Workspace Group Plc · LSE:WKP
Workspace — H1 2020 Earnings Presentation
39 slides from Workspace's earnings presentation, Nov 13, 2019
Slide 1: Investor & Analyst Presentation
WORKSPACE Investor & Analyst Presentation 13 November 2019
Slide 2: Agenda
AGENDA WORKSPACE QUESTIONS OPERATIONS SUPPLEMENTARY INFORMATION FINANCIALS OUTLOOK 2 Investor and Analyst Presentation 13 November 2019
Slide 3: Workspace
WORKSPACE 3 Investor and Analyst Presentation 13 November 2019
Slide 4: Overview
WORKSPACE Overview London Flexible Space • 6.1m working population1 • Now an established and fast growing • 25% employment growth over the last 10 sector years2 • Increasing competition with a wide • 11% employment growth forecast over range of customer offerings next 10 years3 • Some business model
Slide 5: Financial Highlights
WORKSPACE Financial Highlights Trading profit after interest (£m) Strong trading performance* • Net Rental Income up 11% to £60.1m • Trading Profit After Interest up 13% to £40.1m • Interim Dividend per share up 10% to 11.67p High quality portfolio** • Property Valuation up 2.2% to £2,682m • EPRA NA
Slide 6: Operational and Strategic Highlights
WORKSPACE Operational and Strategic Highlights Operating platform driving growth* • Enquiries per month up 9% to 1,109 • Viewings per month up 22% to 708 • Lettings per month up 38% to 127 Proven strategy • Like-for-Like Rent Roll up 1.0%** to £94.0m • 4 refurbishments completed (200,000 sq. ft. of
Slide 7: Operations
OPERATIONS 7 Investor and Analyst Presentation 13 November 2019
Slide 8: Strong customer demand
OPERATIONS Strong customer demand Enquiries 8 Investor and Analyst Presentation 13 November 2019
Slide 9: High level of activity
OPERATIONS High level of activity Six months to Six months to September 2019 March 2019 452 customers joined 424 customers joined 309 internal moves 260 internal moves 203 customers left 247 customers left 9 Investor and Analyst Presentation 13 November 2019
Slide 10: Customers joining from
OPERATIONS Customers joining from • Online furniture and home décor retailer • Joined The Light Box • The world’s largest neighbourhood website and app • Joined Metal Box Factory • Online designer shoe retailer • Joined Archer Street Studios • Document and email management • Joined The Frames 452 Ne
Slide 11: Significant internal activity
OPERATIONS Significant internal activity Moving within same building Moving to another building (234 moves) (75 moves) • Digital solutions for sports industry • Energy company • Joined in April 2013 • Joined in November 2017 • Expanded from Kennington Park to recently • Expanded within Kennington Pa
Slide 12: Customers leaving to
OPERATIONS Customers leaving to 203 Customers left Note: Percentages based on rental income 12 Investor and Analyst Presentation 13 November 2019
Slide 13: Like-for-like properties
OPERATIONS Like-for-like properties Kennington Park, The Biscuit Factory, Kennington Bermondsey 365,000 sq. ft. 254,000 sq. ft. Rent roll: £11.2m Rent roll: £5.3m No. of customers: 154 No. of customers: 190 Rent per sq. ft.: £31.85 Rent per sq. ft.: £23.75 Occupancy: 96% Occupancy: 89% The Shepherds
Slide 14: Like-for-like trends
OPERATIONS Like-for-like trends Rent Roll Growth Occupancy Rent per sq. ft. Growth • Return to rent roll growth in H1 • Driven by occupancy increase, offset by price reductions • Expect to see further rent roll growth in H2 14 Investor and Analyst Presentation 13 November 2019
Slide 15: Completed Projects
OPERATIONS Completed Projects The Frames, Edinburgh House, Shoreditch Vauxhall 52,000 sq.ft. 65,000 sq.ft. Rent roll: £2.3m Rent roll: £1.9m No. of customers: 64 No. of customers: 62 Occupancy: 99% Occupancy: 81% The Frames Edinburgh House Letting up Letting up Data as at 30 September 2019 15 Invest
Slide 16: Current Year Activity
OPERATIONS Current Year Activity Brickfields, Mare Street Studios, Hoxton Hackney 57,000 sq. ft. 55,000 sq. ft. Launched June 2019 Launching Spring 2020 Rent roll: £0.3m Occupancy: 25% Data as at 30 September 2019 16 Investor and Analyst Presentation 13 November 2019
Slide 17: Financials
FINANCIALS 17 Investor and Analyst Presentation 13 November 2019
Slide 18: Income Statement
FINANCIALS Income Statement September September £m 2019 2018 Change Net Rental Income 60.1 54.1 +11% Administrative Expenses (8.5) (8.4) +1% Net Finance Costs (11.5) (10.3) +12% Trading Profit after Interest 40.1 35.4 +13% Change in Fair Value of Investment Properties 59.6 60.6 Profit on Sale of Inv
Slide 19: Net Rental Income
FINANCIALS Net Rental Income £m 19 Investor and Analyst Presentation 13 November 2019
Slide 20: Cash Flow
FINANCIALS Cash Flow £m September 2019 September 2018 Trading Net Cash from Operations after Interest 44 24 Dividends Paid (38) 6 (32) (8) Investment Capital Expenditure (33) (49) Purchase of Investment Properties – (100) Property Disposals and Cash Receipts 11 56 Share Placement – 176 Other (1) (23
Slide 21: Balance Sheet
FINANCIALS Balance Sheet September March £m 2019 2019 Investment Property Valuation 2,682 2,604 Net Debt (597) (580) Other (43) (42) Net Assets 2,042 1,982 EPRA NAV per Share £11.15 £10.86 Loan to Value 22% 22% Undrawn Revolver Facilities and Cash £111m £127m 21 Investor and Analyst Presentation 13
Slide 22: Revaluation
FINANCIALS Revaluation Underlying Valuation Movement Main components ERV per sq. ft. down 1.4% to £44.70 £(24)m Like-for-like £1,672m £33m Equivalent yield contraction of 0.1% to 5.8% £57m The Frames £8m Completed Projects £583m £15m Ink Rooms £4m Current Refurbishments £219m £0m Current Redevelopme
Slide 23: Debt
FINANCIALS Debt September 2019 March 2019 Net Debt £597m £580m Average Interest Cost 3.6% 3.7% Marginal Cost (Undrawn Facilities) over LIBOR 1.5% 1.5% Average Period to Maturity 5.0 years 5.6 years S&P Rating BBB (stable) BBB (stable) Facilities By Type Maturity Profile 23 Investor and Analyst Prese
Slide 24: Outlook
OUTLOOK 24 Investor and Analyst Presentation 13 November 2019
Slide 25: Current Rent Roll Trajectory
OUTLOOK Current Rent Roll Trajectory Rent Roll (£m) Notes: • Not a profit forecast, for illustrative purposes only • Assumes like-for-like ERV reversion at 30 September 2019 captured at current occupancy level • Future rents for projects based on the assumptions set out in Appendices 1 & 2 • Assumes
Slide 26: Operational Priorities
OUTLOOK Operational Priorities Broadening our channels to market Leveraging our data and technology Enhancing our sales capabilities Raising the customer service level Investor and Analyst 26 Investor and Analyst Presentation 13 November 2019 Presentation
Slide 27: Portfolio Priorities
OUTLOOK Portfolio Priorities Continue to exploit refurbishment and redevelopment opportunities across the portfolio - Execution of current pipeline - Identify and secure planning for further schemes Well positioned to take advantage of acquisition opportunities: - Focus on London - Larger scale prop
Slide 28: Questions
QUESTIONS 28 Investor and Analyst Presentation 13 November 2019
Slide 29: Supplementary Information
SUPPLEMENTARY INFORMATION 29 Investor and Analyst Presentation 13 November 2019
Slide 30: Refurbishment Projects (1/2)
APPENDIX 1 Refurbishment Projects (1/2) Estimated Estimated September Unaffected Upgraded New Space ERV Rent at 90% 2019 At September 2019 Valuation Cost Completion date area (sq. ft.) area (sq. ft.) (sq. ft.) (Average) occupancy* Rent Roll Completed Goswell Road £36m £6m Sep 2019 – 42,808 – £50 £2.
Slide 31: Refurbishment Projects (2/2)
APPENDIX 1 Refurbishment Projects (2/2) Actual/ Estimated Estimated At September 2019 Valuation Estimated Cost to Estimated Unaffected Upgraded New Space ERV Rent at 90% September 2019 cost Complete Completion area (sq. ft.) area (sq. ft.) (sq. ft.) (Average) occupancy* Rent Roll Underway Mare Stree
Slide 32: Redevelopment Projects
APPENDIX 2 Redevelopment Projects Commercial space returned Other proceeds Commercial September Space 2019 Rent estimated Residential New Space Estimated Estimated Cash Cash to Overage to At September 2019 Development partner Valuation Roll completion units no. (sq. ft.) ERV Rent* received come come
Slide 33: Environmental & Social Initiatives
APPENDIX 3 Environmental & Social Initiatives Our Strategy: Our ESG strategy underpins our commitment to the sustainable growth of our business and ensures that we operate responsibly in our dealings with all stakeholders. Continuously striving to enhance our environmental performance and contributi
Slide 34: Environmental & Social Awards and Accreditations
APPENDIX 3 Environmental & Social Awards and Accreditations Global Real Estate Sustainability Benchmark (‘GRESB’) London Healthy Workplace Award Green Star for the sixth year in a row, achieving a score Achieved the Healthy Workplace Award Foundation of 85, exceeding both the average score of 72 and
Slide 35: Customer Sector Diversity
APPENDIX 4 Customer Sector Diversity Rent Roll as at July 2019 35 Investor and Analyst Presentation 13 November 2019
Slide 36: Workspace Investment Case (1/2)
APPENDIX 5 Workspace Investment Case (1/2) Highly recognisable • Flexible lease terms for space in inspiring London properties combined with high brand and flexible quality facilities, enhanced connectivity through bespoke technology and outstanding customer offering customer service. 100% ownership
Slide 37: Workspace Investment Case (2/2)
APPENDIX 5 Workspace Investment Case (2/2) Conservatively • Consistent record of valuation uplifts but, with a capital value of under £700 per sq.ft., valued portfolio still significant potential for further growth driven by our focused asset management. Deep understanding of the • 30 years of exper
Slide 38: Property Portfolio
APPENDIX 6 Property Portfolio 38 Investor and Analyst Presentation 13 November 2019
Slide 39: Disclaimer
DISCLAIMER The information in this document may include forward-looking statements, which As a result, you are cautioned not to place reliance on such forward-looking are based on current expectations and projections about future events. These statements as a prediction of actual results or otherwis