International Workplace Group Plc · LSE:IWG
International Workplace — IWG — H1 2018 Earnings Presentation
24 slides from International Workplace's earnings presentation, August 2018
Slide 1: 2018 Interim Results
2018 INTERIM RESULTS August 2018
Slide 2: Caution statement
Caution statement No representations or warranties, express or implied are given in, or in because, by their very nature, they are subject to known and unknown respect of, this presentation or any further information supplied. In no risks and uncertainties and can be affected by other factors that c
Slide 3: Offer approaches
Offer approaches Termination of discussions ▪ Starwood, Terra Firma and TDR were informed on 5 August that IWG did not intend to continue discussions regarding their possible offers ▪ The Board of Directors believe that none of the interested parties is currently capable of delivering an executable
Slide 4: Interim highlights
Interim highlights Increased investment in growth and infrastructure, improving sales momentum and strong cash conversion ▪ Revenue from open centres increased 9.8% to £1,194.1m. Group revenue increased 7.1% to £1,204.0m ▪ Mature revenue growth of 2.4% to £1,104.4m ▪ Mature gross profit margin incre
Slide 5: Actions being taken to improve UK performance
Actions being taken to improve UK performance ▪ Continued focus on upgrading and new openings ▪ 2017 & 2018 openings developing strongly ▪ Recently refurbished locations gaining momentum ▪ 11 locations currently under major refurbishment ▪ Significant investment into centre team members ▪ Enhancemen
Slide 6: 18,000 business leaders, in 96 countries said…
18,000 business leaders, in 96 countries said… 91% 89% Flexible workspace Flexible working helps enables employees in their their business GROW company to be MORE PRODUCTIVE while on the move 87% 87% 87% Flexible working helps Flexible working helps Enabling their company’s their business stay MAXIM
Slide 7: IWG is uniquely positioned to service this demand
IWG is uniquely positioned to service this demand ▪ The world’s leading physical platform with 3,211 locations in 1,090 towns and cities Places to work for Creative workspaces with ▪ Multi-brand product to cater for all everyone, worldwide a unique entrepreneurial spirit customer requirements ▪ The
Slide 8: Accelerated network growth
Accelerated network growth Increased investment in network growth ▪ Net growth capital expenditure of £130.1m ▪ Added 132 locations (2.8m sq. ft.) ▪ Strong focus on organic growth (126 openings) ▪ Approximately 40% of organic openings were partnership deals ▪ Strong roll out of Spaces – 45 new locat
Slide 9: Growth outlook
Growth outlook Strong pipeline for 2018 ▪ Confidence in investment programme underpinned by structural growth drivers and returns being achieved ▪ Current visibility ▪ c. 275 locations ▪ c. 6.7m sq. ft. ▪ c. 22% more space than added in 2017 ▪ c. 45% more organic growth added ▪ c. £230m net investme
Slide 10: Financial review
Financial review 2018 Interim Results – August 2018
Slide 11: Performance in line
Performance in line Group income statement £ million H1 2018 H1 2017 % change actual % change constant ▪ Revenue from open centres increased currency currency 9.8%* Revenue 1,204.0 1,169.7 2.9% 7.1% ▪ Group revenue up 7.1%*, Mature Gross profit (centre contribution) 195.1 211.3 (8)% (5)% revenue gro
Slide 12: Group revenue development
Group revenue development Half year 2018 year-on-year revenue development 7.0% (2.3)% (4.0%) 2.2% 2.9% 1,204.0 1,169.7 £m H1 2017 Mature* New '17 + '18* Closures* Foreign Exchange H1 2018 2018 Sequential quarterly revenue development 1.7% 6.2% 2.6% (0.5%) 2.4% 620.1 583.9 £m Q1 2018 Revenue Mature*
Slide 13: Mature gross margin and investment into the business
Mature gross margin and investment into the business ▪ Improving mature gross margin +60bp ▪ Incremental start up costs of £6.4m, which is an important investment ▪ Year-on-year negative impact from closures of £12.9m which should improve profitability in the future ▪ Leading to a reduction in gross
Slide 14: Mature performance by geography
Mature performance by geography Centre contribution H1 2018 ▪ Mature* revenue growth of 2.4% in H1 ▪ Primarily driven by the Americas and Asia Pacific 14% Americas ▪ Improving sales momentum a positive trend for second half 17% 43% EMEA Asia Pacific Mature revenue growth outside of the UK UK 26% ▪ M
Slide 15: Overhead efficiency a competitive advantage
Overhead efficiency a competitive advantage Total overheads as a % of revenue ▪ Cost leadership a significant competitive advantage 18.5 ▪ Increased investment to build capacity to support 16.7 14.7 further growth % 11.8 11.1 10.1 10.6 ▪ Overall first half 2018 overheads increased 11%* after signifi
Slide 16: Gross profit margin before depreciation
Gross profit margin before depreciation ▪ First half openings predominately Year group by vintage 2014 organic locations 2018 2017 2016 2015 and before ▪ Excellent 2016 year group performance 40 28.9% ▪ Good 2017, 2016 and 2015 year group 28.3% 23.1% 24.4% 20 progression 5.4% 15.8% 3.8% 0 ▪ 2014 and
Slide 17: Post-tax cash return on net growth investment
Post-tax cash return on net growth investment Year group by vintage 2014 2018 2017 2016 2015 and before We continue to make attractive returns 20 18.3% ▪ Benefiting from operational leverage 16.4% and capital efficiency 10 8.6% ▪ After increased investment in 7.3% maintenance capital expenditure % 0
Slide 18: Cash flow
Cash flow ▪ Strong cash conversion ▪ Group EBITDA of £170.9m ▪ Increased investment in maintenance capital expenditure ▪ Higher tax paid reflecting timing differences ▪ Cash flow before net growth investment of £75.7m £ million H1 2018 H1 2017 Cash flow Group EBITDA 170.9 190.5 before net growth cap
Slide 19: A healthy balance sheet
A healthy balance sheet £ million H1 2018 H1 2017 Balance sheet Cash flow before net growth capital expenditure, share repurchases and 75.7 87.4 ▪ Maintained prudent approach to balance sheet dividends management Net growth capital expenditure (130.1) (179.7) Total net cash flow from operations (54.
Slide 20: First half summary
First half summary ▪ Good revenue growth in Americas, Asia Pacific and EMEA ▪ Strengthening order book ▪ Actions to improve UK performance well underway ▪ Good cash conversion ▪ Dividend increase of 11%, reflecting confidence in long-term outlook 2018 Interim Results – August 2018 20
Slide 21: Outlook
Outlook ▪ Current sales activity trends are strengthening the order book, providing an encouraging outlook ▪ Continue to invest in our network in a disciplined manner ▪ Strong pipeline visibility ▪ Well placed to take advantage of growth in our industry ▪ Focused on delivering attractive returns and
Slide 22: Questions?
QUESTIONS? 2018 Interim Results – August 2018 22
Slide 23: Contact details
Contact details Wayne Gerry ▪ Group Investor Relations Director ▪ +44 (0) 7584 376533 ▪ wayne.gerry@iwgplc.com 2018 Interim Results – August 2018 23
Slide 24: Thank you
Thank you International Workplace Group iwgplc.com