Workspace Group PLC

Earnings Release • Mar 31, 2015

WORKSPACE RESULTS 2015 GROWTH THROUGH PERFORMANCE

INVESTOR AND ANALYST PRESENTATION 3 JUNE 2015

WORKSPACE

Jamie Hopkins Chief Executive Officer

PERFORMANCE

Graham Clemett Chief Financial Officer

DIRECTION

Jamie Hopkins Chief Executive Officer

QUESTIONS

	March 2015	March 2014	Change
Strong Growth
Rent Roll (lfl)	£46.5m	£39.5m	+18%
Property Valuation	£1,423m	£1,078m	+30%*
Total Property Return	37%	35%	Up 2%
EPRA NAV (per share)	£7.03	£4.96	+42%
Dividend (per share)	12.04p	10.63p	+13%
Operational Momentum
Enquiries (per month)	1,222	1,063	+15%
Occupancy (lfl)	92.2%	91.4%	Up 0.8%
Rent per sq. ft (lfl)	£18.37	£15.87	+16%
Trading Profit after Interest	£26.6m	£20.5m	+30%

* Underlying increase

£m	March 2015	March 2014	Change
Net Rental Income	57.7	50.3	+15%
Joint Venture Income	1.2	1.1	+9%
Administrative Expenses	(13.8)	(12.4)	+11%
Net Finance Costs	(18.5)	(18.5)	0%
Trading Profit after Interest	26.6	20.5	+30%
Revaluation Surplus	328.1	228.4	+44%
Other items	5.3	3.6	–
Profit Before Tax	360.0	252.5	+43%
Underlying Earnings per Share	17.2p	13.9p	+24%
Dividend per Share	12.04p	10.63p	+13%

PERFORMANCE NET RENTAL INCOME

PERFORMANCE LIKE-FOR-LIKE PROPERTIES

• Like-for-like performance as reported over the last 3 years
• Like-for-like rent roll of £46.5m represents 67% of total rent roll

PERFORMANCE COMPLETED PROJECTS

REFURBISHMENTS REDEVELOPMENTS

£2.7m £6.1m £8.2m £0.0m £2.0m £4.0m £6.0m £8.0m £10.0m March 2014 March 2015 ----------------- Future Rent Roll Rent Roll

• 5 refurbishments completed

• Majority of future rent to come is at the Metal Box Factory, completed January 2015

• 2 business centres opened in the year

• Majority of future rent to come is at The Light Bulb, opened March 2015

• 8 projects underway

• 3 expected to complete during 2015

• Excludes projects at the design stage

• 3 business centres to be delivered

• Grand Union Studios due in December 2015
• Excludes projects at the planning/design stage

PERFORMANCE PROJECTS UNDERWAY

DRIVERS OF INCOME GROWTH

PERFORMANCE

£m
Trading
Net Cash from Operations	36
Dividends Paid	(17)	19
Investment
Capital Expenditure	(37)
Property Acquisitions	(80)
Property Disposals	44
Capital Receipts	55	49
Share Placement	94
Settlement of Glebe Proceeds Share	(30)
Distributions from Joint Ventures	3
Net Movement in year		68
Net Debt at March 2014		(338)
Net Debt at March 2015		(270)

£m	March 2015	March 2014
Investment Property Valuation	1,423	1,078
Investment in Joint Ventures	29	23
Net Debt	(270)	(338)
Other	(36)	(37)
Net Assets	1,146	726
EPRA NAV per Share	£7.03	£4.96
Loan to Value	19%	31%
Facility Headroom	£140m	£72m

REVALUATION UPLIFT PERFORMANCE

£m	Uplift 2015	Main movements
Like-for-Like	177	Pricing Yield	59% (£105m) 41% (£72m)
Completed Projects	59	Metal Box Factory ScreenWorks The Pill Box	£29m £15m £6m
Redevelopments	50	Residential Consents Overage New Business Space	£26m £12m £12m
Refurbishments	28	Cargo Works Hatton Square Business Centre Westminster Business Square	£9m £4m £4m
Other	14	Industrial Disposal Acquisitions	£11m £3m
Total	328

NET ASSET VALUE PER SHARE PERFORMANCE

	March 2015	March 2014
Net Debt	£270m	£338m
Total Facilities (all unsecured)	£410m	£410m
Hedged/Fixed Rate Facilities	73%	73%
Average Period to Maturity	5.8 years	6.8 years

FACILITIES BY TYPE MATURITY PROFILE

DIRECTION THE RIGHT STRATEGY

DIRECTION INVEST IN OUR MARKET

INVEST IN EXISTING LOCATIONS DIRECTION

	THIS YEAR	UNDERWAY	PIPELINE
THE LIGHT BULB, WANDSWORTH			SCREENWORKS, ISLINGTON
REFURBISHMENTS NEW AND UPGRADED SPACE	218,000 sq. ft.	372,000 sq. ft.	399,000 sq. ft.
	5 projects	8 projects	6 projects
	£32m cost	£105m cost	£77m cost
			+ more to come
REDEVELOPMENTS BRAND NEW SPACE	114,000 sq. ft.	180,000 sq. ft.	114,000 sq. ft.
	2 projects	6 projects	4 projects
			+ more to come

DIRECTION INVEST IN EXISTING LOCATIONS

GRAND UNION STUDIOS LADBROKE GROVE

Developer: Taylor Wimpey

December 2015: Completion due

60,000 sq. ft. of new business space

DIRECTION INVEST IN EXISTING LOCATIONS

METAL BOX FACTORY BANKSIDE

21

DIRECTION INVEST IN EXISTING LOCATIONS

PLEASE SCAN THIS QR CODE TO SEE THE METAL BOX FACTORY: WORKSPACE RESULTS 2015 VIDEO

DIRECTION INVEST IN ESTABLISHED LOCATIONS

60 GRAY'S INN ROAD MIDTOWN

November 2013: Acquired

£26 Average rent per sq. ft. when acquired

Common area + reception: Upgraded December 2014

£56 Highest rent achieved per sq. ft.

+ £4m (21%) Underlying valuation increase in year

160 FLEET STREET MIDTOWN

November 2014: Acquired

£54 Average rent per sq. ft. when acquired

Common area + reception: Upgrade commencing in June 2015

£66 Highest rent achieved per sq. ft.

DIRECTION INVEST IN ESTABLISHED LOCATIONS

EASTON STREET CLERKENWELL

INVEST IN ESTABLISHED LOCATIONS
EASTON STREET CLERKENWELL
RATIONALE		FINANCIALS
Core Clerkenwell location	Increasing demand	£16.6m
Good strategic ft	Cluster of offces	£794 per sq. ft. capital value
Short term leaseback	Refurbish for growth	£10 per sq. ft. 2-year leaseback
Seller owns next door	Build relationship	1.2% net initial yield
Additional value	3rd foor extension	8 to 9% reversionary yield

DIRECTION

DIRECTION INVEST IN EMERGING LOCATIONS

EDINBURGH HOUSE KENNINGTON

DIRECTION INVEST IN EMERGING LOCATIONS
EDINBURGH HOUSE KENNINGTON
RATIONALE		FINANCIALS
Off market deal	Opportunistic	£25.3m
Good strategic ft	Cluster effciencies	£370 per sq. ft. capital value
Let until 2030	Early surrender	£22 per sq. ft.
Metropolitan Police occupy	Well known	5.2% net initial yield
Large prominent property	Leverage brand	£40 per sq. ft. estimated

DIRECTION OUR PROPERTIES

DIRECTION OUR PROPERTIES

CARGO WORKS SOUTHWARK 60,000 sq. ft. Size

£39 Average rent per sq. ft. at March 2015

April 2015: Works completed

£85

Highest rent per sq. ft. achieved so far

WESTBOURNE STUDIOS LADBROKE GROVE

56,000 sq. ft. Size

£39 Average rent per sq. ft. at March 2015

March 2015: Upgrade works commenced

DIRECTION OUR PROPERTIES

PLEASE SCAN THIS QR CODE TO SEE THE WESTBOURNE STUDIOS: WORKSPACE RESULTS 2015 VIDEO

DIRECTION OUR PERFORMANCE

DIRECTION HOW WE MAKE MONEY

Workspace

March 2014

Sep 2014 March 2015

0%

ERV psf

QUESTIONS QUESTIONS

SUPPLEMENTARY INFORMATION

REDEVELOPMENT PROJECTS

At March 2015	Development partner	Valuation	March 2015 Rent Roll	Expected completion	Residential units no.	Commercial space returned			Other proceeds
						Area	Estimated ERV	Estimated Rent*	Cash received	Cash to come	Overage to come **
Completed
ScreenWorks	Taylor Wimpey	£37m	£1.9m	May 2014	72	61,867	£36	£2.0m	£5m	-	£1m
The Light Bulb	Mount Anvil	£28m	£0.2m	Mar 2015	209	52,127	£23	£1.1m	-	-	£12m
		£65m	£2.1m		281	113,994		£3.1m	£5m	-	£13m
Underway
Grand Union Studios	Taylor Wimpey	£20m	-	Dec 2015	145	60,000	£22	£1.2m	£5m	£1m	£1m
Bow Enterprise Park (phase 1)	Peabody	£7m	-	Dec 2015	267	10,000	£12	£0.1m	£11m	-	£4m
The Faircharm	L&Q	£7m	-	Jun 2016	148	52,000	£20	£0.9m	£10m	-	n/a
Poplar Business Park (phase 1)	Telford Homes	£2m	-	Apr 2017	170	8,000	£12	£0.1m	£16m	-	£0m
Bow Enterprise Park (phase 2)	Peabody	£12m	-	May 2017	160	3,000	£10	£0.0m	-	£11m	n/a
The Biscuit Factory (part)	Grosvenor	£36m	£0.3m	Jun 2017	800	47,000	£20	£0.8m	£32m	£19m	£0m
		£84m	£0.3m		1,690	180,000		£3.1m	£74m	£31m	£5m
With Planning
Bow Enterprise Park (phase 3)					130	38,000
Poplar Business Park (phase 2/3)					222	58,000
The Light Bulb (phase 2)					77	18,000
Arches Business Centre					110	-
		£52m	£1.3m		539	114,000
At Planning Stage
Marshgate					207
Rainbow Industrial Estate					224
Highway Business Park					130
Lombard House					96
		£66m	£1.5m		657
At Design Stage # Chocolate Factory (part)					300
Stratford Office Village					110
					410

* Expected Rent at 90% occupancy

** Overage as valued by CBRE as at March 2015

In like-for-like category

REFURBISHMENT PROJECTS
At March 2015	Valuation	Actual/ Estimated cost	Cost to Complete	Estimated Completion	Unaffected area	Upgraded area	New space	Estimated ERV (Average)	Estimated Rent at 90% occupancy *	March 2015 Rent Roll *
Completed
Leyton Industrial Village (phase 1)	£14m	£3m	-	Apr 2013	84,131	-	26,600	£15	£0.8m	£0.8m
Pill Box	£23m	£9m	-	Feb 2014	-	-	50,409	£33	£1.5m	£1.3m
Leyton Industrial Village (phase 2)	£4m	£2m	-	May 2014	-	-	21,293	£14	£0.3m	£0.3m
Bounds Green Industrial Estate	£15m	£2m	-	Dec 2014	110,670	-	13,891	£12	£1.0m	£0.8m
Metal Box Factory	£72m	£16m	-	Jan 2015	-	81,028	25,148	£48	£4.6m	£2.9m
	£128m	£32m			194,801	81,028	137,341		£8.2m	£6.1m
Underway
Cargo Works	£47m	£3m	£1m	Apr 2015	11,532	60,238	-	£44	£2.8m	£2.5m
Westminster Business Square	£26m	£17m	£9m	Dec 2015	46,532	6,137	49,464	£31	£2.3m	£1.0m
Linton House	£19m	£9m	£6m	Dec 2015	-	30,000	16,000	£40	£1.7m	£0.6m
Barley Mow Centre	£31m	£8m	£7m	Sep 2016	58,961	-	21,000	£36	£2.3m	£1.6m
Hatton Square Business Centre	£20m	£24m	£21m	Mar 2017	-	-	60,600	£46	£2.5m	£0.0m
Holywell Centre **	£9m	£19m	£19m	2017	-	-	55,000	£45	£2.3m	£0.5m
Greville Street **	£9m	£8m	£8m	2017	-	-	23,000	£50	£1.2m	£0.5m
Cremer Business Centre**	£10m	£17m	£17m	2018	-	-	51,000	£37	£1.8m	£0.8m
	£171m	£105m	£88m		117,025	96,375	276,064		£16.9m	£7.5m
At Design Stage #
Southbank House	£33m	£4m	£4m		63,137	9,000	-			£1.8m
Leroy House	£15m	£14m	£14m		-	35,000	38,000			£1.0m
Mare Street Studios	£9m	£17m	£17m		-	38,000	20,000			£0.5m
Pall Mall Deposit	£18m	£10m	£10m		-	49,000	12,000			£0.9m
Havelock Terrace	£16m	£20m	£20m		-	59,000	40,000			£0.9m
Riverside	£16m	£12m	£12m		-	99,000	-			£1.2m
	£107m	£77m	£77m		63,137	289,000	110,000			£6.3m

* Includes rent for unaffected areas at March 2015 rental levels

** Planning application submitted

In like-for-like category

WORKSPACE PORTFOLIO

DISCLAIMER

The information in this document may include forward-looking statements, which are based on current expectations and projections about future events. These forward‑looking statements reflect the directors' beliefs and expectations and are subject to risks, uncertainties and assumptions about the Company, including, amongst other things, the development of its business, trends in its operating industry, returns on investment and future capital expenditure and acquisitions, that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statements. None of the future projections, expectations, estimates or prospects in this document should be taken as forecasts or promises nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or prospects have been prepared are correct or exhaustive or, in the case of the assumptions, fully stated in the document. As a result, you are cautioned not to place reliance on such forward looking statements as a prediction of actual results or otherwise. The information and opinions contained in this document are provided as at the date of this document and are subject to change without notice. No one undertakes to publicly update or revise any such forwardlooking statements.

This presentation should also be read in the light of the Company's full preliminary results announcement for the year ended 31 March 2015 including the principal risks and uncertainties identified therein. No statement in this document is or is intended to be a profit forecast or profit estimate or to imply that the earnings of the Company for the current or future financial years will necessarily match or exceed the historical or published earnings of the Company.