Workspace Group Plc · LSE:WKP
Workspace — H1 2021/22 Earnings Presentation
41 slides from Workspace's earnings presentation, Nov 17, 2021
Slide 1: Half Year Results 2021/22
Half Year Results 2021/22 Investor & Analyst Presentation The Frames, Shoreditch 17th November 2021
Slide 2: Agenda
Agenda 01 02 Introduction Financial review Graham Clemett Dave Benson CEO CFO 03 04 Delivering sustainable Supplementary growth information Graham Clemett CEO 2 Workspace | Half Year Results 2021/22 Brickfields, Hoxton
Slide 3: Introduction
Introduction Graham Clemett, CEO 3 Workspace | Half Year Results 2021/22 Pall Mall Deposit, Ladbroke Grove
Slide 4: Positive momentum with growth opportunities ahead
Introduction Positive momentum with growth opportunities ahead • Significant pick-up in demand through first half • Strong letting activity driving improvement in occupancy with pricing stabilised • Return of customers to their offices continuing • Sustainable approach to extensive refurbishment and
Slide 5: The SME market in London
Introduction The SME market in London No. of SMEs¹ Spread of SMEs across London² 350,000 300,000 North 25% 250,000 East 15% West Central North 200,000 17% 21% Central South 5% 150,000 100,000 South 17% 50,000 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 ¹ Based on Companies House filings
Slide 6: SME sentiment update
Introduction SME sentiment update* Confident 85% 14% Looking to 29% 2% about future move in next business success six months 01 Location 02 Value for money Top priorities 03 Flexibility Number of days 2.9 0.2 days when selecting in office office space 04 Connectivity per week days 05 Trust in landlo
Slide 7: Financial highlights
Introduction Financial highlights Sep 21 Sep 20 Sep 21 Mar 21 Net rental income £41.0m £36.5m Property valuation £2,271m £2,324m Trading profit after interest £21.8m £15.3m EPRA NTA per share £9.28 £9.38 Interim dividend per share 7.0p – Loan to value 23% 24% Trading profit NTA per share £90m £12.00
Slide 8: Operating highlights
Introduction Operating highlights Average per month H1 21/22 FY 20/21 Sep 21 Mar 21 Enquiries 941 739 Like-for-like occupancy 85.6% 81.9% Viewings 622 328 Like-for-like rent per sq. ft. £35.50 £36.25 Lettings 131 96 Like-for-like rent roll £87.3m £85.5m Monthly enquiries Like-for-like occupancy 100%
Slide 9: Customer activity across London
Introduction Customer activity across London Viewings per month Share of viewings by region in H1 21/22 800 700 675 North 600 4% 622 East 18% 500 West Central North -38% -71% 14% 22% 400 Central South 23% 300 328 South 200 19% 100 0 FY 19/20 FY 20/21 H1 21/22 9 Workspace | Half Year Results 2021/22
Slide 10: Customer lettings by sector
Introduction Customer lettings by sector* H1 21/22 Change vs. FY 20/21 E-commerce 6% -1% Technology 6% 2% Fashion Design 6% -1% Film/Video Production 5% -1% Architecture 4% 2% FinTech 4% 2% Art 3% — Business Consultancy 3% -1% Food & Drink 3% 1% Other 60% * Based on number of lettings in H1 21/22 10
Slide 11: Customer office use
Introduction Customer office use Office utilisation¹ Utilisation by day² 60% 70% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Monday Tuesday Wednesday Thursday Friday ¹ Based on unique wi-fi logins vs. pre-Covid levels 11 Workspace | Half Year Re
Slide 12: Financial Review
Financial Review Dave Benson, CFO 12 Workspace | Half Year Results 2021/22 Brickfields, Hoxton
Slide 13: Income statement
Financial review Income statement £m Sep 21 Sep 20 Change Net rental income 41.0 36.5 +12% Administrative expenses (8.7) (9.4) -7% Net finance costs (10.5) (11.8) -11% Trading profit after interest 21.8 15.3 +42% Change in fair value of investment properties (14.9) (125.3) Loss on sale of investment
Slide 14: Net rental income
Financial review Net rental income £m H1 21/22 H2 20/21 H1 20/21 Underlying rental income 47.5 50.8 59.9 Unrecovered service charges (2.2) (1.4) (0.8) Empty rates and other non-recoverable costs (4.9) (3.9) (3.2) Services, fees, commissions and sundry income - (0.2) (0.5) Underlying net rental incom
Slide 15: Balance sheet
Financial review Balance sheet £m Sep 21 Mar 21 Investment property valuation 2,271 2,324 Net debt (532) (565) Other (48) (39) Net assets 1,691 1,720 EPRA NTA per share £9.28 £9.38 Mar-21 Sep-21 15 Workspace | Half Year Results 2021/22
Slide 16: Valuation
Financial review Valuation Sep 2021 Movement £m Valuation in H1 21/22 ERV per sq. ft. down 3.1% to £40.91 £(63)m Like-for-like 1,817 (11) Equivalent yield reduced from 5.9% to 5.8% £52m Capital value per sq. ft. unchanged at £633 Mare Street Studios £(2)m Completed projects 155 (1) Parkhall £1m Have
Slide 17: Net debt and cash flow
Financial review Net debt and cash flow Mar-21 Cash from operations Dividend Acquisitions Disposals Capex Other Sep-21 Sep-21 -£460m -£480m -£500m -£520m 92 21 -532 -£540m -15 7 -£560m -565 -£580m -29 -£600m -£620m -43 17 Workspace | Half Year Results 2021/22
Slide 18: Debt
Financial review Debt Sep 21 Mar 21 Net debt £532m £565m Average interest cost (drawn facilities) 3.1% 3.8% Undrawn revolver facilities and cash £318m £434m Marginal cost (undrawn facilities) over LIBOR 1.5% 1.5% Average period to maturity (total facilities) 4.8 years 4.8 years Debt Maturity Covenan
Slide 19: FY 21/22 Outlook: recovery well underway
Financial review FY 21/22 Outlook: recovery well underway Monthly enquiries and lettings Leavers and contractions 200 1600 180 180 1400 160 Number of Customers 160 140 1200 140 120 120 1000 Enquires Lettings 100 100 800 80 80 600 60 60 400 40 40 20 200 20 0 0 0 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun
Slide 20: Future rent roll opportunity
Financial review Future rent roll opportunity * Not a profit forecast, for illustrative purposes only. 20 Workspace | Half Year Results 2021/22 * Based on properties at 90% occupancy at the CBRE estimated rental values at 30 September 2021.
Slide 21: Delivering sustainable growth
Delivering sustainable growth Graham Clemett, CEO 21 Workspace | Half Year Results 2021/22
Slide 22: Active recycling of capital
Delivering sustainable growth Active recycling of capital 13-17 Fitzroy Street The Old Dairy Fitzrovia Shoreditch • Sold in September 2021 for £92m • Acquired in September 2021 for £43m • Useful source of income for the last four years • Adjacent to The Frames and strengthens our presence in Shoredi
Slide 23: The Busworks acquisition
Delivering sustainable growth The Busworks acquisition • Acquired for £45m • Former Victorian bus factory in Islington • 104,000 sq. ft. of net lettable space across two warehouse buildings • Currently operated as a multi-let business centre • Significant potential to be upgraded and repositioned 23
Slide 24: Unique property portfolio
Delivering sustainable growth Unique property portfolio Like-for-like Refurbishments Redevelopments Acquisitions 24 Workspace | Half Year Results 2021/22
Slide 25: Distinctive, character buildings
Delivering sustainable growth Distinctive, character buildings Clerkenwell Workshops Edinburgh House The Frames Metal Box Factory Farringdon, 53,000 sq. ft. Kennington, 65,000 sq. ft. Shoreditch, 52,000 sq. ft. Southwark, 107,000 sq. ft. The Leather Market Grand Union Studios Pill Box China Works Lo
Slide 26: Extensive project pipeline
Delivering sustainable growth Extensive project pipeline 132,000 sq. ft. 151,000 sq. ft. 388,000 sq. ft. 581,000 sq. ft. Havelock Terrace Kennington Park The Biscuit Factory (J Block) 250,000 Riverside 200,000 Sq. ft. Chocolate Factory (1) The Biscuit Factory (C Block) The Shaftesbury Centre 150,000
Slide 27: Repurposing iconic buildings: Mare Street Studios, Hackney
Delivering sustainable growth Repurposing iconic buildings: Mare Street Studios, Hackney • Formerly workshop and studio space refurbished and expanded to provide new business centre in Hackney • Whole life carbon impact of the refurbishment is significantly less than a traditional new build • BREEAM
Slide 28: Reviving communities: Fuel Tank, Deptford
Delivering sustainable growth Reviving communities: Fuel Tank, Deptford • A former light industrial complex transformed into a thriving residential and business hub next to Deptford Creek • BREEAM “Very Good” Refurbishment and Fit Out certification and EPC B • Smart metering system allows customers
Slide 29: Compelling, long-term sustainable investment story
Delivering sustainable growth Compelling, long-term sustainable investment story Near–term • Positive SME indicators Clear • Distinctive, flexible offer momentum • Demand back at pre-covid levels strategy • London at its heart • Occupancy improving • Sustainable model • Pricing stabilised • Repurpos
Slide 30: Q&A
Q&A 30 Workspace | Half Year Results 2021/22
Slide 31: Supplementary information
Supplementary information 31 Workspace | Half Year Results 2021/22 Mare Street Studios, Hackney
Slide 32: Refurbishment projects (1 of 3)
Appendix Refurbishment projects (1 of 3) Unaffected Upgraded Estimated Estimated Actual area area New space ERV rent at 90% Sep 2021 At September 2021 Valuation cost Completion (sq. ft.) (sq. ft.) (sq. ft.) (average) occupancy rent roll Completed 160 Fleet Street £24m £2m Aug 2017 – 41,786 – £48 £1.
Slide 33: Refurbishment projects (2 of 3)
Appendix Refurbishment projects (2 of 3) Actual/ Unaffected Upgraded Estimated Estimated estimated Cost to Estimated area area New space ERV rent at 90% Sep 2021 At September 2021 Valuation cost complete completion (sq. ft.) (sq. ft.) (sq. ft.) (average) occupancy rent roll Underway Westbourne Studi
Slide 34: Refurbishment projects (3 of 3)
Appendix Refurbishment projects (3 of 3) Actual/ Unaffected Upgraded estimated Cost to Estimated area area New space At September 2021 cost complete completion (sq. ft.) (sq. ft.) (sq. ft.) Design Stage (with planning consent) The Biscuit Factory (J block) £19m £19m 23/24 – 83,811 31,206 The Biscuit
Slide 35: Mixed-use redevelopment projects (1 of 2)
Appendix Mixed-use redevelopment projects (1 of 2) Commercial space New Estimated Sep 2021 estimated Residential commercial Estimated rent at 90% Cash At September 2021 Development partner Valuation rent roll completion units no. space (sq. ft.) ERV occupancy received Completed Lock Studios Peabody/
Slide 36: Mixed-use redevelopment projects (2 of 2)
Appendix Mixed-use redevelopment projects (2 of 2) Commercial Sep 2021 space estimated Residential New commercial At September 2021 rent roll completion units no. space (sq. ft.) Design Stage (with planning consent) The Chocolate Factory (2) / Parma House/ Mallard Place £0.3m 22/23 245 10,933 Rivers
Slide 37: Sustainability credentials
Appendix Sustainability credentials GRESB 5 Star rating FTSE4Good We procure 100% green electricity 87/100 Real Estate Assessment Score Absolute rating: 3 out of 5 93/100 Development Assessment Score CDP A List Signed up to the Social Mobility Pledge We are a London Living Wage employer Supplier and
Slide 38: Property portfolio
Appendix Property portfolio Like-for-like Refurbishments Redevelopments Acquisitions 38 Workspace | Half Year Results 2021/22
Slide 39: Property portfolio
Appendix Property portfolio Like-for-like Map ref Property name Net lettable Net rent Map Ref property name Net lettable Net rent area (sq. ft.) roll (£) area (sq. ft.) roll (£) 1 Archer Street Studios 14,984 601,489 21 Kennington Park 366,958 9,814,708 2 Biscuit Factory (Cocoa Studios) 39,298 869,8
Slide 40: Property portfolio
Appendix Property portfolio Refurbishments Mixed-use redevelopments Map ref Property name Net lettable Net rent Map ref Property name Net lettable Net rent area (sq. ft.) roll (£) area (sq. ft.) roll (£) 40 Barley Mow Centre 75,655 1,310,138 41 Chocolate Factory (2) 48,691 5,000 41 Chocolate Factory
Slide 41: Disclaimer
Appendix Disclaimer The information in this document may include forward-looking statements, which are based on current expectations and projections about future events. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words suc