Slide 1: 2013 Interim Results Presentation
Regus plc 2013 Interim Results Presentation Mark Dixon, Chief Executive Officer Dominique Yates, Chief Financial Officer 27 August 2013
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: Strong progress on delivering our strategy
Strong progress on delivering our strategy Demand led Mature operating New developments Grow customer base revenue growth margin growth and Third Place • Revenue up 22.4% • Achieved 14.6% in H1 • Continued product & • Currently 1.45 to £744.7m • Economies of scale and service innovation million memb
Slide 4: Strong cash generation funding growth and dividend distribution
Strong cash generation funding growth and dividend distribution Strong mature Increased net Further dividend Strong mature cash flow free cash flow investment in growth progression and £200m facility underpin future growth £m £m Pence £m 3.5 3.20 144 175 3.0 2.90 192 188 117 2.60 2.5 90 110 2.0 2.20
Slide 5: Mature centres performing strongly
Mature centres performing strongly • Operating profit up 50% to £91.4m • Revenue growth of 4.5% at constant currency to £626.0m • Occupancy remains strong at 84.2% (H1 2012: 83.9%) • REVPOW of £3,913 up 3.7% at constant currency • Gross margin up to 28.5% (H1 2012: 26.7%) • Improved performance acro
Slide 6: Network growth on track
Network growth on track • Further strengthening of the network – broader and deeper • Continued customer demand • Substantial opportunities to invest above our hurdle rate Strong network growth • Scale drives reduction in overheads per centre 2,000 +14% What have we delivered? +5% +11% 1,605 +8% 1,4
Slide 7: Third Place building momentum
Third Place building momentum • Highly complimentary to core 1. 2. business centre network • Enables us to reach a far greater target audience • Strong demand from major organisations across multiple industry sectors demonstrates market opportunity • Strong returns discipline Key developments • 69 t
Slide 8: Innovation is a major differentiator
Innovation is a major differentiator • A major differentiator; sets us apart from competition • Investment in the future of the business • Fast moving environment Key developments 1. 2. • Launched contactless card and smartphone technologies to improve access to network • Cloud based printing • Call
Slide 9: Flexible working is becoming mainstream
Flexible working is becoming mainstream Early adopters – SMEs and growing companies Mainstream adopters – large corporates Google co-working space 9.
Slide 10: Financial review
Regus plc Financial review 10.
Slide 11: Income statement – mature centres
Income statement – mature centres £ million H1 2013 H1 2012 Change Revenue 626.0 591.1 5.9% • Revenue growth of 4.5% at constant currency Gross profit 178.7 158.1 13% (centre contribution) • Occupancy strong at 84.2% Gross margin 28.5% 26.7% • REVPOW up 3.7% to £3,913 at Overheads (87.6) (96.7) 9% c
Slide 12: Regional performance – mature centres
Regional performance – mature centres Mature revenue Mature contribution Mature margin (%) £ million H1 2013 H1 2012 H1 2013 H1 2012 H1 2013 H1 2012 Americas 273.9 253.0 87.7 73.3 32.0% 29.0% EMEA 154.2 145.2 41.5 38.7 26.9% 26.7% Asia Pacific 93.5 90.6 29.4 28.4 31.4% 31.3% UK 103.5 101.6 20.5 16.6
Slide 13: Cash flow – mature centres
Cash flow – mature centres £ million H1 2013 H1 2012 • Maintenance capex remains EBITDA 125.2 91.3 in the 4-5% guidance range Working capital (3.9) 9.0 of mature revenue Maintenance capital • Tax based on 20% of profit (30.6) (24.7) expenditure before tax, the anticipated Other items 1.4 (2.9) long
Slide 14: Net investment in new centres
Net investment in new centres £ million H1 2013 H1 2012 • 203 new centres added in EBITDA (44.8) (24.6) period (H1 2012: 76) Working capital 15.0 7.0 • New centres continue to have Growth a positive impact on working (166.6) (64.5) capital expenditure capital Other items 2.2 - • Currently on track f
Slide 15: Income statement – new centres
Income statement – new centres £ million H1 2013 H1 2012 New centres - 2012 New centres 2012 • Progressing to maturity as Revenues 66.4 6.6 expected Gross profit (1.6) (5.4) • Timing of openings in 2012 Growth overheads (19.4) (20.6) has impacted profitability in H1 Operating loss (21.0) (26.0) 2013
Slide 16: Group overheads (including R&D)
Group overheads (including R&D) Overheads per available workstation • 17%* annual increase in £ overheads against a 24% 1,217 increase in workstations 1,146 1,127 • Overheads per available 568 572 580 529 workstation down 7%* at 502 constant currency (5.5% at 1st half actual rates) despite 2nd half
Slide 17: Funding increased investment
Funding increased investment New centre openings £m Investment in growth* • Significant growth in network • Returns support continued 175 243 investment • Conservative balance sheet 110 1st half approach - £200m revolving 139 167 125 86 credit facility 186 2nd half 71 203 91 85 38 64 65 76 40 48 33
Slide 18: Group results – overview
Group results – overview £ million H1 2013 H1 2012 Revenue 744.7 608.6 • Underlying Group operating profit Gross profit up 22% 180.6 153.2 (centre contribution) • 15.8% effective tax rate still Gross margin 24.3% 25.2% benefiting from accounting Overheads (143.4) (116.6) changes and resolution of an
Slide 19: Financial summary
Financial summary Mature business delivers pleasing performance • Strong occupancy and REVPOW gains driving margin improvement • 2011 centres continue to mature Significant investment in new centre growth • 2012 centres and 2013 centres performing in line with expectations • Integration of MWB proce
Slide 20: Prospects
Regus plc Prospects 20.
Slide 21: The potential of our maturing network
The potential of our maturing network Growth of mature network and earnings potential Mature portfolio 2008 2009 2010 2011 2012 • Gradually improving gross margin performance 920 948 1029 1160 1403 • Scale benefit on overheads drives operating margin • Mature group getting bigger through annual addi
Slide 22: Prospects
Prospects Demand led Improve mature Drive innovation Grow customer base revenue growth margins • On track to deliver full • Measured progress • Continue to lead • Strong demand across year numbers on gross margin market innovation all geographies • Significant end user • Further efficiencies • Incre
Slide 23: Thank you Q&A
Regus plc Thank you Q&A 23.
Slide 24: Appendices
Appendices 1. Financial performance by maturity 2. Consolidated cash flow 3. Investor relations contact details 24.
Slide 25: Financial performance by maturity
Financial performance by maturity H1 2013 H1 2012 Mature New Closed Mature New Closed Total Total centres centres centres centres centres centres £m Revenue 626.0 118.0 0.7 744.7 591.1 6.6 10.9 608.6 Cost of sales (447.3) (115.5) (1.3) (564.1) (433.0) (12.0) (10.4) (455.4) Gross Profit (centre 178.7
Slide 26: Consolidated cash flow
Consolidated cash flow £m H1 2013 H1 2012 Mature free cash flow 72.3 61.2 New investment in new centres (186.4) (75.3) Closed centres cash flow (0.9) (0.3) Exceptional items - - Total net cash flow from operations (115.0) (14.4) Dividends (20.8) (18.8) Corporate financing activities (0.2) (0.7) Chan
Slide 27: Investor relations contact details
Investor relations contact details Wayne Gerry Group Investor Relations Director +44 (0) 7584 376533 wayne.gerry@regus.com 27.