June 5, 2020 / 7:02 AM / a month ago

UPDATE 1-Britain's Workspace posts lower annual profit, sees subdued market ahead

(Adds details on results, market conditions)

June 5 (Reuters) - Office-space provider Workspace Group Plc said on Friday its annual profit nearly halved due to a small dip in property valuations after a steep jump a year ago, while also predicting more trouble ahead after a sharp fall in new business enquiries since March.

Office-space operators have struggled with rent payment defaults in the March quarter as the lockdown to curb the spread of the novel coronavirus led companies to adopt work-from-home policies.

These operators are now banking on the future demand for flexible workspaces.

“...we expect that the structural shift in the office market towards flexibility will now accelerate more broadly,” Chief Executive Officer Graham Clemett said in a statement.

But the London-based company said it expected subdued levels of operational performance in the short term, with a reduction in rental income.

Last month, rival IWG raised cash to go on a deal making spree.

Workspace also said it proposed a 10% increase in the final dividend payment, which has resulted in full year payment of 36.16 pence per share.

The FTSE-250 listed company, which also rivals U.S.-based WeWork, reported a 47% fall in pretax profit to 72.5 million pounds ($91.73 million) for the full year ended March 31. Its underlying valuation of its properties dipped 8 million pounds compared to a 61 million pound gain a year earlier.

Its net rental income rose 10% to 122 million pounds and occupancy rate stood at 93.1%.

($1 = 0.7903 pounds)

Reporting by Samantha Machado in Bengaluru; Editing by Rashmi Aich

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