International Workplace Group Plc · LSE:IWG
International Workplace — FY2020 Earnings Presentation
30 slides from International Workplace's earnings presentation, Mar 9, 2021
Slide 1: 2020 Full year results
2020 Full year results 9 March 2021
Slide 2: Caution statement
2020 YEAR END RESULTS Caution statement No representations or warranties, express or implied are given in, or in respect of, be affected by other factors that could cause actual results, and our plans and this presentation or any further information supplied. In no circumstances, to the objectives,
Slide 3: 2020 the most challenging year in our history
2020 YEAR END RESULTS 2020 the most challenging year in our history • Very strong Q1 performance – best ever • Swiftly implemented protocols for physical distancing and hygiene • Immediate and continuous action taken on costs • Sales sustained at a remarkably good level • Occupancy reduction moderat
Slide 4: Actions taken to mitigate impact of COVID-19
2020 YEAR END RESULTS Actions taken to mitigate impact of COVID-19 • Swiftly implemented protocols for physical distancing and hygiene • Significant customer support provided – c. £100m • Took early and decisive actions to reduce costs, improve cash flow and liquidity - Annualised cost savings in th
Slide 5: Key financial highlights
2020 YEAR END RESULTS Key financial highlights • Resilient revenue performance despite COVID-19 - Strong sales in H2 but lockdowns affecting service revenues and leading to more churn - Open centre revenue up 0.5% to £2,393.4m - Total revenue down 5.3% to £2,480.2m • Adjusted operating loss of £173.
Slide 6: Group results
2020 YEAR END RESULTS Group results Revenue and profit impacted by COVID-19 • Open centre revenue up 0.5% to £2,393.4m £m 2020* 2019 • Pre-2019 EBITDA of £255.9m despite COVID-19 Revenue 2,480.2 2,648.9 • Adjusted operating loss of £173.8m, in line with management’s Open centre revenue 2,393.4 2,408
Slide 7: Group cash flow
2020 YEAR END RESULTS Group cash flow Despite COVID-19, cash generated and sound balance sheet £m 2020 2019 • Cash flow before investment down, in line with management’s Adjusted EBITDA 133.8 428.3 expectations, impacted by COVID-19 Working capital 242.3 267.2 - H1: £241.0m and H2: £28.5m Growth rel
Slide 8: Future vision
2020 YEAR END RESULTS Future vision • Shape of recovery • Exciting market changes • Sea change in the way corporate clients are engaging • Best corporate sales in our history • Growth moving apace, almost all capital light • Attractive M&A additions 2020 Full Year Results – 9 March 2021 8
Slide 9: Likely recovery shape
2020 YEAR END RESULTS Likely recovery shape • Clearly visible inflexion point February/March • Poor Q1, slowly strengthening Q2 • Real improvements expected in Q3 and more in Q4 • Multiple positive trends expected to impact • - occupancy improves • - services return • - price follows • - substantial
Slide 10: Hybrid working becomes the norm!
2020 YEAR END RESULTS Hybrid working becomes the norm! • Permanent shift in our direction • Workplace is anywhere businesses and workers want it to be • IWG best placed to convert this demand: - Leading enabler - Leading flex inventory coverage - Multiple service offerings - Significant growth oppor
Slide 11: Hybrid work – everyone's talking about it
2020 YEAR END RESULTS Hybrid work – everyone’s talking about it 2020 Full Year Results – 9 March 2021 11
Slide 12: Hybrid work – what employers are saying
2020 YEAR END RESULTS Hybrid work – what employers are saying Return to work survey shows six major ‘resets’ in key areas of work experience 1. Real estate footprint 6. Flexibility and wellbeing policies 51% 74% 78% Redesigning offices/ Employers are planning Employers are planning moderate and exte
Slide 13: Favourable tailwinds
2020 YEAR END RESULTS Favourable tailwinds Structural growth drivers • Growing acceptance of remote and hybrid 1 Better for employees working during lockdown 2 Better for companies • Increased focus on cost saving initiatives 3 Good for the environment • Opportunity to accelerate ESG strategies 2020
Slide 14: Better for people
2020 YEAR END RESULTS Better for people • Supporting hybrid working • Reduced commuting - Releases time - Saves money - Creates a better work/life balance • It’s what employees want! - Builds loyalty - Boosts productivity 2020 Full Year Results – 9 March 2021 14
Slide 15: Better for companies
2020 YEAR END RESULTS Better for companies • Significant cost efficiencies ~ 50% savings • No capital expenditure requirement • Creates a greater pool of available talent • Improves productivity • Our business offering helps our customers improve their own sustainability practices - Reduced commutin
Slide 16: Better for the environment
2020 YEAR END RESULTS Better for the environment • COVID-19 has accelerated the increasing importance of ESG for companies • Hybrid working reduces carbon emissions • Multiple sustainability benefits • More efficient use of space/less space built • More distributed work reduces city concentrations 2
Slide 17: New Enterprise wins
2020 YEAR END RESULTS New Enterprise wins More enterprises preparing for the new world of working Standard Chartered signed a global deal to allow 95,000 Shell Italia required co-ordinated access to a centralised of their employees access to IWG’s 3,300+ offices. This and custom workspace with a red
Slide 18: Stop press!
2020 YEAR END RESULTS Stop press! • Unprecedented surge in new membership deals • More than half a million new members added to the network - NTT – 300,000 colleagues - Cisco - Salesforce - Talentsoft - Staples - Citrix • More than 1 million future members in the pipeline 2020 Full Year Results – 9
Slide 19: Rapid evolution to new model
2020 YEAR END RESULTS Rapid evolution to new model 1 2 3 Pivot to Rapidly growing Create flex property capital light service platform funds Franchise Home and mobile worker Creation of new flex space support platform funds MFA CRE support packages More efficiency, Refranchise higher returns Digital
Slide 20: Growth and Deployment of capital
2020 YEAR END RESULTS Growth and Deployment of capital Capital light expansion M&A ▪ Organic network expansion in new and ▪ Compelling opportunities competitor locations – The Wing ▪ Multiple WeWork & other competitor locations – European company ▪ Many new franchise partners – Multiple service comp
Slide 21: Important brand addition
2020 YEAR END RESULTS Important brand addition • Leading community and co-working space company designed for women • Networking membership club • Founded in 2016 • Market leader • Exciting opportunity to pursue substantial growth both in the US and internationally • Joint venture with: - NEA - Googl
Slide 22: Building our physical platform
2020 YEAR END RESULTS Building our physical platform Rapid capital light growth • Franchise Services • Management contracts platform • JV • Organic 120 countries • Variable leases 2020 Full Year Results – 9 March 2021 22
Slide 23: Expanding our network of franchise partners
2020 YEAR END RESULTS Expanding our network of franchise partners 2020 • Added 15 franchise partners (2019: 9) • Added 67 committed locations • MFA in Gibraltar & Monaco • Added Togo and Libya 2021 • First franchise agreements in USA - Detroit, Michigan - Dayton & Toledo, Ohio - Fort Wayne, Indiana
Slide 24: Sustainability
2020 YEAR END RESULTS Sustainability Oslo, Norway Napa Valley, California, USA • New Spaces centre renovated and extended • New retail focused model • Using recycled materials from 25 buildings • New innovative centre design • Compared to using new, c.95% reduction in CO2 emissions • Sustainable des
Slide 25: Outlook
2020 YEAR END RESULTS Outlook • Now seeing daily positive improvement • Lifting of lockdowns and easing of restrictions, now driving demand • The uptake of new working practices has accelerated and here to stay • Recent performance starting to indicate an inflexion point • The market is coming towar
Slide 26: Q&A
2020 YEAR END RESULTS Q&A 2020 Full Year Results – 9 March 2021
Slide 27: Appendix
2020 YEAR END RESULTS APPENDIX 2020 Full Year Results – 9 March 2021
Slide 28: Adjusting items H1 2020 and FY 2020
2020 YEAR END RESULTS Adjusting items H1 2020 and FY 2020 H1 2020 H2 2020 FY 2020 Adjusting items (£m) (£m) (£m) Accelerated network rationalisation 134.5 177.5 312.0 Transaction costs in respect of Master Franchise Agreements not yet completed 5.8 2.4 8.2 Expected credit losses 9.4 8.1 17.5 Impairm
Slide 29: Thank you
Thank you IDG fee" |WGplc.com
Slide 30: Contact details
2020 YEAR END RESULTS Contact details Wayne Gerry Group Investor Relations Director wayne.gerry@iwgplc.com 2020 Full Year Results – 9 March 2021 30
International Workplace Group — FY2020 Earnings Presentation on 6ix