Slide 1: 2009 Full Year Results
2009 Full Year Results March 22, 2010 1
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. 2
Slide 3: Agenda
Agenda Introduction Mark Dixon Financials Stephen Gleadle Strategy and Outlook Mark Dixon 3
Slide 4: Introduction
Introduction Mark Dixon Chief Executive Officer 4
Slide 5: Business performing solidly in downturn
Business performing solidly in downturn Revenues to £1,055.1m Operating profit to £86.0m Net Cash to £237.0m Earnings per Share at 7.1p Dividend per share to 2.4p Note: Results include exceptional net income from settlement of a legal dispute of £18.3 million and the £2.6million impact of the 2010 r
Slide 6: Robust performance
Robust performance Actual exchange rates Revenue £m Operating profit before exceptionals, £m 569.7 74.4 73.0 557.4 507.5 497.7 66.2 450.9 56.4 411.5 377.4 49.2 50.1 302.6 33.0 20.2 H1 06 H2 06 H1 07 H2 07 H1 08 H2 08 H1 09 H2 09 H1 06 H2 06 H1 07 H2 07 H1 08 H2 08 H1 09 H2 09 Annualised EPS, pence N
Slide 7: Robust performance
Robust performance Actual exchange rates Weighted av. Available workstations Annualised REVPAW 173,004* 160,835 157,433 162,075 £7,235 149,087 £6,808 £6,932 138,018 £6,436 £6,532 127,857 £6,279 £6,388 £6,142 118,112 96,402 H1 06 H2 06 H1 07 H2 07 H1 08 H2 08 H1 09 H2 09 H1 06 H2 06 H1 07 H2 07 H1 08
Slide 8: Financials
Financials Stephen Gleadle Chief Financial Officer 8
Slide 9: Summary income statement
Summary Actual exchange rates income statement £ million 2009 2008 Change Revenue 1,055.1 1,077.2 (22.1) Centre contribution 235.6 305.7 (70.1) Overheads (165.3) (153.5) (11.8) Operating profit 70.3 152.2 (81.9) Exceptional receipt 18.3 - 18.3 Restructuring & (2.6) (4.8) 2.2 Reorganisation Joint ven
Slide 10: Revenue & centre contribution
Revenue & centre contribution Revenue Contribution Margin (%) £ million £ million 2008 1,077.2 305.7 28% Impact of exchange rate movement 115.7 36.6 2008 at 2009 exchange rates 1,192.9 342.3 29% Mature business (156.1) (108.5) Added 2008 35.0 12.2 Added 2009 6.2 (1.8) Closures (22.9) (8.6) 2009 1,05
Slide 11: Regional analysis
Regional analysis Actual exchange rates Revenue Contribution Mature margin (%) £ million 2009 2008 2009 2008 2009 2008 Americas 423.8 414.9 92.9 116.1 24% 30% EMEA 306.2 319.0 83.0 109.2 29% 36% Asia Pacific 132.3 120.9 40.3 37.4 34% 36% UK 191.4 220.8 18.5 41.5 11% 20% Other 1.4 1.6 0.9 1.5 -- -- 1
Slide 12: Overheads
Overheads £million Business doubles in size 82.5 83.9 81.4* 75.8 68.3 61.0 53.4 48.5 H1 06 H2 06 H1 07 H2 07 H1 08 H2 08 H1 09 H2 09 Impact of Smartworking * excludes exceptional 2010 restructuring costs of £2.6 million 12
Slide 13: Growth costs
Growth costs Net capex of c.£3,500 per workstation Contribution loss c.£400 per workstation Marketing spend c.£200 per workstation Growth teams c.£3.5m per year 13
Slide 14: Interest and tax
Interest and tax £ million Interest 2009 2008 Change Interest payable on bank loans and overdrafts (1.6) (3.5) 1.9 Interest receivable 2.6 5.3 (2.7) Finance lease (0.1) (0.2) 0.1 Non cash - Deferred finance costs (0.5) (0.6) 0.1 Non cash - UK acquisition related (1.5) (1.5) - Net Interest (1.1) (0.5
Slide 15: Cash flow
Cash flow £ million 2009 2008 Change Cash from operations 105.1 249.6 (144.5) Other income 1.2 1.9 (0.7) Exceptional receipt 18.3 -- 18.3 Cash in 124.6 251.5 (126.9) Maintenance capex (20.2) (32.9) 12.7 Interest and tax (24.1) (30.2) 6.1 Free cash flow 80.3 188.4 (108.1) Acquisitions and JV Investme
Slide 16: Summary balance sheet
Summary balance sheet @ Actual exchange rates £ million 2009 2008 Change Non-current assets 650.8 729.6 (78.8) Working capital (284.2) (345.8) 61.6 Net cash 237.0 211.2 25.8 Other non-current liabilities (104.1) (114.7) 10.6 Net assets 499.5 480.3 19.2 16
Slide 17: Summary
Summary In an uncertain trading environment, we have remained cash generative increased our net cash balance executed and exceeded our cost savings plans increased our dividend by a third We remain well placed for the long term a wide, well diversified geographic presence rationalised and tightened
Slide 18: Strategy and Outlook
STRATEGY AND OUTLOOK Mark Dixon Chief Executive Officer 18
Slide 19: Overview
Overview Bottom reached; cash generated throughout downturn - strategy is working 80 countries, 1000+ centres, 600,000+ customers – huge scope for growth Global Market leader – in a growing market Cautious yet increased optimism Ready to exploit growth opportunities Low risk, low cost acquisitions R
Slide 20: Regus – resilience through the cycle
Regus – resilience through the cycle In the last five years, we have Cash generated from operations, £m* 249.6 Invested £411m in growth 211.1 132.8 123.4 Repaid £124m to the bank 78.1 Returned £77m to shareholders 2005 2006 2007 2008 2009 Continued strong cash generation from operations Net cash, £m
Slide 21: Margin and Growth
Margin and Growth Grow our revenue Maximise revenue opportunities Price and Occupancy uplifts sought New product contributions growing Control our costs Significant savings already achieved – more targeted Long term focus on adding 4+ points of additional margin Simplify operations and leverage scal
Slide 22: Cost savings critical
Cost savings critical Core overhead cost per workstation – reduces as business grows Overhead per WS 108 95 91 91 91 87 73 68 H1 06 H2 06 H1 07 H2 07 H1 08 H2 08 H1 09 H2 09 22
Slide 23: Operational and process innovation
Operational and process innovation Global Management Centre – Lower Costs Ease of Single Centre Leveraging our Operating Opening Improved global scale Platform Stronger Operational Control 23
Slide 24: Routes to market
Routes to market Global trend – Flexible working Centres Centres Mobile Mobile workers workers Home Home workers workers Corporate Corporate •• 2010 2010 planned planned growth growth •• Enabling Enabling work work from from in- in- •• Business Business world world isis low low cost cost •• Global G
Slide 25: Market moving toward Regus
Market moving toward Regus In the throes of a working revolution - changing the way organisations function Increasingly, people aren’t going to work; work is coming to them Technology - the catalyst; no longer the same need to gather in one place Increasingly, people choosing to work away from the t
Slide 26: New channels
New channels Retail is progressing well and now in stores across UK and US as well as online Helping us access home and mobile workers who wouldn’t necessarily consider Regus Looking at launching in Europe in Q2 Starting to produce variations on the main product for different retailers Partnerships
Slide 27: New products
New products Competition intensifies - we continue to innovate and augment our product portfolio New product launches occurring throughout 2010 Businessworld embodies our flexible work ethos - as compelling for the largest corporate as it is 327,561 to the smallest business; as such growth remains s
Slide 28: Marketing
Marketing Tailored marketing plans in 80 countries, local to specific needs Targeted campaigns using proven approaches are delivering results - Email, web, outdoor advertising, radio, TV, dominating web search Strategy to encourage direct rather than introduced business Enquiry volumes are encouragi
Slide 29: Enterprise solutions
Enterprise solutions Fundamental shift towards flexible working Potential for Regus to reduce enterprises' costs is large (e.g. saved Nortel US$129million) Early stages of what is a significant opportunity Sales cycle can often exceed 12 months 29
Slide 30: Driving regional performance
Driving regional performance Asia outperformed peers by significant margin margins improving, volume and price on the move maximum growth profile EMEA good performance through recession shallower curve in and out acquisition opportunities capitalised; continued focus on growth US held up well – slow
Slide 31: Ready to move forward
Ready to move forward Signs of downturn stabilising £245m total cash in bank 33% increase in dividend Delivering expected cost savings Ready to capitalise on appropriate opportunities: A scalable model A growth industry – significant potential A global platform – multiple opportunities Management te
Slide 32: Appendix
Appendix 32 workwithoutboundaries
Slide 33: Growth - low risk, low cost
Growth - low risk, low cost Q1 2010 approved growth already > total for 2009 Low capex/low risk remains focus Variable terms wherever possible Property portfolio @ Dec 09 New centres opened in 2009 65% 22% 13% Non flexible Flexible Variable 33
Slide 34: Stability in our business model
Stability in our business model Workstation segmentation Customer sectors 34
Slide 35: Regional diversity
Regional diversity 2009 revenues by region 35
Slide 36: Global footprint
Global footprint Algeria Denmark Italy Norway South Africa Argentina Ecuador Japan Oman South Korea Australia Egypt Jordan Pakistan Spain Austria El Salvador Kenya Panama Sweden Bahrain England Latvia Paraguay Switzerland Belgium Estonia Lebanon Peru Taiwan Brazil Finland Luxembourg Philippines Thai