Slide 1: Full Year Results 2010 Presentation
Full Year Results 2010 Presentation 21 March 2011 Mark Dixon, Chief Executive Officer Stephen Gleadle, Chief Financial Officer
Slide 2: Caution statement
Caution statement This presentation may contain forward looking statements, which are subject to risk and uncertainty. A variety of factors could cause our actual results to differ materially from the anticipated results expressed in such forward looking statements 1
Slide 3: Continued financial and strategic delivery
Continued financial and strategic delivery Financial highlights • Revenues of £1,040.4m • EBITDA of £112.6m* (£97.2 after growth costs) • EBIT of £42.0m* (£23.8m after growth costs) • Cash from Operations of £109.7m; Net Cash of £191.5m • Earnings per share of 1.9p* • Full Year Dividend per share of
Slide 4: Healthy underlying revenue and margin trends
Healthy underlying revenue and margin trends Actual exchange rates Mature revenue Total revenue Mature operating profit margin Total operating profit margin 3
Slide 5: Strong cash generation
Strong cash generation Cash from operations Acquisitions and NCO's • Increased cash from Maintenance capex operations Dividends • Significant investment in growth – all self funded Interest and Tax • Robust dividend payments UK restructuring • Maintained robust cash position Share buy-backs Net cash
Slide 6: Investment in growth continues
Investment in growth continues Total available workstations Workstation growth by region 200 150 EMEA 23% Americas Thousands 30% 100 Asia 18% UK 50 29% 0 H1 07 H2 07 H1 08 H2 08 H1 09 H2 09 H1 10 H2 10 Workstations by market New countries added include: Lithuania Emerging 33% Oman Ghana Emerge
Slide 7: Business improvements – marketing
Business improvements – marketing Large in-house team Retail initiatives focussed on web Stockists include BA, Team increased from 5 to 47 WHSmiths, Staples Increased spend 2009: £26.2m – 2010: £33.3m Improved planning Detailed at a local monthly levels Reorganised management From 1 central to 30 se
Slide 8: Business improvements – sales
Business improvements – sales New products specific to New wins Improved systems Invested £1m in upgrades corporate needs Total approach refresh Training and development Specific marketing support Doubled spend and retrained entire New head of corporate marketing team Improved customer Increased hea
Slide 9: Business improvements – Regus now a mainstream choice
Business improvements – Regus now a mainstream choice • We are attractive to any size or type of Contract Duration* company 30% 12 months • The decision to use Regus is Project commercially and financially driven as it space 60% 29 reduces cost by 50-80% months average • Additional reasons include:
Slide 10: Business improvements – operations and costs
Business improvements – operations and costs Strengthened Finance Team Titan automation Integrated with CSR £4m invested,50% complete programme IT helpdesk in-sourced. Jan 2011 – new head recruited Saving £1.5m pa PeopleSoft and Oracle £0.5m invested,25% complete Centralised programmes Back office m
Slide 11: Business improvements – proactive approach to addressing UK challenges
Business improvements – proactive approach to addressing UK challenges Cash Break even 1/3 Variable producing Q4 Q3 2010 2010 Suffering Restructured Legacy Margin 2/3 fixed SPV Reinvestment from legacy into 150 regeared and growing in Lower rent in UK centres leases companies renegotiated 2011 23 ce
Slide 12: Business improvements – stronger management team and structure
Business improvements – stronger management team and structure • New country managers 22 key appointed in Canada, Brazil, countries Mexico, Japan and Germany Four 30 regions markets • Additional key hires and Eight groups of smaller promotions will be made countries Single management Completed by en
Slide 13: Summary
Summary Sales Improved conversion Marketing High levels of enquiries Customers Diversified and improved base Growth Strong growth Operations Streamlined process Costs Strong action taken Management Important key senior hires 12
Slide 14: I. Financials
I. Financials Stephen Gleadle Chief Financial Officer
Slide 15: Summary income statement
Summary income statement Actual exchange rates £ million 2010 2009 Change Revenue 1,040.4 1,055.1 (14.7) Centre contribution 215.9 235.6 (19.7) Overheads (193.4) (165.3) (28.1) Joint ventures 1.3 2.0 (0.7) EBIT pre-exceptional 23.8 72.3 (48.5) Exceptional receipt - 18.3 (18.3) Restructuring & Reorga
Slide 16: Revenue & centre contribution
Revenue & centre contribution Revenue Contribution Margin (%) £ million £ million 2009 1,055.1 235.6 22% Impact of exchange rate movement 16.3 4.4 2009 at 2010 exchange rates 1,071.4 240.0 22% Mature business (60.8) (24.5) Added 2009 13.0 4.8 Added 2010 25.1 (7.0) Closures (8.3) 2.6 2010 1,040.4 215
Slide 17: Regional analysis
Regional analysis Actual exchange rates Revenue Contribution Mature margin (%) £ million 2010 2009 2010 2009 2010 2009 Americas 436.9 423.8 99.1 92.9 24% 23% EMEA 281.2 306.2 65.8 83.0 25% 28% Asia Pacific 141.7 132.3 36.4 40.3 29% 30% UK 178.9 191.4 13.2 18.5 8% 10% Other 1.7 1.4 1.4 0.9 -- -- Tota
Slide 18: Cash flow
Cash flow £ million 2010 2009 Change Cash from operations and other income 111.5 106.3 5.2 Maintenance capex (30.8) (20.2) (10.6) Interest and tax (15.4) (24.1) 8.7 Free cash flow 65.3 62.0 3.3 Acquisitions and JV investments (17.0) 1.0 (18.0) New centre openings and property purchase (42.7) (26.7)
Slide 19: Summary balance sheet
Summary balance sheet Actual exchange rates £ million 2010 2009 Change Non-current assets 676.6 650.8 25.8 Working capital (272.0) (284.2) 12.2 Net cash 191.5 237.0 (45.5) Other non-current liabilities (110.3) (104.1) (6.2) Net assets 485.8 499.5 (13.7) 18
Slide 20: Risk management and leases
Risk management and leases • With the recent publication of an Exposure Draft on lease accounting there has been increased focus on the extent of our lease liability • While the contents of any potential new accounting standard remain uncertain it is not possible to estimate how or what impact on ou
Slide 21: Summary
Summary • Strong and improving cash generation • Stable mature margins • Robust balance sheet • Continued investment in growth with appropriate discipline • Realising benefits of strategic initiatives • Well positioned for future revenue growth and business improvement 20
Slide 22: II. Current Trading & Outlook
II. Current Trading & Outlook Mark Dixon Chief Executive Officer
Slide 23: Current trading
Current trading • Solid improvements throughout H2 2010 • Good start to 2011 • Global pick up resulting from strategic initiatives • Investment in sales and marketing increasing new business • Occupancy to 85%; price lower but gradual recovery expected to begin in H2 2011 • New contract wins with la
Slide 24: 2011 Outlook
2011 Outlook • Grow network by 10-15% (w/s) • Significant progress on re-engineering and efficiency projects • Falling run rate overhead per workstation • Recovery of UK to positive contributor over time • Continue to strengthen global management team • Maintain strong cash generation • Well positio
Slide 25: Well positioned to seize our opportunity
Well positioned to seize our opportunity • An indefinably large, fragmented and high growth market, underpinned by structural trend to flexible working • Clear global leader by a substantial margin • Roll-out a necessity and opportunity – Demand led from global companies – Competitive gap widening –