Slide 1: 2012 full year presentation
Regus plc 2012 full year presentation Mark Dixon, Chief Executive Officer Dominique Yates, Chief Financial Officer 5 March 2013
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: Consistent delivery of our strategy
Consistent delivery of our strategy Revenue growth Mature margin Third place Grow customer base growth • Revenue up 9.2%* to • Exceeds 17% in H2 • Complementary • Currently 1.35 £1,244.1m • Measured progress in locations – mostly million members • 243 new centres gross margin partnership / JV • Focu
Slide 4: Strong cash generation funding growth and dividend distribution
Strong cash generation funding growth and dividend distribution Progress on mature Growing net Increased Financial strength free cash flow investment in new dividends maintained centres £m £m Pence £m 160 200 3.5 350 2.20 320.0 144.3 180 175.3 140 3.0 2.00 300 160 117.1 1.75 120 1.60 140 2.5 250 100
Slide 5: Mature Centres business
Mature Centres business • Revenue growth of 2.9% at constant currency to £1,124.1m • Occupancy 85.8% (2011: 85.6%) • REVPOW of £7,565 up 2.4% at constant currency • Adjusted* gross margin up to 27.9% (2011: 26.0%) • Adjusted* operating profit up 51% to £158.5m * Before accounting changes 4.
Slide 6: Growth is demand driven
Growth is demand driven Technology advancement 3.1bn in work today 1.3bn mobile workers 72% of workers say they are more productive when they Company work flexibly Cost adoption 12.8bn hours wasted annually by US commuters 66% of workers would consider a pay-cut for more flexible work conditions 90%
Slide 7: Network growth
Network growth Why is growth so important? Growth in size of network • Continued customer demand 2,000 • Substantial opportunities to invest above our hurdle rate 1,411 1,203 • Scale drives reduction in overheads 983 1,084 per centre • Further strengthening of the network What we delivered in 2012 M
Slide 8: New centre performance
New centre performance 2011 • Revenues up to £74.0m (2011: £20.1m) • Progressing to maturity in line with expectations • Turned contribution positive in Q2 and close to operating profit break even in Q4 2012 • Revenues of £39.0m • 243 new centres opened 7.
Slide 9: Third place
Third place • Important additional part of the strategy • Extends reach and supports core network • Growth is demand driven – organisations are approaching us to partner with them • Ventures now in place with seven organisations across five countries • Significant opportunities in pipeline • Regus a
Slide 10: Group summary
Group summary Group • Revenues up 9.2% at constant currency to £1,244.1m • Reported operating profit up 66% to £90.2m • Full year dividend up 10% to 3.2p • Strong balance sheet – net cash of £120.0m; £200m facility signed Mature • Mature operating margin improved from 9.3% to 15.2% • 10s contributin
Slide 11: Financial review
Regus plc Financial review 10.
Slide 12: 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 1,124.1 - 1,124.1 1,114.3 - 1,114.3 0.9% Gross profit 325.7 (12.0) 313.7 289.6 1.2 288.4 8% (centre contribution) Gross marg
Slide 13: Regional performance – mature centres
Regional performance – mature centres Adjusted mature margin Revenue Contribution Mature margin (%) (%)* £ million 2012 2011 2012 2011 2012 2011 2012 2011 Americas 480.0 463.3 152.9 132.7 31.9% 28.6% 31.1% 28.7% EMEA 275.2 288.8 80.1 75.2 29.1% 26.0% 27.8% 26.1% Asia Pacific 163.4 159.8 53.5 45.1 32
Slide 14: Cash flow – mature centres
Cash flow – mature centres £ million 2012 2011 • Prior year working capital EBITDA 223.1 173.1 benefited from increased rate Working capital 6.7 31.2 of occupancy gains Maintenance capital • Maintenance capex remains (48.1) (46.9) expenditure in the 4-5% guidance range Other items (1.9) (1.5) of rev
Slide 15: Net investment in new centres
Net investment in new centres £ million 2012 2011 • 243 new centres added EBITDA (63.1) (40.8) • Strong positive working Working capital 39.7 19.6 capital from new openings Growth • Investment largely self (171.1) (91.4) capital expenditure funded from mature free Taxation 19.2 9.2 cash flow Net inv
Slide 16: Income statement – new centres
Income statement – new centres £ million 2012 2011 New centres - 2011 New centres 2011 • Progressing as expected Revenues 74.0 20.1 • Expect these centres to be Gross profit 3.8 (8.4) operating profit positive in Growth overheads (20.4) (36.1) early 2013 Operating loss (16.6) (44.5) New centres 2012
Slide 17: CBITDA margin by year group
2012 improved performance per year group Margin progression by year of opening • 2010s generating strong returns – 27% return on NCO year Mature group 2012 2011 2010 2009 gross investment in 2012 • 2011 and 2012 centres 33.4% Financial tracking as anticipated 32.1% Reporting 30.2% Year 2011 23.5% 20
Slide 18: Group overheads
Group overheads Overheads per available workstation 1,220 1,150 1,125 • 8% reduction on a per available workstation basis despite 1,030 accelerated growth • Total overhead up 4% at constant currency vs 11% increase in average no. of workstations • Reflects economies of scale and greater efficiencies
Slide 19: Funding increased investment
Funding increased investment New centre openings £m Investment in growth 175.3 243 139 86.4 125 71.4 45 • Conservative balance sheet 18.2 approach • Strong organic cash flow • Growing mature network capable £m Mature free cash flow* £m Net cash of supporting more growth if 320.0 desired 144.3 117.1
Slide 20: Group results – overview
Group results – overview Total Accounting Adjusted Adjusted Accounting Total £ million • Long term tax rate 2012 Changes 2012 2011 Changes 2011 is expected to be Revenue 1,244.1 1,244.1 1,162.6 1,162.6 approximately 20% Gross profit 320.7 (21.6) 299.1 275.2 (3.9) 279.1 • Dividend up 10% (centre cont
Slide 21: Financial summary
Financial summary Mature • Good profit performance, strong cash conversion • Strong occupancy & REVPOW gains deliver margin improvement • 10s contributing in line with mature, achieving attractive returns New • Material investment into quality assets • 11s and 12s performing in line with expectation
Slide 22: Prospects
Regus plc Prospects 21.
Slide 23: The potential of our maturing network
The potential of our maturing network Embedded growth of mature network 1600 382 1400 • Improving gross margin 1200 255 performance 164 1000 • Lower overhead growth and Centres NCOs 800 1029 Mature Centres scale benefits drive operating 600 margin 948 400 920 • Mature group getting bigger 200 throug
Slide 24: Prospects
Prospects Revenue growth Margin growth Third place Grow customer base • Current trading since • Measured progress on • Strong demand • Strong demand from year end has been good gross margin • More locations all areas and in line with • Further efficiencies • Continued innovation expectations • Enhan
Slide 25: Thank you Q&A
Regus plc Thank you Q&A 24.
Slide 26: Appendices
Appendices 1. Financial performance by maturity 2. Mature 09s and 10s 3. Consolidated cash flow 4. Overheads allocation methodology 5. Accounting changes - a recap 6. Investor relations contact details 25.
Slide 27: Financial performance by maturity
Financial performance by maturity 2012 2011 Mature New Closed Mature New Closed Total Total centres centres centres centres centres centres £m Revenue 1,124.1 113.0 7.0 1,244.1 1,114.3 20.1 28.2 1,162.6 Cost of sales (798.4) (117.9) (7.1) (923.4) (825.9) (28.5) (29.1) (883.5) Gross Profit (centre 32
Slide 28: Mature 09s and 10s
Mature 09s and 10s £m Mature 09s 10s Total Revenues 1,016.1 108.0 1,124.1 Gross profit (centre 299.9 25.8 325.7 contribution) CBITDA¹ margin 33.4% 30.3% 33.1% ¹ Centre Contribution before Interest, Tax, Depreciation & Amortisation 27.
Slide 29: Consolidated cash flow
Consolidated cash flow £m 2012 2011 Mature free cash flow 144.3 135.1 New investment in new centres (175.3) (103.4) Closed centres cash flow (6.4) (4.5) Exceptional items - (1.9) Total net cash flow from operations (37.4) 25.3 Dividends (28.2) (25.0) Corporate financing activities (0.3) 0.1 Change i
Slide 30: 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 31: 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 better reflects the underlying economic reality of our business • No imp
Slide 32: Investor relations contact details
Investor relations contact details Wayne Gerry Group Investor Relations Director +44 (0) 7584 376533 wayne.gerry@regus.com 31.