Slide 1: Full Year Results, 24 August 2023
For personal use only 24 August 2023
Slide 2: Disclaimer
DISCLAIMER Important Information Servcorp Limited (ABN 97 089 222 506) (“Servcorp”) is the parent entity of the Servcorp Group and is responsible for all information contained in this presentation. Not an offer nor investment advice This presentation is not an offer or invitation for subscription or
Slide 3: Contents
3 For personal use only CONTENTS
Slide 4: For personal use only
For personal use only
Slide 5: A Year of Achievements
A YEAR OF ACHIEVEMENTS Servcorp delivered robust results in FY23, achieved all performance targets set. For personal use only Global At least Expansion & Profit Target $60M Free $60M CAPEX $41M to $43M Cash commitment commenced* Increased Exit from Improve declared under- client dividend performing
Slide 6: FY KPI Highlights
FY KPI HIGHLIGHTS $42.3M 55% For personal use only Up 66% $61.7M $293.8M Up 36% Up 17% Up 9% $115.7M $37.9M Up 8% Up 40% 36.3 cps 22.0 cps 5 floors Up 39% Up10% 6 * Includes 12.0 cps final dividend (20% franked) for FY23 *ROFE refers to Return on Net Funds Employed, calculated as underlying NPBIT ex
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Slide 8: Business Focus
BUSINESS FOCUS Servcorp continues to pursue its long-term strategy of driving profitable growth, cultivating business resilience and ensuring sustainable income For personal use only streams. People, Culture & Market Share & Innovation & Training Presence Technology • Cultivating Growth • Expansion
Slide 9: Why Servcorp
WHY SERVCORP The power of BIG, when you are small. For personal use only Enabling smooth Eight more floors and seamless currently under Focus on hybrid work while construction for Saves on Connects business core maintaining scheduled opening average 65% Global scale clients to and stop losing produc
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Slide 11: Changing Global Footprint
CHANGING GLOBAL FOOTPRINT • During FY23, 5 new operations were For personal use only open, including 3 in Australia & New Zealand, 1 in North Asia, and 1 in the Middle East. • 3 locations were closed in Australia & New Zealand in FY23. All were replaced by deploying resources to more prestigious loc
Slide 12: Improved Global Footprint
IMPROVED GLOBAL FOOTPRINT In February 2023, Servcorp stated its intention to recommence expansion of its global footprint For personal use only where suitable opportunities and management depth are present. The plan discussed in February 2023 was to spend ~$60m on building 15 more floors over the ne
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Slide 14: Business Efficiency
BUSINESS EFFICIENCY Return on Funds Emplo yed ROFE For personal use only FY23 55% • Mature floor occupancy was steady at 72%. FY22 33% • Client retention improved year-on-year across all markets. FY21 28% • Leads volume shows a steady upward trend, especially in the last quarter of FY23. FY20 30% •
Slide 15: Portfolio Overview
PORTFOLIO OVERVIEW For personal use only Less than 1 Year Staggered 1 to 3 years 3 to 5 years Lease Expir y 5 to 10 years Profile Over 10 years Diversified Client Base ANZ & SEA North Asia Europe & Middle East USA 15
Slide 16: Financial Results
NCIAL RESULTS NA Fl Ajuo asn yeugs
Slide 17: Results Overview
RESULTS OVERVIEW Underlying $293.8M Revenue * $61.7M Up 9% For personal use only 36.3 cps Underlying Underlying 22.0 cps $42.3M Free Cash EPS Up 17% DPS Underlying Up 10% Up 39% NPBIT * Up 36% $37.1M Underlying $115.7M NPAT * Unencumbered Up 47% 55% Cash ROFE * Up 8% Up 66% 5,150 $187.8M Stock Capac
Slide 18: Revenue
REVENUE Underlying Revenue* achieved a growth of 12% year-on-year For personal use only • Underpinned by improvement in both sales and pricing, FY23 Underlying Revenue* increased by $30.6m on pcp. $295.5M Statutor y $293.8M • Premium services at prestigious locations enabled materialisation of stron
Slide 19: Expenses
EXPENSES Balancing cost discipline with long term investments For personal use only • Service expenses increased by $7.8m or 13%, partially driven by higher remuneration costs following creation of new positions to further support clients. The cost increments were largely recovered within one year f
Slide 20: Profitability
PROFITABILITY Strong operating performance in FY23; growth momentum expected to continue For personal use only • Underlying NPBIT $42.3m, met mid-range of the profit target, up $11.2m or 36%* on pcp • Interest & dividend income almost doubled on pcp as cash rates globally continued to rise • Statuto
Slide 21: Cash Flow
CASH FLOW Large cash reserve to support organic growth and continued global expansion For personal use only FY23 FY22 Var Var #039;m #039;m #039;m % Net Operating Cash flow 155.5 145.6 9.9 7% • Underlying free cash generated in FY23 of Add: $61.7m, attributed to: Tax paid 2.1 13.1 (11.1) (84%) Less: Lease li
Slide 22: Cash Flow
22 For personal use only CASH FLOW
Slide 23: Balance Sheet
BALANCE SHEET Balance Sheet Jun-23 Jun-22 PP&E ROUA Total PP&E & ROUA #039;m #039;m #039;m #039;m #039;m Cash 105.4 100.8 For personal use only Opening balance 80.5 260.0 340.5 Trade Receivables 27.8 20.0 PP&E & ROUA 385.7 340.5 Addition1 19.5 163.1 182.5 2 Software & Intangible 2.4 2.1 Disposal (1.6) (6.0) (7.6)
Slide 24: Segment Overview
SEGMENT OVERVIEW A • Segment profit from mature operations improved to $11.9m For personal use only • Performance recovery continues, evident in rising revenue, improving occupancy and client retention rate C D B B • Exited Hong Kong due to business headwinds caused by C the local market. • The rest
Slide 25: ANZ and South East Asia
ANZ AND SOUTH EAST ASIA Mature: Revenue, Segment Profit & Cash Earnings* For personal use only $70.0 • Performance Recovery $62.6 Australia, New Zealand and South East Asia $60.0 has demonstrated a strong performance $53.0 rebound coming out of the pandemic. $50.0 • Mature Revenue Surge $40.0 Mature
Slide 26: North Asia
NORTH ASIA Mature: Revenue, Segment Profit & Cash Earnings* For personal use only $120.0 • Disappointing Performance North Asia results in general retreated from the $98.1 year before, mostly resulting from the protracted $100.0 $93.6 underperformance in Greater China given the slow rebound from arg
Slide 27: Europe and Middle East
EUROPE AND MIDDLE EAST Mature: Revenue, Segment Profit & Cash Earnings* For personal use only $105.0 • Robust Performance $94.0 Europe & Middle East continued to perform well. $90.0 $82.4 • Mature Revenue Surge $75.0 Mature revenue recorded a healthy growth of $11.6m on pcp. $60.0 • Impairment #039;m $
Slide 28: USA
USA Mature: Revenue, Segment Profit & Cash Earnings* • Improved Performance For personal use only $23.0 USA continued to show improvements in performance in FY23, closing the year with a $19.1 small Segment Profit of $0.8m. $18.0 • Strong Momentum in Revenue Growth $16.5 Revenue continued growing, b
Slide 29: Dividend
DIVIDEND Final FY23 Dividend • Final dividend payable of 12.0 cps, 20% franked, payable on 5 October 2023 For personal use only • Total FY23 dividend of 22.0 cps (up 10%) FY24 Dividend • Guidance for FY24 dividends will be announced at the Annual General Meeting in November; however, we would expect
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For personal use only = | WW ye? | tN Y me i ie
Slide 31: Guidance and Targets
GUIDANCE AND TARGETS Outlook Despite the ongoing challenges facing the world economy, For personal use only Servcorp remains cautiously optimistic. Eight locations are under construction, scheduled for opening in FY24. Management is actively exploring markets for opportunities based strategically wh
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Slide 33: Revenue
REVENUE $’m Statutory Total Revenue FY23 295.5 FY22 275.6 Var 20.0 % 7% Less Other revenue and income* (3.1) (3.9) 0.9 22% For personal use only Statutory Operating Revenue 292.5 271.6 20.8 8% Add Revenue from JV operation 1.5 1.1 0.4 36% Other revenue adj** - 1.9 (1.9) (100%) Less Royalty Income (0
Slide 34: Expenses
EXPENSES #039;m FY23 FY22 Var % Service expenses 74.5 65.7 8.8 13% For personal use only Marketing expenses 18.4 14.7 3.7 25% Lease expenses 113.2 110.1 3.0 3% Other Occupancy expenses 38.2 33.8 4.4 13% Administrative expenses 22.3 18.7 3.6 19% Other losses/ (gain) 12.0 (1.9) 13.9 nmf Total Expenses 27
Slide 35: Profit
PROFIT FY23 #039;m FY22 #039;m Var #039;m Var % FY22 #039;m Statutory NPBT 17.0 34.4 (17.4) (51%) FY22 Underlying NPBIT reported in FY22 35.2 One-off income* (4.8) Add Underlying NPBIT reported in FY22 excl. For personal use only Operating loss from pre-mature or post-closure floors 3.8 2.8 1.0 35% 30.3 the one
Slide 36: Profit
PROFIT Statutory Profit Underlying FY23 FY22 Var Var FY23 FY22 Var Var #039;m #039;m #039;m % #039;m #039;m #039;m % Revenue and other income 295.5 275.6 20.0 7% Statutory Revenue and other income 295.5 275.6 20.0 7% For personal use only Total expenses (278.6) (241.2) (37.4) (15%) Revenue from operations pre-maturit
Slide 37: Segment
SEGMENT Total Revenue Revenue from Other Total Revenue Adj. from status Adj. Total Revenue from Revenue from Other from Continuing new floors pre- Mature Revenue from Continuing changes since new floors pre- Mature Revenue adjustments Continuing adjustments Operations maturity Operations FY22* matur
Slide 38: KPI Tracker
KPI TRACKER 400.0 50.0 40.0 300.0 EPS (cents) 30.0 Millions 200.0 Statutory Underlying Underlying 20.0 Revenue NPBIT* EPS 100.0 #039;m #039;m cents 10.0 For personal use only FY19 337.4 32.0 30.2 - - FY20 352.9 37.5 31.6 FY19 FY20 FY21 FY22 FY23 FY21 275.7 30.0 24.4 FY22 275.6 31.0 26.1 Statutory Revenue
Slide 39: Stats vs Underlying Tracker
STATS VS UNDERLYING TRACKER Statutory Revenue vs. Revenue from continuing operations and other income* For personal use only Revenue Revenue from 400.0 $352.9 $337.4 Statutory continuing 350.0 $21.5 $295.5 Revenue operations and $39.0 $275.7 $275.6 300.0 $11.9 $0.4 $6.5 other income** 250.0 Millions
Slide 40: Glossary
GLOSSARY ANZ Australia and New Zealand Cash Earnings Is EBITDA minus Cash Rent paid Cash Rent Cash Rent is the amount paid to a landlord (or lessor) by Servcorp as a lessee under the terms of a signed lease agreement For personal use only cps Cents per share DPS Dividend per share EME Europe & the M