Workspace ups dividend but crisis hits trading

Workspace increased its final dividend as annual trading profit rose but the company said rent reductions and a sharp slowdown in enquiries would hit performance in the current year.

The London-focused flexible office provider declared a final dividend of 24.49p a share, up from 22.26p a year earlier, taking the annual payout to 36.16p - up 10%. The payment is in line with requirements for real estate investment trusts.

Trading profit after interest for the year to the end of March rose 12% to 81m as net rental increased 10% to £122m. Pretax profit almost halved to £72.5m from £137.3m as property values fell £8m compared with a £61m increase the year before.

Workspace said customer demand was strong during the financial year but that it had a "significant slowdown in enquiries" from the end of March during the Covid-19 lockdown though its centres stayed open.

The company cut rents by 50% for existing customers for three months and offered them rent deferrals. Taking these measures into account rent collection was 70% for the first quarter. The company said in the longer term it had a big opportunity as working practices change in light of the Covid-19 emergency.

Graham Clemett, Workspace's chief executive, said: "We will undoubtedly see subdued levels of operational performance in the short term with a reduction in rental income. However, we expect that the structural shift in the office market towards flexibility will now accelerate more broadly.

"We believe that, with our well established flexible offer and the quality of our space and services, Workspace is ideally positioned to benefit as London recovers from the impact of the Covid-19 pandemic."