Yeah. Good. Right. Well, good morning, everyone, and many thanks for joining us today to listen to what we've achieved over the first half of 2023, in what's been a, 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. We are absolutely delivering on what we said we planned to do. In H1, we delivered record revenue for the six-month period, with system-wide revenues up by 14% at GBP 1.7 billion. Most importantly, I think with EBITDA coming through, up almost 50% at just under GBP 200 million, and that's, that's very close to record levels for us.
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. You know, per share, when I looked at this, per share, is about 35p annualized per share in, in cash flow coming through from the business, pre-investment. You know, I'm, I'm personally very happy with that as an investor and a CEO, to see the, 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 debt 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 2025, and this is going to give us a lot more optionality as we come into 2024. For the first time for a while, you know, we've been in a very strong cash position and have to think about what we do with that cash. I think most importantly, it, 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 the really, the, the, 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. The growth, 95% capital light. The 5% are really the remnants of things we signed up in 2018, and, and there's, and there's quite a lot of what we call synthetic leases in there, which are leases that are very similar to a management contract, but we have no investment and no risk. It's-- there's still a lease. Some companies, absolutely have to have a lease for their own financing purposes, and we will do those. 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. I think, Richard and Charlie are gonna help.
We're gonna try and give more guidance as to. There's a lot of currency mix in here to try and help compute what the future revenues and fees will be on these. Y-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're in, and we need to give a bit more help with that. I think what's, what's good, and again, Charlie is gonna talk more to this, you can start to see meaningful cash flow starting to grow from these capital light deals. They're great for the network. They're starting to impact cash flow, and, and, you know, there's a lot more to come on that. 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, is down 40% year-on-year, and that will continue to reduce. There'll be just a trickle as we go through second half and into 2024. 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. You'll also see a great performance, and Charlie will talk to that, in terms of controlling costs.
We're substantially below inflation in terms of cost, 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. 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. Again, Charlie will talk to that. You know, margin continues to expand on company-owned and also on the management deals. It's really that margin that pays the bills and creates the cash flow. Really pleased with inflation. Also, good, good price rises as well. Costs under control, we're getting higher prices, more margin expansion.
I've already talked to these, but look, the bottom line is setting out here all the things we said we'd do. This was three half years ago where we set these things out. We're absolutely delivering on them. Margins expanding, growth coming through in quantity and, you know, really quite a new business model, and that's again, one of the things that is gonna start to become more apparent as we go through the second half of this year and into 2024. There's a new business model. 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. You've got growth bringing in fee revenues coming in at scale and not requiring capital to do it. That completely changes the model, in a very virtuous way. I'm one behind.
Just a quick reminder, and I keep doing this because, just to remind people about what, what do we do? We are- we're the bridge between the property industry, people that invest in properties or own properties, and this new customer base. Look, they're the same people that were renting space before. They just want to consume it in a different way. We're helping one meet the other across the platform. We make money as it goes both ways. From a customer point of view, we, 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 this story about Zoom asking people to come back to the office, two days a week.
You know, it's not that they're not hybrid working. Zoom, completely hybrid work. I know, I know exactly how they work. They're one of our customers. What they want is people to come together and collaborate certain times in the month because they... You can't have everyone working remotely all the time. You know, 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.
It, 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. You know, it's fantastic. You know, for CFOs, it rarely happens where you cut costs and everyone applauds. That's what's happening. This is a trend that is permanent, it's continuing, and we will continue to benefit from it. We, you know, and, and we know because we're engaged with so many of these companies now, the pipeline that we have is significant, and we, we know exactly what's going on. We also have done a lot of research, and we can see what's coming down the track as well.
For if you're a building owner on the other side, you know, it's a tough world if you own buildings today. You know, 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 altogether. It, it's tough. Plus, you've got high interest rates, higher interest rates, and, you know, it, that, that's a, that's what a tough market. 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 five or 10 years. They are coming to us in quantity. This is not small numbers. We've got, I think, something like 10,000-15,000 in the pipeline, different building owners who want to change.
Maybe the circumstances aren't right today, but they are. You know, when they have the right opportunity, they are doing it. 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 all, and we sell them over a very large digital platform. 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. This is working, you know, for them and for us. You know, we've got owners now coming back.
We're, I think, the biggest owners now on, I think, about 22 buildings, going from one to 22, and we've got other deals we did. PERIAL is one of them, French REIT for 50 buildings. We're working with Generali, 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. We've got space coming from all directions, and we've got a method to convert that space into cash.... You know, great reporting, all the things you need as an investor, we can supply. This is moving very, very well. You know, it's still early days.
We've been doing it since the beginning of 2022, 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. From a capital point of view, the investment's zero. Human point of view, significant investment in support. With that, I'll hand over to Charlie.
Thanks, Mark. H1's 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, Worka 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 % points, combined with the cost discipline, as Mark just mentioned.
Here we present the P&L on an IFRS basis. 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 and this combination drives cash flow. 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. Fundamentally, the result is a GBP 83 million net debt reduction over the last 12 months, and GBP 54 million in this half alone. 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, this means at various times you'll see revenues and costs move in different ways. During H1, the SKU was disproportionate towards pricing, which is up 9 % points versus occupancy. 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 new center signings come through in 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, 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, in this industry is our cost leadership, and you can see the EBITDA margins have increased by about a third or 3% points. In this chart, basically, we show the two bits separately. The first bit is the company-owned business in the first box, and that has the net impact, again, as I said, net, net increase in pre-IFRS EBITDA, and then the growth focus after that. 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 is a lot more volatile.
Going forward to net debt, our focus on use of cash flow is currently to reduce net financial debt. So far this year, we've reduced net debt by GBP 54 million. Pre-growth acquisitions and non-cash movements, this is reduced by GBP 109 million. As discussed in the full year presentation, we expect to see net debt continuing to fall during 2023. We've said that we'd be reducing growth CapEx and expanding out the capital light business. This is now coming through in the cash flows and also the new center numbers. Additionally, during Q2, we simplified our debt structure. We now have two debt facilities. The first one is the convertible 0.5% interest cost, which isn't due until December 2025 at the earliest. The RCF, which has a final maturity in November 2025.
Over the coming 18 months, we'll 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 with the fortunate position that ESG at IWG isn't just a moniker, but better for our business as well. Our product, hybrid working, is good for the planet as it reduces carbon from less commuting. We can also give clients certification they've been operating in a carbon 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 was very volatile period 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 US dollars. Given this review, we're also looking to see whether US 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've been able 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. With that, back to Mark.
Thank you, Charlie. 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 accelerator's 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. You get there 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.
We're coming up now to thinking about 2024. Definitely going to be a very interesting period for the company. We have a new set of decisions that we need to start making. With that, thank you for your attention, and we'll move over to Q&A. 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. Thank you all very much. First question.
Start with Andrew.
Hi, guys. Good morning, everybody. I'm Peel Hunt. Three questions, if I may. The first is on US GAAP. That seems quite interesting. Would that mean that you would do US GAAP? Would you also have to do IFRS 16, and then would you also have to give pre-IFRS 16? What's the real rationale for that? You've mentioned a sort of sotto voce, regardless of listing venue, so is that a thought? Second question from me, if I may, is on net debt. You said that net debt, lower net debt, obviously gives you optionality, and, and that must do. At what point do you think it does? What would your net debt/EBITDA have to be to start to give you that optionality? What's that comfortable level? Perhaps related to that, third question is Worka.
Okay, we can see market conditions, et cetera, et cetera. Can you give us any update on thoughts and timing? Thanks.
Great. so maybe I'll take the first two-
Sure.
Mark take the second. US GAAP, the rationale and our reporting standard basically is, it's centered around the understandability of IWG's financials. We believe at the moment that IFRS 16 might not be the best way to understand how IWG is performing as a business. If we did do that transition, we would only report under US GAAP, so we would 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 the IWG structure. Really, that is the rationale, is just helping investors understand the business better.
When it comes to net debt, and optionality, of course, the, 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, or other things. Right now, we're just focused on continuing, that net debt, net debt reduction. We don't have a specific target in mind at this stage, but that's under constant review.
Then on to Worka. Lots of speculation around Worka, but in the end, this is an investment where we've combined our digital assets with the old Instant Offices assets. We've got a great management team. This is the company that, that's supplying the picks and the shovels at the entrance to the gold mine. They provide all the tools, the whole digital platform, to anyone that's interested in going into this business. You know, we're 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. Again, this is not something, you know... The, the, 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. Hybrid working's moved on a lot in this, at the same time. You know, this is a spot to watch, but again, it's not the main event. The margins coming for the, from the rest of the business, this is a great margin producer, but it's a smaller part of the business. Important, but small. It, it's gonna, you know, it's gonna 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 totally different KPIs, and, and is completely free of anything to do with real estate as well.
it, you know, it should produce a very good multiple at some point in the future.
Thank you.
Hi, Standard from Seaflower. 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 bit at the moment, or is there a certain point you'll be able to give us the margin on, on that element as, as that scales? Finally, on your biggest listed competitor, WeWork, do you think... so very impressive price performance from you guys in the first half.
Do you think the management change there and their ongoing challenges will create more price issues or competition in, in central business districts? Thank you.
So just covering the openings. We opened 133 new centers in the first half. Only 17 of those were, 17 of those were conventional. The rest were basically a combination of variable rent, managed partnerships, and as part of our franchise business. 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 are 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.
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. Therefore, in some ways, like, when we look at the, the cash flow generation of GBP 160 million of, of cash flow pre-investment, that doesn't actually include that investment. The cash flow without that team, without the investment from that team, would actually be even higher.
Much you want to comment or add to that? You opened, what was it, how many?
Uh, 133 .
133. You have a It's a triangle, you know, it takes 18 months to mature them. You can see the position today, you know, we need to give better guidance as to how that comes through in terms of, you know, the future sort of runway of fees. It's, 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, is quite fixed. The margin expectation, we said at the beginning, about 50% margin, so, you know, the cost is about 50% all in, including all overhead. I think we're absolutely in the zone for that sort of going, going forward.
In terms of our friends at WeWork, different business model to us. Same business, different model, and that's what's causing them a problem. 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, WeWorks, and we have to refit them, go again. Is there price pressure? Yes, in a limited number of markets. 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. But this is an anomaly from, you know, a huge investment made years ago, that eventually. Now, it's unraveling, as you can see, 'cause they're just running through cash. It will eventually sort of normalize.
It still hasn't yet, but it's, it's a small effect, but the effect is there, and it's sort of an unnatural effect. It's sort of a, you know, it, it, it's a sort of trying to get cash under any means possible.
Hi, 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've mentioned the helping the, the bigger companies effectively. Just again, how much at the moment would you say large companies contribute to revenue under that model, you know, you've outlined? Then thirdly, you know, you're quite well into this sort of the franchised, you know, model now. How has your experience been in, in the structuring of those deals as it's evolved? Have there been any sort of, you know, changes you'd, you would point to in the lessons of learning?
Yep. How many in the second half, do you know?
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, will start to come through sort of further in the second half. As Mark said, that you kind of have about some nine months from sort of signing to, to opening. And also the, 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, what we know is there's a, you know, there's a, as every month's a new cliff, so that's why we've invested in resources, 'cause there's a lot more opening month-over-month. 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. In terms of the sort of large company percentage, it's growing all the time. 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 generally, they'll start small with one country, and then they add more. It's becoming a bigger proportion. It's well over 50% now and will continue to grow.
you know, again, very... When you look at this, again, we're resourcing up on, on the corporate side, adding a lot more people dealing directly with large corporates. We have a team now, we will have by 2024, five times the number of people, just to deal with the, 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, 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." It's sort of coming to us rather than... We're not really doing any marketing to that market. It's word of mouth coming in, and growing.
Mark, does that include people using it in a very small way, with sort of variable costs, so-?
Yes. Yeah, yeah.
As well as taking over, you know, a glass oak building?
Yeah, it's all of that. You know, what's interesting is what corporates want is a single platform. We're working on making our technology work for the corporates, so they can use our app on their own space. That's what they want. 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. You know, this is the future. You know, people will be using an app, just like you book a taxi with Gett or Uber. That's what they're gonna be doing in the future. Two, three years' time, be absolutely normal. It's a very interesting marketplace. We're not selling any more to these guys.
We don't sell. We, we just implement for them. It's, it's, it, it's very, very attractive marketplace. 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 2024, it's sort of becoming more and more popular. You know, 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 fill up, filled up, get the cash flow moving, and report very well. That's what our partners want from us. Support, they want communication.
Where we've invested is in partner support, partner reporting, integrating into their accounts. It's a lot of back office communication, too, and we found that, that is what, you know, deliver and communicate well, they will give you more buildings. We've simplified the contracts. Lots of things, you know, we've got a whole team of people now focused on just opening centers. That's all they do. Their job is to take a signature to an opening, and then they hand over to the partner team that manage the partner afterwards. That's what we've had to put, and it's working, putting more resourcing 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.
Thank you.
Morning, 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? Lastly, a small dip in revenue in Q2 and Q1, how should we think about company-owned center closures in the second half? Thank you.
I'll take the working capital question. Basically, in particular, from the Instant acquisition, we sort of get some working capital swings, particularly, in sort of first half, second half. We don't think there's gonna be anything material, in, in second half, and that's the reason why, we can continue to be confident the net debt's gonna 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'll just also just go back to the point, which is the GBP 162 million of, of cash flow before, CapEx interest and tax, which shows that the, the core business is generating the business sort of, before those activities, is producing an immense amount of cash.
You'll see a small, small acquisition in there, plus the growth CapEx, which will continue to fall. I think, that's really where we sort of see guidance in the second half. We're delivering exactly as, as we said we would at the start of the year, which is net debt falling and also the reduction in the, in the growth CapEx. In terms of sort of the, the, 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.
One of the things that we have seen a big pickup in recently has been, has been meeting room space, and you've seen that come through in the services revenue. The as, as I said, and as Mark said in, in our, in our remarks earlier, the way we think about this business is entirely around delivery of margin, and at the end of the day, it's the margin that produces the cash flow. It's a combination of, 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, the new center openings on the capital light side, which drives through the system-wide revenue and, and fees.
Again, though, you, you sort of see slightly less leverage on that because obviously, we're just taking a fixed percentage of the revenue. I think, sort of, I've covered the, the revenue in Q2 comments.
Yeah. 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. That's all in the services. Now, repeating what Charlie said, it's all about margin. it, and price, services individually, it's those as a group, and keep managing the cost down, which we are continuing to do. 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. You know, we're in business to make money, we're not in business to pay rent.
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, there's just no middle ground. A lot more discipline around that. Tough decision sometimes, but it's what you have to do. You're right, that, you know, it does affect revenue, but it has a very attractive impact on margin.
Okay. I don't think we've got any more questions in the room. We've, Mark, we've had a few questions online, maybe just start with a couple of questions. We've had on Worka, if you could describe the product launches in the second half, and how you think that will translate through to, to revenue.
Yeah, I mean, it will take. Again, obviously, we'd always like to have the impact much sooner, there's been a lot of work done to create new products. You know, remember, picks and shovels, entrance to the gold mine, they've got to be easy to buy. What the guys at Worka have been working on is converting what they do into more products that people can buy. Quite a lot of investment's gone in there. These are digital products and other products, you know, including supply chain, many, many things. You know, 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. It's really, the real impact you're gonna see will be in 2024.
The core business still grows, but the real growth, the, 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, in our consolidated number, but that, you know, so they're growing into a global platform and adding products. Impact, 24. Yeah, as I said earlier, good management team and, you know, exciting developments there, and I think, you know, it will become quite a, quite a, quite an attractive part of the business in the coming couple of years.
I've got one question, it's 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 at RBC. Andy, if you don't think I've answered that, I'm happy to follow up on that. I think actually the rest of the questions we've got online are largely related to the Worka ones, the net debt, and then also the size of the backlog as well on capital light openings.
Yeah.
Maybe, I think we've covered that.
Big backlog, and 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. You know, where you can see enormous growth for us, I mean, it's significant, are in countries like Egypt. You know, the currency in, you know, this, this is a, a, a much lower currency. You have to open a lot more centers in Egypt than you do in the United States for, for the same revenue. We've got lots in Egypt, Vietnam, Thailand, lots of these countries where the, you know, the currency is different. Indonesia, huge number in Indonesia, then a lot in the United States.
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. It's starting to move the bar. You know, if we look at our forecast, forecast towards the end of this year, you can see it's starting to become more significant. That will continue to grow during 2024, and that will become quite an important number for everyone to, to focus on.
Are there any more questions?
No more questions. Any more questions from the room? No. Very good. Well, thank you all very much for your time. As usual, Charlie, myself, and Richard, who's recently joined us, will be available for any follow-up questions. Thank you.
Thanks.