REG - Workspace Grp PLC - WORKSPACE GROUP PLC FULL YEAR RESULTS
05/06/2024 07:00
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RNS Number : 1222R Workspace Group PLC 05 June 2024
05 June 2024
WORKSPACE GROUP PLC
FULL YEAR RESULTS
STRONG INCOME AND DIVIDEND GROWTH FROM OUR
FLEXIBLE OFFER AND SCALABLE PLATFORM
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 2024. The comments in this announcement refer to the period from 1
April 2023 to 31 March 2024 unless otherwise stated.
Financial highlights: Strong rental income growth driving increase in
dividend, valuation reduction from yield expansion slowing in second half
● Net rental income up 8.2% (£9.6m) to £126.2m (31 March 2023: £116.6m)
● Trading profit after interest(†) up 8.7% to £66.0m (31 March 2023: £60.7m)
● Total dividend per share up 8.5% to 28.0p per share (31 March 2023: 25.8p)
● Property valuation of £2,446m, an underlying(1) reduction of 3.1% (£78m) in
the second half, compared to a reduction of 6.6% (£178m) in the first half
● Like-for-like portfolio valuation down 8.1% over the full year with ERV per
sq. ft. up 3.4% to £49.43 and equivalent yield out 78bps to 7.0%
● Loss before tax of £192.8m (31 March 2023: £37.5m) reflecting the reduction
in the property valuation
● EPRA net tangible assets per share down 13.7% from 31 March 2023 to £8.00
● Robust balance sheet with £145m of undrawn facilities and cash and LTV at 35%
(31 March 2023: 33%)
● Average cost of debt over the year was 3.8% with 89% at fixed rates and a
weighted average drawn debt maturity of 3.6 years as at 31 March 2024
Scalable operating platform: Supporting high level of customer demand with
stable occupancy and continued pricing growth
● Active year with 1,238 lettings and 705 renewals completed with a total rental
value of £53.3m, highlighting the appeal of our flexible offer
● Strong rental growth with like-for-like rent roll up 9.6% to £111.2m
● Improved pricing with like-for-like rent per sq. ft. up 10.4% to £44.27
● Like-for-like occupancy broadly stable at 88.1% (31 March 2023: 89.1%)
Significant portfolio activity and sustainability progress
● Active capital recycling with £143m of disposals exchanged or completed in
the year, and a further £4.6m exchanged in April 2024
● Nine larger refurbishment projects underway delivering 390,000 sq. ft. of new
and upgraded space. Further 1.0m sq. ft. of larger projects in the pipeline
● 30 smaller refurbishment and unit subdivision projects completed in year
delivering strong income returns
● Excellent performance against our environmental objectives, with 11% reduction
in operational energy intensity, 36% reduction in gas use and 11% increase in
EPC A and B rated space to 52%
Commenting on the results, Graham Clemett, Chief Executive Officer said:
"It has been a year of continued progress at Workspace, driven by the
resilience and dynamism of our 4,000 SME customers. The strong trading
performance has once again been underpinned by rental growth with stable
occupancy, delivering an 8.5% growth in the total dividend to shareholders of
28p per share.
We actively manage our portfolio to align our spaces with customer needs. Over
the past year, we have successfully completed a wide range of projects
delivering strong income returns alongside excellent progress against our 2030
environmental targets. At the same time, we are continuing with non-core
disposals to further strengthen our balance sheet and invest in our value-add
project activity.
Our valuation was down in the year by 9.5%, although the reduction was
significantly lower in the second half. I would expect this valuation to be
the low point of the current cycle given the forecast of interest rate
reductions combined with our ability to continue to deliver pricing growth and
value-add asset management activity.
Looking ahead, the future is bright for Workspace as London's leading provider
of flexible, sustainable work space to SME's. Our scalable operating platform,
combined with more than three decades of experience in the flex space, puts us
in a strong position to maintain our leadership position in this growing
market and continue delivering long-term income and dividend growth for our
shareholders."
Summary Results
31 March 31 March Change
2024 2023
Financial performance
Net rental income £126.2m £116.6m +8.2%
Trading profit after interest(†) £66.0m £60.7m +8.7%
Loss before tax £(192.8)m £(37.5)m
Full year dividend per share 28.0p 25.8p +8.5%
Valuation
EPRA net tangible assets per share(†) £8.00 £9.27 -13.7%
Property valuation(†) £2,446m £2,741m -9.5%(1)
Financing
Loan to value 35% 33%
Undrawn bank facilities and cash £145m £148m
† 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 excluding capital expenditure and disposals.
For media and investor enquiries, please contact:
Workspace Group 020 7138 3300
PLC
Graham Clemett, Chief Executive Officer
Dave Benson, Chief Financial Officer
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 results presentation and Q&A for analysts and
investors on Wednesday, 05 June 2024 at 8:45am. The venue for the presentation
is Eventspace, at Salisbury House, 114 London Wall, EC2M 5QA.
The presentation and Q&A can also be accessed live via webcast, available
at the following link:
https://secure.emincote.com/client/workspace/workspace025
(https://secure.emincote.com/client/workspace/workspace025)
Notes to Editors
About Workspace Group PLC:
Workspace is London's leading owner and operator of flexible workspace,
currently managing 4.5 million sq. ft. of sustainable space at 77 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
We've had another year of strong trading at Workspace. Continued demand for
our flexible lease offer has meant that we've been able to maintain broadly
stable occupancy and increase pricing by some 10% through the year. This has
involved a huge amount of customer activity with our teams completing 1,238
lettings and 705 renewals, worth £53.3m in terms of rent roll. The result is
an 8% growth in net rental income delivering a 9% increase in trading profit
after interest, to £66m. As a result, the Board has recommended a final
dividend of 19p per share, taking the full year dividend to 28p per share, an
increase of 8.5% on last year. Our ability to deliver sustainable dividend
growth for shareholders remains a key focus for the Company.
Our property teams have been busy too. We're continuing to deliver three major
refurbishment projects and I'm looking forward to the launch of Leroy House in
Islington in September, which will be our first net zero building. Our
property portfolio also offers up rich opportunities for smaller scale
projects and we have completed on some 30 smaller refurbishments and upgrades
over the year, which are delivering strong and immediate income returns. We've
also exchanged or completed on the disposal of £143m of non-core assets as we
continue to recycle capital and strengthen the balance sheet.
Our property valuation has reduced by 9.5% on an underlying basis over the
year although the pace of this reduction slowed significantly in the second
half. This was primarily driven by a continued outward movement in yields,
with the like-for-like equivalent yield now at 7.0%. As a result, our net
tangible asset value per share is down 13.7% to £8.00, which remains
significantly higher than our current share price. I would expect this
valuation to be the low point of the current cycle given the forecast of
interest rate reductions combined with our ability to continue delivering
pricing growth and value-add asset management activity.
With the Executive and senior management teams, we've spent useful time over
the year on how we can deliver on our longer-term ambitions, with the vision
to be the first choice in London for the brightest businesses, people and
investors. We are now progressing a number of customer and technology
initiatives to take forward these plans.
We describe our customers as London's brightest businesses. They are SMEs, the
unsung heroes of the London and UK economy, and a large and growing part of
it. Workspace has been providing space for SMEs for over 35 years and we
understand what they need to grow their businesses. They need the right
buildings in the right locations, true flexibility - both in their lease and
how they can use the space - and a work space provider with a sustainable
mindset that puts the community and the environment at the heart of its offer.
To be first choice for these businesses, we need the brightest people in the
market. Our unique and valuable operating platform is a combination of these
people, smart systems and actionable data and insights. On that note I want to
thank all our teams for their hard work over the last year. It is no surprise
that our customer satisfaction score has risen this year to 86.1%.
As I come towards the end of my tenure at Workspace, I have been reflecting on
the changes I've seen over the last seventeen years. The most obvious is that
the flexible model, which Workspace has pioneered since its inception in the
late 1980s, has become increasingly mainstream in the real estate industry.
There is undoubtedly more competition in our space but as the leading flexible
brand for SMEs across London, I am confident that Workspace has a clear
competitive advantage.
I am immensely proud of the distinctive culture we've cultivated at Workspace;
it has made my time in the business hugely enjoyable, despite the challenges
we have had to deal with over the last two decades. I have no doubt that
Lawrence Hutchings, who succeeds me as Chief Executive Officer, will be a
great fit for the business and that Workspace will continue to thrive under
his leadership.
I wish everyone at Workspace and all our stakeholders all the best for the
future. I will of course remain an invested shareholder and I look forward to
watching from the sidelines as Workspace goes from strength to strength.
BUSINESS REVIEW
CUSTOMER ACTIVITY
We have seen resilient customer demand, despite the early Easter impacting
enquiries in the fourth quarter, with 1,238 lettings completed in the year
with a total rental value of £31.3m.
Monthly Average
FY FY Q4 Q3 Q2 Q1
2023/24 2022/23 2023/24 2023/24 2023/24 2023/24
Enquiries 788 798 818 759 837 738
Viewings 524 518 589 488 527 491
Lettings 103 110 114 104 108 87
Good activity levels have continued into the first quarter of 2024/25, with
725 enquiries, 537 viewings and 92 new lettings in April 2024.
Alongside our new lettings, we have seen strong renewal activity in the year,
with over 700 customers renewing for a £2.4m (12%) uplift in annual rent.
RENT ROLL
Total rent roll, representing the total annualised net rental income at a
given date, was up 2.4% (£3.3m) in the year to £143.4m at 31 March 2024.
Total Rent Roll £m
At 31 March 2023 140.1
Like-for-like portfolio 9.7
Completed projects (0.3)
Projects underway and design stage (0.1)
South East Office (0.2)
Non-core 0.2
Disposals (6.0)
At 31 March 2024 143.4
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
£194.6m at 31 March 2024.
Like-for-like portfolio
The like-for-like portfolio represents 78% of the total rent roll as at 31
March 2024. It comprises 43 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 24 30 Sep 23(1) 31 Mar 23(1)
Occupancy 88.1% 88.5% 89.1%
Occupancy change(2) (0.4%) (0.6%) 0.6%
Rent per sq. ft. £44.27 £42.82 £40.08
Rent per sq. ft. change 3.4% 6.8% 5.3%
Rent roll £111.2m £108.0m £101.5m
Rent roll change 3.0% 6.4% 4.9%
(1) Restated for the transfer in of Castle Lane, Mare Street Studios,
Westbourne Studios, Wilson Street, Lock Studios and Mirror Works and the
transfer out of Poplar Business Park and Atelier House (part of Centro).
(2) Absolute change
We have continued to move pricing forward across our like-for-like portfolio
with rent per sq. ft. increasing by 10.4% in the year to £44.27, with
like-for-like occupancy marginally down by 1.0% to 88.1% in the year,
resulting in an overall increase in like-for-like rent roll of 9.6% (£9.7m)
to £111.2m.
We have seen ERV per sq. ft. increase by 3.4% in the year. If all the
like-for-like properties were at 90% occupancy at the CBRE estimated rental
values at 31 March 2024, the rent roll would be £126.8m, £15.6m higher than
the actual rent roll at 31 March 2024.
Completed Projects
There are six projects in the completed projects category. Rent roll reduced
overall by £0.3m in the year to £7.1m. An underlying increase of £0.6m in
rent roll was offset by a £0.9m reduction at Evergreen Studios, Richmond,
following the expiry of a short leaseback of the building by the developer.
If the buildings in this category were all at 90% occupancy at the ERVs at 31
March 2024, the rent roll would be £10.0m, an uplift of £2.9m.
Projects Underway - Refurbishments
We are currently underway on nine larger refurbishment projects that will
deliver 390,000 sq. ft. of new and upgraded space. As at 31 March 2024, rent
roll was £9.3m, down £0.7m in the year.
Assuming 90% occupancy at the ERVs at 31 March 2024, the rent roll at these
nine buildings once they are completed would be £21.1m, an uplift of £11.8m.
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 2024, the rent roll
at these properties was £6.2m, up £0.6m.
South East Office
As at 31 March 2024, the rent roll of the South East office portfolio,
comprising nine buildings, was £6.9m, down £0.2m.
Assuming 90% occupancy (or current occupancy if higher) at the ERVs at 31
March 2024, the rent roll would be £9.7m, an uplift of £2.8m.
Non-core
As at 31 March 2024, the rent roll of the non-core portfolio was £2.7m, up
£0.2m.
Disposals
During the year, there was £143m exchanged or completed sales. In aggregate,
disposals have delivered £118m of proceeds (net of sales costs) in the year
(including £10m for the deferred consideration of Riverside, Wandsworth), at
a combined net initial yield of 5.3%.
In April, we exchanged on the sale of 20-30 Greyfriars Road, Reading and
Cygnet House, Staines for a combined consideration of £4.6m, in line with the
March 2024 valuation.
In May, we completed on the sale of Poplar Business Park for £21.5m which we
exchanged for sale in January.
PROFIT PERFORMANCE
Trading profit after interest for the year was up 8.7% (£5.3m) on the prior
year to £66.0m.
£m 31 Mar 31 Mar
2024 2023
Net rental income 126.2 116.6
Administrative expenses - underlying (22.0) (20.1)
Administrative expenses - share based costs(1) (3.3) (1.4)
Net finance costs (34.9) (34.4)
Trading profit after interest 66.0 60.7
(1) These relate to both cash and equity settled costs
Net rental income was up 8.2% (£9.6m) to £126.2m.
£m 31 Mar 31 Mar
2024 2023
Underlying rental income 122.3 113.1
Unrecovered service charge costs (4.0) (4.3)
Empty rates and other non-recoverable costs (9.5) (9.3)
Services, fees, commissions and sundry income 1.4 0.5
Underlying net rental income 110.2 100.0
Acquisitions 13.4 10.7
Disposals 2.6 5.9
Net rental income 126.2 116.6
The £9.2m increase in underlying rental income to £122.3m reflects the
strong increase in average rent per sq. ft. achieved over the last year. Total
net rental income also benefited from increased rents from recent acquisitions
which have continued to let up well in the year.
Unrecovered service charge costs decreased by £0.3m, with the majority of
service charge costs recovered from customers, despite the unusually high
levels of inflation we have seen in the UK over the last year.
There was a small increase in empty rates and other non-recoverable costs
which were up £0.2m to £9.5m. Net revenue from services, fees, commissions
and sundry income was up by £0.9m, including increased hospitality revenue.
Underlying administrative expenses increased by £1.9m to £22.0m, reflecting
the high levels of wage inflation seen in the UK in the period. Share-based
costs increased by £1.9m to £3.3m driven by higher vesting levels and
assumptions with the Workspace portfolio performing strongly relative to the
London IPD index.
Net finance costs increased by £0.5m to £34.9m in the year reflecting the
increase in SONIA over the last two years offset by a reduction in average net
debt following asset disposals in the period and an increase in capitalised
interest reflecting the increase in activity on major projects over the year.
The average debt balance over the year was £53.0m lower than in the prior
year, whilst the average interest cost increased from 3.7% to 3.8%.
Loss before tax was £192.8m compared to £37.5m in the prior year.
£m 31 Mar 31 Mar
2024 2023
Trading profit after interest 66.0 60.7
Change in fair value of investment properties (255.3) (93.1)
Loss on sale of investment properties (2.3) (0.7)
Exceptional costs (1.2) (4.3)
Other items - (0.1)
Loss before tax (192.8) (37.5)
Adjusted underlying earnings per share 34.1p 31.7p
The change in fair value of investment properties, including assets held for
sale, was a decrease of £255.3m compared to a decrease of £93.1m in the
prior year.
The loss on sale of investment properties of £2.3m was driven by costs
associated with disposals in the year.
Exceptional costs include one-off items relating to the implementation of our
new finance and property management system, and in the prior year relating to
the acquisition and integration of McKay.
Adjusted underlying earnings per share, based on EPRA earnings adjusted for
non-trading items and calculated on a diluted share basis, was up 7.6% to
34.1p. 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, with our aim being to ensure the total dividend per
share in each financial year is covered at least 1.2 times by adjusted
underlying earnings per share.
With the strong improvement in trading 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 28.0p (2023:
25.8p), to be paid on 02 August 2024 to shareholders on the register at 05
July 2024. The dividend will be paid as a REIT Property Income Distribution
(PID) net of withholding tax where appropriate.
PROPERTY VALUATION
At 31 March 2024, our property portfolio was independently valued by CBRE at
£2,446m, an underlying decrease of 9.5% (£256m) in the year. The main
movements in the valuation are set out below:
£m
Valuation at 31 March 2023 2,741
Capital expenditure 71
Disposals (110)
Underlying revaluation (256)
Valuation at 31 March 2024 2,446
There was an underlying revaluation decrease of 3.1% (£78m) in the second
half of the year compared to a decrease of 6.6% (£178m) in the first half. A
summary of the full year valuation and revaluation movement by property type
is set out below:
£m Valuation Underlying revaluation decrease
31 March
2024 Full Year H2 H1
Like-for-like properties 1,833 162 49 113
Completed projects 137 19 7 12
Refurbishments 319 46 16 30
Redevelopments 19 5 1 4
South East office 86 14 5 9
Non-core 52 10 - 10
Total 2,446 256 78 178
Like-for-like Properties
There was an 8.1% (£162m) underlying decrease in the valuation of
like-for-like properties to £1,833m. This was driven by a 78bps outward shift
in equivalent yield (£233m), offset by a 3.4% increase in the ERV per sq. ft.
(£71m).
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 6.2% in the year for units under
1,000 sq. ft., compared to larger spaces where ERVs increased by 1.3%. 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
2024 2023(1) Change
ERV per sq. ft. £49.43 £47.82 3.4%
Rent per sq. ft. £44.27 £40.08 10.4%
Equivalent yield 7.0% 6.2% 0.8%(2)
Net initial yield 5.5% 4.6% 0.9%(2)
Capital value per sq. ft. £643 £694 (7.3)%
(1) Restated for the transfer in of Castle Lane, Mare Street, Westbourne
Studios, Wilson Street, Lock Studios and Mirror Works and the transfer out of
Poplar Business Park and Centro - Atelier House.
(2) Absolute change
A 2.5% increase in ERV per sq. ft. would increase the valuation of
like-for-like properties by approximately £44m while a 25bps increase in
equivalent yield would decrease the valuation by approximately £64m.
Completed Projects
There was an underlying decrease of 12.2% (£19m) in the value of the six
completed projects to £137m. The overall valuation metrics for completed
projects are set out below:
31 Mar
2024
ERV per sq. ft. £34.69
Rent per sq. ft. £29.30
Equivalent yield 7.3%
Net initial yield 4.6%
Capital value per sq. ft. £431
Current Refurbishments and Redevelopments
There was an underlying decrease of 12.6% (£46m) in the value of our current
refurbishments to £319m and a reduction of 20.8% (£5m) in the value of our
current redevelopments to £19m.
The decreases in respect of refurbishments largely reflected an 85bps outward
movement in equivalent yield, with redevelopment valuations also impacted by a
decline in expected residential values and increases in expected build costs.
South East Office
There was a 14% (£14m) underlying decrease in the valuation of the South East
office portfolio to £86m with 152bps outward shift in equivalent yield,
offset by a 3.5% increase in ERV per sq. ft. The overall valuation metrics are
set out below:
31 Mar
2024
ERV per sq. ft. £29.00
Rent per sq. ft. £22.84
Equivalent Yield 10.4%
Net Initial Yield 7.9%
Capital Value per sq. ft. £243
REFURBISHMENT ACTIVITY
A summary of the status of the refurbishment pipeline at 31 March 2024 is set
out below:
Projects Number Capex spent Capex to spend Upgraded and new space (sq. ft.)
Underway 9 £55m £49m 390,000
Design stage 8 £0m £454m 717,000
Design stage (without planning) 4 £0m £161m 265,000
We are on-site at Leroy House, Islington, where we are delivering a
refurbished and extended 58,000 sq. ft. business centre which we expect to
complete in September 2024. Our adaptive re-use of the existing building
creates 70% less embodied carbon compared to a new build scheme. We have also
recently commenced major upgrades and extensions at Chocolate Factory, Wood
Green, and at The Biscuit Factory, Bermondsey.
We obtained vacant possession of Atelier House, at the northern end of our
Centro property, in December 2023, which will allow us to progress with our
planned conversion of the building to a business centre.
SUSTAINABILITY
We have an inherently green property portfolio with energy intensity already
29% lower than industry best practice for net zero carbon offices. 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 52% EPC A and B rated, an increase of 11% in the year,
and we are on track to upgrade the remainder of our portfolio to these
categories by 2030. We are also targeting a reduction in Scope 1 gas emissions
by a minimum of 5% each year, whilst continuing to procure 100% renewable
electricity (REGO backed). In the year we also achieved a 11% reduction in
operational energy intensity and a 36% reduction in gas use.
In December, we signed a Corporate Purchase Power Agreement to supply around
two thirds of our electricity demand over the next 10 years from a newly
constructed solar plant.
CASH FLOW
A summary of cash flows is set out below:
£m 31 Mar 31 Mar
2024 2023
Net cash from operations after interest(†) 63 70
Dividends paid (51) (44)
Capital expenditure (71) (60)
Purchase of investment properties - (201)
Net debt acquired - (162)
Property disposals and cash receipts 118 49
Other (12) 4
Net movement 47 (344)
Opening debt (net of cash) (902) (558)
Closing debt (net of cash) (855) (902)
† excludes £8.8m of VAT receipt (2023)/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 £47m in net debt reflects the disposals made in the
period.
NET ASSETS
Net assets decreased in the year by £239m to £1,549m. EPRA net tangible
assets (NTA) per share at 31 March 2024 was down 13.7% (£1.27) to £8.00.
EPRA NTA per share £
At 31 March 2023 9.27
Adjusted trading profit after interest 0.34
Property valuation deficit (1.32)
Dividends paid (0.26)
Other (0.03)
At 31 March 2024 8.00
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 (10.9)% compared to (3.8)% in the
prior year ended March 2023. 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 2024, the Group had £4m of available cash and £141m 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
Bank facilities 194.0 335.0 2026
Total 859.0 1,000.0
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 £335.0m
which were £194.0m drawn as at 31 March 2024. The maturity of the bank
facilities was successfully extended by a further year in November 2023 with
£135m now maturing in April 2026 and £200m in December 2026. The average
maturity of drawn debt at 31 March 2024 was 3.6 years (31 March 2023: 4.1
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 2024, the Group's
effective interest rate was 3.7% based on SONIA at 5.2%, with 89% (£765m) of
the debt at fixed or hedged rates. The average interest cost of our fixed-rate
borrowings was 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 2024, loan to value (LTV) was 35% (31 March 2023: 33%) and
interest cover, based on net rental income and interest paid over the last 12
month period, was 3.7 times (31 March 2023: 3.8 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 9.3 times to 8.3 times during
the year.
FINANCIAL outlook FOR 2024/25
Over the past year, we have seen strong rental growth driven by increased
pricing and stable occupancy. Rental income in 2024/25 will be underpinned by
the growth in like-for-like rent roll we have seen over the last year, with
like-for-like rent roll growing by 6% in the second half of last year on an
annualised basis. We continue to see good demand and expect continued growth
in rent roll in 2024/25. Rental income growth will also be supported by the
letting up of recently completed projects.
The high levels of inflation we have seen over the last year, which have
impacted on both our service charge and administrative costs, are reducing and
are expected to have less impact in the coming year, albeit wage inflation
remains significantly above historic norms.
We expect capital expenditure to be maintained at a similar level to last
year, around £60-70m, as we continue to progress with planned asset
management projects, including the refurbishments of Leroy House, Chocolate
Factory and The Biscuit Factory. This will be largely offset by recycled
capital from asset disposals.
The £118m of proceeds from disposals of non-core properties received over the
last year has reduced our floating-rate debt, which currently has an effective
interest rate of 7%. Our average interest rate has been reduced further by the
£100m of floating rate debt we have swapped to fixed at an effective rate of
6%. With planned capital expenditure largely offset by asset disposals, we
expect this to result in a reduction in interest costs in the current year.
property statistics
Half Year ended
31 Mar 30 Sep 31 Mar 30 Sep
2024 2023 2023 2022
Workspace Portfolio
Property valuation £2,446m £2,505m £2,741m £2,863m
Number of locations 77 79 86 87
Lettable floorspace (million sq. ft.) 4.5 4.7 5.2 5.4
Number of lettable units 4,678 4,718 4,910 4,901
Rent roll of occupied units £143.4m £141.9m £140.1m £134.7m
Average rent per sq. ft. £38.21 £36.81 £32.86 £30.03
Overall occupancy 83.0% 83.5% 81.5% 84.0%
Like-for-like number of properties 43 42 38 38
Like-for-like lettable floor space (million sq. ft.) 2.9 2.9 2.7 2.7
Like-for-like rent roll growth 3.0% 6.4% 3.4% 3.6%
Like-for-like rent per sq. ft. growth 3.4% 6.8% 5.2% 4.0%
Like-for-like occupancy movement (0.4%) (0.6%) (0.5%) 0.1%
1) The like-for-like category has been restated in the current financial
year for the transfer in of Castle Lane, Mare Street Studios, Westbourne
Studios, Wilson Street, Lock Studios and Mirror Works and the transfer out of
Poplar Business Park and Atelier House (part of Centro).
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.
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2024
Notes 2024 2023
£m £m
Revenue 1 184.3 174.2
Direct costs(1) 1 (58.1) (57.6)
Net rental income 1 126.2 116.6
Administrative expenses 2 (25.3) (21.5)
Trading profit 100.9 95.1
Loss on disposal of investment properties 3(a) (2.3) (0.7)
Other expenses 3(b) (1.2) (3.8)
Change in fair value of investment properties 10 (251.2) (88.0)
Impairment of assets held for sale (4.1) (5.1)
Operating loss (157.9) (2.5)
Finance costs 4 (34.9) (34.4)
Exceptional finance costs 4 - (0.6)
Loss before tax (192.8) (37.5)
Taxation 6 0.3 (0.3)
Loss for the financial year after tax (192.5) (37.8)
Basic loss per share 8 (100.4p) (19.9p)
Diluted loss per share 8 (100.4p) (19.9p)
1. Direct costs in 2024 includes impairment of receivables of
£0.8m (2023: £1.1m). See note 1 for additional information.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2024
Notes 2024 2023
£m
£m
Loss for the financial year (192.5) (37.8)
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Change in fair value of other investments 1.1 0.4
Fair value of derivative 0.2 -
Items that will not be reclassified subsequently to profit or loss:
Pension fund movement - 0.9
Other comprehensive income in the year 1.3 1.3
Total comprehensive loss for the year (191.2) (36.5)
CONSOLIDATED BALANCE SHEET
AS AT 31 MARCH 2024
Notes 2024 2023
£m £m
Non-current assets
Investment properties 10 2,408.5 2,643.3
Intangible assets 2.2 2.0
Property, plant and equipment 11 3.0 4.4
Other investments 12 3.2 2.1
Derivative financial instruments 0.2 -
Deferred tax 0.3 -
2,417.4 2,651.8
Current assets
Trade and other receivables 13 36.7 45.8
Assets held for sale 65.7 123.0
Cash and cash equivalents 14 11.6 18.5
114.0 187.3
Total assets 2,531.4 2,839.1
Current liabilities
Trade and other payables 15 (93.0) (107.8)
Borrowings 16(a) - (49.8)
(93.0) (157.6)
Non-current liabilities
Borrowings 16(a) (854.8) (859.1)
Lease obligations 17 (34.7) (34.7)
(889.5) (893.8)
Total liabilities (982.5) (1,051.4)
Net assets 1,548.9 1,787.7
Shareholders' equity
Share capital 19 191.9 191.6
Share premium 19 296.6 295.5
Investment in own shares (9.9) (9.9)
Other reserves 20 93.0 91.0
Retained earnings 977.3 1,219.5
Total shareholders' equity 1,548.9 1,787.7
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2024
Notes Attributable to owners of the Parent
Share capital Share premium Investment in own shares Other reserves Retained earnings Total share-holders' equity
£m £m £m £m £m £m
Balance at 31 March 2022 181.1 295.5 (9.9) 32.6 1,300.3 1,799.6
Loss for the financial year - - - - (37.8) (37.8)
Other comprehensive income for the year - - - 0.4 0.9 1.3
Total comprehensive income/(loss) - - - 0.4 (36.9) (36.5)
Transactions with owners:
Shares issued 19 10.5 - - 56.6 - 67.1
Dividends paid 7 - - - - (43.9) (43.9)
Share based payments - - - 1.4 - 1.4
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
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2024
Notes 2024 2023
£m £m
Cash flows from operating activities
Cash generated from operations 19 87.7 110.5
Interest paid (33.8) (31.7)
Net cash inflow from operating activities 53.9 78.8
Cash flows from investing activities
Purchase of investment properties - (184.4)
Capital expenditure on investment properties (71.7) (56.2)
Proceeds from government grant 1.5 -
Proceeds from disposal of investment properties (net of sale costs) 22.3 7.1
Proceeds from disposal of assets held for sale (net of sale costs) 96.2 41.4
Purchase of intangible assets (0.8) (0.8)
Purchase of property, plant and equipment (0.4) (3.1)
Other expenses (1.2) (2.9)
Settlement of defined benefit pension scheme - (1.3)
Net cash inflow/(outflow) from investing activities 45.9 (200.2)
Cash flows from financing activities
Finance costs for new/amended borrowing facilities (0.8) (1.6)
Repayment of bank borrowings and Private Placement Notes 16(h) (211.0) (150.0)
Draw down of bank borrowings 16(h) 156.0 286.0
Settlement of share schemes (0.2) -
Dividends paid 7 (50.7) (43.5)
Net cash (outflow)/inflow from financing activities (106.7) 90.9
Net decrease in cash and cash equivalents (6.9) (30.5)
Cash and cash equivalents at start of year 14 18.5 49.0
Cash and cash equivalents at end of year 14 11.6 18.5
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 March 2024 or 2023 but is derived
from those accounts. Statutory accounts for 2023 have been delivered to the
Registrar of Companies, and those for 2024 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 2023, 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 presentational 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 Directors are required to assess the appropriateness of applying the going
concern basis in the preparation of the financial statements. The current
macroeconomic issues have heightened concerns around the UK economy and
increased the risk of an economic downturn. In this context, the Directors
have fully considered the business activities and principal risks of the
Company and Group.
In preparing the assessment of going concern, the Directors have 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
historic levels.
Continued elevated levels of cost inflation.
SONIA rates remaining elevated, 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 47% compared to the March
2024 Net Rental Income and a fall in the asset valuation of 41% compared to
31 March 2024 before these covenants are breached, assuming no mitigating
actions are taken.
As at 31 March 2024, the Group had significant headroom with £145m 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, and a £65m secured loan facility. Shorter-term
liquidity and flexibility is provided by floating rate sustainability-linked
revolving credit facilities (RCFs) totalling £335m, with £135m due in April
2026 and £200m due in December 2026. The £200m RCF also has the option to
increase the facility amount by up to £100m, subject to lender consent.
For the full period of assessment under the scenarios 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 adequate resources to continue in operational existence for
a period of at least 12 months from the date of signing of these financial
statements and therefore the Directors continue to adopt the Going Concern
basis in their preparation.
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 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;
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 2024 the Group adopted the following accounting
standards and guidance:
IAS 12 (amended) Deferred Tax related to Assets and Liabilities arising from a Single
Transaction
IAS 12 (amended) International Tax Reform (Pillar Two Model Rules)
IAS 8 (amended) Accounting Policies, Changes in Accounting Estimates and Errors: Definition
IAS 1 (amended) and IFRS Practice Statement 2 Presentation of Financial Statements and IFRS Practice Statement 2 Making
Materiality Judgements
IFRS 17 Insurance Contracts
IFRS 9 Comparative Information
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 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 (amended) Supplier Finance Arrangements
IAS 21 (amended) Lack of Exchangeability
IFRS 16 (amended) Lease Liability in a Sale and Leaseback
1. ANALYSIS OF NET RENTAL INCOME AND SEGMENTAL INFORMATION
2024 2023
Revenue Direct Net rental income Revenue Direct Net rental income
£m costs(1) £m £m costs(1) £m
£m
£m
Rental income 145.0 (4.9) 140.1 136.7 (4.2) 132.5
Service charges 32.6 (37.5) (4.9) 30.0 (35.7) (5.7)
Empty rates and other non-recoverable costs - (10.2) (10.2) - (10.6) (10.6)
Services, fees, commissions and sundry income 6.7 (5.5) 1.2 7.5 (7.1) 0.4
184.3 (58.1) 126.2 174.2 (57.6) 116.6
1. There are two properties within the current period (prior period: none)
that are non-rent producing.
Included within direct costs for rental income is a charge of £0.8m (2023:
£1.0m) and within direct costs for service charges is a charge of £nil
(2023: £0.1m) 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 2024,
management have determined that the Group operates a single operating segment
providing business accommodation for rent in and around London.
2. OPERATING LOSS
The following items have been charged in arriving at operating loss:
2024 2023
£m £m
Depreciation(1) (note 11) 1.7 1.6
Staff costs (including share based costs)(1) (note 5) 30.5 25.3
Repairs and maintenance expenditure on investment properties 3.7 5.4
Trade receivables impairment (note 13) 0.8 1.1
Amortisation of intangibles 0.6 0.7
Audit fees payable to the Company's Auditor 0.8 0.4
1. Charged to direct costs and administrative expenses based
on the underlying nature of the expenses.
Auditor's remuneration: services provided by the Company's Auditor and its 2024 2023
associates
£000
£000
Audit fees:
Audit of Parent Company and consolidated financial statements 507 330
Audit of subsidiary financial statements 110 40
617 370
Fees for other services:
Audit-related assurance services1 97 70
Total fees payable to Auditor 714 440
2. Audit-related assurance services consist of £97k for half
year review (2023: £56k); and £nil for Green Bond use of Proceeds Assurance
(2023: £14k).
2024 2023
£m
£m
Total administrative expenses are analysed below:
Staff costs 14.8 13.4
Equity-settled share based payments 3.1 1.4
Cash-settled share based payments 0.2 -
Other 7.2 6.7
Total administrative expenses 25.3 21.5
3(a). LOSS ON DISPOSAL OF INVESTMENT PROPERTIES AND ASSETS HELD FOR SALE
2024 2023
£m £m
Proceeds from sale of investment properties (net of sale costs) 12.3 7.0
Proceeds from sale of assets held for sale (net of sale costs) 96.2 52.1
Book value at time of sale (110.8) (59.8)
Loss on disposal (2.3) (0.7)
3(b). OTHER EXPENSES
2024 2023
£m £m
Change in fair value of deferred consideration - (0.1)
Other expenses (1.2) (3.7)
(1.2) (3.8)
The value of deferred consideration (cash and overage) from the sale of
investment properties has been revalued by CBRE Limited at 31 March 2024 and
31 March 2023. This resulted in a reduction in the fair value of deferred
consideration of £nil at 31 March 2024 (31 March 2023: £0.1m). The amounts
receivable are included in the consolidated balance sheet under current trade
and other receivables (note 13).
Other expenses include exceptional one-off costs relating to the
implementation and replacement of our finance and property management system
of £1.2m (2023: £1.8m). In addition, other expenses in the prior year also
include exceptional one-off costs relating to the acquisition and integration
of McKay Securities Limited (£1.9m), including the cost of buying out the
McKay Securities Limited defined benefit pension scheme. These costs are
outside the Group's normal trading activities.
4. FINANCE COSTS
2024 2023
£m £m
Interest payable on bank loans and overdrafts (15.0) (11.9)
Interest payable on other borrowings (19.3) (19.0)
Amortisation of issue costs of borrowings (1.7) (2.0)
Interest payable on leases (2.1) (1.9)
Interest capitalised on property refurbishments (note 10) 3.0 0.2
Interest receivable 0.2 0.2
Finance costs (34.9) (34.4)
Exceptional finance costs - (0.6)
Total finance costs (34.9) (35.0)
The exceptional finance costs in the prior year related to unamortised finance
costs for McKay Securities Limited's previous bank loan which were written off
when this was refinanced in September 2022.
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.
5. EMPLOYEES AND DIRECTORS
Staff costs for the Group during the year were: 2024 2023
£m £m
Wages and salaries 26.2 23.3
Social security costs 3.4 3.8
Other pension costs 1.3 1.0
Equity-settled share based costs 3.1 1.4
34.0 29.5
Less costs capitalised (3.5) (4.2)
30.5 25.3
The monthly average number of people employed during the year was: 2024 2023
Number Number
Head office staff (including Directors) 166 154
Estates and property management staff 152 137
318 291
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 £2.9m (2023: £3.0m),
comprising of £2.2m (2023: £2.2m) of Directors' remuneration, £0.6m (2023:
£0.7m) gain on exercise of share options and £0.1m (2023: £0.1m) of cash
contributions in lieu of pension in respect of two Directors (2023: two).
6. TAXATION
2024 2023
£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
(0.3) 0.3
Total taxation (credit)/ charge (0.3) 0.3
Taxation chargeable in the year relates to income from non-REIT activities
such as overage, meeting room income and utilities recharges.
The tax on the Group's loss for the year differs from the standard applicable
corporation tax rate in the UK of 25% (2023: 19%). The differences are
explained below:
2024 2023
£m £m
Loss before taxation (192.8) (37.5)
Tax at standard rate of corporation tax in the UK of 25% (2023: 19%) (48.2) (7.1)
Effects of:
REIT exempt income (19.2) (12.1)
Changes in fair value not subject to tax as a REIT 63.8 17.7
Share based payment adjustments 0.5 (0.3)
Unrecognised losses carried forward 2.7 1.8
Other non-taxable expenses 0.1 0.3
Total taxation (credit)/ charge (0.3) 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 (increased from 19% in
the previous period).
The Group currently has an unrecognised asset in relation to tax losses from
the non-REIT business carried forward of £8.9m (2023: £6.2m) calculated at a
corporation tax rate of 25% (2023: 25%).
7. DIVIDENDS
Payment date Per share 2024 2023
£m £m
For the year ended 31 March 2022:
Final dividend August 2022 14.5p - 27.8
For the year ended 31 March 2023:
Interim dividend February 2023 8.4p - 16.1
Final dividend August 2023 17.4p 33.3 -
For the year ended 31 March 2024:
Interim dividend February 2024 9.0p 17.3 -
Dividends for the year 50.6 43.9
Timing difference on payment of withholding tax 0.1 (0.4)
Dividends cash paid 50.7 43.5
The Directors are proposing a final dividend in respect of the financial year
ended 31 March 2024 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 2 August 2024 to shareholders who
are on the register of members on 5 July 2024. 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: 2024 2023
£m £m
Basic and diluted earnings (192.5) (37.8)
Decrease in fair value of investment properties 251.2 88.0
Impairment of assets held for sale 4.1 5.1
Loss on disposal of investment properties 2.3 0.7
EPRA earnings 65.1 56.0
Adjustment for non-trading items:
Other expenses 1.2 3.8
Exceptional finance costs - 0.6
Taxation (0.3) 0.3
Trading profit after interest 66.0 60.7
Earnings have been adjusted to derive an earnings per share measure as defined
by the European Public Real Estate Association ('EPRA') and an adjusted
underlying earnings per share measure.
Number of shares used for calculating earnings per share: 2024 2023
Number Number
Weighted average number of shares (excluding own shares held in trust) 191,676,994 190,470,363
Dilution due to share option schemes 1,537,856 1,129,310
Weighted average number of shares for diluted earnings per share 193,214,850 191,599,673
In pence: 2024 2023
Basic loss per share (100.4p) (19.9p)
Diluted loss per share (100.4p) (19.9p)
EPRA earnings per share 34.0p 29.4p
Adjusted underlying earnings per share1 34.1p 31.7p
1. Adjusted underlying earnings per share is calculated by dividing
trading profit after interest by the diluted weighted average number of shares
of 193,214,850 (2023: 191,599,673).
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: 2024 2023
Number Number
Shares in issue at year end 191,910,392 191,638,357
Less own shares held in trust at year end (139,649) (152,550)
Dilution due to share option schemes 1,637,759 1,201,277
Number of shares for calculating diluted adjusted net assets per share 193,408,502 192,687,084
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 2024 March 2023
EPRA EPRA EPRA EPRA EPRA EPRA
NRV
NTA
NDV
NRV
NTA
NDV
£m £m £m £m £m £m
IFRS Equity attributable to shareholders 1,548.9 1,548.9 1,548.9 1,787.7 1,787.7 1,787.7
Fair value of derivative financial instruments (0.2) (0.2) - - - -
Intangibles per IFRS balance sheet - (2.2) - - (2.0) -
Excess of book value of debt over fair value - - 59.3 - - 86.6
Purchasers' costs 166.4 - - 186.4 - -
EPRA measure 1,715.1 1,546.5 1,608.2 1,974.1 1,785.7 1,874.3
EPRA measure per share £8.87 £8.00 £8.32 £10.24 £9.27 £9.73
Total accounting return
Total Accounting Return 2024 2023
£ £
Opening EPRA net tangible assets per share (A) 9.27 9.88
Closing EPRA net tangible assets per share 8.00 9.27
Decrease in EPRA net tangible assets per share (1.27) (0.61)
Ordinary dividends paid in the year 0.26 0.23
Total return (B) (1.01) (0.38)
Total accounting return (B/A) (10.9%) (3.8%)
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 2024 was -10.9% (31 March 2023: -3.8%).
10. INVESTMENT PROPERTIES
2024 2023
£m £m
Balance at 1 April 2,643.3 2,366.7
Purchase of investment properties - 426.6
Capital expenditure 68.4 55.8
Change in value of lease obligations - 3.7
Capitalised interest on refurbishments (note 4) 3.0 0.2
Disposals during the year (12.5) (5.5)
Change in fair value of investment properties (251.2) (88.0)
Disposed properties tenant incentives recognised in advance under IFRS 16 1.4 -
Less: Classified as assets held for sale (43.9) (116.2)
Balance at 31 March 2,408.5 2,643.3
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 £317.2m
(2023: £321.9m) for which there are lease obligations of £34.7m (2023:
£34.7m). Investment property lease commitment details are shown in note 17.
During the prior period, the Group acquired McKay Securities Limited (formerly
McKay Securities PLC) adding 32 properties in and around London to the
portfolio.
Three of the properties classified as held for sale at the end of the prior
year were not sold during the year. These are retained within current assets
as they are still expected to sell within the next 12 months to 31 March 2025
and have been subject to an impairment charge of £2.6m following the
valuation carried out at 31 March 2024. One of them exchanged during the year.
Six (2023: Ten) additional properties were reclassified as held for sale at
year-end. Four of these properties have exchanged for sale and are likely to
complete within the next 12 months. The transfer value is their year-end
valuation per CBRE.
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 6.8% (2023:
3.9%). The total amount of capitalised interest included in investment
properties is £18.1m (2023: £15.1m).
The change in fair value of investment properties is recognised in the
consolidated income statement.
Valuation
The Group's investment properties are held at fair value and were revalued at
31 March 2024 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 each
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. 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 valuers are provided with information on tenure, letting,
town planning and the repair of the buildings and sites.
The reconciliation of the valuation report total to the amount shown in the
consolidated balance sheet as non‑current assets, investment properties, is
as follows:
2024 2023
£m £m
Total per CBRE valuation report 2,446.5 2,741.1
Deferred consideration on sale of property (0.6) (0.5)
Head leases treated as leases under IFRS 16 34.7 34.7
Tenant incentives recognised under IFRS 16 (6.4) (8.8)
Less: Reclassified as assets held for sale (65.7) (123.2)
Total investment properties per balance sheet 2,408.5 2,643.3
The Group's investment properties are carried at fair value and under IFRS 13
are required to be analysed by level depending on the valuation method
adopted. The different valuation methods are as follows:
Level 1 - Quoted prices (unadjusted) in active markets for identical
assets or liabilities that the entity can access at the measurement date.
Level 2 - Use of a model with inputs (other than quoted prices
included in Level 1) that are directly or indirectly observable market data.
Level 3 - Use of a model with inputs that are not based on observable
market data.
As noted in the significant judgements and critical estimates section,
property valuations are complex and involve data which is not publicly
available and involves a degree of judgement. All the investment properties
are classified as Level 3, due to the fact that one or more significant inputs
to the valuation are not based on observable market data.
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 2024.
Key unobservable inputs:
Property category Valuation Valuation technique ERVs - per sq. ft. Equivalent yields
£m
Range Weighted average Range Weighted average
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
The following table summarises the valuation techniques and inputs used in the
determination of the property valuation at 31 March 2023.
Key unobservable inputs:
Property category Valuation Valuation technique ERVs - per sq. ft. Equivalent yields
£m
Range Weighted average Range Weighted average
Like-for-like 1,886.9 A £21-£79 £48 5.0%-7.7% 6.2%
Completed projects 264.8 A £24-£51 £34 5.8%-6.8% 6.5%
Refurbishments 171.9 A/B £21-£53 £35 4.5%-6.7% 5.8%
Redevelopments 25.4 A/B £16-£35 £28 4.8%-6.9% 5.5%
Acquisitions 268.4 A £13-£70 £34 5.2%-10.8% 7.4%
Tenant incentives (8.8) N/A - - - -
Head leases 34.7 N/A - - - -
Total 2,643.3
A = Income capitalisation method.
B = Residual value method.
A key unobservable input for redevelopments at planning stage and
refurbishments is developer's profit. The range is 10%-16% with a weighted
average of 13%.
Costs to complete is a key unobservable input for redevelopments at planning
stage with a range of £262-£448 per sq. ft. and a weighted average of £356
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 +189/-189 -76/+83
Completed projects +27/-27 -10/+11
Refurbishments +23/-23 -10/+11
Redevelopments +6/-6 -3/+3
Acquisitions +27-27 -9/+9
11. PROPERTY, PLANT AND EQUIPMENT
Cost or valuation Equipment
and fixtures
£m
1 April 2022 9.5
Additions during the year 3.3
Disposals during the year (0.3)
Balance at 31 March 2023 12.5
Additions during the year 0.5
Disposals during the year (4.8)
Balance at 31 March 2024 8.2
Accumulated depreciation
1 April 2022 6.6
Charge for the year 1.6
Disposals during the year (0.1)
Balance at 31 March 2023 8.1
Charge for the year 1.7
Disposals during the year (4.6)
Balance at 31 March 2024 5.2
Net book amount at 31 March 2024 3.0
Net book amount at 31 March 2023 4.4
12. OTHER INVESTMENTS
The Group holds the following investments:
2024 2023
£m £m
2.0% of share capital of Wavenet Limited 3.2 2.1
3.2 2.1
In accordance with IFRS 9 the shares in Wavenet Limited have been valued at
fair value, resulting in £1.1m movement in the financial year (2023: £0.4m),
recognised in the consolidated statement of comprehensive income.
13. TRADE AND OTHER RECEIVABLES
Current trade and other receivables 2024 2023
£m
£m
Trade receivables 22.6 16.9
Less provision for impairment of receivables (3.9) (4.6)
Trade receivables - net 18.7 12.3
Prepayments, other receivables and accrued income 16.9 22.3
Deferred consideration on sale of investment properties 1.1 11.2
36.7 45.8
Receivables at fair value
Included within deferred consideration on sale of investment properties is
£0.6m (2023: £0.5m) 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 2023: £0.1m decrease) (note 3(b)).
2024 2023
£m £m
Deferred consideration on sale of investment properties:
Balance at 1 April 11.2 0.6
Cash received (10.1) -
Additions - 10.7
Change in fair value - (0.1)
Balance at 31 March 1.1 11.2
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:
2024 2023
£m £m
Balance at 1 April 4.6 5.2
Increase in provision for impairment of trade receivables 0.8 1.1
Receivables written off during the year (1.5) (1.7)
Balance at 31 March 3.9 4.6
14. CASH AND CASH EQUIVALENTS
2024 2023
£m £m
Cash at bank and in hand 4.1 12.0
Restricted cash 7.5 6.5
11.6 18.5
£6.7m (2023: £6.5m) 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
2024 2023
£m £m
Trade payables 7.4 15.4
Other tax and social security payable 4.8 15.9
Tenants' deposit deeds 8.2 6.5
Tenants' deposits 32.0 30.5
Accrued expenses 28.5 26.1
Deferred income - rent and service charges 12.1 13.4
93.0 107.8
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
2024 2023
£m £m
Current
Bank loans (unsecured) - 49.8
Non-current
Bank loans (unsecured) 192.3 197.2
Other loans (secured) 64.1 63.9
3.07% Senior Notes (unsecured) 79.9 79.9
3.19% Senior Notes (unsecured) 119.9 119.8
3.6% Senior Notes (unsecured) 99.9 99.9
Green Bond (unsecured) 298.7 298.4
854.8 859.1
Total borrowings 854.8 908.9
(b) Net debt
2024 2023
£m £m
Borrowings per (a) above 854.8 908.9
Adjust for:
Cost of raising finance 4.2 5.1
859.0 914.0
Cash at bank and in hand (note 14) (4.1) (12.0)
Net debt 854.9 902.0
At 31 March 2024, the Group had £141.0m (2023: £136.0m) of undrawn bank
facilities, a £2.0m overdraft facility (2023: £2.0m) and £4.1m of
unrestricted cash (2023: £12.0m).
(c) Maturity
2024 2023
£m £m
Repayable within one year - 50.0
Repayable between one and two years 80.0 -
Repayable between two and three years 194.0 279.0
Repayable between three years and four years 420.0 -
Repayable between four years and five years 100.0 420.0
Repayable in five years or more 65.0 165.0
859.0 914.0
Cost of raising finance (4.2) (5.1)
Total 854.8 908.9
(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
Non-current
Private Placement Notes:
3.07% Senior Notes 80.0 3.07% Half yearly August 2025
3.19% Senior Notes 120.0 3.19% Half yearly August 2027
3.6% Senior Notes 100.0 3.60% Half yearly January 2029
Bank Loan 125.0 SONIA + 1.77%(1) Monthly December 2026
Bank Loan 69.0 SONIA + 1.77%(1) Monthly April 2026
Other Loan (Secured) 65.0 4.02% Quarterly May 2030
Green Bond 300.0 2.25% Yearly March 2028
859.0
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:
2024
Carrying amount of derivative 0.2
Change in fair value of designated hedging instrument 0.2
Notional amount £m 100
Rate payable (%) 4.285
Maturity 31 January 2026
Hedge ratio 1:1
(f) Financial instruments and fair values
2024 2024 2023 2023
Book value Fair value Book value Fair value
£m £m £m £m
Financial liabilities held at amortised cost
Bank loans 192.3 192.3 247.0 247.0
Other loans 64.1 61.6 63.9 63.5
Private Placement Notes 299.6 285.4 299.6 287.8
Lease obligations 34.7 34.7 34.7 34.7
Green Bond 298.7 256.1 298.4 224.0
889.4 830.1 943.6 857.0
Financial assets at fair value through other comprehensive income
Financial derivative 0.2 0.2 - -
Other investments 3.2 3.2 2.1 2.1
3.4 3.4 2.1 2.1
Financial assets at fair value through profit or loss
Deferred consideration (including overage) 1.1 1.1 11.2 11.2
1.1 1.1 11.2 11.2
In accordance with IFRS 13, disclosure is required for financial instruments
that are carried or disclosed in the financial statements at fair value. The
fair values of all the Group's bank loans and Private Placement Notes have
been determined by reference to market prices and discounted expected cash
flows at prevailing interest rates and are Level 2 valuations. There have been
no transfers between levels in the year.
The different levels of valuation hierarchy as defined by IFRS 13 are set out
in note 10.
(g) Financial instruments by category
a) Assets at fair value through profit or loss
Deferred consideration (overage) 0.6 0.5
0.6 0.5
b) Loans and receivables
Cash and cash equivalents 11.6 18.5
Trade and other receivables excluding prepayments1 27.4 31.7
39.0 50.2
c) Assets at value through other comprehensive income
Financial derivative 0.2 -
Other investments 3.2 2.1
3.4 2.1
Total 43.0 52.8
Liabilities 2024 2023
£m £m
Other financial liabilities at amortised cost
Borrowings 854.8 908.9
Lease liabilities 34.7 34.7
Trade and other payables excluding non-financial liabilities2 76.1 78.5
965.6 1,022.1
1. Trade and other receivables exclude prepayments of £5.0m
(2023: £13.6m), accrued income of £3.7m (2023: £nil) and non-cash deferred
consideration of £0.6m (2023: £0.5m).
2. Trade and other payables exclude other tax and social
security of £4.8m (2023: £15.9m) and deferred income of £12.1m (2023:
£13.4m).
(h) Changes in liabilities from financing activities
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
Bank loans and borrowings Lease liabilities
£m £m
Balance at 1 April 2022 595.5 31.0
Changes from financing cash flows:
Proceeds from bank borrowings 286.0 -
Repayment of bank borrowings (150.0) -
Finance costs for new/amended borrowing facilities (1.6) -
Finance costs assumed on asset acquisition (1.6) -
Total changes from cash flows 132.8 -
Exceptional finance costs 0.6 -
Amortisation of issue costs of borrowing 2.0 -
Debt assumed on asset acquisition 178.0 -
Changes in leases - 3.7
Total other changes 180.6 3.7
Balance at 31 March 2023 908.9 34.7
17. LEASE OBLIGATIONS
Lease liabilities are in respect of leased investment property.
Minimum lease payments under leases fall due as follows:
2024 2023
£m £m
Within one year 2.1 2.1
Between one and five years 8.4 8.4
Between five and fifteen years 17.2 19.0
Beyond fifteen years 180.5 180.8
208.2 210.3
Future finance charges on leases (173.5) (175.6)
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 (2023: £2.1m) is offset by
future finance charges on leases of £2.1m (2023: £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 loss for the year to cash generated from operations:
2024 2023
£m £m
Loss before tax (192.8) (37.5)
Depreciation 1.7 1.6
Amortisation of intangibles 0.6 0.7
Letting fees amortisation 0.3 0.5
Loss on disposal of investment properties 2.3 0.7
Other expenses (note 3b) 1.2 3.8
Net loss from change in fair value of investment property 251.2 88.0
Impairment of assets held for sale 4.1 5.1
Equity-settled share based payments 3.3 1.4
Finance costs 34.9 34.4
Exceptional finance costs - 0.6
Changes in working capital:
Increase in trade and other receivables (2.9) (6.4)
(Decrease)/ Increase in trade and other payables (16.2) 17.6
Cash generated from operations 87.7 110.5
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
2024 2023
£m £m
Issued: Fully paid ordinary shares of £1 each 191.9 191.6
Movements in share capital were as follows: 2024 2023
Number Number
Number of shares at 1 April 191,638,357 181,125,259
Issue of shares 272,035 10,513,098
Number of shares at 31 March 191,910,392 191,638,357
In the year, the Group issued 272,035 options in relation to share schemes
with net proceeds £nil (31 March 2023: no share scheme options issued). In
the prior year, the Group issued 10,513,098 shares as part of the
consideration for the acquisition of McKay Securities Limited. The average
share price on issue was £6.38 leading to an increase in the merger reserve
of £56.6m in the period.
Share capital Share premium
2024 2023 2024 2023
£m £m £m
£m
Balance at 1 April 191.6 181.1 295.5 295.5
Issue of shares 0.3 10.5 1.1 -
Balance at 31 March 191.9 191.6 296.6 295.5
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 2022 - - 23.9 8.7 32.6
Share based payments - - 1.4 - 1.4
Issue of shares (note 19) - - - 56.6 56.6
Change in fair value 0.4 - - - 0.4
Balance at 31 March 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
21. CAPITAL COMMITMENTS
At the year end the estimated amounts of contractual commitments for future
capital expenditure not provided for were:
2024 2023
£m £m
Investment property construction 18.8 34.4
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 sales of Mallard Court in April 2024 and Poplar
Business Park in May 2024 for a total consideration of £25.8m, the sales
price for both are in line with the 31 March 2024 valuation. In addition,
Cygnet House and 20-30 Greyfriars Road have exchanged for sale in April 2024,
with completion set for June 2024 and January 2025 respectively.
23. RESPONSIBILITY STATEMENT
The 2024 Annual Report, which will be issued on 13 June 2024, contains a
responsibility statement which states that on 4 June 2024, 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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