International Workplace Group plc (IWG) Earnings Call Transcript & Summary

Right. Good morning, everyone. Many thanks for joining us today to listen to what we've achieved over the first half of 2023 in what's been a truly fascinating time for the hybrid working industry, where we are clearly the global leader and fantastically well positioned to drive future growth. The first half of this year has seen a very strong performance for IWG, and we are absolutely delivering on what we said we planned to do. In H1, we delivered record revenue for the 6-month period with system-wide revenues up by 14% at GBP 1.7 billion. And most importantly, I think, with EBITDA coming through, up almost 50%, just under GBP 200 million. And that's very close to record levels for us. And probably of even more importance, this EBITDA is dropping through into cash with excellent cash flow from the business activities coming in at GBP 163 million. Per share. When I looked at this, per share is about 35p annualized per share in cash flow coming through from the business pre-investment. And I'm personally very happy with that as an investor and as CEO to see the cash coming through like this. This has enabled us to pay down debt, which has now fallen almost GBP 100 million from the end of H1 last year, and that will continue to fall in the second half. It's also worth noting, and Charlie will talk to this, that we have no refinancing needs until Q4 '25. And this is going to give us a lot more optionality as we come into '24. For the first time for a while, we've been a very strong cash position and have to think about what we do with our cash. I think most importantly, it's really just the start. You can see the growth coming through in the first half, 400 locations signed. Most of those locations haven't yet opened. So the impact of them is yet to be felt. There have been openings from those that we signed last year, but really the sort of flow starts in the second half when it starts to -- we've already got meaningful fees coming in. Those fees get a lot more meaningful as we go through the second half. So the growth, 95% capital light. The 5% are really the remnants of things we signed up in 2018. And there's quite a lot of what we call synthetic leases in there, which are leases that are very similar to our management contracts, but we have no investment and no risk. So it's -- there's still a lease leak. Some companies absolutely have to have a lease for their own financing purposes, and we would do those. So just to note, these openings take on average about 10 months, that's what we're seeing from signing to opening, and then a further 18 months for those centers to get to maturity. And I think Richard and Charlie are going to help, we're going to try and give more guidance as to -- because there's a lot of currency mix in here to try and help compute what the future revenues and fees will be on these. You just can't do it by looking at the number of centers or the space or anything. You've got to know where they are and the currencies they are in, and we need to give a bit more help with that. So I think what's good, and again, Charlie is going to talk more to this, you can start to see meaningful cash flow starting to grow from these capital-light deals. So they're great for the network. They're starting to impact cash flow. And there's a lot more to come on that. So quite exciting. You also see the CapEx going down. So the centers -- the few centers that there are where we're opening and investing in them, these are the remnant centers. You can see CapEx substantially reduced. It's down 40% year-on-year, and that will continue to reduce. There will be just a trickle as we go through second half and into '24. So inflation, clearly an issue over the past years as we've sort of ended the COVID period, and then we've gone into an inflationary period. But you'll also see a great performance, and Charlie will talk to that, in terms of controlling costs. So we're substantially below inflation in terms of costs, and that is managing the supply chain, getting more and more efficient at how we both build things even if we're doing it with other people's money and how we operate the business. So more scale and a lot of engineering to say how can we do things better to reduce costs, all of that coming through into margin expansion. And that's really the thing to focus on. And again, Charlie will talk to that. The margin continues to expand on company-owned and also on the management deals, and it's really that margin that pays the bills and creates the cash flow. So really pleased with inflation. Also, good price rises as well. So costs under control. We're getting higher prices, more margin expansion. So I've really talked to these. But look, the bottom line is setting out here. All the things we said, we do. This was 3.5 years ago where we set these things out. We're absolutely delivering on them, margins expanding, growth coming through in quantity and really quite a new business model. And that's, again, one of the things that is going to start to become more apparent. As we go through the second half of this year and into '24, there's a new business model. So you've got the company-owned margin expanding even in, I would say, quite a difficult world economy, and we're confident that will continue. And you've got growth bringing fee revenues coming in at scale and not requiring capital to do it. And that completely changes the model in a very virtuous way. So just a quick reminder, and I keep doing this because just to remind people about what do we do. And we are the bridge between the property industry, people that invest in properties, our own properties and this new customer base. Look, they're the same people that we're renting space before, they just want to consume it in a different way. So we're helping one meet the other across the platform. We make money as it goes both ways. So from a customer point of view, again, we've talked about this, but demand is still strong. I mean, it's very interesting. We see this morning a story in the Times about Zoom, which I've been questioned about. I think every journalist has also seen the story about Zoom asking people to come back to the office 2 days a week. But it's not that they're not hybrid working, Zoom completely hybrid work. And I know exactly how that work with one of our customers. But what they want is people to come together and collaborate certain times in a month because you can't have everyone working remotely all the time. But the whole of this is sort of misunderstood. The narrative hasn't yet caught up with reality, and reality is large corporations globally are moving to a much more flexible approach to how they support their people. They're moving towards hybrid working, and it's universal and it's gathering pace. The only thing slowing it down is the fact that these corporations already have buildings they own or leases they have, and it just takes time for them to get out of them. But it is happening, and it's happening because it cuts their cost by 50% at a minimum. It reduces carbon footprint by 70% at a minimum, and their people are asking for it. it's fantastic, for CFOs, it really happens where you cut costs and everyone applauds. That's what's happening. So this is a trend that is permanent. It's continuing, and we will continue to benefit from it. So we -- and we know because we're engaged with so many of these companies now. The pipeline that we have is significant, and we know exactly what's going. We also have done a lot of research, and we can see what's coming down the track as well. So if you're building on it on the other side, it's a tough world if you own buildings today. The tenants that you used to rely on just aren't there anymore, and the tenants that you have are reducing space or canceling it all together. So it's tough. Plus, you've got high interest rates, higher interest rates, and that's a tough market. So investors in properties, owners of properties are having to innovate. They have to change the model. They can't just rely on a tenant turning up and renting space for 5 or 10 years. So they are coming to us in quantity, this is not small numbers. We've got, I think, something like 10,000 to 15,000 in the pipeline, different building out who want to change. Maybe the circumstances aren't right today, but they are -- when they have the right opportunity, they are doing it. And so what does it mean? They're converting their space into products. That's what we do. We create products that are easy for people and companies to buy. And we run our centers well, and they're open every day. They're clean and well presented. We staff them, and that will -- and we sell them over a very large digital platform. And so we give investors what they want. Number one thing, cash flow. So we can take space, turn it into a product and get it producing cash in a market where cash is hard to come by. And this is working for them and for us. And we've got owners now coming back with -- and we're -- I think the biggest owners now on, I think, about 22 buildings going from 1 to 22. And we've got other deals we did. Perion's one of them. French REIT for 50 buildings. We're working with GENERON. So very big institutions, lots of insurance companies at the top and then lots of individual owners that may have small portfolios or even a single building, plus corporations that are trying to mitigate on space that is too much for them in a hybrid world. So we've got space coming from all directions, and we've got a method to convert that space into cash. And great reporting. All the things you need as an investor, we can supply. So this is moving very, very well. And it's still early days. We've been doing it since the beginning of '22, and we're gaining momentum all the time and learning more about what works and how to deal with it. We have invested quite a bit in human resources in order to support all of these partners and all of this growth. But from a capital point of view, the investment is zero. Human point of view, a significant investment in support. And with that, I hand over to Charlie.

Thanks, Mark. So H1 has been a very good half for IWG, and we continue to deliver aligned with our expected financial performance, in particular with revenue growth driving cash flow, as Mark just mentioned. System-wide revenue for the half was up 14% year-on-year to an IWG record of GBP 1.7 billion. Importantly, this record revenue is also feeding through to pre-IFRS EBITDA and operating profit, which increased by 48% and 154%, respectively. Unsurprisingly, the largest increases in H1 revenue comes from our focused growth areas, worker and our capital-light business. The latter of which has seen around 400 new center signings in H1 alone. As always, we focus on delivery of margins, and we're seeing good performance here with an increase in pricing by 9 percentage points combined with the cost discipline, as Mark just mentioned. Here, we present the P&L on an IFRS basis. But as always, we look at EBITDA on a pre-IFRS basis. What you can see, as I mentioned on the previous slide, the combination of revenue increases with cost discipline, and this combination drives cash flow. And cash flow from business operations, which is the cash flow before growth CapEx, interest, tax and acquisitions, is GBP 162 million, up substantially from 2022. I'll discuss how this translates through to net debt in a bit. But fundamentally, the result is an GBP 83 million net debt reduction over the last 12 months and GBP 54 million in this half alone. So you can see that we're increasing the rate and delivering on the financials and reducing the net debt. As usual, our company-owned business revenue increases from a combination of pricing, occupancy and service revenue. As I mentioned earlier, we run this business to generate margin, and this means at various times, you'll see revenues and costs move in different ways. During H1, the SKU is disproportionately towards pricing, which is up 9 percentage points versus occupancy. And you'll see in the next slide how we've been very disciplined on costs as usual. We're also starting to see the fruits of last year's [indiscernible] come through an additional fee income, which is also encouraging. We continue to deliver good EBITDA momentum. As we did in the full year presentation, EBITDA is presented on a pre-IFRS basis, and we believe this is the most meaningful and easiest to understand because it also includes the rent charge. We show a detailed bridge from IFRS EBITDA to pre-IFRS basis in the RNS statement. We believe that one of IWG's core strengths in this industry is our cost leadership, and you can see the EBITDA margins have increased by about 1/3 or 3 percentage points. So in this chart, basically, we show the 2 bits separately. So the first bit is the company-owned business in the first box, and that has the net impact, again, as I said, net increase in pre-IFRS EBITDA and then the growth focus after that. And the combination of all of that plus also our cost discipline has meant that we're seeing that net increase coming through. Small impact on the FX in the first half. We expect to see a lot more of an impact in the second half where sterling was a lot more volatile. Going forward to net debt, our focus on use of cash flow is currently to reduce net financial debt. And so far this year, we've reduced net debt by GBP 54 million. Pre-growth acquisitions and noncash movements, this is reduced by GBP 109 million. As discussed in the full year presentation, we expect to see net debt continue to fall during 2023. We've said that we'll be reducing growth CapEx and expanding out the capital-light business, and this is now coming through in the cash flows and also the new center numbers. Additionally, during Q2, we simplified our debt structure, and we now have 2 debt facilities. The first one is the convertible, 0.5% interest cost, which isn't due until December 2025 at the earliest. And the RCF, which has a final maturity in November 2025. Over the coming 18 months, we look at ways to diversify our funding further. Fundamentally, though, we believe that low leverage gives our business more optionality, which is the reason why we focus so heavily on deleveraging right now. We continue to be a good corporate citizen. And we're in a fortunate position, the ESG at IWG isn't just a moniker, but better for our business as well. Our product, hybrid working, is good for the planet because it reduces carbon from less commuting. We can also give client certification they've been operating in carbon neutral offices for all of 2023, which reduces their admin overhead. We're also putting in focus on ensuring our policies are up to date and increasing our ESG disclosure, so we can get credit from the equity markets for all the good work that we do in this area. In terms of outlook, we confirmed our outlook only a month ago. So not a huge amount to say here, except we continue to focus on increasing revenue and increasing cash flow, which in turn reduces net debt. As we all know, last autumn is very volatile here for sterling, which will give us a headwind in our second half performance on a like-for-like basis versus 2022. As we also announced today, the Board is reviewing whether we should continue to report in sterling, given the majority of our business is already in U.S. dollars. And given this review, we're also looking to see where the U.S. GAAP is the most appropriate reporting standard in terms of how to understand the financial performance of the business. Whilst global growth is fairly sluggish, we've been aided by the tailwinds from hybrid working, as Mark outlined earlier, which is the reason why we came to deliver the numbers you've seen today. For now though, we remain focused on delivery and just basically doing what we said we'd do. So with that, back to Mark.

Thank you, Charlie. So a brief conclusion. We've got an unrivaled footprint already, and that puts us in a fantastic position to win in the structurally growing market. As Charlie said, we continue to focus, and we have done with meaningful delivery in terms of revenue, expanding margins and generating cash. We're really pleased that the -- it accelerate us really firmly to the ground in terms of capital-light growth. And the winner in this hybrid market in the medium term is the one that has the best coverage. It's all about coverage. It's all about being everywhere that people want to be. So you get the first, you win, you make higher margins, and we're achieving that. CapEx spend falling, producing cash, balance sheet improving, financing needs all in place until the end of '25, optionality coming in. So we're coming up now to thinking about '24, definitely going to be a very interesting period for the company. We have a new set of decisions that we need to start making. So with that, thank you for your attention, and we'll move over to Q&A. And I'm told that if you are online, there is a question box and you can just put your questions into that box and they will be delivered to us apparently. So thank you all very much.

The first question, start with Andrew.

Andrew Shepherd-Barron, Peel Hunt. Three questions, if I may. The first is on U.S. GAAP. That seems quite interesting. Would that mean that you would do U.S. GAAP? Would you also have to do IFRS 16? And then would you also have to give pre-IFRS 16? And what's the real rationale for that? You've mentioned sort of [ watch ] regardless of listing venue. So is that a thought? Second question from me is on net debt. You said that net debt, lower net debt obviously gives you optionality, and that must do. But at what point do you think it does? What would your net debt to EBITDA have to be to start to give you that optionality? What's that comfortable level? And perhaps related to that third question is worker. Okay, we can see market conditions, et cetera, et cetera. Can you give us any update on thoughts and timing?

Great. So maybe I'll take the first and then Mark take the second. So U.S. GAAP, the rationale and our reporting standard basically is centered around the understandability of IWG's financials. And we believe at the moment that IFRS 16 might not be the best way to understand how IWG is performing as a business. We would -- if we did do that transition, we would only report under U.S. GAAP, so we did not need to report under IFRS 16 or IAS 17. We believe we can -- for what it's worth, remain London listed while doing that due to IWG structure. And really, that is the rationale. It's just helping investors understand the business better. When it comes to net debt and optionality, of course, the lower the net debt, the more optionality that gives to do whatever we may want to do, whether it's acquisitions, whether it's buybacks, whether it's dividends or other things. Right now, we're just focused on continuing that net debt reduction. We don't have a specific target in mind at this stage, but that's under constant review.

And then on to worker. Lots of speculation around worker, but in the end, this is an investment where we've combined our digital assets with the old incident offices assets. We've got a great management team. This is the company that's supplying the picks and the shovels at the entrance to the gold mine. So they provide all the tools, the whole digital platform to anyone that's interested in going into this business. And we are confident that this business will continue to grow and will be an exciting company in its own right that we will, at some point, spin-off, and we may take an investment along the way. But again, this is not something -- the business plan that we had at the beginning remains the same today. We're a year in. We're happy with it. We're happy with the prospects. I think it's actually a bigger opportunity than we thought. The hybrid working has moved on a lot at the same time. So this is a spot to watch. But again, it's not the main event. The margins coming from the rest of the business. It's -- this is a great margin producer, but it's a smaller part of the business. Important, but small. But it's going to produce, we believe, very good return for investors over time and uses everything that we have combined with them to create an entirely different platform separately managed that has a totally different KPIs. And it's completely free of anything to do with real estate as well. So it should produce a very good multiple at some point in the future.

Sam from Stifel. Three questions from me, please. Firstly, on the capital-light growth. I think you said you got GBP 21 million of fees. Are you able to say how many centers are open that generate that fee? Secondly, on the EBITDA from capital-light centers, I think you said there's an incremental GBP 6 million improvement year-on-year. Is that profitable in its own right? Or do you allocate the costs to that at the moment? Or is there a certain point that you'll be able to give us the margin on that element as that scales? And then finally, on your biggest listed competitor, WeWork. Do you think -- so a very impressive price performance from you guys in the first half. Do you think the management changed there, and their ongoing challenges will create more price issues or competition in central business districts?

So just covering the openings. We opened 133 new centers in the first half, only 17 of those were -- 17 of those were conventional. So the rest were basically a combination of variable rents, managed partnerships and as part of our franchise business. So as you can see, it's very, very heavily skewed towards capital light. At the moment, we are not in the numbers allocating the costs associated with that into the incremental numbers. But though the drop-through from revenue to EBITDA is extremely high, and the margins on that extremely high. We will sort of start to include the cost of the team that does that within the segment numbers. At the moment, it's just included in the overhead. So in some ways, I think it's also important to think about it in this way, which is the investment in that team. You don't see in -- as CapEx, it comes through in OpEx. And therefore, in some ways, when we look at the cash flow generation of GBP 160-odd million of cash flow pre-investment, it doesn't actually include the investments to the cash flow without that team. Without the investments in that team, it would actually be even higher. Mark, do you want to comment or add to that?

So you open -- what was it? How many?

133.

133. You have -- it's a triangle. It takes 18 months to mature them. So you can see the position today. We need to give better guidance as to how that comes through in terms of the future sort of runway of fees. It has no -- it has very little volatility. So it's quite different to the margin that we would get in the company-owned business, which has slightly more volatility. But this is quite fixed. The margin expectation we said at the beginning, about 50% margin. So the cost is about 50%, all in, including all overhead. So -- and I think we're absolutely in the zone for that sort of going forward. In terms of our friends at WeWork, so a different business model to us. Same business, different model. And that's what's causing the problem. So they have very little service revenue, and the space has been set up incorrectly. We've taken over, I don't know what number we're up to now, maybe 50 now. WeWork, so we have to -- we refit them, go again. Is there price pressure? Yes, in a limited number of markets. So this performance that you see here is -- would be better if they were reshaped in some way. They report tonight. I'm told all will be revealed. Now -- but this is an anomaly from a huge investment made years ago. The event -- it's unraveling as you can see because they're just running through cash. It will eventually sort of normalize. It still hasn't yet. But it's a small effect, but the effect is there. And it's sort of an unnatural effect. It's sort of trying to get cash under any means possible.

Steve Woolf from Numis. Just a couple from me. First of all, can you give us a guide for how many openings in the second half of those capital-light models? Secondly, you mentioned the -- helping the bigger companies effectively. Just again, how much at the moment would you say large companies contribute to revenue under that model you've outlined? And then thirdly, you're quite well into this sort of the franchise model now. How has your experience been in the structuring of those deals as it's evolved? Have there been any sort of changes you would point to in the lessons of learning?

Yes. How many in the second half?

So I think we'll do the same again, but slightly accelerated. Basically, you'll start to see the 421 that we signed last year will start to come through sort of further in the second half. As Mark said, they kind of -- you have about sort of 9 months from sort of signing to opening. And also that 421 we signed last year, the majority of those were in the second half and to the back end of the year. So just think about it that way.

What we know is there's -- every month is a new cliff. So that's why we've invested in resources because there's a lot more opening month on month. So I would say the number will be higher, but it sort of builds towards the back end. And the fees are growing all the time is the key. So in terms of the sort of large company percentage, it's growing all the time. And so what we've got is companies we already have that are just putting more people onto hybrid. And we're getting a lot of new companies coming in, who are adopting hybrid for the first time. And they start -- generally, they will start small with one country and then they add more. So it's becoming a bigger proportion. It's well over 50% now and will continue to grow. So again, very -- when you look at this, again, we're resourcing up on the corporate side, adding a lot more people dealing directly with large corporates. So we have a team now. We will have, by '24, 5x the number of people. Just to deal with the pipeline that we can see today, it will continue to grow. It's the sort of thing that CFOs talk about at conferences, what are you doing, how are you managing things. So we've done hybrid, you should speak to these guys, we did it with them. And it's sort of coming to us rather -- we're not really doing any marketing to that market, it's word of mouth coming in and growing.

Well, does that include people using it in a very small way with sort of very recalled...

Yes, yes, yes.

As well as taking over...

Yes, it's all of that. And what's interesting is the -- what corporates want is a single platform. So we're working on making our technology work for the corporate so they can use our app on their own space. That's what they want. So if you're a worker for a company, the app will allow you to book space both in your own building, company-owned buildings or on our network or on the wider worker network, by the way, which has 30,000 locations on it. So you've -- this is the future. People will be using an app just like you book a taxi with Get or Uber. That's what they're going to be doing in the future, 2, 3 years' time be absolutely normal. So it's a very interesting marketplace. We're not selling any more to these guys. We don't sell. We just implement for them. So it's a very, very attractive marketplace. And on the other side, Steve, so I mean, as I said earlier in my comments, we learned a great deal from -- we've always franchised, by the way, and we've always done management contracts for 30 years, but in small quantities. As we're doing them now on scale, and those -- we would expect the numbers to continue to scale up in the second half and into '24. So it's becoming more and more popular. What we've learned most of all is it's important to do a great job. I know it's obvious, but get the buildings filled up and get the cash flow moving and report very well, that's what our partners want from us and support. They want communication. So where we've invested is in partner support, partner reporting, integrating into their accounts. A lot of -- it's a lot of back office communication to -- and we found that, that is what -- deliver and communicate well, they will give you more buildings. We've simplified the contracts, lots of things. We've got a whole team of people now focused on just opening centers. That's all they do. So their job is to take a signature to an opening, and then they hand over to the partner team that manage the partner afterwards. So it's -- that's what we've had to put, and it's working, putting more resource in to sort of hold the hand of an owner across those early stages, and that speeds up the openings and improves the result Okay. Thank you, Steve.

James Zaremba from Barclays. Three questions, please. Firstly, on working capital, the first half had a working capital inflow. Can you discuss the outlook and drivers for working capital in the second half? Secondly, on operating profit, a small pre-IFRS 16 loss in the first half. Can you talk us through the outlook for your different profit levers, price, occupancy, services, fee income and cost in the second half? And lastly, a small dip in revenue in Q2 and Q1. How should we think about company-owned center closures in the second half?

So I'll take the working capital question. So basically, in particular from the Instant acquisition, we sort of get some working capital swings, particularly in sort of first half versus second half. We don't think there's going to be anything material in second half, and that's the reason why we can continue to be confident. The net debt is going to fall through the rest of the year at basically roughly the same rate as the first half sort of close to GBP 30 million a quarter. I think I'd just also just go back to the point, which is the GBP 162 million of cash flow before CapEx, interest and tax, which shows that the core business is generating -- the business sort of before those activities is producing an immense amount of cash. And you'll see a small acquisition in there plus the growth CapEx, which will continue to fall. So I think -- so that's really where we sort of see guidance in the second half. And we're delivering exactly as we said we would at the start of the year, which is net debt falling and also the reduction in the growth CapEx. In terms of the levers that we see sort of price occupancy, service fees, just the one thing that's worth noting is that when we talk about occupancy statistics, that sort of invest comes long-term occupancy, i.e., rented out space. It does not include meeting rooms, for example. So one of the things that we have seen a big pickup in recently has been meeting with space, and you've seen that come through in the services revenue. But as I said and as Mark said in our remarks earlier, the way we think about this business is entirely around delivery of margin, and that -- at the end of the day, it's the margin that produces the cash flow. And it's a combination of all of those things. When we sort of look at revenues going into the second half of the year, we've got a big pickup from the new center openings on the capital-light side, which drives through system-wide revenue and fees. Again, you sort of see slightly less leverage on that because, obviously, we're just taking a fixed percentage of the revenue. And I think sort of I've covered the revenue in Q2 commentary.

Yes. So look, again, look, just to echo also in office occupancy does not include short term. So people renting by the day, week, whatever, and that's now quite a significant occupier and significant revenue producer. So that's all in the services. Now repeating what Charlie said, it's all about margin. It's not about occupancy and price services individually as those as a group and keep managing the cost down, which we are continuing to do. So we expect in the company-owned units to continue to see margin expansion in the second half, gradual margin expansion. And closures are part of that. If we're in business to make money, we're not in business to pay rents. So we have to be making a margin, and we have to be sure that, that center -- maybe it doesn't make a margin today, but it will make it tomorrow. Otherwise, it needs to be closed or we need to renegotiate it. There's just no middle ground. So a lot more discipline around that, tough decisions sometimes, but it's what you have to do. So you're right, it does affect revenue, but it has a very attractive impact on margin.

I don't think we've got any more questions in the room. So we've had a few questions online. So maybe to start with a couple of questions we had on work, if you could describe the product launches in the second half and how you think that will translate through to revenue.

Yes. I mean, it take -- again, and obviously we always like to have the impact much sooner. But there's been a lot of work done to create new products. Remember, picks and shovels, entrance to the gold mine. They've got to be easy to buy. So what the guys at work have been working on is converting what they do into more products that people can buy. And quite a lot of investment has gone in there. And these are digital products and other products, including supply chain, many, many things. And that will start to lead to more subscription sales. It's all about subscription. It's already happening, but it will start to happen more at pace. It will build during the second half. But it's really, the real impact you're going to see will be in '24. So the core business still grows, but the real growth -- the new products really aren't in the market yet. There's also quite a bit of consolidation and M&A going on in there, small amounts of cash. They're in the number in our consolidated number. But that -- so they're growing into a global platform and adding products, impact '24. And yes, as I said earlier, good management team and exciting developments there. And I think it will become quite an attractive part of the business in the coming couple of years.

So I've got one question, so a technical question about GBP 24 million provision release and what is that. I think that relates to the closure costs. That was from Andy Brooke, RBC. But for Andy, if you don't think I've answered that, happy to follow up on that. I think, actually, the rest of the question we've got online is largely related to the work ones, the net debt and then also the size of the backlog as well capital-light openings.

Yes. Maybe -- so leave backlog on. We'll try and give what we're hearing, and I think what's important is to be able to give more guidance on the sort of how the fee revenue is likely to develop. We can't give a forecast on it, but we can give a shape to it. Where you can see enormous growth for us, I mean, it's significant are in countries like Egypt. And the currency, this is a much lower currency. You have to open a lot more centers in Egypt than you do in United States for the same revenue. So we've got lots in Egypt, Vietnam, Thailand, lots of these countries where the currency is different. Indonesia, a huge number in Indonesia. And then a lot in the United States. So it's trying to -- we've got to try and create some kind of modeling tool that allows people to sort of forecast where the fees will get to in the years to come. But it's -- it will start to move -- it's starting to move the bar. If we look at our forecast towards the end of this year, you can see it starting to become more significant, and that will continue to grow during '24, and that will become quite an important number for everyone to focus on.

Any more questions?

No more questions. Any more questions from the room? No. Very good. Well, thank you all very much for your time. And as usual, Charlie, myself and Richard, who's recently joined us, will be available for any follow-up questions. Thank you.

Thanks.