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Workspace Group hails return to the office despite profit hit

Workers are starting to return to the office amid the coronavirus pandemic
Workers are starting to return to the office amid the coronavirus pandemic

Profits at Workspace Group almost halved after the value of its property portfolio fell following the coronavirus pandemic.

The FTSE 250 flexible office provider's property was valued at £2.5bn after £32m was knocked  off due to the risk of rent defaults from struggling clients.

Set against a sharp uplift in value during the previous year, profits were £72.5m for the year ending March 31, down from £137m for the previous 12 months.

Chief executive Graham Clemett said he was expecting “subdued levels” of demand to knock income in the short-term, but that the trend towards more flexible office space would accelerate.

Despite the fall in property value, Workspace Group’s underlying performance was strong, with a 12pc rise in trading profit - its preferred measure of performance - to £81m.

The company plans to increase the final dividend payment by 10pc, meaning a total dividend payment of 36.1p a share.

Most of Workspace’s customers started working from home when the coronavirus pandemic hit and most have been given a 50pc rent cut for the three months to the end of June, as well as the opportunity to defer rent payments for three months.

Mr Clemett said customers were returning to the office and demand from new customers was starting to rise, but that the capacity of London public transport would be an issue given social distancing requirements.

“We are beginning to see a return to work. Its cautious and its patchy - but overall probably about 15pc of businesses are back in occupation - not necessarily full occupation, but day by day more people are coming back," he said.

"And we are now seeing the return of enquiries. They are not back to normal levels - we typically get 1,000 enquiries a month and are now probably at half that level, but it is beginning to pick up. So there are signs of the return of confidence and people returning to work, but its still early days.

“We have seen a couple of people looking to expand, equally some looking to downsize as their businesses have been impacted. There is nothing at the moment you could say is a general trend.”

Shares rose 2.3pc, valuing the company at almost £1.5bn.