Slide 1: Regus plc 2013 full year results presentation
Regus plc 2013 full year results presentation Mark Dixon, Chief Executive Officer Dominique Yates, Chief Financial Officer 4 March 2014
Slide 2: Caution statement
Caution statement No representations or warranties, express or implied are given in, or in respect of, this presentation or any further information supplied. In no circumstances, to the fullest extent permitted by law, will the Company, or any of its respective subsidiaries, shareholders, affiliates
Slide 3: Results overview – strong performance
Results overview – strong performance • Strong mature performance; net margin up to 16.7% • Firm control over cost – overheads (ex R&D) down 3.8% per available workstation • Record network growth of 30% to 1,831 business centre locations • Group revenue increased 23.3% to £1,533.5m • 13% increase in
Slide 4: Grow, mature, return - the potential of our network
Grow, mature, return - the potential of our network Mature portfolio 2009 2010 2011 2012 2013 2014** • Mature group expands as each year group graduates 948 1029 1144 1383 1831 2131+ • Manage all centres to achieve mature margin potential • Scale benefit on overheads drives improvements to operating
Slide 5: Strong mature performance
Strong mature performance Mature operating profit* MATURE – improving performance • Continued strong momentum 205.3 170.5 • Operating profit up 33% to £205.3m 170.5 • Mature EPS increased 34% to 17.0p (2012: 12.7p) £m 106.8 • Gross profit up 9% as a result of better yield management 63.7 • Strong op
Slide 6: Progress on overhead efficiency
Progress on overhead efficiency • Group overheads (ex R&D) per available workstation Overheads* as a % of sales reduced by 3.8% 30 • Achieved through: 18.3% 19.1% 18.1% 18.0% • Scale advantages of a larger network 20 15.5% • Further automation of back office % 10 • Management delayering and strength
Slide 7: Record network growth
Record network growth Net annual growth of network • 448 new centres – 30% growth of centre network (2012: 17%) 35 +30% 30 • 76 new third place locations – total network now stands 25 at 98 20 +17% • Opportune time to invest in broadening and deepening % 15 our network – growing customer demand and
Slide 8: Innovation
Innovation • £7.2m invested in Research & Development – up 60% • Ability to innovate crucial to driving long-term growth • Examples of customer focussed innovation • Business Workbox – self contained workspace • DocStation – cloud printing platform • Cloud Voice Platform • Global Single Sign-on 1. 1
Slide 9: Working with partners globally
Working with partners globally 1. 3. 2. 4. 5. 1. Railway – Amersfoort 3. Roadside – Cambridge 5. Retail – Reading 2. Community centre – Laren 4. Airport – Schiphol 9.
Slide 10: Strong and growing customer demand
Strong and growing customer demand • Strong customer demand across all sectors • Increasing customer diversity • Penetration of new markets – more • Support across 12 countries in companies looking to outsource last year – fixed and flexible • Success with large global corporates • Convenient and af
Slide 11: Summary
Summary • Strong mature performance • Record growth of network • New centres performing in line with expectations • Continue to lead industry innovation • Positive progress on overhead control 11.
Slide 12: Financial review
Regus plc Financial review 12.
Slide 13: Income statement – mature centres
Income statement – mature centres £ million 2013 2012 Change • 34% mature EPS growth to 17.0p (2012: 12.7p) Revenue 1,226.3 1,182.0 3.7% • Revenue growth of 3.7% Gross profit 359.0 328.3 9% • REVPOW growth of 4.3% to £7,750, up £321 (centre contribution) • Occupancy strong at 83.8% (2012: 84.5%) Gro
Slide 14: Regional performance – mature centres
Regional performance – mature centres Revenue Contribution Mature margin (%) £ million 2013 2012 2013 2012 2013 2012 Americas 534.0 509.6 168.9 153.4 31.6 30.1 EMEA 298.3 283.5 82.5 78.3 27.7 27.6 Asia Pacific 181.6 184.7 58.7 57.7 32.3 31.2 UK 210.7 202.9 50.3 37.6 23.9 18.5 Other 1.7 1.3 (1.4) 1.3
Slide 15: Cash flow – mature centres
Cash flow – mature centres £ million 2013 2012 • Mature free cash flow per EBITDA 272.1 216.8 share of 16.6p Working capital (21.3) 20.5 • Small outflow of working Maintenance capital capital due to timing (53.2) (58.0) expenditure differences - represents 1.6% of gross Group working Other items 3.1
Slide 16: Net investment - new centres
Net investment - new centres £ million 2013 2012 • Record investment in growth driven by strong EBITDA (83.7) (56.8) demand across all markets – 448 new centres added • Strong positive working capital from new additions Working capital 85.4 25.9 • Investment supported by mature free cash flow and Gr
Slide 17: Income statement – new centres
Income statement – new centres £ million 2013 2012 New centres - 2012 New centres 2012 • Progressing in line to maturity Revenues 139.4 39.0 • Occupancy up to 70% Gross profit 6.9 (8.7) Growth overheads (35.7) (53.9) New centres 2013 Operating loss (28.8) (62.6) • Record growth – 448 centres New cen
Slide 18: 2013 – similar progression to last year
2013 – similar progression to last year Margin progression by year of opening • Maturation progressing as expected NCO year group NEW YEAR NEW YEAR NEW YEAR GROUP 40 2013 2012 2011 2010 • 2011s narrowed margin gap Financial • 2012 and 2013 centres 34.3% 33.4% Reporting tracking as anticipated 30 30.
Slide 19: Grow, mature, return - the potential of our network
Grow, mature, return - the potential of our network Mature portfolio 2009 2010 2011 2012 2013 2014** • Mature group expands through annual addition of centres 948 1029 1144 1383 1831 2131+ • Mature network increased by 21% on 1 January 2014 • Provides good forward visibility on the network and its r
Slide 20: Group overheads (ex. R&D)
Group overheads (ex. R&D) Total Group overheads* • Investing to support growth whilst 275.9 maintaining strong cost discipline 221.6 225.7 • Improving overhead efficiency with 190.6 overheads (ex R&D) per available 162.7 £m workstation reducing by 3.8% - in spite of more growth, MWB transaction rela
Slide 21: Funding increased investment
Funding increased investment New centre additions Investment in growth* • Record growth in network 301.1 448 • New centre returns support continued investment 243 175.3 • Mature cash flow capable £m of supporting approximately 125 139 71.4 86.4 15% centre growth per 45 18.2 annum 2009 2010 2011 2012
Slide 22: Group results – overview
Group results – overview £ million 2013 2012 • R&D spend increased 60% to £7.2m Revenue 1,533.5 1,244.1 • Dividend up 13% Gross profit 373.8 320.7 (centre contribution) Gross margin 24.4% 25.8% Overheads (275.9) (225.7) Investment in R&D (7.2) (4.5) Joint ventures 0.1 (0.3) Operating profit 90.8 90.
Slide 23: Financial summary
Financial summary Strong performance • Good profit and cash performance from Mature business • Record level of new centre growth, with 12s and 13s performing in line with expectations • Strong discipline on cost control maintained with 3.8% reduction in SG&A costs (ex R&D) per workstation • Robust b
Slide 24: Summary
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Slide 25: Summary: 2014 priorities and outlook
Summary 2014 priorities • Focus on driving further improvements to mature operating profit • Ensure new centres continue to progress • Investing in innovation; further develop range of products and services • Controlling absolute level of overheads and increase efficiencies Outlook • Current trading
Slide 26: Thank you Q&A
Regus plc Thank you Q&A 26.
Slide 27: Appendices
Appendices 1. Financial performance by maturity 2. Consolidated cash flow 3. Overheads allocation methodology 4. Investor relations contact details 27.
Slide 28: Financial performance by maturity
Financial performance by maturity 2013 2012 Mature New Closed Mature New Closed Total Total centres centres centres centres centres centres £ millions Revenue 1,226.3 298.8 8.4 1,533.5 1,182.0 39.0 23.1 1,244.1 Cost of sales (867.3) (284.6) (7.8) (1,159.7) (853.7) (47.7) (22.0) (923.4) Gross profit
Slide 29: Consolidated cash flow
Consolidated cash flow £ millions 2013 2012 Mature free cash flow 156.5 149.4 New investment in new centres (301.1) (178.4) Closed centres cash flow - (6.4) Total net cash flow from operations (144.6) (35.4) Dividends (31.1) (28.2) Corporate financing activities 0.3 (2.3) Change in net cash (175.4)
Slide 30: Overheads allocation methodology
Overheads allocation methodology Four key elements 1. New centre opening costs estimated at £110,000 per centre. Reflects the costs incurred to the point of opening. 2. Property team costs. It is estimated that 90% of the property teams’ costs are spent on supporting the growth programme. 3. Sales a
Slide 31: Investor relations contact details
Investor relations contact details Wayne Gerry Group Investor Relations Director +44 (0) 7584 376533 wayne.gerry@regus.com 31.