Workspace Group Plc · LSE:WKP
Workspace — FY2023/24 Earnings Presentation
38 slides from Workspace's earnings presentation, Jun 5, 2024
Slide 1: Full Year Results 2023/24: Investor & Analyst Presentation
Workspace Group PLC Full Year Results 2023/24: Investor & Analyst Presentation 5 June 2024
Slide 2: Agenda
2 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 AGENDA 01 OVERVIEW Graham Clemett, CEO 02 FINANCIAL REVIEW Dave Benson, CFO 03 OUTLOOK Graham Clemett, CEO
Slide 3: Overview
3 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 GRAHAM CLEMETT, CEO OVERVIEW
Slide 4: Our Business Model
4 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 OUR BUSINESS MODEL 4.5M LONDON’S LEADING PROVIDER OF FLEXIBLE, SUSTAINABLE WORK SPACE SQ. FT. OF LETTABLE SPACE ACROSS 77 LOCATIONS Moretti Interior Design at Barley Mow Centre 4,000 CUSTOMERS DIVERSE BY SECTO
Slide 5: Delivering a Strong Trading Performance
5 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 DELIVERING A STRONG TRADING PERFORMANCE STRONG TRADING MOMENTUM ROBUST BALANCE SHEET LFL rent roll £111.2m +10% Property valuation £2,446m -9.5%1 Net rental income £126.2m +8% LFL equivalent yield 7.0% +78 bps
Slide 6: Underpinned by Long-Term Rental Growth
6 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 UNDERPINNED BY LONG-TERM RENTAL GROWTH AVERAGE RENT ROLL GROWTH OF 6% OVER LAST TEN YEARS, WITH OCCUPANCY STABLE LFL RENT ROLL GROWTH LFL OCCUPANCY 20% 100% 17.7% 15.4% 15% 13.7% 90% 9.6% 80% 10% 8.6% 8.7% 7.7
Slide 7: Leveraging Our Scalable Operating Platform
7 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2022/23 LEVERAGING OUR SCALABLE OPERATING PLATFORM OUR PLATFORM BRINGS TOGETHER A SKILLED TEAM, SYSTEMS AND DATA… …MANAGING SIGNIFICANT LEVELS OF ACTIVITY EVERY MONTH 46,000 788 ENGAGED WEBSITE ENQUIRIES CUSTOMER- PRO
Slide 8: With Sustainability in Our DNA – Aligned with Our Customers
8 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 WITH SUSTAINABILITY IN OUR DNA – ALIGNED WITH OUR CUSTOMERS REFURBISHMENT-FIRST ETHOS • Preserving the historical character of London • Retrofitting and refurbishment of landmark buildings • Bringing new life
Slide 9: Financial Review
9 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 DAVE BENSON, CFO FINANCIAL REVIEW
Slide 10: Resilient Customer Demand and Pricing Growth
10 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 RESILIENT CUSTOMER DEMAND AND PRICING GROWTH AVERAGE MONTHLY ENQUIRIES AVERAGE MONTHLY LETTINGS 1000 932 120 114 114 108 110 108 106 104 900 837 818 757 780 759 100 800 724 738 87 700 80 600 500 13% 60 400 co
Slide 11: Rental Growth = Dividend Growth
11 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 RENTAL GROWTH = DIVIDEND GROWTH £m Mar 24 Mar 23 Change Net rental income 126.2 116.6 +8% Administrative expenses - underlying (22.0) (20.1) Administrative expenses – share-based costs (3.3) (1.4) Net finance
Slide 12: Strong Underlying Rental Growth, Costs Controlled
12 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 STRONG UNDERLYING RENTAL GROWTH, COSTS CONTROLLED £m Mar 24 Mar 23 Change Underlying rental income 122.3 113.1 +8% Unrecovered service charge costs (4.0) (4.3) Empty rates and other non-recoverable costs (9.5
Slide 13: Balance Sheet
13 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 BALANCE SHEET £m Mar 24 Mar 23 Investment property valuation 2,446 2,741 Net debt (855) (902) Other (42) (52) Net assets 1,549 1,787 EPRA NTA per share £8.00 £9.27 £ EPRA NTA per share movement
Slide 14: Property Valuation Reduction Slowed in H2
14 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 PROPERTY VALUATION REDUCTION SLOWED IN H2 £m
Slide 15: Property Valuation Summary
15 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 PROPERTY VALUATION SUMMARY 31 Mar 24 Movement in year Valuation Cap. Val. Valuation Valuation Equivalent Yield ERV £m Initial Yield Equivalent Yield £psf £m % bps £psf Like-for-like 1,833 5.5% 7.0% 643 -162 -
Slide 16: Yields Stabilising, Good Underlying ERV Growth
16 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 YIELDS STABILISING, GOOD UNDERLYING ERV GROWTH Significant yield expansion but rates stabilising ERV growth strongest for smaller units 8% 8% 7% Units <1,000 sq. ft. 6% (1.2m sq. ft.) 6% 5% LFL ERV growth 4%
Slide 17: Capital Discipline Maintained
17 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 CAPITAL DISCIPLINE MAINTAINED £m Continue to execute our Attractive returns to rolling pipeline of Selectively recycle capital shareholders through Proactively identify refurbishment and through disposals div
Slide 18: Robust Debt Profile
18 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 ROBUST DEBT PROFILE Drawn Facility Amount Amount Average Mar 24 Mar 23 Debt £m £m interest rate Maturity Bank facilities drawn £194m £249m Fixed rate borrowings Fixed rate borrowings £665m £665m Private place
Slide 19: Financial Outlook 2024/25
19 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 FINANCIAL OUTLOOK 2024/25 • Resilient customer demand • Growth in rental income driven by opening rent roll, reversionary pricing on new deals and renewals and project activity • Cost inflation pressures redu
Slide 20: Outlook
20 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 GRAHAM CLEMETT, CEO OUTLOOK
Slide 21: Leading Provider to a Diverse and Growing SME Market
21 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 LEADING PROVIDER TO A DIVERSE AND GROWING SME MARKET OUR CUSTOMERS BY INDUSTRY Information communication Wholesale & retail Arts, entertainment & recreation & technology 9% 17% 3% 3% 3% 5% 15% 5% 6% Quell Tec
Slide 22: A Distinctive Business Model That Is Hard to Replicate
22 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 WITH A DISTINCTIVE BUSINESS MODEL THAT IS HARD TO REPLICATE OUR COMPETITIVE ADVANTAGE FLEXIBLE LEASE OFFER GREAT CUSTOMER SERVICE BUILDINGS ADAPTABLE TO MULTI-LET CONFIGURATION FREEHOLD OWNERSHIP OPERATING PL
Slide 23: Providing Choice and Good Value
23 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 PROVIDING CHOICE AND GOOD VALUE LIKE-FOR-LIKE PROPERTIES ERV PER SQ. FT. Metal Box Factory 144 units £ Average ERV: £81 120 Brickfields 97 units Average ERV: £60 110 100 Vox Studios 141 units 90 Average ERV:
Slide 24: A Rich Opportunity to Reposition and Upgrade
24 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 AND A RICH OPPORTUNITY TO REPOSITION AND UPGRADE MAJOR REFURBISHMENT PROJECTS • Leroy House, Islington - 58,000 sq. ft. new business centre • The Chocolate Factory, Wood Green – 40,000 sq. ft. of new and upgr
Slide 25: Which Will Deliver a Significant Income Upside
25 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 WHICH WILL DELIVER A SIGNIFICANT INCOME UPSIDE • Like-for-like reversion of £18m largely £250m delivered from moving all customers up to £230m current ERV pricing levels £210m Reversion at current ERVs = £33m
Slide 26: Looking Forward
26 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 LOOKING FORWARD • Flex now an established mainstream option, but covers a wide range of offers depending on occupier requirements • Workspace offer is tailored to the needs of a vibrant and underserved SME ma
Slide 27: Q&A
27 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 Q&A
Slide 28: Appendix
28 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 APPENDIX
Slide 29: Our Sustainability Benchmarks and Scores
29 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 OUR SUSTAINABILITY BENCHMARKS AND SCORES We transparently disclose our performance and data to numerous external benchmarking authorities. 5 star 4 star Development Standing investment Our top scores reflect
Slide 30: Project Pipeline
30 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 PROJECT PIPELINE Sq. ft. 250,000 200,000 150,000 100,000 50,000 0 The Shaftesbury Riverside Kennington Busworks Old Dairy Havelock Busworks Morie Street Riverside Kennington East London E1 Studios The Biscuit
Slide 31: Completed Projects
31 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 COMPLETED PROJECTS Unaffected area Upgraded area New Space ERV psf Rent at 90% Mar-24 At March 2024 Valuation (£m) (sq. ft.) (sq. ft.) (sq. ft.) (Average) occupancy Rent roll (£m) Wenlock Studios 15 19,850 11
Slide 32: Projects Underway
32 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 PROJECTS UNDERWAY Actual/ Cost to Unaffected Upgraded Mar-24 Valuation Estimated Complete area area New Space ERV psf Rent at 90% Rent Roll At March 2024 (£m) cost (£m) (£m) Completion (sq. ft.) (sq. ft.) (sq
Slide 33: Future Projects
33 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 FUTURE PROJECTS Estimated cost Unaffected area Upgraded area New space At March 2024 (£m) (sq. ft.) (sq. ft.) (sq. ft.) Design stage (with planning consent) Busworks (phase 1) 28 12,000 58,000 7,000 1 The Sha
Slide 34: Property Portfolio
34 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 PROPERTY PORTFOLIO LIKE-FOR-LIKE LIKE-FOR-LIKE REFURBISHMENT REDEVELOPMENTS Map Property Net lettable Net rent NON-CORE ref name area (sq. ft.) roll (£) 1 Archer Street Studios 14,984 893,607 2 Brickfields 56
Slide 35: Property Portfolio
35 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 PROPERTY PORTFOLIO LIKE-FOR-LIKE continued LIKE-FOR-LIKE continued Map Property Net lettable Net rent Map Property Net lettable Net rent ref name area (sq. ft.) roll (£) ref name area (sq. ft.) roll (£) 20 Ke
Slide 36: Property Portfolio
36 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 PROPERTY PORTFOLIO REFURBISHMENTS REDEVELOPMENTS Map Property Net lettable Net rent Map Property Net lettable Net rent ref name area (sq. ft.) roll (£) ref name area (sq. ft.) roll (£) 44 Barley Mow Centre 81
Slide 37: Property Portfolio
37 Workspace Group PLC Overview Financial Review Outlook Appendix Full Year Results 2023/24 PROPERTY PORTFOLIO SOUTH EAST OFFICE NON-CORE Map Property Net lettable Net rent Map Property Net lettable Net rent ref name area (sq. ft.) roll (£) ref name area (sq. ft.) roll (£) 62 Ashcombe House* 17,522
Slide 38: Disclaimer
38 Workspace Group PLC Overview Financial Review Outlook Appendix Full 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 future