2020 INTERIM RESULTS 4 August 2020 2020 Interim Results – 4 August 2020 1
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Key interim financial highlights ▪ H1 total revenue up 3.5% to £1,322.7m despite COVID-19 ▪ Open centre revenue up 10.2% to £1,298.2m, all regions contributing ▪ Pre-2019 revenue up 0.2% to £1,164.4m ▪ Pre-2019 EBITDA up 17.1% to £212.6m ▪ Cash generation before growth capital expenditure, share repurchases & adjusting items of £125.4m ▪ Strong balance sheet - £830.3m of available liquidity - Net debt close to zero 2020 Interim Results – 4 August 2020 3
Interim highlights ▪ Great start to year, best ever Q1, followed by a challenging Q2 ▪ Comprehensive actions taken to reduce costs, improve cash flow and liquidity - £180m cash savings from operations so far - One-off charge of £155.8m resulting from COVID-19 • £29.1m relating to H1 • £126.7m provision for network rationalisation ▪ Challenging Q3 but we are seeing green shoots for improvement by Q4 ▪ Long term structural drivers are strengthening - Many companies increasingly looking at more dispersed working ▪ Current environment presenting increased growth opportunities ▪ IWG is in a strong financial position, generating positive cash every month - Raised £320m new equity and increased debt covenant to accelerate growth and enhance our market leading position ▪ Continued momentum in franchising strategy 2020 Interim Results – 4 August 2020 4
Actions taken to mitigate impact of COVID-19 ▪ Further cost savings: £180m cash savings so far and looking for more ▪ Increased focus on costs across all areas ▪ 50% reduction in Board remuneration ▪ Reduced growth and maintenance capital expenditures ▪ Network rationalisation – always a last resort ▪ Dividend cancelled ▪ £100m share repurchase programme suspended ▪ Result – positive monthly cash flow and working to generate more 2020 Interim Results – 4 August 2020 5
Enhanced demand for flexibility Structural growth drivers Incremental tailwinds ▪ Increased focus on cost saving initiatives ▪ Cheaper – potential c.50% saving 1 Cost efficiency ▪ Space required to comply with social distancing at a ▪ Higher productivity reasonable cost ▪ Environmental advantage 2 Environment ▪ Opportunity to accelerate ESG strategies ▪ Less commuting What ▪ Growing acceptance of “remote working” during lockdown to ▪ Successful remote working 3 employees drive growth in “working closer to home” desire Secure ▪ Cyber crime means high security top of ▪ Increased corporate acceptance of remote working practices 4 technology list and need for secure work environments platform Better ▪ IFRS 16 ▪ Enterprise customers addressing balance sheet pressure 5 for balance sheet Current environment expected to accelerate the structural shift in the workplace 2020 Interim Results – 4 August 2020 6
New world of working ▪ Clear view of dramatically transitioning market place ▪ World beyond COVID-19 will still need offices ▪ Greater requirement for more flexible space ▪ More distributed workforces ▪ More working near home ▪ Significant opportunities for IWG - Business scale - Coverage - Home working options ▪ Record sales of membership and home working solutions 2020 Interim Results – 4 August 2020 7
Importance of scale and coverage IWG’s business model provides a level of resilience relative to the wider industry Resilient revenue Truly global presence Unrivalled coverage 3,392 centres 1,131 towns & cities - urban and suburban C.10% 9% 11% 12% 20% 38% 48% C.90% 29% 33% Contracted Spot Americas EMEA APAC UK Americas EMEA APAC UK Supporting our diversified customer base and the increasing demand from enterprise customers 2020 Interim Results – 4 August 2020 8
Supporting dispersed workforces Network coverage provides alternatives to commuting within a 5, 10 and 20 km radius of High Wycombe 2020 Interim Results – 4 August 2020 9
Unique capability to do this globally Paris, France Dallas, Texas, US Sydney, Australia Kuala Lumpur, Malaysia 2020 Interim Results – 4 August 2020 10
New Enterprise wins Preparing for the new world of working SANOFI: multinational pharmaceutical company. Transitioned from existing long-term LOOv traditional lease for small teams (10 to 150 people) to maximize agility and reduce real estate costs . Already installed in Hungary, Ecuador, Chile, Hong Kong, Italy and Portugal. ENGIE: multinational energy company. Installed its Digital branch in a Regus center in LOGO LOGO Paris CBD in order to attract and retain talent. LOGO ORACLE France: Relocating all the offices except the HQ from existing long-term traditional lease to a Hub & Spoke model to provide incremental flexibility & mitigate LOGO LOGO LOGO risk. 6 dedicated locations across France already installed. LOGO Bytedance/Tik Tok: Video sharing, social networking platform having occupied space across multiple locations, is experiencing fast-paced growth and expanding rapidly. 2020 Interim Results – 4 August 2020 11
Four methods to accelerate growth Franchising ▪ Continue to make M&A progress with MFAs and sub- franchising ▪ Compelling opportunities Rescue situations ▪ Keep active dialogue with ▪ Operators unable to meet interested parties across our ▪ Ability for IWG platform to absorb growth funding requirements Organic expansion global footprint other operators profitably ▪ 2020 to date ▪ Enhanced speed to market ▪ Organic network expansion in - Added 6 franchise partners new and competitor locations - Added 30+ committed ▪ Accelerating momentum in locations franchising strategy ▪ To date ▪ Brand expansion - # franchise partners: 31 - # countries: 30 - # locations: 440+ Highly visible pipeline of active opportunities 2020 Interim Results – 4 August 2020 12
Group results H1 revenues up, profits impacted by COVID-19 ▪ Revenue up 3.5% to £1,322.7m £m H1 2020 H1 2019 ▪ Open centre revenue up 10.2% to £1,298.2m ▪ Pre-2019 EBITDA up 17.1% to £212.6m Revenue 1,322.7 1,276.3 Open centre revenue 1,298.2 1,176.7 ▪ Adjusted operating loss of £13.4m, in line with management’s expectations, impacted by COVID-19 Adjusted gross profit 144.0 187.8 - Includes earnings drag of £96.7m (H1 2019: £46.2m) Adjusted operating (loss)/profit (13.4) 43.3 ▪ COVID-19 related adjusting items of £155.8m Adjusting operating items (155.8) 0.0 - Network rationalisation £134.5m Operating (loss)/profit (169.2) 43.3 • Including £7.8m incurred in H1 Taxation (26.1) (5.0) • £126.7m provision for rationalisation (Loss)/profit for the period (203.3) 294.8 - Provision for expected credit losses £9.4m Basic EPS (p) - Adjusted (5.2) 3.4 - Transaction costs for deferred deals £5.8m Basic EPS (p) - Statutory (22.7) 32.9 - Goodwill impairment £4.9m Adjusted EBITDA 137.4 189.8 - Other one-off items £1.2m Pre-2019 EBITDA 212.6 181.6 2020 Interim Results – 4 August 2020 13
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