REG - Workspace Grp PLC - Half Year Results
17/11/2021 07:05
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RNS Number : 6029S Workspace Group PLC 17 November 2021
17 November 2021
WORKSPACE GROUP PLC
HALF YEAR RESULTS
POSITIVE CUSTOMER MOMENTUM AND FOCUS ON GROWTH
OPPORTUNITIES AHEAD
Workspace Group PLC ("Workspace"), London's leading provider of flexible
office space, today announces its results for the half year to
30 September 2021.
The results reflect a recovery in our trading performance and good momentum in
customer activity. Our customers are returning to their offices and we're
seeing strong new customer demand for flexible, well-located office space
across London.
Financial highlights: Trading profit recovery, strong balance sheet
· Trading profit after interest(†) up 42.5% to £21.8m (30 September
2020: £15.3m) driven by 12.3% (£4.5m) increase in net rental income
· Property valuation of £2,271m, a small underlying decrease of 0.7%
(£15m) from 31 March 2021
· Profit before tax of £3.4m (30 September 2020: £110.4m loss)
· Interim dividend reinstated at 7.00p per share (30 September 2020:
Nil)
· EPRA net tangible assets per share down 1.1% to £9.28 from 31 March
2021
· Loan to value of 23% (31 March 2021: 24%) with £318m of available
cash and undrawn facilities
Customer activity: Strong demand and improving customer utilisation
· Strong customer demand with enquiries, viewings and lettings now at
pre-Covid levels
· Like-for-like rent roll up by 2.1% to £87.3m in the six months to 30
September 2021
· Strong growth in like-for-like occupancy, up 3.7% to 85.6%, with rent
per sq. ft. stabilising in the second quarter, up 0.3% to £35.50 after a 2.3%
decline in the first quarter
· Significant increase in customers returning to their offices, with
utilisation of our centres reaching 60% of pre-Covid levels mid-week, and 55%
over the week as a whole
· High levels of rent collection, with 97% of rents due for the first
half received as at 9 November 2021
Portfolio activity: Expanding our footprint through sustainable asset
management
· Strategic recycling of capital with the disposal of 13-17 Fitzroy
Street for £92m and the acquisition of The Old Dairy in Shoreditch for
£43.4m
· Acquisition announced today of former Victorian bus factory, The
Busworks in Islington, for £45m, with significant potential to be sustainably
upgraded and repositioned
· Extensive refurbishment of our 60,000 sq. ft. Pall Mall Deposit
business centre in Ladbroke Grove completed in September 2021
· Mirror Works, a new 40,000 sq. ft. business centre in Stratford,
launched in October 2021
· Two further projects to complete in the second half, providing a
further 32,000 sq. ft. of new or upgraded space
· Healthy pipeline of refurbishment and redevelopment activity, projected
to deliver 1.2m sq. ft. of new and upgraded space over the next five years
Commenting on the results, Graham Clemett, Chief Executive Officer said:
"We have seen a strong recovery in our trading performance in the first half
of the year after successfully managing through the challenges of the last
year. The speed and strength of that recovery has been fuelled by rising
demand for our unique flexible offering, which is proving to be an attractive
option for an increasing number of businesses in London as the way people work
rapidly evolves. Now more than ever, space matters and businesses are making
decisions about their offices based on what their people want - great space in
interesting, convenient locations with top sustainability credentials.
All the signs point to strong underlying momentum in our business. Demand
metrics continued to improve in the first half across London, utilisation of
our centres is increasing, prices have stabilised and rent collection is
strong.
We are building on this momentum through active management of our portfolio
and have our sights firmly set on the exciting growth opportunities ahead as
we continue to expand our property footprint. And, as sustainability becomes
an increasingly important consideration for our business and our customers,
our unique business model serves us well. We are focused on repurposing and
investing in our portfolio of iconic buildings to make them greener and fit
for our customer's changing needs. We revive communities by providing quality
business space in a broad range of areas across the Capital and of course
always acting responsibly with our customers, partners and those communities.
As our half year results show, those who predicted that the pandemic would
lead to the end of the office are being quickly disproven. Our performance
highlights that with the right space in the right locations and a flexible,
customer-centric offering, businesses still believe they do their best work
together. We are excited by the significant growth opportunities in front of
us, and the plans we have in place to capture them."
Summary Results
September September Change
2021 2020
Financial performance
Net rental income £41.0m £36.5m +12%
Trading profit after interest(†) £21.8m £15.3m +42%
Profit/(loss) before tax £3.4m £(110.4)m +103%
Interim dividend per share 7.0p - -
September March Change
2021 2021
Valuation
EPRA net tangible assets per share(†) £9.28 £9.38 -1.1%
CBRE property valuation(†) £2,271m £2,324m -0.7%**
Financing
Loan to value 23% 24% -1%*
Undrawn bank facilities and cash £318m £434m -£116m*
† 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 excluding capital expenditure and disposals
For media and investor enquiries, please contact:
Workspace Group 020 7138 3300
PLC
Graham Clemett, Chief Executive Officer
Dave Benson, Chief Financial Officer
Clare Marland, Head of Corporate Communications
Finsbury
Guy Lamming 07804 953489
Chris Ryall 07342 713748
Details of results presentation
Workspace will host a results presentation for analysts and investors on
Wednesday, 17 November 2021 at 10:00am. The venue for the presentation is The
London Stock Exchange, 10 Paternoster Square, EC4M 7LS.
The presentation can also be accessed live via webcast or conference call.
Webcast: The live webcast will be available here:
https://secure.emincote.com/client/workspace/workspace018
(https://secure.emincote.com/client/workspace/workspace018)
Conference call: In order to join via phone at 10.00am, 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/workspace018/vip_connect
(https://secure.emincote.com/client/workspace/workspace018/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 London's brightest 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
(http://www.workspace.co.uk)
BUSINESS REVIEW
ENQUIRIES AND LETTINGS
New customer demand for space in our business centres continues to improve,
with a monthly average of 941 enquiries in the first half and good conversion
to viewings and lettings.
Monthly average Monthly activity
H1 H1 Sep Aug Jul Jun May Apr
21/22 20/21 2021 2021 2021 2021 2021 2021
Enquiries 941 687 1,004 888 912 927 974 939
Viewings 622 289 633 660 593 593 640 612
Lettings 131 81 175 119 119 121 154 100
The positive trend has continued into the third quarter, with 955 enquiries
and 594 viewings in October 2021.
We have also seen a strong pick-up in utilisation of our centres as more
customers return to their offices. Utilisation of our centres is currently
running at some 55% of pre-Covid levels, with activity peaking mid-week at 60%
of pre-Covid levels.
RENT ROLL
Total rent roll, representing the total annualised net rental income at a
given date, was down 1.8% in the six months to £102.1m at 30 September 2021,
with overall occupancy increasing from 77.8% to 81.2%.
Rent Roll £m
At 31 March 2021 103.9
Like-for-like portfolio 1.8
Completed projects 0.7
Projects underway and design stage 0.2
Acquisitions 2.2
Disposals/other (6.7)
At 30 September 2021 102.1
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) was £144.8m at 30 September
2021.
Like-for-like Portfolio
The like-for-like portfolio represents 86% of the total rent roll as at 30
September 2021. It comprises 39 properties with stabilised occupancy,
excluding buildings impacted by significant refurbishment or redevelopment
activity or contracted for sale.
Quarter Ended
Like for Like 30 Sep 21 30 Jun 21 31 Mar 21
Occupancy 85.6% 82.9% 81.9%
Occupancy change 2.7% 1.0%
Rent per sq. ft. £35.50 £35.41 £36.25
Rent per sq. ft. change 0.3% (2.3)%
Rent roll £87.3m £84.6m £85.5m
Rent roll change 3.2% (1.1)%
The like-for-like rent roll has increased by 2.1% (£1.8m) in the six months
to 30 September 2021 to £87.3m. The increase has come from a 3.7% increase in
occupancy from 81.9% to 85.6%, offset by a 2.1% decrease in rent per sq. ft.
to £35.50. We have seen pricing stabilise with a 0.3% increase in rent per
sq. ft. in the second quarter after a decline of 2.3% in the first quarter.
If all the like-for-like properties were at 90% occupancy at the CBRE
estimated rental values at 30 September 2021, the rent roll would be £105.7m,
£18.4m higher than the actual cash rent roll at 30 September 2021.
Completed Projects
There are six projects in the completed projects category, with overall rent
roll increasing by 16.0% (£0.7m) in the six months to £4.8m and occupancy at
65.5%. This includes Pall Mall Deposit, Ladbroke Grove, where we completed an
extensive refurbishment of our 60,000 sq. ft. business centre in September
2021.
If the buildings in this category were all at 90% occupancy at the CBRE
estimated rental values at 30 September 2021, the rent roll would be £9.3m,
an uplift of £4.5m.
Projects Underway - Refurbishments
We are currently underway on four refurbishment projects that will deliver
214,000 sq. ft. of new and upgraded space. We expect to complete the upgrade
of 15,000 sq. ft. at Westbourne Studios during the second half. As at 30
September 2021, rent roll was £3.9m, up £0.2m in the six months.
Assuming 90% occupancy at the CBRE estimated rental values at 30 September
2021, the rent roll at these four buildings once they are completed would be
£7.7m, an uplift of £3.8m.
Projects Underway - Redevelopments
At the half year two mixed-use redevelopment projects were underway providing
57,000 sq. ft. of net lettable space. Mirror Works, a new 40,000 sq. ft.
business centre in Stratford was launched in October 2021 and we expect to
deliver 17,000 sq. ft. of additional space at The Light Bulb, Wandsworth, in
the second half of the year.
Assuming 90% occupancy at the CBRE estimated rental values at 30 September
2021, the rent roll at the two new business centres would be £1.4m.
Projects at Design Stage
These are properties where we are planning a refurbishment or redevelopment
that has not yet commenced. The rent roll at these properties at 30 September
2021 was £3.9m, stable in the six months.
Acquisitions
In September 2021, we completed the acquisition of The Old Dairy in Shoreditch
for £43.4m, adding £2.2m to our rent roll.
Assuming 90% occupancy at the CBRE estimated rental value at 30 September
2021, the rent roll at this building would be £2.7m, an uplift of £0.5m.
Disposals
We completed the sale of 13-17 Fitzroy Street in Fitzrovia for £92m in
September 2021. At 31 March 2021 rent roll at this property was £6.0m, with
the single occupier, Arup, vacating as expected in June 2021. We had
originally planned a major refurbishment of this building upon the vacation of
Arup however, having reviewed our options, we decided that it was the optimum
time to sell and recycle the capital into other more attractive organic and
acquisition opportunities which we believe will generate superior value for
shareholders.
PROFIT PERFORMANCE
Trading profit after interest for the half year was up 42.5% (£6.5m) on the
prior half year to £21.8m.
£m 30 Sep 30 Sep
2021 2020
Net rental income 41.0 36.5
Administrative expenses (8.7) (9.4)
Net finance costs (10.5) (11.8)
Trading profit after interest 21.8 15.3
Net rental income was up 12.3% (£4.5m) to £41.0m, as detailed below:
£m 30 Sep 30 Sep
2021 2020
Underlying net rental income 40.4 55.4
Rent discounts and waivers - (19.9)
Expected credit losses (0.3) (1.5)
Disposals 0.9 2.5
Net rental income 41.0 36.5
There was a £15m (27.1%) decrease in underlying net rental income to £40.4m,
as detailed below:
£m 30 Sep 30 Sep
2021 2020
Underlying rental income 47.5 59.9
Unrecovered service charges (2.2) (0.8)
Empty rates and other non-recoverable costs (4.9) (3.2)
Services, fees, commissions and sundry income (0.0) (0.5)
Underlying net rental income 40.4 55.4
The reduction in rental income of £12.4m to £47.5m reflects the reduction in
rent roll during the course of the prior year resulting from reduced occupancy
and average rent per sq. ft.
Our focus on cost control during the lockdown periods enabled us to reduce
unrecovered service charges in the prior year. With customers now returning to
our centres in increasing numbers, service charge costs are returning to more
normal levels which, combined with lower average occupancy compared to the
prior year, has resulted in an increase in unrecovered service charge costs in
the first half of this financial year. The lower average occupancy has also
resulted in an increase in empty rates and nonrecoverable costs to £4.9m.
Net rental income in the prior year 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 our business centre customers.
These one-off discounts and waivers have not been repeated in the current
financial year.
In addition, although we hold rent deposits for the majority of our customers,
the Government restrictions on rent collection have impeded efforts to collect
rent from a number of our customers which resulted in a significant charge for
expected credit losses in the prior year. Although restrictions still remain
in place, rent collection in the first half has continued to improve, with a
charge of £0.3m in the six months to 30 September 2021.
Administrative expenses decreased by £0.7m to £8.7m, down 7.4%, with
discretionary costs remaining under tight control during the first half.
Net finance costs decreased by 11.0% (£1.3m) in the half year. The average
net debt balance over the 6 months was £51.5m lower than the first six months
of the prior year, whilst the average interest rate has decreased from 3.8% to
3.1% following the pre-payment of £148.5m of 5.6% Private Placement loan
notes in April 2021.
Profit before tax in the half year was £3.4m reflecting the small decrease in
the property valuation of £14.9m which compares to the £125.3m decrease in
the first six months of the prior year.
£m 30 Sep 30 Sep
2021 2020
Trading profit after interest 21.8 15.3
Change in fair value of investment properties (14.9) (125.3)
Loss on sale of investment properties (3.5) (0.2)
Other items - (0.2)
Profit/(loss) before tax 3.4 (110.4)
Adjusted underlying earnings per share 12.0p 8.4p
The loss on sale of investment property of £3.5m relates to the disposal of
Fitzroy Street.
Adjusted underlying earnings per share, based on EPRA earnings adjusted for
non-trading items and calculated on a diluted share basis, is up 43% to 12.0p.
INTERIM DIVIDEND
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 total dividend per
share in each financial year is covered at least 1.2 times by adjusted
underlying earnings per share.
With the ongoing recovery and continued confidence in the outlook for the
Group the Board is pleased to announce that this year an interim dividend of
7.0p per share (2020: nil) will be paid on 2 February 2022 to shareholders on
the register at 7 January 2022. The dividend will be paid as a Property Income
Distribution.
PROPERTY VALUATION
At 30 September 2021, our property portfolio was independently valued by CBRE
at £2,271m, an underlying decrease of 0.7% (£15m) in the half year. The main
movements in the valuation are set out below:
£m
Valuation at 31 March 2021 2,324
Capital expenditure 14
Acquisitions 43
Disposals (95)
Revaluation (15)
Valuation at 30 September 2021 2,271
A summary of the half year valuation and revaluation movement by property type
is set out below:
£m Valuation Movement
Like-for-like Properties 1,817 (11)
Completed Projects 155 (1)
Refurbishments 158 (2)
Redevelopments 98 (1)
Acquisitions 43 -
Total 2,271 (15)
Like-for-like Properties
There was a 0.6% (£11m) underlying decrease in the valuation of like-for-like
properties to £1,817m. This is driven by a 3.1% decrease in the ERV per sq.
ft. (£63m) reflecting the pricing of lettings and renewals, offset by a 15
bps shift in equivalent yield (£52m).
30 Sep 31 March
2021 2021 Change
ERV per sq. ft. £40.91 £42.23 -3.1%
Rent per sq. ft. £35.50 £36.25 -2.1%
Equivalent Yield 5.8% 5.9% -0.1%
Net Initial Yield 4.3% 4.2% +0.1%
Capital Value per sq. ft. £633 £633 -0.0%
Completed Projects
There was an underlying decrease of 0.6% (£1m) in the value of the six
completed projects to £155m. The overall valuation metrics for completed
projects are set out below:
30 Sep
2021
ERV per sq. ft. £28.33
Rent per sq. ft. £20.10
Equivalent Yield 6.1%
Net Initial Yield 2.8%
Capital Value per sq. ft. £424
Current Refurbishments and Redevelopments
There was an underlying decrease of 1.3% (£2m) in the value of our current
refurbishments to £158m and a reduction of 1.0% (£1m) in the value of our
current redevelopments to £98m.
The most significant movements in this category are an increase of £2.5m at
Havelock Terrace, Battersea, where we have had positive pre-application
discussions with planners on a major refurbishment scheme, offset by a
reduction of £2.3m at Westbourne Studios, where we are progressing
refurbishment plans for one wing of the centre.
REFURBISHMENT ACTIVITY
A summary of the status of the refurbishment pipeline at 30 September 2021 is
set out below:
Projects Number Capex spent Capex to spend Upgraded and new space (sq. ft.)
Underway 4 £4m £43m 214,000
Design stage 4 - £124m 371,000
Design stage (without planning) 2 - £130m 270,000
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 typically to
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 30 September 2021 is
set out below:
No. of properties Residential units Cash received New commercial space (sq. ft.)
Underway 2 277 £24m 57,000
Design stage 5 1,241 - 281,000
ACQUISITIONS AND DISPOSALS
During the first half, we completed the sale of 13-17 Fitzroy Street in
Fitzrovia for £92m. We had originally planned a major refurbishment of this
building when the occupier, Arup, vacated as expected in June. However, having
reviewed our options, we decided that it was the optimum time to sell and
recycle the capital into other more attractive organic and acquisition
opportunities which we believe will generate superior value for shareholders.
In this regard, we recently completed the acquisition of The Old Dairy in
Shoreditch for £43.4m. Adjacent to our existing business centre, The Frames,
and currently 80.4% occupied, we will reposition The Old Dairy over time to
our distinctive, flexible model, which will strengthen our presence and
broaden our offering in this exciting and dynamic area of London.
We continue to track additional opportunities across London but remain
disciplined in our returns criteria.
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:
£m 30 Sep 30 Sep
2021 2020
Net cash from operations after interest† 21 14
Dividends paid (29) (42)
Capital expenditure (15) (13)
Purchase of Investment Properties (43) -
Property disposals 92 11
Other 7 -
Net movement 33 (30)
Opening debt (net of cash) (565) (541)
Closing debt (net of cash) (532) (571)
† Excludes £18m of VAT receipts relating to sale of Fitzroy included in
'other'.
There is a reconciliation of net debt in note 13(b) to the financial
statements.
Rent collection remains robust, despite the continued Government restrictions
on rent collection measures. The majority of our customers pay monthly and we
have, as of 9 November 2021, collected 97% of rent due for the second quarter
taking the collection rate for the first half or the year to 97%.
The majority of the amounts still outstanding are covered by rent deposits or
by the provision for doubtful debts.
FINANCING
As at 30 September 2021, the Group had £68.1m of available cash and £250.0m
of undrawn facilities:
Drawn amount Facility Maturity
£m £m
Private Placement Notes 300.0 300.0 2025-2029
Green Bond 300.0 300.0 2028
Bank facilities - 250.0 2022-2023
Total 600.0 850.0
All facilities are provided on an unsecured basis with an average maturity of
4.8 years (31 March 2021: 4.8 years).
At 30 September 2021, the average interest cost of our fixed rate private
placement notes and Green Bond was 2.8% and our revolver bank facilities are
provided at a floating rate of 1.65% over LIBOR.
At 30 September 2021, loan to value (LTV) was 23% (31 March 2021: 24%) and
interest cover, based on net rental income and interest paid over the last 12
month period (excluding exceptional refinancing costs), was 4.3 times (31
March 2021: 3.8 times), providing good headroom on all facility covenants.
NET ASSETS
Net assets decreased in the six months by £28.7m to £1,691m. EPRA net
tangible assets (NTA) per share at 30 September 2021 was down 1.1% (£0.10) to
£9.28:
EPRA NTA per share
£
At 31 March 2021 9.38
Adjusted trading profit after interest 0.12
Property valuation deficit (0.08)
Loss on disposal of Investment Property (0.02)
Dividends paid (0.18)
Other 0.06
At 30 September 2021 9.28
The calculation of EPRA NTA per share measures are set out in note 8 of the
financial statements.
outlook
The strong pick-up in new customer activity that we saw towards the end of the
last financial year has continued into the first half of the current financial
year. Assuming no material impact from government-imposed Covid restrictions
through the winter, we expect to see continued momentum into the second half
of the year.
We remain focussed on improving occupancy, and are on track to make
significant progress towards reaching pre-covid levels by the end of the
financial year. We have seen pricing stabilise during the first half and will
selectively look to start to increase pricing during the second half of the
financial year, with more meaningful price increases likely in the next
financial year.
Improvement in net rental income will lag improvement in rent roll and, in the
short term, whilst occupancy recovers to pre-covid levels, there will be a
drag on income from unrecovered service charges and other occupancy related
costs, such as empty rates.
The increase in rent roll as occupancy and pricing improve, together with the
delivery of our pipeline of refurbishment and redevelopment projects and the
impact from potential acquisition activity, provides the opportunity for
significant income and capital growth over the medium term.
KEY property statistics
Half Year ended
30 Sep 31 March 30 Sep 31 March
2021 2021 2020 2020
Workspace Group Portfolio
CBRE property valuation £2,271m £2,324m £2,450m £2,574m
Number of locations 58 58 58 59
Lettable floorspace (million sq. ft.) 3.9 3.9 3.9 3.9
Number of lettable units 4,234 4,196 4,147 4,009
Rent roll of occupied units £102.1m £103.9m £118.2m £132.8m
Average rent per sq. ft. £32.28 £33.90 £37.15 £39.18
Overall occupancy 81.2% 77.8% 81.1% 87.0%
Like-for-like number of properties 39 38 38 29
Like-for-like lettable floor space (million sq. ft.) 2.9 2.8 2.8 2.2
Like-for-like rent roll growth 2.1% (13.9)% (11.6)% 1.2%
Like-for-like rent per sq. ft. growth (2.1)% (9.9)% (3.3)% 0.3%
Like-for-like occupancy movement 3.7% (3.9)% (7.8)% 0.9%
1) The like-for-like category has been restated in the current financial
year for the following:
· The transfer in of Brickfields and Rainbow Industrial Estate
(part) from the completed projects category
· The transfer out of Leroy House to the refurbishment 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 Six Months ENDED 30 September 2021
Notes Unaudited 6 months ended 30 September 2021 Unaudited 6 months ended 30 September 2020 Audited
£m £m Year ended
31 March 2021
£m
Revenue 2 61.2 75.5 142.3
Direct costs 2 (20.2) (39.0) (60.8)
Net rental income 2 41.0 36.5 81.5
Administrative expenses (8.7) (9.4) (19.0)
Trading profit 62.5
32.3 27.1
Loss on disposal of investment properties 3(a) (3.5) (0.2) (0.1)
Other expenses 3(b) - (0.2) (0.2)
Change in fair value of investment properties 9 (14.9) (125.3) (257.7)
Operating profit/ (loss) 13.9 (98.6) (195.5)
Finance costs 4 (10.5) (11.8) (23.8)
Exceptional finance costs 4 - - (16.4)
Profit/ (Loss) before tax (235.7)
3.4 (110.4)
Taxation 5 - - -
Profit/ (Loss) for the period after tax (235.7)
3.4 (110.4)
Basic earnings per share 7 1.9p (61.1) p (130.3) p
Diluted earnings per share 7 1.9p (60.8) p (130.3) p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE six months ENDED 30 September 2021
Unaudited 6 months ended 30 September 2021 Unaudited 6 months ended 30 September 2020 Audited
£m £m Year ended
31 March 2021
£m
Profit/ (Loss) for the period (235.7)
3.4 (110.4)
Other comprehensive income:
Items that may be classified subsequently to profit or loss:
Change in fair value of other investments - - -
Cash flow hedge - transfer to income statement (0.3) 3.7 8.6
Cash flow hedge - change in fair value - (4.2) (9.8)
Other comprehensive income/(loss) in the year (0.3) (0.5) (1.2)
Total comprehensive income/ (loss) for the period (236.9)
3.1 (110.9)
CONSOLIDATED BALANCE SHEET
AS AT 30 September 2021
Notes Unaudited 30 September 2021 Audited 31 March 2021 Unaudited 30 September 2020
£m £m £m
Non-current assets
Investment properties 9 2,297.1 2,349.9 2,471.4
Intangible assets 2.2 2.4 2.2
Property, plant and equipment 3.4 4.0 4.3
Other investments 7.9 7.9 7.9
Derivative financial instruments 13(e) & (f) - 8.7 14.3
Deferred tax 0.4 0.4 0.5
2,373.3
2,311.0 2,500.6
Current assets
Trade and other receivables 10 28.1 29.3 35.0
Cash and cash equivalents 11 75.0 191.0 12.4
220.3
103.1 47.4
Total assets 2,593.6
2,414.1 2,548.0
Current liabilities
Trade and other payables 12 (100.3) (95.0) (90.3)
Borrowings 13(a) - (156.6) -
(100.3) (251.6) (90.3)
Non-current liabilities
Borrowings 13(a) (596.7) (596.2) (586.9)
Lease obligations 14 (26.3) (26.3) (26.3)
(622.5)
(623.0) (613.2)
Total liabilities (874.1)
(723.3) (703.5)
Net assets 1,719.5
1,690.8 1,844.5
Shareholders' equity
Share capital 17 181.1 181.1 181.1
Share premium 295.5 295.5 295.1
Investment in own shares (9.6) (9.6) (9.6)
Other reserves 33.4 33.1 33.2
Retained earnings 1,190.4 1,219.4 1,344.7
Total shareholders' equity 1,719.5
1,690.8 1,844.5
Consolidated Statement of Changes in Equity
FOR THE period ENDED 30 September 2021
Attributable to owners of the Parent
Unaudited 6 months to Notes Share Share Investment Other Retained Total Shareholders'
equity
30 September 2021 capital premium in own reserves earnings
£m
£m £m shares £m £m
£m
Balance at 1 April 2021 181.1 295.5 (9.6) 33.1 1,219.4 1,719.5
Profit for the period - - - - 3.4 3.4
Other comprehensive income - - - - (0.3) (0.3)
Total comprehensive income - - - - 3.1 3.1
Transactions with owners:
Share issues 17 - - - - - -
Dividends paid 6 - - - - (32.1) (32.1)
Share based payments - - - 0.3 - 0.3
Balance at 30 September 2021 181.1 295.5 (9.6) 33.4 1,190.4 1,690.8
Unaudited 6 months to
30 September 2020
Balance at 1 April 2020 180.7 295.4 (9.6) 32.2 1,499.3 1,998.0
Profit for the period - - - - (110.4) (110.4)
Other comprehensive income - - - (0.5) - (0.5)
Total comprehensive income - - - (0.5) (110.4) (110.9)
Transactions with owners:
Share issues 17 0.4 (0.3) - - - 0.1
Dividends paid 6 - - - - (44.2) (44.2)
Share based payments - - - 1.5 - 1.5
Balance at 30 September 2020 181.1 295.1 (9.6) 33.2 1,344.7 1,844.5
Audited 12 months to
31 March 2021
Balance at 1 April 2020 180.7 295.4 (9.6) 32.2 1,499.3 1,998.0
Profit for the year - - - - (235.7) (235.7)
Other comprehensive income - - - (1.2) - (1.2)
Total comprehensive income - - - (1.2) (235.7) (236.9)
Transactions with owners:
Share issues 17 0.4 0.1 - (0.4) - 0.1
Dividends paid 6 - - - - (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 PERIOD 30 September 2021
Notes Unaudited Unaudited Audited
6 month ended 30 September 2021 6 months ended 30 September 2020 Year ended
£m £m 31 March
2021
£m
Cash flows from operating activities
Cash generated from operations 15 48.3 25.6 62.4
Interest paid (9.3) (11.8) (23.4)
Tax paid - (0.7) (0.6)
Net cash inflow from operating activities 39.0 13.1 38.4
Cash flows from investing activities
Purchase of investment properties (43.5) - -
Capital expenditure on investment properties (14.3) (12.2) (23.6)
Proceeds from disposal of investment properties 91.8 11.0 11.0
Purchase of intangible assets (0.3) (0.5) (1.2)
Purchase of property, plant and equipment (0.3) (0.4) (1.2)
Other income 4.5 - 0.1
Purchase of investments - (0.1) -
Net cash inflow/ (outflow) from investing activities 37.9 (2.2) (14.9)
Cash flows from financing activities
Proceeds from issue of ordinary share capital - 0.1 0.1
Settlement and re-couponing of derivative financial instruments 0.7 - (2.0)
Repayment of Private Placement Notes (148.5) (9.0) (217.0)
Repayment of bank borrowings (25.0) (81.0) -
Drawdown of bank borrowings 25.0 54.0 54.0
Exceptional finance costs (16.4) - -
Green Bond Proceeds - - 299.5
Own shares purchased - - -
Dividends paid 6 (28.7) (41.8) (46.3)
Net cash (outflow)/ inflow from financing activities (192.9) (77.7) 88.3
Net (decrease)/ increase in cash and cash equivalents (116.0) (66.8) 111.8
Cash and cash equivalents at start of period 11 191.0 79.2 79.2
Cash and cash equivalents at end of period 11 75.0 12.4 191.0
NOTES TO THE FINANCIAL STATEMENTS
FOR THE period ENDED 30 September 2021
1. Accounting policies
Basis of preparation
The half year report has been prepared in accordance with the Disclosure and
Transparency Rules and with IAS34 'Interim Financial Reporting' as adopted for
use in the UK. The half year report should be read in conjunction with the
annual financial statements for the year ended 31 March 2021, which have been
prepared in accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 and in accordance with IFRSs
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European
Union ("IFRSs as adopted by the EU").
The condensed financial statements in the half year report are unaudited and
do not constitute statutory accounts within the meaning of Section 434 of the
Companies Act 2006. The Annual Report and Accounts for the year to 31 March
2021, which were prepared under IFRSs have been delivered to the Registrar of
Companies. The auditor's opinion on those accounts was unqualified, did not
contain an emphasis of matter paragraph and did not contain any statement made
under Section 498 of the Companies Act 2006. The annual financial statements
of the Group for the year ended 31 March 2022 will be prepared in accordance
with UK-adopted international accounting standards
There have been no changes in estimates of amounts reported in prior periods
which have a material impact on the current half year period.
As with most other UK property companies and REITs, the Group presents many of
its financial measures in accordance with the guidance criteria issued by the
European Public Real Estate Association ('EPRA'). These measures, which
provide consistency across the sector, are all derived from the IFRS figures
in notes 7 and 8.
Going concern
The Board is required to assess the appropriateness of applying the going
concern basis in the preparation of the financial statements. 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 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 Directors fully considered the Principal risks of the Company and how they
may impact the model. Further details of the principal risks can be found on
pages 32 to 34.
The appropriateness of the going concern basis is reliant on the continued
availability of borrowings and compliance with loan covenants. All 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 57% and a fall in the asset valuation of 54% compared to
September 2021 before these covenants are breached, assuming no mitigating
actions are taken.
As at 30 September 2021 the Group had a fully unsecured loan portfolio of
£850m and significant headroom on its facilities with £68m of cash and
undrawn facilities of £250m. Of the undrawn facilities, £83m is due to
expire in June 2022 and the remaining £167m in 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 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.
This report was approved by the Board on 16 November 2021.
Change in accounting policies
The accounting policies adopted are consistent with those of the annual
financial statements for the year ended 31 March 2021, with the exception of
the following standards, amendments and interpretations endorsed by the UK
were effective for the first time for the Group's current accounting period
and had no material impact on the financial statements.
· References to Conceptual Framework in IFRSs (amended);
· IFRS 16 (amended) - Covid-19-related Rent Concessions;
· IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (amended) - Interest
Rate Benchmark Reform - Phase 2.
Standards in issue but not yet effective
The following standards, amendments and interpretations were in issue at the
date of approval of these financial statements but were not yet effective for
the current accounting period and have not been adopted early. Based on the
Group's current circumstances, the Directors do not anticipate that their
adoption in future periods will have a material impact on the financial
statements of the Group.
· IFRS 17 - Insurance Contracts;
· IAS 1 (amended) - Classification of liabilities as current or
non-current;
· IAS 1 and IFRS Practice Statement 2 (amended) - Disclosure of
Accounting Policy;
· IAS 8 (amended) - Definition of Accounting Estimate;
· IAS 37: Onerous Contracts-Cost of Fulfilling a Contract;
· Amendments to IAS 16: Property, Plant and Equipment-Proceeds
before Intended;
· Annual Improvements to IFRS Standards 2018-2020;
· Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12)
2. Analysis of net rental income
6 months ended 30 September 2021 6 months ended 30 September 2020
Revenue Direct costs Net rental income Revenue Direct costs Net rental income
£m £m £m £m £m £m
Rental income 49.6 (1.5) 48.1 63.7 (20.7) 43.0
Service charges 9.3 (11.5) (2.2) 9.9 (12.7) (2.8)
Empty rates and other non-recoverable costs - (4.9) (4.9) - (3.2) (3.2)
Services, fees, commissions and sundry income 2.3 (2.3) - 1.9 (2.4) (0.5)
61.2 (20.2) 41.0 75.5 (39.0) 36.5
Year ended 31 March 2021
Revenue Direct Net rental
£m costs income
£m £m
Rental income 118.0 (24.4) 93.6
Service charges 20.3 (24.6) (4.3)
Empty rates and other non-recoverable costs - (7.1) (7.1)
Services, fees, commissions and sundry income 4.0 (4.7) (0.7)
142.3 (60.8) 81.5
Included within direct costs for rental income and service charge in the
period are amounts of £nil and £nil (31 March 2021: £17.8m and £2.1m, 30
September 2020: £17.9m and £2.0m) respectively, relating to discounts
provided to customers, accounted for in accordance with IFRS 9. Additionally,
a charge of £0.3m (31 March 2021: £4.2m, 30 September 2020: £1.5m) 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 assess performance is
reviewed as one portfolio. As a result, management have determined that the
Group operates a single operating segment of providing business space for rent
in London.
3(a). Loss on disposal of investment properties
6 months ended 30 September 2021 6 months Year
£m ended 30 September 2020 ended
£m 31 March
2021
£m
Proceeds from sale of investment properties (net of sale costs) 91.8 11.0 11.0
Book value at time of sale (95.3) (11.2) (11.1)
Loss on disposal (3.5) (0.2) (0.1)
3(b). Other expenses
6 months ended 30 September 2021 6 months Year
£m ended 30 September 2020 ended
£m 31 March
2021
£m
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 re-valued by CBRE Limited at 30 September 2021.
The amounts receivable are included in the consolidated balance sheet under
current trade and other receivables (note 10).
4. Finance costs
6 months ended 30 September 2021 6 months Year
£m ended 30 September 2020 ended
£m 31 March
2021
£m
Interest payable on bank loans and overdrafts (0.8) (1.6) (3.1)
Interest payable on other borrowings (8.5) (9.2) (18.6)
Amortisation of issue costs of borrowings (0.6) (0.4) (0.9)
Interest on lease liabilities (0.8) (0.8) (1.6)
Interest capitalised on property refurbishments (note 9) 0.2 0.2 0.4
Foreign exchange (losses)/gains on financing activities - (3.7) (8.6)
Cash flow hedge - transfer from equity - 3.7 8.6
Finance Cost (10.5) (11.8) (23.8)
Exceptional Finance Cost - - (16.4)
Total finance costs (10.5) (11.8) (40.2)
5. Taxation
6 months ended 30 September 2021 6 months Year
£m ended 30 September 2020 ended
£m 31 March
2021
£m
Current tax:
UK corporation tax - - -
Deferred tax:
On origination and reversal of temporary differences - - -
Total taxation charge - - -
The Group is a Real Estate Investment Trust (REIT). The Group's UK property
rental business (both income and capital gains) is exempt from tax. The
Group's other income is subject to corporation tax. No tax charge has arisen
on this other income for the half year (31 March 2021: £nil, 30 September
2020: £nil).
6. Dividends
Ordinary dividends paid Payment Per 6 months ended 6 months Year
date share 30 September ended 30 September 2020 ended
2021 £m 31 March
£m 2021
£m
For the year ended 31 March 2020:
Final dividend August 2020 24.49p - 44.2 44.2
For the year ended 31 March 2021:
Final dividend August 2021 17.75p 32.1 - -
Dividends for the period 32.1 44.2 44.2
Timing difference on payment of withholding tax (3.4) (2.4) 2.1
Dividends cash paid 28.7 41.8 46.3
In addition, the Directors are proposing an interim dividend in respect of the
financial year ending 31 March 2022 of 7 pence per ordinary share which will
absorb an estimated £12.7m of revenue reserves and cash. The dividend will be
paid on 2 February 2022 to shareholders who are on the register of members on
7 January 2022. The dividend will be paid as a REIT Property Income
Distribution (PID) net of withholding tax where appropriate.
7. Earnings per share
Earnings used for calculating earnings per share: 6 months ended 30 September 2021 6 months Year
£m ended 30 September 2020 ended
£m 31 March
2021
£m
Basic and diluted earnings/ (losses) 3.4 (110.4) (235.7)
Change in fair value of investment properties 14.9 125.3 257.7
Exceptional finance costs - - 16.4
Loss on disposal of investment properties 3.5 0.2 0.1
EPRA earnings 21.8 15.1 38.5
Adjustment for non-trading items:
Other expenses (note 3(b)) - 0.2 0.2
Taxation - - -
Adjusted trading profit after interest 21.8 15.3 38.7
Earnings have been adjusted to derive an earnings per share measure as defined
by the European Public Real Estate Association (EPRA) and an adjusted
underlying earnings per share measure.
Number of shares used for calculating earnings per share: Year ended
6 months ended 30 September 2021 6 months ended 31 March
30 September 2021
2020
Weighted average number of shares (excluding own shares held in trust) 181,006,085 180,725,220 180,839,945
Dilution due to share option schemes 832,534 888,198 -
Weighted average number of shares for diluted earnings per share 181,838,619 181,613,418 180,839,945
6 months ended 6 months ended Year ended
30 September 2021 30 September 2020 31 March
2021
Basic earnings per share 1.9p (61.1)p (130.3)p
Diluted earnings per share 1.9p (60.8)p (130.3)p
EPRA earnings per share 12.1p 8.4p 21.3p
Adjusted underlying earnings per share(1) 12.0p 8.4p 21.3p
(1 )Adjusted underlying earnings per share is calculated on a diluted basis.
8. Net assets per share
Number of shares used for calculating net assets per share: 30 September 31 March 30 September
2021 2021 2020
Shares in issue at period-end 181,123,659 181,113,594 181,106,425
Less own shares held in trust at period-end (162,113) (159,139) (165,034)
Number of shares for calculating basic net assets per share 180,961,546 180,954,455 180,941,391
Dilution due to share option schemes 954,111 1,116,127 1,038,337
Number of shares for calculating diluted adjusted net assets per share 181,915,657 182,070,582 181,979,728
30 September 2021 31 March 30 September
2021 2020
Basic net assets per share £9.34 £9.50 £10.19
Diluted net assets per share £9.29 £9.44 £10.14
EPRA net tangible assets per share £9.28 £9.38 £10.05
EPRA Net Asset Value Metrics
EPRA published updated best practice reporting guidance in October 2019, which
included 3 new Net Asset Valuation metrics;
EPRA Net Reinstatement Value (NRV), EPRA Net Tangible Assets (NTA) and EPRA
Net Disposal Value (NDV). This new set of EPRA NAVs metrics came into full
effect for accounting periods starting from 1(st) January 2021, presented
below;
September 2021 March 2021
EPRA NRV EPRA NTA EPRA NDV EPRA NRV EPRA NTA EPRA NDV
£m £m £m £m £m £m
IFRS Equity attributable to shareholders 1,690.8 1,690.8 1,690.8 1,719.5 1,719.5 1,719.5
Derivative financial instruments at fair value - - - (8.7) (8.7) -
Intangibles per IFRS balance sheet - (2.2) - - (2.3) -
Excess of fair value of debt over book value - - (48.4) - - (22.2)
Purchasers costs 154.5 - - 158.1 - -
New EPRA measure 1,845.3 1,688.6 1,642.4 1,868.9 1,708.5 1,697.3
Number of shares for calculating diluted net assets per share (millions) 181.9 181.9 181.9 182.1 182.1 182.1
New EPRA measure per share £10.14 £9.28 £9.03 £10.26 £9.38 £9.32
September 2020
EPRA NRV EPRA NTA EPRA NDV
£m £m £m
IFRS Equity attributable to shareholders 1,844.5 1,844.5 1,844.5
Derivative financial instruments at fair value (14.3) (14.3) -
Intangibles per IFRS balance sheet - (2.2) -
Excess of fair value of debt over book value - - (31.6)
Purchasers costs 166.6 - -
New EPRA measure 1,996.8 1,828.0 1,812.9
Number of shares for calculating diluted net assets per share (millions) 182.0 182.0 182.0
New EPRA measure per share £10.97 £10.05 £9.96
9. Investment Properties
30 September 2021 31 March 30 September
£m 2021 2020
£m £m
Balance at 1 April 2,349.9 2,586.3 2,586.3
Purchase of investment properties 43.4 - -
Capital expenditure 13.8 22.8 12.1
Remeasurement of leases - (1.9) (1.9)
Capitalised interest on refurbishments (note 4) 0.2 0.4 0.2
Disposals during the period (95.3) - -
Change in fair value of investment properties (14.9) (257.7) (125.3)
Total investment properties 2,297.1 2,349.9 2,471.4
Investment properties represent a single class of property being business
accommodation for rent in London.
Capitalised interest is included at a rate of capitalisation of 3.7% (March
2021: 3.7%, September 2020 3.8%). The total amount of capitalised interest
included in investment properties is £14.7m (March 2021: £14.5m, September
2020 £14.3m).
The change in fair value of investment properties is recognised in the
consolidated income statement.
The Group occupies around 14,000 square feet of space within one of its
Investment Properties as its Head Office. The deemed valuation of this space
equates to approximately 0.5% of the overall Investment Property valuation and
as such has not been split out as specific Owner Occupied Property.
Valuation
The Group's investment properties are held at fair value and were revalued at
30 September 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. 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.
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 ERVs. 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 ERV
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 investment properties, is as follows:
30 September 2021 31 March 30 September
£m 2021 2020
£m £m
Total per CBRE valuation report 2,271.4 2,324.2 2,450.3
Deferred consideration on sale of property (0.6) (0.6) (5.2)
Head leases obligations 26.3 26.3 26.3
Less: reclassified as held for sale - - -
Total investment properties per balance sheet 2,297.1 2,349.9 2,471.4
The Group's Investment properties are carried at fair value and under IFRS 13
are required to be analysed by level depending on the valuation method
adopted. The different valuation methods are as follows:
Level 1 - Quoted prices (unadjusted) in active markets for identical
assets or liabilities that the entity can access at the measurement date.
Level 2 - Use of a model with inputs (other than quoted prices included
in Level 1) that are directly or indirectly observable market data.
Level 3 - Use of a model with inputs that are not based on observable
market data.
Property valuations are complex and involve data which is not publicly
available and involves a degree of judgement. All the investment properties
are classified as Level 3, due to the fact that one or more significant inputs
to the valuation are not based on observable market data. If the degree of
subjectivity or nature of the measurement inputs changes then there could be a
transfer between Levels 2 and 3 of classification. No changes requiring a
transfer have occurred during the current or previous year.
The following table summarises the valuation techniques and inputs used in the
determination of the property valuation at 30 September 2021.
Key unobservable inputs:
ERVs - per sq. ft. Equivalent yields
Property category Valuation Valuation Range Weighted Range Weighted
£m technique average average
Like-for-like 1,816.9 1 £12 - £66 £41 4.3% - 7.4% 5.7%
Completed projects 155.2 1 £19 - £48 £28 5.4% - 6.4% 5.9%
Refurbishments 157.7 2 £18 - £35 £25 3.6% - 6.3% 5.3%
Redevelopments 97.6 2 £14 - £30 £20 3.6% - 6.8% 5.2%
Other 43.4 1 £53 - £53 £53 4.9% - 4.9% 4.9%
Head leases 26.3 n/a
Total 2,297.1
1 = Income capitalisation method.
2 = Residual value method.
Developer's profit is a key unobservable input for redevelopments and
refurbishments at planning stage. The range is 10%-19% with a weighted average
of 15%.
Costs to complete is a key unobservable input for redevelopments at planning
stage with a range of £213-£268 per sq. ft. and a weighted average of £244
per sq. ft.
Costs to complete are not considered to be a significant unobservable input
for refurbishments due to the high percentage that is already fixed.
10. Trade and other receivables
Current trade and other receivables 30 September 2021 31 March 30 September 2020
£m 2021 £m
£m
Trade receivables 10.0 11.4 14.0
Prepayments, other receivables and accrued income 17.5 12.8 15.8
Deferred consideration on sale of investment properties 0.6 5.1 5.2
28.1 29.3 35.0
Included within trade receivables is the provision for impairment of
receivables of £4.9m (March 2021: £4.6m, September 2020: £2.6m). In
accordance with IFRS16 £0.4m of covid-19 deferrals are being accounted for
within other receivables (March 2021: £1.1m, September 2020: £2.5m).
The deferred consideration arising on the sale of investment properties
relates to cash and overage. The overage has been fair valued by CBRE Limited
on the basis of residual value, using appropriate discount rates, and will be
revalued on a regular basis. This is a Level 3 valuation of a financial
asset, as defined by IFRS 13. The change in fair value recorded in the
Consolidated income statement was £nil (31 March 2021: loss of £0.2m, 30
September 2020: loss of £0.2m) (note 3(b)).
Receivables at fair value:
Included within deferred consideration on sale of investment properties is
£0.6m (March 2021: £5.1m, September 2020: £5.2m) of overage or cash which
is held at fair value through profit and loss.
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. All the Group's trade and other
receivables are denominated in Sterling.
11. Cash and cash equivalents
30 September 2021 31 March 30 September 2020
£m 2021 £m
£m
Cash at bank and in hand 68.1 183.6 4.3
Restricted cash - tenants' deposit deeds 6.9 7.4 8.1
75.0 191.0 12.4
Tenants' deposit deeds represent returnable cash security deposits received
from tenants and are ring-fenced under the terms of the individual lease
contracts.
12. Trade and other payables
30 September 2021 31 March 30 September 2020
£m 2021 £m
£m
Trade payables 12.5 10.4 9.7
Other tax and social security payable 24.6 3.6 13.2
Corporation tax payable - - -
Tenants' deposit deeds (note 11) 6.9 7.4 8.1
Tenants' deposits 23.3 20.7 23.6
Accrued expenses 23.4 43.4 24.4
Deferred income - rent and service charges 9.6 9.5 11.3
100.3 95.0 90.3
There is no material difference between the above amounts and their fair
values due to the short-term nature of the payables.
13. Borrowings
(a) Balances
30 September 2021 31 March 30 September 2020
£m 2021 £m
£m
Current
5.6% Senior US Dollar Notes 2023 (unsecured) - 72.6 -
5.53% Senior Notes 2023 (unsecured) - 84.0
Non-current
Bank loans (unsecured) (0.6) (0.8) 126.2
5.6% Senior US Dollar Notes 2023 (unsecured) - - 77.5
5.53% Senior Notes 2023 (unsecured) - - 83.9
3.07% Senior Notes 2025 (unsecured) 79.8 79.8 79.8
3.19% Senior Notes 2027 (unsecured) 119.8 119.7 119.7
3.6% Senior Notes 2029 (unsecured) 99.8 99.8 99.8
Green Bond (unsecured) 297.9 297.7 -
596.7 752.8 586.9
(b) Net Debt
30 September 2021 31 March 30 September 2020
£m 2021 £m
£m
Borrowings per (a) above 596.7 752.8 586.9
Adjust for:
Cost of raising finance 3.3 3.8 1.7
Foreign exchange differences - (8.1) (13.1)
600.0 748.5 575.5
Cash at bank and in hand (note 11) (68.1) (183.6) (4.3)
Net Debt 531.9 564.9 571.2
At 30 September 2021, the Group had £250m (31 March 2021: £250m, 30
September 2020: £123m) of undrawn bank facilities and £68.1m of unrestricted
cash (31 March 2021: £183.6m, 30 September 2020: £4.3m).
The Group has a loan to value covenant applicable to the Bank Loan and Senior
Debt Borrowings of 60% and Green Bond of 65%, and compliance is being
comfortably met. Loan to value at 30 September 2021 was 23% (March 2021: 24%,
September 2020: 23%).
The Group also has an interest cover covenant of 2.0x applicable to the Bank
Loan and Senior Debt Borrowings, and 1.75x applicable for the Green Bond. This
is calculated as net rental income divided by interest payable on loans and
other borrowings. At 30 September 2021 interest cover was 4.3x (31 March 2021:
3.8x, September 2020: 4.5x).
(c) Maturity
Unaudited Audited Unaudited
30 September 2021 31 March 30 September
£m 2021 2020
£m £m
Repayable within one year - 148.5 -
Repayable between one and two years - - 127.0
Repayable between two and three years - - 148.5
Repayable between three years and four years 80.0 - -
Repayable between four years and five years - 80.0 80.0
Repayable in five years or more 520.0 520.0 220.0
600.0 748.5 575.5
Cost of raising finance (3.3) (3.8) (1.7)
Foreign exchange differences - 8.1 13.1
596.7 752.8 586.9
(d) Interest rate and repayment profile
Principal at Interest Interest Repayable
period end rate payable
£m
Current
Bank overdraft due within one year or on demand (£2m facility) - Base +2.25% Variable On demand
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
Revolver loan - LIBOR +1.65% Monthly June 2022 & 2023
Green Bond 300.0 2.25% Yearly March 2028
600.0
(e) Derivative financial instruments
In the previous period the Group had cross currency swaps to ensure the US
Dollar liability streams generated from the US Dollar Notes were fully hedged
into Sterling for the life of the transaction. Through entering cross currency
swaps the Group had created a synthetic Sterling fixed rate liability
totalling £64.5m. The Debt was repaid in the period and subsequently the
Derivative was derecognised.
The swaps were designated as a cash flow hedge with changes in fair value
dealt with in other comprehensive income. The Group 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 hedging instrument.
The effects of the cash flow US Dollar swap hedging relationship is as
follows:
30 September 2021 31 March 30 September 2020
£m 2021 £m
£m
Carrying amount of derivative - 8.7 14.3
Change in fair value of designated hedging instrument - (9.8) (4.2)
Change in fair value of designated hedged item - 8.6 3.7
Notional amount £m - 64.5 64.5
Notional amount ($m) - 100 100
Rate payable (%) - 5.66% 5.66%
Maturity - June 2023 June 2023
Hedge ratio - 1:1 1:1
(f) Financial instruments and fair values
Unaudited Unaudited Audited Audited Unaudited Unaudited
30 September 2021 30 September 2021 31 March 31 March 30 September 2020 30 September 2020
Book Value Fair Value 2021 2021 Book Value Fair Value
£m £m Book Value Fair Value £m £m
£m £m
Financial liabilities held at amortised cost
Bank loans (0.6) (0.6) (0.8) (0.8) 126.2 127.0
Private Placement Notes 299.4 323.9 455.9 478.1 460.8 491.6
Lease obligations 26.3 26.3 26.3 26.3 26.3 26.3
Green Bond 297.9 321.8 297.7 297.7 - -
623.0 671.4 779.1 801.3 613.3 644.9
Financial assets at fair value
through other comprehensive income
Derivative financial instruments:
Cash flow hedge - derivatives used for hedging - - 8.7 8.7 14.3 14.3
Other Investments 7.9 7.9 7.9 7.9 7.9 7.9
7.9 7.9 16.6 16.6 22.2 22.2
Financial assets at fair value through profit or loss
Deferred consideration (overage) 0.6 0.6 5.1 5.1 5.2 5.2
0.6 0.6 5.1 5.1 5.2 5.2
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 9.
The total change in fair value of derivative financial instruments recorded in
other comprehensive income was a £nil (March 2021: loss of £9.8m, September
2020: loss of £4.2m).
14. Lease obligations
Lease liabilities in respect of leased investment property are recognised in
accordance with IFRS 16.
Unaudited Audited Unaudited
30 September 2021 31 March 30 September
£m 2021 2020
£m £m
Leases repayable in two years or more 26.3 26.3 26.3
Minimum lease payments under leases fall due as follows:
Within one year 1.6 1.6 1.6
Between two and five years 6.6 6.6 6.6
Beyond five years 147.6 148.4 149.2
155.8 156.6 157.4
Future finance charges on leases (129.5) (130.3) (131.1)
Present value of lease liabilities 26.3 26.3 26.3
15. Notes to cash flow statement
Reconciliation of profit for the year to cash generated from operations:
6 months ended 30 September 2021 £m 6 months Year ended
ended 30 September 2020 £m 31 March 2021
£m
Profit/(Loss) before tax 3.4 (110.4) (235.7)
Depreciation 0.9 0.9 2.0
Amortisation of intangibles 0.4 0.3 0.9
Loss on disposal of investment properties 3.5 0.2 0.1
Other expenses - 0.2 0.2
Net loss from change in fair value of investment property 14.9 125.3 257.7
Equity settled share based payments 0.3 1.5 2.5
Finance expense 10.5 11.8 23.8
Exceptional finance costs - - 16.4
Changes in working capital:
Increase in trade and other receivables (3.2) (9.8) (4.4)
Increase/ (decrease) in trade and other payables 17.6 5.6 (1.1)
Cash generated from operations 48.3 25.6 62.4
For the purposes of the cash flow statement, cash and cash equivalents
comprise the following:
30 September 2021 31 March 30 September
£m 2021 2020
£m £m
Cash at bank and in hand 68.1 183.6 4.3
Restricted cash - tenants' deposit deeds 6.9 7.4 8.1
191.0
75.0 12.4
16. Capital commitments
At the period end the estimated amounts of contractual commitments for future
capital expenditure not provided for were:
Unaudited Audited Unaudited
30 September 2021 31 March 30 September
£m 2021 2020
£m £m
Construction or refurbishment of investment properties 3.2 4.2 4.2
17. Share Capital
Unaudited Audited Unaudited
30 September 2021 31 March 30 September
£m 2021 2020
£m £m
Issued: fully paid ordinary shares of £1 each 181.1 181.1 181.1
Movements in share capital were as follows: Unaudited Audited Unaudited
30 September 31 March 30 September
2021 2021 2020
£m £m £m
Number of shares at 1 April 181,113,594 180,747,868 180,747,868
Issue of shares 10,065 365,726 358,557
Number of shares at period end 181,123,659 181,113,594 181,106,425
The Group has issued shares to satisfy the exercise of employee share option
schemes.
18. Post balance sheet events
In November 2021, the Group completed the acquisition of The Busworks business
for £45m.
Responsibility statement of the directors in respect of the half-yearly
financial report
We confirm that to the best of our knowledge:
• the condensed set of financial statements has been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted for use in the UK;
• the interim management report includes a fair review of the information
required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an
indication of important events that have occurred during the first six months
of the financial year and their impact on the condensed set of financial
statements; and a description of the principal risks and uncertainties for the
remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being
related party transactions that have taken place in the first six months of
the current financial year and that have materially affected the financial
position or performance of the entity during that period; and any changes in
the related party transactions described in the last annual report that could
do so.
The Directors of Workspace Group PLC are listed in the Workspace Group PLC
Annual Report and Accounts for 31 March 2021. A list of current Directors is
maintained on the Workspace Group website: www.workspace.co.uk
(http://www.workspace.co.uk) .
Approved by the Board on 16 November 2021 and signed on its behalf by
D Benson
Director
INDEPENDENT REVIEW REPORT TO WORKSPACE GROUP PLC
Conclusion
We have been engaged by the Group to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
September 2021 which comprises the Consolidated Income Statement, Consolidated
Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated
Statement of Changes in Equity, Consolidated Statement of Cash Flows and the
related explanatory notes.
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2021 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the UK. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures.
We read the other information contained in the half-yearly financial report
and consider whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 1, the latest annual financial statements of the group
were prepared in accordance with International Financial Reporting Standards
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European
Union and in accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 and the next annual financial
statements will be prepared in accordance with UK-adopted international
accounting standards. The directors are responsible for preparing the
condensed set of financial statements included in the half-yearly financial
report in accordance with IAS 34 as adopted for use in the UK.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Group in accordance with the terms of our engagement to assist the Group in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the Group those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Group for our review work, for this report, or for the conclusions we have reached.
Richard Kelly
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
16 November 2021
Principal Risks and uncertainties
The Board assesses and monitors the key risks of the business. The key risks
that could affect the Group's medium-term performance and the factors which
mitigate these risks, have not materially changed from those set out in the
Group's Annual Report and Accounts 2021 and have been assessed in line with
the requirements of the 2019 UK Corporate Governance Code. They are
reproduced below. The Board is satisfied that we continue to operate within
our risk profile.
The Covid-19 pandemic has had a significant impact on Workspace and its
customers. A Covid-19 working group was set up to identify specific risks in
relation to the pandemic and implement an action plan to address these
risks. Key areas of consideration included employees, customers, regulation,
properties, financing and a back-to-business plan following the easing of
restrictions.
Risk area Mitigating activities
Brexit · Modelling and stress testing our business plans and viability throughout
the year, including loan covenants and borrowing levels
· Reviewing and monitoring loan covenants and borrowing levels
The UK has now entered into a trade agreement with the EU, removing the most
significant risk of a no-deal Brexit. The Risk Committee and the Board have · Regular communication with customers and stakeholders to gather
continued to consider the potential impacts that Brexit may have on the information on potential Brexit impacts
business throughout the year.
· Review of any key contracts which may be impacted by Brexit
· Consideration of the potential impact on employees and communication with
Workspace operates solely in London with no international activities. The staff as and when applicable
main risks to the Group are the impact on the UK economy and Workspace
customers. · Liaising with our advisors on any potential changes to regulation which
may arise
Customer demand · Launched a new, more intuitive consumer website to grow direct web
enquiries and drive organic search
· Broad mix of buildings across London with different office experiences at
Demand for our flexible office space declining as a result of social, economic various price points to match customer requirements
or competitive factors, which impacts on:
· Pipeline of refurbishment and redevelopments to further enhance the
· Fall in occupancy levels at our properties portfolio
· Falling rent roll · Weekly meeting to track enquiries, viewings and lettings to closely track
customer trends and amend pricing as demand changes
· Reduction in property valuation
· Centre staff maintain ongoing relationships with our customers to
understand their requirements and implement change to meet their needs
· Business plans are stress tested to assess the sensitivity of forecasts
to reduced levels of demand and implement contingency measures.
· Initiated a brand campaign to raise awareness of our differentiated brand
The move to more flexible working, particularly working patterns, has offer with digital and out of home advertising
accelerated in the past year as a result of Covid-19. Opportunities for growth
could be missed without a clear branding strategy to meet these changing
demands.
Valuation · Market-related valuation risk is largely dependent on external factors.
We maintain a conservative LTV ratio which can withstand a severe decline in
property values without covenant breaches
Value of our properties decreasing as a result of external market or internal · We monitor changes in sentiment in the London real estate market, yields
management factors, impacting on: and pricing to track possible changes in valuation. CBRE, the leading
full-service real estate services and investment organisation in the world,
· Financing covenants linked to loan to value ratio provides twice yearly valuations of all our properties.
· Impact on share price · Alternative use opportunities, including mixed-use developments, are
actively pursued across the portfolio.
Customer payment default · Rent collections have been impacted during the year as a result of the
moratorium put in place by the Government which limits the use of some debt
recovery methods.
Covid-19 and its impact on the economy has resulted in an increase in · The impact has been mitigated by strong credit control processes in place
customers defaulting on their rental payments. A continued economic downturn and an experienced team of credit controllers, able to make quick decisions
could result in further pressure on rent collection figures with a prolonged and negotiate with customers for payment. In addition, we hold a three month
period of companies failing leading to a decline in occupancy and increase in deposit for the majority of customers.
office vacancies, which impacts on:
· Centre staff maintain relationships with customers and can identify early
· Negative cash flow and increasing interest costs signs of potential issues.
· Breach of financial covenants
Risk area Mitigating activities
Acquisition pricing · We have an acquisition strategy determining key criteria such as
location, size and potential for growth. These criteria are based on the many
years of knowledge and understanding of our market and customer demand.
Inadequate appraisal and due diligence of a new acquisition could lead to · A detailed appraisal is prepared for each acquisition and is presented to
paying above market price leading to a negative impact on valuation and rental the Investment Committee for challenge and discussion prior to authorisation
income targets, which impacts on: by the Board. The acquisition is then subject to thorough due diligence prior
to completion.
· Negative impact on valuation
· Workspace will only make acquisitions that are expected to yield a
· Impact on overall shareholder return minimum return and will not knowingly overpay for an asset.
Third party relationships · Workspace has in place a robust tender and selection process for key
contractors and partners. Contracts contain service level agreements which are
monitored regularly and actions taken in the case of underperformance.
Poor performance from one of Workspace's key contractors or third party · For key services, Workspace maintains relationships with alternative
partners could result in an interruption to or reduction in quality of our providers so that other solutions would be available if the main contractor or
service offering to customers or could lead to significant disruptions and third party was unable to continue providing their services. Processes are in
delays in any refurbishment or redevelopment projects. Which could impact: place for identifying key suppliers and understanding any specific risks that
require further mitigation.
· Decline in customer confidence
· We have committed to being London Living Wage compliant
· Increase project or operational costs for all contractors by April 2022.
· Fall in customer demand
Regulatory · Health and safety is one of our primary concerns, with strong leadership
promoting a culture of awareness throughout the business. We have
well-developed policies and procedures in place to help ensure that any
workers, employees or visitors on site comply with strict safety guidelines
Failure to meet regulatory requirements and/or lack of knowledge about and we work with well-respected suppliers who share our high quality standards
changing regulation in property development, finance or health and safety. in health and safety.
· Health and safety management systems are reviewed and updated in line
with changing regulation and regular audits are undertaken to identify any
Regulatory infringements can lead to fines, tax penalties, health and safety potential improvements.
sanctions or more stringent regulatory controls which can also affect our
corporate reputation, development activity and customer demand. · Sustainability requirements have an increasing importance for the Group
and it is a responsibility we take seriously. We have committed to a Carbon
Zero target of 2030 and we are implementing the TCFD recommendations.
Resourcing · We have a robust recruitment process to attract new joiners and
established interview and evaluation processes with a view to ensuring a good
fit with the required skill set and our valued corporate culture. Various
incentive schemes align employee objectives with the strategic objectives of
An inability to recruit and retain talented employees in key areas could lead the Group to motivate employees to work in the best interests of the Group and
to: its stakeholders. This is supported by a robust appraisal and review process
for all employees.
· Increased costs from high staff turnover
· Our HR and Support Services teams run a detailed training and development
· Adverse impact on brand and reputation programme designed to ensure employees are supported and encouraged to
progress with learning and study opportunities. The HR function was this year
· Delay to growth plans strengthened by the newly created appointment of a Head of People who will
coordinate all activities to attract and retain talented employees.
· We have a strong internal culture based on our Company values which
encourage independent thought and initiative which is articulated in our four
key values:
- Know your stuff.
- Find a way.
- Show we care.
- Be a little bit crazy.
Cyber security · Cyber security risk is managed using a mitigation framework comprising
network security, IT security policies and third party risk assessments.
Controls are regularly reviewed and updated and include technology such as
next generation firewalls, multi layered access control through to people
Malicious threats to information systems could lead to: solutions such as user awareness training and mock-phishing emails.
· Assurance of the frameworks performance is gained through an independent
maturity assessment, penetration testing and network vulnerability testing,
· Loss of critical data all performed annually.
· Financial loss due to fraud
· Reputational damage amongst customers
Risk area Mitigating activities
Financing · We regularly review funding requirements for business plans and ensure we
have a wide range of options to fund our forthcoming plans. We also prepare
Reduced availability of financing options could result in: a five-year business plan which is reviewed and updated annually
· We have a broad range of funding relationships in place and regularly
review our refinancing strategy
· Inability to fund business plans
· Loan covenants are monitored and reported to the Board on a monthly basis
· Restricted ability to invest in new opportunities and we undertake detailed cashflow monitoring and forecasting.
· Increased interest costs. · We extended our Revolving Credit Facility for a further year and launched
a successful £300m Green Bond in the prior year, providing the group with
· Negative reputational impact amongst lenders and in the investment adequate funds for future plans.
community
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