Slide 1: 2008 Interim Results
2008 Interim Results August 29, 2008
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 strongly
Business performing strongly Revenues up 23% to £507.5m Operating profit up 32% to £74.4m Cash from operations up 45% to £123.4m Earnings Per Share up 27% to 5.7p Maiden Interim Dividend of 0.6p 5
Slide 6: Regus delivering the promise
Regus delivering the promise Actual exchange rates Revenue Revenue growth, growth, £m £m Operating Operating profit, profit, £m £m Cash Cash from from operations, operations, £m £m Annualised Annualised EPS, EPS, pence pence (excl. (excl. impact impact of of deferred deferred tax) tax) 6
Slide 7: Regus delivering the promise
Regus delivering the promise Actual exchange rates Weighted Weighted av. av. Available Available workstations workstations Annualised Annualised REVPAW REVPAW Average Average occupancy occupancy Annualised Annualised REVPOW REVPOW 7
Slide 8: Financials
Financials Stephen Gleadle Finance Director 8
Slide 9: Summary income statement
Summary Actual exchange rates income statement £ million 2008 2007 Change Revenue 507.5 411.5 96.0 Centre contribution 150.2 117.5 32.7 Overheads (75.8) (61.1) (14.7) Operating profit 74.4 56.4 18.0 JV / Associate 1.2 - 1.2 Net interest (1.1) (2.8) 1.7 Tax (20.0) (9.1) (10.9) Earnings 54.5 44.5 10.0
Slide 10: Revenue & centre contribution
Revenue & centre contribution Workstations Revenue Contribution Margin (%) Weighted av. £ million £ million 127,858 2007 411.5 117.5 29% Impact of exchange rate movement 19.7 6.0 2007 at 2008 exchange rates 431.2 123.5 29% 303 Mature business 26.0 18.2 15,686 Added 2007 44.9 13.5 5,574 Added 2008 6.
Slide 11: Regional analysis
Regional analysis Actual exchange rates Revenue Contribution Mature margin (%) £ million 2008 2007 2008 2007 2008 2007 Americas 190.5 162.0 56.1 48.8 33% 31% EMEA 150.8 114.5 52.2 38.6 37% 35% Asia Pacific 55.0 34.9 17.6 12.2 38% 38% UK 111.2 100.1 24.3 17.9 24% 19% 507.5 411.5 150.2 117.5 32% 30% 1
Slide 12: Overheads
Overheads Overheads Overheads as as % % of of revenue revenue 12 12 month month rolling rolling trend trend 12
Slide 13: Interest and Tax
Interest and Tax Interest 2008 2007 Change Interest payable on bank loans and overdrafts (1.9) (2.3) 0.4 Interest receivable 2.2 1.1 1.1 Finance lease (0.1) (0.1) - Non cash - Deferred finance costs (0.2) (0.3) 0.1 Non cash - UK acquisition related (1.1) (1.2) 0.1 Net Interest (1.1) (2.8) 1.7 Tax Co
Slide 14: Cash flow
Cash flow £ million 2008 2007 Change Cash from operations 123.4 85.1 38.3 Dividends from joint ventures 0.6 - 0.6 Cash in 124.0 85.1 38.9 Maintenance capex (13.8) (11.1) (2.7) Interest and tax (12.9) (7.3) (5.6) Free cash flow 97.3 66.7 30.6 Acquisitions (inc fees) (9.0) (5.0) (4.0) New centre openi
Slide 15: Summary balance sheet
Summary balance sheet £ million 2008 2007 restated Change Non-current assets 542.9 465.4 77.5 Working capital (253.6) (183.9) (69.7) Net cash 140.2 46.1 94.1 Other non-current (89.5) (75.5) (14.0) liabilities Net assets 340.0 252.1 87.9 15
Slide 16: Change of residence - background
Change of residence - background Regus has become and will continue to develop as a true international business and consequently there is a need to better reflect this at Board level. In 2007 only 7% of Group operating profit was attributable to the UK business Proposed creation of a new UK listed,
Slide 17: What will change?
What will change? Board membership will be strengthened with more international experience Shareholders can continue to receive dividends from a UK company Shares will be traded on London Stock Exchange as now and remain in FT All-Share Company will be subject to Jersey company law & Luxembourg comp
Slide 18: Summary
Summary Operating profit up 32% Cash from operations up 45% Average workstations up 16.6% Net Cash to £140.2m 18
Slide 19: Strategy and Outlook
Strategy and Outlook Mark Dixon Chief Executive Officer 19
Slide 20: Building on our foundations
Building on our foundations Regional overview Product innovation Purchasing group Video conferencing BusinessWorld Proven business model Efficiency and cost Expanded regional diversity Continued portfolio flexibility 20
Slide 21: Americas
Americas Continue positive growth in mature markets Americas due to reach the 500 centres mark early H2 3 new countries in Latin America El Salvador opened H1, Honduras & Paraguay due to open H2 Continued penetration into new US states (i.e. Louisiana and Idaho). Mature centre margin up 2% and holdi
Slide 22: EMEA
EMEA Mature centre margin up 2% to 37% Mature occupancy traded > 90% for first time during H1 Opened 17 new centres Increased presence to 223 centres in 41 countries - added Malta (centre due to open H2) Middle East revenue growth up 40% over H2 07 Centralised Financial Service Centre (FSC) in Pragu
Slide 23: Asia Pacific
Asia Pacific Continued high demand in emerging Asian economies 12 new centres opened in 10 Cities; new cities include Adelaide, Aus; Fukuoka, Japan; Karachi, Pakistan Crossed the 100 centre threshold Major Partnership signed with Thai Airways Royal Orchid programme to harness potential 400,000 membe
Slide 24: United Kingdom
United Kingdom Mature margin up 5% Record sales made in July Tough competitive landscape Early adopter of new concepts Continued focus on efficiency/cost New towns added – Peterborough, Maidstone, Portsmouth Stonemartin Acquisition completed – 3 centres 24
Slide 25: Product innovation
Product innovation Extensive proactive product development - meeting changing customer requirements Optimise solutions Campus Hot-desking Disaster Recovery Purchasing Group BusinessWorld 25
Slide 26: Purchasing group
Purchasing group Regus customer community obtain benefit of Plc purchasing power Accords major customer benefits; Access to great deals/services – “buy like a £billion business” – usually inaccessible to smaller individual companies End to end business solutions Improved customer experience and ther
Slide 27: Purchasing group – partners
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Slide 28: Video conferencing
Video conferencing Regus is the world’s largest public videoconferencing room operator Upgraded equipment 26% yr on yr growth Reducing our customers costs - decreasing travel time & expense Recognising increasing environmental concerns – air miles saved Constant product innovation - new on line rese
Slide 29: BusinessWorld – from strength to strength
BusinessWorld – from strength to strength “By 2010 – 60% of work will be done off site or outside of a corporate facility” - Gartner Generating real revenues and cashflows Continues to enhance centre footfall & new revenue streams Helps to sell the last 10% of inventory Significant growth prospect f
Slide 30: A simple, innovative membership programme
A simple, innovative membership programme Provides your employees Unlimited access to Provides 10 days a month An alternative to the discounts and promotions business cafes and of private office use with traditional fixed workplace with no minimum spend lounges for all your telephone and internet. w
Slide 31: Proven business model
Proven business model Workstation Workstation segmentation segmentation Customer Customer sectors sectors 31
Slide 32: 71 countries
71 countries Algeria Egypt Kenya Argentina El Salvador Korea Australia England Lebanon Austria Finland Luxembourg Bahrain France Malaysia Belgium Germany Mexico Puerto Rico Brazil Greece Morocco Qatar Bulgaria Guatemala Netherlands Romania Canada Hong Kong New Zealand Russian Federation Chile Hungar
Slide 33: A continued global growth story
A continued global growth story B.R.I.C. B.R.I.C. NATIONS NATIONS N-11 N-11 NATIONS NATIONS EASTERN EASTERN EUROPE EUROPE AFRICA AFRICA EXCL EXCL EGY/MOR EGY/MOR LATIN LATIN AMERICA AMERICA MIDDLE MIDDLE EAST EAST ASIA ASIA EXCL EXCL INDIA/CHINA INDIA/CHINA 33
Slide 34: Regional diversity
Regional diversity H1 H1 2008 2008 revenues revenues by by region region 34
Slide 35: Efficiency & Cost
Efficiency & Cost Acting early and definitively Key projects began over a year ago – we have traction Significant investment in streamlining initiatives and systems implementation “Back to basics” on costs – both above and below the line 35
Slide 36: Portfolio flexibility – H1 2008
Portfolio flexibility – H1 2008 New New centres centres opened opened in in 2008 2008 88% of new centre lease deals variable or flexible 41% of new centre lease deals variable Increasing number of management contracts Property Property portfolio portfolio 62% variable or flexible portfolio Constant
Slide 37: Summary
Summary £140m cash in bank Cash and cashflow is king Maiden Interim dividend Macro-environmental conditions challenging Forward order book and enquiries remain strong Product innovation creating new revenue streams Attractive growth opportunities remain Proactive cost management continues a priority
Slide 38: Appendix
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Slide 39: A proven business model
A proven business model 39 Add new services or sales methods to maximise margin Acquisition or organic Overhead synergies Leverage margin workwithoutboundaries
Slide 40: A proven business model
A proven business model Compelling for the Customer Compelling for the Landlord 40
Slide 41: Glossary - Country Listings
Glossary - Country Listings “BRIC” – Brazil, Russia, India, China “N11” - Next 11 countries which Goldman Sachs has considered has promising outlooks for investment and future growth. Based on macroeconomic stability, political maturity, openness of trade and investment policies and quality of educa