International Workplace Group Plc · LSE:IWG
International Workplace — IWG — H1 2017 Earnings Presentation
25 slides from International Workplace's earnings presentation, Aug 8, 2017
Slide 1: 2017 Interim Results Presentation
2 0 1 7 I N T E R I M R E S U LT S P R E S E N TAT I O N 8 August 2017
Slide 2: Caution statement
IWG PLC / 2017 INTERIM RESULTS PRESENTATION Caution statement No representations or warranties, express or implied are given in, or in respect of, this presentation or any further information supplied. In no circumstances, to the fullest extent permitted by law, will the Company, or any of its respe
Slide 3: First half highlights
IWG PLC / 2017 INTERIM RESULTS PRESENTATION First half highlights Sequential performance improving and accelerated investment • Continued strong returns on investment • Post-tax ROI on pre-2013 net investment of 23.3% (FY16: 23.6%) • Group revenues stable at £1,169.7m (up 2.2%* excluding closures) •
Slide 4: Attractive cash returns
IWG PLC / 2017 INTERIM RESULTS PRESENTATION Attractive cash returns • 21.5% post-tax cash return on all Post-tax cash returns based on 2016 results Post-tax cash returns based on LTM results to June 2017 locations opened on or before 31 December 2013 31.1% • Returns remain attractive and 25.0% 24.3%
Slide 5: Exciting time for the industry
IWG PLC / 2017 INTERIM RESULTS PRESENTATION Exciting time for the industry The industry is growing fast globally Businesses and individuals have changed the way they work and use office space. 30% of all office floor space Is forecast to be flexible by 2030 (JLL forecast) 5
Slide 6: Developing national networks and formats globally
IWG PLC / 2017 INTERIM RESULTS PRESENTATION 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 6
Slide 7: IWG PLC / 2017 INTERIM RESULTS PRESENTATION
IWG PLC / 2017 INTERIM RESULTS PRESENTATION 7
Slide 8: IWG PLC / 2017 INTERIM RESULTS PRESENTATION
IWG PLC / 2017 INTERIM RESULTS PRESENTATION 8
Slide 9: The growing Spaces network
IWG PLC / 2017 INTERIM RESULTS PRESENTATION The growing Spaces network 9
Slide 10: Spaces - coming soon
IWG PLC / 2017 INTERIM RESULTS PRESENTATION Spaces - coming soon Americas EMEA UK Vancouver Broomfield Zurich Brighton Toronto Pittsburgh Oslo Newcastle Sao Paulo Los Angeles (2) Bergen London City Point San Mateo San Diego Madrid Raleigh New York Barcelona Asia Pacific Arlington Irving Brussels Seo
Slide 11: IWG's growth strategy
IWG PLC / 2017 INTERIM RESULTS PRESENTATION IWG’s growth strategy • Current environment attractive to accelerate growth • Expect strong returns, through less capital intensive expansion • Our focus remains on developing national networks offering a range of brands, products and price points • Stream
Slide 12: Supporting our customers' needs
IWG PLC / 2017 INTERIM RESULTS PRESENTATION Supporting our customers’ needs Customer Digital Physical Support Manilla Dallas Barcelona Kuala Lumpur 12
Slide 13: Financial Review
IWG PLC / 2017 INTERIM RESULTS PRESENTATION FINANCIAL REVIEW 13
Slide 14: Returns developing as expected
IWG PLC / 2017 INTERIM RESULTS PRESENTATION Returns developing as expected NCO year group 40 Gross profit margin* 31.9% 20 30.2 21.9% 27.2% 28.8% • 2014, 2015 and 2016 additions 0 14.3% (13.2%) showing continued improvement % -20 (35.9%) • 2016 & 2017 locations -40 predominately organic additions -6
Slide 15: Momentum improving
IWG PLC / 2017 INTERIM RESULTS PRESENTATION Momentum improving Group income statement • Revenue down 0.4% at constant % change % change currency with growth in all regions £ million H1 2017 H1 2016 actual constant except the UK currency currency Revenue 1,169.7 1,077.6 8.5% (0.4)% • Revenue momentum
Slide 16: Mature centre performance: by geography
IWG PLC / 2017 INTERIM RESULTS PRESENTATION Mature centre* performance: by geography • Increased sales activity now starting to benefit revenue performance • Mixed performance by individual countries • Sequential recovery in revenue performance in Q2 • Positive growth anticipated for second half Mat
Slide 17: Group revenue development
IWG PLC / 2017 INTERIM RESULTS PRESENTATION Group revenue development Half year 2017 year-on-year revenue development 1,200 8.9% 8.5% (2.0%) 4.2% (2.6%) 1,100 1,169.7 1,077.6 1,000 £m 0 H1 2016 Mature* New '16 + '17* Closures* Foreign Exchange H1 2017 2017 Sequential quarterly revenue development 2.
Slide 18: Group profit development
IWG PLC / 2017 INTERIM RESULTS PRESENTATION Group profit development Group EBIT development 19.4 (7.2) (11.5) (0.4) 90 89.1 (11.4) 18.0 87.0 80 (9.0) 70 60 £m 0 EBIT H1 2016 Mature Gross Growth Gross Closure Gross Gross Profit FX Overheads* Overheads FX JV EBIT H1 2017 Profit* Profit* Profit* Impact
Slide 19: Further overhead efficiency
IWG PLC / 2017 INTERIM RESULTS PRESENTATION Further overhead efficiency Total overheads as a % of revenue 18.5 18.5 16.7 • Cost leadership a significant competitive advantage 14.7 12.7 • Overall overheads declined 14% at constant currency, % 11.8 10.6 compared to a 5% increase in the number of locat
Slide 20: Cash flow
IWG PLC / 2017 INTERIM RESULTS PRESENTATION Cash flow • Good cash performance • Group EBITDA decreased by 3% at constant £ million H1 2017 H1 2016 currency to £190.5m Group EBITDA 190.5 177.7 • H1 2016 benefitted from specific programmes to Working capital (11.7) 50.3 unlock working capital, resulti
Slide 21: Prudent balance sheet
IWG PLC / 2017 INTERIM RESULTS PRESENTATION Prudent balance sheet £ million H1 2017 H1 2016 Balance Sheet Cash flow before net growth • Net debt to EBITDA ratio at 0.8x. Well within 87.4 141.7 expenditure range we consider appropriate Net growth capital expenditure (179.7) (83.1) Total net cash flow
Slide 22: Financial summary
IWG PLC / 2017 INTERIM RESULTS PRESENTATION Financial summary • Strong post-tax cash return on net investment • Further improved overhead and operational efficiency • Improving revenue momentum in second quarter • Net growth investment more than doubled • More partnership deals & more Spaces locatio
Slide 23: Outlook
IWG PLC / 2017 INTERIM RESULTS PRESENTATION Outlook • Very exciting period for the WaaS industry • As market leader we are perfectly positioned to benefit from the structural growth globally • Good opportunity to increase network growth • Very good initial performance from new locations • Strong pip
Slide 24: Questions
IWG PLC / 2017 INTERIM RESULTS PRESENTATION QUESTIONS 24
Slide 25: Contact details
IWG PLC / 2017 INTERIM RESULTS PRESENTATION Contact details Wayne Gerry Group Investor Relations Director +44 (0) 7584 376533 wayne.gerry@iwgplc.com 25