Workspace : announces Half Year Results 2020/21

11 November 2020

WORKSPACE GROUP PLC

HALF YEAR RESULTS

RESILIENT OPERATING PERFORMANCE,

REINFORCING STRENGTH OF OUR OPPORTUNITY

Workspace Group PLC ("Workspace") today announces its half year results for the period to 30 September 2020.

Despite a challenging operating environment due to Covid-19, the half year results reflect the resilience of the business, underpinned by its flexible customer-focused offering and freehold ownership model. Workspace is uniquely placed to meet the fast-changing needs of London's brightest businesses as they emerge from the pandemic.

Financial highlights: Resilience in the face of near-term impact of Covid-19

• Trading profit after interest† of £15.3m (2019: £40.1m) after £19.9m of rent discounts given to customers
• Property valuation of £2,450m, an underlying reduction of £126m (4.9%) from 31 March 2020
• Loss before tax of £110.4m (30 September 2019: £99.1m profit), reflecting a fall in the property valuation
• In light of the current pandemic and the recent return to lockdown, the Board has decided to defer a decision on dividend payment until the full year
• Loan to value of 23% (31 March 2020: 21%) with £127m of available cash and undrawn facilities
• EPRA net tangible assets per share of £10.05, down 7.6% from 31 March 2020

Customer activity: Near-term challenges but positive signs of recovery under eased restrictions in Q2

• Increase in customers vacating and downsizing due to Covid-19
• Like-for-likeoccupancy declined by 7.8% to 85.5%; rent per sq. ft. reduced by 3.3% to £40.61; like-for-like rent roll down 11.6% to £98.8m
• Strong levels of rent collection, with 95% of rents due for the first half (net of discounts and deferrals) received as at 2 November 2020
• Significant improvement in new customer demand under eased restrictions, reaching near pre-Covid levels in September
• Steadily increased customer utilisation of our centres in second quarter, reaching over 30% of pre-Covid levels by mid-September, prior to new Government restrictions

Portfolio activity: Further strengthening our leading London footprint

• One disposal completed for £11m, in line with the 31 March 2020 valuation
• Two new business centres providing 94,000 sq. ft. of net lettable space opened in the first half
• Three projects expected to complete in the second half, providing a further 105,000 sq. ft. of new and upgraded space

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Commenting on the results, Graham Clemett, Chief Executive Officer said:

"Like so many businesses, we have had a challenging first half as a result of the Covid-19 pandemic. Despite the difficult environment, we have delivered a resilient performance which has highlighted the strength of our offering and business model. We have sought to support our customers as much as possible during this time, offering the majority a 50% rent discount in the first quarter. We believe our freehold ownership model, our financial strength and our long- established flexible offer will be an attractive option for an increasing number of London businesses as the economy recovers. In this regard, it was encouraging to see the increase in enquiries and lettings from new customers to near pre-Covid levels in the second quarter, confirming the appeal of our offer.

There is no doubt that people's expectations of the office are changing. Although this trend has been apparent to us for several years, the pandemic has accelerated fundamental changes to the role and requirements of the office for an increasing number of businesses and their employees. As the economy recovers from Covid-19, businesses will need to be more agile and will expect the same from office space providers. By owning our properties outright, we can quickly adapt to customers' changing needs - from ensuring they are Covid-safe to making our offices ever more sustainable. This is distinct to Workspace and ideally positions us in the flight to flexibility.

Our immediate priority is to manage our way through the challenges of the second half of the year. With Government Covid-19 restrictions in place we expect to see further pressure on occupancy and pricing in the near-term, which will impact on our full year performance. However, our strong balance sheet, compelling customer offer and experienced team mean that Workspace is well positioned to navigate the challenges ahead and benefit as the economy recovers."

Summary Results

	September	September	Change
	2020	2019
Financial performance
Net rental income	£36.5m	£60.1m	-39%
Trading profit after interest†	£15.3m	£40.1m	-62%
Profit/(loss) before tax	£(110.4)m	£99.1m	-211%
Interim dividend per share	-	11.67p	-
	September	March	Change
	2020	2020
Valuation
EPRA net tangible assets per share†	£10.05	£10.88	-7.6%
EPRA net reinstatement value per share†	£10.98	£11.92	-7.9%
CBRE property valuation†	£2,450m	£2,574m	-4.9%**
Financing
Loan to value	23%	21%	+2%*
Undrawn bank facilities and cash	£127m	£166m	-£39m*

• • Alternative performance measure (APM). The Group uses a number of financial measures to assess and explain its performance. Some of these which are not defined within IFRS are considered APMs. For further details see Notes to the Financial Statements.
• absolute change
• underlying change excluding capital expenditure and disposals

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For media and investor enquiries, please contact:
Workspace Group PLC	020 7138 3300
Graham Clemett, Chief Executive Officer
Dave Benson, Chief Financial Officer
Clare Marland, Head of Corporate Communications
Finsbury
James Bradley	07500 616161
Chris Ryall	07342 713748

Details of results presentation

The results presentation will be published online at 07.30am and be available at www.workspace.co.uk/investors/reportingcentre

There will be a live Q&A session with Workspace's management team for analysts and investors today at 10.00am, available to access via webcast or conference call. Questions can be submitted either online via the webcast or to the operator on the conference call.

Webcast: The live webcast will be available here: https://secure.emincote.com/client/workspace/workspace015

Conference call: In order to join the Q&A session via phone at 10am, please register at the following link and you will be provided with dial-in details and a unique access code: https://secure.emincote.com/client/workspace/workspace015/vip_connect

Notes to Editors

About Workspace Group PLC:

Established in 1987, and listed on the London Stock Exchange since 1993, Workspace owns and manages some 4 million sq. ft. of business space in London. We are home to thousands of businesses, including fast growing and established brands across a wide range of sectors. Workspace is geared towards helping businesses perform at their very best. We provide inspiring, flexible work spaces in dynamic London locations.

Workspace (WKP) is a FTSE 250 listed Real Estate Investment Trust (REIT) and a member of the European Public Real Estate Association (EPRA).

LEI: 2138003GUZRFIN3UT430

For more information on Workspace, visit www.workspace.co.uk

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BUSINESS REVIEW

ENQUIRIES AND LETTINGS

The Covid-19 Government restrictions on public movement had a significant impact on enquiries and lettings in the first quarter but the improving trend seen in May and June continued into the second quarter, with enquiries reaching near pre-Covid levels by mid-September.

	Monthly average			Monthly activity
	H1	H1	Sep	Aug	Jul	Jun	May	Apr
	2020/21	2019/20	2020	2020	2020	2020	2020	2020
Enquiries	687	1,109	935	757	914	765	480	272
Viewings	289	708	491	345	469	318	95	14
Lettings	81	127	126	114	118	91	17	20

Activity levels reduced following the new Government restrictions and advice announced in September with 785 enquiries and 122 lettings in October.

RENT ROLL

Total rent roll, representing the total annualised net rental income at a given date, was down 11.0% in the six months to £118.2m at 30 September 2020, with overall occupancy reducing from 87.0% to 81.1%.

Rent Roll	£m
At 31 March 2020	132.8
Like-for-like portfolio	(12.9)
Completed projects	0.3
Projects underway and design stage	(2.0)
At 30 September 2020	118.2

The total estimated rental value (ERV) of the portfolio, comprising the ERV of the like-for-like portfolio and those properties currently undergoing refurbishment or redevelopment (but only including properties at the design stage at their current rent roll and occupancy) was £161.1m at 30 September 2020.

Like-for-like Portfolio

The like-for-like portfolio represents 84% of the total rent roll as at 30 September 2020. It comprises 38 properties with stabilised occupancy, excluding buildings impacted by significant refurbishment or redevelopment activity or contracted for sale. Like-for-like trends reported for previous financial years are not restated for the property transfers made in the current financial year.

The like-for-like rent roll has decreased by 11.6% (£12.9m) in the six months to 30 September 2020 to £98.8m. The decline has come from a 7.8% reduction in occupancy from 93.3% to 85.5%, combined with a 3.3% decrease in rent per sq. ft. to £40.61.

If all the like-for-like properties were at 90% occupancy at the CBRE estimated rental values at 30 September 2020, the rent roll would be £115.8m, £17.0m higher than the actual cash rent roll at 30 September 2020.

Completed Projects

There are five projects in the completed projects category, with overall rent roll increasing by 11% (£0.3m) in the six months to £3.3m and occupancy at 46%. This includes Mare Street, Hackney,

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