Workspace Group PLC

Investor Presentation • Sep 30, 2015

WORKSPACE INTERIM RESULTS DELIVERING GROWTH THROUGH ACTIVE MANAGEMENT

INVESTOR AND ANALYST PRESENTATION 11 NOVEMBER 2015

WORKSPACE

Jamie Hopkins Chief Executive Officer

PERFORMANCE

Graham Clemett Chief Financial Officer

DIRECTION

Jamie Hopkins Chief Executive Officer

QUESTIONS

Active Management	September 2015	March 2015	Change
Rent Roll (lfl)	£49.7m	£45.7m	8.8%
Rent per sq. ft. (lfl)	£20.68	£18.61	11.1%
Enquiries (per month)	1,027	1,222	(16.0)%
Occupancy (lfl)	90.9%	92.2%	(1.3)%
Property Valuation	£1,631m	£1,423m	9.6%*
Capital Value per sq. ft. (lfl)	£313	£284	10.2%
EPRA NAV (per share)	£7.92	£7.03	12.7%

Strong Growth	September 2015	September 2014
Trading Profit after interest	£20.4m	£12.4m	65%
Interim Dividend (per share)	4.86p	3.89p	25%

£m	September 2015	September 2014	Change
Net Rental Income	35.9	27.9	+29%
Joint Venture Income	0.5	0.5	–
Administrative Expenses	(7.6)	+13%
Net Finance Costs	(8.4)	(9.3)	(10)%
Trading Profit after Interest	20.4	12.4	+65%
Revaluation Surplus	137.9	143.5	(4)%
Other items	5.1	17.8	–
Profit Before Tax	163.4	173.7	(6)%
Underlying Earnings (per share)	12.5p	8.4p	+49%
Interim Dividend (per share)	4.86p	3.89p	+25%

PERFORMANCE LIKE-FOR-LIKE PROPERTIES

90.9% 92.9% 92.2% 90.6% 90.9% 80% 85% 90% 95% 100% Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 OCCUPANCY

RENT PER SQ. FT.

PERFORMANCE COMPLETED PROJECTS

• 5 refurbishments completed in previous years
• Cargo Works completed April 2015

• 279,000 sq. ft. of new/upgraded space

• ScreenWorks opened June 2014

• The Light Bulb opened March 2015
• 113,000 sq. ft. of new space

PERFORMANCE PROJECTS UNDERWAY

REFURBISHMENTS REDEVELOPMENTS

• 7 projects underway (£111m capex)
• 2 completing December 2015

• 362,000 sq. ft. of new/upgraded space

• 6 projects underway (no capex)

• Grand Union Studios completing December 2015
• 167,000 sq. ft. of new space

£m
Trading
Net Cash from Operations	18
Dividends Paid	(12)	6
Investment
Capital Expenditure	(27)
Property Acquisitions	(58)
Property Disposals	1	(63)
Capital Receipts	14
Distributions from Joint Ventures	7
Net Movement in year		(57)
Net Debt at March 2015		(270)
Net Debt at September 2015		(327)

£m	September 2015	March 2015
Investment Property Valuation	1,631	1,423
Investment in Joint Ventures	21	29
Net Debt	(327)	(270)
Other	(26)	(36)
Net Assets	1,299	1,146
EPRA NAV (per share)	£7.92	£7.03
Loan to Value	20%	19%
Facility Headroom	£83m	£140m

PROPERTY VALUATION PERFORMANCE

£m	Uplift	Main movements
Like-for-like	64	Pricing Yield	£60m (94%) £4m (6%)
Completed Projects	33	Metal Box Factory The Light Bulb Cargo Works	£12m £8m £4m
Redevelopments	31	Residential Consents New Business Space Overage	£20m £6m £5m
Refurbishments	12	The Print Rooms Vox Studios	£3m £2m
Other	3	Acquisitions	£3m
Total	143

	September 2015	March 2015
Net Debt	£327m	£270m
Total Facilities (all unsecured)	£410m	£410m
Hedged/Fixed Rate Facilities	50%	73%
Interest Cost (*exit rate)	4.8%*	5.4%
Average Period to Maturity	6.0 years	5.8 years

DIRECTION THE RIGHT STRATEGY

DIRECTION PROPERTY PORTFOLIO

DIRECTION PROPERTY PORTFOLIO

PORTFOLIO MIX BY RENT ROLL RENT PER SQ. FT. (lfl)

Business Centres Industrials

19

RENT PER SQ. FT. BY PROPERTY (lfl)

RATIONALE

• 135,500 sq. ft. industrial estate
• Successful repositioning
• Strong interest from potential buyers
• Opportune market timing

FINANCIALS

• £23m
• 4.8% net initial yield
• 25% premium to March 2015 valuation

LEYTON INDUSTRIAL VILLAGE LEYTON

ALEXANDRA HOUSE WOOD GREEN

ACQUISITION
ALEXANDRA HOUSE WOOD GREEN

RATIONALE FINANCIALS

DIRECTION

Off market deal	Opportunistic
Wood Green location	Infrastructure investment
Good strategic ft	Chocolate Factory cluster
Let to Haringey Council until 2021	Rent review in February 2016
Additional value	Refurbishment opportunity

£14m
£255 per sq. ft. capital value
£10 per sq. ft.
3.7% net initial yield

ACQUISITION CANNON WHARF SURREY QUAYS

RATIONALE FINANCIALS

Limited marketing

DIRECTION

Acquired from Barratt Homes

New build

Strategic location

Cluster effciencies

Part of wider redevelopment
Design ft

Opportunistic

Area of regeneration

Close to Biscuit Factory

£10.4m

£310 per sq. ft. capital value

Target £25 per sq. ft.

QUESTIONS QUESTIONS

SUPPLEMENTARY INFORMATION

REDEVELOPMENT PROJECTS

At September 2015	Development partner	Valuation	September 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	£2.0m	May 2014	72	60,601	£37	£2.0m	£6m	-	-
The Light Bulb	Mount Anvil	£36m	£0.8m	Mar 2015	209	52,894	£26	£1.2m	-	-	£12m
		£73m	£2.8m		281	113,495		£3.2m	£6m	-	£12m
Underway
Grand Union Studios	Taylor Wimpey	£22m	-	Dec 2015	145	59,652	£25	£1.3m	£6m	-	£3m
Bow Enterprise Park (phase 1)	Peabody	£8m	-	Dec 2015	267	14,000	£18	£0.2m	£11m	-	£4m
The Faircharm	L&Q	£7m	-	H1 2017	148	36,303	£20	£0.7m	£10m	-	n/a
Poplar Business Park (phase 1)	Telford Homes	£3m	-	H1 2017	170	7,000	£13	£0.1m	£16m	-	£3m
Bow Enterprise Park (phase 2)	Peabody	£12m	-	H1 2018	160	3,000	£10	£0.0m	£11m	-	n/a
The Biscuit Factory (part)	Grosvenor	£42m	£0.3m	2018	800	47,000	£35	£1.5m	£32m	£19m	£0m
		£94m	£0.3m		1,690	166,955		£3.8m	£86m	£19m	£10m
With Planning
Bow Enterprise Park (phase 3)					130	32,000
Poplar Business Park (phase 2/3)					222	61,600
The Light Bulb (phase 2)					77	18,000
Arches Business Centre					110	-
Lombard House					96	23,000
Rainbow Industrial Estate					224	37,000
		£84m	£2.1m		859	171,600
At Planning Stage
Marshgate					207
Highway Business Park					130
		£26m	£0.6m		337
At Design Stage # Chocolate Factory (part)					300
Stratford Office Village					110
					410
* Expected Rent at 90% occupancy

** Overage as valued by CBRE as at September 2015

In like-for-like category

	REFURBISHMENT PROJECTS
At September 2015	Valuation	Actual/ Estimated cost	Cost to Complete	Estimated Completion	Unaffected area	Upgraded area	New space	Estimated ERV (Average)	Estimated Rent at 90% occupancy *	September 2015 Rent Roll *
Completed
Leyton Industrial Village (phase 1)	£16m	£3m	-	Apr 2013	86,559	-	26,600	£16	£0.9m	£0.9m
Pill Box	£24m	£9m	-	Feb 2014	-	-	50,409	£35	£1.6m	£1.3m
Leyton Industrial Village (phase 2)	£5m	£2m	-	May 2014	-	-	21,293	£14	£0.3m	£0.3m
Bounds Green Industrial Estate	£17m	£2m	-	Dec 2014	108,012	-	13,891	£12	£1.1m	£1.1m
Metal Box Factory	£85m	£16m	-	Jan 2015	-	80,926	25,148	£57	£5.4m	£4.9m
Cargo Works	£52m	£3m	-	Apr 2015	11,532	61,164	-	£64	£4.0m	£3.2m
	£199m	£35m			206,103	142,090	137,341		£13.3m	£11.7m
Underway
Vox Studios	£34m	£17m	£3m	Dec 2015	46,533	6,137	48,960	£31	£2.3m	£1.0m
The Print Rooms	£25m	£9m	£2m	Dec 2015	-	28,386	17,980	£40	£1.7m	£0.6m
Barley Mow Centre	£36m	£10m	£8m	Feb 2017	-	50,273	20,800	£41	£2.6m	£1.7m
Hatton Square Business Centre	£25m	£24m	£18m	Mar 2017	-	-	60,600	£58	£3.1m	£0.0m
Holywell Centre	£9m	£21m	£21m	2017	-	-	49,000	£55	£2.4m	£0.3m
Cremer Business Centre	£11m	£21m	£21m	2018	-	-	57,000	£45	£2.3m	£0.8m
Greville Street **	£9m	£9m	£9m	2017	-	-	23,000	£50	£1.2m	£0.4m
	£149m	£111m	£82m		46,533	84,796	277,340		£15.6m	£4.8m
At Design Stage #
Southbank House	£35m	£4m	£4m		-	72,138	-			£1.9m
Leroy House**	£16m	£15m	£15m		-	35,000	38,000			£1.1m
Mare Street Studios	£9m	£17m	£17m		-	38,000	25,000			£0.5m
Pall Mall Deposit	£18m	£10m	£10m		-	49,000	12,000			£1.0m
Havelock Terrace	£17m	£20m	£20m		-	59,000	40,000			£1.0m
	£95m	£66m	£66m		-	253,138	115,000			£5.5m

* Includes rent for unaffected areas at September 2015 rental levels

** Planning application submitted

In like-for-like category

ANGEL HOUSE ISLINGTON ANGEL HOUSE ISLINGTON

Riverside Mecca Bingo

APPENDIX 5 HOW WE MAKE MONEY

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.