Transcript investors.workspace.co.uk

Workspace Group PLC
Interim Results
for the six months ended
30 September 2007
Agenda
1. Introduction
2. Highlights – H1 2007
3. Financial Performance – H1 2007
4. Prospects
The Business: A Reminder
“ We provide affordable, flexible space for new and
small businesses in London”
•
c.4,500 customers over 119 estates; 6.2 million sq .ft
•
Over 10,000 enquiries a year; market leading brand in
fragmented market
•
A simple product offer
•
Superior service from in-house management
•
Customer focused
Dynamics of London
• London is THE Global city
• London drives the UK economy
• Most multicultural – home to more than 300 languages
• 42 immigrant populations of 10,000 or more
• Home to 12.5% of UK population, produces 16.5% of its output
• Highest concentration of fastest-growing, most productive
business sectors
London is our Knowledge Base
Unique London Portfolio
Workspace Customer Base
Customer base of more than 4,000 small
businesses
1%
5%
2%
1%
12%
10%
Manufacture
6%
Retail
Construction
Utilities/Infrastructure
Organisations
18%
45%
Design & Creative
Services
Storage & Distribution
Unclassified
Classification based on DTI categories
Three Drivers of Growth
CORE BUSINESS
Strong Rental Growth
High Occupancy
+
ACQUISITIONS
Proven Track Record
Extensive Database
+
REDEVELOPMENT
In-house expertise
Employment led regeneration
Agenda
1. Introduction
2. Highlights – H1 2007
3. Financial Performance
4. Prospects
Highlights
September 2007
March 2007
Rent Roll
£49.5m
£47.2m
Occupancy
86.4%
84.8%
Portfolio Valuation
£1,035m
£1,002m
Number of Estates
104
101
Valuation Performance
To September 2007
6 months
12 months
Valuation Surplus
£12.2m
£47.8m
ERV growth
+6.1%
+14.5%
Reversionary Yield movement
-18 bps
- 19 bps
10
15
Relative IPD Ranking
Valuation – London Portfolio
Business
Centres
Industrial
71
33
Valuation
£800m
£235m
Valuation Surplus
+£12m
0
Capital Value/sq ft
£245
£138
Average Rent/sq ft
£13.92
£7.12
ERV/sq ft
£17.03
£8.01
Number of properties
Valuation – Southbank Portfolio
Number of properties
9
Valuation
£248m
Valuation Surplus
+£6m
Capital Value/sq ft
£305
Average Rent/ sq ft
£17.19
ERV/sq ft
£21.21
Occupancy
September 2007
March 2007
September 2006
Like-for-Like
89.2%
87.6%
85.9%
Clerkenwell, EC1
95.4%
89.4%
49.8%
The Light Box, W4
84.5%
81.4%
33.4%
Enterprise House, SE1
97.8%
88.5%
71.2%
Lombard House, Croydon
33.4%
23.4%
23.4%
Avro & Hewlett House, SW8
95.9%
85.6%
-
Exmouth House, EC1
100.0%
100.0%
-
Kennington Park, SW9
69.4%
75.7%
74.8%
Total Occupancy
86.4%
84.8%
81.7%
Rent Roll Growth
To September 2007
6 Months
12 Months
+£1.6m (4.2%)
+£2.9m (8.0%)
Completed Developments
+£0.4m
+£2.1m
Ongoing Developments
-£0.4m
-£0.3m
Acquisitions/Disposals
+£0.8m
+£1.8m
+£2.4m (5.0%)
+£6.5m (15.1%)
Like-for-like
Total Rent Roll
Acquisitions
£m
Neil House, E1
10.8
Other Properties
11.3
Total
22.1
Capital Value
£159 per sq. ft
Initial Yield
3.8%
Reversionary Yield
7.5%*
* Excluding any additional potential in our hands
Neil House
Agenda
1. Introduction
2. Highlights
3. Financial Performance
4. Prospects
Financial Performance
Income Statement
September 2007
September 2006
Change
£20.7m
£16.4m
+26%
Trading PBT
£7.0m
£5.1m
+37%
Trading EPS
4.0p
2.2p
+82%
1.52p
1.38p
+10%
September 2007
March 2007
Change
£1,035m
£1,002m
+3%
343p
336p
+2%
Trading Operating Profit
Dividend per share
Balance Sheet
Portfolio Valuation
Diluted adjusted NAV
per share
Financial Resources
September 2007
March 2007
£422m
£381m
Net gearing
71%
65%
Trading interest cover
1.52
1.44
Average interest cost
7.0%
6.3%
Available undrawn facilities
£79m
£65m
41%
38%
Net debt
Loan to value
Valuation - Fundamentals
September 2007
March 2007
£69.3m
£65.3m
£1,035m
£1,002m
Reversionary Yield
6.70%
6.52%
Equivalent Yield (90%)
6.03%
5.87%
Current Yield
4.78%
4.71%
£12.9m
£11.6m
ERV
Valuation
Reversionary Potential (to 90%)
Core Business Valuation
What if…..
Over next
18 months
Yields
Stable
Yields out
50bps
Yields out
100bps
Typical
Customer
ERV up
5% p.a.
+£80m
0
-£70m
+£17 / week
ERV up
10% p.a.
+£160m
+£80m
0
+£34 / week
6.7%
7.2%
7.7%
Reversionary
Yield
Agenda
1. Introduction
2. Highlights
3. Financial Performance
4. Prospects
London Growth
•
Population expected to grow from 7.5 million to 8.8 million in 2029
•
Households expected to grow from 3.2 million to 3.6 million by 2021
(source: ONS, Population trends 128; Summer 2007)
Source: GLA Working paper 24: An analysis of London’s
employment by sector
Source: Domestic & International Net Migration in London,
1981-2005
Trading Outlook
To September 2007
6 Months
12 Months
790
750
88
92
24
27
Enquiries
- Number/month
New Lettings
- Number/month
Renewals
- Number/month
Refurbishment Update
Kennington – Canterbury Court
Greville Street
• Expected completion December 2007
• Total cost £12.2m
• 188,000 sq ft
• Completed June 2007
• Total cost £1.1m
• 11,500 sq. ft – currently 41% occupancy
Lombard House
Wharf Road
• Completed June 2007
• Total cost £5.7m
• 46,000 sq ft – currently 33% occupancy
• To be completed H1 2008
• 32,000 sq ft
Redevelopment Pipeline
Planning Application
Timescales
Workspace
Glebe JV
2007
4
2 (1 approved)
2008
9
1
2009
5
4
• Also adding our name and brand to other large strategic schemes across London
• Will continue to feed into the redevelopment process other sites as opportunities
appear/ conditions suit
Redevelopment Scale
Before
Aberdeen
Commercial
66,000 sq ft
+ Residential
+ Affordable
Greenheath
Commercial
+ Residential
+ Affordable
Intensification
66,000 sq ft
x 2.0
45 apartments
27 apartments
46,000 sq ft
+ Student Housing
Wandsworth Commercial
(Glebe JV)
After
86,000 sq ft
74,000 sq ft
x 2.6
230 rooms
86,000 sq ft
156 apartments
53 apartments
x 2.5
Outlook
CORE BUSINESS
ACQUISITIONS
REDEVELOPMENT



London
• SMEs
Workspace
• Brand
• Available space
• Portfolio
• Asset Management Skills
• Pricing
• Market
• Mixed use agenda
• Residential demand
• Database
• Financial Resources
• Mixed use credentials
• Partners
• Pipeline
Long-term track record
IPD PERCENTILE
RANKING
Top 20
15
15
10
Top 10
10
1
LAST
6 MONTHS
LAST
YEAR
LAST
3 YEARS
LAST
5 YEARS
LAST
10 YEARS