Workspace Group (WKP) H2 24/25 earnings summary

Executive summary

• Delivered a solid full-year performance with adjusted profit of £66.8m, up 1.2% year-over-year, and a fully covered dividend of £0.284, up 1.4%, despite challenging macroeconomic conditions and increased competition.

• Occupancy declined to 83% and is expected to fall further before stabilizing, but strategic actions are underway to rebuild occupancy and income.

• Strategy reset focuses on operational excellence, portfolio management, and capital recycling to drive income-led growth and scale.

• Extensive market research underpins confidence in London SME market opportunities and Workspace's positioning.

Financial highlights

• Underlying rental income increased by £2.3m to £135.5m, driven by a near 5% rise in average rent per sq ft.

• Net rental income fell 3.2% to £122.1m due to property disposals, offset by lower interest and admin costs.

• Adjusted underlying EPS rose 1.2% to 34.5p.

• Property valuation decreased 2.4% year-over-year to £2,368m, mainly due to lower occupancy.

• EPRA NTA per share at £7.74, down 3.3% year-over-year.

Outlook and guidance

• Earnings for the coming year will be impacted by lower opening rent roll, continued occupancy pressure, higher costs (living wage, National Insurance), and increased debt costs.

• Planned capital expenditure of £50-60m, focused on high-return asset management, to be offset by further property disposals.

• Occupancy expected to decline further before recovery, with a long-term target to return to the historical average of around 90%.

• Macroeconomic uncertainty expected to continue impacting sentiment in 2025/26.