years on a proforma basis. Following
the refinancing, 71% of our facilities are at fixed rates,
representing 100% of our borrowings on a drawn basis, LTV remains
unchanged at 24% and undrawn revolver facilities and cash reduces
to GBP269m on a proforma basis.
NET ASSETS
Net assets decreased in the year by GBP279m to GBP1,720m. EPRA
net tangible assets (NTA) per share at 31 March 2021 was down 13.8%
(GBP1.50) to GBP9.38 and EPRA net reinstatement value (NRV) per
share was down 13.9% (GBP1.66) to GBP10.26:
EPRA NRV per EPRA NTA per
share share
GBP GBP
--------------------------------------- ------------ ------------
At 31 March 2020 11.92 10.88
Adjusted trading profit after interest 0.21 0.21
Property valuation deficit (1.42) (1.42)
Purchasers costs (0.16) -
Dividends paid (0.24) (0.24)
Exceptional finance costs (0.09) (0.09)
Other 0.04 0.04
---------------------------------------- ------------ ------------
At 31 March 2021 10.26 9.38
---------------------------------------- ------------ ------------
The calculation of EPRA NTA and NRV per share measures are set
out in note 9 of the financial statements.
outlook
The strong pick-up in new customer activity that we saw through
the fourth quarter has continued into the new financial year.
Assuming the lifting of Covid restrictions continues as planned and
there are no further lockdowns, we expect to see continued momentum
on new lettings and the rate of customers leaving and downsizing
returning to normal levels.
Looking at the financial outlook for FY 2021/22, the following
should be taken into account:
-- Our focus in the coming year will be on regaining occupancy
and we will continue to price to the market until we see sustained
improvement in occupancy levels
-- Net rental income will lag the improvement in rent roll as occupancy recovers
-- There will also be a drag on income from unrecovered service
charges and other occupancy-related costs, such as empty rates
-- Capex will increase as we continue to progress the project
pipeline. This includes Arup's vacation of Fitzroy Street,
Fitzrovia, in June 2021 ahead of the planned refurbishment
-- We expect credit losses to reduce to more normal levels once
the Government moratorium on rent collection is lifted
-- The successful refinancing has resulted in a lower cost of debt
KEY property statistics
Half Year ended
------------------------------------------
31 Mar 30 Sept 31 Mar 30 Sept
2021 2020 2020 2019
-------------------------------------- --------- --------- --------- ---------
Workspace Group Portfolio
CBRE property valuation GBP2,324m GBP2,450m GBP2,574m GBP2,682m
Number of locations 58 58 59 64
Lettable floorspace (million sq.
ft.) 3.9 3.9 3.9 4.0
Number of lettable units 4,196 4,147 4,009 4,969
Rent roll of occupied units GBP103.9m GBP118.2m GBP132.8m GBP130.4m
Average rent per sq. ft. GBP33.90 GBP37.15 GBP39.18 GBP38.06
Overall occupancy 77.8% 81.1% 87.0% 86.3%
Like-for-like number of properties 38 38 29 28
Like-for-like lettable floor space
(million sq. ft.) 2.8 2.8 2.2 2.2
Like-for-like rent roll growth (13.9)% (11.6)% 1.2% 0.7%
Like-for-like rent per sq. ft. growth (9.9)% (3.3)% 0.3% (1.0)%
Like-for-like occupancy movement (3.9)% (7.8)% 0.9% 1.7%
-------------------------------------- --------- --------- --------- ---------
1) The like-for-like category has been restated in the current financial year for the following:
-- The transfer in of Goswell Road, Cannon Wharf, Ink Rooms, 60
Gray's Inn Road, The Light Box, Edinburgh House, The Frames, The
Leather Market, China Works and Fuel Tank from the completed
projects category
-- The transfer in of Canalot Studios from the refurbishment projects category
The transfer in of Poplar Business Park from the redevelopment
projects category
-- The transfer out of Westbourne Studios to the refurbishment projects category
The transfer out of Mallard Place to the redevelopment projects
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 2021
2021 2020
Notes GBPm GBPm
------------------------------------------------ ----- -------- ------
Revenue 1 142.3 161.4
------------------------------------------------ ----- -------- ------
Direct costs 1 (60.8) (39.4)
------------------------------------------------ ----- -------- ------
Net rental income 1 81.5 122.0
------------------------------------------------ ----- -------- ------
Administrative expenses 2 (19.0) (17.7)
------------------------------------------------ ----- -------- ------
Trading profit 62.5 104.3
------------------------------------------------ ----- -------- ------
Loss on disposal of investment properties 3(a) (0.1) (0.8)
------------------------------------------------ ----- -------- ------
Other expenses 3(b) (0.2) (0.2)
------------------------------------------------ ----- -------- ------
Change in fair value of investment properties 10 (257.7) (7.5)
------------------------------------------------ ----- -------- ------
Operating (loss)/ profit 2 (195.5) 95.8
------------------------------------------------ ----- -------- ------
Finance costs 4 (23.8) (23.3)
------------------------------------------------ ----- -------- ------
Exceptional finance costs 4 (16.4) -
------------------------------------------------ ----- -------- ------
(Loss)/ profit before tax (235.7) 72.5
------------------------------------------------ ----- -------- ------
Taxation 6 - (0.4)
------------------------------------------------ ----- -------- ------
(Loss)/ profit for the financial year after tax (235.7) 72.1
------------------------------------------------ ----- -------- ------
Basic (loss)/ earnings per share 8 (130.3)p 40.0p
------------------------------------------------ ----- -------- ------
Diluted (loss)/ earnings per share 8 (130.3)p 39.7p
------------------------------------------------ ----- -------- ------
Consolidated statement of comprehensive income
For the year ended 31 March 2021
2021 2020
GBPm GBPm
------------------------------------------------------------- ------- -----
(Loss)/ profit for the financial year (235.7) 72.1
------------------------------------------------------------- ------- -----
Other comprehensive income:
------------------------------------------------------------- ------- -----
Items that may be classified subsequently to profit or loss:
------------------------------------------------------------- ------- -----
Change in fair value of other investments - (1.9)
------------------------------------------------------------- ------- -----
Cash flow hedge - transfer to income statement 8.6 (4.2)
------------------------------------------------------------- ------- -----
Cash flow hedge - change in fair value (9.8) 8.3
------------------------------------------------------------- ------- -----
Other comprehensive (loss)/ income in the year (1.2) 2.2
------------------------------------------------------------- ------- -----
Total comprehensive (loss)/ income for the year (236.9) 74.3
------------------------------------------------------------- ------- -----
Consolidated balance sheet
As at 31 March 2021
2021 2020
Notes GBPm GBPm
--------------------------------- ----------- ------- -------
Non-current assets
--------------------------------- ----------- ------- -------
Investment properties 10 2,349.9 2,586.3
--------------------------------- ----------- ------- -------
Intangible assets 2.4 2.0
--------------------------------- ----------- ------- -------
Property, plant and equipment 11 4.0 4.8
--------------------------------- ----------- ------- -------
Other investments 12 7.9 7.9
--------------------------------- ----------- ------- -------
Derivative financial instruments 16(e) & (f) 8.7 18.5
--------------------------------- ----------- ------- -------
Deferred tax 6 0.4 0.6
--------------------------------- ----------- ------- -------
2,373.3 2,620.1
--------------------------------- ----------- ------- -------
Current assets
--------------------------------- ----------- ------- -------
Trade and other receivables 13 29.3 25.2
--------------------------------- ----------- ------- -------
Assets held for sale 10 - 11.0
--------------------------------- ----------- ------- -------
Cash and cash equivalents 14 191.0 79.2
--------------------------------- ----------- ------- -------
220.3 115.4
--------------------------------- ----------- ------- -------
Total assets 2,593.6 2,735.5
--------------------------------- ----------- ------- -------
Current liabilities
--------------------------------- ----------- ------- -------
Trade and other payables 15 (95.0) (83.1)
--------------------------------- ----------- ------- -------
Borrowings 16(a) (156.6) (9.0)
--------------------------------- ----------- ------- -------
(251.6) (92.1)
--------------------------------- ----------- ------- -------
Non-current liabilities
--------------------------------- ----------- ------- -------
Borrowings 16(a) (596.2) (617.2)
--------------------------------- ----------- ------- -------
Lease obligations 17 (26.3) (28.2)
--------------------------------- ----------- ------- -------
(622.5) (645.4)
--------------------------------- ----------- ------- -------
Total liabilities (874.1) (737.5)
--------------------------------- ----------- ------- -------
Net assets 1,719.5 1,998.0
--------------------------------- ----------- ------- -------
Shareholders' equity
--------------------------------- ----------- ------- -------
Share capital 19 181.1 180.7
--------------------------------- ----------- ------- -------
Share premium 19 295.5 295.4
--------------------------------- ----------- ------- -------
Investment in own shares (9.6) (9.6)
--------------------------------- ----------- ------- -------
Other reserves 20 33.1 32.2
--------------------------------- ----------- ------- -------
Retained earnings 1,219.4 1,499.3
--------------------------------- ----------- ------- -------
Total shareholders' equity 1,719.5 1,998.0
--------------------------------- ----------- ------- -------
Consolidated statement of changes in equity
For the year ended 31 March 2021
Attributable to owners of the Parent
--------------- ----- ----------------------------------------------------------------------------------------------
Total
Investment in Retained share-holders'
Share capital Share premium own shares Other reserves earnings equity
Notes GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ----- ------------- ------------- --------------- -------------- --------------- --------------
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 20 - - - 2.2 - 2.2
--------------- ----- ------------- ------------- --------------- -------------- --------------- --------------
Total
comprehensive
income - - - 2.2 72.1 74.3
--------------- ----- ------------- ------------- --------------- -------------- --------------- --------------
Transactions
with owners:
--------------- ----- ------------- ------------- --------------- -------------- --------------- --------------
Share issues 19 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
--------------- ----- ------------- ------------- --------------- -------------- --------------- --------------
Profit for the
financial year - - - - (235.7) (235.7)
--------------- ----- ------------- ------------- --------------- -------------- --------------- --------------
Other
comprehensive
loss for the
year 20 - - - (1.2) - (1.2)
--------------- ----- ------------- ------------- --------------- -------------- --------------- --------------
Total
comprehensive
loss - - - (1.2) (235.7) (236.9)
--------------- ----- ------------- ------------- --------------- -------------- --------------- --------------
Transactions
with owners:
--------------- ----- ------------- ------------- --------------- -------------- --------------- --------------
Share issues 19 0.4 0.1 - (0.4) - 0.1
--------------- ----- ------------- ------------- --------------- -------------- --------------- --------------
Dividends paid 7 - - - - (44.2) (44.2)
--------------- ----- ------------- ------------- --------------- -------------- --------------- --------------
Share based
payments - - - 2.5 - 2.5
--------------- ----- ------------- ------------- --------------- -------------- --------------- --------------
Balance at 31
March 2021 181.1 295.5 (9.6) 33.1 1,219.4 1,719.5
--------------- ----- ------------- ------------- --------------- -------------- --------------- --------------
Consolidated statement of cash flows
For the year ended 31 March 2021
2021 2020
Notes GBPm GBPm
-------------------------------------------------------------------- ----- ------- ------
Cash flows from operating activities
-------------------------------------------------------------------- ----- ------- ------
Cash generated from operations 18 62.4 108.7
-------------------------------------------------------------------- ----- ------- ------
Interest paid (23.4) (24.1)
-------------------------------------------------------------------- ----- ------- ------
Tax (paid)/ received (0.6) 0.1
-------------------------------------------------------------------- ----- ------- ------
Net cash inflow from operating activities 38.4 84.7
-------------------------------------------------------------------- ----- ------- ------
Cash flows from investing activities
-------------------------------------------------------------------- ----- ------- ------
Capital expenditure on investment properties (23.6) (59.7)
-------------------------------------------------------------------- ----- ------- ------
Proceeds from disposal of investment properties (net of sale costs) 11.0 75.0
-------------------------------------------------------------------- ----- ------- ------
Purchase of intangible assets (1.2) (0.9)
-------------------------------------------------------------------- ----- ------- ------
Purchase of property, plant and equipment (1.2) (2.3)
-------------------------------------------------------------------- ----- ------- ------
Other income (overage receipts) 0.1 2.0
-------------------------------------------------------------------- ----- ------- ------
Purchase of investments - 0.5
-------------------------------------------------------------------- ----- ------- ------
Net cash (outflow)/ inflow from investing activities (14.9) 14.6
-------------------------------------------------------------------- ----- ------- ------
Cash flows from financing activities
-------------------------------------------------------------------- ----- ------- ------
Proceeds from issue of ordinary share capital 19 0.1 0.6
-------------------------------------------------------------------- ----- ------- ------
Finance costs for new/ amended borrowing facilities (2.0) -
-------------------------------------------------------------------- ----- ------- ------
Repayment of bank borrowings and Private Placement Notes 16(h) (217.0) (90.1)
-------------------------------------------------------------------- ----- ------- ------
Draw down of bank borrowings 16(h) 54.0 104.0
-------------------------------------------------------------------- ----- ------- ------
Green Bond Proceeds 299.5 -
-------------------------------------------------------------------- ----- ------- ------
Own shares purchase (net) - (0.3)
-------------------------------------------------------------------- ----- ------- ------
Dividends paid 7 (46.3) (61.0)
-------------------------------------------------------------------- ----- ------- ------
Net cash inflow/ (outflow) from financing activities 88.3 (46.8)
-------------------------------------------------------------------- ----- ------- ------
Net increase in cash and cash equivalents 111.8 52.5
-------------------------------------------------------------------- ----- ------- ------
Cash and cash equivalents at start of year 18 79.2 26.7
-------------------------------------------------------------------- ----- ------- ------
Cash and cash equivalents at end of year 18 191.0 79.2
-------------------------------------------------------------------- ----- ------- ------
Notes to the CONDENSED financial statements
For the year ended 31 March 2021
The financial information set out above does not constitute the
company's statutory accounts for the years ended 31 March 2021 or
2020 but is derived from those accounts. Statutory accounts for
2020 have been delivered to the Registrar of Companies, and those
for 2021 will be delivered in due course. The auditor has reported
on those accounts; their reports were i) unqualified and ii) 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 2020, with exception of the following:
Basis of preparation
These condensed 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 Accounting Standards in
conformity with the Companies Act 2006 ('IFRS') and the applicable
legal requirements of the Companies Act 2006. In addition the Group
financial statements are required under the UK Disclosure and
Transparency Rules 4.1.6, to be prepared in accordance with
International Financial Reporting Standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union
("IFRSs as adopted by the EU").
The extended 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 some
uncertainty as to how the economy will recover and whether there
will be any long term impact on the demand for office space. 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 includes the following key
assumptions:
- A gradual recovery period of two years from summer 2021 to
return pre-pandemic levels of 90% occupancy.
- New lettings continue to be below the average price per sq.
ft. of vacating customers until like for-like occupancy levels
reach 90%.
- Continued higher levels of counterparty risk, with bad debt
significantly higher than pre-pandemic levels.
- A further two months of Government restrictions on public
movement in the winter of 2021 ("lockdown").
- The forecast assumes there will be no movement in yield, but
the property valuation will decrease further in line with the fall
in rent psf.
The appropriateness of the going concern basis is reliant on the
continued availability of borrowings and compliance with loan
covenants. The Group issued a GBP300m green bond and extended two
thirds of the GBP250m revolving loan facility in March 2021. At 31
March 2021, the Group had a fully unsecured loan portfolio of
GBP748.5m, which subsequently reduced to GBP684m following the
early prepayment in April 2021 of the private placement loan notes
due in 2023. All outstanding borrowings require compliance with LTV
and Interest Cover covenants. As at the tightest test date in the
scenarios modelled, the Group could withstand a reduction in net
rental income of 55% and a fall in the asset valuation of 51%
compared to 31 March 2021 before these covenants are breached,
assuming no mitigating actions are taken.
As at 31 March 2021, the Company had significant headroom on its
facilities with GBP184m of cash and undrawn facilities of GBP250m.
Of the undrawn facilities, GBP83m is due to expire in June 2022.
There is no other debt due to be refinanced until June 2023. For
the full period of the scenario tested, the Group maintains
sufficient headroom in its cash and loan facilities and loan
covenants are met.
Consequently, the Directors are confident that the Group and
Company will have sufficient funds to continue to meet its
liabilities as they fall due for at least 12 months from the date
of approval of the financial statements and therefore have prepared
the financial statements on a going concern basis.
New accounting standards, amendments and guidance
a) During the year to 31 March 2021 the Group adopted the
following accounting standards and guidance:
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
-------------------------------- ----------------------------------------------------------------------
There was no material impact from the adoption of these
accounting standard amendments on the 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 17 Insurance contracts
---------------------------- -------------------------------------------------------------------------------------
IAS 1 (amended) Classification of liabilities as current or non-current
---------------------------- -------------------------------------------------------------------------------------
IFRS 10 and IAS 28 (amended) Sale or Contribution of Assets between an investor and its Associate or Joint Venture
---------------------------- -------------------------------------------------------------------------------------
IFRS 3 (amended) Reference to the Conceptual Framework
---------------------------- -------------------------------------------------------------------------------------
IAS 16 (amended) Property, Plant and Equipment: Proceeds before intended use
---------------------------- -------------------------------------------------------------------------------------
1. Analysis of net rental income and segmental information
2021 2020
---------------------------------------- ----------------------------------------
Revenue Direct costs Net rental income Revenue Direct costs Net rental income
GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------------- ------- ------------ ----------------- ------- ------------ -----------------
Rental income 118.0 (24.4) 93.6 132.7 (2.2) 130.5
---------------------------------- ------- ------------ ----------------- ------- ------------ -----------------
Service charges 20.3 (24.6) (4.3) 21.8 (25.5) (3.7)
---------------------------------- ------- ------------ ----------------- ------- ------------ -----------------
Empty rates and other
non-recoverables - (7.1) (7.1) - (6.3) (6.3)
---------------------------------- ------- ------------ ----------------- ------- ------------ -----------------
Services, fees, commissions and
sundry income 4.0 (4.7) (0.7) 6.9 (5.4) 1.5
---------------------------------- ------- ------------ ----------------- ------- ------------ -----------------
142.3 (60.8) 81.5 161.4 (39.4) 122.0
---------------------------------- ------- ------------ ----------------- ------- ------------ -----------------
Included within direct costs for rental income and service
charge in the period are amounts of GBP17.8m (2020: GBPnil) and
GBP2.1m (2020: GBPnil) respectively, relating to discounts provided
to customers, accounted for in accordance with IFRS 9.
Additionally, a charge of GBP4.2m (2020: GBP0.4m) for expected
credit losses in respect of receivables from customers is
recognised in direct costs of rental income in the period.
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:
2021 2020
GBPm GBPm
------------------------------------------------------------- ----- -----
Depreciation1 2.0 0.9
------------------------------------------------------------- ----- -----
Staff costs (including share based costs)1 (note 5) 20.1 18.7
------------------------------------------------------------- ----- -----
Repairs and maintenance expenditure on investment properties 2.5 2.4
------------------------------------------------------------- ----- -----
Trade receivables impairment (note 13) 3.5 0.8
------------------------------------------------------------- ----- -----
Amortisation of intangibles 0.9 0.5
------------------------------------------------------------- ----- -----
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.
2021 2020
Auditor's remuneration: services provided by the Company's Auditor and its associates GBP000 GBP000
-------------------------------------------------------------------------------------- ------- -------
Audit fees:
-------------------------------------------------------------------------------------- ------- -------
Audit of Parent Company and consolidated financial statements 207 178
-------------------------------------------------------------------------------------- ------- -------
Audit of subsidiary financial statements 33 31
-------------------------------------------------------------------------------------- ------- -------
240 209
-------------------------------------------------------------------------------------- ------- -------
Fees for other services:
-------------------------------------------------------------------------------------- ------- -------
Audit-related assurance services 96 31
-------------------------------------------------------------------------------------- ------- -------
Total fees payable to Auditor 336 240
-------------------------------------------------------------------------------------- ------- -------
2021 2020
GBPm GBPm
-------------------------------------------------- ----- -----
Total administrative expenses are analysed below:
-------------------------------------------------- ----- -----
Staff costs 11.3 9.8
-------------------------------------------------- ----- -----
Cash-settled share based costs 0.2 -
-------------------------------------------------- ----- -----
Equity settled share based costs 2.3 2.6
-------------------------------------------------- ----- -----
Other 5.2 5.3
-------------------------------------------------- ----- -----
19.0 17.7
-------------------------------------------------- ----- -----
3(a). LOSS on disposal of investment properties
2021 2020
GBPm GBPm
---------------------------------------------------------------- ------ ------
Proceeds from sale of investment properties (net of sale costs) 11.0 79.5
---------------------------------------------------------------- ------ ------
Book value at time of sale (11.1) (80.3)
---------------------------------------------------------------- ------ ------
Loss on disposal (0.1) (0.8)
---------------------------------------------------------------- ------ ------
3(b). Other expenses
2021 2020
GBPm GBPm
----------------------------------------------- ----- -----
Change in fair value of deferred consideration 0.2 0.2
----------------------------------------------- ----- -----
0.2 0.2
----------------------------------------------- ----- -----
The value of deferred consideration (cash and overage) from the
sale of investment properties has been revalued by CBRE Limited at
31 March 2021 and 31 March 2020. This resulted in a reduction in
the fair value of deferred consideration of GBP0.2m at 31 March
2021 (31 March 2020: GBP0.2m). The amounts receivable are included
in the consolidated balance sheet under current trade and other
receivables (note 13).
4. Finance costs
2021 2020
GBPm GBPm
---------------------------------------------------------- ------ ------
Interest payable on bank loans and overdrafts (3.1) (4.1)
---------------------------------------------------------- ------ ------
Interest payable on other borrowings (18.6) (18.6)
---------------------------------------------------------- ------ ------
Amortisation of issue costs of borrowings (0.9) (0.7)
---------------------------------------------------------- ------ ------
Interest payable on leases (1.6) (1.7)
---------------------------------------------------------- ------ ------
Interest capitalised on property refurbishments (note 10) 0.4 1.8
---------------------------------------------------------- ------ ------
Foreign exchange (losses)/ gains on financing activities (8.6) 4.2
---------------------------------------------------------- ------ ------
Cash flow hedge - transfer from/ (to) equity 8.6 (4.2)
---------------------------------------------------------- ------ ------
Finance costs (23.8) (23.3)
---------------------------------------------------------- ------ ------
Exceptional finance costs (16.4) -
---------------------------------------------------------- ------ ------
Total finance costs (40.2) (23.3)
---------------------------------------------------------- ------ ------
The exceptional finance costs relate to the refinancing of $100m
& GBP84m private placement notes due 2023 which were repaid
early in April 2021, an irrevocable notice for the repayment was
given in March 2021. The costs included a GBP16.3m premium on
redemption and GBP0.1m of unamortised finance costs. The costs have
been calculated in accordance with IFRS 9, re-estimating the cash
flows based on original effective interest rate with the adjustment
being taken through P&L.
5. Employees and Directors
2021 2020
Staff costs for the Group during the year were: GBPm GBPm
------------------------------------------------ ----- -----
Wages and salaries 16.3 15.3
------------------------------------------------ ----- -----
Social security costs 2.1 1.8
------------------------------------------------ ----- -----
Other pension costs (note 27) 0.8 0.7
------------------------------------------------ ----- -----
Cash-settled share based costs (note 23) 0.2 -
------------------------------------------------ ----- -----
Equity settled share based costs (note 23) 2.3 2.6
------------------------------------------------ ----- -----
21.7 20.4
------------------------------------------------ ----- -----
Less costs capitalised (1.6) (1.7)
------------------------------------------------ ----- -----
20.1 18.7
------------------------------------------------ ----- -----
2021 2020
The monthly average number of people employed during the year was: Number Number
------------------------------------------------------------------- ------- -------
Head office staff (including Directors) 121 117
------------------------------------------------------------------- ------- -------
Estates and property management staff 118 118
------------------------------------------------------------------- ------- -------
239 235
------------------------------------------------------------------- ------- -------
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 167 to
197. These form part of the financial statements.
Total Directors' emoluments for the financial year were GBP1.7m
(2020: GBP2.9m), comprising of GBP1.6m (2020: GBP1.4m) of
Directors' remuneration, nil (2020: GBP1.4m) gain on exercise of
share options and GBP0.1m (2020: GBP0.1m) of cash contributions in
lieu of pension in respect of two Directors (2020: two).
6. Taxation
2021 2020
GBPm GBPm
----------------------------------------------------- ----- -----
Current tax:
----------------------------------------------------- ----- -----
UK corporation tax - 0.8
----------------------------------------------------- ----- -----
Adjustments to tax in respect of previous periods - -
----------------------------------------------------- ----- -----
- 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% (2020:
19%). The differences are explained below:
2021 2020
GBPm GBPm
--------------------------------------------------------------------- ------- ------
(Loss)/ profit before taxation (235.7) 72.5
--------------------------------------------------------------------- ------- ------
Tax at standard rate of corporation tax in the UK of 19% (2020: 19%) (44.8) 13.8
--------------------------------------------------------------------- ------- ------
Effects of:
--------------------------------------------------------------------- ------- ------
REIT exempt income (8.0) (14.3)
--------------------------------------------------------------------- ------- ------
Changes in fair value not subject to tax as a REIT 49.0 1.4
--------------------------------------------------------------------- ------- ------
Share based payment adjustments (0.1) -
--------------------------------------------------------------------- ------- ------
Overage income subject to tax when received - (0.1)
--------------------------------------------------------------------- ------- ------
Unrecognised losses carried forward 3.8 -
--------------------------------------------------------------------- ------- ------
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% (2020:
19%).
The Group currently has an unrecognised asset in relation to tax
losses carried forward of GBP5.6m (2020: GBP1.3m) calculated at a
corporation tax rate of 19% (2020: 19%).
2021 2020
GBPm GBPm
------------------------------------------------------------ ----- -----
Deferred tax assets:
------------------------------------------------------------ ----- -----
- Deferred tax to be recovered within 12 months 0.5 0.8
------------------------------------------------------------ ----- -----
Deferred tax liabilities:
------------------------------------------------------------ ----- -----
- Deferred tax liabilities to be recovered within 12 months (0.1) (0.2)
------------------------------------------------------------ ----- -----
Deferred tax assets (net) 0.4 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 2019 0.6 0.6
----------------------------- ------------------------------- -----
Credited to income statement (0.4) (0.4)
----------------------------- ------------------------------- -----
At 31 March 2020 0.2 0.2
----------------------------- ------------------------------- -----
Credited to income statement (0.1) (0.1)
----------------------------- ------------------------------- -----
At 31 March 2021 0.1 0.1
----------------------------- ------------------------------- -----
Expenses
(share based payment) Tax losses Total
Deferred tax assets GBPm GBPm GBPm
---------------------------- ---------------------- ---------- -----
At 1 April 2019 (0.6) (0.2) (0.8)
---------------------------- ---------------------- ---------- -----
Charged to income statement - - -
---------------------------- ---------------------- ---------- -----
At 31 March 2020 (0.6) (0.2) (0.8)
---------------------------- ---------------------- ---------- -----
Other movement - 0.2 0.2
---------------------------- ---------------------- ---------- -----
Charged to income statement 0.1 - 0.1
---------------------------- ---------------------- ---------- -----
At 31 March 2021 (0.5) - (0.5)
---------------------------- ---------------------- ---------- -----
7. Dividends
2021 2020
Payment date Per share GBPm GBPm
------------------------------------------------ -------------- --------- ----- -----
For the year ended 31 March 2019:
------------------------------------------------ -------------- --------- ----- -----
Final dividend August 2019 22.26p 40.1
------------------------------------------------ -------------- --------- ----- -----
For the year ended 31 March 2020:
------------------------------------------------ -------------- --------- ----- -----
Interim dividend February 2020 11.67p 21.1
------------------------------------------------ -------------- --------- ----- -----
Final dividend August 2020 24.49p 44.2 -
------------------------------------------------ -------------- --------- ----- -----
Dividends for the year 44.2 61.2
---------------------------------------------------------------- --------- ----- -----
Timing difference on payment of withholding tax 2.1 (0.2)
---------------------------------------------------------------- --------- ----- -----
Dividends cash paid 46.3 61.0
---------------------------------------------------------------- --------- ----- -----
The Directors are proposing a final dividend in respect of the
financial year ended 31 March 2021 of 17.75p pence per ordinary
share which will absorb an estimated GBP32.1m of revenue reserves
and cash. If approved by the shareholders at the AGM, it will be
paid on 6 August 2021 to shareholders who are on the register of
members on 2 July 2021. The dividend will be paid as a REIT
Property Income Distribution ('PID') net of withholding tax where
appropriate.
8. Earnings per share
2021 2020
Earnings used for calculating earnings per share: GBPm GBPm
-------------------------------------------------- ------- -----
Basic and diluted earnings (235.7) 72.1
-------------------------------------------------- ------- -----
Change in fair value of investment properties 257.7 7.5
-------------------------------------------------- ------- -----
Exceptional finance costs 16.4 -
-------------------------------------------------- ------- -----
Profit on disposal of investment properties 0.1 0.8
-------------------------------------------------- ------- -----
EPRA earnings 38.5 80.4
-------------------------------------------------- ------- -----
Adjustment for non-trading items:
-------------------------------------------------- ------- -----
Other expenses 0.2 0.2
-------------------------------------------------- ------- -----
Taxation - 0.4
-------------------------------------------------- ------- -----
Trading profit after interest 38.7 81.0
-------------------------------------------------- ------- -----
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.
2021 2020
Number of shares used for calculating earnings per share: Number Number
----------------------------------------------------------------------- ----------- -----------
Weighted average number of shares (excluding own shares held in trust) 180,839,945 180,465,649
----------------------------------------------------------------------- ----------- -----------
Dilution due to share option schemes - 981,867
----------------------------------------------------------------------- ----------- -----------
Weighted average number of shares for diluted earnings per share 180,839,945 181,447,516
----------------------------------------------------------------------- ----------- -----------
In pence: 2021 2020
---------------------------------------- -------- -----
Basic (loss)/ earnings per share (130.3p) 40.0p
---------------------------------------- -------- -----
Diluted (loss)/ earnings per share (130.3p) 39.7p
---------------------------------------- -------- -----
EPRA earnings per share 21.3p 44.5p
---------------------------------------- -------- -----
Adjusted underlying earnings per share1 21.3p 44.6p
---------------------------------------- -------- -----
1. Adjusted underlying earnings per share is calculated by
trading profit after interest on a diluted weighted average number
of shares of 181,831,833 (2020: 181,447,516).
The diluted loss per share for the period to 31 March 2021 has
been restricted to a loss of 130.3p per share, as the loss per
share cannot be reduced by dilution in accordance with IAS 33,
Earnings per Share.
9. Net assets per share and total accounting return
2021 2020
Net assets used for calculating net assets per share: GBPm GBPm
------------------------------------------------------ ------- -------
Net assets at end of year (basic) 1,719.5 1,998.0
------------------------------------------------------ ------- -------
Derivative financial instruments at fair value (8.7) (18.5)
------------------------------------------------------ ------- -------
EPRA net assets 1,710.8 1,979.5
------------------------------------------------------ ------- -------
2021 2020
Number of shares used for calculating net assets per share: Number Number
----------------------------------------------------------------------- ----------- -----------
Shares in issue at year end 181,113,594 180,747,868
----------------------------------------------------------------------- ----------- -----------
Less own shares held in trust at year end (159,139) (174,719)
----------------------------------------------------------------------- ----------- -----------
Dilution due to share option schemes 1,116,127 1,232,747
----------------------------------------------------------------------- ----------- -----------
Number of shares for calculating diluted adjusted net assets per share 182,070,582 181,805,896
----------------------------------------------------------------------- ----------- -----------
2021 2020
---------------------------- ------- --------
EPRA net assets per share GBP9.40 GBP10.89
---------------------------- ------- --------
Basic net assets per share GBP9.50 GBP11.07
---------------------------- ------- --------
Diluted net assets per share GBP9.44 GBP10.99
---------------------------- ------- --------
Net assets have been adjusted and calculated on a diluted basis
to derive a net asset per share measure as defined by EPRA.
EPRA Net Asset Value Metrics
EPRA published updated best practice reporting guidance in
October 2019, which included three 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 came into full effect for accounting periods starting from
1 January 2020, presented below for comparison to the previous EPRA
NAV metric.
March 2021 March 2020
---------------------------- ----------------------------
EPRA NRV EPRA NTA EPRA NDV EPRA NRV EPRA NTA EPRA NDV
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------------------------- -------- -------- -------- -------- -------- --------
IFRS Equity attributable to shareholders 1,719.5 1,719.5 1,719.5 1,998.0 1,998.0 1,998.0
----------------------------------------------- -------- -------- -------- -------- -------- --------
Fair value of derivative financial instruments (8.7) (8.7) - (18.5) (18.5) -
----------------------------------------------- -------- -------- -------- -------- -------- --------
Intangibles per IFRS balance sheet - (2.3) - - (2.0) -
----------------------------------------------- -------- -------- -------- -------- -------- --------
Excess of fair value of debt over book value - - 22.2 - - 11.9
----------------------------------------------- -------- -------- -------- -------- -------- --------
Purchasers' costs 158.1 - - 187.8 - -
----------------------------------------------- -------- -------- -------- -------- -------- --------
New EPRA measure 1,868.9 1,708.5 1,741.7 2,167.3 1,977.5 2,009.9
----------------------------------------------- -------- -------- -------- -------- -------- --------
New EPRA measure per share GBP10.26 GBP9.38 GBP9.57 GBP11.92 GBP10.88 GBP11.06
----------------------------------------------- -------- -------- -------- -------- -------- --------
Reconciliation to previously reported EPRA NAV
March 2021 March 2020
---------------------------- ----------------------------
EPRA NRV EPRA NTA EPRA NDV EPRA NRV EPRA NTA EPRA NDV
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------------------- -------- -------- -------- -------- -------- --------
EPRA NAV 1,710.8 1,710.8 1,710.8 1,979.5 1,979.5 1,979.5
------------------------------------------------------- -------- -------- -------- -------- -------- --------
Include fair value of derivative financial instruments - - 8.7 - - 18.5
------------------------------------------------------- -------- -------- -------- -------- -------- --------
Exclude intangibles per IFRS balance sheet - (2.3) - - (2.0) -
------------------------------------------------------- -------- -------- -------- -------- -------- --------
Excess of fair value of debt over book value - - 22.2 - - 11.9
------------------------------------------------------- -------- -------- -------- -------- -------- --------
Purchasers' costs 158.1 - - 187.8 - -
------------------------------------------------------- -------- -------- -------- -------- -------- --------
New EPRA measure 1,868.9 1,708.5 1,741.7 2,167.3 1,977.5 2,009.9
------------------------------------------------------- -------- -------- -------- -------- -------- --------
Total accounting return
2021 2020
Total Accounting Return GBP GBP
----------------------------------------------------------- ------- -----
Opening EPRA net tangible assets per share (A) 10.88 10.85
----------------------------------------------------------- ------- -----
Closing EPRA net tangible assets per share 9.38 10.88
----------------------------------------------------------- ------- -----
(Decrease)/ Increase in EPRA net tangible assets per share (1.50) 0.03
----------------------------------------------------------- ------- -----
Ordinary dividends paid in the year 0.24 0.34
----------------------------------------------------------- ------- -----
Total return (B) (1.26) 0.37
----------------------------------------------------------- ------- -----
Total accounting return (B/A) (11.5%) 3.4%
----------------------------------------------------------- ------- -----
The total accounting return for the year comprises the growth in
absolute EPRA net tangible assets per share plus dividends paid in
the year as a percentage of the opening EPRA net tangible assets
per share. The total return for the year ended 31 March 2021 was
(11.5%) (31 March 2020: 3.4%).
10. Investment properties
2021 2020
GBPm GBPm
------------------------------------------------ ------- -------
Balance at 1 April 2,586.3 2,591.4
------------------------------------------------ ------- -------
Purchase of investment properties - -
------------------------------------------------ ------- -------
Capital expenditure 22.8 53.5
------------------------------------------------ ------- -------
Change in value of lease obligations (1.9) 12.4
------------------------------------------------ ------- -------
Capitalised interest on refurbishments (note 4) 0.4 1.8
------------------------------------------------ ------- -------
Disposals during the year - (65.3)
------------------------------------------------ ------- -------
Change in fair value of investment properties (257.7) (7.5)
------------------------------------------------ ------- -------
Less: Reclassified as deferred consideration - -
------------------------------------------------ ------- -------
Less: Classified as assets held for sale - -
------------------------------------------------ ------- -------
Balance at 31 March 2,349.9 2,586.3
------------------------------------------------ ------- -------
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
3.7% (2020: 4.0%). The total amount of capitalised interest
included in investment properties is GBP14.5m (2020: GBP14.1m).
The change in fair value of investment properties is recognised
in the consolidated income statement.
Investment properties include buildings with a carrying amount
of GBP271m (2020: GBP305m) held under leases with a carrying amount
of GBP26.3m (2020: GBP28.2m). Investment property lease commitment
details are shown in note 17.
Valuation
The Group's investment properties are held at fair value and
were revalued at 31 March 2021 by the external valuer, CBRE
Limited, a firm of independent qualified valuers in accordance with
the Royal Institution of Chartered Surveyors Valuation - Global
Standards at this balance sheet date. All the properties are
revalued at period end regardless of the date of acquisition. In
line with IFRS 13, all investment properties are valued on the
basis of their highest and best use. For like-for-like properties
their current use equates to the highest and best use. For
properties undergoing refurbishment or redevelopment, most of these
are currently being used for business accommodation in their
current state. However, the valuation is based on the current
valuation at the balance sheet date including the impact of the
potential refurbishment and redevelopment as this represents the
highest and best use.
The Executive Committee and the Board both conduct a detailed
review of each property valuation to 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 reductions. They are
satisfied with the valuers conclusions.
The valuation as at 31 March 2020, was subject to a material
valuation uncertainty clause due to the uncertainty in the property
market following the outbreak of Covid-19. In addition, to allow
for the immediate impact of the pandemic, the valuers reflected in
their assessment a GBP32m deduction that a buyer might expect to
allow for the risk of increased customer defaults and non-payment
of rent. This deduction was calculated based on the assumption that
two quarters of rent would be discounted by 50%. The valuation as
at 31 March 2021 does not include a material uncertainty clause and
does not include a similar deduction.
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 and market
comparatives whilst also considering the occupancy and timing of
rent reviews at each property. Although occupancy and rent review
timings are known, and there is market evidence for transaction
prices for similar properties, there is still a significant element
of estimation and judgement in estimating ERV's. 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:
2021 2020
GBPm GBPm
---------------------------------------------- ------- -------
Total per CBRE valuation report 2,324.2 2,574.4
---------------------------------------------- ------- -------
Deferred consideration on sale of property (0.6) (5.3)
---------------------------------------------- ------- -------
Head leases treated as leases under IFRS 16 26.3 28.2
---------------------------------------------- ------- -------
Less: Reclassified as assets held for sale - (11.0)
---------------------------------------------- ------- -------
Total investment properties per balance sheet 2,349.9 2,586.3
---------------------------------------------- ------- -------
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
Property category GBPm Valuation technique Range Weighted average Range Weighted average
------------------- --------- ------------------- ----------- ---------------- --------- ----------------
Like-for-like 1,790.5 A GBP12-GBP68 GBP42 4.5%-7.4% 5.8%
------------------- --------- ------------------- ----------- ---------------- --------- ----------------
Completed projects 180.7 A GBP19-GBP48 GBP31 4.5%-6.5% 5.7%
------------------- --------- ------------------- ----------- ---------------- --------- ----------------
Refurbishments 255.7 A/B GBP20-GBP70 GBP36 3.8%-6.6% 5.1%
------------------- --------- ------------------- ----------- ---------------- --------- ----------------
Redevelopments 96.7 A/B GBP14-GBP33 GBP20 3.9%-6.7% 5.3%
------------------- --------- ------------------- ----------- ---------------- --------- ----------------
Head leases 26.3 n/a - - - -
------------------- --------- ------------------- ----------- ---------------- --------- ----------------
Total 2,349.9
------------------- --------- ------------------- ----------- ---------------- --------- ----------------
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 14%-19% with
a weighted average of 16%.
Costs to complete is a key unobservable input for redevelopments
at planning stage with a range of GBP213-GBP242 per sq. ft. and a
weighted average of GBP232 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 +179/-179 -74/+81
------------------- --------------- --------------------
Completed projects +18/-18 -8/+8
------------------- --------------- --------------------
Refurbishments +28/-28 -16/+17
------------------- --------------- --------------------
Redevelopments +9/-7 -3/+5
------------------- --------------- --------------------
11. Property, plant and equipment
Equipment and fixtures
Cost or valuation GBPm
--------------------------------- ----------------------
1 April 2019 8.7
--------------------------------- ----------------------
Additions during the year 2.3
--------------------------------- ----------------------
Balance at 31 March 2020 11.0
--------------------------------- ----------------------
Additions during the year 1.2
--------------------------------- ----------------------
Disposals during the year (1.6)
--------------------------------- ----------------------
Balance at 31 March 2021 10.6
--------------------------------- ----------------------
Accumulated depreciation
--------------------------------- ----------------------
1 April 2019 5.3
--------------------------------- ----------------------
Charge for the year 0.9
--------------------------------- ----------------------
Balance at 31 March 2020 6.2
--------------------------------- ----------------------
Charge for the year 2.0
--------------------------------- ----------------------
Disposals during the year (1.6)
--------------------------------- ----------------------
Balance at 31 March 2021 6.6
--------------------------------- ----------------------
Net book amount at 31 March 2021 4.0
--------------------------------- ----------------------
Net book amount at 31 March 2020 4.8
--------------------------------- ----------------------
12. Other investments
The Group holds the following investment:
2021 2020
GBPm GBPm
------------------------------------------------------------ ----- -----
15% of share capital of Excell Holdings Limited (2020: 15%) 7.9 7.9
------------------------------------------------------------ ----- -----
7.9 7.9
------------------------------------------------------------ ----- -----
In accordance with IFRS 9 the valuation of the share in Excell
Holdings has been adjusted to fair value, resulting in no movement
in the financial year (2020: a reduction of GBP1.9m), recognised in
the consolidated statement of comprehensive income.
13. Trade and other receivables
2021 2020
Current trade and other receivables GBPm GBPm
-------------------------------------------------------- ----- -----
Trade receivables 16.0 11.1
-------------------------------------------------------- ----- -----
Less provision for impairment of receivables (4.6) (1.1)
-------------------------------------------------------- ----- -----
Trade receivables - net 11.4 10.0
-------------------------------------------------------- ----- -----
Prepayments, other receivables and accrued income 12.8 9.9
-------------------------------------------------------- ----- -----
Deferred consideration on sale of investment properties 5.1 5.3
-------------------------------------------------------- ----- -----
29.3 25.2
-------------------------------------------------------- ----- -----
Receivables at fair value:
Included within deferred consideration on sale of investment
properties is GBP0.6m (2020: GBP0.8m) 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 they
have 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
2020: GBP0.2m) (note 3(b)).
2021 2020
GBPm GBPm
--------------------------------------------------------- ----- -----
Deferred consideration on sale of investment properties:
--------------------------------------------------------- ----- -----
Balance at 1 April 5.3 2.9
--------------------------------------------------------- ----- -----
Cash received - (1.9)
--------------------------------------------------------- ----- -----
Additions/reclassifications - 4.5
--------------------------------------------------------- ----- -----
Change in fair value (0.2) (0.2)
--------------------------------------------------------- ----- -----
Balance at 31 March 5.1 5.3
--------------------------------------------------------- ----- -----
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.
Trade receivables and the corresponding provision for bad debts
have increased in the year to 31 March 2021 as a result of delayed
payments from customers impacted by Covid-19. Receivables
outstanding for more than 30 days amount to GBP8.1m and are subject
to a provision for bad debt of GBP4.0m. The balance of GBP4.1m, not
subject to a bad debt provision, has either been received post year
end or is covered by available tenants deposits.
Movements on the provision for impairment of trade receivables
are shown below:
2021 2020
GBPm GBPm
---------------------------------------------------------- ----- -----
Balance at 1 April 1.1 0.7
---------------------------------------------------------- ----- -----
Increase in provision for impairment of trade receivables 4.3 0.8
---------------------------------------------------------- ----- -----
Receivables written off during the year (0.8) (0.4)
---------------------------------------------------------- ----- -----
Balance at 31 March 4.6 1.1
---------------------------------------------------------- ----- -----
14. Cash and cash equivalents
2021 2020
GBPm GBPm
----------------------------------------- ----- -----
Cash at bank and in hand 183.6 70.3
----------------------------------------- ----- -----
Restricted cash - tenants' deposit deeds 7.4 8.9
----------------------------------------- ----- -----
191.0 79.2
----------------------------------------- ----- -----
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
2021 2020
GBPm GBPm
------------------------------------------- ----- -----
Trade payables 10.4 4.8
------------------------------------------- ----- -----
Other tax and social security payable 3.6 5.6
------------------------------------------- ----- -----
Corporation tax payable - 0.8
------------------------------------------- ----- -----
Tenants' deposit deeds (note 14) 7.4 8.9
------------------------------------------- ----- -----
Tenants' deposits 20.7 25.6
------------------------------------------- ----- -----
Accrued expenses 43.4 26.6
------------------------------------------- ----- -----
Deferred income - rent and service charges 9.5 10.8
------------------------------------------- ----- -----
95.0 83.1
------------------------------------------- ----- -----
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
2021 2020
GBPm GBPm
--------------------------------------------- ----- -----
Current
--------------------------------------------- ----- -----
Senior Floating Rate Notes 2020 (unsecured) - 9.0
--------------------------------------------- ----- -----
5.6% Senior US Dollar Notes 2023 (unsecured) 72.6 -
--------------------------------------------- ----- -----
5.53% Senior Notes 2023 (unsecured) 84.0 -
--------------------------------------------- ----- -----
Non-current
--------------------------------------------- ----- -----
Bank loans (unsecured) (0.8) 153.0
--------------------------------------------- ----- -----
5.6% Senior US Dollar Notes 2023 (unsecured) - 81.0
--------------------------------------------- ----- -----
5.53% Senior Notes 2023 (unsecured) - 83.9
--------------------------------------------- ----- -----
3.07% Senior Notes (unsecured) 79.8 79.8
--------------------------------------------- ----- -----
3.19% Senior Notes (unsecured) 119.7 119.7
--------------------------------------------- ----- -----
3.6% Senior Notes (unsecured) 99.8 99.8
--------------------------------------------- ----- -----
Green Bond (unsecured) 297.7 -
--------------------------------------------- ----- -----
752.8 626.2
--------------------------------------------- ----- -----
In March 2021, the Group issued a Green Bond of GBP300m. At year
end the bank loan facility had been fully repaid, there are
unamortised finance costs of GBP0.8m (2020: GBP1.0m) included
within borrowings.
(b) Net debt
2021 2020
GBPm GBPm
----------------------------------- ------- ------
Borrowings per (a) above 752.8 626.2
----------------------------------- ------- ------
Adjust for:
----------------------------------- ------- ------
Cost of raising finance 3.8 1.9
----------------------------------- ------- ------
Foreign exchange differences (8.1) (16.6)
----------------------------------- ------- ------
748.5 611.5
----------------------------------- ------- ------
Cash at bank and in hand (note 14) (183.6) (70.3)
----------------------------------- ------- ------
Net debt 564.9 541.2
----------------------------------- ------- ------
At 31 March 2021 the Group had GBP250m (2020: GBP96m) of undrawn
bank facilities, a GBP2m overdraft facility (2020: GBP2m) and
GBP183.6m of unrestricted cash (2020: GBP70.3m).
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, lease obligations and any
cost of raising finance as they have no future cash flows.
(c) Maturity
2021 2020
GBPm GBPm
--------------------------------------------- ----- -----
Repayable within one year 148.5 9.0
--------------------------------------------- ----- -----
Repayable between one year and two years - -
--------------------------------------------- ----- -----
Repayable between two years and three years - 154.0
--------------------------------------------- ----- -----
Repayable between three years and four years - 148.5
--------------------------------------------- ----- -----
Repayable between four years and five years 80.0 -
--------------------------------------------- ----- -----
Repayable in five years or more 520.0 300.0
--------------------------------------------- ----- -----
748.5 611.5
--------------------------------------------- ----- -----
Cost of raising finance (3.8) (1.9)
--------------------------------------------- ----- -----
Foreign exchange differences 8.1 16.6
--------------------------------------------- ----- -----
752.8 626.2
--------------------------------------------- ----- -----
(d) Interest rate and repayment profile
Principal at
period end
GBPm Interest rate Interest payable Repayable
------------------------------------------------ ------------ ------------- ---------------- ---------------------
Current
------------------------------------------------ ------------ ------------- ---------------- ---------------------
Bank overdraft due within one year or on demand - Base+2.25% Variable On demand
------------------------------------------------ ------------ ------------- ---------------- ---------------------
Private Placement Notes:
------------------------------------------------ ------------ ------------- ---------------- ---------------------
5.6% Senior US Dollar Notes 64.5 5.6% Half year April 2021
------------------------------------------------ ------------ ------------- ---------------- ---------------------
5.53% Senior Notes 84.0 5.53% Half year April 2021
------------------------------------------------ ------------ ------------- ---------------- ---------------------
Non-current
------------------------------------------------ ------------ ------------- ---------------- ---------------------
Private Placement Notes:
------------------------------------------------ ------------ ------------- ---------------- ---------------------
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 - LIBOR+1.65% Monthly June 2022 & June 2023
------------------------------------------------ ------------ ------------- ---------------- ---------------------
Green Bond 300.0 2.25% Half yearly March 2028
------------------------------------------------ ------------ ------------- ---------------- ---------------------
748.5
------------------------------------------------ ------------ ------------- ---------------- ---------------------
Irrevocable notice was given on 31st March 2021 to repay the
private placement notes due for repayment in June 2023 on 30th
April 2021, the termination costs have been reflected in
exceptional finance costs.
(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:
2021 2020
------------------------------------------------------ --------- ---------
Carrying amount of derivative 8.7 18.5
------------------------------------------------------ --------- ---------
Change in fair value of designated hedging instrument (9.8) 8.3
------------------------------------------------------ --------- ---------
Change in fair value of designated hedged item 8.6 (4.2)
------------------------------------------------------ --------- ---------
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
------------------------------------------------------ --------- ---------
The Cashflow hedge was terminated in line with the repayment of
the US Dollar Notes.
(f) Financial instruments and fair values
2021 2021 2020 2020
Book value Fair value Book value Fair value
GBPm GBPm GBPm GBPm
------------------------------------------------------------------ ----------- ----------- ----------- -----------
Financial liabilities held at amortised cost
------------------------------------------------------------------ ----------- ----------- ----------- -----------
Bank loans (0.8) (0.8) 153.0 154.0
------------------------------------------------------------------ ----------- ----------- ----------- -----------
Private Placement Notes 455.9 478.1 473.2 484.1
------------------------------------------------------------------ ----------- ----------- ----------- -----------
Lease obligations 26.3 26.3 28.2 28.2
------------------------------------------------------------------ ----------- ----------- ----------- -----------
Green Bond 297.7 297.7 - -
------------------------------------------------------------------ ----------- ----------- ----------- -----------
779.1 801.3 654.4 666.3
------------------------------------------------------------------ ----------- ----------- ----------- -----------
Financial assets at fair value through other comprehensive income
------------------------------------------------------------------ ----------- ----------- ----------- -----------
Derivative financial instruments:
------------------------------------------------------------------ ----------- ----------- ----------- -----------
Cash flow hedge - derivatives used for hedging 8.7 8.7 18.5 18.5
------------------------------------------------------------------ ----------- ----------- ----------- -----------
Other investments 7.9 7.9 6.9 6.9
------------------------------------------------------------------ ----------- ----------- ----------- -----------
16.6 16.6 25.4 25.4
------------------------------------------------------------------ ----------- ----------- ----------- -----------
Financial assets at fair value through profit or loss
------------------------------------------------------------------ ----------- ----------- ----------- -----------
Deferred consideration (overage) 5.1 5.1 5.3 5.3
------------------------------------------------------------------ ----------- ----------- ----------- -----------
5.1 5.1 5.3 5.3
------------------------------------------------------------------ ----------- ----------- ----------- -----------
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
2021 2020
Assets GBPm GBPm
------------------------------------------------------ ----- -----
a) Assets at value through profit or loss
------------------------------------------------------ ----- -----
Deferred consideration (overage) 5.1 5.3
------------------------------------------------------ ----- -----
5.1 5.3
------------------------------------------------------ ----- -----
b) Loans and receivables
------------------------------------------------------ ----- -----
Cash and cash equivalents 191.0 79.2
------------------------------------------------------ ----- -----
Trade and other receivables excluding prepayments1 14.5 11.7
------------------------------------------------------ ----- -----
205.5 90.9
------------------------------------------------------ ----- -----
c) Assets at value through other comprehensive income
------------------------------------------------------ ----- -----
Cash flow hedge - derivatives used for hedging 8.7 18.5
------------------------------------------------------ ----- -----
Other investments 7.9 6.9
------------------------------------------------------ ----- -----
16.6 25.4
------------------------------------------------------ ----- -----
Total 227.2 121.6
------------------------------------------------------ ----- -----
2021 2020
Liabilities GBPm GBPm
-------------------------------------------------------------- ----- -----
Other financial liabilities at amortised cost
-------------------------------------------------------------- ----- -----
Borrowings 752.8 626.2
-------------------------------------------------------------- ----- -----
Lease liabilities 26.3 28.2
-------------------------------------------------------------- ----- -----
Trade and other payables excluding non-financial liabilities2 81.9 65.9
-------------------------------------------------------------- ----- -----
861.0 720.3
-------------------------------------------------------------- ----- -----
1. Trade and other receivables exclude prepayments of GBP9.7m
(2020: GBP8.2m) and non-cash deferred consideration of GBP5.1m
(2020: GBP5.3m).
2. Trade and other payables exclude other tax and social
security of GBP3.6m (2020: GBP5.6m), corporation tax of nil (2020:
GBP0.8m) and deferred income of GBP9.5m (2020: GBP10.8m).
(h) Changes in liabilities from financing activities
Bank loans and borrowings Lease liabilities Derivatives used for hedging-assets
GBPm GBPm GBPm
----------------------------------- ------------------------- ----------------- -----------------------------------
Balance at 1 April 2020 626.2 28.2 18.5
----------------------------------- ------------------------- ----------------- -----------------------------------
Changes from financing cash flows: - -
----------------------------------- ------------------------- ----------------- -----------------------------------
Proceeds from bank borrowings and
Private Placement Notes 54.0 - -
----------------------------------- ------------------------- ----------------- -----------------------------------
Repayment of bank borrowings and
Private Placement Notes (217.0) - -
----------------------------------- ------------------------- ----------------- -----------------------------------
Proceeds from Green Bond 299.5 - -
----------------------------------- ------------------------- ----------------- -----------------------------------
Total changes from cash flows 136.5 - -
----------------------------------- ------------------------- ----------------- -----------------------------------
Changes in fair value of derivative
financial instruments - - (9.8)
----------------------------------- ------------------------- ----------------- -----------------------------------
Foreign exchange differences (8.5) - -
----------------------------------- ------------------------- ----------------- -----------------------------------
Amortisation of issue costs of
borrowing (1.4) - -
----------------------------------- ------------------------- ----------------- -----------------------------------
Changes in leases - (1.9) -
----------------------------------- ------------------------- ----------------- -----------------------------------
Interest payable 21.7 1.6 -
----------------------------------- ------------------------- ----------------- -----------------------------------
Interest paid (21.7) (1.6) -
----------------------------------- ------------------------- ----------------- -----------------------------------
Total other changes (9.9) (1.9) (9.8)
----------------------------------- ------------------------- ----------------- -----------------------------------
Balance at 31 March 2021 752.8 26.3 8.7
----------------------------------- ------------------------- ----------------- -----------------------------------
17. Lease Obligations
Lease liabilities are in respect of leased investment
property.
Minimum lease payments under leases fall due as follows:
2021 2020
GBPm GBPm
----------------------------------- ------- -------
Within one year 1.6 1.7
----------------------------------- ------- -------
Between two and five years 6.6 6.8
----------------------------------- ------- -------
Beyond five years 148.4 156.0
----------------------------------- ------- -------
156.6 164.5
----------------------------------- ------- -------
Future finance charges on leases (130.3) (136.3)
----------------------------------- ------- -------
Present value of lease liabilities 26.3 28.2
----------------------------------- ------- -------
Following the adoption of IFRS 16 lease obligations, which were
previously included in borrowings, have been shown separately on
the face of the balance sheet. The balance represents a non-current
liability as the payment shown within one year of GBP1.6m (2020:
GBP1.7m) is offset by future finance charges on leases of GBP1.6m
(2020: GBP1.7m).
18. Notes to cash flow statement
Reconciliation of profit for the year to cash generated from
operations:
2021 2020
GBPm GBPm
---------------------------------------------------------- ------- -----
(Loss)/ profit before tax (235.7) 72.5
---------------------------------------------------------- ------- -----
Depreciation 2.0 0.9
---------------------------------------------------------- ------- -----
Amortisation of intangibles 0.9 0.5
---------------------------------------------------------- ------- -----
(Loss)/profit on disposal of investment properties 0.1 0.8
---------------------------------------------------------- ------- -----
Other expenses 0.2 0.2
---------------------------------------------------------- ------- -----
Net loss from change in fair value of investment property 257.7 7.5
---------------------------------------------------------- ------- -----
Equity settled share based payments 2.5 2.6
---------------------------------------------------------- ------- -----
Finance costs 23.8 23.0
---------------------------------------------------------- ------- -----
Exceptional finance costs 16.4 -
---------------------------------------------------------- ------- -----
Changes in working capital:
---------------------------------------------------------- ------- -----
Increase in trade and other receivables (4.4) (9.5)
---------------------------------------------------------- ------- -----
(Decrease)/ Increase in trade and other payables (1.1) 10.2
---------------------------------------------------------- ------- -----
Cash generated from operations 62.4 108.7
---------------------------------------------------------- ------- -----
For the purposes of the cash flow statement, cash and cash
equivalents comprise the following:
2021 2020
GBPm GBPm
----------------------------------------- ----- -----
Cash at bank and in hand 183.6 70.3
----------------------------------------- ----- -----
Restricted cash - tenants' deposit deeds 7.4 8.9
----------------------------------------- ----- -----
191.0 79.2
----------------------------------------- ----- -----
19. Share capital and share premium
2021 2020
GBPm GBPm
------------------------------------------------ ----- -----
Issued: Fully paid ordinary shares of GBP1 each 181.1 180.7
------------------------------------------------ ----- -----
2021 2020
Movements in share capital were as follows: Number Number
-------------------------------------------- ----------- -----------
Number of shares at 1 April 180,747,868 180,385,498
-------------------------------------------- ----------- -----------
Issue of shares 365,726 362,370
-------------------------------------------- ----------- -----------
Number of shares at 31 March 181,113,594 180,747,868
-------------------------------------------- ----------- -----------
The Group issued 365,726 shares (2020: 362,370 shares) during
the year to satisfy the exercise of share options with net proceeds
of GBP0.1m (2020: GBP0.7m).
Share capital Share premium
-------------------- --------------- ---------------
2021 2020 2021 2020
GBPm GBPm GBPm GBPm
-------------------- ------- ------ ------- ------
Balance at 1 April 180.7 180.4 295.4 295.1
-------------------- ------- ------ ------- ------
Issue of shares 0.4 0.3 0.1 0.3
-------------------- ------- ------ ------- ------
Balance at 31 March 181.1 180.7 295.5 295.4
-------------------- ------- ------ ------- ------
20. Other reserves
Equity settled share
Other Investment Reserve based payments Merger reserve Hedging reserve Total
GBPm GBPm GBPm GBPm GBPm
------------------------- ------------------------ ------------------------- -------------- --------------- -----
Balance at 1 April 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
------------------------- ------------------------ ------------------------- -------------- --------------- -----
Share based payments - 2.5 - - 2.5
------------------------- ------------------------ ------------------------- -------------- --------------- -----
Issue of shares - (0.4) - - (0.4)
------------------------- ------------------------ ------------------------- -------------- --------------- -----
Change in fair value of
other investments (note
12) - - - - -
------------------------- ------------------------ ------------------------- -------------- --------------- -----
Change in fair value of
derivative financial
instruments (cash flow
hedge) - - - (1.2) (1.2)
------------------------- ------------------------ ------------------------- -------------- --------------- -----
Balance at 31 March 2021 2.1 22.3 8.7 - 33.1
------------------------- ------------------------ ------------------------- -------------- --------------- -----
21. Capital commitments
At the year end the estimated amounts of contractual commitments
for future capital expenditure not provided for were:
2021 2020
GBPm GBPm
--------------------------------- ----- -----
Investment property construction 4.2 4.3
--------------------------------- ----- -----
22. Post balance sheet events
On the 31st March 2021 the Group gave notice to make an early
repayment of the $100m & GBP84m private placement notes due
June 2023, which were repaid in April 2021. The costs in relation
to the termination are reflected in exceptional finance costs as
shown in note 4.
23. RESPONSIBILITY STATEMENT
The 2021 Annual Report, which will be issued on 21 June 2021,
contains a responsibility statement which states that on 2 June
2021, 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.
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