International Workplace Group Plc · LSE:IWG
International Workplace — Investor Day (September 2017)
44 slides from International Workplace's investor day presentation, Sep 20, 2017
Slide 1: Capital Markets Day 20 September 2017
C A P I TA L M A R K E T S D AY 20 SEPTEMBER 2017
Slide 2: Strategy
CAPITAL MARKETS DAY 2017 S T R AT E G Y
Slide 3: The market context: a developing industry offering substantial growth prospects
CAPITAL MARKETS DAY 2017 The market context: a developing industry offering substantial growth prospects • Growing customer awareness of workspace-as-a-service sector, driving increasing demand • Numerous customer types emerging - based on size, industry and specifications • Well-funded new entrants
Slide 4: IWG as global industry leader: clear advantages from our scale
CAPITAL MARKETS DAY 2017 IWG as global industry leader: clear advantages from our scale • Diversification - geographic, regional vs city, customer • Capital deployment – ability to prioritise capital deployment to the highest performing geographies • Capital efficiency - IWG as the preferred industr
Slide 5: The opportunity
CAPITAL MARKETS DAY 2017 The opportunity Circa $29 trillion1 • Huge industry • Highly fragmented • c. 8m office workers in the UK2 • c. 30m office workers in US3 • Ripe for disruption in a digital world Commercial Real Estate market 1 – Savills Commercial Research 2 – Office for National Statistics
Slide 6: Repackaging the industry
CAPITAL MARKETS DAY 2017 Repackaging the industry Fortune500 Sole Trader Global Corporate SME Real Estate Infrastructure Owners Owners Office Retail Global integrator Making work more efficient Corporate Government owners and and Institutions renter’s own space A capital light growth company that ca
Slide 7: Our approach
CAPITAL MARKETS DAY 2017 Our approach Grow the Cost business Leadership Operating Platform
Slide 8: Supporting our customers' needs
CAPITAL MARKETS DAY 2017 Supporting our customers’ needs Customer Digital Physical Support Manilla Dallas Barcelona Kuala Lumpur Digital platform underpins business success
Slide 9: Digital platform – app world
CAPITAL MARKETS DAY 2017 Digital platform – app world Customer app Team member app Corporate customer app Broker app Digital platform underpins business success
Slide 10: Developing national networks and formats globally
CAPITAL MARKETS DAY 2017 Developing national networks and formats globally Regus St Marys Axe, London Spaces Opéra Garnier Paris Spaces Ballpark, Denver Spaces Ropewalks Liverpool Regus Utrecht, WTC Papendorp Regus Amsterdam, Vinoly 10
Slide 11: Continuous focus on costs
Total overheads (£m at actual rates) CAPITAL MARKETS DAY 2017 Continuous focus on costs 118.7 111.5 139.2 136.5 139.3 140.3 144.4 139.5 136.5 126.3 124.3 £m • One business 24/7 • Ongoing process of continued efficiency engineering H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 • Lower customer interaction cost 20
Slide 12: Revenue growth
CAPITAL MARKETS DAY 2017 Growth in paying members Revenue growth • Format and brand pick-up • Product innovation • Improved sales structure • Improved marketing • Retention focus Growth in workplace recovery • More “drop in” users • Corporate accounts • Outsourcing Evolution of our business
Slide 13: Corporate Sales
CAPITAL MARKETS DAY 2017 C O R P O R AT E SALES
Slide 14: Corporate case studies
CAPITAL MARKETS DAY 2017 Corporate case studies
Slide 15: Case study 1: Global leader in network solutions
CAPITAL MARKETS DAY 2017 Case study 1 Global leader in network solutions Adding expertise to the planning process to right- size space in line with utilisation • Tasked with reducing global property spend by 5 – 10% per annum • Previous focus on larger sites – no assessment on the collective savings
Slide 16: Case study 2: Major European airline
CAPITAL MARKETS DAY 2017 Case study 2 Major European airline Roll-out of hub and spoke model to reduce spend and increase efficiency • Major restructure consolidating business support functions – resulting in vacant space across its branch locations worldwide • Requirement to minimize commercial ris
Slide 17: Case study 3: Leading global technology corporation
CAPITAL MARKETS DAY 2017 Case study 3 Leading Global technology corporation Remove unnecessary capex from the balance sheet • Assess the viability of eliminating property capex from the balance sheet • Wanted to introduce a 100% flexible solution – employees able to take advantage of drop-in space &
Slide 18: Case study 4: Online retail leader
CAPITAL MARKETS DAY 2017 Case study 4 Online retail leader Rapid expansion and new market entry using IWG flexible workspace • Constantly expanding its global footprint at short notice evolving its brand and product mix • An IWG workspace solution provides cost-effective, risk- free space to support
Slide 19: Financials
CAPITAL MARKETS DAY 2017 FINANCIALS
Slide 20: Cash flow
CAPITAL MARKETS DAY 2017 Cash flow £ million 2012 2013 2014 2015 2016 Operating profit 90.2 90.8 104.3 144.8 186.2 Depreciation and amortisation 69.1 97.5 120.5 145.2 194.5 Group EBITDA 159.3 188.3 224.8 290.0 380.7 Working capital 46.4 64.1 80.3 103.5 104.2 Less: growth related landlord contributio
Slide 21: Centre maturity
CAPITAL MARKETS DAY 2017 Centre maturity Number of Centres in different year groups 1411 1831 2269 2768 2926 43% 40% 45% 49% 62% 6% 9% 6% 14% 12% 15% 8% 2% 15% 8% 13% 19% 16% 10% 18% 24% 20% 20% 17% 8% 2012 2013 2014 2015 2016 < 1 year 1-2 years 2-3 years 3-4 years >4 years
Slide 22: Returns development
CAPITAL MARKETS DAY 2017 Returns development NCO Year Group 2017 2016 2015 2014 2013 and before 20 21.5% 21.5% 10 13.3% 10.0% 6.5% % 0 (3.6%) (2.6%) -10 (15.8%) (19.2%) -20 Post-tax cash return on net investment based on 2016 results Post-tax cash return on net investment based on LTM results to Jun
Slide 23: Cash utilisation
CAPITAL MARKETS DAY 2017 Cash utilisation Source of funding 400 Net disposal proceeds Corporate financing activities 80.0 32.0 0.4 38.8 Additional funding 300 31.1 Cash flow before capital growth expenditure 175.5 123.8 286.1 41.9 17.3 60.0 109.3 83.7 35.4 38.6 £m 200 215.7 Use of funding 99.8 43.3
Slide 24: Deal types and profile
CAPITAL MARKETS DAY 2017 Deal types and profile Deal type Capital intensity Risk Returns Abs. cash Conventional Medium Medium 2 – 3x WACC High Partnership Lower Lower Good Medium Franchise / Management agreement Zero Lowest Good Low Clearly above WACC s/t: low - l/t: Business acquisition Higher but
Slide 25: IFRS 16 Summary
CAPITAL MARKETS DAY 2017 IFRS 16 SUMMARY
Slide 26: IFRS16 Leases: Background
CAPITAL MARKETS DAY 2017 – IFRS 16 SUMMARY IFRS16 Leases Background • Effective from 1 January 2019 • The standard removes the concept of operating and finance leases, instead requiring leasing arrangements in general to be recorded on the balance sheet. • This requires a “Right-of-use-asset” and a
Slide 27: IFRS16 Leases: Key differences between IFRS 16 and IAS 17
CAPITAL MARKETS DAY 2017 – IFRS 16 SUMMARY IFRS16 Leases Key differences between IFRS 16 and IAS 17 IAS 17 IFRS 16 Lease definition Recognises two classes of leases: Adopts a single model for all leases, with a right-of-use asset and and recognition • Operating leases – held off balance sheet corres
Slide 28: IFRS16 Leases: Illustrative example – IFRS 16 versus IAS 17
CAPITAL MARKETS DAY 2017 – IFRS 16 SUMMARY IFRS16 Leases Illustrative example – IFRS 16 versus IAS 17
Slide 29: IFRS16 Leases: Implications for IWG plc
CAPITAL MARKETS DAY 2017 – IFRS 16 SUMMARY IFRS16 Leases Implications for IWG plc Significant impact: Balance sheet as a result of the right-of-use asset and related finance lease recognised. Income statement: • Due to the elimination of the historical rental expense and the recognition of a depreci
Slide 30: IFRS – The opportunity for us
CAPITAL MARKETS DAY 2017 – IFRS 16 SUMMARY IFRS16 Leases IFRS 16 – The opportunity for us • IFRS 16 will be an additional catalyst to support strong structural market growth as our WaaS solution will provide an additional benefit, namely optimized balance sheet exposure, as • we provide a service an
Slide 31: Investing for Growth
CAPITAL MARKETS DAY 2017 INVESTING FOR GROWTH
Slide 32: Commitment to growth
CAPITAL MARKETS DAY 2017 Commitment to growth • Structural growth sector • IWG is the largest player in fragmented market • Why do we continue to grow? – Scale advantages – High returns on incremental investment – National networks • IWG is well positioned for growth
Slide 33: IWG – Well positioned for growth
CAPITAL MARKETS DAY 2017 IWG – Well positioned for growth Planned Disciplined Brands Growth People Partners Portfolios
Slide 34: Growth planning
CAPITAL MARKETS DAY 2017 Growth planning • Growth must be well planned • Strategic Plan gives clear view of: – National networks – How to get there • Tactical overlay: – Opportunities/Risks • Plans evolve as the opportunity evolves • Success measured against plan 3 4
Slide 35: IWG Brands
CAPITAL MARKETS DAY 2017 IWG Brands
Slide 36: Spaces
CAPITAL MARKETS DAY 2017 Spaces
Slide 37: IWG Brands
CAPITAL MARKETS DAY 2017 IWG Brands
Slide 38: No.
CAPITAL MARKETS DAY 2017 No. 18
Slide 39: Partners
CAPITAL MARKETS DAY 2017 Partners • Significant growth opportunity • Strategic decision to partner – Share the economics – Share the risks – Share the returns • Partnership strategy is working • Multiple locations
Slide 40: Entra
CAPITAL MARKETS DAY 2017 Entra • Listed on Oslo stock exchange • Market Capitalisation: £2bn • 1.3m sqm of space
Slide 41: Disciplined growth & investment
CAPITAL MARKETS DAY 2017 Disciplined growth & investment • Attractive business model • Committed to growth – National Networks • Positioned for growth – Brands – Partners – Portfolios • But we must remain disciplined • Risk-adjusted returns
Slide 42: Summary
CAPITAL MARKETS DAY 2017 SUMMARY
Slide 43: Clear strategy
CAPITAL MARKETS DAY 2017 Clear strategy 3300 centres • Revenue Growth • Cost Leader 115 countries • Multibrand • ROI driven growth 550,000 • National Networks members • Global Network • Strong Cash Generation c. 50m sq ft Capital Markets Day 2017
Slide 44: Capital Markets Day 2017 Q&A
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International Workplace Group — Investor Day (September 2017) on 6ix