Status Update

Jun 7, 2021

Press Release

Hello, and welcome to the IWG Plc Conference Call. All participants will be in listen only mode, and afterwards, there will be a question and answer session. Just to remind you, this conference call is being recorded. Today, I am pleased to present your speakers, Mark Dixon, Chief Executive Officer and Jim Hughes, Chief Financial Officer. Please begin your meeting. Hello. Good morning, everyone. So you've always had a chance hopefully to see this morning's update. Really just to put a little bit more color around that, This is a story that regards only the speed of recovery. We've never been in a better position for the medium and longer term with more and more companies Switching to hybrid working, but in the shorter term, that is 2021, Whilst we're seeing some very strong positive developments in some markets, particularly in the United States And now the beginnings of a recovery in the UK. We are being affected in a number of other countries By continued lockdowns, extended lockdowns. But overall, We're seeing just a continued level of disruption and uncertainty, and it's this uncertainty that slows decision making. So, inquiry levels have recovered in many places to close to or actually exceeding pre COVID levels. So we don't have an inquiry problem. It is really surrounding decision making whilst this level of uncertainty persists. So we're taking a more cautious view on the trajectory of improvement this year. And remember, three things make a difference: Our occupancy rate of improvement, how price moves and how services come back. Now in terms of occupancy in both April, May June, we saw pretty much a 1% improvement In each of those months, but it wasn't the level we thought it would be. Even though it was good, it wasn't as good as we thought it would be. So And what you can see when we look at the different rates of improvement, we've got some markets improving At 2% or even 3% per month, and then we've got others that are flat and a very small number that are looking slightly Backwards. So in terms of occupancy, the average improvement has been good each month, but just not to the level that we expected. In terms of price, price is following well, but this price improvements We're very tightly in line with occupancy. So the better the occupancy improvement, the better the price improvement. But we have again Seeing good progress from the middle of April through May and into June on price. Price is The impact really to revenues that takes the longest to bring back into the order book, but it is improving month on month. With services, these again, this is probably another significant impact in that the recovery here It's slower than expected. So it continues to improve, but just not at the same level that we had expected a few months back. And this is just disruption and uncertainty causing this. Just like to emphasize that We're much more confident on 2022. So we've got everything lined up for a strong recovery into next year. We've got unprecedented continuing wins on enterprise wide accounts. This has continued Through May and into June, with more and more companies moving over to hybrid work. And you can see this widely reported in newspapers as well As more and more companies move this way, and we are a net winner as these companies move as we have The most the biggest network, and we have the best operating platform for companies to move in this direction. This plus Healthy levels of inquiries overall and very strong levels in some markets that have more completely opened up, plus All of that on a lower cost base means that we're confident given enough time And it really is a timing issue that we're talking to you about today. We're lined up for a good 2022. So we're Confident in that number. Very briefly on MFAs. Discussions continue. There are no effects on those discussions. And the MFAs We are in discussion on are in markets that are unaffected by what's going on today. And also, we have a healthy level of growth, which seems a little counterintuitive, But there is increasing demand for what we do. Network is what wins the day, And we continue to add to it with excellent levels of growth, both in franchise and in management contracts. So low capital requirements No capital requirements, and we should end this year with a reasonable growth rate Compared to the market we're in at the moment. So overall, just to say one more time, this is a timing issue. It's a slower recovery than the trajectory that we'd built in and that we had seen. We're comfortable On 2022, and we expect to see a reasonable level of Network growth also coming in, in the second half of the year. And with that, I'll close and open up for questions. Thank The first question is from Andy Gogler from Credit Suisse. Please go ahead. Your line is now open. Hi, good morning. A couple just a couple at this stage for me. Given the expected losses this year, what does that mean for the balance sheet and the expectation of M and A From the equity rates and so forth last year. And then secondly, can you just help us with, From a cost perspective, what your expectations are for this year? Just to kind of build a bit of a bridge From last year to 2021, please. Glyn, do you want to deal with that? Yes. So Yes. In terms of balance sheet, Andy, we have adequate funding Within the business, we envisage closing 2021 at a net debt level of between 3.50 To €400,000,000 So we have no concerns in that respect. And as occupancy picks up in the business, we get favorable cash inflows from, Obviously, working capital as customers place deposits with us. So all okay there. I think on M and A, I mean, we're doing quite a bit. It's not really M and A in the It's sort of very cheap M and A and that we're taking over failing operators. So it has some cost, But these are the costs of gaining synergies and quite a we should see this year A good uptick in terms of management deals. These are largely management deals where we take over Failing competitors, of which there are quite a number. So Up until we're not seeing the right opportunities yet. In terms of distress, we're Doing more significant M and A would make sense. But if we saw the right opportunity, Andy, Where we could make the right returns with the right risk profile, we have the firepower to do it. So it certainly doesn't We're not curtailed in any way. We're looking forward to the other side. We're not focused on today In terms of where everything is, we know and we can see that Having the network, the coverage, and the operating system that allows companies to flex and use And offer it to their employees wherever they want to use it is a thing is going to be really a major Move in the future for many, many companies and we're well placed to benefit from that. And to do that, we're going to need more coverage To convert more of that. So we have this in mind as we're doing it. And we're doing it Basically managing this for many property owners who can also see that if they just keep to their old model of leasing space, It's going to be an uphill struggle. And so we've got a significant number of New management contracts, just managing space, that are not takeovers from building owners who can see that there's a new thing coming. In terms of costs, finally, Andy, look, the I'm not quite sure, Pilleen, how to answer this, but the I'm not the costs are must be lower, but I haven't I may have to come back to you on that. Yes. Look, high level, Andy. The cost savings guidance that we've given in previous announcements, We're on track to deliver those both with property related and the non property related costs. So that broadly takes us in line with business communication. I think the one piece to say is there are certain elements of the business that we're going to continue to invest in ahead of the curve, particularly around Franchising personnel, etcetera, in certain markets. But the cost guidance that had previously been communicated at the outset of the year is still applies. And Mark, thank you for that. Mark, just going back to your previous answer around M and A, just trying to bring all of that together because when you were Yes, Shireen, convertibles and raising equity last year. You talked about this once in a lifetime opportunity to acquire and not there hasn't been all that much Activity on one side. And 2, in terms of capabilities when that does come through, I think cash expectations are now Materially lower, 100 of 1,000,000 lower than they would have been at the time. Just kind of putting all of that together, do you really I mean, do you really have the firepower We're going to do a big deal or is that now not really on the count? Look, A, we really have the firepower. B, there's not enough distress. There is distress, but it's not people limp along. So that GBP 5,000 is there for true distress. And that's it's coming out of the woodwork, but it's all small. You're going to get a growth rate this year. You will see it as it starts to emerge. As these sort of takeovers come in, you'll see Whilst we have the firepower, we're growing using almost no capital, which is the most attractive Type of growth you would agree. If the right deals come along, We have a lot of liquidity. And remember, the business is improving month on month. It's not a This is we're not updating today to say the business is going backwards. We're updating to say the business isn't moving forward At the same trajectory as we had expected, that's it. But it's definitely moving forward. So with moving forward, as Glyn said, rising occupancy, rising price gives you more cash flow And more positive more negative working capital coming in. Okay. Thank you very much. Thank you. The next question is from Sami Manimi from Kite I'm not sure if that's me. You got the next question, operator. Of course. The next question is from Edward Dinos from 1 Investment. Please go ahead. Your line is now open. Good morning, gentlemen. A couple from my side. Just going back to the area to the geographies where Everything is looking more robust and tracking back to as planned. To get an idea on the service take And the pricing that you're seeing there versus pre COVID, just to give an idea of sort of benchmarking when you say things were actually On track. Just give us an idea of what's actually going on in those regions. It would be helpful to start. I think, look, to deal with price, what I've said previously and I reiterate today and Glenn We'll back up. It takes about a year for the business to recover and that's largely Down to price. So occupancy is first indicator, services, Then price, it takes with price, it takes price takes a long time to go down. It's taken a year to reduce and it will take a year to recover. Now what we've seen in the past Month, if we look at the month of May and the second half of April is strong price recovery. And we're talking around about 8%, 9%, but that 8%, 9% is in New sales that were done in that month. And so however many sales you're doing in the month, It then takes time for that to you have to do that every month for a year to get a 9% price increase. Now just to be clear, it's not a price increase. This is just reducing discounting. So you're getting back to your Target price. So we're making good progress on this where we have Improvements in occupancy. And the 2, as I said in my comments earlier, very closely linked. So that's an average increase On price, that's where we've got slow and fast trajectory. If we get if we move faster On occupancy, we move faster on price. We don't need to offer as much discount. If you go To those areas where you've got a better trajectory, is that tracking the correlation between occupancy, pricing and service, Acknowledging the lagging effect on those as you were planning. And if you go back to previous cycles, and I know this one is very, very different because of the Circumstances, but are you seeing a similar behavior pattern? Look, we've You can't go back to any previous cycles except for SARS, where and the SARS effect It was minor compared to the effects of this pandemic. But we are seeing Exactly as I'm saying here, where you get the shining example here is the United States, where You've got pretty much the whole of the U. S. Improving, but the states that exited first We'll be right at the top end of improvement month on month and the stage exiting second, third will be lower, but everything's improving. And with that, less discounts, so better price and services coming back. The U. S. Is less affected by Seasonality in the summer, Americans take less holidays and it's not like Europe closing down. So again, one of the reasons for our caution Is that we know that in parts of Europe, companies will delay making decisions until after the summer. And so we're taking a cautious view now just to manage expectations going through the rest of this year. But it's evidence everywhere. We can see this in many, many markets that just different rates of recovery And they are all similar in terms of how they come out. We've got quite a uniform business in that way. Okay. And then 2 other questions, if you don't mind. Just as the recoveries is gathering momentum broadly, What are you seeing with regard to landlord behavior and the dialogue I'll have from that side? And then the other one with the last question would be just on your Dedicated city center urban sites, what again is the behavior patterns and the take up and returns that you're seeing there This is some of the original planet. Well, look, the biggest change is in The sort of downtown areas because as people start to come back into them, they were the worst affected. So clearly, They will improve relatively speaking the most. The and we're seeing that improvement. I mean, but it is a question of I think it's also related to commuting and the people where the commute is the longest, Those are the slowest to recover. So but we're seeing improvements. I mean, in places that were Very, very difficult such as New York. We're seeing quite strong improvements in New York. And you have to just look at the reasons why. During the whole of COVID, we continue to sell in New York and London, so we didn't stop selling. Look, we were selling to a new type of customer, and these were customers that were companies that had a break in their lease and were downsizing. And I've pointed this out over the past year. And so these were companies saying, we just don't need to be have so much space in the city, We'll get smaller space and sort of take space on a flex basis where and when we need it. That is continuing. And we get there is a definite trend for more and more companies to adopt It's a much more flexible approach to their space and have more people working either from home or from close to home And have smaller sort of central offices. And we win on that. And we can see that happening In the city markets where you get more and more companies that are looking for Smaller space and more flexibility. So I think from a trend point of view And we're adding more centers in the city centers, just to be clear, which brings me on to the second point on landlords. Landlords, even though you will hear from brokers, all the real estate brokers will say They're the busiest they've ever been, etcetera, etcetera, etcetera. It's partly true, and that's just that it's because You've got a year's pent up activity all happening at once. But the reality is these are companies getting out of leases and taking Smaller space in the main. Some companies obviously are not, but many, many are downsizing in the cities. So this is giving forward looking landlords understand there's a problem coming And are talking to us and we are opening centers with them to provide the space that future companies want, Which is managed, it's flexible, it allows smaller space, has great central amenities. That's what companies are going to be looking for More and more in the future is what we do. And so a good more than we've done in any other year Coming through now in terms of us working with landlords to create that space. And but overall, in spite of whatever you may read, there is going to be a definite change in Office occupation is certainly not going back to where it was. And it's but this bodes very well for us. Again, As I mentioned in my comments, more significant wins, we'll update on the half year results, More significant wins from enterprise wide customers, where you can see them changing. And all research points in this direction. Our wins points in this direction. Of the way companies use space It has changed and will not change back in our opinion. Great. Thank you very much for that. Thank you. Thank you. The next question is from Steve Wolf from Numis Securities. Please go ahead. Your line is now open. Good morning all. Just a few from me. In terms of the rate of recovery, you flagged that Europe is definitely a laggard in that U. S. Is better. So it sounds like Asia is also lagging, but of course, Part of that has been better in terms of the rate of recovery. Just generally, I appreciate Japan is possibly an exception to that. So I was wondering if you could give a bit more detail on Asia. Secondly, if Cost savings are on track. I just wondered, could you remind me of the impact of the annualization of those cost savings in 2021? And then final well, 2 more as follow ups. The renewals rate, you mentioned the new deals are going through At a better rate than the floor of about 8% to 9%. Is that also holding true for renewals that you're going through? And then finally, Just a question regarding that level of net debt at sort €300,000,000 to €400,000,000 Could you just remind us or remind me rather on the covenants You've got against some of that there as well, please. Thanks. Okay. Dealing on the FirstSource renewals Have reached pre COVID levels. So that's I mean, this is a very strong underlying sign. And that's one of the reasons That occupancy is picking up. It's not just sales. It's that less people are moving out. And that's a strong indicator. Then if I turn to the next question I think you had, which is Price, that price is not the renewal price. That is the new sales improvement in price that I was talking about With renewals as you're going through, right? What you were saying is the pre COVID price. Okay. Yes. And then the overall price improvement, you're looking at about 8%, 9% on average. But this is just sort of 1, 1.5 months data, but that again, it's a strong sign. And that's reduction in discounts, not an increase of price. In terms of the Glyn, The annualizing, not quite sure about the question, but leave to you, Glyn. Yes, that's fine. So I think high level, the previous We've given on anticipated cost savings still hold for 2021 because some of these cost savings were delivered In 2020. For 2021, we've got savings on closures, which are going to be property and non property of about £130,000,000 And then we've got an extra £50,000,000 to £60,000,000 in year savings from Procurement, people and other rent deals that we anticipate coming to the fore. So you're looking In year 2021 of around just under €200,000,000 Okay. Perfect. And then the covenants, obviously, the Converseable in there as well, just general covenant. Sorry, Steve, I missed that. Sorry, Tony. On the net debt position and the covenants again, I appreciate you got the convertible in there, obviously, as well. Yes. So the net debt Full year and closing 2021, we're anticipating net debt in the €350,000,000 to €400,000,000 range. We've also taken the opportunity to advise The covenants with our banking partners over the last few months as well to give us more operational flexibility. So we have no concerns In that respect. Okay. And the covenants themselves, are you prepared to disclose what they are to 2.5% times? Those well, firstly, those are commercially sensitive. And secondly, they are, let's say, more flexible than they have been in the past, Bearing in mind the recovery phase that we're in, so we're not in a position to disclose the actual targets. Okay. No problem. And then just one follow-up. In terms of that recovery, I think some of your competitors have perhaps been a little more Positive regarding the pace of recovery. Yes, have you found that perhaps which one, slightly more difficult one, A very noisy competitor, shall we say. And obviously, there was comments from Workspace Yesterday in terms of London now, albeit there's London specifically. But I think look, if you look at Workspace, Graham is talking about a recovery over the next couple of years. It takes time. We're saying it's going to take about 12 months. Graham Clement is saying More like 24 months, we've got we're much more dynamically set than a company like Workspace And we have a lot more diversity. And we've got enterprise accounts and so on, which are giving new layers of income The company like Workspace don't have. If we look at WeWork, Look, the asset test will be the actual numbers. I mean, yes, they're talking positive, but the actual numbers All went completely negative. And they will be benefiting from a U. S. Recovery, just like we are, But they are so far underwater that it's hard to see how The sort of level of improvement they're talking about, if they're able to achieve it, we as a company would be very happy Because it will mean we will achieve it as well and there would have been no need from this update today. But it's we're in this for the long term. We want to make sure that we're not having expectations That we feel would be difficult to achieve and so on. So But the acid test will be the numbers, Steve, and it's going to take a miracle for them to achieve theirs, I think. Thank you very much. Cheers, Mark. Thank you. The next question is from Daniel Kalman from HSBC. Please go ahead. Your line is now open. Good morning. Dan Cowen here from HSBC. I've got two questions. One is, can you give us an idea I don't know if actually if you got enough data on this, but What's the take up then of the enterprise deals that you've signed so far? Have you got any idea of the rate at which they're being used So far, I appreciate if I take time to onboard these big accounts. But have you got any sense of the new build out? Yes. Look, I mean, what we are sort of modeling is and again, it's only what I've said Previously is that our short term occupancy, that's use of drop in day office products, We'll move next year to from 1% to 5%, maybe it will be more. And just to give a backdrop on this, from our friends at WeWork, they're claiming that they're going to have 10% of their revenue coming from drop in. But they're not signing up any enterprise accounts, they're all individuals. So We are seeing the take up improves sort of month on month, Week on week, more people on board, more people tried and more people come in, the company gets more used to using it. So The two impacts will be day office and meeting rooms. We will be spending a little money to upgrade our meeting rooms in some places This year, because we're seeing more meeting room usage from these companies. Well, as you would expect, as they reduce their own space, They need to use someone else's space then. So we're comfortable in this. And as I said, we've signed up more. My underlying concern remains is, Do we have enough space in the right places? That's my underlying concern has not gone away. Got Thank you. And just the second question is actually on occupancy. I mean, I think Q1, you were talking About 66% occupancy from mature centers. Can you give us an idea of roughly where you'd see that For the full year and maybe into next year, I appreciate it's a bit of a moving target. But given the sort of confidence in 2022 Still being pretty firm. Can you give us perhaps your thoughts on where what CapEx might end up? Glenn? Yes. So yes, thanks, Dan. So at a very high level, as Mark indicated, we're anticipating continued pickup month on month in occupancy. And we'd hope that at a total kind of global level, our occupancy levels are in the low to mid-70s at the end of 2021, With the mature estate a couple of percentage points higher than that, from that starting point, we're then working on the premise that occupancy would steadily Improve throughout 2022 and particularly in the second half, as Mark alluded to. So 12 months from now, the business should be, I would say a steady state and more representative of what the future holds. And that would get us in 2022 At an occupancy level slightly ahead of where we were pre COVID in the high 70s, low 80%. And then if you add to that, Glynisworth, then you add The enterprise space. Put a conservative 3% additional occupancy Because our occupancy does not don't confuse our occupancy with the WeWork occupancy where They're dividing the number of members by the number of seats. We don't do that because it's not occupancy. Well, our occupancy that we're giving you and that Glyn was speaking about is long term occupancy. In addition, we have short term drop in occupancy. And that, again, if it became 4%, just if you took it on a 3% average in that 22 year, That probably, Glyn, would be reasonable for people to do. Yes. That's what we've kind of embedded in our forecast, yes. So Would be at the low 80% occupancy plus an overlay for the enterprise deals. Mark Then if you then if services are badly hit, again, you can just compare them It's quite easy to do to compare where they were with and it's then coming back on the size of the estate then. You can it's quite easy to see that coming back and then price. The price has taken An impact, but that building back has the biggest effect with what I think We'll be talking about next year, which will be inflation. We're very well set with what we've done so far on costs We can we've got good cover, I think, in what I think is going to be an inflationary market in 2022 on average. Thank you, Jeff. It's really unusual. Thank you. The next question is from James Sarumba from Barclays. Please go ahead. Your line is now open. Hi, good morning. Yes. One follow-up just on services. Can you discuss what level of Incremental improvement is anticipated here to meet your kind of 'twenty two expectations and how that level kind of compares to the pre COVID levels. Then one on occupancy. Just in terms of being slightly below behind the trend you're expecting, has this Lee, higher churn than expected? Or was it lower new sale rates than expected? And I guess, where does that churn at the moment compare to Pre COVID levels. And then just one for Glyn on the kind of cost base and your comments about SG and A investment going to support the franchise strategy. Kind of conversely, can you talk about how much SG and A gain there's been from, I suppose, doing No conventional lease openings this year and I suppose going forward. Thank you. Sorry, what's that last question? I missed that one. Sorry. The last one was just about within SG and A. I guess there's been some comp here historically to sports Conventional lease openings, which are obviously reducing sales. I think just deal with that in order and then I'll pass that over to you, Glyn. But I think, Glyn, you've already answered that third one. Churn is at pre COVID level. So we're back up to The retention rate or the churn rate are pre COVID, which is a very strong sign, and we've been there for the last 2 months at least. So that's so the occupancy gains are coming from Your churn rate is at a lower level And new sales are at a stronger level, pure and simple. And we've seen Sales overall, and I'm taking this off the top of my head, but close to or even ahead of pre COVID levels in places like the U. S. So and it's patchy overall globally, but the U. S. Overall improving, UK improving in the recent in the last month and Even places some Germany improved. So it's very It is everything's primed for improvement. On average, everything is improving In general, it's just the rate of that improvement. We need basically more sales And to hold the keep the retention level up. And the retention level looks very healthy. So that's we're not concerned on that. It's just getting more decisions. We have the inquiry rates. It's just getting more conversion. In the SG and A question, I mean, Glyn, I think you answered it on front. We continue to invest, but do you want to deal with that? Yes. Continue to invest. I think high level, we've, I would say, taken decisive action to reduce the level of overhead The expenditures within the business, both people and non people, our capital expenditure plans for this year, I think, are more aligned with A lower risk, lower capital intensity growth plan going forward. Obviously, that will, over time, feed through into Lower depreciation rates, but the impact on 2021 numbers in terms of that latter element is relatively low That takes a while to feed through the system. But we're making, I would say, good progress in terms of keeping overheads, let's say, At a level which is relevant for the future business. I think finally, You mentioned services and services recovery. 1 of the areas apart from growth that we've continued to invest in, in fact, we've Increased investment has been in the tech platform and has been in services. So this is business development teams That are developing services for the future. We've launched new services. We are anticipating What these larger hybrid accounts want, and we've got people developing solutions for them. We've also acquired a few small but very attractive Services businesses, which we have synergized, we've now invested in to grow. So We see the Services by side as being a potential upside for 2022, But definitely an upside for the future beyond that. So we're taking a gain. We're comfortable with 2022 because we had Cushion in there anyway, but there are upsides. If these services initiatives start to deliver In addition to everything else, that will help. Thank you. Thank you. The next question is from Sam Dindal from Stifel. Please go ahead. Your line is now open. Good morning, guys. A couple of questions from me. Firstly, on the trading recovery, it sounds like 2020 expectations have not changed too much. Just Wondering when you expect to get some sort of EBIT breakeven. Is that going to be fairly or later in the second half? Or any sort of color around that? And then second on the MSA, obviously, you make comments on some discussion in the final stages. Is it fair to assume those costs are being North American based given Commentary on sort of trading trends, etcetera. And would we expect an announcement before interims? Or is that more likely in August? Thanks. In relation to operating performance, so at an EBITDA level, we are Making, I would say, small positive EBITDA month on month as we speak. In terms of that translating into operating profit becoming positive The back end of 2021, early 2022 will be in positive territory at an operating profit level. Please go ahead. Yes. MFA is again We would expect announcements this year and the earlier parts of the year. But again, this is these will take the time that they take. Number of discussions ongoing as before, and we'll update As soon as we have something to say. Hi there. The next question is from Edward Jeno from One Investment. Please go ahead. Your line is now open. Sorry, gentlemen, you just got me back. It's just one quick one. I just want to get a clear understanding of the EBITDA we're referencing for full year 2020. That's my starting point. That's the first Then we can just follow on question from that. Glenn? Yes. So we referenced in the announcement That we will be below the 2020 number, and that was €134,000,000 of recurring EBITDA. Anticipating that 2021 will be below that number, somewhere in the region of 50 to 100. Okay. Now I acknowledge I don't run your business, but I do invest in it. I'm slightly confused as to the calls that were progressing through last year, the early part of this and to the figure we got today. Looking at the cost saving program, looking at the, I call it, the hopper of commercial discussions you're having and how that was actually being converted to sales, Your conversation and points with regard to reduced churn, various key regions back to or slightly better than pre. Just bringing all that together, I'd have difficulty to understand why this year would be leave aside the number that the market had, What I don't quite get is why it'd be significantly below that of 21. You've Just got more bad months in the year. It's basic mathematics. You had the best first quarter we've ever had at the beginning of 2020. And then you have from that high point, you have mathematically 9 months of decline. Okay? So 3 high months and 9 declining months. Then if we look at 2021, We went down from continued to decline into the Q1, Okay. And even into April, because the following effect of price, so your The bottom of the curve is sort of April time. You start moving up in May and onwards, and you just have You have less months to recover. That's all. So the it's simple mathematics. Now, It can change if occupancy you can do the arithmetic yourself. If occupancy, which is improving at 1% Each month recovers at 2% each month, you have a better outcome. You have obviously the effect of occupancy and price And the services come back more quickly. But it's just the number of good months you have in a difficult year. And it's that Okay. I'm sorry, Mark. I apologize, but I acknowledge that. But I'm also remembering that there was a significant effort put by yourselves as a management team into reducing the cost base as well. Yes. A lot of dynamic handling. And I'm trying to I just have difficulty seeing where everything is sort of missing Hi. Okay. Maybe I've got to go back and look at my spreadsheet. Well, we need to take you through it because it's basically the costs are reduced. Okay. Essentially, we're missing half of our service revenue, which is painful. We our occupancy levels are off and price is off. I mean, it's those That is what it and we've reduced the cost thankfully and continue to do so. There's no getting away from the arithmetic. I mean, it's unfortunately. I get it. All right. Yes. But we'll take you through it. I mean, it's a tough one, but it is what it is. Again, it's just Ben, it's our job now to try and improve the trajectory of recovery. And that's the up for this year is possible. Our focus is on 2022. The better we can get the trajectory this year, the better The exit to this year, the better next year will be. Do you see a need on what you're tracking so far to actually look harder at the cost base than the original planning would have been? Actually, that flexibility, Noggin. That's it. We're looking at it all the time. Don't worry. This is we are focused we're not sort of ignoring costs at all. In fact, the opposite part of our problem Here, running the business is it's easy to focus on fixed costs, go back and we are going back And if redoing leases even today, we're not hesitating. Where we think we've got an unviable unit, we'll go back And work that one over again. The challenge when running a business in a it's hard to see it obviously with Today's update, but we're in a super exciting place with the world of workplace coming in our direction. The challenge is investing in the right things for the future business, and that is in the business development required For the platform, for the services and so on. We're doing it in a small way, in a cautious way. But that's the challenging part. The easy part is to close nonperforming units or renegotiate them. That's easy. The difficulty is actually investing for the future in a time like today. But we are doing it, but moderately. Many thanks, gentlemen. I appreciate the candor. Thank you. There are no further questions. So I'll hand back to Mark for closing comments. Okay. Right. Thank you all very much and thank you as always for the questions and for joining us In short notice this morning. Rest assured, we'll be back to any investors today that want to get any further Informational color, and we thank you for your patience this morning. Thanks. Bye bye. Thank you. This now concludes today's call. Thank you all for joining. You may now disconnect your lines.