Slide 1: Servcorp Limited 2023 Half Year Results Presentation
Servcorp Limited 2023 Half Year Results Presentation 16 February 2023 1
Slide 2: Disclaimer
DISCLAIMER Important Information Servcorp Limited (ABN 97 089 222 506) (“Servcorp”) is the parent entity of the Servcorp Group and is responsible for all information contained in this presentation. Not an offer nor investment advice This presentation is not an offer or invitation for subscription or
Slide 3: Contents
CONTENTS 1. 1H23 HIGHLIGHTS 2. RESULTS OVERVIEW 3. PORTFOLIO & SEGMENT OVERVIEW 4. DIVIDEND 5. OUTLOOK & GUIDANCE 6. APPENDICES A. RESULTS BRIDGING B. CONTINUED INVESTMENT IN IT & PRODUCT DEVELOPMENT C. COMMUNITY & SOCIAL RESPONSIBILITY D. GLOSSARY
Slide 4: Half Year Results Highlights
HALF°YEAR « RESULTS HIGHLIGHTS,
Slide 5: 1H23 Highlights Key Message
1H23 HIGHLIGHTS KEY MESSAGE Strong growth in revenue and free cash production underpinned Servcorp is empowered by its strong by strategic focus on client retention, team development and the balance sheet including the respectable cash reserves, global commencement of new investment in growth opport
Slide 6: 1H23 Highlights (cont'd)
1H23 HIGHLIGHTS (cont’d) Underlying NPBIT $20.3m NTA $1.98/ share On track to meet profit Strong Balance Sheet, with guidance of $41.0m - $43.0m >$100m cash on hand Commitment made to Increased investment in open at least 5 new floors global team development in the next 12 months & training initiati
Slide 7: Results Overview
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Slide 8: Results Overview
RESULTS OVERVIEW $144.5m $18.9m $20.3m $29.2m $115.6m Underlying Underlying Underlying Underlying Unencumbered Revenue Operating Profit NPBIT Free Cash Cash Up 10%* Up 56%* Up 49%* Up 13%* Up 7% ∆ $14.9m 15.4 cps $1.98 $207.8m Statutory NPAT EPS NTA Net Asset Up 12% Up 12% Up 5% ∆ Up 5% ∆ 52% 9.3% 5
Slide 9: Results Overview (cont'd) Operating Revenue
RESULTS OVERVIEW (cont’d) Operating Revenue 1H23 1H22 Var Var #039;000 #039;m #039;m #039;m % Other revenue and income Statutory Total Revenue 145.4 137.7 7.6 6% Other revenue and income Less - Includes interest income, which jumped 177% on pcp Other revenue and income (1.5) (1.4) (0.1) (8%) due to the rising c
Slide 10: Results Overview (cont'd) Operating Expenses
RESULTS OVERVIEW (cont’d) Operating Expenses 1H22 1H23 ▼1% 60.0 55.8 55.3 1H23 total operating 50.0 expense up 5% or ▲7% $6.2m on 1H22 40.0 34.9 32.7 30.0 Millions ▲5% 17.6 ▲15% 20.0 ▲21% 16.8 10.3 11.8 7.5 9.1 ▲44% 10.0 (1.4) (0.8) - Service expenses Marketing expenses Lease expenses Other Occupanc
Slide 11: Underlying Profit & Statutory Profit
RESULTS OVERVIEW (cont’d) Underlying Profit & Statutory Profit 1H23 1H22 Var Var #039;m #039;m #039;m % Impairment loss Statutory NPBT 17.4 16.0 1.5 9% $1.8m impairment loss was recognised against lease assets held in Hong Kong Add Operating loss from new floors pre-maturity or from closed floors post-maturi
Slide 12: Results Overview (cont'd) Balance Sheet
RESULTS OVERVIEW (cont’d) Balance Sheet Balance Sheet Dec-22 Jun-22 Collection cycle and efficiency #039;m #039;m - Although the gross receivable balances went up ~$4.5m in the 6 months to December 2022 Cash 105.1 100.8 (excluding forex impact), the increment is predominately arising from a strong growth
Slide 13: Results Overview (cont'd) Free Cash Production
RESULTS OVERVIEW (cont’d) Free Cash Production 1H23 1H22 Var Var #039;m #039;m #039;m % Net Operating Cash flow 78.0 79.9 (1.9) (2%) Underlying Free Cash produced in 1H23 was $29.2m (up Add: 13%* on 1H22), adjusting for the timing differences arising Tax paid 3.8 6.2 (2.4) (39%) Less: from the remittance of
Slide 14: Cash Flow & Liquidity
RESULTS OVERVIEW (cont’d) Cash Flow & Liquidity 14
Slide 15: Portfolio Overview
S x Dec PORTROEIQ 8. OVERVIEW
Slide 16: Servcorp Capacity & Continued Investment
SERVCORP CAPACITY & CONTINUED INVESTMENT Servcorp closed one floor in ANZ & SEA, and replaced it with a new floor at a more premium location in the same area, through which the capital is recycled to drive opportunities with higher expected return. In addition, one floor at a new building was opened
Slide 17: Portfolio Overview
PORTFOLIO OVERVIEW Less than 1 Year 1 to 3 years 3 to 5 years 5 to 10 years Over 10 years ANZ & SEA Staggered Diversified North Asia Lease Expiry Client Base Europe & Middle East Profile USA Annualised Client Retention Ratio 80% 63% 65% 60% 55% 51% 44% 40% 40% 32% 30% 20% 0% ANZ & SEA Europe & Middl
Slide 18: Segment Performance Global Overview
SEGMENT PERFORMANCE Global Overview Revenue continues recovering post-pandemic, driven almost equally by increase in effective prices (net of incentives) and growth in sales. As a result, profit margin almost doubled year-on-year, excluding the forex impact. • Mature Revenue was $12.4m higher on pcp
Slide 19: Segment Performance: ANZ & South East Asia
SEGMENT PERFORMANCE (cont’d) ANZ & South East Asia (ANZ & SEA) ANZ & SEA performance showed early Mature: Revenue, Segment Profit & Cash Earnings signs of recovery, up 11% year-on-year in $40.0 Mature revenue. One floor was closed in $32.4 $29.2 1H23. The capital was recycled and $30.0 deployed to o
Slide 20: Segment Performance: North Asia
SEGMENT PERFORMANCE (cont’d) North Asia North Asia as a whole continued to deliver Mature: Revenue, Segment Profit & Cash Earnings a solid result, although the year-on-year $60.0 $57.0 performance was undermined largely due $52.6 to the ongoing government pursuit of zero- $50.0 Covid-19 policy in Ch
Slide 21: Segment Performance: Europe & Middle East
SEGMENT PERFORMANCE (cont’d) Europe & Middle East (EME) EME continues to outperform. Mature: Revenue, Segment Profit & Cash Earnings $50.0 $44.1 Mature Revenue was up $9.5m in 1H23 compared to 1H22, of which ~40% $40.0 $34.6 converted into Mature Segment Profit and Cash Earnings, which increased 90%
Slide 22: Segment Performance: USA
SEGMENT PERFORMANCE (cont’d) USA Mature: Revenue, Segment Profit & Cash Earnings $13.0 Although Mature Revenue continued $9.4 growing in the USA, up 19% or $1.5m on $7.9 pcp, the increase was fully offset by the $8.0 higher operating expenses. #039;m Both Mature Segment Profit and Cash $3.0 Earnings re
Slide 23: Dividend
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Slide 24: Dividend
DIVIDEND Dividends paid (cents per share) 25.0 23.0 20.0 20.0 20.0 20.0 18.0 10.0 15.0 9.0 10.0 10.0 9.0 10.0 13.0 5.0 11.0 10.0 10.0 9.0 - FY19 FY20 FY21 FY22 FY23 Interim Final Expected 2H23 Interim FY23 dividend • Interim dividend payable of 10.0 cps, unfranked, payable on 5 April 2023. • The fin
Slide 25: Outlook & Guidance
Slide 26: Outlook & Guidance
OUTLOOK & GUIDANCE While uncertainty remains in the general economic climate worldwide, Servcorp is well positioned to take advantage of the opportunities in the market to expand globally and organically. With the improvement in performance starting to materialize in ANZ & South East Asia, and conti
Slide 27: Appendices
Slide 28: Results Bridging
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Slide 29: Results Bridging: Income Statement to Cash Flow Statement
RESULTS BRIDGING Income Statement to Cash Flow Statement Statutory Profit Underlying 1H23 1H22 Var Var 1H23 1H22 Var Var #039;m #039;m #039;m % #039;m #039;m #039;m % Revenue and other income 145.4 137.7 7.6 6% Statutory Revenue and other income 145.4 137.7 7.6 6% Total expenses (127.9) (121.8) (6.2) (5%) Revenue fro
Slide 30: Results Bridging (cont'd) Segment notes reconciliation
RESULTS BRIDGING (cont’d) Segment notes reconciliation Adj. Total Total Revenue Revenue from Total Revenue Adj. from status Revenue from Other Revenue from Other from Continuing new floors pre- Mature Revenue from Continuing changes since new floors pre- Mature Revenue adjustments Continuing adjustm
Slide 31: 5-Year KPI Tracker
5-YEAR KPI TRACKER Underlying Revenue Statutory NPAT EPS NPBIT* #039;m #039;m #039;m cents 1H19 164.2 14.2 (12.8) (13.2) 1H20 178.8 21.0 14.8 15.3 1H21 142.0 16.9 15.5 16.0 1H22 137.7 13.6 13.3 13.7 1H23 145.4 20.3 14.9 15.4 Underlying Unencumbered DPS Free Cash* Cash* #039;m #039;m cents 1H19 30.7 72.9 13.0 1H20
Slide 32: 5-Year Statutory & Underlying Results
5-YEAR STATUTORY & UNDERLYING RESULTS Statutory Revenue vs. Revenue from continuing operations and other income* Revenue Revenue from Statutory continuing 200.0 $164.2 $178.8 Revenue operations and $7.8 $15.5 $142.0 $137.7 $145.4 150.0 $0.0 $0.3 other income $4.2** Millions #039;m #039;m 100.0 1H19 164.2
Slide 33: Continued Investment in IT & Product Development
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Slide 34: Flexible Workspace Demand
FLEXIBLE WORKSPACE DEMAND The pandemic catalyzed an unprecedented change in commercial workspace industry. Following the initial radical shift to Work From Home (“WFH”) due to mandatory social distancing orders, businesses have been actively assessing their needs to seek purpose-driven flexibility t
Slide 35: Continued Investment in IT Development
CONTINUED INVESTMENT IN IT DEVELOPMENT Servcorp achieved a critical milestone of Organisations worldwide are putting more modernising the sales tool, enhancing sales and prioritised focus on cybersecurity as growing revenue generation. Upon completion, the cyber risks and threats continue driving pu
Slide 36: Social & Community Responsibility
Slide 37: Social & Community Responsibility
SOCIAL & COMMUNITY RESPONSIBILITY Minimising Our Pawprint Servcorp acknowledges the seriousness of climate change and the impact high concentrations of greenhouse gases in the atmosphere are having on our planet. There is growing need for businesses to become sustainable to ensure the protection of
Slide 38: Glossary
Slide 39: Glossary
GLOSSARY ANZ Australia and New Zealand Cash Earnings Is EBITDA minus Cash Rent paid Cash Rent Cash Rent is the amount paid to a landlord (or lessor) by Servcorp as a lessee under the terms of a signed lease agreement cps Cents per share DPS Dividend per share EME Europe & the Middle East EPS Earning