Workspace Group Plc · LSE:WKP
Workspace — H1 2023/24 Earnings Presentation
41 slides from Workspace's earnings presentation, Nov 21, 2023
Slide 1: Home to London's Brightest Businesses
HOME TO LONDON’S BRIGHTEST BUSINESSES Workspace Group PLC Half Year Results 2023/24: Investor & Analyst Presentation 21 November 2023
Slide 2: Agenda
2 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Agenda 01 Overview Graham Clemett, CEO 02 Financial Review Dave Benson, CFO 03 Outlook Graham Clemett, CEO Customer space at Barley Mow Centre, Chiswick
Slide 3: Overview
3 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Overview Graham Clemett, CEO Salisbury House, Moorgate
Slide 4: Work space not office space
4 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Work space not office space TYPICAL OFFICE DEFINITIONS DEFINITION OF WORK SPACE ROOM OR PART OF A BUILDING WHERE PEOPLE SPACE WHERE THINGS ARE CREATED WORK SITTING AT DESKS WHERE CONNECTIONS ARE FORGED
Slide 5: Our differentiated model drives long-term growth
5 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Our differentiated model drives long-term growth Unique offer developed over 35 years to meet the needs of growing businesses A category of one – true flexibility, offered at scale across portfolio of
Slide 6: Performance highlights
6 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Performance highlights STRONG TRADING RENTAL INCOME UP 9% TO £61.0M TRADING PROFIT AFTER INTEREST UP 7% TO £31.1M INTERIM DIVIDEND UP 7% TO 9.0P VALUATION REDUCTION VALUATION DOWN 7%1 TO £2,505M EPRA N
Slide 7: Good levels of customer demand
7 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Good levels of customer demand AVERAGE MONTHLY ENQUIRIES AVERAGE MONTHLY LETTINGS 1,000 932 120 114 108 110 108 900 837 106 757 780 800 724 738 100 87 700 80 600 500 60 400 13% 300 conversion 40 200 20
Slide 8: Lettings diverse by size and sector
8 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Lettings diverse by size and sector LETTINGS BY SIZE IN H1 LETTINGS BY INDUSTRY SECTOR IN H11 PROFESSIONAL, TECHNICAL By number & CONSULTANCY SERVICES ARTS, ENTERTAINMENT 70 63% & RECREATION 6% 60 3% I
Slide 9: Insight into customer letting activity
9 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Insight into customer letting activity Muddy Machines TALA GoalHanger Podcasts Instant Impact The Light Box, Chiswick China Works, Vauxhall Kennington Park, Oval The Leather Market, London Bridge Provi
Slide 10: Asset management activity
10 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Asset management activity MAJOR PROJECTS (£12m capex) OTHER PROJECTS (£22m capex) INCLUDING: DISPOSALS Leroy House, Islington Salisbury House, Moorgate The Leather Market, London Bridge Seven disposal
Slide 11: Financial Review
11 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Financial Review Dave Benson, CFO Chocolate Factory, Wood Green
Slide 12: Income statement
12 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Income statement £m Sep 23 Sep 22 Change Net rental income 61.0 56.1 +9% Administrative expenses (11.6) (11.4) +2% Net finance costs (18.3) (15.6) +17% Trading profit after interest 31.1 29.1 +7% Chan
Slide 13: Net rental income
13 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Net rental income £m Sep 23 Sep 22 Change Underlying rental income 59.3 54.9 +8% Unrecovered service charge costs (2.7) (1.7) Empty rates and other non-recoverable costs (5.1) (4.8) Services, fees, co
Slide 14: Balance sheet
14 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Balance sheet £m Sep 23 Mar 23 Investment property valuation 2,505 2,741 Net debt (867) (902) Other (30) (52) Net assets 1,608 1,787 EPRA NTA per share £8.32 £9.27 EPRA NTA per share movement £ 10.00
Slide 15: Investment property
15 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Investment property £m 3,000 2,741 34 2,505 2,500 -178 -92 2,000 1,500 1,000 500 0 Mar 23 Mar. Revaluation Capital expenditure Disposals Sep 23 Sep. 23
Slide 16: Property valuation
16 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Property valuation 30 Sep 23 Movement in half year Valuation Initial yield Equivalent yield Cap. Val. Valuation Valuation Equivalent yield ERV £m % % £psf £m % bps £psf Like-for-like 1,881 5.2% 6.7% 6
Slide 17: Like-for-like portfolio valuation sensitivities
17 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Like-for-like portfolio valuation sensitivities ERV per sq. ft. EPRA NTA per share (£) -5.0% -2.5% £43.38 +2.5% +5.0% -50bps 8.59 8.86 9.10 9.37 9.64 Equivalent Yield -25bps 8.21 8.45 8.69 8.96 9.20 6
Slide 18: Net debt and cash flow
18 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Net debt and cash flow £m -750 -800 -850 92 20 -9 -867 -900 -902 -32 -950 -36 -1000 Mar. Mar23 23 Cash fromOperations Cash from operations Dividend Capital expenditure Disposals Disposal Other Sep. Se
Slide 19: Debt profile
19 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Debt profile Drawn Facility Amount Amount Average Sep 23 Mar 23 Debt £m £m interest rate Maturity Floating rate bank facilities drawn £207m £249m Fixed rate borrowings Fixed rate borrowings £665m £665
Slide 20: Financial outlook H2 2023/24
20 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Financial outlook H2 2023/24 Continued growth in rental income driven by H1 rent roll growth and reversionary pricing on new deals Cost inflation pressures reducing Reduced interest cost with lower ne
Slide 21: Outlook
21 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 BRICKFIELDS, THE LEATHER MARKET, CLERKENWELL WORKSHOPS, FUEL TANK, HOXTON LONDON BRIDGE CLERKENWELL DEPTFORD Outlook Graham Clemett, CEO PALL MALL DEPOSIT, KENNINGTON PARK, MARE STREET STUDIOS, PILL B
Slide 22: A significant addressable market
22 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 A significant addressable market NUMBER OF BUSINESSES IN LONDON TARGET SMES BY LOCATION Total number 1,049,000 SMEs: 1-249 employees 253,000 25% 15% Target 17% 134,000 26% 17% Source: BEIS Business Po
Slide 23: Our competitive advantage
23 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Our competitive advantage Extensive owned property portfolio: - Character buildings - Broad spread of locations - Adaptable, multi-let configuration Distinctive, well-recognised brand Flexible offer H
Slide 24: Revenue growth: £32m of rent reversion
24 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Revenue growth: £32m of rent reversion LIKE-FOR-LIKE & SOUTH EAST OFFICES PROJECTS COMPLETED RENTAL INCOME INCREASE +£18m RENTAL INCOME INCREASE +£3m Rent roll1 £160m Reversion1 Eight completed projec
Slide 25: Future pricing growth
25 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Future pricing growth LIKE-FOR-LIKE PROPERTIES AVERAGE ERV PER SQ. FT. The Frames Shoreditch Salisbury House Moorgate 80 £80 £77 The Leather Market London Bridge 70 £70 £68 £60 60 The Light Box Chiswi
Slide 26: Project pipeline
26 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Project pipeline sq. ft. 250,000 Pipeline will deliver 1m sq. ft. of new and upgraded space Kennington Park (phase 2/3) Havelock Terrace All properties currently income 200,000 earning, will be upgrad
Slide 27: Significant income upside
27 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Significant income upside £250m £32m £200m 11 174 18 3 £150m 142 £100m £50m £0m Sep 23 Like-for-like/ Completed Projects Reversionary Future pricing Project Future Future rent roll South East Offices
Slide 28: Summary
28 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Summary CURRENT FINANCIAL YEAR SOLID FIRST HALF TRADING PERFORMANCE GOOD MOMENTUM INTO SECOND HALF ADDED VALUE PROJECT ACTIVITY LOOKING FURTHER OUT GROWTH FROM REVERSION AND PROJECT PIPELINE SIGNIFICA
Slide 29: Q&A
29 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Q&A Mare Street Studios, Hackney
Slide 30: Appendix
30 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Appendix The Frames, Shoreditch
Slide 31: Our distinctive flexible offer
31 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Our distinctive flexible offer HIGH FLEXIBILITY THE WORKSPACE OFFER TRADITIONAL OFFER Large floor plates Unfurnished USE OF SPACE LOW FLEXIBILITY TURN-KEY OFFER SERVICED OFFER Large floor plates Offic
Slide 32: Our sustainability benchmarks and scores
32 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Our sustainability benchmarks and scores Our ESG approach aligns with financial outcomes, positioning us 4 star strongly on: 3 star Development Standing investment Energy and carbon management – An in
Slide 33: Refurbishment projects (1 of 3)
33 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Refurbishment projects (1 of 3) Unaffected area Upgraded area New space ERV psf Rent at 90% Sep 23 At September 2023 (sq. ft.) (sq. ft.) (sq. ft.) (Average) occupancy (£m) Rent roll (£m) Completed Wen
Slide 34: Refurbishment projects (2 of 3)
34 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Refurbishment projects (2 of 3) Actual/ Estimated Cost to Unaffected area Upgraded area New space ERV psf Rent at 90% Sep 23 At September 2023 cost (£m) complete (£m) Completion (sq. ft.) (sq. ft.) (s
Slide 35: Refurbishment projects (3 of 3)
35 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Refurbishment projects (3 of 3) Actual/Estimated Unaffected Upgraded New space At September 2023 cost (£m) Completion area (sq. ft.) area (sq. ft.) (sq. ft.) Design stage (with planning consent) River
Slide 36: Mixed-use redevelopment projects (1 of 2)
36 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Mixed-use redevelopment projects (1 of 2) Commercial New Sep 23 Cash Development space Residential commercial ERV psf Rent at 90% Rent roll received At September 2023 partner completion units no. spac
Slide 37: Mixed-use redevelopment projects (2 of 2)
37 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Mixed-use redevelopment projects (2 of 2) Commercial Sep 23 space estimated Residential New commercial Rent roll At September 2023 completion units no. space (sq. ft.) (£m) Design stage (with planning
Slide 38: Property portfolio
38 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Property portfolio Like-for-like LIKE-FOR-LIKE Refurbishments Map Property Net lettable Net rent Redevelopments ref name area (sq. ft.) roll (£) South East Office 1 Archer Street Studios 14,984 848,90
Slide 39: Property portfolio
39 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Property portfolio LIKE-FOR-LIKE continued REFURBISHMENT Map Property Net lettable Net rent Map Property Net lettable Net rent ref name area (sq. ft.) roll (£) ref name area (sq. ft.) roll (£) 22 Kenn
Slide 40: Property portfolio
40 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Property portfolio REDEVELOPMENTS SOUTH EAST OFFICE Map Property Net lettable Net rent Map Property Net lettable Net rent ref name area (sq. ft.) roll (£) ref name area (sq. ft.) roll (£) 59 Lock Stud
Slide 41: Disclaimer
41 Workspace Group PLC Overview Financial Review Outlook Summary Appendix Half Year Results 2023/24 Disclaimer This document is not audited and may include certain forward-looking statements relating to Workspace Group PLC (the “Company”), its plans and its current goals and expectations relating to