Slide 1: Full Year Results Presentation cover letter
For personal use only 21 August 2008 The Manager Company Announcements Office Australian Stock Exchange Limited By electronic lodgement Dear Sir Servcorp Limited (SRV) Full Year Results Presentation Enclosed is a copy of the 2008 Annual Results briefing presented at Servcorp’s analyst presentation h
Slide 2: Analyst Presentation, Year ended 30 June 2008
Servcorp Limited For personal use only Analyst Presentation 21st August 2008 Financial Year ended 30th June 2008 Taine Moufarrige, Executive Director Marcus Moufarrige, CIO & CEO - Office² Thomas Wallace, CFO
Slide 3: Servcorp Background
Servcorp Background For personal use only ▶ World’s finest Serviced Offices and Virtual Offices ▶ Market leader – Excellence in every aspect of the business ▶ Product Differentiation – premium locations, technology, business services, people ▶ Number of clients – approximately 11,000 ▶ Established 1
Slide 4: Servcorp Floors Geographic Spread
Servcorp Floors Geographic Spread For personal use only Qatar 2 Bahrain 2 UAE 2 Belgium 2 France 4 Australia 18 NZ 3 Japan 18 Singapore 5 China 6 Thailand 4 Malaysia 2 Hong Kong 3 Australia NZ Singapore China Hong Kong Malaysia Thailand Japan France Belgium UAE Qatar Bahrain
Slide 5: 2008 Financial Highlights
2008 Financial Highlights For personal use only 000’s ▶ Revenue Up 14% to $190,142 ▶ Mature floor profit Up 23% to $ 52,782 ▶ Net Profit Before Tax Up 31% to $ 44,579 ▶ Net Profit After Tax Up 29% to $ 33,834 ▶ Negligible Debt ($ 270) ▶ Cash balance $ 73,716 ▶ Earnings Per Share Up 28% to $0.42 ▶ Ne
Slide 6: Thank you Senior Management
Thank you Senior Management ▶ Thomas Wallace, Chief Financial Officer – 8 years For personal use only ▶ Susie Martin, General Manager Aus/NZ – 12 years ▶ Olga Vlietstra, General Manager Japan – 8 years ▶ Wilma Wu, General Manager Greater China – 7 years ▶ Laudy Lahdo, Senior Manager, Middle East – 6
Slide 7: 2008 Operational Highlights
2008 Operational Highlights For personal use only ▶ 9 new floors opened capacity by 9% ▶ Hottdesk v2.7 introduced – Servcorp is no longer just a real estate business ▶ Virtual website launched in Australia and Japan ▶ Entry into two new markets, Chengdu & Qatar ▶ Successful launch of Franchising mod
Slide 8: 2008 Operational Highlights: New Floors
2008 Operational Highlights 2007/2008 - 9 NEW FLOORS For personal use only ▶ Chengdu September 2007 ▶ Sydney January 2008 ▶ Paris January 2008 ▶ Wellington February 2008 ▶ Bahrain March 2008 ▶ Sydney May 2008 ▶ Qatar June 2008 ▶ Beijing June 2008
Slide 9: Hottdesk Version 2.7 introduced
2008 Operational Highlights For personal use only ▶ Hottdesk Version 2.7 introduced – Servcorp is no longer just a real estate business ▶ Services and Solutions on-line in real time ▶ Our clients control what they use, when they use it ▶ Our clients control their costs ▶ Our clients focus on their b
Slide 10: Virtual website launch in Australia
2008 Operational Highlights For personal use only ▶ Virtual website launch in Australia ▶Sign up on-line ▶Automatic set up ▶Access to Hottdesk = access to Servcorp ▶100 point security check ▶AML check
Slide 11: Entry into two new markets
2008 Operational Highlights For personal use only ▶ Entry into two new markets ▶Chengdu & Qatar ▶Middle East is our focus ▶Chengdu earthquake – Servcorp was there for our clients
Slide 12: Franchising model launch in India
2008 Operational Highlights For personal use only ▶ Successful launch of Franchising model in India ▶ 2 floors opened in 2008 ▶Mumbai and Hyderabad ▶More to come ▶No compromise on standards
Slide 13: Office² Operational Highlights
2008 Operational Highlights For personal use only ▶ OFFICE ² – Marcus Moufarrige ▶Successful rollout of Office² model in pilot project Nexus ▶First major signing of Office² deal in I-City Malaysia ▶Future forecast
Slide 14: Office Squared August 2008
For personal use only Office Squared 21 August 2008
Slide 15: A little on Office Squared
A little on Office Squared For personal use only • Subsidiary of Servcorp: - Community of 11,000 - All connected by 1 Cisco network - All managed by 1 management system - All clients have “self management” • Increased income from commercial real estate: - Servcorp has generated more income from subs
Slide 16: What do the tenants want?
What do the tenants want? For personal use only 1. Better connectivity at reduced cost 2. Seamless wireless access 3. Integrated ICT and building networks 4. Multimedia and collaborative tools 5. Fast set-up, straightforward facilities, no hassle 6. Geographical/ Spatial flexibility 7. Control of lo
Slide 17: Strategic Partnership: Owner, Operator, Technology Provider
Acceleration of business value; founded on a deeper partnership For personal use only Owner Technology Service Provider Landlord Partners Operator Strategic Partnership Key Outcomes of the Partnership: • Shared technology vision • Strong service center business model • Sound financial model • Clear
Slide 18: A little on Office Squared: managed networks
A little on Office Squared For personal use only Managing large scale managed networks: • i-City - Technology Park - 50,000 knowledgeable workers - Stage 1: All SME’s - Developer/ Office2 JV has ownership of entire network - TM and other carriers love working with us • Nexus - Operating profit - 75%
Slide 19: Testimonials
Testimonials For personal use only Wanted to pass on my warmest thanks for the way you and the team have made my move to Nexus such a hassle free experience. I anticipated all sorts of issues in setting up my phone lines, including internet service provider, however, the opposite was the case. Phone
Slide 20: Nexus at Norwest
Nexus at Norwest For personal use only • Only 12,000 sqm, 40 Suites, Strata title, 80% SME clients • 75% take-up of our services • Currently AUD 600K pa revenue after 6 months of operation; aiming for AUD1M • Aiming for 400K profit pa • Additional marginal income from telecommunications
Slide 21: Technology Partner-Owner-Operator Tripartite Relationship for i-City
Technology Partner-Owner-Operator Tripartite Relationship for i-City For personal use only One Stop Shop for Tenants: • Telecom/IT Services • Estate Management Services • Security Services Operator Implementation primed CAPEX jointly owned by Cisco Gold SI by i-City and Operator Technology Real Esta
Slide 22: Performance
Performance For personal use only • 07/08 Right on target -3m • 08/09 - 3m again • 09/10 Breakeven • 10/11 Raining dollars • Pipeline: • One major developer out of Singapore project in China Same size as i-City LOI Signed Final protracted contract negotiations • Major multitenant portfolio Heads of
Slide 23: Financial Results
For personal use only Financial Year ended 30th June 2008 FINANCIAL RESULTS Thomas Wallace - CFO
Slide 24: Profit and Loss Highlights
Servcorp Consolidated Profit and Loss Highlights Year ended 30 June 2008 For personal use only 2008 2007 Growth 000’s 000’s % Revenue $190,142 $167,518 14% Expenses ($145,564) ($133,394) 9% Net Profit Before Tax $ 44,578 $ 34,124 31% Income tax expense ($ 10,744) ($ 7,792) Net Profit After Tax $ 33,
Slide 25: Total Revenue years 2004 - 2008
Servcorp Consolidated Total Revenue 5 years 2004 - 2008 For personal use only 190.1 200.0 180.0 167.5 ▶ Revenue up 160.0 145.9 14% on PCP ▶ 2008: 71 floors 140.0 123.9 120.0 107.5 A U D (M i l l i o n s ) 100.0 ▶ 2004: 47 floors 80.0 60.0 40.0 20.0 0.0 2004 2005 2006 2007 2008 Years
Slide 26: Mature / Immature Floors & Office² NPBT
Servcorp Consolidated Mature / Immature Floors & Office² NPBT – 5 years 2004 - 2008 For personal use only 60 52.8 ▶ Mature floor profit up 23% 50 38.3 42.9 compared to 2007 ▶ Strong steady 40 27.0 30 mature floor NPBT growth AUD (Millions) 14.8 20 for the last 5 years 10 -1.35 -3.02 ▶ 9 floors 0 -1.
Slide 27: Net Profit Before Tax years 2004 - 2008
Servcorp Consolidated Net Profit Before Tax 5 years 2004 - 2008 For personal use only ▶ Strong 2008 50.0 46.8 44.6 45.0 growth of 31% 40.0 on PCP 35.2 34.1 ▶ NPBT impacted 35.0 30.0 as Servcorp A U D (M i l l i o n s ) 25.0 22.3 opens new 20.0 floors 13.7 15.0 10.0 5.0 0.0 2004 2005 2006 2007 2008 2
Slide 28: Net Profit After Tax years 2004 - 2008
Servcorp Consolidated Net Profit After Tax 5 years 2004 - 2008 For personal use only 35.0 33.8 ▶ Strong NPAT growth in 2008 of 30.0 26.3 29% compared to 25.4 2007 ▶ 2008 Tax 25.0 expense rate of A U D (M i l l i o n s ) 20.0 17.2 24.1% 15.0 ▶ After tax profit 9.4 reflects 10.0 geographic spread of S
Slide 29: Earnings Per Share years 2004 - 2008
Servcorp Consolidated Earnings Per Share 5 years 2004 - 2008 For personal use only 45.0 42.0 40.0 32.7 35.0 31.6 A U D ( C e n t s P e r S h a re ) 30.0 25.0 21.4 20.0 15.0 11.8 10.0 5.0 0.0 2004 2005 2006 2007 2008 Years
Slide 30: Profit and Loss Highlights, Constant Currency
Servcorp Consolidated Profit and Loss Highlights Year ended 30 June 2008 For personal use only Constant Currency 2008 2007 Growth Growth 000’s 000’s % % Revenue $190,142 $167,518 14% 18% Expenses ($145,564) ($133,394) 9% 14% Net Profit Before Tax $ 44,578 $ 34,124 31% 36% Income tax expense ($ 10,74
Slide 31: Currency Impact
Servcorp Consolidated Currency Impact Year ended 30 June 2008 For personal use only ▶ AUD has appreciated against all major currencies in 2008 ▶ AUD Consolidated results had a strong currency headwind in 2008 Average P&L Average P&L rate - 2008 rate - 2007 % Change USD $0.8981 $0.7818 (15.0%) JPY ¥
Slide 32: Cash Flow from Operations
Servcorp Consolidated Cash Flow from Operations Year ended 30 June 2008 For personal use only $ 000’s ▶ Cash Balance at 30 June 2007 $54,114 ▶ Operating cash flow $51,192 Increase of 28% on PCP ▶ Payments for PPE ($23,831) 9 floors constructed in 2008 ▶ Payments for Lease deposits ($ 1,524) New floo
Slide 33: Cash Flow from Operations years 2004 - 2008
Servcorp Consolidated Cash Flow from Operations 5 years 2004 - 2008 For personal use only 55.0 51.2 ▶ Strong cash 50.0 flows in 2008 ▶ Growth of 28% 45.0 40.3 40.0 35.3 compared to 35.0 27.9 2007 A U D (M i l l i o n s ) ▶ Steady growth 30.0 25.0 18.9 for last 5 years 20.0 15.0 10.0 5.0 0.0 2004 200
Slide 34: 2008 – 2009 Focus
2008 – 2009 FOCUS For personal use only ▶ Management focus rather than expansion ▶ Stopped everything other than Middle East expansion ▶ Cautious look at opportunities both East and West ▶ Getting immature floors to maturity ASAP – looking good so far ▶ Focus on getting the most from Hottdesk ▶ Focu
Slide 35: Around The World: Europe & Middle East
Around The World 2008 - 2009 For personal use only EUROPE & MIDDLE EAST ▶ Dubai and Bahrain – performing strongly ▶ Qatar - open ▶ Middle East – looking at opportunities ▶ Europe – Economic slow down – However better year ahead
Slide 36: Around The World: Japan
Around The World 2008 - 2009 For personal use only JAPAN ▶ Great locations performing well but …… ▶ Competitive markets – particularly in Tokyo ▶ Economic slow down – softening results ▶ Weak Yen hurts ▶ Tough in the South
Slide 37: Around The World: Asia & China
Around The World 2008 - 2009 For personal use only ASIA & CHINA ▶ Rents high, low vacancies ▶ Hong Kong and Singapore particularly tight ▶ China – take opportunities if they come ▶ “Wait & see” ▶ Weak USD hurts
Slide 38: Around The World: Australia & New Zealand
Around The World 2008 - 2009 For personal use only AUSTRALIA & NEW ZEALAND ▶“Wait & see” ▶“Resources Boom” cities should continue to perform ▶Adelaide and North Sydney – new floor
Slide 39: Around The World: IT Client Services and Solutions
Around The World 2008 - 2009 For personal use only IT CLIENT SERVICES AND SOLUTIONS ▶ Complete Hottdesk v2.7 rollout ▶ Maximise return from Hottdesk ▶ Move towards all products on-line – Hottdesk v3 ▶ Maximise return from converged network – quality VOIP to clients
Slide 40: 2009 Outlook
2009 Outlook For personal use only ▶ NPBT growth approximately 5% - good growth in a global economic downturn ▶Management focus not expansion focus ▶Cautious approach in existing markets ▶Only 6 additional new floors planned to open in 2009 ▶Expand operations in Middle East ▶Focus on sales / revenue
Slide 41: 2009 Outlook (continued)
2009 Outlook For personal use only ▶NPBT growth approximately 5% - good growth in a global economic downturn (continued) ▶Complete rollout of Hottdesk and maximise returns from our IT platforms and infrastructure ▶Look for opportunities ▶Develop Office² business model
Slide 42: 2007/08 Dividend
2007/08 Dividend For personal use only ▶Normal dividend for 2009 – 15 cps fully franked ▶Special dividend for 2009 – 5 cps fully franked
Slide 43: Questions and Answers
Questions and Answers For personal use only