Slide 1: Half Year Results Presentation, February 2024
For personal use only 22 February 2024
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
6; Brjouosiot 104 SE SERVCORP
Slide 5: 1H Underlying Results
H UNDERLYING RESULTS For personal use only Underlying Underlying Underlying NPBIT Operating Revenue Operating Profit on pcp on pcp on pcp Underlying Free Cash Underlying EPS DPS on pcp on pcp on pcp 5
Slide 6: 1H Statutory Results
H STATUTORY RESULTS For personal use only Statutory Revenue Statutory Statutory NPBT Operating Profit on pcp on pcp on pcp Statutory NPAT Free Cash Basic EPS on pcp on pcp on pcp 6
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Slide 8: Continued Investment in Technology
CONTINUED INVESTMENT IN Stage migration to the new Smart Office For personal use only was completed in enabling a more Establishment of new data architecture automated and streamlined new billing facilitating data analytics to induce and client management application with revenue optimization better
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Slide 10: Growing Global Presence
GROWING GLOBAL PRESENCE • During 1H24, 6 new operations* were For personal use only open, including 3 in Australia & New Zealand, 2 in North Asia, and 1 in the Middle East. • 1 location was closed in Australia & New Zealand in 1H24, replaced by deploying resources to more prestigious locations opene
Slide 11: 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
Slide 12: Portfolio Overview
PORTFOLIO OVERVIEW For personal use only Staggered Lease Expir y Profile Less than 1 Year 1 to 3 years 3 to 5 years 5 to 10 years Over 10 years 12
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Slide 14: Financial Performance
FINANCIAL PERFORMANCE Revenue Underlying NPBIT For personal use only 330.0 60.0 320.0 55.0 310.0 50.0 45.0 #039;mil #039;mil 300.0 40.0 290.0 35.0 280.0 30.0 270.0 25.0 FY21 FY22 FY23 FY24 FY21 FY22 FY23 FY24 Revenue Est. FY24 (low) Est. FY24 (high) Underlying NPBIT Est. FY24 (low) Est. FY24 (high) Return
Slide 15: Revenue
REVENUE Underlying Operating Revenue* achieved a growth of 8% year-on-year For personal use only • Underpinned by continued improvement in effective pricing, 1H24 Underlying Operating Revenue increased by $10.7m on pcp. $143.6M Underlying • Premium services at prestigious locations enabled $157.7M m
Slide 16: Expenses
EXPENSES Overall expenses rose 6% on 1H23, while revenue was up 8% For personal use only • Service expenses increased by $5.2m or 15%, as a result of persistent inflationary pressure. • Strategically, Servcorp continued its focus on marketing activities, invested an extra $0.5m on spending year-on-y
Slide 17: Profitability
PROFITABILITY Underlying Operating Profit up 25%*; Statutory Operating Profit up 42%* For personal use only • Underlying NPBIT $28.3m, exceeding the mid-point of the 6-month pro-rated profit target, up $5.7m or 25% on pcp** • Statutory NPBT includes non-recurring costs totalling $4.5m: o Impairment
Slide 18: Cash Flow
CASH FLOW Large cash reserve to support organic growth and continued global expansion For personal use only 1H24 1H23 Var Var • Underlying free cash generated in 1H24 of #039;m #039;m #039;m % $35.8m, attributed to the strong operating Net Operating Cash flow 81.6 78.0 3.6 5% performance driven by continued
Slide 19: Cash Flow
CASH FLOW For personal use only Balance at 1H23 $107.6m $87.0m ($54.0m) ($3.8m) ($3.8m) ($10.4m) ($0.7m) - ($3.0m) ($9.7m) - ($2.7m) $115.6m 19
Slide 20: Balance Sheet
BALANCE SHEET Balance Sheet Dec-23 Jun-23 PP&E ROUA Total PP&E & ROUA #039;m #039;m #039;m #039;m #039;m For personal use only Cash 95.8 105.4 Opening balance 80.4 305.3 385.7 Trade Receivables 36.4 27.8 PP&E & ROUA 396.7 385.7 Addition 1 19.5 59.9 79.4 Software & Intangible 2.8 2.4 Disposal 2 (5.0) - (5.0) Goodwi
Slide 21: Balance Sheet Comparison
BALANCE SHEET COMPARISON Servcorp Another Operator Consolidated Statement of Financial Position 31-Dec-23 31-Dec-22 31-Dec-21 31-Dec-22 31-Dec-21 $’m $’m $’m $’m $’m For personal use only CURRENT ASSETS Cash and cash equivalents 96 105 103 286 145 Trade and other receivables 36 26 22 1,634 1,365 Oth
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Slide 23: Segment Overview
SEGMENT OVERVIEW A • Segment profit from mature operations improved to $8.4m For personal use only • Trading performance continues to improve • Profit margin increased to 25%, up 3% on pcp C D B B • While remained profitable, the overall performance was C lower than expected as profit slipped $3.0m
Slide 24: All Mature Operations
ALL MATURE OPERATIONS For personal use only Mature: Revenue, Segment Profit & Cash Earnings* • Strong 1H24 $143.6 Mature operations globally achieved a $132.9 respectable performance, evident in notable $135.0 improvement across revenue, profit and cash earnings As a result, FY24 profit guidance was
Slide 25: ANZ and South East Asia
ANZ AND SOUTH EAST ASIA For personal use only Mature: Revenue, Segment Profit & Cash Earnings • Enhanced Performance $40.0 Australia, New Zealand and South East Asia continues to improve and enhance its market $33.4 position $29.3 $30.0 • Mature Revenue Improvement Mature revenue is up $4.1m or 14%
Slide 26: North Asia
NORTH ASIA For personal use only Mature: Revenue, Segment Profit & Cash Earnings • Weaker Performance $60.0 North Asia as a whole continued to deliver a solid result. The decline in revenue was resulted $47.4 from the extended underperformance in Greater China. A further $1.5m impairment was $45.0 $
Slide 27: Europe and Middle East
EUROPE AND MIDDLE EAST For personal use only Mature: Revenue, Segment Profit & Cash Earnings • Robust Performance $60.0 $55.7 Europe & Middle East continued to perform well. • Mature Revenue Surge $50.0 $45.2 Mature revenue recorded a healthy growth of $10.5m on pcp off the back of stronger demand.
Slide 28: USA
USA Mature: Revenue, Segment Profit & Cash Earnings • Improved Performance For personal use only $13.0 USA continued to show improvements in performance in 1H24, albeit at a slower-than- expected pace. $10.2 $9.4 • Segment Profit Following the restructure of the local $8.0 management team, USA succe
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Slide 30: Outlook
OUTLOOK Outlook GUIDANCE FY24 commenced with strong momentum, marked by year-on-year improvements in key performance indicators across For personal use only our business, despite facing significant competition. While acknowledging the persistent challenges and uncertainties in the global economic sp
Slide 31: Dividends
DIVIDENDS TSR For personal use only since ipo est dividend yield TSR since fy Dividends paid/estimate (cents per share) 30.0 25.0 25.0 22.0 20.0 20.0 18.0 20.0 13.0 15.0 9.0 10.0 12.0 9.0 10.0 5.0 11.0 10.0 10.0 12.0 9.0 - FY20 FY21 FY22 FY23 FY24 Interim Final Expected Final FY24 *TSR: Total Shareh
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Slide 33: Revenue
REVENUE #039;m 1H24 1H23* Var % Statutory Total Revenue 157.7 145.4 12.3 8% For personal use only Add Revenue from JV operation 0.9 0.7 0.2 24% Less Royalty Income ** - (0.1) 0.1 (100%) Other revenue and income *** (1.8) (1.5) (0.3) 21% Operating Revenue 156.7 144.5 12.3 9% Less Pre-maturity revenue (1
Slide 34: Profit
PROFIT 1H24 #039;m 1H23 #039;m Var #039;m Var % 1H23 #039;m Statutory NPBT 22.5 17.4 5.1 29% 1H23 Underlying NPBIT reported in 1H23 20.3 Floors closed in the last 12 months on 1H23** 2.0 For personal use only Add Floors turned mature in the last 12 months on 1H23 0.4 Operating loss from pre-mature or post-closu
Slide 35: Profit
PROFIT Statutory Profit Underlying 1H24 1H23 Var Var 1H24 1H23 Var Var #039;m #039;m #039;m % #039;m #039;m #039;m % For personal use only Revenue and other income 157.7 145.4 12.3 8% Statutory Revenue and other income 157.7 145.4 12.3 8% Total expenses (135.2) (127.9) (7.2) (6%) Revenue from JV 0.9 0.7 0.2 24% Net p
Slide 36: 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 1H23* matur
Slide 37: KPI Tracker
200.0 30.0 KPI TRACKER 25.0 150.0 20.0 EPS (cents) #039;m 100.0 15.0 Statutory Underlying Underlying Revenue NPBIT EPS 10.0 50.0 #039;m #039;m cents For personal use only 5.0 1H20 178.8 21.0 17.4 1H21 142.0 19.0 16.6 - - 1H22 137.7 13.6 11.6 1H20 1H21 1H22 1H23 1H24 1H23 145.4 22.6 20.0 Statutory Revenue Und
Slide 38: Stats vs Underlying Tracker
STATS VS UNDERLYING TRACKER Statutory Revenue vs. Revenue from continuing operations and other income* Revenue For personal use only 200.0 $178.8 Revenue from Statutory continuing $15.5 $157.7 $145.4 $0.6 $142.0 Revenue operations & 150.0 $0.3 $137.7 $0.0 $0.8 other income #039;m #039;m #039;m 100.0 1H20 178
Slide 39: 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 cps Cents per share For personal use only DPS Dividend per share EME Europe & the M