RESULTS 6 March 2019 2018 Full Year Results 6 March 2019 1 - PowerPoint PPT Presentation

2018 FULL YEAR RESULTS 6 March 2019 2018 Full Year Results – 6 March 2019 1

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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

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 ▪ Operating profit of £154.1m, in line with management’s expectations ▪ Excellent cash generation up £43.7m to £259.2m**, £93.9m returned to shareholders - Dividend up 11% to 6.3p - £40.2m share repurchase ▪ Record organic expansion: 6.8m sq. ft., invested £332.0m ▪ Strong balance sheet - Net debt £460.8m (1.2x net debt to EBITDA ratio) - RCF increased to £950m and maturity improved to 2024 * at constant currency. ** Before net growth capital expenditure, share repurchases and dividends. 2018 Full Year Results – 6 March 2019 4

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 improving ▪ Increasing traction on enterprise accounts – record sales ▪ Strengthened management team 2018 Full Year Results – 6 March 2019 5

Regional review 2018 Growth Open centre % of at constant Highlights Group Revenue - £m currency Record revenues. Quarterly sequential growth. 2,483.1* 100.0%* 13.3% GROUP Strong exit. Good cash generation Very strong revenue and profit performance from 1,030.1 41.5% 12.8% AMERICAS the US and Canada. Latam challenged Good revenue and profit performance. Strong H2. 617.9 24.9% 20.7% EMEA Continental Europe key driver Strong performance in Japan and Philippines. 404.6 16.3% 13.3% APAC Good recovery in Hong Kong Actions focused on revitalising performance. 425.6 17.1% 5.2% UK 27 openings, 9 refurbs and 14 closures * Includes ‘Other revenues’ of £4.9m, 0.2% of Group 2018 Full Year Results – 6 March 2019 6

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 & increased 2018/19 2018/19 2018/19 sales focus ▪ Selective investment in optimisation of Investment Reposition Grow estate with existing estate, 9 refurbs and 14 closures in people existing estate quality centres ▪ Added new inventory, 27 openings 2017 ▪ Q3 sales improvement weaker than anticipated ▪ Resultant pause in recovery of mature business Underperforming ▪ Mixed performance business 2018 Full Year Results – 6 March 2019 7

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 development Largest location opened Jan‘19 “IWG, the world’s largest serviced “This huge centre breaks records in “Among all its high -profile office “Spaces is making its biggest office group, is to launch a private this area. With its ten floors and tenants, the Hudson Yards District expansion in North America with members’ club in London’s 18,000sqm, Spaces is supplanting had not yet gotten in on the deals to rent large chunks of office Battersea Power Station its competitors ….. at La Défense.” coworking trend sweeping the city space in Toronto and Vancouver.” development as the company Bloomberg — until now.” Bloomberg strikes out into new lines of BizNow business.” Financial Times 2018 Full Year Results – 6 March 2019 8

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 building block of the workspace requirement in Europe Real Estate Strategy ▪ Telos is responsible for screening and ▪ ▪ finger-printing candidates ▪ Major internal restructure Intensive RFP process in 2018 Tasked with moving 5 – 10% of its consolidating business support covering Ad-hoc flexible space, global portfolio per annum from ▪ Co-ordinating this activity from 100+ functions Managed Office Solutions (MOS) and traditional lease to flexible workspace Regus centres throughout the USA monetisation of surplus space ▪ ▪ Right-size space to reduce spend and Reduce the long term commercial risk ▪ Proof of Concept started in November ▪ increase in employee efficiency by IWG won all three elements of associated by long-term traditional 2018 (30 locations) after extensive enabling employees to work more the contract leases and mitigate the impact of IFRS negotiation with advisors and Telos, flexibly and not be tied to 16 ▪ with another 100 due to be rolled out IWG detailed, transparent approach one location ▪ March/April 2019 and professionalism secured its Great opportunity for cost savings ▪ 40+ global branch locations from appointment through improving workspace traditional leases to a Regus “hub and efficiency ▪ Partnership now rolled out across the spoke” model ▪ rest of Europe Generally requirements are for ▪ IWG’s extensive global footprint was custom-build solution for 100+ crucial in partner selection workstations 2018 Full Year Results – 6 March 2019 9

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

The commercial property industry c. $29 trillion market 1 ▪ Huge opportunity ▪ Highly fragmented ▪ c. 30m office workers in US 2 ▪ c. 8m office workers in the UK 3 ▪ Ripe for disruption in a digital world 1 – Savills Commercial Research 2018 Full Year Results – 6 March 2019 11 2 – Henry J Kaiser Foundation – State Health Facts 3 – Office for National Statistics(ONS)