Workspace Group Plc · LSE:WKP
Workspace — FY2020/21 Earnings Presentation
36 slides from Workspace's earnings presentation, Jun 3, 2021
Slide 1: Full Year Results 2020/21
Full Year Results 2020/21 Investor & Analyst Presentation 3rd June 2021
Slide 2: Agenda
Agenda 01 02 Introduction Financial review Graham Clemett Dave Benson CEO CFO 03 04 Outlook Supplementary Graham Clemett information CEO 2 Workspace | Full Year Results 2020/21
Slide 3: Introduction
Introduction Graham Clemett, CEO 3 Workspace | Full Year Results 2020/21
Slide 4: A resilient performance and encouraging signs for the year ahead
Introduction A resilient performance and encouraging signs for the year ahead • London shut down for much of the year • £20m of rent discounts given • Ensured all business centres are Covid-safe and secure • Lost some 10% of our customers • Occupancy levels now stabilising • Good momentum into the n
Slide 5: Financial highlights
Introduction Financial highlights Mar 21 Mar 20 Mar 21 Mar 20 Net rental income £81.5m £122.0m Property valuation £2,324m £2,574m Trading profit after interest £38.7m £81.0m EPRA NTA per share £9.38 £10.88 Total dividend per share 17.75p 36.16p Loan to value 24% 21% Trading Profit after interest NTA
Slide 6: Operating highlights
Introduction Operating highlights Year ending Mar 21 Mar 20 Mar 21 Mar 20 Enquiries per month 739 1,087 Like-for-like occupancy 81.6% 93.3% Viewings per month 328 675 Like-for-like rent per sq. ft. £36.57 £41.98 Lettings per month 96 121 Like-for-like rent roll £85.1m £111.7m Monthly enquiries Like-
Slide 7: Customers joining and leaving
Introduction Customers joining and leaving E-Commerce 7% Business Consultancy 4% Fashion Design 6% Film / Video Production 4% Film / Video Production 6% Architecture 3% Art / Photography 6% Events 3% Technology 4% IT Services 3% Business Consultancy 4% Graphic Design 3% Software & Software Design 3%
Slide 8: Customer viewings by region
Introduction Customer viewings by region Q1 – Q3: -54% vs. prior year Q4: -35% vs. prior year -50% -49% -20% -17% -38% -71% -17% -50% -45% -22% Less More No. of viewings by region 20/21 vs 19/20 8 Workspace | Full Year Results 2020/21
Slide 9: Customer feedback and sentiment
Introduction Customer feedback and sentiment Confident about future Views on employees business success working from home Negative Positive Less More How many days expect Change in space employees to work from home requirements over next year 1 or less 3 or more Negative Positive Based on feedback f
Slide 10: Financial review
Financial review Dave Benson, CFO 10 Workspace | Full Year Results 2020/21
Slide 11: Income statement
Financial review Income statement £m Mar 21 Mar 20 Change Underlying net rental income* 105.5 120.3 -12% Discounts (19.9) - Expected credit losses (4.2) (0.4) Disposals 0.1 2.1 Net rental income 81.5 122.0 -33% Administrative expenses (19.0) (17.7) +7% Net finance costs (23.8) (23.3) +2% Trading pro
Slide 12: Underlying net rental income
Financial review Underlying net rental income £m Mar 21 Mar 20 Movement Rental income 115.4 128.4 (13.0) Unrecovered service charges (2.1) (3.3) 1.2 Empty rates and other non-recoverable costs (7.1) (6.3) (0.8) Services, fees, commissions and sundry income (0.7) 1.5 (2.2) Underlying net rental incom
Slide 13: Balance sheet
Financial review Balance sheet £m Mar 21 Mar 20 Investment property valuation 2,324 2,574 Net debt (565) (541) Other (39) (35) Net assets 1,720 1,998 EPRA NTA per share £9.38 £10.88 EPRA NRV per share £10.26 £11.92 13 Workspace | Full Year Results 2020/21
Slide 14: Valuation
Financial review Valuation Underlying Movement 31 Mar 2021 Valuation Full Year H2 H1 £m ERV per sq. ft. down 9.8% to £42.07 £(205)m Like-for-like 1,790 (205) (112) (93) Equivalent yield unchanged at 5.8% - Capital value per sq. ft. of £628 Mare Street Studios £(5)m Completed projects 181 (8) - (8) F
Slide 15: Net debt
Financial review Net debt 15 Workspace | Full Year Results 2020/21
Slide 16: Robust cash collection
Financial review Robust cash collection 100% FY20/21 90% • 50% discount given to majority of customers in 80% respect of Q1, with some deferrals on a case by case basis 70% • 95% of rent collected, net of discounts and deferrals % Rent Collected 60% • Outstanding balances weighted towards travel, 50
Slide 17: Debt
Financial review Debt Proforma* Mar 21 Mar 20 Net debt £581m £565m £541m Average interest cost 3.1% 3.8% 3.7% Undrawn revolver facilities and cash £269m £434m £166m Marginal cost (undrawn facilities) over LIBOR 1.5% 1.5% 1.5% Average period to maturity 5.3 years 4.8 years 4.5 years £350m Covenants#
Slide 18: FY22 Outlook: poised for recovery
Financial review FY22 Outlook: poised for recovery Monthly Enquiries and Lettings Leavers and Contractions 180 1,600 180 Number of Customers 160 1,400 160 140 1,200 140 120 120 Enquires 1,000 Lettings 100 100 800 80 80 600 60 60 40 400 40 20 200 20 0 0 0 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep
Slide 19: 2021/22 Outlook
Financial review 2021/22 Outlook • Positive momentum • Focus on regaining occupancy • Pricing recovery will lag occupancy • Drag from unrecovered service charge and void costs • Progress on delivery of refurbishment and redevelopment pipeline • Strong balance sheet with significant liquidity and low
Slide 20: Outlook
Outlook Graham Clemett, CEO 20 Workspace | Full Year Results 2020/21
Slide 21: Leveraging the Workspace brand
Outlook Leveraging the Workspace brand • We have in-house marketing capability, harvesting enquiries through ‘always on’ search marketing, social media and digital advertising • We manage all our enquiries, viewings, lettings and renewals, capturing valuable data and insight • Our refreshed brand po
Slide 22: Unique property portfolio
Outlook ? ? ? Unique property portfolio ? ? ? ? ? ? ? ? ? ? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ? ? ? ? ? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? 22 Workspace | Full Year Results 2020/21
Slide 23: Extensive project pipeline
Sq. ft. - 50,000 100,000 200,000 150,000 250,000 Mare Street Studios Outlook Lock Studios Rainbow (1) 2020/21 Wenlock Studios Extensive project pipeline Parkhall Pall Mall Projects complete Westbourne Studios Mirror Works 2021/22 132,000 sq. ft. Light Bulb Barley Mow Projects underway 23 Chocolate F
Slide 24: Regeneration in action: Lock Studios
Outlook Regeneration in action: Lock Studios 24 Workspace | Full Year Results 2020/21
Slide 25: ESG: Our Doing the Right Thing framework
Outlook ESG: Our Doing the Right Thing framework 1. Climate change mitigation 2. Looking after our people: 3. Inspiring the next generation and resilience employees, customers and suppliers and supporting communities • Committed to becoming a net zero • Employee and customer wellbeing • Opening busi
Slide 26: The growth opportunity
Outlook The growth opportunity • London offers us an exciting future • Occupier market moving in our direction • Clear brand proposition • Proven expertise and scalable operating platform • Immediate priority on rebuilding occupancy • Strong balance sheet • Opportunity to scale up through extensive
Slide 27: Supplementary information
Supplementary information 27 Workspace | Full Year Results 2020/21
Slide 28: 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% Mar 2021 At March 2021 Valuation cost Complete Completion (sq. ft.) (sq. ft.) (sq. ft.) (Average) occupancy* Rent Roll Completed 160 Fleet Street £24m £2m –
Slide 29: 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% Mar 2021 At March 2021 Valuation cost Complete Completion (sq. ft.) (sq. ft.) (sq. ft.) (Average) occupancy* Rent Roll Underway Pall Mall Deposit £
Slide 30: Mixed-use redevelopment projects
Appendix Mixed-use redevelopment projects Commercial space returned Other proceeds Commercial Space March 2021 estimated New Space Estimated Estimated Cash Cash Overage to At March 2021 Development partner Valuation Rent Roll completion Residential units no. (sq. ft.) ERV Rent* received to come come
Slide 31: Our EPC roadmap
Appendix Our EPC roadmap Estimated completion No. of properties timing A & B rated Currently fully A & B rated n/a 15 Rolling upgrade of customer units 2021 - 2024 33 Current refurbishment and redevelopment projects 2021 - 2026 48 Future projects, including listed properties Target by 2026 58 • Targ
Slide 32: Diversified customer base
Appendix Diversified customer base Retail Offices & E-commerce 13% Information, Communication & Technology Professional, Technical & Consultancy Services 4% Arts, Entertainment & Recreation 13% 5% Marketing 5% Financial Services 5% 12% Design Not For Profit 8% 8% 12% Construction & Property Administ
Slide 33: Property portfolio
Appendix 56 41 41 54 Property portfolio Like for like 30 Refurbishments 21 Mixed-use 46 7 redevelopments 55 50 16 40 17 4 19 14 26 36 10 31 47 51 42 1 25 35 45 18 29 11 12 43 53 6 27 3423 37 32 33 9 3 3 2 8 5 39 13 57 38 20 44 15 58 24 22 22 2852 48 49 49 33 Workspace | Full Year Results 2020/21
Slide 34: 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 14,984 513,355 21 Leroy House 46,802 890,340 Biscuit Factory 22 Light Bulb (part) 52,644 1,123,055 2
Slide 35: 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 (£) 39 Barley Mow Centre 75,880 1,147,562 41 Chocolate Factory (dev) 51,026 250,733 40 Brickfields 56,
Slide 36: 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