UK's Workspace posts first-half loss as budget uncertainty delays leasing

By Ankita Bora

(Reuters) -Workspace Group said on Wednesday that uncertainty ahead of the UK budget led to delays in leasing decisions by small- and medium-sized businesses, as the London-focused flexible office space provider reported a half-yearly loss amid falling valuations.     

Shares of the company, which have fallen about 18% so far this year, tumbled nearly 6% to a more than three-year low.

Businesses are growing cautious ahead of the November 26 UK budget, delaying decisions until they get more clarity. British commercial property landlord Landsec said last week that clients were delaying leasing decisions due to concerns over potential property tax increases.

"It's very difficult for (our customers) to plan, course adjust, et cetera without some certainty," Workspace CFO Dave Benson told Reuters in a call, adding that uncertainty was one of the company's biggest challenges.

"I do think people are waiting and maybe deferring decisions until after they have clarity of the budget," Benson said.

Under CEO Lawrence Hutchings, who joined a year ago, Workspace launched a transformation plan in June to expand its core business, retain customers and upgrade its products as it navigates falling occupancies and rental income.   

The company's EPRA net tangible assets per share, a key industry metric that reflects asset valuations, fell 6.8% for the six months ended September 30, it said. 

Analysts at Panmure Liberum noted that the NTA looks weak, reinforcing their view that office values are coming under pressure.

Workspace reported a pretax loss of 71.1 million pounds ($93.4 million) for the six months to September 30, compared to a profit of 10.2 million pounds a year earlier. 

($1 = 0.7613 pounds)  

(Reporting by Ankita Bora in Bengaluru; Editing by Sonia Cheema)