Victory Offices Limited Results Presentation | Year Ended 30 June - PowerPoint PPT Presentation

Victory Offices Limited Results Presentation | Year Ended 30 June 2019 | 29 August 2019

Contents 1. Overview 3 2. Financial Information 8 3. The Business 14 4. The Market 19 5. Outlook 22 Appendix A.1 Key Location Metrics 25 A.2 Case Study – Barangaroo 26 WE MIND YOUR BUSINESS 2

Overview – History of Victory Offices Victory Offices Overview  Victory Offices is an Australian company that provides a suite of premium flexible workspace solutions as an alternative to traditional office spaces  Established in 2013, Victory has grown to:  22 locations across four states  93% average overall occupancy  ~2,250 customers  6.8 years WALE + 3.4 years average option  Average customer licence term of 14.3 months  Over 33,000 sqm of floor space December 2013 December 2016 September 2018 5 th location opened and 14 th location opened, Victory Offices founded first in Sydney (CBD) the first Victory Lounge in Melbourne (CBD) July 2018 August 2019 12 th location opened and 20 th location first in Perth (CBD) opened in St Kilda Rd, Melbourne August 2014 November 2017 March 2019 June 2019 1 st location opened in 10 th location opened and 19 th location opened, the Victory Offices Melbourne CBD first in Brisbane (CBD) second Victory Lounge at successfully completes Chadstone in VIC IPO and lists on the ASX WE MIND YOUR BUSINESS 3

Overview – FY2019 Highlights Summary metrics FY2019 FY2018  Strong result in FY2019 in-line ($'million) ($'million) Revenue from flexible workspace services $47.0 $29.4 with recent Prospectus forecasts Net profit after tax $9.6 $5.7  Net profit after tax up 67% to $9.6 Operating cash flows $27.9 $18.9 million Net assets $44.7 $6.9  Average total occupancy 93% 85% Operating revenue up 60% to $47.0 million Growing revenues from flexible workspace services  Operating cash flows increased to 50,000,000 $27.4 million 45,000,000  Average total occupancy remains 40,000,000 strong at 93% 35,000,000  Eight locations opened in FY2019 30,000,000  Eight locations scheduled to open 25,000,000 in FY2020 with three announced 20,000,000 post year-end 15,000,000 10,000,000 5,000,000 - A solid year of growth FY2015 FY2016 FY2017 FY2018 FY2019 in line with the Number of locations 2 2 6 11 19 Locations opened 2 - 4 5 8 recent Prospectus Total square metres 2,432 2,432 8,378 17,044 26,204 WE MIND YOUR BUSINESS 4

Overview - Victory Offices at a Glance $9.6m 93% (1) $47.6m 71% 96% (1)(2) FY19 Revenue FY19 EBITDA FY19 NPAT Ave. Total Ave. Mature Margin Occupancy Occupancy 22 596 75 645 (3) (1) (1) (1) Locations Private Offices Meeting Rooms Coworking Desks Notes: (1) As at 30 June 2019 WE MIND YOUR BUSINESS 5 (2) Locations that have been operating for greater than 12 months (3) Includes St Kilda Rd, Melbourne (opened August 2019), North Sydney and Fortitude Valley (scheduled to open 2QFY2020)

Overview - Geographic Spread Diversified Australian portfolio Fortitude Valley 900 Ann St (2) Brisbane CBD 175 Eagle St Sydney CBD 200 George St 420 George St Perth CBD 300 Barangaroo Ave 2 The Esplanade 100 Mount St, North Sydney (2) Chadstone Chadstone Shopping Centre Chadstone Shopping Centre (Lounge) Box Hill Dandenong 990 Whitehorse Rd 311 Lonsdale St 988 Whitehorse Rd Melbourne CBD 420 Collins St 35 Collins St Sunshine 567 Collins St 600 Bourke St 12 Clarke St 727 Collins St 333 Collins St 418 Collins St 180 St Kilda Rd (1) 416 Collins St (Lounge)  Victory Offices operates 22 locations across Australia, with locations concentrated in Melbourne and Sydney as these are Australia’s two largest markets within Australia  New locations announced post-listing include: 180 St Kilda Rd, Melbourne; 100 Mount St, North Sydney; and 900 Ann St, Fortitude Valley Notes: (1) 180 St Kilda Rd, Melbourne opened in August 2019 WE MIND YOUR BUSINESS 6 (2) 100 Mount St, North Sydney and 900 Ann St, Fortitude Valley are expected to open in 2QFY2020

Overview - Client Base High quality customer base seeking a premium service Victory Offices customer breakdown by reporting period Customer FY2019 FY2018  Multinational corporates – establishing a presence Total Customers 2,264 915 within Australia, without the requirement for traditional commercial office space Customers > $100,000 revenue 81 (39% revenue) 79 (65% revenue)  Large local corporates – seeking to optimise costs, Customers $10,000 - $100,000 697 (54%) 237 (31%) outsource non-core functions and have flexibility to Customers < $10,000 1,486 (7%) 599 (4%) scale up and down Top 10 customers 13% revenue 30% revenue  SMEs – wanting access to high quality facilities and Top 20 customers 20% 38% a more prestigious address in proximity to clients Top 40 customers 27% 50%  Professionals – seeking high quality facilities with Top 100 customers 43% 71% flexible leases and minimal lead times to set-up The customer base is growing in number and diversity Victory Offices customers by industry  Diversified revenue across customers – top 40 customers account for only 27% of revenue  Customer numbers increased to 2,264 in FY2019 up from 915 in FY2018  A diverse spread of industries with a high proportion of customers in growing service related businesses - finance, legal, recruitment, technology and consulting A growing and diverse customer base WE MIND YOUR BUSINESS 7

2. F Finan ancial al Informatio tion

Financial Summary Revenue ($m) (1) CAPEX ($m) Locations open at year-end Net Profit After Tax ($m) Operating Cash Flows ($m) Average Total Occupancy (%) Notes: (1) Excludes services charges revenue WE MIND YOUR BUSINESS 9

Profit and Loss Income Statement FY2019 FY2018 %  Net profit after tax up 67% to ($'000) ($'000) Movement $9.6 million Revenue   Operational revenue up 60% to Revenue from suite services 47,003 29,402 60%  Service charges 584 2,106 -72% $47.0 million  Interest 36 30 20%  EBITDA up 57% to $33.6 million  Total revenue 47,623 31,538 51%  Expenses Depreciation and amortisation  Employee benefits (6,539) (3,151) 108% includes lease accounting  Depreciation and amortisation (12,904) (7,897) 63% expenses  Other expenses (3,622) (2,790) 30%  Finance costs includes lease  Occupancy costs (3,201) (2,034) 57%  Service charges expenses (584) (2,106) -72% accounting expenses  Finance costs (7,293) (5,354) 36%  Service charges have now  Total expenses (34,143) (23,332) 46% ceased  Net Profit Before Tax 13,480 8,206 64%  Income tax expense (3,884) (2,464) 58%  Net Profit After Tax 9,596 5,742 67%  EBITDA 33,641 21,427 57% Proven business model WE MIND YOUR BUSINESS 10

Cash Flows Cash Flow Highlights FY2019 FY2018 %  Operating cash flows up 47% to ($'000) ($'000) Movement $27.9 million Receipts from customers 52,808 35,595  Operating cash flows include Operational payments (19,261) (14,178) notional interest paid Interest received 36 29 Interest paid (leases) (5,722) (2,521) component of lease payments  Operational cash flows 27,861 18,925 47% pursuant to AASB 16 Purchase of P,P&E (26,226) (21,246)  P,P&E for FY2019 includes $8 Payment for bank guarantees (1,372) - million in costs for locations to Term deposits (20,986) -  open in FY2020 Investing cash flows (48,584) (21,246) 129% Landlord incentives received 1,756 6,930  Prior bank guarantees funded IPO proceeds (net) 28,165 - via founder, now funded via Related parties (net) (2,989) (4,370) business cash flows Lease liabilities (rent) (4,399) (1,629) Hire purchase (58) (95)  Lease liabilities in total is $10.1  >100% Financing cash flows 22,475 836 million and is less than lease expenses due to rent-free  >100% Net cash flows 1,752 (1,485) period lease incentives Opening cash 1,447 2,932 Closing cash 3,199 1,447  Victory was part of tax consolidated group until listing in June 2019, tax payments Strong operational cash flows made via related party loans WE MIND YOUR BUSINESS 11