REG - Workspace Grp PLC - WORKSPACE GROUP PLC FULL YEAR RESULTS
Thu 07:00
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RNS Number : 5122L Workspace Group PLC 05 June 2025
05 June 2025
WORKSPACE GROUP PLC
FULL YEAR RESULTS
PERFORMANCE IN LINE WITH EXPECTATIONS
UNDERLYING RENTAL INCOME GROWTH AND DIVIDEND INCREASED
Workspace Group PLC ("Workspace"), London's leading owner and operator of
sustainable, flexible work space today announces its results for the year to
31 March 2025. The comments in this announcement refer to the period from 1
April 2024 to 31 March 2025 unless otherwise stated.
Commenting on the results, Lawrence Hutchings, Chief Executive Officer said:
"We have delivered a solid full year performance in line with expectations in
what has been a volatile macroeconomic and competitive environment. Underlying
rental income was up 1.7% and LFL rent per sq. ft. grew 4.8%, helping to
balance the fall in LFL occupancy in the year due to the impact of larger unit
vacations. These challenges will continue in the coming year, but we now have
a very clear, deliverable strategy in place to stabilise and rebuild our
occupancy and drive rental growth.
Looking through a wider lens, having now been CEO of Workspace for more than
six months, I have thoroughly reviewed our business, as well as conducted
extensive, expert third-party market research which validates our new
strategy. A number of strategic actions successfully undertaken since January
have further reinforced my confidence in Workspace's potential. We are leaders
in a structural growth market, catering to the most exciting, innovative,
creative and growing SMEs in London. We have a lot to play for inside a
significant market opportunity.
We have forensically analysed the portfolio and know that where we have the
right properties, with the right amenities, in the right locations we are able
to deliver superior returns and income growth. Having disposed of over £100m
worth of assets in the year, we will look to further recycle capital in the
medium-term into our conviction assets, positioning the business to scale over
the longer-term.
There is still a lot of work to do and it will take time to see the full
impact, but I am confident that we have a strategy to deliver a market-leading
product and experience for our customers and that we are well placed to be a
growing, income-led business, with a focus on dividend growth and creating
long-term, enduring value for our shareholders."
Financial highlights: Underlying rental income growth, dividend increased,
marginal valuation reduction
● Underlying rental income(†1) up 1.7% to £135.5m (31 March 2024: £133.2m),
net rental income down 3.2% (£4.1m) to £122.1m (31 March 2024: £126.2m)
following disposals
● Trading profit after interest(†) up 1.2% (£0.8m) to £66.8m (31 March 2024:
£66.0m)
● Total dividend of 28.4p per share (31 March 2024: 28.0p)
● Property valuation of £2,368m an underlying(2) reduction of 2.4% (£58m) from
March 2024
● Like-for-like portfolio valuation down 1.6%(2) over the full year with ERV per
sq. ft. up 1.0% to £50.85 and equivalent yield out 10bps to 6.8%
● Profit before tax of £5.4m (31 March 2024: £192.8m loss) reflecting trading
profit after interest less the reduction in the property valuation
● EPRA net tangible assets per share(†) down 3.3% from 31 March 2024 to £7.74
(31 March 2024: £8.00)
● Robust balance sheet with £260m of undrawn facilities and cash and LTV at 34%
(31 March 2024: 35%)
● Average cost of debt over the year(3) was 4.1% with 91% of debt at fixed rates
as at 31 March 2025
Good overall customer demand, occupancy impacted by larger customer leavers
● Active year with 1,266 lettings and 500 renewals completed with a total rental
value of £46.4m, highlighting the appeal of our flexible offer
● Like-for-like rent per sq. ft. up 4.8% to £48.08
● Like-for-like rent roll down 0.8% to £107.9m, reflecting a higher than usual
level of larger customers vacating in the period
● Like-for-like occupancy at 83.0% (31 March 2024: 88.0%(4))
Accretive asset management and sustainability activity to drive customer
demand
● Active capital recycling with £100.5m of disposals exchanged or completed in
the year, and a further £10.3m completed in April 2025, broadly in line with
book values
● Refurbishment and extension of Leroy House in Islington completed, our first
net zero building, delivering 57,000 sq. ft. of new space across 101 units
● Eight larger refurbishment projects underway delivering 509,000 sq. ft. of new
and upgraded space
● Excellent performance against our environmental objectives, with a 7%
reduction in operational energy intensity across the core portfolio and an 8%
increase in EPC A and B rated space, making 60% of the whole portfolio A/B
rated
Summary Results
31 March 31 March Change
2025 2024
Financial performance
Net rental income(†) £122.1m £126.2m -3.2%
Trading profit after interest(†) £66.8m £66.0m +1.2%
Profit/(Loss) before tax £5.4m (£192.8m)
Full year dividend per share 28.4p 28.0p +1.4%
Valuation
EPRA net tangible assets per share(†) £7.74 £8.00 -3.3%
Property valuation(†) £2,368m £2,446m -2.4%(2)
Financing
Loan to value(†) 34% 35%
Undrawn bank facilities and cash £260m £145m
† 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.
(1) Underlying change adjusted for disposals.
(2) Underlying change excluding capital expenditure and disposals.
(3) After amortisation of issue costs and commitment fees.
(4) Restated for the transfer in of Old Dairy, Shoreditch where occupancy is
now stabilised post refurbishment, the transfer out of Archer Street Studios,
Soho, and Rainbow Industrial Estate (part), Raynes Park, which have been sold,
the transfer out of Shaftesbury Centre, Ladbroke Grove to non-core which has
been exchanged for sale and the transfer out of The Biscuit Factory site in
Bermondsey which is undergoing major refurbishment.
For media and investor enquiries, please contact:
Workspace Group 020 7138 3300
PLC
Lawrence Hutchings, Chief Executive Officer
Dave Benson, Chief Financial Officer
Paul Hewlett, Director of Strategy & Corporate Development
Clare Marland, Head of Corporate Communications
FGS Global 020 7251 3801
Chris Ryall
Guy Lamming
Details of results presentation
Workspace will host a strategy update alongside the FY results presentation
and Q&A for analysts and investors on Thursday, 05 June 2025 at 9:00am.
The venue for the presentation is Eventspace, at Salisbury House, 114 London
Wall, EC2M 5QD.
The presentation and Q&A can also be accessed live via webcast, available
at the following link:
https://secure.emincote.com/client/workspace/workspace027
(https://secure.emincote.com/client/workspace/workspace027)
Notes to Editors
About Workspace Group PLC:
Workspace is London's leading owner and operator of flexible workspace,
currently managing 4.3 million sq. ft. of sustainable space at 67 locations in
London and the South East.
We are home to some 4,000 of London's fastest growing and established brands
from a diverse range of sectors. Our purpose, to give businesses the freedom
to grow, is based on the belief that in the right space, teams can achieve
more. That in environments they tailor themselves, free from constraint and
compromise, teams are best able to collaborate, build their culture and
realise their potential.
We have a unique combination of a highly effective and scalable operating
platform, a portfolio of distinctive properties, and an ownership model that
allows us to offer true flexibility. We provide customers with blank canvas
space to create a home for their business, alongside leases that give them the
freedom to easily scale up and down within our well-connected, extensive
portfolio.
We are inherently sustainable - we invest across the capital, breathing new
life into old buildings and creating hubs of economic activity that help
flatten London's working map. We work closely with our local communities to
ensure we make a positive and lasting environmental and social impact,
creating value over the long term. Workspace was established in 1987, has been
listed on the London Stock Exchange since 1993, is a FTSE 250 listed Real
Estate Investment Trust (REIT) and a member of the European Public Real Estate
Association (EPRA).
Workspace® is a registered trademark of Workspace Group PLC, London, UK.
LEI: 2138003GUZRFIN3UT430
For more information on Workspace, visit www.workspace.co.uk
(http://www.workspace.co.uk)
CHIEF EXECUTIVE's STATEMENT
Workspace has delivered a resilient performance this year, despite operating
in a tough economic and competitive climate. Net rental income was £122.1m
following disposals, which drove a 1.2% increase in trading profit to £66.8m.
We saw a small reduction in the property valuation, largely driven by lower
occupancy at our like-for-like properties.
Despite the robust performance in 2024/25, our outlook is more challenging. We
have seen an increase in supply and softer demand due to macroeconomic
factors. While we saw some positive signs on demand in the fourth quarter, our
business model and flexible offer means that we have visibility on a stock of
space coming back to us, which will further impact occupancy. That in turn
will work its way through to earnings in 2025/26.
It is clear we have a lot of work to do to mitigate the challenges we're
seeing. It is going to require some tough decisions and discipline as we embed
a culture of operational excellence, which sits at the heart of our refreshed
strategy, which we are presenting to the market today.
There is no fundamental change in our strategy. We will continue to own
high-quality London real estate, we will continue to service SMEs and we will
remain in the flexible space market. The Board and I remain confident in our
franchise and this confidence is based on evidence from significant and
thorough market research we have commissioned in recent months. This research
tells us that London is a growth market, the SME market within London is
growing and flex space is also growing.
Against this backdrop, while our fundamental strategy is not changing, our
strategic approach is. A focus on short, medium and long-term outcomes will
ensure agility and, by doubling down on operational excellence, we will
deliver a growing, income-led business that creates long-term, enduring value
for our shareholders.
Our number one priority in the near-term is to recover the occupancy we have
lost. To do that, we need to go back to basics and focus on what our customers
want from us. I am confident that we have the right strategy to rebuild
occupancy but it will take some time to see the impact of our initiatives.
Over the past few months, we have been piloting a number of projects which
have delivered some exciting outcomes. These have included capital-light
refurbishments at selected properties addressing high-touch communal areas in
response to customer feedback, more targeted marketing aimed at larger
customers and optimisation of our sales process. All of these initiatives can
deliver marked improvements in retention and new customer acquisition.
In the medium term, we will be more clinical in recycling capital by disposing
of low conviction assets, identified following a detailed review of our
portfolio, and investing in our conviction and high conviction properties with
a keen focus on returns.
Beyond this, we have identified areas where we need to sharpen up
operationally to win on the ground once more. There are significant
opportunities to enhance our operating platform through a more efficient use
of technology and by better leveraging the data and insights we have within
the platform.
Since joining the business at the end of 2024, I have spent a lot of time
getting out to see the assets and meet our teams, both at head office and
across our sites around London. Workspace has a fantastic team who truly live
by our values, and I've been blown away by the dedication and energy of the
people I've met in our centres and our head office.
Workspace is a brilliant business, with its almost 40-year legacy and role as
a pioneer in offering space on flexible terms. There is an enormous respect
for what we do as a business, from creating a platform for social mobility in
London, to preserving beautiful, historic and characterful buildings for the
next generation.
We have seen the impact of strategic initiatives we put in place in the fourth
quarter of 2024/25 on our trading performance. This has demonstrated what can
be achieved when we pull together as a team. I look forward to seeing the
results as our refreshed strategy is brought to life. By enhancing our core
business in the short term, we will be able to accelerate income growth in the
medium term and innovate to take advantage of opportunities to scale over the
longer term.
BUSINESS REVIEW
CUSTOMER ACTIVITY
We have seen resilient customer demand with 1,266 lettings completed in the
year with a total rental value of £31.8m.
Monthly Average
FY FY Q4 Q3 Q2 Q1
2024/25 2023/24 2024/25 2024/25 2024/25 2024/25
Enquiries 703 788 796 628 700 688
Viewings 507 524 585 457 486 499
Lettings 106 103 130 91 99 102
The good level of customer lettings has been offset by a higher than usual
level of customer vacations in the period, including a number of larger
customers. In line with our strategy, we are subdividing some of these larger
spaces into smaller units, for which we see stronger demand and achieve higher
pricing, as well as implementing marketing initiatives specifically targeted
at larger businesses to drive leasing.
Customer demand in the first quarter of 2025/26 is expected to be quieter,
impacted by the timing of bank holidays and a more challenging macro
environment, with 631 enquiries, 465 viewings and 65 new lettings in April
2025.
RENT ROLL
Total rent roll, representing the total annualised net rental income at a
given date, was down 2.8% (£4.0m) in the year to £139.4m at 31 March 2025.
Total Rent Roll £m
At 31 March 2024 143.4
Like-for-like portfolio (0.9)
Completed projects 0.8
Projects underway and design stage 0.4
South East Office 0.2
Disposals (4.5)
At 31 March 2025 139.4
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 and non-core properties at their current rent roll and occupancy), was
£191.9m at 31 March 2025.
Like-for-like portfolio
The like-for-like portfolio represents 77% of the total rent roll as at 31
March 2025. It comprises 39 properties with stabilised occupancy excluding
recent acquisitions, buildings impacted by significant refurbishment or
redevelopment activity, or contracted for sale.
Six Months Ended
Like for Like 31 Mar 25 30 Sep 24(1) 31 Mar 24(1)
Occupancy 83.0% 84.2% 88.0%
Occupancy change(2) (1.2%) (3.8%) (0.4%)
Rent per sq. ft. £48.08 £47.12 £45.86
Rent per sq. ft. change 2.0% 2.7% 3.4%
Rent roll £107.9m £107.1m £108.8m
Rent roll change 0.7% (1.6%) 3.0%
(1) Restated for the transfer in of Old Dairy, Shoreditch where occupancy is
now stabilised post refurbishment, the transfer out of Archer Street Studios,
Soho, and Rainbow Industrial Estate (part), Raynes Park, which have been sold,
the transfer out of Shaftesbury Centre, Ladbroke Grove to non-core which has
been exchanged for sale and the transfer out of The Biscuit Factory site in
Bermondsey which is undergoing major refurbishment.
(2) Absolute change
We have continued to move pricing forward across our like-for-like portfolio
with rent per sq. ft. increasing by 4.8% in the year to £48.08. Like-for-like
occupancy was down by 5.0% to 83.0% in the year, with an overall decrease in
like-for-like rent roll of 0.8% (£0.9m) to £107.9m, reflecting the higher
than usual level of customer vacations in the period, as noted above.
We have seen ERV per sq. ft. increase by 1.0% in the year. If all the
like-for-like properties were at 90% occupancy at the CBRE estimated rental
values at 31 March 2025, the rent roll would be £125.1m, £17.2m higher than
the actual rent roll at 31 March 2025.
Completed Projects
There are seven projects in the completed projects category. Rent roll
increased overall by £0.8m in the year to £7.8m.
If the buildings in this category were all at 90% occupancy at the ERVs at 31
March 2025, the rent roll would be £12.3m, an uplift of £4.5m.
Projects Underway - Refurbishments
We are currently underway on eight larger refurbishment projects that will
deliver 509,000 sq. ft. of new and upgraded space. As at 31 March 2025, rent
roll was £13.0m, up £0.4m in the year.
Assuming 90% occupancy at the ERVs at 31 March 2025, the rent roll at these
eight buildings once they are completed would be £23.5m, an uplift of
£10.5m.
Projects at Design Stage
These are properties where we are well advanced in planning a refurbishment or
redevelopment that has not yet commenced. As at 31 March 2025, the rent roll
at these properties was £2.7m, no change to March 2024.
South East Office
As at 31 March 2025, the rent roll of the South East office portfolio,
comprising eight buildings, was £7.0m, up £0.2m.
Assuming 90% occupancy (or current occupancy if higher) at the ERVs at 31
March 2025, the rent roll would be £9.1m, an uplift of £2.1m.
Non-core
As at 31 March 2025, the rent roll of the non-core portfolio was £1.0m, no
change to March 2024.
Disposals
During the year, there was £100.5m in exchanged or completed sales, broadly
in line with book values. In aggregate, disposals have delivered £77m of
proceeds (net of sales costs) in the year, at a combined net initial yield of
4.2%.
In April, we exchanged and completed on the sale of Q West in Brentford for
£10.3m, in line with the March 2025 valuation.
PROFIT PERFORMANCE
Trading profit after interest for the year was up 1.2% (£0.8m) on the prior
year to £66.8m.
£m 31 Mar 31 Mar
2025 2024
Underlying rental income 135.5 133.2
Unrecovered service charge costs (4.2) (4.7)
Empty rates and other non-recoverable costs (11.4) (9.8)
Services, fees, commissions and sundry income (0.3) 1.3
Underlying net rental income 119.6 120.0
Disposals 2.5 6.2
Net rental income 122.1 126.2
Administrative expenses - underlying (20.7) (22.0)
Administrative expenses - share based costs(1) (2.6) (3.3)
Net finance costs (32.0) (34.9)
Trading profit after interest 66.8 66.0
(1) These relate to both cash and equity settled costs
Underlying rental income increased £2.3m to £135.5m, reflecting the increase
in average rent per sq. ft. achieved over the last year. Net rental income was
down 3.2% (£4.1m) to £122.1m following the disposals made over the last
year.
Unrecovered service charge costs decreased by £0.5m, with costs tightly
controlled and the majority of costs recovered from customers.
Empty rates and other non-recoverable costs increased by £1.6m due to lower
occupancy, which also impacted net revenue from services, fees, commissions
and sundry income together with increased unrecovered energy, hospitality and
events costs.
Underlying administrative expenses decreased by £1.3m to £20.7m, with lower
staff costs reflecting performance in the year and tight control of other
costs offsetting inflation. Share-based costs decreased by £0.7m to £2.6m
driven by lower vesting levels.
Net finance costs decreased by £2.9m to £32.0m in the year reflecting the
reduction in average net debt following asset disposals. The average debt
balance over the year was £19.0m lower than in the prior year.
Profit before tax was £5.4m compared to a loss of £192.8m in the prior year.
£m 31 Mar 31 Mar
2025 2024
Trading profit after interest 66.8 66.0
Change in fair value of investment properties (56.3) (255.3)
Loss on sale of investment properties (1.5) (2.3)
Other costs (3.6) (1.2)
Profit/(loss) before tax 5.4 (192.8)
Adjusted underlying earnings per share 34.5p 34.1p
The change in fair value of investment properties, including assets held for
sale, was a decrease of £56.3m compared to a decrease of £255.3m in the
prior year.
The loss on sale of investment properties of £1.5m was driven by costs
associated with disposals in the year.
Other costs include one-off items relating to the replacement of our finance
and property management system and CRM system as well as one-off costs
relating to the new CEO appointed in the year.
Adjusted underlying earnings per share, based on trading profit after interest
and calculated on a diluted share basis, was up 1.2% to 34.5p. The calculation
of adjusted, basic, diluted and EPRA earnings per share is shown in note 8 to
the financial statements.
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, recognising the importance to our shareholders of
paying a regular, growing dividend, whilst ensuring the total dividend per
share in each financial year is fully covered by adjusted underlying earnings
per share.
Based on trading profit performance and confidence in the longer-term
prospects of the Company, the Board is recommending a final dividend of 19.0p
per share, taking the full year dividend to 28.4p (2024: 28.0p), to be paid on
1 August 2025 to shareholders on the register at 4 July 2025. The dividend
will be paid as a REIT Property Income Distribution (PID) net of withholding
tax where appropriate.
PROPERTY VALUATION
At 31 March 2025, our property portfolio was independently valued by CBRE at
£2,368m, an underlying decrease of 2.4% (£58m) in the year. The main
movements in the valuation are set out below:
£m
Valuation at 31 March 2024 2,446
Capital expenditure 60
Disposals (80)
Underlying revaluation movement (58)
Valuation at 31 March 2025 2,368
A summary of the full year valuation and revaluation movement by property type
is set out below:
£m Valuation Underlying revaluation
31 March 2025
decrease
Like-for-like properties 1,764 (29)
Completed projects 175 (4)
Refurbishments 322 (16)
South East office 76 (7)
Non-core 31 (2)
Total 2,368 (58)
Like-for-like Properties
There was an 1.6% (£29m) underlying decrease in the valuation of
like-for-like properties to £1,764m. This was driven by a 10bps outward shift
in equivalent yield (£54m) due to an increased void assumption, offset by a
1.0% increase in the ERV per sq. ft. (£25m).
ERV growth has returned to a lower, historically more normal level of annual
increase, with pricing at most centres now back at or above pre-Covid levels.
We saw stronger growth in ERV for smaller space, which represents the majority
of our lettings activity, with an increase of 3.4% in the year for units under
1,000 sq. ft., compared to larger spaces where ERVs decreased by 0.8%. This
reflects our approach to implement a wide range of smaller unit refurbishments
and subdivisions to align our spaces with customer demand.
31 Mar 31 Mar
2025 2024(1) Change
ERV per sq. ft. £50.85 £50.33 1.0%
Rent per sq. ft. £48.08 £45.86 4.8%
Equivalent yield 6.8% 6.7% 0.1%(2)
Net initial yield 5.6% 5.6% -
Capital value per sq. ft. £645 £664 (2.9%)
(1) Restated for the transfer in of Old Dairy, Shoreditch where occupancy is
now stabilised post refurbishment, the transfer out of Archer Street Studios,
Soho, and Rainbow Industrial Estate (part), Raynes Park, which have been sold,
the transfer out of Shaftesbury Centre, Ladbroke Grove to non-core which has
been exchanged for sale and the transfer out of The Biscuit Factory site in
Bermondsey which is undergoing major refurbishment.
(2) Absolute change
A 2.5% increase in ERV per sq. ft. would increase the valuation of
like-for-like properties by approximately £46m while a 25bps increase in
equivalent yield would decrease the valuation by approximately £61m.
Completed Projects
There was an underlying decrease of 2.2% (£4m) in the value of the seven
completed projects to £175m. This was driven by a 0.6% decrease in the ERV
per sq. ft. The overall valuation metrics for completed projects are set out
below:
31 Mar
2025
ERV per sq. ft. £35.80
Rent per sq. ft. £31.08
Equivalent yield 6.9%
Net initial yield 4.1%
Capital value per sq. ft. £459
Current Refurbishments
There was an underlying decrease of 4.7% (£16m) in the value of our current
refurbishments to £322m.
The decreases in respect of refurbishments reflected the combination of an
outward movement yields, increase in build costs and reduction in ERVs.
South East Office
There was a 8.4% (£7m) underlying decrease in the valuation of the South East
office portfolio to £76m with 50bps outward shift in equivalent yield, and a
1.7% decrease in ERV per sq. ft. The overall valuation metrics are set out
below:
31 Mar
2025
ERV per sq. ft. £28.58
Rent per sq. ft. £24.13
Equivalent Yield 10.3%
Net Initial Yield 8.9%
Capital Value per sq. ft. £227
REFURBISHMENT ACTIVITY
A summary of the status of the refurbishment pipeline at 31 March 2025 is set
out below:
Projects Number Capex spent Capex to spend Upgraded and new space (sq. ft.)
Underway 8 £58m £32m 509,000
Design stage 6 £0m £335m 520,000
Design stage (without planning) 4 £0m £113m 222,000
Activity is ongoing at our major refurbishment projects; Chocolate Factory in
Wood Green, where we are delivering 45,000 sq. ft. of new and upgraded space
with practical completion achieved in May 2025, and The Biscuit Factory in
Bermondsey, which will deliver 31,000 sq. ft. of new space towards the end of
the year. We have also started on site at The Centro Buildings in Camden,
where we are transforming a traditional office building, Atelier House, into a
Workspace business centre with 41 units, a café and meeting room, and expect
to attain practical completion in October 2025.
In addition to these major refurbishment projects, in order to pilot some of
our new strategic initiatives, we have undertaken some capital-light
refurbishment work at two sites, The Leather Market in London Bridge, and Vox
Studios in Vauxhall. The work has addressed high-impact areas including
entrances, external and internal breakout spaces, cafes, corridors and
bathrooms. All changes have centred on addressing customer feedback and
initial customer reactions have been very positive.
SUSTAINABILITY
We have an inherently sustainable portfolio, underpinned by our refurbishment
led ethos resulting in 40-70% lower emissions, compared to industry best
practice, from our development and refurbishment activities and our energy
efficient operations. The average energy intensity of our portfolio is 15%
lower than industry best practice for net zero carbon offices, set at
90kWhe/m2(1). Further improving the energy efficiency of our buildings is key
in helping us to achieve our target of being a net zero carbon business.
The Workspace portfolio is currently 60% EPC A and B rated, an increase of 8%
in the year, ensuring our portfolio is future proofed against the proposed
regulated trajectory for all commercial buildings to be EPC A/B rated by 2030.
We also continue to procure 100% renewable electricity, with two-thirds of
this demand being met via our power purchase agreement with a solar plant in
Devon. In the year we also achieved a 7% reduction in operational energy
intensity across the core portfolio.
To ensure we build long-term climate resilience, we have updated our net zero
carbon commitment - being the first UK REIT to adopt the latest building
sector guidance from science based targets - committing us to a target of 90%
emissions reduction by 2040 against our 2020 baseline. We are pleased to
report that we have already reduced our emissions by 35% and have strong
foundations in place to continue to drive climate action at pace.
(1)https://ukgbc.org/wp-content/uploads/2020/01/UKGBC-Net-Zero-Carbon-Energy-Performance-Targets-for-Offices.pdf
(https://ukgbc.org/wp-content/uploads/2020/01/UKGBC-Net-Zero-Carbon-Energy-Performance-Targets-for-Offices.pdf)
CASH FLOW
A summary of cash flows is set out below:
£m 31 Mar 31 Mar
2025 2024
Net cash from operations after interest(†) 77 63
Dividends paid (56) (51)
Capital expenditure (60) (71)
Property disposals and cash receipts 77 118
Other (3) (12)
Net movement 35 47
Opening debt (net of cash) (855) (902)
Closing debt (net of cash) (820) (855)
† excludes £8.8m of VAT payment (2024) relating to the sale of Riverside
included in 'Other'
There is a reconciliation of net debt in note 16(b) in the financial
statements.
The overall decrease of £35m in net debt largely reflects the disposals made
in the period.
NET ASSETS
Net assets decreased in the year by £46.7m to £1,502m. EPRA net tangible
assets (NTA) per share at 31 March 2025 was down 3.3% (£0.26) to £7.74.
EPRA NTA per share £
At 31 March 2024 8.00
Adjusted trading profit after interest 0.34
Property valuation deficit (0.30)
Dividends paid (0.28)
Other (0.02)
At 31 March 2025 7.74
The calculation of EPRA NTA per share is set out in note 9 of the financial
statements.
TOTAL ACCOUNTING RETURN
The total accounting return for the year was 0.3% compared to -10.9% in the
prior year ended March 2024. The total accounting return comprises the change
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
calculation of total accounting return is set out in note 9 of the financial
statements.
FINANCING
As at 31 March 2025, the Group had £25m of available cash and £235m 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
Secured loan 65.0 65.0 2030
Term loan 80.0 80.0 2026
Bank facilities 100.0 335.0 2026-2028
Total 845.0 1,080.0
The majority of the Group's debt comprises long-term fixed rate committed
facilities including a £300m green bond, £300m of private placement notes,
and a £65m secured loan facility.
Shorter term liquidity and flexibility is provided by floating-rate
sustainability-linked Revolving Credit Facilities (RCFs) totalling £335m
which were £100m drawn as at 31 March 2025. In November, the terms of the
£135m RCF were amended to extend the maturity to 30 November 2028, with
options to extend by up to a further two years and an option to increase the
facility amount to £255m, subject to lender consent. In addition, an £80m
term loan facility was agreed with an initial maturity of November 2026 and
with the option to extend by up to two further years, subject to lender
consent. In May 2025 the terms of the £200m RCF were amended to extend the
maturity to 30 June 2029, with options to extend by up to a further two years
and an option to increase the facility amount to £300m, subject to lender
consent. Following the refinancing, on a pro-forma basis, the average debt
facility maturity at 31 March 2025 was 3.1 years (31 March 2024: 3.4 years).
In February 2024, £100m of the floating rate bank borrowings were swapped to
an all in fixed rate of 6.1% for two years. At 31 March 2025, the Group's
effective interest rate excluding the impact of capitalisation but including
amortisation of issue costs and commitment fees was 4.0% based on SONIA at
4.5%, with 91% (£745m) of the debt at fixed or hedged rates. The average
interest cost of our fixed-rate borrowings is 3.3% and our un-hedged
floating-rate bank borrowings had an average margin of 1.8% over SONIA. A 1%
change in SONIA would change the effective interest rate by 0.1% (at current
debt levels).
At 31 March 2025, loan to value (LTV) was 34% (31 March 2024: 35%) and
interest cover, based on net rental income and interest paid over the last
12-month period, was 3.8 times (31 March 2024: 3.7 times), providing good
headroom on all facility covenants. Our net debt to earnings ratio (calculated
as net debt divided by trading profit before interest, but excluding
depreciation and amortisation), improved from 8.3 times to 8.1 times during
the year.
FINANCIAL CONSIDERATIONS FOR 2025/26
Looking ahead to our new financial year, recent macroeconomic events combined
with slower economic growth and high levels of competition will continue to
impact our business in the near term. As announced in our post-close
financial update, we expect trading profit headwinds driven by a lower opening
rent roll, further large unit vacations, additional costs from higher national
insurance and higher living wages and additional refinancing costs due to the
repayment of £80m of private placement notes in August.
We have already taken a number of tangible actions to stabilise our business,
but these will take time to take full effect and we will likely see continued
pressure on occupancy in the year ahead, given visibility we have on more
large customers vacating in H1. We are also working hard to deliver
efficiencies to mitigate cost increases through streamlining our support
functions to create a leaner, faster organisation, as well as a focus on
non-recoverable property costs and general administrative expenses.
We expect capital expenditure to be maintained at a similar level to last
year, around £50-60m, as we continue to progress with planned asset
management projects, including the refurbishments of Chocolate Factory and The
Biscuit Factory, alongside tactical capital-light refurbishments to enhance
our offering in conviction and high conviction buildings. This will be offset
by recycled capital from asset disposals. As we look further ahead, we have
confidence that our strategic plan will ensure we deliver a market-leading
product for our rapidly growing client base of creative and innovative SME's,
whilst at the same time delivering long term, enduring value for our
shareholders.
property statistics
Half Year ended
31 Mar 30 Sep 31 Mar 30 Sep
2025 2024 2024 2023
Workspace Portfolio
Property valuation £2,368m £2,423m £2,446m £2,505m
Number of locations 67 73 77 79
Lettable floorspace (million sq. ft.) 4.3 4.3 4.5 4.7
Number of lettable units 4,744 4,650 4,678 4,718
Rent roll of occupied units £139.4m £140.1m £143.4m £141.9m
Average rent per sq. ft. £41.50 £40.27 £38.21 £36.81
Overall occupancy 78.5% 81.5% 83.0% 83.5%
Like-for-like number of properties 39 39 43 42
Like-for-like lettable floor space (million sq. ft.) 2.7 2.7 2.9 2.9
Like-for-like rent roll growth 0.7% (1.6%) 3.0% 6.4%
Like-for-like rent per sq. ft. growth 2.0% 2.7% 3.4% 6.8%
Like-for-like occupancy movement (1.2%) (3.8%) (0.4%) (0.6%)
1) The like-for-like category has been restated in the current financial
year for the transfer in of Old Dairy, Shoreditch where occupancy is now
stabilised post refurbishment, the transfer out of Archer Street Studios,
Soho, and Rainbow Industrial Estate (part), Raynes Park, which have been sold,
the transfer out of Shaftesbury Centre, Ladbroke Grove to non-core which has
been exchanged for sale and the transfer out of The Biscuit Factory site in
Bermondsey which is undergoing major refurbishment.
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 includes 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.
PRINCIPAL RISKS AND UNCERTAINTIES
The Board assesses and monitors the principal risks of the business and
considers how these risks could best be mitigated, where possible, through a
combination of internal controls and risk management.
The financial year has seen continued risks to the UK economy with political
instability, inflation and the ongoing disruption from tariffs weakening
consumer confidence and leaving macroeconomic conditions challenging. This has
led to softer demand and coincided with an increasing supply of flexible space
across London which means the challenges we face are intensifying.
Overall however, key risks that could affect the Group's medium-term
performance and the factors that mitigate these risks have not materially
changed from those set out in the Group's Annual Report and Accounts 2024.
These risks have been assessed in line with the 2018 UK Corporate Governance
Code requirements and are shown below. The Board is satisfied that we continue
to operate within our risk profile.
Risk Area Mitigating activities
Customer demand · Broad mix of buildings across London with different space
offerings, at various price points to match customer requirements.
Opportunities for growth could be missed without a clearly differentiated
brand positioning strategy and products to meet the evolving demands of target · Pipeline of refurbishment and redevelopments to further enhance
customers. Macroeconomic factors, including political instability and the portfolio.
geopolitical tensions, weak economic growth, inflationary pressures, higher
interest rates, as well as increased supply of flexible space, could also · Enhanced market insight, segmentation, data and reporting to
impact our customers. track customer trends, optimise sales performance and develop new
propositions.
RISK IMPACT
· Increased accountability for centre staff to maintain ongoing
· Fall in occupancy levels at our properties relationships with our customers, understand their requirements and implement
change to meet their needs.
· Reduction in rent roll
· Business plans are stress tested to assess the sensitivity of
· Reduction in property valuation forecasts to reduced levels of demand and implement contingency measures.
· Targeted marketing creates demand for Workspace and drives
conversion to viewings, with advertising content and messaging regularly
reviewed and updated.
Financing · We regularly review funding requirements for business plans, and
we have a wide range of options to fund our forthcoming plans. We also prepare
There may be a reduction in the availability of long-term financing due to an a five-year business plan which is reviewed and updated annually.
economic recession, which may result in an inability to grow the business and
impact Workspace's ability to deliver services to customers. · We have a broad range of funding relationships in place and
regularly review our refinancing strategy.
RISK IMPACT
· We maintain a specific interest rate profile via the use of fixed
· Inability to fund business plans and invest in new opportunities rates on the majority of our debt facilities so that our interest payment
profile is broadly stable. We also had a £100m interest rate hedge in place
· Increased interest costs as we refinance long term fixed debt throughout the year to further fix our interest costs.
· Negative reputational impact amongst lenders and in the · Loan covenants are monitored and reported to the Board on a
investment community monthly basis, and we undertake detailed cash flow monitoring and forecasting.
· In November 2024 we refinanced the £135m RCF to November 2028
and extended the £200m RCF by a further 12 months to December 2026 as well as
taking out an £80m term loan, providing further certainty over our funding
position going forwards.
· In May 2025 the £200m bank debt facility was refinanced out to
June 2029 further extending our average debt maturity.
Valuation · Market-related valuation risk is largely dependent on
independent, external factors. We maintain a conservative LTV ratio which can
Macroeconomic uncertainty, reductions in occupancy or pricing, or failure to withstand a severe decline in property values without covenant breaches.
meet ESG legislation targets could have an impact on asset valuations. With a
decrease in net income and ERV and an increase in property yield, valuations · We monitor changes in sentiment in the London real estate market,
fall. This may result in a reduction in return on investment and negative yields, and pricing to track possible changes in valuation. CBRE, a leading
impact on covenant testing. full-service real estate services and investment organisation, provides
twice-yearly independent valuations of all our properties.
RISK IMPACT
· We manage and invest in our properties, planning and undertaking
· Financing covenants linked to loan to value ('LTV') ratio. upgrades where necessary, to ensure they are compliant with current Minimum
Energy Efficiency Standards (MEES) for EPCs.
· Impact on share price.
· Alternative use opportunities, including mixed-use developments,
are actively pursued across the portfolio.
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
Inadequate appraisal and due diligence of a new acquisition could lead to years of knowledge and understanding of our market and customer demand.
paying above market price leading to a negative impact on valuation and rental
income targets. · A detailed appraisal is prepared for each acquisition and is
presented to the Investment Committee for challenge and discussion prior to
RISK IMPACT authorisation by the Board. The acquisition is then subject to thorough due
diligence prior to completion, including capital expenditure and risks
· Negative impact on valuation associated with ESG concerns.
· Impact on overall shareholder return · Workspace will only make acquisitions that are expected to yield
a minimum return and will not knowingly overpay for an asset.
· We undertake appropriate property, financial and tax due
diligence including a review of ESG when required.
Customer payment default · Rent collection and customer payment levels have remained strong
throughout the year, however the economic environment remains challenging.
Uncertainty remains around the macroeconomic environment. Although inflation
and interest rates have reduced during the period, given the broader · The risk continues to be mitigated by strong credit control
geopolitical climate and recent increases to living wage and national processes and an experienced team of credit controllers, able to make quick
insurance costs, there remains a risk of an economic downturn, which could put decisions and negotiate with customers for payment. In addition, we hold a
pressure on rent collection figures. three-month deposit for the majority of customers.
RISK IMPACT · Centre staff maintain relationships with customers and can
identify early signs of potential issues.
· Negative cash flow and increasing interest costs
· Breach of financial covenants
Cyber security · Cyber security risk is managed using a mitigation framework
comprising network security, IT security policies and third-party risk
A cyber attack could lead to a loss of access to Workspace systems or a assessments. Controls are regularly reviewed and updated and include
network disruption for a prolonged period of time. This could damage technology such as next generation firewalls, multi layered access control
Workspace's reputation and inhibit our ability to run the business. through to people solutions such as user awareness training, mock-phishing
emails and cyber attack simulations.
RISK IMPACT
· Assurance over the framework's performance is gained through an
· Inability to process new leases and invoice customers independent maturity assessment, penetration testing and network vulnerability
testing, all performed annually.
· Reputational damage
· We are committed to continue the adoption of the NIST
· Increased operational costs Cybersecurity Framework to enhance our cyber security maturity. This adoption
will strengthen risk management, improve controls, fortify incident response,
and ensure consistent protection and recovery, validated through external
independent assessments.
Resourcing · We have a robust recruitment process to attract new joiners and
established interview and evaluation processes with a view to ensuring a good
Ineffective succession planning, recruitment, and people management could lead fit with the required skill set and our corporate culture.
to limited resourcing levels and a shortage of suitably skilled individuals to
be able to achieve Workspace's objectives and grow the business. Inadequate · We have diversified our recruitment pools, including the launch
resourcing may also result in management being spread too thinly and a decline of a new apprenticeship programme to ensure we have a diverse talent pool.
in effectiveness.
· Various incentive schemes align employee objectives with the
RISK IMPACT strategic objectives of the Group to motivate employees to work in the best
interests of the Group and its stakeholders. This is supported by a formal
· Increased costs from high staff turnover appraisal and review process for all employees.
· Delay in growth plans · Our HR and People teams run a broad training and development
programme designed to ensure employees are supported and encouraged to
· Reputational damage progress with learning and study opportunities.
· We have an in-house Recruitment Manager who oversees the entire
recruitment process and ensures that we have a diverse and wide-ranging talent
pool.
· The HR team utilises a candidate applicant tracking system to
track the source of applications. This allows us to manage the process better
and diversify our talent from various application sources. At the same time,
we have revised our internal application process for existing employees with
31 individuals being internally promoted during this period and 63% of new
starters being recruited directly without recruitment agencies.
Third party relationships · Workspace has in place a robust tender and selection process for
key contractors and partners. Contracts contain service-level agreements that
Poor performance from one of Workspace's key contractors or third-party are monitored regularly, and actions are taken in the case of
partners could result in an interruption to or reduction in the quality of our underperformance.
service offering to customers or could lead to significant disruptions and
delays in any refurbishment or redevelopment projects. · For key services, Workspace maintains relationships with
alternative providers so that other solutions would be available if the main
RISK IMPACT contractor or third party was unable to continue providing their services.
Processes are in place to identify key suppliers and understanding any
· Decline in customer confidence specific risks that require further mitigation.
· Increased project or operational costs · Workspace remains committed to being London Living Wage compliant
for all service providers.
· Fall in customer demand
· Weaker cash flow
· Reputational damage
Regulatory · Health and safety is one of our primary concerns, and strong
leadership promotes a culture of awareness throughout the business. We have
A failure to keep up to date and plan for changing regulations in key areas well-developed policies and procedures in place to help ensure that any
such as health and safety and sustainability, could lead to fines or workers, employees, or visitors on site comply with strict safety guidelines,
reputational damage and we work with well-respected suppliers who share our high-quality standards
in health and safety. This year saw the recruitment of a new role (Health and
RISK IMPACT Safety Manager) to support our commitment to Health and Safety throughout the
business.
· Increased costs
· Health and safety management systems are updated in line with
· Reputational damage changing regulations and regular audits are undertaken to identify any
potential improvements.
· Sustainability requirements are becoming increasingly important
for the Group, and we take this responsibility seriously. We have committed to
becoming a net zero carbon business and being climate resilient. We undertake
an annual review of all ESG regulations and our policies and procedures to
ensure compliance. We also closely monitor and manage physical risk arising
from climate change along with a mitigation strategy.
· Workspace has a robust legal framework in place, managed by the
Company Secretary and Head of Legal, to ensure full compliance with applicable
laws, regulations, and corporate governance.
Climate change · The inherent risk from climate change is universal, with a high
likelihood of risk materialising in the near future resulting in a potentially
Failure to recognise that climate change presents a financial risk to our material impact on businesses in general. For Workspace, our risk is lower
business, alongside our customers' increasing expectations for the sustainable when compared to many other real estate businesses, in particular our exposure
operation of our properties, could have a significant impact on the business. to physical risk. However, transition risk is an industry-wide risk and is
impacting all real estate businesses due to the environmental impact
RISK IMPACT associated with the sector. As a result, the regulatory requirements continue
to become more stringent. In response to this, Workspace has been proactively
· Loss of rent roll managing its risk exposure. Our mitigation strategy includes:
· Negative impact on value · Periodic assessment of our climate risk exposure, using climate
modelling every time the portfolio changes.
· Reduced occupancy levels
· Bi-annual review of control measures and their effectiveness by
· Reputational damage our Risk Management Group and the Environmental Committee.
· Active management of acute physical risks such as floods and
storms across the portfolio through emergency preparedness, site maintenance
surveys and business continuity planning.
· Delivery of net zero carbon and EPC upgrades across the portfolio
to manage transition risk.
· Embedding of climate-related objectives linked with remuneration,
to incentivise focused action.
· Active management of our energy and raw materials costs via
efficiency measures and design optimisation.
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2025
Notes 2025 2024
£m £m
Revenue 1 185.2 184.3
Direct costs(1) 1 (63.1) (58.1)
Net rental income 1 122.1 126.2
Administrative expenses 2 (23.3) (25.3)
Trading profit 98.8 100.9
Loss on disposal of investment properties and assets held for sale 3(a) (1.5) (2.3)
Other expenses 3(b) (3.6) (1.2)
Change in fair value of investment properties 10 (55.9) (251.2)
Impairment of assets held for sale (0.4) (4.1)
Operating profit/(loss) 37.4 (157.9)
Finance costs 4 (32.0) (34.9)
Profit/(loss) before tax 5.4 (192.8)
Taxation 6 - 0.3
Profit/(loss) for the financial year after tax 5.4 (192.5)
Basic earnings/(loss) per share 8 2.8p (100.4p)
Diluted earnings/(loss) per share 8 2.8p (100.4p)
1. Direct costs in 2025 includes impairment of receivables of £1.0m
(2024: £0.8m). See note 1 for additional information.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2025
Notes 2025 2024
£m £m
Profit/(loss) for the financial year 5.4 (192.5)
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Change in fair value of other investments 12 0.1 1.1
Items that may be reclassified subsequently
to profit or loss:
Change in fair value of derivatives (0.3) 0.2
Other comprehensive (loss)/income in the year (0.2) 1.3
Total comprehensive income/(loss) for the year 5.2 (191.2)
CONSOLIDATED BALANCE SHEET
AS AT 31 MARCH 2025
Notes 2025 2024
£m £m
Non-current assets
Investment properties 10 2,351.7 2,408.5
Intangible assets 1.1 2.2
Property, plant and equipment 11 3.4 3.0
Other investments 12 3.3 3.2
Derivative financial instruments 16(e) - 0.2
Deferred tax 0.3 0.3
2,359.8 2,417.4
Current assets
Trade and other receivables 13 32.8 36.7
Assets held for sale 10 45.2 65.7
Cash and cash equivalents 14 32.7 11.6
110.7 114.0
Total assets 2,470.5 2,531.4
Current liabilities
Trade and other payables 15 (92.2) (93.0)
Borrowings 16(a) (79.9) -
Derivative financial instruments 16(e) (0.1) -
(172.2) (93.0)
Non-current liabilities
Borrowings 16(a) (761.4) (854.8)
Lease obligations 17 (34.7) (34.7)
(796.1) (889.5)
Total liabilities (968.3) (982.5)
Net assets 1,502.2 1,548.9
Shareholders' equity
Share capital 19 192.1 191.9
Share premium 19 295.6 296.6
Investment in own shares (0.3) (9.9)
Other reserves 20 71.2 93.0
Retained earnings 943.6 977.3
Total shareholders' equity 1,502.2 1,548.9
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2025
Attributable to owners of the Parent
Notes Share capital Share premium Investment in own shares Other reserves Retained earnings Total shareholders' equity
£m £m £m £m £m £m
Balance at 31 March 2023 191.6 295.5 (9.9) 91.0 1,219.5 1,787.7
Loss for the financial year - - - - (192.5) (192.5)
Other comprehensive income for the year - - - 1.3 - 1.3
Total comprehensive income/(loss) - - - 1.3 (192.5) (191.2)
Transactions with owners:
Dividends paid 7 - - - - (50.6) (50.6)
Share-based payments 0.3 1.1 0.7 0.9 3.0
Balance at 31 March 2024 191.9 296.6 (9.9) 93.0 977.3 1,548.9
Profit for the financial year - - - - 5.4 5.4
Other comprehensive loss for the year - - - (0.2) - (0.2)
Total comprehensive (loss)/income - - - (0.2) 5.4 5.2
Transactions with owners:
Dividends paid 7 - - - - (54.5) (54.5)
Own shares transferred in prior years(2) - - 9.3 - (9.3) -
Cost of shares awarded to employees - - 0.3 - - 0.3
Share-based payments 0.2 (1.0)(1) - (0.4) 3.5 2.3
Share options lapsed in prior years(3) - - - (21.2) 21.2 -
Balance at 31 March 2025 192.1 295.6 (0.3) 71.2 943.6 1,502.2
1. The movement in the year on share premium relates to the excess between
the nominal value and the vested share price on awarded shares to employees in
the previous year. This has been reclassified to retained earnings in the
current year.
2. In the year the Group transferred the excess amounts held in the
investment in own shares reserve to retained earnings in accordance with the
carrying value of the remaining shares held. The transfer should have been
made prior to the date of the opening comparative period but was omitted. The
error is not considered material and hence it is being corrected in the
current year.
3. In the year the Group transferred amounts held in the share-based
payment reserve to retained earnings In relation to share options that had
lapsed in prior years. The transfer should have been made prior to the date of
the opening comparative period but was omitted. The error is not considered
material and hence it is being corrected in the current year.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2025
Notes 2025 2024
£m £m
Cash flows from operating activities
Cash generated from operations 18 105.1 87.7
Interest paid (28.5) (33.8)
Net cash inflow from operating activities 76.6 53.9
Cash flows from investing activities
Purchase of investment properties - -
Capital expenditure on investment properties (58.9) (71.7)
Proceeds from government grant 0.7 1.5
Proceeds from disposal of investment properties (net of sale costs) 36.5 22.3
Proceeds from disposal of assets held for sale (net of sale costs) 40.4 96.2
Purchase of intangible assets (0.4) (0.8)
Purchase of property, plant and equipment (1.8) (0.4)
Other expenses - (1.2)
Net cash inflow from investing activities 16.5 45.9
Cash flows from financing activities
Finance costs for new/amended borrowing facilities (1.3) (0.8)
Repayment of bank borrowings 16(h) (355.5) (211.0)
Draw down of bank borrowings 16(h) 341.5 156.0
Settlement of share schemes (0.4) (0.2)
Dividends paid 7 (56.3) (50.7)
Net cash outflow from financing activities (72.0) (106.7)
Net Increase/(decrease) in cash and cash equivalents 21.1 (6.9)
Cash and cash equivalents at start of year 14 11.6 18.5
Cash and cash equivalents at end of year 14 32.7 11.6
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 March 2025 or 2024 but is derived
from those accounts. Statutory accounts for 2024 have been delivered to the
Registrar of Companies, and those for 2025 will be delivered in due course.
The auditor has reported on those accounts; their reports were i) unqualified
and i i) 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 2024, 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 and approved by the Directors on a going concern basis, in
accordance with United Kingdom adopted international accounting standards.
The Board is required to assess the appropriateness of applying the going
concern basis in the preparation of the financial statements. Macroeconomic
and geo-political issues, including the impact of US tariffs on UK businesses
and their supply chains, have heightened wider concerns around the UK economy
and mean there is a continuing risk of an economic downturn. In this context,
the Directors have fully considered the business activities and principal
risks of the Group.
In preparing the assessment of going concern, the Board has reviewed a number
of different scenarios over the 12-month period 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 reduction in occupancy, reflecting weaker customer demand for office space.
A reduction in the pricing of new lettings, resulting in a reduction in
average rent per sq. ft..
Elevated levels of counterparty risk, with bad debt significantly higher than
pre-pandemic levels.
Continued elevated levels of cost inflation.
Further increases in SONIA rates impacting the cost of variable rate
borrowings.
Estimated rental value reduction in-line with the decline in average rent per
sq. ft. and outward movement in investment yields resulting in a lower
property valuation.
The appropriateness of the going concern basis is reliant on the continued
availability of borrowings, sufficient liquidity 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 12% compared to the March
2025 Net Rental Income and a fall in the asset valuation of 37% compared to 31
March 2025 before these covenants are breached, assuming no mitigating actions
are taken.
As at 31 March 2025, the Company had significant headroom with £260m of cash
and undrawn facilities. The majority of the Group's debt is long-term
fixed-rate committed facilities comprising a £300m green bond, £300m of
private placement notes, a £65m secured loan facility and an £80m term loan.
Shorter-term liquidity and flexibility is provided by floating-rate bank
facilities which comprise of £335m of sustainability-linked revolving credit
facilities (RCFs) made up of £135m which was renewed in November 2024 to
November 2028 and £200m which was renewed in May 2025 at the current rate to
June 2029. Both facilities include the potential to be extended by a further
two years subject to lender consent. The £135m has the option to increase the
facility amount by up to £120m and the £200m RCF has the option to increase
the facility amount by up to £100m, both subject to lender consent.
For the full period of assessment under the scenario tested, the Group
maintains sufficient headroom in its cash and loan facilities.
Consequently, the Directors have a reasonable expectation 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 the financial statements have been prepared on a
going concern basis.
Consideration of climate change
In preparing the financial statements, the Directors have considered the
impact of climate change, particularly in the context of the risks identified
in the TCFD disclosure on pages 99 to 106 this year. There has been no
material impact identified on the financial reporting judgements and
estimates. In particular, the Directors considered the impact of climate
change in respect of the following areas:
the potential impact on the valuation of our investment properties due to
transition risks;
going concern and viability of the Group over the next three years; and the
capital expenditure required to upgrade our assets' EPC ratings and deliver
our net zero targets.
Whilst there is currently minimal medium-term impact expected from climate
change, the Directors are aware of the ever-changing risks attached to climate
change and will regularly assess these risks against judgements and estimates
made in the preparation of the Group's financial statements.
New accounting standards, amendments and guidance
a) During the year to 31 March 2025 the Group adopted the following
accounting standards and guidance:
IAS 1 (amended) Classification of Liabilities as Current or Non-Current; Non-Current
Liabilities with Covenants; Deferral of Effective Date Amendment
IAS 7 and IFRS 7 Disclosures - Supplier Finance Arrangements
IFRS 16 (amended) Lease Liability in a Sale and Leaseback
There was no material impact from the adoption of these accounting standards
and 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 result in changes to presentation and disclosure only. They have
not been adopted early by the Group:
IAS 21 (amended) Lack of Exchangeability
IFRS 9 and IFRS 7 (amended) Amendments to the Classification and Measurement of Financial Instruments
IFRS 18 Presentation and Disclosure in Financial Statements
IFRS 19 Subsidiaries without Public Accountability: Disclosures
1. Analysis of net rental income and segmental information
2025 2024
Revenue Direct Net rental income Revenue Direct Net rental income
£m costs(1) £m £m costs(1) £m
£m £m
Rental income 144.9 (6.7) 138.2 145.0 (4.9) 140.1
Service charges 33.2 (37.4) (4.2) 32.6 (37.5) (4.9)
Empty rates and other non-recoverable costs - (11.5) (11.5) - (10.2) (10.2)
Services, fees, commissions and sundry income 7.1 (7.5) (0.4) 6.7 (5.5) 1.2
185.2 (63.1) 122.1 184.3 (58.1) 126.2
1. There was one property within the current period (prior period: two)
that were non-rent producing. Direct costs relating to investment properties
that did not generate any rental income were nil (2024: nil).
Included within direct costs for rental income is a charge of £1.0m (2024:
£0.8m) for expected credit losses in respect of receivables from customers 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
presented as one portfolio. As a result, for the year ended 31 March 2025,
management have determined that the Group operates a single operating segment
providing business accommodation for rent in and around London.
2. Operating profit/(loss)
The following items have been charged in arriving at operating profit/(loss):
2025 2024
£m £m
Depreciation(1) (note 11) 1.4 1.7
Staff costs (including share-based payment costs)(1) (note 5) 31.9 30.5
Repairs and maintenance expenditure on investment properties 5.3 3.7
Trade receivables impairment (note 13) 1.0 0.8
Amortisation of intangibles(2) 1.5 0.6
Audit fees payable to the Company's Auditor 0.6 0.8
1. Charged to direct costs and administrative expenses based on the
underlying nature of the expenses.
2. During the year the amortisation charge was expensed to administrative
costs and other expenses following a change in the expected useful life of the
assets (2024: amortisation charge was expensed to administrative costs).
Auditor's remuneration: services provided by the Company's Auditor and its 2025 2024
associates
£000 £000
Audit fees:
Audit of Parent Company and consolidated financial statements 457 507
Audit of subsidiary financial statements 46 110
503 617
Fees for other services:
Audit-related assurance services(1) 67 97
Total fees payable to Auditor 570 714
1. Audit-related assurance services consist of £67k for half year review
(2024: £97k).
2025 2024
£m £m
Total administrative expenses are analysed below:
Staff costs 13.8 14.8
Equity-settled share-based payments 2.4 3.1
Cash-settled share-based payments 0.2 0.2
Other 6.9 7.2
Total administrative expenses 23.3 25.3
3(a). Loss on disposal of investment properties AND Assets HELD FOR SALE
2025 2024
£m £m
Proceeds from sale of investment properties (net of sale costs) 38.4 12.3
Proceeds from sale of assets held for sale (net of sale costs) 40.4 96.2
Book value at time of sale (80.3) (110.8)
Loss on disposal (1.5) (2.3)
3(b). Other expenses
2025 2024
£m £m
Other expenses (3.6) (1.2)
(3.6) (1.2)
Other expenses include exceptional one-off costs relating to the replacement
of our finance and property management system and CRM system of £2.7m (2024:
£1.2m), which brings the cumulative spend to date to £5.7m with a forecast
spend in the next financial year of £1.2m in relation to the CRM system with
an expected go live date in the second half of the year. There are also
one-off costs relating to the new CEO appointed in the year of £0.9m (2024:
£nil). These costs are outside the Group's normal trading activities.
4. net Finance costs
2025 2024
£m £m
Interest payable on bank loans and overdrafts (12.8) (15.0)
Interest payable on other borrowings (19.3) (19.3)
Amortisation of issue costs of borrowings (1.8) (1.7)
Interest payable on leases (2.1) (2.1)
Interest capitalised on property refurbishments (note 10) 3.4 3.0
Interest receivable 0.6 0.2
Total net finance costs (32.0) (34.9)
All finance costs have been calculated in accordance with IFRS 9,
re-estimating the cash flows based on the original effective interest rate
with any adjustment being taken through the consolidated income statement,
with the exception of interest payable on leases which is calculated in
accordance with IFRS 16.
5. Employees and Directors
Staff costs for the Group during the year were: 2025 2024
£m £m
Wages and salaries 27.5 26.2
Social security costs 3.2 3.4
Other pension costs (note 24) 1.4 1.3
Equity-settled share-based costs (note 23) 2.6 3.1
34.7 34.0
Less costs capitalised (2.8) (3.5)
31.9 30.5
The monthly average number of people employed during the year was: 2025 2024
Number Number
Head office staff (including Directors) 173 166
Estates and property management staff 162 152
335 318
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.
Total Directors' emoluments for the financial year were £2,4m (2024: £2.9m),
comprising of £2.1m (2024: £2.2m) of Directors' remuneration, £0.3m (2024:
£0.6m) gain on exercise of share options and £0.1m (2024: £0.1m) of cash
contributions in lieu of pension in respect of three Directors (2024: two).
6. Taxation
2025 2024
£m £m
Current tax:
UK corporation tax - -
Adjustments to tax in respect of previous periods - -
- -
Deferred tax:
On origination and reversal of temporary differences - (0.3)
- (0.3)
Total taxation credit - (0.3)
The tax on the Group's profit/(loss) for the year differs from the standard
applicable corporation tax rate in the UK of 25% (2024: 25%). The differences
are explained below:
2025 2024
£m £m
Profit/(loss) before taxation 5.4 (192.8)
Tax at standard rate of corporation tax in the UK of 25% (2024: 25%) 1.4 (48.2)
Effects of:
REIT exempt income (17.2) (19.2)
Changes in fair value not subject to tax as a REIT 14.3 63.8
Share-based payment adjustments 0.2 0.5
Unrecognised losses carried forward 1.0 2.7
Other non-taxable expenses 0.3 0.1
Total taxation credit - (0.3)
The Group is a Real Estate Investment Trust ('REIT'). The Group's UK property
rental business (both income and capital gains) is exempt from UK corporation
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.
Profits arising from any residual business activities (e.g. trading activities
and interest income), after the utilisation of tax losses, are subject to
corporation tax at the main rate of 25% for the period.
The Group currently has an unrecognised asset in relation to tax losses from
the non-REIT business carried forward of £8.6m (2024: £8.9m) calculated at a
corporation tax rate of 25% (2024: 25%).
7. Dividends
Payment date Per share 2025 2024
£m £m
For the year ended 31 March 2023:
Final dividend August 2023 17.4p - 33.3
For the year ended 31 March 2024:
Interim dividend February 2024 9.0p - 17.3
Final dividend August 2024 19.0p 36.5 -
For the year ended 31 March 2025:
Interim dividend February 2025 9.4p 18.0 -
Dividends for the year 54.5 50.6
Timing difference on payment of withholding tax 1.8 0.1
Dividends cash paid 56.3 50.7
The Directors are proposing a final dividend in respect of the financial year
ended 31 March 2025 of 19.0 pence per ordinary share, which will absorb an
estimated £36.5m of retained earnings and cash. If approved by the
shareholders at the AGM, it will be paid on 1 August 2025 to shareholders who
are on the register of members on 4 July 2025. The dividend will be paid as a
REIT Property Income Distribution ('PID') net of withholding tax where
appropriate.
8. Earnings per share
Earnings used for calculating earnings per share: 2025 (Restated) 2024
2024
£m
£m
£m(2)
Basic and diluted earnings 5.4 (192.5) (192.5)
Decrease in fair value of investment properties 55.9 251.2 251.2
Impairment of assets held for sale 0.4 4.1 4.1
Loss on disposal of investment properties 1.5 2.3 2.3
Other expenses(2) (note 3(b)) 3.6 1.2 -
EPRA earnings 66.8 66.3 65.1
Adjustment for non-trading items:
Other expenses (note 3(b)) - - 1.2
Taxation - (0.3) (0.3)
Trading profit after interest 66.8 66.0 66.0
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.
Number of shares used for calculating earnings per share: 2025 (Restated) 2024
2024
Number
Number
Number(2)
Weighted average number of shares (excluding own shares held in trust) 191,997,294 191,676,994 191,676,994
Dilution due to share option schemes 1,770,841 1,537,856 1,537,856
Weighted average number of shares for diluted earnings per share 193,768,135 193,214,850 193,214,850
In pence: 2025 2024 (Restated) 2024
Basic earnings/(loss) per share 2.8p (100.4p) (100.4p)
Diluted earnings/(loss) per share 2.8p (100.4p) (100.4p)
EPRA earnings per share 34.8p 34.6p 34.0p
Diluted EPRA earnings per share 34.5p 34.3p 34.0p
Adjusted underlying earnings per share(1) 34.5p 34.1p 34.1p
Adjusted underlying earnings per share (basic) 34.8p 34.4p 34.4p
1. Adjusted underlying earnings per share is calculated by dividing
trading profit after interest by the diluted weighted average number of shares
of 193,768,135 (2024: 193,214,850).
2. The EPRA Best Practice Guidelines were updated in 2024, the new
guidelines have been adopted and applied for the year ended 31 March 2025. To
ensure comparability, EPRA earnings as at 31 March 2024 have been restated in
line with the new guidelines. The key change in the guidelines is to include
an additional adjustment to EPRA earnings for non-operating and exceptional
items. Other expenses (see note 3(b)) are now considered to be adjusting items
for this reason.
The diluted loss per share for the period to 31 March 2024 has been restricted
to a loss of 100.4p 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
Number of shares used for calculating net assets per share: 2025 2024
Number Number
Shares in issue at year end 192,143,004 191,910,392
Less own shares held in trust at year end (57,524) (139,649)
Dilution due to share option schemes 1,871,843 1,637,759
Number of shares for calculating diluted adjusted net assets per share 193,957,323 193,408,502
EPRA Net Asset Value Metrics
The Group measures financial position with reference to EPRA Net Tangible
Assets ('NTA'), Net Reinvestment Value ('NRV') and Net Disposal Value ('NDV').
March 2025 March 2024
EPRA EPRA EPRA EPRA EPRA EPRA
NRV
NTA
NDV
NRV
NTA
NDV
£m £m £m £m £m £m
IFRS Equity attributable to shareholders 1,502.2 1,502.2 1,502.2 1,548.9 1,548.9 1,548.9
Fair value of derivative financial instruments 0.1 0.1 - (0.2) (0.2) -
Intangibles per IFRS balance sheet - (1.1) - - (2.2) -
Excess of book value of debt over fair value - - 39.9 - - 59.3
Purchasers' costs 161.0 - - 166.4 - -
EPRA measure 1,663.3 1,501.2 1,542.1 1,715.1 1,546.5 1,608.2
EPRA measure per share £8.58 £7.74 £7.95 £8.87 £8.00 £8.32
Total accounting return
Total Accounting Return 2025 2024
£ £
Opening EPRA net tangible assets per share (A) 8.00 9.27
Closing EPRA net tangible assets per share 7.74 8.00
Decrease in EPRA net tangible assets per share (0.26) (1.27)
Ordinary dividends paid in the year 0.28 0.26
Total return (B) 0.02 (1.01)
Total accounting return (B/A) 0.3% (10.9%)
The total accounting return for the year comprises the movement 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 2025 was 0.3% (31 March 2024: - 10.9%).
10. Investment properties
2025 2024
£m £m
Balance at 1 April 2,408.5 2,643.3
Capital expenditure 54.3 68.4
Capitalised interest on refurbishments (note 4) 3.4 3.0
Disposals during the year (38.5) (12.5)
Change in fair value of investment properties (55.9) (251.2)
Disposed properties tenant incentives recognised in advance under IFRS 16 0.2 1.4
Less: Classified as assets held for sale (20.3) (43.9)
Balance at 31 March 2,351.7 2,408.5
Investment properties represent a single class of property, being business
accommodation for rent in and around London.
Investment properties include buildings with a carrying amount of £291.9m
(2024: £317.2m) for which there are lease obligations of £34.7m (2024:
£34.7m). Investment property lease commitment details are shown in note 17.
Disposed properties tenant incentives relate to disposed properties during the
year, where there were tenant lease incentives accounted for under IFRS 16.
Capitalised interest is included at a rate of capitalisation of 6.7% (2024:
6.8%). The total amount of capitalised interest included in investment
properties is £21.5m (2024: £18.1m).
The change in fair value of investment properties is recognised in the
consolidated income statement.
Investment property held for sale
2025 2024
£m £m
Balance at 1 April 65.7 123.0
Capital expenditure 1.4 1.2
Reclassified from investment properties in the period 20.3 43.9
Disposals during the year (41.8) (98.3)
Impairment of assets held for sale (0.4) (4.1)
Balance at 31 March 45.2 65.7
Two of the properties classified as held for sale at the end of the prior year
were not sold during the year. One of these is retained within current assets
as it is still expected to sell within the next 12 months to 31 March 2026.
One of them exchanged during the year.
Four (2024: six) additional properties were reclassified as held for sale at
year-end. Two of these properties have exchanged for sale and all are likely
to complete within the next 12 months. The transfer value is their year-end
valuation per CBRE.
Valuation
The Group's investment properties are held at fair value and were revalued at
31 March 2025 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.
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 still being used for business accommodation in their current state.
However, the valuation at the balance sheet date includes 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 the
property valuation to assess whether appropriate assumptions have been applied
and that valuations are appropriate. Meetings are held with the valuers to
discuss and challenge the valuations, to confirm that they have considered all
relevant information.
The valuation of like-for-like properties (which are not undergoing
significant 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. The ERVs include assumptions about future occupancy
levels, these are primarily derived from current occupancy levels adjusted as
considered necessary by the valuer. As a result of adjustments made to market
observable data, the significant inputs are deemed unobservable under IFRS 13.
When valuing properties where Workspace is carrying out a major refurbishment,
the residual value method is used. The completed value of the refurbishment is
determined as for like-for-like properties above. This is then adjusted for
costs to complete and developers' profit margin. A discount factor is applied
to reflect the time period to complete construction and make allowance 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
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 valuer is 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:
2025 2024
£m £m
Total per CBRE valuation report 2,367.8 2,446.5
Deferred consideration on sale of property (0.6) (0.6)
Head leases treated as leases under IFRS 16 34.7 34.7
Tenant incentives recognised under IFRS 16 (5.0) (6.4)
Less: Reclassified as assets held for sale (45.2) (65.7)
Total investment properties per balance sheet 2,351.7 2,408.5
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 and critical estimates section,
property valuations are complex and involve data which is not publicly
available and involve 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.
CBRE have made enquiries to ascertain any sustainability factors which are
likely to impact on value, consistent with the scope of their terms of
engagement. Sustainability encompasses a wide range of physical, social,
environmental, and economic factors that can affect the value of an asset,
even if not explicitly recognised. This includes key environmental risks; such
as flooding, energy efficiency, climate, design, legislation and management
considerations - as well as current and historic land use. Where CBRE
recognise the value impacts of sustainability, they reflect their
understanding of how market participants include sustainability factors in
their decisions and the consequential impact on market valuations.
The following table summarises the valuation techniques and inputs used in the
determination of the property valuation at 31 March 2025.
Key unobservable inputs:
ERVs - per sq. ft. Equivalent yields
Property category Valuation Valuation technique Range Weighted average Range Weighted average
£m
Like-for-like 1,755.8 A £24-£84 £51 5.9%-8.6% 6.8%
Completed projects 167.8 A £25-£55 £37 4.9%-7.6% 6.9%
Refurbishments 322.6 A/B £23-£75 £36 5.3%-10.2% 7.2%
South East Office 75.8 A £25-£35 £29 8.4%-12.5% 10.3%
Tenant incentives (5.0) N/A - - - -
Head leases 34.7 N/A - - - -
Total 2,351.7
A = Income capitalisation method.
B = Residual value method.
See appendices for breakdown of properties by category.
A key unobservable input for redevelopments at planning stage and
refurbishments is developer's profit. The range is 0%-15% with a weighted
average of 3%.
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.
£m +/- 10% in ERVs +/- 25 bps in yields
Like-for-like +176/-176 -62/+67
Completed projects +17/-17 -6/+6
Refurbishments +37/-37 -13/+14
South East Office +8/-8 -2/+2
The following table summarises the valuation techniques and inputs used in the
determination of the property valuation at 31 March 2024.
Key unobservable inputs:
ERVs - per sq. ft. Equivalent yields
Property category Valuation Valuation technique Range Weighted average Range Weighted average
£m
Like-for-like 1,833.2 A £24-£81 £49 4.9%-8.4% 7.0%
Completed projects 137.4 A £25-£53 £35 6.6%-7.2% 7.3%
Refurbishments 318.5 A/B £24-£75 £38 5.0%-9.9% 7.3%
Redevelopments 18.9 A/B £18-£30 £19 4.8%-8.7% 7.4%
South East Office 72.2 A £25-£40 £30 8.0%-11.4% 10.4%
Tenant incentives (6.4) N/A - - - -
Head leases 34.7 N/A - - - -
Total 2,408.5
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 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 £273-£416 per sq. ft. and a weighted average of £325
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.
£m +/- 10% in ERVs +/- 25 bps in yields
Like-for-like +183/-183 -66/+71
Completed projects +14/-14 -5/+5
Refurbishments +35/-35 -15/+17
Redevelopments +0/-0 -0/+0
South East Office +27-27 -9/+9
11. Property, plant and equipment
Cost or valuation Equipment
and fixtures
£m
1 April 2023 12.5
Additions during the year 0.5
Disposals during the year (4.8)
Balance at 31 March 2024 8.2
Additions during the year 1.9
Disposals during the year (0.2)
Balance at 31 March 2025 9.9
Accumulated depreciation
1 April 2023 8.1
Charge for the year 1.7
Disposals during the year (4.6)
Balance at 31 March 2024 5.2
Charge for the year 1.4
Disposals during the year (0.1)
Balance at 31 March 2025 6.5
Net book amount at 31 March 2025 3.4
Net book amount at 31 March 2024 3.0
12. Other investments
The Group holds the following investments:
2025 2024
£m £m
2.0% of share capital of Wavenet Limited 3.3 3.2
3.3 3.2
In accordance with IFRS 9 the shares in Wavenet Limited have been valued at
fair value, resulting in £0.1m movement in the financial year (2024: £1.1m),
recognised in the consolidated statement of comprehensive income.
13. Trade and other receivables
Current trade and other receivables 2025 2024
£m £m
Trade receivables 19.2 22.6
Less provision for impairment of receivables (3.5) (3.9)
Trade receivables - net 15.7 18.7
Prepayments, other receivables and accrued income 14.0 16.9
Deferred consideration on sale of investment properties 3.1 1.1
32.8 36.7
Receivables at fair value
Included within deferred consideration on sale of investment properties is
£0.6m (2024: £0.6m) of overage which is held at fair value through profit
and loss. 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 was £nil
(31 March 2024: £nil).
Deferred consideration on sale of investment properties 2025 2024
£m £m
Balance at 1 April 1.1 11.2
Cash received - (10.1)
Additions 2.0 -
Balance at 31 March 3.1 1.1
Receivables at amortised cost
The remaining receivables are held at amortised cost. There is no material
difference between the above amounts and their fair values due to the
short-term nature of the receivables. Trade receivables are impaired when
there is evidence that the amounts may not be collectable under the original
terms of the receivable. All the Group's trade and other receivables are
denominated in Sterling.
Movements on the provision for impairment of trade receivables are shown
below:
2025 2024
£m £m
Balance at 1 April 3.9 4.6
Increase in provision for impairment of trade receivables 1.0 0.8
Receivables written off during the year (1.4) (1.5)
Balance at 31 March 3.5 3.9
14. Cash and cash equivalents
2025 2024
£m £m
Cash at bank and in hand 25.3 4.1
Restricted cash 7.4 7.5
32.7 11.6
£7.2m (2024: £6.7m) of the restricted cash relates to tenants' deposit deeds
which represent returnable cash security deposits received from tenants which
are held in ring-fenced bank accounts in accordance with the terms of the
individual lease contracts. The remaining balance relates to restricted cash
under terms of development projects' funding.
15. Trade and other payables
2025 2024
£m £m
Trade payables 6.8 7.4
Other tax and social security payable 3.2 4.8
Tenants' deposit deeds 7.3 8.2
Tenants' deposits 32.1 32.0
Accrued expenses 31.7 28.5
Deferred income - rent and service charges 11.1 12.1
92.2 93.0
There is no material difference between the above amounts and their fair
values due to the short-term nature of the payables.
16. Borrowings
(a) Balances
2025 2024
£m £m
Current
3.07% Senior Notes (unsecured) 79.9 -
Non-current
Bank loans (unsecured) 178.2 192.3
Other loans (secured) 64.3 64.1
3.07% Senior Notes (unsecured) - 79.9
3.19% Senior Notes (unsecured) 119.9 119.9
3.6% Senior Notes (unsecured) 99.9 99.9
Green Bond (unsecured) 299.1 298.7
761.4 854.8
Total borrowings 841.3 854.8
(b) Net debt
2025 2024
£m £m
Borrowings per (a) above 841.3 854.8
Adjust for:
Cost of raising finance unamortised 3.7 4.2
845.0 859.0
Cash at bank and in hand (note 14) (25.3) (4.1)
Net debt 819.7 854.9
At 31 March 2025, the Group had £235.0m (2024: £141.0m) of undrawn bank
facilities, a £2.0m overdraft facility (2024: £2.0m) and £25.3m of
unrestricted cash (2024: £4.1m).
The Group has a loan to value covenant applicable to the Bank Loans and Senior
Debt Borrowings of 60%, Green Bond of 65% and Aviva Loan of 55%. Loan to value
at 31 March 2025 was 34% (31 March 2024: 35%).
The Group also has an interest cover covenant of 2.0x applicable to the Bank
Loan and Senior Debt Borrowings, 1.75x applicable for the Green Bond and 2.25x
applicable for the Aviva Loan. This is calculated as net rental income divided
by interest payable on loans and other borrowings. At 31 March 2025 interest
cover was 3.8x (31 March 2024: 3.7x).
(c) Maturity
2025 2024
£m £m
Repayable within one year 80.0 -
Repayable between one and two years 80.0 80.0
Repayable between two and three years 420.0 194.0
Repayable between three years and four years 200.0 420.0
Repayable between four years and five years - 100.0
Repayable in five years or more 65.0 65.0
845.0 859.0
Cost of raising finance (3.7) (4.2)
Total 841.3 854.8
(d) Interest rate and repayment profile
Principal at Interest rate Interest payable Repayable
period end
£m
Current
Bank overdraft due within one year or on demand - Base + 2.25% Variable On demand
Private Placement Notes:
3.07% Senior Notes 80.0 3.07% Half yearly August 2025
Non-current
Private Placement Notes:
3.19% Senior Notes 120.0 3.19% Half yearly August 2027
3.6% Senior Notes 100.0 3.60% Half yearly January 2029
Bank Loan - SONIA + 1.77%(1) Variable December 2026
Bank Loan 100.0 SONIA + 1.82%(1) Variable November 2028
Bank Loan 80.0 SONIA + 1.80%(1) Half yearly November 2026
Other Loan (Secured) 65.0 4.02% Quarterly May 2030
Green Bond 300.0 2.25% Yearly March 2028
845.0
1. The base margin is dependent upon the LTV as reported in the client
certificate, which is submitted twice a year. The base margin can be adjusted
further by up to 4.5bps dependent upon achievement of three ESG-linked
metrics.
(e) Derivative financial instruments
The Group uses a mixture of fixed rate and variable rate facilities to manage
its interest rate exposure appropriately to provide operational and budget
certainty. To manage the interest rate risk arising on variable rate debt,
£100m of the debt has been swapped to fixed rate GBP using an interest rate
swap.
The hedged item is designated as the variability of the cash flows of the
specific debt instrument arising from future changes in the SONIA rate, which
is an eligible hedged item.
Hedge effectiveness is assessed on critical terms (amount, interest rate,
interest settlement dates, currency and maturity date). The critical terms of
this hedging relationship perfectly matched at origination, so for the
prospective assessment of effectiveness a qualitative assessment was
performed. The interest rate swap creates an equal and opposite interest
receipt and a fixed interest payment, therefore creating an exact offset for
this transaction resulting in a net fixed interest payable. Potential sources
of hedge ineffectiveness include significant change in the credit risk of
either party or a reduction in the hedged item as such will impact the
economic relationship between the fair value changes of the hedged item and
the swap.
The effects of the interest rate swap hedging relationship is as follows:
2025 2024
Carrying amount of derivative (0.1) 0.2
Change in fair value of designated hedging instrument (0.3) 0.2
Notional amount £m 100 100
Rate payable (%) 4.285 4.285
Maturity 31 January 2026 31 January 2026
Hedge ratio 1:1 1:1
(f) Financial instruments and fair values
2025 2025 2024 2024
Book value Fair value Book value Fair value
£m £m £m £m
Financial liabilities held at amortised cost
Bank loans 178.2 178.2 192.3 192.3
Other loans 64.3 61.5 64.1 61.6
Private Placement Notes 299.7 290.5 299.6 285.4
Lease obligations 34.7 34.7 34.7 34.7
Green Bond 299.1 271.2 298.7 256.1
876.0 836.1 889.4 830.1
Financial assets/(liabilities) at fair value through other comprehensive
income
Financial derivative (0.1) (0.1) 0.2 0.2
Other investments 3.3 3.3 3.2 3.2
3.2 3.2 3.4 3.4
Financial assets at fair value through profit or loss
Deferred consideration (including overage) 3.1 3.1 1.1 1.1
3.1 3.1 1.1 1.1
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 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. The Green bond
is listed on the Irish stock exchange and is measured at the quoted price
using Level 1 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
Assets 2025 2024
£m £m
a) Assets at fair value through profit or loss
Deferred consideration (overage) 0.6 0.6
0.6 0.6
b) Loans and receivables
Cash and cash equivalents 32.7 11.6
Trade and other receivables excluding prepayments(1) 23.5 27.4
56.2 39.0
c) Assets/(liabilities) at value through other comprehensive income
Financial derivative (0.1) 0.2
Other investments 3.3 3.2
3.2 3.4
Total 60.0 43.0
Liabilities 2025 2024
£m £m
Other financial liabilities at amortised cost
Borrowings 841.3 854.8
Lease liabilities 34.7 34.7
Trade and other payables excluding non-financial liabilities(2) 77.9 76.1
953.9 965.6
1. Trade and other receivables exclude prepayments of £5.9m (2024:
£5.0m), accrued income of £2.8m (2024: £3.7) and non-cash deferred
consideration of £0.6m (2024: £0.6m).
2. Trade and other payables exclude other tax and social security of
£3.2m (2024: £4.8m) and deferred income of £11.1m (2024: £12.1m).
(h) Changes in liabilities from financing activities
Bank loans and borrowings Lease liabilities
£m £m
Balance at 1 April 2024 854.8 34.7
Changes from financing cash flows:
Proceeds from bank borrowings 341.5 -
Repayment of bank borrowings (355.5) -
Finance costs for new/amended borrowing facilities (1.3) -
Total changes from cash flows (15.3) -
Amortisation of issue costs of borrowing 1.8 -
Total other changes 1.8 -
Balance at 31 March 2025 841.3 34.7
Bank loans and borrowings Lease liabilities
£m £m
Balance at 1 April 2023 908.9 34.7
Changes from financing cash flows:
Proceeds from bank borrowings 156.0 -
Repayment of bank borrowings (211.0) -
Finance costs for new/amended borrowing facilities (0.8) -
Total changes from cash flows (55.8) -
Amortisation of issue costs of borrowing 1.7 -
Total other changes 1.7 -
Balance at 31 March 2024 854.8 34.7
17. Lease Obligations
Lease liabilities are in respect of leased investment property.
Minimum lease payments under leases fall due as follows:
2025 2024
£m £m
Within one year 2.1 2.1
Between one and five years 8.4 8.4
Between five and fifteen years 20.9 17.2
Beyond fifteen years 174.8 180.5
206.2 208.2
Future finance charges on leases (171.5) (173.5)
Present value of lease liabilities 34.7 34.7
Following the adoption of IFRS 16, lease obligations are shown separately on
the face of the balance sheet. The balance represents a non-current liability
as the payment shown within one year of £2.1m (2024: £2.1m) is offset by
future finance charges on leases of £2.1m (2024: £2.1m). All lease
obligations are long leaseholds, therefore, the majority of the obligations
fall beyond fifteen years.
18. Notes to cash flow statement
Reconciliation of profit/(loss) for the year to cash generated from
operations:
2025 2024
£m £m
Profit/(Loss) before tax 5.4 (192.8)
Depreciation 1.4 1.7
Amortisation of intangibles 0.9 0.6
Letting fees amortisation 0.6 0.3
Loss on disposal of investment properties 1.5 2.3
Other expenses 0.7 1.2
Net loss from change in fair value of investment property 55.9 251.2
Impairment of assets held for sale 0.4 4.1
Equity-settled share-based payments 2.7 3.3
Finance costs 32.0 34.9
Changes in working capital:
Decrease/(Increase) in trade and other receivables 5.7 (2.9)
Decrease in trade and other payables (2.1) (16.2)
Cash generated from operations 105.1 87.7
For the purposes of the cash flow statement, cash and cash equivalents include
restricted cash - tenants' deposit deeds (note 14).
19. Share capital and share premium
2025 2024
£m £m
Issued: Fully paid ordinary shares of £1 each 192.1 191.9
Movements in share capital were as follows: 2025 2024
Number Number
Number of shares at 1 April 191,910,392 191,638,357
Issue of shares 232,612 272,035
Number of shares at 31 March 192,143,004 191,910,392
In the year, the Group issued 232,612 shares in relation to share schemes with
net proceeds £nil (31 March 2024: 272,035 share scheme options issued with
£nil net proceeds).
Share capital Share premium
2025 2024 2025 2024
£m £m £m £m
Balance at 1 April 191.9 191.6 296.6 295.5
Issue of shares 0.2 0.3 - 1.1
Reduction of shares - - (1.0) -
Balance at 31 March 192.1 191.9 295.6 296.6
The movement in the year on share premium relates to the excess between the
nominal value and the vested share price on awarded shares to employees in the
previous year. This has been recycled to retained earnings in the current
year.
20. Other reserves
Other investment reserve Hedging Reserve Equity-settled share-based payments Merger reserve Total
£m
£m £m £m £m
Balance at 1 April 2023 0.4 - 25.3 65.3 91.0
Share-based payments - - 0.7 - 0.7
Change in fair value of other investment (note 12) 1.1 - - - 1.1
Change in fair value of derivative financial instruments (cash flow hedge) - 0.2 - - 0.2
Balance at 31 March 2024 1.5 0.2 26.0 65.3 93.0
Share-based payments - - (0.4) - (0.4)
Share options lapsed in prior years(1) - - (21.2) - (21.2)
Change in fair value of other investment (note 12) 0.1 - - - 0.1
Change in fair value of derivative financial instruments (cash flow hedge) - (0.3) - - (0.3)
Balance at 31 March 2025 1.6 (0.1) 4.4 65.3 71.2
1. In the year the Group transferred amounts held in the share-based
payment reserve to retained earnings In relation to share options that had
lapsed in prior years. The transfer should have been made prior to the date of
the opening comparative period, but was omitted. The error is not considered
material and hence it is being corrected in the current year.
21. Capital commitments
At the year end the estimated amounts of contractual commitments for future
capital expenditure not provided for were:
2025 2024
£m £m
Investment property construction 24.1 18.8
For both current and prior periods, there were no material obligations for the
repair or maintenance of investment properties. All material contracts for
enhancement are included in the capital commitments.
22. POST BALANCE SHEET EVENTS
The Group completed the sale of Q West in April 2025, for a total
consideration of £10.3m, the sales price is in line with the 31 March 2025
valuation. In May 2025, the Group's £200m RCF bank facilities were refinanced
extending maturity to June 2029, with options to extend by up to a further two
years and an option to increase the facility amount to £300m, subject to
lender to consent.
23. RESPONSIBILITY STATEMENT
The 2025 Annual Report, which will be issued on 13 June 2025, contains a
responsibility statement which states that on 4 June 2025, 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 UK
adopted international accounting standards, 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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