Source - Alliance News

Workspace Group PLC on Thursday increased its total dividend as it swung to a profit and reported higher rental income, but it of headwinds for the year ahead amid lower occupancy.

The London-based provider of flexible workspace swung to a pretax profit of £5.4 million in the 12 months to the end of March from a loss of £192.8 million a year before.

Pretax profit benefited as the loss in fair value of investment properties narrowed to £55.9 million from £251.2 million.

Revenue increased 0.5% to £185.2 million from £184.3 million, while net rental income was down 3.2% to £122.1 million from £126.2 million the year prior.

Direct costs grew 8.6% to £63.1 million from £58.1 million.

The company said net rental income was down following disposals, while underlying rental income was £135.5 million, up 1.7% from £133.2 million.

Workspace declared an unchanged final dividend of 19.0 pence per share. This took the full-year dividend to 28.4p, up 1.4% from 28.0p a year ago.

‘We have delivered a solid full year performance in line with expectations in what has been a volatile macroeconomic and competitive environment,’ said Chief Executive Lawrence Hutchings.

Like-for-like occupancy fell to 83.0% from 88.0% a year prior. Hutchings said this was due to the vacation of larger units.

‘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,’ Hutchings added.

Looking ahead, Workspace said it expects trading profit headwinds driven by a lower opening rent roll, further large unit vacations, costs from higher national insurance and living wages as well as additional refinancing costs.

‘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,’ the company said.

CEO Hutchings said: ‘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.’

Shares in Workspace were up 1.2% at 410.50 pence in London on Thursday morning.

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