Slide 1: 2011 full year presentation
Regus plc 2011 full year presentation 20 March 2012
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 statement. 1.
Slide 3: A strong performance
A strong performance • Mature gross margin up to 26.6% Mature • Mature operating profit up 66% to £107.7m • Mature free cashflow of £117.1m • Invested £86.4m into new high quality assets New • 139 locations added and nine new countries • All performing in-line with expectations • Revenues up 11% to
Slide 4: Mature centre performance
Mature centre performance Mature net operating margin (%) 25.0% 2011 financial highlights 20.0% • Revenues of £1,035.1m: +3.8% 19.2 • EBIT of £107.7m: +66% 15.0% 13.2 • Mature gross margin: 26.6% 10.0% 10.3 10.4 • Mature cash flow of £117.1m: +53% 5.0% 6.6 • Mature EPS 8.7p (H2: 5.6p) 0.0% 2008 2009
Slide 5: New centre performance
New centre performance Cash investment in growth (£m) 100.0 90.0 Investment highlights 80.0 86.4 • Investment in growth of £86.4 in new high 70.0 71.4 quality assets 60.0 50.0 • Internally funded from group cash flows 40.0 • Normal drag effect on income statement 30.0 20.0 26.2 18.2 Financial highli
Slide 6: Third Place
Second Place (Home) Third Place Overview • Embryonic, but tangible Libraries • Significant opportunity to become a major part of the group Suppliers locations • We expect investment and returns to be Business on a par with the rest of the business centres Cafés • Strong financial discipline & risk m
Slide 7: Financial review
Regus plc Financial review 6.
Slide 8: Income statement – Mature centres
Income statement – Mature centres £ million 2011 2010 Change Revenue 1,035.1 997.6 3.8% Centre contributions 274.9 222.7 23% Gross margin 26.6% 22.3% Overheads - 167.3 - 159.0 5% As a % of sales 16.2% 15.8% EBIT Pre-exceptional (inc JV) 107.7 65.0 66% Net Margin 10.4% 6.6% Net Interest - 5.1 - 0.3 T
Slide 9: Regional performance – Mature centres
Regional performance – Mature centres Mature margin Mature Revenue Contribution £ million (%) margin (%) 2011 2010 2011 2010 2011 2010 H2 2011 Americas 431.8 422.3 126.6 100.5 29.3% 23.8% 31.0% EMEA 274.3 266.3 73.5 66.1 26.8% 24.8% 28.7% Asia Pacific 139.7 132.5 41.7 40.2 29.8% 30.3% 30.8% UK 187.6
Slide 10: Cash flow – Mature centres
Cash flow – Mature centres £ million 2011 2010 Change EBIT 107.7 65.0 42.7 Depreciation 60.6 68.9 - 8.3 Working capital 11.0 - 8.1 19.1 Maintenance capital expenditure - 39.4 - 31.8 - 7.6 Other items - 1.4 -2.1 - 0.7 Net finance costs -0.9 0.1 - 1.0 Taxation - 20.5 - 15.5 - 5.0 Mature free cash flow
Slide 11: Aspirational targets for current Mature business
Aspirational targets for current Mature business “the first thousand centres” Gross margin: 33% Overheads: 12% FY 2011 H2 2011 Target Net margin: 21% Gross 26.6% 27.9% 33% margin • Business as normal will result in a gradual improvement to gross Overheads 16.2% 14.7% 12% margin • A larger business w
Slide 12: Building towards the “next 1,000” centres
Building towards the “next 1,000” centres 40 2010 & 2011 openings – the path to maturity 30 33% • 255 new centres Gross • Performance progressing Margin 20 in line with expectations (%) 10 0.8% 0 HY Aspirational 2011 Target 11.
Slide 13: Income statement – 2010 and 2011 openings
Income statement – 2010 and 2011 openings £ million 2011 2010 Change H2 2011 New centres 2010 Revenues 100.0 22.9 77.1 53.8 Centre contribution 15.0 -7.1 22.1 10.2 Centre contribution margin 15.0% -31.0% 19.0% Growth overheads -20.0 -32.4 12.4 -8.8 EBIT -5.0 -39.5 34.5 1.4 New centres 2011 Revenues
Slide 14: Net investment in new centres (2010 and 2011 openings)
Net investment in new centres (2010 and 2011 openings) £ million 2011 2010 Change EBIT - 54.7 - 39.5 - 15.2 Depreciation 12.3 2.9 9.4 Working capital 39.7 18.7 21.0 Growth capital expenditure - 93.6 - 61.1 - 32.5 Taxation 9.9 - 9.9 Net investment in growth - 86.4 - 79.0 - 7.4 • Invested in high qual
Slide 15: Investing in high quality assets
Investing in high quality assets 14.
Slide 16: Third Place business
Third Place business • Embryonic, in business development stage • Strong financial discipline & risk management to be maintained • Same stringent focus as on the rest of the business 15.
Slide 17: Consolidated income statement
Consolidated income statement £ million 2011 2010 Change Revenue 1,162.6 1,040.4 11.7% Centre contributions 275.2 215.9 27% Overheads - 224.7 - 193.3 16% Joint ventures 0.1 1.3 EBIT pre-exceptional 50.6 23.9 112% Restructuring & Reorganisation - - 15.8 Net interest - 5.1 - 0.3 Taxation - 8.9 - 5.9 E
Slide 18: Consolidated cash flow
Consolidated cash flow £ million 2011 2010 Change Mature cash flow 117.1 76.5 40.6 Investment in growth - 86.4 - 79.0 - 7.4 Closed centres cash flow - 3.4 0.1 - 3.5 Exceptional items - 1.9 -13.7 11.8 Total net cash flow from operations 25.4 -16.1 41.5 Dividends - 25.0 - 23.2 - 1.8 Corporate financin
Slide 19: Risk management
Risk management Revenue • Geographic diversity • One million strong customer base • Range of customers, from big to small • Increased subscription income Costs • Proven ability to manage costs • Leases – fully risk managed – 80% flexible and variable Disaster recovery • Strong capability • Extensive
Slide 20: Financial summary
Financial summary Mature • Like-for-like mature sales up 3.8% (H2: 5.4%) • Operating profit up 66% to £107.7m (H2: £68.8m) • Gross margin up to 26.6% (H2: 27.9%) • EPS up 58% to 8.7p (H2: 5.6p) • Free cash flow up 53% to £117.1m (H2: £69.9m) • Stronger H2 performance New • Continued investment in qu
Slide 21: Strategy
Regus plc Strategy L J foe. 20. Resus :
Slide 22: Our strategy – growth and returns
Our strategy – growth and returns A major player in the fast developing industry of flexible work provision – the platform of choice from which business operates. To achieve this we will: • Grow mature revenues – improve mix and diversity • Expand our footprint • Accelerate product and service innov
Slide 23: Our mature business
Our mature business Active management is key • A well established business with many centres older than 20 years • Robust year-on-year improvements • Aim is to have centres in optimal condition, in optimal locations generating strong returns • Key facets of this business:- • Decreasing cyclicality •
Slide 24: Mature business drives revenues
Mature business drives revenues 23.
Slide 25: Our customers
Our customers Recent new corporate customers Strength through diversity • More than a million members – almost quadrupled since 2007 • From largest global corporates to fast growing entrepreneurial businesses • All conceivable market sectors represented • Many customers have been with us for longer
Slide 26: Selected 2011 achievements
Selected 2011 achievements High quality performance across a wide range of areas Strengthened and decentralised management • Day-to-day management devolved to country level • Key hires made Innovation remains a core differentiator • Strengthening “Only at Regus” concept • Launched businessLink and m
Slide 27: Our new centres
Our new centres Capacity expansion is key Centre numbers – 2005-2014 • The larger our network the more compelling we become • Target 2000 locations by 2014 • 2012 will see c.200 new locations and openings in 6-8 new countries • Strengthened development team, increasing automation, ensure optimal use
Slide 28: Third Place opportunity
T h | rd P | ace Retail Business centres Airports ur prostcts and servis “The cor of the Regis network is ‘Aninreashg nurber of ekpots have bean avallabie on the ‘ts business cantres which offer, ‘are now served by Regus and high streot for more tan a opportunity — ‘our fullrengs of products enc the
Slide 29: Shell
Shell 28.
Slide 30: Summary
Summary • Building towards:- • optimum mature margin • a network of 2,000 centres by 2014 • Clear and consistent strategy • A well established, high performing mature business • Continued achievements and improvements to core parts of the business • Consistent, planned growth resulting in well perfo
Slide 31: Prospects
Regus plc Prospects L J foe. 30. Resus :
Slide 32: Prospects
Prospects • Resilient business model and strong market position • Performing well, gradual increases in margin • Achieving our growth programme – 10s and 11s performing in line with expectations • Macro economy still fragile – we remain cautiously optimistic – and can scale back if required 31.
Slide 33: Q&A
Regus plc Q&A L J foe. 32. Resus :
Slide 34: Appendix
Appendix 33.
Slide 35: Balance sheet / Consolidated
Balance sheet / Consolidated £ million 2011 2010 Change Non-current assets 725.5 676.6 48.9 Working capital - 297.3 - 251.2 - 35.7 Net cash 188.3 191.5 7.2 Other non-current liabilities - 127.8 - 110.3 - 17.5 Net assets 488.7 485.8 2.9 34.
Slide 36: H2 income statement / Mature
H2 income statement / Mature £ million 2011 2010 Change % Revenue 523.5 496.7 5.4 Centre contributions 145.8 114.6 27 Gross margin 27.9% 23.1% Overheads - 77.0 - 76.5 1 Joint Ventures - 0.4 - EBIT Pre-exceptional 68.8 38.5 79 Net margin 13.1% 7.8% Net Interest - 2.3 - - Taxation - 13.3 - 7.7 73 Earn