Workspace Group plc

Reported figures for the first half included underlying rental income of GBP 67.3 million, up GBP 0.5 million; total rental income of GBP 58.7 million, down 2.9%; trading profit after interest of GBP 30.6 million, down 6.4%; and adjusted underlying earnings per share of 15.8p. Like-for-like occupancy was down 2.5%, with like-for-like average rent per square foot broadly flat; admin expenses were down 5.6%, roughly GBP 2 million annualized; and one-off costs were GBP 4.5 million. The company reported a loss before tax of GBP 71.1 million, net debt of GBP 833 million, and NTA per share of GBP 7.21. Valuation was down 4% overall, with like-for-like value down 3%, driven by lower occupancy and a 2.3% decrease in ERV per square foot. Management said full-year capex is expected to be around GBP 60 million, interim dividend will be 9.4p per share, and no additional refinancing is required until 2027. Looking ahead, they said H2 will be affected by the lower opening rent roll and higher average debt cost, partly offset by the full six-month benefit of cost savings; they also expect less occupancy pressure from large customer vacations in H2.

Lawrence Hutchings framed the quarter as consistent with expectations and emphasized that the business is now focused on stabilizing and rebuilding occupancy. He said the strategy is starting to show traction, citing better conversion, higher retention, and a much higher NPS, and he repeatedly stressed that the company is being pragmatic on pricing while prioritizing occupancy. His tone was confident but measured: “we have a lot to do,” but he said Workspace is moving at pace and is closer to customers than before.

David Benson highlighted the softer economic backdrop and said some customers are deferring decisions ahead of the budget, which weighed on inquiries and occupancy. He quantified the financial impact: rental income of GBP 67.3 million underlying, GBP 58.7 million total, trading profit after interest of GBP 30.6 million, EPS of 15.8p, one-off costs of GBP 4.5 million, net debt of GBP 833 million, and NTA per share of GBP 7.21. On capital allocation, he said the company refinanced GBP 200 million of bank facilities to 2029, extended another GBP 215 million by one year, repaid GBP 80 million of private placement notes, and expects around GBP 60 million of capex for the full year, funded by disposal proceeds. He also reiterated that the interim dividend will be 9.4p per share, in line with prior year.

Analysts focused on when occupancy might trough, whether more large-unit breaks are coming, how current leasing compares with ERV, and what retention and conversion could realistically reach. Management said one other large occupier in West London is being watched closely, but visibility is much lower in H2 and it would be “rash” to guide to a trough given macro uncertainty and the budget. On pricing, they said they are still willing to be pragmatic to win occupancy, and that some current deals are at or below ERV as part of that effort. They also answered that the new AI agent Elodie costs roughly the equivalent of one inquiries agent or less annually, and is intended to free staff for higher-value work rather than replace them.