Workspace Group Plc · LSE:WKP
Workspace — H1 2020/21 Earnings Presentation
38 slides from Workspace's earnings presentation, Nov 11, 2020
Slide 1: Half Year Results 2020/21
Half Year Results 2020/21 Resilient Operating Performance Investor & Analyst Presentation 11 November 2020
Slide 2: Agenda
Agenda Introduction Financial Review Outlook Graham Clemett Dave Benson Graham Clemett CEO CFO CEO Supplementary Information 11 November 2020 2 Workspace Group PLC | Half Year Results 2020/21
Slide 3: Introduction
Introduction Graham Clemett, CEO 11 November 2020 3 Workspace Group PLC | Half Year Results 2020/21
Slide 4: A challenging first half
Introduction A challenging first half Covid-19 lockdown 50% rent discount Back to business Customer activity Resilient operating performance Underpinned by the enduring despite the challenging attractions of our flexible model. environment. 11 November 2020 4 Workspace Group PLC | Half Year Results
Slide 5: Financial highlights
Introduction Financial highlights Sep 20 Sep 19 Sep 20 Mar 20 Net rental income £36.5m £60.1m Property valuation £2,450m £2,574m Trading profit after interest £15.3m £40.1m EPRA NTA per share £10.05 £10.88 Interim dividend per share – 11.67p Loan to value 23% 21% 11 November 2020 5 Workspace Group P
Slide 6: Operating highlights
Introduction Operating highlights Six months ending Sep 20 Sep 19 Sep 20 Mar 20 Enquiries per month 687 1,109 Like-for-like occupancy 85.5% 93.3% Viewings per month 289 708 Like-for-like rent per sq. ft. £40.61 £41.98 Lettings per month 81 127 Like-for-like rent roll £98.8m £111.7m Monthly enquiries
Slide 7: Stable customer base despite Covid-19 disruption
Introduction Stable customer base despite Covid-19 disruption 12% Customers retained Customers leaving 10% New customers No change 3% 75% All percentages based on total rent roll 11 November 2020 7 Workspace Group PLC | Half Year Results 2020/21
Slide 8: Majority of leavers not taking new office space
Introduction Majority of leavers not taking new office space Customers leaving: 10% of total rent roll 62% of leavers no longer working from an office 38% have changed office location 43% 33% 62% 38% 80% 20% 24% In financial difficulty Moving within London Temporarily working from home Moving out of
Slide 9: Financial Review
Financial Review Dave Benson, CFO 11 November 2020 9 Workspace Group PLC | Half Year Results 2020/21
Slide 10: Income statement
Financial review Income statement £m Sep 20 Sep 19 Change Net rental income before discounts 57.9 60.3 -4% Discounts (19.9) - Expected credit losses (1.5) (0.2) Net rental income 36.5 60.1 -39% Administrative expenses (9.4) (8.5) +11% Net finance costs (11.8) (11.5) +3% Trading profit after interest
Slide 11: Net rental income
Financial review Net rental income 11 November 2020 11 Workspace Group PLC | Half Year Results 2020/21
Slide 12: Rent roll
Financial review Rent roll 11 November 2020 12 Workspace Group PLC | Half Year Results 2020/21
Slide 13: Net debt
Financial review Net debt Sustainable Dividend driven Acquisitions/ Project pipeline operating cash by 2019/20 disposals vs. delivering long- flow in line with operating strict returns term value trading profit performance criteria creation 11 November 2020 13 Workspace Group PLC | Half Year Results
Slide 14: Robust cash collection
Financial review Robust cash collection £m Q1 Q2 H1 Rent collected as proportion of rent receivable after discounts and deferrals 97% 94% 95% Rent collected as proportion of gross rents 44% 88% 66% First half Q3 to date 50% discount given to majority of customers in respect 86% of Q3 rent due (inclu
Slide 15: Balance sheet
Financial review Balance sheet £m Sep 20 Mar 20 Investment property valuation 2,450 2,574 Net debt (571) (541) Other (34) (35) Net assets 1,845 1,998 EPRA NTA per share £10.05 £10.88 EPRA NRV per share £10.98 £11.92 Loan to value 23% 21% *EPRA NRV (Net Reinstatement Value) includes purchasers costs
Slide 16: Valuation Sep 2020
Financial review Valuation 30 Sep 2020 Movement £m Valuation in H1 ERV per sq. ft. down 3.1% £(64)m Like-for-like 1,898 (93) Equivalent yield out 8bps £(29)m Mare Street Studios £(3)m Completed projects 126 (6) 160 Fleet Street £(3)m Fitzroy Street £(6)m Current refurbishments 323 (25) Biscuit Facto
Slide 17: Debt
Financial review Debt Sep 20 Mar 20 Net debt £571m £541m Average interest cost 3.8% 3.7% Undrawn revolver facilities and cash £127m £166m Marginal cost (undrawn facilities) over LIBOR 1.5% 1.5% Average period to maturity 4.1 years 4.5 years Drawn debt Undrawn Bank Facilities Covenants Sep 20 £300m I
Slide 18: Near term outlook dependent on Government policy
Financial review Near term outlook dependent on Government policy Christmas Start of lockdown Lockdown eased Back to Restrictions school increased 01/11/2019 01/12/2019 01/01/2020 01/02/2020 01/03/2020 01/04/2020 01/05/2020 01/06/2020 01/07/2020 01/08/2020 01/09/2020 01/10/2020 01/11/2020 Enquiries
Slide 19: Full year outlook
Financial review Full year outlook • Reduced first half rent roll impacting second half net rental income • Existing customer activity and new demand sensitive to Government policy • Expect continued pressure on occupancy and pricing in second half • Robust cash collection and flexible capex schedul
Slide 20: Outlook
Outlook Graham Clemett, CEO 11 November 2020 20 Workspace Group PLC | Half Year Results 2020/21
Slide 21: Multiple views on future of the office
Outlook Multiple views on future of the office Media commentary Business commentary “Businesses are not yet able to reap the full productivity benefits that “The future of work is offering employees more optionality.” researchers have noted when staff have the choice of where to work” Jennifer Chris
Slide 22: Workspace is ideally positioned
Outlook 22 Workspace is ideally positioned Key themes Flexibility and choice Community Company culture Learning and development Creativity and collaboration Secure, high speed technology Mental health and wellbeing Sustainability 11 November 2020 22 Workspace Group PLC | Half Year Results 2020/21
Slide 23: Flight to flexibility
Outlook Flight to flexibility More than just flexible lease terms, our flexible business model means we: Allow customers to Provide communal space personalise their space beyond the office Flex pricing and space Adapt our offer to meet options changing customer needs 11 November 2020 23 Workspace Gr
Slide 24: Unique property portfolio
Outlook Unique property portfolio WOOD GREEN HIGHBURY & ISLINGTON CAMDEN HACKNEY LADBROKE GROVE KING’S STRATFORD CROSS BETHNAL OLD GREEN STREET FARRINGDON SHOREDITCH NOTTING HILL PADDINGTON SOHO LIVERPOOL STREET WATERLOO SHEPHERD’S LONDON BUSH WESTMINSTER BRIDGE CANARY WHARF BERMONDSEY HAMMERSMITH C
Slide 25: Extensive project pipeline
Sq. ft. 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 0 Brickfields 11 November 2020 Outlook Mare Street Studios Rainbow Industrial Estate (Part) Lock Studios Extensive project pipeline 2020/21 Wenlock Studios Parkhall Business Centre The Light Bulb (Development Phase 2
Slide 26: Enhancing our ESG credentials
Outlook Enhancing our ESG credentials • Project plans align with our strategy of employment-led regeneration of London • Bringing more employment to emerging areas • Refurbished or built with sustainability in mind • Science-based targets approved with further commitments to reduce greenhouse gas em
Slide 27: Our market opportunity
Outlook Our market opportunity North London Central London Target SMEs: 20,000 Target SMEs: 19,000 East London West London Target SMEs: 17,000 Target SMEs: 16,000 South London Target SMEs: 28,000 Source: ONS Business Population Estimates 2019, ONS UK Business Counts 2019 11 November 2020 27 Workspac
Slide 28: Our market opportunity
Outlook Our market opportunity North London Central London Target SMEs: 20,000 Target SMEs: 19,000 WKP Share: 1% WKP Share: 3% East London West London Target SMEs: 17,000 Target SMEs: 16,000 WKP Share: 2% WKP Share: 4% South London Target SMEs: 28,000 WKP Share: 5% Source: ONS Business Population Es
Slide 29: Summary
Outlook Summary Challenging operating environment • Increased customer activity • Encouraging levels of enquiries and lettings • Resilient trading performance • Strong rent collection rates • Conservatively financed • Well placed to navigate challenges ahead Growth opportunity ahead • Proven flexibl
Slide 30: Supplementary information
Supplementary information 11 November 2020 30 Workspace Group PLC | Half Year Results 2020/21
Slide 31: Refurbishment projects (1 of 2)
Appendix Refurbishment projects (1 of 2) Actual/ Unaffected Upgraded Estimated Estimated Estimated Cost to area area New Space ERV Rent at 90% Sep 2020 At September 2020 Valuation cost Complete Completion (sq. ft.) (sq. ft.) (sq. ft.) (Average) occupancy Rent Roll Completed 160 Fleet Street £26m £2m
Slide 32: Refurbishment projects (2 of 2)
Appendix Refurbishment projects (2 of 2) Actual/ Unaffected Upgraded Estimated Estimated Estimated Cost to Estimated area area New Space ERV Rent at 90% Sep 2020 At September 2020 Valuation cost Complete Completion (sq. ft.) (sq. ft.) (sq. ft.) (Average) occupancy* Rent Roll Underway Wenlock Studios
Slide 33: Redevelopment projects
Appendix Redevelopment projects Commercial space returned Other proceeds Commercial Space Sep 2020 estimated Residential New Space Estimated Estimated Cash Cash Overage to At September 2020 Development partner Valuation Rent Roll completion units no. (sq. ft.) ERV Rent* received to come come Complet
Slide 34: Diversified customer base
Appendix Diversified customer base Information, Communication & Technology Professional, Technical & Consultancy Services Wholesale & Retail 16% Arts, Entertainment & Recreation Financial Services 4% Marketing 4% Administrative & Support Services Not For Profit 4% 16% Construction & Property 4% Desi
Slide 35: Property portfolio
Appendix Property portfolio Like-for-like Refurbishments Redevelopments WOOD GREEN 56 54 41 30 21 HIGHBURY & 7 ISLINGTON CAMDEN 55 46 HACKNEY LADBROKE GROVE 4 50 40 STRATFORD KING’S 45 47 CROSS 42 14 10 16 17 OLD BETHNAL 36 19 STREET 26 GREEN 51 FARRINGDON 18 35 31 SHOREDITCH 25 1 43 29 11 12 52 NOT
Slide 36: Property portfolio
Appendix Property portfolio Like-for-like Map Ref Property Name Net lettable area Net Rent Roll (£) Map Ref Property Name Net lettable area Net Rent Roll (£) (sq.ft.) (sq.ft.) 1 Archer Street Studios 14,984 653,396 21 Leroy House 46,802 985,337 2 Biscuit Factory (Cocoa Studios) 38,413 805,823 22 Lig
Slide 37: Property portfolio
Appendix Property portfolio Refurbishments Redevelopments Map Ref Property Name Net lettable area Net Rent Roll (£) Map Ref Property Name Net lettable area Net Rent Roll (£) (sq.ft.) (sq.ft.) 39 Barley Mow Centre 77,337 1,625,246 41 Chocolate Factory (dev) 51,023 245,084 40 Brickfields 56,755 1,718,
Slide 38: 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