Slide 1: Interim Results 2010 Presentation
Interim Results 2010 Presentation Date: 27.08.2010
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.
Slide 3: Summary
SUMMARY Mark Dixon Chief Executive Officer
Slide 4: Solid performance in difficult markets
Solid performance in difficult markets Financial Highlights • Revenues of £515.5m • EBIT of £10.2m* • EBIT (before growth costs) of £16.7m* • Cash from Operations of £47.1m; Net Cash - £224.2m • Earnings per share of 0.9p* • Dividend per share of 0.85p; 6% increase Operational Highlights • New centr
Slide 5: Solid performance
Solid performance Actual exchange rates Revenue £m EBIT before exceptionals, £m 75.6 74.1 67.0 569.7 557.4 507.5 497.7 515.5 56.4 450.9 51.4 411.5 20.9 10.2 H1 07 H2 07 H1 08 H2 08 H1 09 H2 09 H1 10 H1 07 H2 07 H1 08 H2 08 H1 09 H2 09 H1 10 Annualised EPS before exceptionals, pence Net cash, £m 229.
Slide 6: Solid performance
Solid performance Total available workstations H1 2010 revenues by region 173,633 173,004 176,782 171,277 165,103 155,270 Emerging 145,109 Economies / North America, Asia, 25.0% 36.0% Western Europe, 21.0% H1 07 H2 07 H1 08 H2 08 H1 09 H2 09 H1 10 UK, 18.0% Average Mature occupancy Annualised Mature
Slide 7: Financials
FINANCIALS Stephen Gleadle Chief Financial Officer
Slide 8: Summary income statement
Summary income statement Actual exchange rates £ million 2010 2009 Change Revenue 515.5 557.4 (41.9) Centre contribution 105.5 134.0 (28.5) Overheads (96.2) (83.9) (12.3) Joint ventures 0.9 1.3 (0.4) EBIT pre-exceptional 10.2 51.4 (41.2) Exceptional receipt 0.0 18.3 (18.3) Restructuring & Reorganisa
Slide 9: Revenue & centre contribution
Revenue & centre contribution Revenue Contribution Margin (%) £ million £ million 2009 557.4 134.0 24.0% Impact of exchange rate movement 5.7 2.2 2009 at 2010 exchange rates 563.1 136.2 24.2% Mature business (49.5) (28.6) Added 2009 7.6 2.1 Added 2010 4.5 (2.7) Closures (10.2) (1.5) 2010 515.5 105.5
Slide 10: Regional analysis
Regional analysis Actual exchange rates Revenue Contribution Mature margin (%) £ million 2010 2009 2010 2009 2010 2009 Americas 215.4 227.0 46.8 51.4 23% 24% EMEA 142.2 162.5 35.1 49.1 26% 31% Asia Pacific 68.3 68.6 19.3 20.9 29% 30% UK 88.9 98.5 3.0 11.1 4% 11% Other 0.7 0.8 1.3 1.5 - - 515.5 557.4
Slide 11: Impact of Growth
Impact of Growth • Growth of 44 centres • Income statement impact: • H1 growth costs c. £6.5m – Contribution loss per workstation £450 – Marketing cost per workstation £180 – Plus growth teams and other overheads £2.6m • Underlying EBIT £16.7m • Cashflow impact: • H1 new centre capex c. £11.3m – Cap
Slide 12: Interest and tax
Interest and tax £ million Interest 2010 2009 Change Interest payable on bank loans and overdrafts (0.5) (0.9) 0.4 Interest receivable 0.9 1.3 (0.4) Finance lease (0.1) (0.1) - Non cash - Deferred finance costs - (0.5) 0.5 Non cash - UK acquisition related (0.8) (0.5) (0.3) Net Interest (0.5) (0.7)
Slide 13: Cash flow
Cash flow £ million 2010 2009 Change Cash from operations 47.1 62.2 (15.1) Other income 0.0 0.2 (0.2) Cash in 47.1 62.4 (15.3) Maintenance capex (9.2) (6.8) (2.4) Interest and tax (8.6) (15.2) 6.6 Free cash flow 29.3 40.4 (11.1) New centre openings (14.0) (16.6) 2.6 Share Buybacks, settlement of sha
Slide 14: Continued focus on cash
Continued focus on cash • Robust cash position maintained - £224.2m • Generating consistent cash levels - at difficult point of cycle • Sound position to fund continued growth Cash generated from operations, £m* * 2009 /2010 Results exclude exceptional net income and costs
Slide 15: Summary balance sheet
Summary balance sheet @ Actual exchange rates £ million 2010 2009 Change Non-current assets 656.2 639.7 16.5 Working capital (280.9) (285.9) 5.0 Net cash 224.2 229.5 (5.3) Other non-current liabilities (102.6) (98.6) (4.0) Net assets 496.9 484.7 12.2
Slide 16: Summary
Summary Against the backdrop of a fragile trading environment, we have: • continued to remain cash generative • controlled our costs • continued to take advantage of growth opportunities We remain well placed for the long term: • balance sheet has remained strong through the cycle • strategy remains
Slide 17: Strategy and Outlook
STRATEGY AND OUTLOOK Mark Dixon Chief Executive Officer
Slide 18: Group strategy highlights
Group strategy highlights • Global leader ; More than 1,000 centres in over 80 countries • Managing the cycle effectively; we continue to generate cash • Maximum focus on margin recovery • Continued investment in growth • Critical restructure of the UK completed • Continued investments in our operat
Slide 19: Managing the cycle effectively
Managing the cycle effectively • Cost reduction • Leverage operational gearing • Product innovation • Maximise upturn • Cash preservation • Cash generation • Growth reduction • Maximise growth pipeline • Keep costs tight • Take firm action • Prepare for upturn • Cash management • Invest in growth Ec
Slide 20: Margin recovery – Cost and efficiency
Margin recovery – Cost and efficiency • c.£100m annual savings v H2 2008 • Smartworking programme to deliver more savings in 2011 } • 1000 -> 4 -> 1 centralised accounting and transaction processing 60% complete • Staff freed to focus on the customer; customer satisfaction up 5% } • Continued invest
Slide 21: Margin recovery – UK turnaround
Margin recovery – UK turnaround • Regus remains clear market leader in the UK • Achieved significant rent reductions and improved structure • Closed two centres • Will save £12m+ per annum • One off exceptional cost of £15.8m • Revenue stabilising with signs of improvement. • Seeking to achieve cash
Slide 22: Margin recovery - Revenue
Margin recovery - Revenue • Sales force – upgrade/ enhanced training = efficiency and performance lifted • Yield management, improved management, planning and forecasting • New channels – corporate accounts, retail – Agreement just signed with Microsoft Netherlands – Retail product to be included in
Slide 23: A massive global market
A massive global market • IDC predict 1.2 billion mobile workers globally by 2013, almost a third of the workforce • 1% of this market would provide us with 12 million Businessworld card holders • Regus believes there to be c.735million office desks in the world – 0.1% of this market would result in
Slide 24: Home & Mobility segment – explosive growth
Home & Mobility segment – explosive growth • Exciting high growth complimentary business • Significant uplift in Businessworld members – now 475k • Total customer numbers now 800k • Product team strengthened – Grow membership numbers – Grow revenue per member
Slide 25: Case Study - Yell
Case Study - Yell • 18 sales offices across UK supporting 700-800 sales people • Rarely used as technology enables anywhere working • Offices closed and workforce provided Businessworld cards – transitioned in one month • Saved £1.5million per annum, a 60% reduction in total cost • Regus supports al
Slide 26: Case study - GE
Case study - GE • Regus supporting GEs real estate strategy – flexible component managed within Regus global footprint • Improve GEs utilisation of people to desks • Mitigate risk in GE real estate portfolio & lower GEs total costs of occupancy • Expand GEs network of “as needed” workspaces - effici
Slide 27: 1000 Centres and growing
1000 Centres and growing • Up to 15% centre; 10% capacity expected 2010 • New countries include Ghana, Tanzania and Lithuania amongst others • Low-risk, attractive ROIC • New location, concession opportunities • Renewed focus on emerging markets • New 2011 management structure – should lift developm
Slide 28: Strengthening the management structure
Strengthening the management structure • Reinforced management in our top 25 countries • Several key recruits completed • Opening R&D centre in Geneva • Strengthening the board Country reporting lines Geneva location GENEVA REGIONAL TOP 25 COUNTRIES MANAGEMENT REMAINING COUNTRIES
Slide 29: Strengthening the Board
Strengthening the Board Douglas Sutherland Lance Browne Ulrich Ogiermann Non-Executive Chairman Senior Independent Independent Non-Exec Director Non-Exec Director Former Arthur Andersen partner President / CEO Cargolux International Airlines Vice chairman of Standard Former CFO Skype & CFO Securewav
Slide 30: Looking forward
Looking forward • Maintain focus on cash generation and profitability • Robust cash position and balance sheet • Ready to capitalise on opportunities: • A scalable model • A growth industry – significant potential • A global platform – multiple opportunities • Management team in place to execute