Slide 1: 2018 Full Year Results
2018 FULL YEAR RESULTS 6 March 2019 2018 Full Year Results – 6 March 2019 1
Slide 2: Caution statement
Caution statement No representations or warranties, express or implied are given in, or in to known and unknown risks and uncertainties and can be affected by other respect of, this presentation or any further information supplied. In no factors that could cause actual results, and our plans and obj
Slide 3: Agenda
Agenda 1 Group review Mark Dixon 2 The market opportunity Mark Dixon 3 Group financial review Eric Hageman 4 Outlook Mark Dixon 5 Q&A Mark Dixon & Eric Hageman 2018 Full Year Results – 6 March 2019 3
Slide 4: Highlights
Highlights Strong trends ▪ Open centre revenue up 13.3%* to £2,483.1m, with strong sequential improvement ▪ EBITDA improved £71.2m to £447.4m on pre-18 centres ▪ £40.5m EBITDA investment in New 18 and New 19 centres ▪ One-off EBITDA cost of £16.0m for closures ▪ Group EBITDA up 4%* to £389.9m ▪ Oper
Slide 5: Good momentum in business
Good momentum in business Strong second half performance, momentum continues to accelerate ▪ Strong end to 2018 provides good platform for 2019 ▪ Record organic network growth ▪ Third of network additions from partnering - now a major part of growth strategy ▪ Older estate repositioned, performance
Slide 6: Regional review 2018
Regional review 2018 Open centre Growth % of at constant Highlights Revenue - £m Group currency Record revenues. Quarterly sequential growth. GROUP 2,483.1* 100.0%* 13.3% Strong exit. Good cash generation Very strong revenue and profit performance from AMERICAS 1,030.1 41.5% 12.8% the US and Canada.
Slide 7: The UK turnaround
The UK turnaround Investment in people and network improving financial performance 2019+ ▪ Good performance ▪ Employee & select centre investment delivering Improve profitability ▪ Performance of new centres demonstrates and cash generation market demand in London ▪ Increased investment in people &
Slide 8: Opening new locations across the world
Opening new locations across the world UK France USA Canada No.18 Battersea Power Station, Spaces La Défense, Paris Spaces Hudson Yards, New York Spaces The Well, Toronto / London West Georgia St, Vancouver Very high profile deal at c. 194,000 sq. ft. >100,000 sq. ft. 250,000 sq. ft. combined iconic
Slide 9: Enterprise account case studies
Enterprise account case studies – more companies than ever turning to IWG Small office migration from Preferred partner status for all Supporting the US government with Adoption of flexible workspace as a traditional lease to flexible Deloitte’s flexible workspace the next decennial Census core buil
Slide 10: Agenda
Agenda 1 Group review Mark Dixon 2 The market opportunity Mark Dixon 3 Group financial review Eric Hageman 4 Outlook Mark Dixon 5 Questions Mark Dixon & Eric Hageman 2018 Full Year Results – 6 March 2019 10
Slide 11: The commercial property industry
The commercial property industry c. $29 trillion market1 ▪ Huge opportunity ▪ Highly fragmented ▪ c. 30m office workers in US2 ▪ c. 8m office workers in the UK3 ▪ Ripe for disruption in a digital world 1 – Savills Commercial Research 2 – Henry J Kaiser Foundation – State Health Facts 2018 Full Year
Slide 12: The strategy
The strategy People Technology Estate ▪ Strengthened ▪ 3 new apps added ▪ Repositioning older centres management team ▪ Improved community app added ▪ Selected closures and moves ▪ Significant growth in ▪ Substantial help desk improvement ▪ Constant market rent testing enterprise team ▪ Upgrading ba
Slide 13: A balanced approach
A balanced approach Macro-economic backdrop Structural growth industry ▪ Generally cautious outlook ▪ Fast track growth industry ▪ Positioning business accordingly ▪ Co-working/flexible working gaining popularity ▪ Increased investment discipline ▪ Increasingly mainstream with significant ▪ Strong f
Slide 14: Integrated platform creates competitive advantage
Integrated platform creates competitive advantage ▪ Property platform with unrivalled choice ▪ Supported with a digital platform – more apps ▪ Support services platform – Industry leading service revenue – 29% Support Services Platform (Services revenue from clients) Digital Platform (Digital interf
Slide 15: Spaces overview
Spaces overview SPACES global footprint ▪ Founded in 2008 ▪ Acquired by IWG in 2014 ▪ Premium co-working brand focused on building creative workspaces with a unique entrepreneurial spirit ▪ Emphasis placed on building out brand from 2017 with very strong growth in run Spaces Footprint rate revenues
Slide 16: Agenda
Agenda 1 Group review Mark Dixon 2 The market opportunity Mark Dixon 3 Group financial review Eric Hageman 4 Outlook Mark Dixon 5 Q&A Mark Dixon & Eric Hageman 2018 Full Year Results – 6 March 2019 16
Slide 17: Group results
Group results Strong and improving growth trends, profitability in-line with expectations Group income statement % change % change ▪ Total revenue up 9.7%** to £2,535.4m £ million 2017 2018 2018* 2017 constant actual ▪ Accelerating in Q4 to 14.3%** (Q1: 6.7%; Q2: 7.6%; Q3: 10.2%**) Group Openings cu
Slide 18: Group cash flow
Group cash flow Strong cash generation % change £ million Pre-2018 2018 2017 Actual ▪ Cash flow before net growth capital expenditure of £259.2m, currency up 20% EBITDA 447.4 389.9 376.2 4% - Positively impacted by: Working capital 166.4 44.2 276% • EBITDA growth Less growth related partner contribu
Slide 19: Corporate finance principles
Corporate finance principles Continued commitment to investing in growth, improving shareholder remuneration and prudent financial policies Capital Allocation Financial Policy Financing ▪ Disciplined processes ▪ Net debt/EBITDA ratio of ▪ Revolving Credit Facility ▪ Focused on profitable 1.2x £950m
Slide 20: Shareholder returns
Shareholder returns £93.9m returned to shareholders in 2018 £m shareholder returns Dividends per share + 79% + 58% 4.35 3.95 51.1 3.55 40.2 £m p 3.10 36.4 35.5 2.75 17.2 53.7 48.5 38.8 43.3 35.4 1.95 1.55 1.75 1.25 1.40 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Share repurchases Dividends pa
Slide 21: IFRS 16 Key messages
IFRS 16 Key messages No impact on our plans and ambitions No impact on Our economics Cash How we run the business Unaudited pro-forma balance Significant impact sheet and income statement on financial Leases brought on to our Operating profit increases illustrating the IFRS 16 impact to reporting ba
Slide 22: IFRS 16 background
IFRS 16 background ▪ IFRS 16 is the new lease accounting standard, effective from 1 January 2019, replacing IAS 17 Leases ▪ IFRS 16 requires lessees to recognise most leases on their balance sheet ▪ The majority of IWG’s leases fall within scope of IFRS 16, no impact on the flexibility of our leases
Slide 23: IFRS16 implications for IWG
IFRS16 implications for IWG All figures are based on IWG’s Annual Report & Accounts 2018 IAS 17 figures can be traced directly to the AR&A 2018 KPI IAS 17* KPI IAS 17 ** IFRS 16* Cashflow Creation of a Right-of-use-Asset Per Share 28.6p 28.6p Rent replaced by Depreciation and a Lease liability on th
Slide 24: IFRS16 in summary
IFRS16 in summary No impact on revenue Cash flows are unaffected Post-tax cash return on net investment is a cash-on-cash measure and therefore adjusted for Dividend policy will not be impacted by IFRS 16 depreciation as a non-cash item Customers will not be impacted by the transition to IFRS 16 Ban
Slide 25: Agenda
Agenda 1 Group review Mark Dixon 2 The market opportunity Mark Dixon 3 Group financial review Eric Hageman 4 Outlook Mark Dixon 5 Q&A Mark Dixon & Eric Hageman 2018 Full Year Results – 6 March 2019 25
Slide 26: Outlook for 2019
Outlook for 2019 Strong recovery in second half and into 2019 ▪ Current trading providing a good start to 2019 ▪ Strong focus on margin improvement ▪ Continue to invest in our network in a disciplined manner ▪ Excellent momentum in partnering approach, with counterparties wanting to operate our bran
Slide 27: Agenda
Agenda 1 Group review Mark Dixon 2 The market, the opportunity Mark Dixon 3 Group financial review Eric Hageman 4 Outlook and concluding remarks Mark Dixon 5 Q&A Mark Dixon & Eric Hageman 2018 Full Year Results – 6 March 2019 27
Slide 28: Q&A?
Q&A? 2018 Full Year Results – 6 March 2019 28
Slide 29: Thank you
Thank you iwgplc.com 2018 Full Year Results – 6 March 2019 29
Slide 30: Contact details
Contact details Wayne Gerry ▪ Group Investor Relations Director ▪ wayne.gerry@iwgplc.com 2018 Full Year Results – 6 March 2019 30
Slide 31: Appendix
Appendix 1. Mature performance by geography 2. Group revenue development 3. Gross profit margin development 4. Post-tax returns development 2018 Full Year Results – 6 March 2019 31
Slide 32: Appendix - Mature performance by geography
Appendix 1 - Mature performance by geography ▪ Mature revenue growth improved through the year ▪ Primarily driven by the Americas and EMEA and to a slightly lesser extent EMEA ▪ Strong margin improvement in Americas and EMEA ▪ Stronger sequential performance increased second half margin to 21.5%, wi
Slide 33: Appendix - Group revenue development
Appendix 2 - Group revenue development Full year 2018 2.7% (2.8%) 5.5% (1.8%) 7.8% 4.2% 2,535.4 2,352.3 £m 2017 Mature New '17 New '18 Closures Foreign 2018 Exchange Second half 2018 4.6% (3.1%) 0.4% 12.6% 4.9% 1,331.4 5.8% £m 1,182.6 2017 Mature New '17 New '18 Closures Foreign 2018 Exchange 2018 F
Slide 34: Appendix - Gross profit margin development
Appendix 3 - Gross profit margin development Year group by vintage Gross profit margin 2018 2017 2016 2015 2014 and before ▪ Before depreciation and amortisation 40 ▪ Excellent 2017 and 2016 year group performances 24.8% 29.3% 29.7% ▪ Good 2015 year group progression 20 23.2% ▪ 2014 and before openi
Slide 35: Appendix - Post-tax returns development
Appendix 4 – Post-tax returns development Year group by vintage Post-tax return on net investment ▪ We continue to make attractive returns 2014 2018 2017 2016 2015 and before ▪ Benefiting from operational leverage and 20 18.3% 19.8% capital efficiency 10 ▪ After increased investment in maintenance c