WOTSO (WOT) H2 2024 earnings summary

Executive summary

• Statutory revenue reached $49.7 million for the year ended 30 June 2024, with 16% growth in flexspace revenue to $30 million, driven by five new WOTSO FlexSpace sites and redevelopment of the Cremorne asset.

• The group operates through WOTSO FlexSpace (flexible workspace solutions) and a real estate portfolio valued at $295 million, with 98% property occupancy and 81% membership occupancy.

• Strategic shift from REIT to growth stock, focusing on expansion of the FlexSpace business and acquisition of distressed assets in suburban and regional areas.

• Internalisation of management completed in February 2024, ending external management fees and simplifying the group structure.

Financial highlights

• Adjusted total revenue (excluding Pyrmont deconsolidation) grew 13% to $44.6 million year-over-year.

• Flexspace income increased 16% to $30 million, with net rental income up 20% to $19.6 million.

• Funds from operations (FFO) were $13.1 million, impacted by higher borrowing costs.

• Statutory loss before tax was $65,000, after adjustments for revaluations, depreciation, and non-recurring items.

• Balance sheet shows $261 million in investment property, $34 million in Pyrmont investments, and $80 million valuation for the flexspace business (not recorded for statutory purposes).

• Net gearing reduced to 27% from 35% last year.

Outlook and guidance

• Expectation of measured expansion for WOTSO FlexSpace, with new sites only where opportunities are appropriate.

• Anticipated improvement in FFO as interest rates soften.

• Plans to restore and enhance distributions in the near term after a temporary reduction to support growth.