Workspace Group plc (LON:WKP) posted a 19% drop in annual pre-tax profit, reflecting a decline in the fair value of investment properties and lower disposal proceeds than a year ago.
The London office space provider said pre-tax profit fell to £137.3mln in the year to the end of March 2019 from £170.4mln 12 months earlier.
READ: Workspace boss Jamie Hopkins to leave office owner next month
The fair value of investment properties decreased 26% to £60.8mln and profit on the sale of investment properties slumped 68% to £8.3mln.
However, trading profit after interest – the group’s preferred performance measure – rose 19% to £72.4mln as net rental income rose 16% to £111mln.
Adjusted underlying earnings per share increased 10% to 40.6p.
The net asset value per share increased 4.7% to £10.86.
Customer enquiries rise despite Brexit uncertainty
“While businesses are inevitably cautious in light of the continuing political uncertainty, we are still seeing good customer demand for space,” said interim chief executive Graham Clemett, who took over the reins from Jamie Hopkins last month.
Customer enquiries averaged 1,048 per month, compared with 1,016 last year, while the total rent roll increased 12.9% to £127.5mln or 2.2% on a like-for-like basis to £76.0mln.
However, like-for-like occupancy dropped 0.9% to 90.9% due to new building launches.
The company spent £213mln on the acquisition of three properties in the period and sold three small office buildings for £52mln. It completed eight projects totalling 341,000 sq ft and exchanged two redevelopments for £26mln.
Workspace said it would raise its total dividend by 20% to 32.87p per share, reflecting its “strong financial performance and positive outlook”.
In morning trading, shares were little changed at 905.5p each.
Liberum keeps 'buy' stance
“Workspace delivered good returns, aided by its focus on the growing market for flexible business space, and enhanced by newly completed refurbishment and redevelopments,” said Liberum.
The broker said the net asset value growth of 5% was two percentage points below its forecast, but earnings were ahead of its pre-results prediction. Liberum maintained a ‘buy’ rating and target price of 1,225p.