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Workspace Group PLC

Workspace Group PLC. Preliminary Results For the year ended 31 March 2006. Agenda. 2006 Results Financial Performance Joint Venture Business Plan - Targets. Workspace Group PLC. 2006 - Results Harry Platt. Headline results. Valuation Surplus £131m Up 16%

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Workspace Group PLC

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  1. Workspace Group PLC Preliminary Results For the year ended 31 March 2006

  2. Agenda • 2006 Results • Financial Performance • Joint Venture • Business Plan - Targets

  3. Workspace Group PLC 2006 - Results Harry Platt

  4. Headline results • Valuation Surplus £131m Up 16% • Total Property Valuation £964m Up 34% • Adjusted NAV per share £3.12 Up 36% • Trading pre-tax profit £15.1m Up 4% • EPS per share 65p Up 80% • Annual Rent Roll £46.6m Up 10% • Dividend 3.76p Up 10%

  5. Ten Year Results Five Year Ten Year Compound Growth Compound Growth Adjusted NAV per share 20.9% 21.9% Property at Valuation 21.3% 22.6% Trading PBT 9.9% 13.8% Trading EPS 10.2% 13.0% Dividend per share 10.2% 11.2%

  6. The Business – Hotelier of Space to SMEs • To achieve profit and capital growth from: • Providing workspace to SMEs in London • Investing in properties with potential • - Income growth • - Capital growth • - Alternative use • Increasing scale of portfolio, spreading overheads and • developing the brand • The right financial platform

  7. The Business – Hotelier of Space to SMEs • “ We provide affordable, flexible space for new and small businesses in London and the South East ” • c.4,000 customers over 105 estates; 5.8 million sq .ft • Over 6,600 enquiries a year; market leading brand in • fragmented market • A simple product offer • Superior service from in-house management • Customer focused

  8. Our Buildings Westbourne - external Westbourne – Internal

  9. Customer Profile Typical Workspace tenant*: Rent under 5% of turnover Average rents at 31 March 2006: £9.58 per sq. ft Average customer in say 1,100 sq.ft. Average rent per week £203 *Source: Kingston University survey of over 200 customers. Spring 2004

  10. Our Customers

  11. Total Percentage of Customers by DTI Categories

  12. Workspace Group portfolio 2005/06

  13. Trading: Occupancy & Rents • 31 March 2005 31 March 2006 • Core occupancy 90.2% 86.7% • Overall occupancy 88.3% 84.3% • 75% of change relates to opportunities to improve values • Like-for-like average rents increased by 3.6% to £9.48 per sq.ft.

  14. Acquisitions • 111 Power Road, Chiswick, London W4 • Marshgate Business Centre, Stratford, E15 • Evelyn Court, Deptford, SE8 • Uplands Business Park, Walthamstow, E17 • Kennington Park, Kennington, SW9 • Horton Road Industrial Estate, West Drayton, UB7 • Sundial Court, Kingston-upon-Thames • Park Royal Business Centre, NW10 • 10 Bowling Green Lane, London EC1 • Langdale House, Borough, SE1 • Total £127.42m • Initial Yield 6.4% • Reversionary Yield 8.5%

  15. Disposals • Payne Road Studios and 5 Payne Road, Bow, E3 • Alpine Park, Beckton, London E6 • Magenta Portfolio • Total £47.60m • Exit Yield 6.4%

  16. Acquisitions & Disposals - 5 year Record

  17. Workspace Group PLC Financial Performance Mark Taylor

  18. 2006 Results: P & L Account

  19. Title 2006 Results: Balance Sheet Heading Insert text here

  20. Key Elements on Valuation • ERV £66.5m; 90% ERV = £59.8m; Current net rental income £47.1m leaving £12.7m of potential • Yield (at ERV) 6.9% • Capital value £162 per sq. ft

  21. IPD Performance

  22. Benchmarks Performance

  23. Workspace Group PLC Joint Venture With Glebe Harry Platt

  24. Latent Value • 45% portfolio subject to intensification • - change of use on 10 year basis • Top 26 estates being worked on (5 year target) • Comprise: 2.2m sq.ft. of space Value (March 2006) £312m.

  25. Releasing Latent Value • Pace is quickening • - External driver = London • - Internal driver = Time assets held • Our approach • - Balance existing / future uses • - Minimise on balance sheet development risk • - Participate in value • - Right Skills – Right Partners

  26. Properties in Joint Venture: Timings

  27. Why Glebe? • Entrepreneurial approach – David Phillips • Known to Workspace • Experience of relevant property schemes • - Site assembly / Change of Use / Development • Substantial financial resources • Size of transaction • Specific Director for JV

  28. Glebe Joint Venture • 11 properties acquired by JV - 50% owned by Workspace/ Glebe • Workspace responsible for management - Glebe for promotion • Value of properties into JV £8.6 million above March valuation • Equity stake of Workspace £20 million • Company retains 55% uplift from original Workspace properties

  29. Transaction Impacts £m Sales Proceeds 146.0 Book Value (137.4) Costs provision (3.0) Profit 5.6 Net Worth at 31/03/2006 390.3 Revised net worth 395.9 Sales proceeds 146.0 Equity Stake (20.0) Costs provision (3.0) 123.0 Borrowing 31/03/2006 428.0 Adjusted Borrowing 305.0 Gearing 77%

  30. Workspace Group PLC Business Plan - Targets Harry Platt

  31. The Business Plan: As stated September 2003 Aim: Continuing to grow shareholder value in 5 years to September 2008 - £1billion portfolio - 5% per annum rental increases - No movement in yields / occupancy - Conservative gearing - Annual investment £50m - £60m

  32. New Plan: Continue to grow Shareholder Value • How? • Our growing market place of SMEs • Targeting areas • Rental growth • Refurbishments • Mixed use intensification of sites • Continuing acquisitions – where we see value

  33. Focusing on Growth: London Dynamics London is a global city Centre of finance – commerce – culture – knowledge – creativity – power and influence London’s population likely to grow by 800,000 to 8.1m by 2016 The working population will rise by 516,000 Net internal migration continues to run at about 100,000 a year London is a growing city

  34. Focusing on Growth: London SMEs • 1.07m employ 1 - 20 people • 30% of these are in London and SE • 85% of those businesses with employees in London have less than 10 employees • In 2005, London accounted for 22% (87k) of all new business starts in the England and Wales • London has the highest concentration of the fastest-growing and most productive business sectors in the UK London is theSME incubator London is our Marketplace

  35. Focusing on Growth: Rents Affordable? £20 a week extra £57 a week extra

  36. Focusing on growth: Refurbishments

  37. Summary • Releasing Latent Value • - Glebe Joint Venture • Other Added Value/Refurbishment programmes • Focus on London • - International City • SME Incubator • Robust and Growing Business Model • ‘THE’ SME Brand • Scale of property knowledge • Trusted Partner

  38. APPENDIX

  39. Total Shareholder Return

  40. 5 Year Share Price

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