Slide 1: 2012 interim results Presentation
Regus plc 2012 interim results Presentation Mark Dixon, Chief Executive Officer Dominique Yates, Chief Financial Officer 28 August 2012
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: Measured & steady execution of strategy
Measured & steady execution of strategy Margin growth Revenue growth Additional Grow customer base opportunities • Gradually increase • Organic growth • Third place • Currently 1.16 mature margin • Bolt on • Complementary million members acquisitions locations – mostly • Focus on corporates, • At le
Slide 4: Strong cash generation and dividend distribution
Strong cash generation and dividend distribution Mature free Net investment Dividend Financial strength cash flow in new centres £m £m Pence £m 140.0 100.0 3.50 400.0 200.0 90.0 2.00 350.0 120.0 3.00 80.0 1.75 1.60 300.0 100.0 70.0 2.50 250.0 80.0 60.0 2.00 50.0 200.0 60.0 1.50 40.0 150.0 30.0 65.1
Slide 5: Mature centres
Mature centres • Revenue growth of 2.6%, from £553.4m to £568.0m • Occupancy 85.9% (2011: 84.4%) • REVPOW of £3,800 up 2.4% at constant currency • Gross margin up to 28.3% (2011 24.2%) • Adjusted* operating profit more than doubles from £33.9m to £68.1m * Before accounting changes 4.
Slide 6: Centres opened in 2011
Centres opened in 2011 • Revenues up to £34.4m (2011: £3.1m) • Performing well, in line with expectations • Turned contribution positive in Q2 5.
Slide 7: Organic growth
Organic growth • 15% growth of centre network in last 12 months • 76 new centres added in H1 (2011: 48) • Invested £65.1m in H1 • New markets – strengthening depth and breadth of our platform • New countries – bringing additional revenue diversity 6..
Slide 8: Third place
Third place • Ventures in place with SNCF, NS Trains, Shell and Extra Motorway Services • More opportunities in the pipeline 7.
Slide 9: Growing customer base
Growing customer base Research clearly demonstrates that the market continues to move towards us. • Continued success in attracting SMEs • Strong demand from larger customers for Enterprise Programme • Aviva – helping reduce their UK portfolio to five locations, transitioning employees to Regus plat
Slide 10: Group summary
Group summary • Network of 1,268 centres • Revenues up 7.6% to £608.6m • Adjusted* operating profit up 63% to £23.3m • Interim dividend up 11% to 1.0p • Strong balance sheet – net cash of £153.3m • New £200m revolving credit facility further strengthens financial flexibility * Before accounting chan
Slide 11: Accounting changes
Regus plc Accounting changes 10.
Slide 12: Accounting changes – a recap
Accounting changes – a recap • Announced on 19 July 2012, adopted 1 January 2012 • Two changes: • Estimates of useful economic life of assets • No restatement required • Capitalisation of facility costs • A policy change • Move will better reflect the underlying economic reality of our business • No
Slide 13: Financial review
Regus plc Financial review 12.
Slide 14: Income statement – mature centres
Income statement – mature centres Adjusted Reported Accounting Adjusted Adjusted Accounting Reported £ million % increase/ 2012 changes 2012 2011 changes 2011 decrease Revenue 568.0 - 568.0 553.4 - 553.4 2.6% Gross Profit (centre 160.7 (7.2) 153.5 134.3 0.6 133.7 14% contribution) Gross Margin 28.3%
Slide 15: Regional performance – mature centres
Regional performance – mature centres Mature margin Adjusted mature Revenue Contribution £ million (%) margin (%) 2012 2011 2012 2011 2012 2011 2012 2011 Americas 242.7 228.8 75.6 61.8 31.1% 27.0% 30.4% 27.1% EMEA 139.8 144.8 40.3 35.6 28.8% 24.6% 27.6% 24.7% Asia Pacific 81.5 77.3 27.4 21.0 33.6% 2
Slide 16: Cash flow – mature centres
Cash flow – mature centres £ million 2012 2011 EBITDA 100.9 68.9 • Maintenance capex returning to normalised Working capital (7.8) 16.6 levels Maintenance capital • Prior year working (24.7) (14.3) expenditure capital benefited from Other items (1.7) 0.3 increased rate of Net finance costs 0.2 - occ
Slide 17: Net investment in new centres
Net investment in new centres £ million 2012 2011 EBITDA (33.0) (14.8) • 76 new centres • Strong positive working capital from new Working capital 23.8 2.9 openings Growth capital (64.3) (28.8) expenditure Taxation 8.4 3.7 Net investment in (65.1) (37.0) new centres 16.
Slide 18: Income statement – new centres
Income statement – new centres £ million 2012 2011 New centres 2011 Revenues 34.4 3.1 Gross profit (0.4) (2.3) New centres - 2011 Growth overheads (12.7) (13.2) • Progressing as expected Operating profit (13.1) (15.5) • Gross profit +£1.8m - 9.5% margin in Q2 New centres 2012 Revenues 4.6 - New cent
Slide 19: Group results – overview
Group results – overview Total Accounting Adjusted Adjusted Accounting Total £ million 2012 Changes 2012 2011 Changes 2011 Revenue 608.6 608.6 565.6 565.6 Gross profit 153.2 (10.9) 142.3 129.4 (0.8) 130.2 (centre contribution) Gross margin 25.2% 23.4% 22.9% 23.0% Overheads (118.7) (118.7) (115.2) (1
Slide 20: Financial summary
Financial summary Mature • Good performance – 10s continue to narrow the gap • Steady margin improvement accompanied by REVPOW gains New • Continued investment in quality assets • 11s and 12s performing in line with expectations Third Place • Ventures in place, locations opening • Significant opport
Slide 21: Prospects
Regus plc Prospects Qi, aH il yy
Slide 22: Prospects
Prospects • Macro conditions expected to remain tough worldwide • Business continues to perform well and in line with expectations • Excellent growth opportunities Margin growth Revenue growth Additional Grow customer base opportunities • Steady progress on • Higher level of new • More third place •
Slide 23: Q&A
Regus plc Q&A 22.
Slide 24: Appendices
Appendices 1. Financial performance by maturity 2. Mature 09s and 10s 3. Consolidated cash flow 4. Overheads allocation methodology 5. Enterprise Programme benefits 23.
Slide 25: Financial performance by maturity
Financial performance by maturity 2012 2011 Mature New Closed Mature New Closed Total Total centres centres centres centres centres centres £ million Revenue 568.0 39.0 1.6 608.6 553.4 3.1 9.1 565.6 Cost of sales (407.3) (45.0) (3.1) (455.4) (419.7) (5.4) (10.3) (435.4) Gross Profit (centre 160.7 (6
Slide 26: Mature 09s and 10s
Mature 09s and 10s £ million Mature 09s 10s Total Revenues 513.2 54.8 568.0 • Performance gap is narrowing • 10s on average still less Gross profit (centre than two years old 148.9 11.8 160.7 contribution) CBITDA¹ margin 32.5% 28.9% 32.2% ¹ Centre Contribution before Interest, Tax, Depreciation & Am
Slide 27: Consolidated cash flow
Consolidated cash flow £ million 2012 2011 Mature free cash flow 53.7 65.0 New investment in new centres (65.1) (37.0) Closed centres cash flow (1.5) (2.0) Exceptional items - (2.6) Total net cash flow from operations (12.9) 23.4 Dividends (18.8) (16.5) Corporate financing activities (0.7) (2.0) Cha
Slide 28: Overheads allocation methodology
Overheads allocation methodology Four key elements 1. New centre opening costs estimated at £130,000 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 29: Enterprise Programme benefits
Enterprise Programme benefits Significant cost savings Convenience • Material reductions in real estate costs • Online booking and management portal • Preferential discounts on short-stay • Simple global services agreement products • Electronic invoicing & payment • Complimentary Businessworld membe