International Workplace Group Plc · LSE:IWG
International Workplace — Regus — Investor Day (November 2011)
102 slides from International Workplace's investor day presentation, Nov 30, 2011
Slide 1: Investor & analyst day
Regus plc Investor & analyst day New Broadstreet House, London 30 November, 2011
Slide 2: Agenda
Agenda Regus strategy and investment case 10.30 – 12.00 Mark Dixon, CEO & Dominique Yates, CFO – Regus plc 12.00 – 13.00 Lunch Regus in India 13.00 – 13.25 Madhusudan Thakur, Country Manager – Regus India Regus in the Americas 13.25 – 13.50 Guillermo Rotman, CEO - Regus Americas Michael Turner, RVP
Slide 3: Regus strategy
Mark Dixon CEO, Regus plc Regus strategy New Broadstreet House, London 30 November, 2011
Slide 4: Number 1 in the fast growing flexible work industry
Number 1 In the fast growing flexible work industry #1 Flexible office #1 Business lounges #1 Meeting space #1 Public video conferencing
Slide 5: The Regus story: Striving for growth
The Regus story Striving for growth Exceed 930,000 customers across Businessworld 92 countries Launched 2011 2nd country Netherlands, 2008 Doubles business in Amsterdam last 3 years exceeding 800,000 1990 customers; opens Repurchased central global Business founded majority management centre in Belg
Slide 6: Regus: The reference
Regus The reference Gy REGUS CENTRES gd SNCF STATIONS S&S» MOTORWAY SERVICE STATIONS ME ArKrorrs fd FUTURE REGUS CENTRES Ge HOMEWORKERS MEMBERSHIP
Slide 7: The market: Developing fast, gaining momentum
The market Developing fast, gaining momentum
Slide 8: Competitive position: The players
Competitive position The players About 10% market share Mom & Pop Our differentiators – 1-3 Centres Small chains Scale – all local, few regional National networks Larger chains – 20+ centres • Servcorp £100m revenue Global networks • MWB £95m revenue Businessworld system New Co-working for the young
Slide 9: Mature development strategy
Mature development strategy
Slide 10: Mature development strategy
Mature development strategy
Slide 11: Current strategy: Macro caution, local optimism
Current strategy Macro caution, local optimism
Slide 12: The investment case
Dominique Yates CFO, Regus plc The investment case New Broadstreet House, London 30 November, 2011
Slide 13: Sound business model & outlook
Sound business model & outlook 1 Sustainably profitable business model 2 Solid cash flows 3 Strong balance sheet 4 Clear market leader 5 Excellent growth prospects 6 Deliverability 7 The future
Slide 14: Profitable
1 Profitable Through the cycle – short-term fluctuation, but longer term stability 40% of revenues from non- workstation income provides fundamental protection in a downturn & Long-term approach – investment in R&D and growth
Slide 15: Profitability: Financial performance by maturity
1 Profitability Financial performance by maturity
Slide 16: Solid cash flows
2 Solid cash flows H1 2011 – Notional simplified mature cash flow £ ’m EBIT 38 Depreciation 31 Maintenance CAPEX (14) Working Capital (Estimated) 11 Interest & Tax (Notional) (8) H1 2011 Mature Free Cash Flow 58 Per Share 6.2p Or Annualised Free Cash Flow Yield of 16%* * Based on share price of 79p
Slide 17: Strong balance sheet
Rent liability (£ m) – statutory case 3 Strong balance sheet Total rent liability – £1.6 bn £184m net cash Growth self-funded Risk mitigation Rent liability (£ m) – managed case Geographic diversity and scale reduce risk further Total rent liability – £0.6 bn Proven track record in managing rent lia
Slide 18: Clear market leader
4 Clear market leader #1 player – c. 10% share in a very diversified market #1 player in all markets where we are present Regus becoming the reference in flexible work
Slide 19: Excellent growth prospects
5 Excellent growth prospects Market Significant latent, untapped demand = growth Organic – tenant of choice for landlords Acquisition – buyer of choice for sellers Product & channel development Investing in new products Investigating new channels Developing partnerships When combined together the po
Slide 20: Excellent growth prospects: New centres
5 Excellent growth prospects New centres Typical lease deals - Post-tax cash payback in 3-4 years 2.3 - 10 year post tax IRR of 28% - mature profitability reached in year 3 Variable deals - faster payback 2.3 - better IRR - minimised risk Proven track record – new centres become 2.3 profitable very
Slide 21: Deliverability
6 Deliverability ʿ Strategy ʿ Funding ʿ Capabilities ʿ Processes ʿ Structure / Organisation
Slide 22: The future
7 The future 1. Continue to grow profitably 2. Continue to invest in new products to 2.3 support non-workstation revenue growth, and to investigate other growth opportunities 3. Reduce overheads through further efficiency 2.3 gains – simplification and standardisation 4. Reduce overhead cost per wor
Slide 23: Questions
Questions
Slide 24: Lunch
Lunch
Slide 25: Regus in India
Madhusudan Thakur Country Manager, Regus India Regus in India New Broadstreet House, London 30 November, 2011
Slide 26: India – General Statistics
India – General Statistics Population • Second most populous country in the world, with over 1.21 billion people (2011 census) • Young country: average age 29 yrs (37 for China, 48 for Japan) • More than 65% of the population are below 35 yrs of age Diversity • 35 States, 1,652 languages and dialect
Slide 27: India – Large Cities
India – Large Cities Rank City State/UT Pop. Rank City State/UT Pop. 1 Mumbai Maharastra 13,830,884 11 Jaipur Rajastan 3,210,570 2 Delhi Delhi 12,565,901 12 Lucknow Uttar Pradesh 2,750,447 3 Bengaluru Kamataka 8,425,970 13 Nagpur Maharastra 2,447,063 4 Kolkata West Bengai 5,138,208 14 Patna Bihar 1,
Slide 28: Regus India – current statistics
Regus India – current statistics India Business – started in Jan 2005 • As of end Oct 2011 27 centres in nine cities Mature Business 2011 • Centres – 23 • Occupancy – 90%
Slide 29: Potential for India
Potential for India
Slide 30: India Opportunity
India Opportunity Stages 1. Strengthen position as clear market leader in existing cities. 2. Grow in other major cities/ capitals – Tier two markets. 3. Develop the network – tier three and four cities and towns.
Slide 31: Mumbai: India's commercial capital
Mumbai India’s commercial capital Mumbai Metropolitan Area – 21 million people Mumbai is the richest city in India, and has the highest GDP of any city in South, West or Central Asia Current centres - ten
Slide 32: Delhi: India's capital
Delhi India’s capital One of the highest populated urban area in India, National Capital Region (NCR) – Gurgaon 22.2 million people Current centres – six New Delhi & NOIDA
Slide 33: Regus in the Americas
Regus plc Regus in the Americas New Broadstreet House, London 30 November, 2011
Slide 34: The Americas
The Americas United States 474 centres 17 countries 560 centres 2,500 team members Latin America 15 countries 86 centres
Slide 35: USA
Guillermo Rotman CEO, Regus Americas USA New Broadgate House, London 30 November, 2011
Slide 36: US offers great potential
US offers great potential We are building a solid network across the country Achieved 86% occupancy in mature centres by H1-2011 Grew in October YTD by 49 centres through acquisitions and organic growth New States: New Markets: Utah, Vero Beach,Fl; Nebraska, St Petersburg, FL; New Hampshire Lake For
Slide 37: Our network – breadth and depth
Our network – breadth and depth British 9 9 Columbia 2 Alberta Manitoba Ontario Quebec 10 WA 1 5 MT ND 1 OR MN VT 1 18 NH 1 ID SD 44 WI 1 16 NY MA MI RI WY 4 1 25 CT 1 4 1 IA 8 NV 4 PA 10 21 7 1 NE 1 29 1 OH 1 3 NJ 27 8 IN MD UT 4 3 DC 29 1 DE IL 28 CO 11 4 3 WV CA VA 5 KS 3 3 MO 3 KY NC 4 25 AZ 1 3
Slide 38: Why corporates choose Regus
Why corporates choose Regus We have built a great network that Corporate accounts can leverage to support their needs Reasons why corporates use us Used Regus to open new markets in more than 50 locations around the globe. Confirm size, employees, location Open new markets Use Regus in 40 + location
Slide 39: Building the Regus brand
Building the Regus brand Still going through the impact of the recession but… …generating record enquiries over the last 12 months Communicating our Endorser Listeners/Reach value proposition Rush Limbaugh 70.7 MM Sean Hannity 37.5 MM National TV and radio Mike and Mike 14 MM Howard Stern 7 MM Endor
Slide 40: Regus is leading in co-working, mobile workers and virtual
Regus is leading in co-working, mobile workers and virtual Mobile worker revenue Q2 Q3 Q4 Q1 Q2
Slide 41: Success factors
Success factors Strong management – Ownership by key markets – Experienced development team Focused sales organisation Building brand awareness and image as a reliable workspace provider Strong P&L management and cost control A unique market position. No competitor can equal our market reach
Slide 42: Latin America
Michael Turner RVP, Regus Americas Latin America New Broadstreet House, London 30 November, 2011
Slide 43: Latin America
Latin centre growth Latin America 15 countries 28 cities 86 centres Regus is the only major multi country and city layer in the whole region Regus Latin everywhere, in all countries, all key cities, all key trade zones and best buildings Delivering consistent high occupancy (87%) and profitability
Slide 44: Great locations and facilities
Great locations and facilities Peru Chile Mexico Brazil Panama Argentina
Slide 45: Brazil
Brazil 30 centres Currently operating in 10 key cities Only multi city major operator – International corporate accounts – High acceptance from local companies High occupancy of 89% and good margins Export business opportunity Existing cities
Slide 46: Brazil: A big development opportunity
Brazil A big development opportunity Additional 25 cities with more that 500,000 inhabitants. All with opportunities for new centres Hub-and-spoke development Metro Sao Paulo vs Metro New York Potential cities Existing cities
Slide 47: Mexico
Mexico 30 centres in four strategic cities with 88% occupancy Additional 20 cities with more that 500,000 inhabitants Main potential is in the greater area of Mexico City Main industrial corridor outside of Mexico is the focus for growth Potential cities Existing cities
Slide 48: Lots of potential in all our Latin markets: Colombia
Lots of potential in all our Latin markets: Colombia Five centres in two cities, Bogota and Medellin with > 90% occupancy and excellent margins Five major cities for future multicenter development Regus is only multicity operator in Colombia Great opportunity for further growth as Colombia has a sta
Slide 49: Success factors for Latin America
Success factors for Latin Strong management team Replicating the success formula at country level with high occupancy and high margins Developers trust Regus brand Success of growth is in location, location, location Successful localised country marketing programs and plans No multicity competitor i
Slide 50: Sales today
Bob Gaudreau EVP, Sales & Marketing, Regus Sales today New Broadstreet House, London 30 November, 2011
Slide 51: 2010 Sales action: Used price to get volume
2010 Sales action Used price to get volume
Slide 52: 2010 into 2011: We had to get smarter
2010 into 2011 We had to get smarter 2010 into 2011 2011 into 2012 Brute force Planning and precision • Muscling initiatives through • Applying force where we need it – • One size fits all approach to planning marketing/promo’s • Aggressive pricing on ALL inventory • Driving price where we are stron
Slide 53: Places we need volume
Places we need volume Tough markets & new centres Identifying issues Using price and Standing out from and opportunities SMART discounting the crowd • A plan to sell what • Different promotion • Differentiating Regus is available aggression levels • Demonstrating the value • Keeping actions simple •
Slide 54: Places where we drive margin
Places where we drive margin Maximize margins Build value Improve revenue • Minimize “promotions” • Training up sales force • Management with to sell a higher price existing clients • Push other product sales • Pushing differentiation • Maximise and keep • Look at costs and what against competitors
Slide 55: Maintained sales velocity while improving discount
2011 Maintained sales velocity while improving discount Discounts down 8% from 12 month high
Slide 56: While absorbing +/- 15% growth in workstation capacity
While absorbing +/- 15% growth in ws capacity Total inventory has Available inventory has Selling a higher % of increased by 25,000 ws decreased from 41k available w/s and at a in the past 12-months better price
Slide 57: Double digit growth in non-resident membership base
Also... achieving double digit growth in the non-resident membership base BW membership growth VO membership growth Up 15% Year on Year Up 20% Year on Year
Slide 58: What's next? Key actions for 2012
What’s next? Key actions for 2012 Improve sales productivity • All sales people pitching companies/selling the world • Increase deal quotas by pushing non residential products as sales volume are unconstrained Differentiation – “Only at Regus” • Build more value into the products • Demonstrate and p
Slide 59: Other key actions for 2012: Driving demand
Other key actions for 2012 Driving demand Corporates Retail Partnerships and Alliances • Get the entire sales • Developing the concept • 40+ Partnerships with force selling the world in the UK to export A+ brands • New products other markets • Exposure to millions • Continue to develop • Over 300 st
Slide 60: Success for 2012 is revenue and margin growth
Success for 2012… ...is revenue and margin growth
Slide 61: Product development
Andre Sharpe Global Director, Product and Business Development, Regus Product development New Broadstreet House, London 30 November, 2011
Slide 62: The future of work: Macro trends
The future of work Macro trends The world is changing to flexible working, and away from fixed working Cost Lifestyle It’s cheaper to work Flexibly. Workers want more control of time Space and commuting is expensive. and work-life balance. Worker productivity The changing workforce Flexible Workers
Slide 63: The new global workforce
The new global workforce 1.2 billion mobile workers globally by 2013, almost a third of the workforce. International Data Corporation 300 million home workers 12% of the workforce worked mainly at or from home. This is a 21% increase since 2001. UK Labour Force Survey 930,000 Regus customers A very
Slide 64: Margin through innovation
Margin through innovation Regus Strategy Core Business 1,200 Centres Resident Customers 150,000 office customers Higher share of business wallet Non-Resident Customers New products 780,000 Regus non-office customers Home Workers 300,000,000 home workers Extend network and services to planes, Mobile
Slide 65: Growing margin: BusinessLink
Growing margin BusinessLink Features: It’s like a “Linked-in for my company” Regus customers can network together Fully integrated with Regus Buyers Group – plug-in procurement offers Live in all Regus centres globally ü 1,200 centres 92 countries ü Unique service – built on scale ü Improving sales
Slide 66: Growing margin: BusinessLink cloud printing
Growing margin BusinessLink Cloud printing solution Worked with major vendors & Internal R&D Print from any device Print from anywhere Fax and courier from home Improved document services revenue and billing by 35% in test markets Enables self-service operation Enables advanced mobility & service ap
Slide 67: Growing margin: Regus IT Core / Regus IT Pro
Growing margin Regus IT Core / Regus IT Pro Upgraded standard product Much more competitive offering Pay-per-Use option for mobile and occasional users Video, audio and web conferencing services included Substation increase in take-up, as well as utilisation by non-resident customers Powered by new
Slide 68: Mobility Infrastructure: Railways
Mobility Infrastructure Railways Extend core footprint More network value Subscription and retail access Enterprise deals Drives awareness and enquiries Partner value
Slide 69: Mobility infrastructure: Motorways
Mobility infrastructure Motorways
Slide 70: Regus At Home
Regus At Home Regus At Home - key features “Everything but the Office Space” Phone extension with free calls to Regus office and other colleagues working at home Regus catalogue of furniture, business supplies, PC equipment & software solutions Office & meeting room access Call answering, mail handi
Slide 71: Regus. Shape the future. Lead the way.
Thank you Regus. Shape the future. Lead the way.
Slide 72: Centre opening growth plan – 2011-2014
Mark Jagger Head of Global Development, Regus Centre opening growth plan – 2011-2014 New Broadstreet House, London 30 November, 2011
Slide 73: Agenda
Agenda Planning for growth Managing risk Delivery Q&A Appendix 1: Deal palette extracts Appendix 2: Field manual extracts
Slide 74: Planning for Growth: Strategic Plans
Planning for Growth: Strategic Plans One for each country: targets, risks and timescales Consistent methodology & analysis data Focus on profitable growth Organic growth & acquisitions Set hard targets: measurable & accountable Plus: Market entry strategy for 15 new countries
Slide 75: Managing Risk
Managing Risk Fresh approach to deal making (the “Deal Palette”) More emphasis on profit share, partnership and variable rent deals Better leverage of our investment capital Reduce our fit out costs Pursuing business opportunities, not just buildings
Slide 76: Delivery
Delivery Creating a disciplined, more streamlined process (the “Field Manual”) Blend of focus, discipline and opportunism Defined resource plan Comprehensive training programme Create a culture for motivating people, measuring and rewarding performance Develop improved marketing materials and PR ini
Slide 77: Summary
Summary Strategic approach to growth Clear definitions Emphasis on risk management Improved process Early results encouraging Q&A
Slide 78: Appendices
Appendices:
Slide 79: Appendix 1: Extracts from the Deal Palette
Appendix 1: Extracts from the “Deal Palette”
Slide 80: Appendix 2: Extracts from the Field Manual
Appendix 2: Extracts from the “Field Manual”
Slide 81: Working without an Office
A2 Working without an Office Simon Taylor November2011
Slide 82: Slide 81 A1 Administrator, 3/23/2011
Slide 81 A1 Administrator, 3/23/2011 A2 Administrator, 3/28/2011
Slide 83: Introduction to Yell
Introduction to Yell Yell is a leading international provider of business leads and marketing solutions to SMEs www.yell.com & Yellow Pages Yellow Book - US Paginas Amarillas - Spain
Slide 84: Workspace situation
Workspace situation Pre-1990’s • Working from hotels • High cost for constant relocation • Technology issues (non portable) • Communication & logistical issues Requirement for fixed office locations
Slide 85: Fixed office locations
Fixed office locations A move to a fixed office model in late 1990’s Acquired leases on some 30+ offices • 400 – 500 sq m Standard working environment • 1-2-1 rooms & manager offices • Touch-down space • Large meeting rooms Fixed offices brought a new set of problems
Slide 86: Fixed office locations - the problems: Increasing costs
Fixed office locations - the problems Business rates & property costs Need for cost savings lead to reduction of sales offices from 35 to 20 in 2007 BUT Rent, rates, utilities, telephony, insurance & service charge still <£4.5m and projected to rise over time Fixed costs too high despite portfolio r
Slide 87: Fixed office locations - the problems
Fixed office locations - the problems Continuous office usage decline in last 3 years • Varied usage patterns • Change towards flexible working 70% 25%
Slide 88: Fixed office locations - the problems
Fixed office locations - the problems Management issues • Logistics and coordination of resources • No Management information • Room booking • Maintenance, compliance & upkeep Fixed office = inflexible operations
Slide 89: Summary
Summary • High property costs • Continuing office usage decline • Unpredictable maintenance cost •No management information We needed a solution
Slide 90: Agility @ Work
Agility@Work • Researched best in class workplaces • Six trends transforming the workplace
Slide 91: Benefits of 'Agile Working'
Benefits of ‘Agile Working’ Less travelling Time and cost savings
Slide 92: Benefits of 'Agile Working'
Benefits of ‘Agile Working’ Detailed management reporting Increased budget control
Slide 93: Benefits of 'Agile Working'
Benefits of ‘Agile Working’ Large choice of locations More impromptu meetings & flexibility
Slide 94: Benefits of 'Agile Working'
Benefits of ‘Agile Working’ Ability to book and manage meetings on-line Increased efficiency
Slide 95: UK Multi-location Trial
UK Multi-location Trial Access to strategically important offices 80 sales team members enabled to work flexibly Managers given ability to book meeting rooms wherever required Yell network available in all locations Team members trained and working flexibly
Slide 96: National Roll Out
National Roll Out 95% UK coverage 100% major UK cities
Slide 97: Do the teams have a work space?
Do the teams have a work space? Private or campus offices Business Lounges Meeting Rooms
Slide 98: MyRegus booking website
=] Ec [tn | Ehconvert + PPsele #¥ | Make a booking | My transactions | Scheduled bookings | Replacement card | My details Make A Booking Welcome sarah randell Welcome to MyRegus, a website dedicated to helping you manage your @ Meeting Room You have no forthcoming bookings. Regus account. ® Day Offi
Slide 99: Reporting - unprecedented workplace visibility
Reporting - unprecedented workplace visibility Where they are? What they are doing? What are the costs?
Slide 100: Timeline of Events
Timeline of Events FEB MAY2010 2010 June June2010 2010 Conference Trial Contract signed to Yell employees Mark Dixon Commenced provide flexible usingWorking Flexible Regus working centres & solutions meeting rooms nationally
Slide 101: Immediate results
Immediate results Cost reduction £3.5m per year initial With potential for more with further agile working Exercised Break Options on leases Benefit of a flexible property strategy 800 employees successfully relocated Local offices to the flexible Regus Businessworld environment Work day efficiency
Slide 102: Wrap up
Regus plc Wrap up Dominique Yates 30 November, 2011