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Workspace Group PLC on Friday warned of a ‘substantial step down’ in trading profit as it invests to become the ‘first-choice provider of space.’ In response, shares in the London-based flexible workspace provider plunged 13% to 324.80 pence each in London on Friday morning. Workspace blamed lower starting rents, the impact of disposals, higher debt costs, lower capitalised interest and an increase in operating expenses and investment for the shortfall in the financial year to March 2027. ‘Workspace expects the combined impact of these factors to result in a substantial step down in FY 2026/27 trading profit compared to FY 2025/26,’ the firm said in a statement. Trading profit, after interest, for the year to March 2026 is expected to be in line with market expectations, although Workspace expects lower rents and a reduction in pricing over the second half of the financial year to have a negative impact on the valuation of its property portfolio. Chief Executive Charlie Green, who joined Workspace in February, said to be the ‘first-choice provider of space’ for the start-up, SME and scale-up market will require investment in the portfolio. ‘It will take time to deliver on our ambitions and, as we deliberately reposition the business, there will be a step down in profitability,’ he added. In addition, Workspace said it intends to return dividend cover to 1.2 times earnings for the financial year to March 2026 onwards. JPMorgan said the statement implies 18% to 26% cuts to trading profit forecasts for the year to March 2027, and high-single-digit percentage cuts to financial 2026 dividend consensus. Looking to the medium term, Workspace said it is confident in the structural demand for its space and in its strategy to deliver sustainable earnings growth. ‘We have an opportunity to bring about a step change in pricing as we elevate our product by investing in our high-quality portfolio,’ the firm said. Workspace is also considering additional disposals, beyond the previously identified £200 million disposal programme, to accelerate this ‘accretive investment and further increase balance sheet capacity’. In the fourth quarter to March, Workspace said trading was ‘steady’ with enquiry to letting conversion 18%, up from 16% the year prior. The FTSE 250 listing said 384 lettings were completed with a total rental value of £8.2 million, down from 390 and £10.1 million a year ago. Portfolio occupancy increased 0.3 percentage points to 81.6% and stabilised portfolio rent per square foot was down 0.9% to £46.31, driving a 0.6% reduction in the stabilised portfolio rent roll in the quarter to £108.3 million. Total rent roll declined 1.4% quarter-on-quarter to £127.3 million, reflecting disposals and lower pricing. ‘There is considerable work to be done and we can see a clear path to accelerating our strategy and, in time, delivering sustainable earnings growth,’ CEO Green added. Copyright 2026 Alliance News Ltd. All Rights Reserved.
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