Slide 1: Results Presentation - Full Year Results
22 August 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
CONTENTS
Slide 4: FY24 Highlights
Slide 5: FY Underlying Results
FY UNDERLYING RESULTS Underlying Free Cash* Underlying NPBIT ** on pcp on pcp Underlying Underlying Operating Revenue Operating Profit on pcp on pcp Underlying EPS DPS on pcp on pcp 5 * FY24 Revised Guidance for Underlying Free Cash: at least $70.0m ** FY24 Revised Guidance for Underlying NPBIT: $50
Slide 6: FY Statutory Results
FY STATUTORY RESULTS Statutory Revenue Statutory Operating Profit on pcp on pcp Statutory NPBT Statutory NPAT on pcp on pcp Free Cash* Basic EPS on pcp on pcp 6 * Cash inflow from Operating Activities adjusting for lease payments
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Slide 8: Continued Investment in Smart Office, Digital Ecosystem, Community & Marketplace
CONTINUED INVESTMENT IN Smart Office Digital Ecosystem Community & Marketplace After multiple years of investment, we have developed a new debtor system called the Wombat, - Our development team is currently working on a critical element of the Smart Office Platform. creating a new marketplace tailo
Slide 9: Middle East Update
MIDDLE EAST UPDATE Obtained Regional Completed Appointment of key Headquarter license reorganisation to advisors required for from the local establish Servcorp the planned listing is authorities, enabling Middle East Group completed access to tax and commercial benefits 2024 projected profit All wor
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Slide 11: Growing Global Presence
GROWING GLOBAL PRESENCE • During FY24, 9 new operations* were opened, including 4 in Australia & New Zealand, 2 in North Asia, 2 in the Middle East, and 1 in the USA. • 4 locations were closed in FY24, including 1 in Australia & New Zealand, 1 in South East Asia, 1 in Europe and 1 in the USA. Capita
Slide 12: Improved Global Footprint
IMPROVED GLOBAL FOOTPRINT In February 2023, Servcorp stated its intention to recommence expansion of its global footprint 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 next 18 months*. By 30 J
Slide 13: Portfolio Overview
PORTFOLIO OVERVIEW Staggered Lease Expir y Profile Less than 1 Year 1 to 3 years 3 to 5 years 5 to 10 years Over 10 years Diversified Client Base 13 ANZ & SEA North Asia Europe & Middle East USA
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Slide 15: Financial Performance
FINANCIAL PERFORMANCE Revenue Underlying NPBIT 317.0 56.6 320.0 60.0 305.0 50.0 47.8 295.5 290.0 40.0 275.7 275.6 30.0 31.0 #039;mil #039;mil 275.0 30.0 260.0 20.0 245.0 10.0 230.0 - FY21 FY22 FY23 FY24 FY21 FY22 FY23 FY24 Return on Funds Employed ROFE FY24 68% FY Underlying FY23 62% Free Cash up $ m on p
Slide 16: Revenue
REVENUE Underlying Operating Revenue* achieved a growth of 9% year-on-year • Underpinned by continued improvement in both effective pricing and new business development, FY24 Underlying Operating Revenue increased by $23.7m on pcp. Underlying • Premium services at prestigious locations enabled mater
Slide 17: Revenue: Offices and Coworking
REVENUE Underlying Operating Revenue* achieved a growth of 9% year-on-year Underlying Operating Revenue on pcp +$ +$ GROWTH PRICING OFFICES conversion rate + to profit 17 cOWORKING
Slide 18: Expenses
EXPENSES Overall expenses decreased 2% on FY23, while revenue* was up 8% • Service expenses increased marginally by $1.6m or 2%, reflecting effective cost disciplinary measures implemented to counter-effect the persistent inflationary pressure. • Servcorp continued its strategic investment in market
Slide 19: Profitability
PROFITABILITY Underlying Operating Profit up 25%*; Statutory Operating Profit up 43%* • Underlying NPBIT $56.6m, exceeding the revised profit guidance of $50.0m - $55.0m, up $8.8m or 18% on pcp**. • 2H24 Underlying NPBIT was adversely affected by a weak Japanese Yen (JPY), particular in the last qua
Slide 20: Cash Flow
CASH FLOW Large cash reserve to support organic growth and continued global expansion FY24 FY23 Var Var #039;m #039;m #039;m % Net Operating Cash flow 165.8 155.5 10.3 7% Add: Tax paid 10.5 2.1 8.4 410% Less: Lease liability Cash Rent for related period paid in related period 101.4 98.0 3.4 4% Cash Rent timi
Slide 21: Cash Flow
CASH FLOW Mostly relating to profit growth in regions with 350.0 higher income Acquisition of tax regime two Includes expansion at operations 300.0 four new operations & upcoming centres Dividend of 24.0 cps made up of 250.0 net rent ($115.5) timing differences 200.0 $190.3 in $m ($2.4) ($10.5) 150.
Slide 22: Balance Sheet
BALANCE SHEET Balance Sheet Jun-24 Jun-23 PP&E ROUA Total PP&E & ROUA #039;m #039;m #039;m #039;m #039;m Cash 103.3 105.4 Opening balance 80.4 305.3 385.7 Trade Receivables1 32.7 27.8 PP&E & ROUA 406.1 385.7 Addition3 34.9 117.3 152.2 Software & Intangible 2.7 2.4 Disposal4 (4.7) (0.6) (5.4) Goodwill2 17.3 13.8 De
Slide 23: Other Performance Matrix
OTHER PERFORMANCE MATRIX on pcp Additional on pcp Revenue Space Business efficiency utilisation Efficiency on pcp on pcp on pcp Revenue Service Client per sqm Conversion Base 23
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Slide 25: Segment Overview
SEGMENT OVERVIEW • Segment Profit from mature operations improved to $16.7m • While remained profitable, the overall performance was • Trading performance continues to improve lower than expected as profit slipped $3.1m year-on-year, • Profit margin increased to 24%, up 4% on pcp largely attributed
Slide 26: All Mature Operations
ALL MATURE OPERATIONS • Strong FY24 Our mature global operations have demonstrated a robust performance this fiscal year, showcasing commendable growth in revenue, profit, and sustainable cash earnings. Underlying NPBIT achieved a record level of $56.6m in FY24, outperforming the upgraded profit gui
Slide 27: ANZ and South East Asia
ANZ AND SOUTH EAST ASIA • Australia, New Zealand and South East Asia continues to strengthen and elevate its market position. • Mature Revenue is up $8.2m or 13.0% year-on-year, with enhanced management focus on improving occupancy and service conversion. • Approximately half of the revenue increase
Slide 28: North Asia
NORTH ASIA • North Asia overall maintained solid results. Mature Revenue declined as a result of ongoing challenges in Greater China, coupled with a decade-weak Japanese Yen (JPY). • A further $2.2m impairment was recognised for China in FY24. $105.0 $94.5 $90.0 $85.4 $75.0 $60.0 #039;m $45.0 $30.0 $20
Slide 29: Europe and Middle East
EUROPE AND MIDDLE EAST • Mature Revenue is up by $25.3m on pcp. • 2 new operations were added to the portfolio in FY24, with another 2 opened in July 2024. • Segment Profit and Cash Earnings for the region were up $11.5m and $11.4m respectively on pcp. FY24 margin was 24% (FY23: 18%). $150.0 $119.8
Slide 30: USA
USA • FY24 Segment Loss was $1.3m. The Segment remained cash breakeven in FY24. • FY24 margin was -7% (FY23: 0%). $18.9 $17.7 $18.0 $13.0 #039;m $8.0 $3.0 ($0.1) ($1.3) $0.1 $0.0 FY23 FY24 ($2.0) 30 Revenue Segment Profit Cash Earnings
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Slide 32: Dividends
DIVIDENDS Final FY24 Dividend • Final dividend payable of 13.0 cps, 20% franked, payable on 5 October 2024 • Total FY24 dividend of 25.0 cps (up 14%) FY25 Dividend • Guidance for FY25 dividends will be announced at the Annual General Meeting in November; our dividend payment will not be below 26.0 c
Slide 33: Outlook Guidance
OUTLOOK GUIDANCE Outlook FY24 marked a year of significant progress, with Servcorp delivering record Underlying NPBIT and achieved substantial improvement across a majority of performance indicators, particularly in revenue growth from sustainable income sources. Most countries experienced positive
Slide 34: Appendices
Slide 35: Revenue
REVENUE #039;m FY24 FY23* Var % Statutory Total Revenue 317.0 295.5 21.5 7% Add Revenue from JV operation 1.9 1.5 0.4 27% Less Royalty Income** - (0.2) 0.2 (100%) Other revenue and income*** (2.9) (3.1) 0.2 (5%) Operating Revenue 316.0 293.8 22.3 8% Less Pre-maturity revenue (20.3) (7.0) (13.3) 192% Po
Slide 36: Profit
PROFIT FY24 FY23* Var Var FY23 #039;m #039;m #039;m % #039;m Statutory NPBT 42.9 17.0 26.0 153% FY23 Underlying NPBIT reported in FY23 42.3 Floors closed in the last 12 months on FY23** 5.9 Add Floors turned mature in the last 12 months on FY23 (0.4) Operating loss from pre-mature or post-closure floors 5.5 9.4
Slide 37: Profit
PROFIT Statutory Profit Underlying FY24 FY23* Var Var FY24 FY23* Var Var #039;m #039;m #039;m % #039;m #039;m #039;m % Revenue and other income 317.0 295.5 21.5 7% Statutory Revenue and other income 317.0 295.5 21.5 7% Total expenses (274.1) (278.6) 4.5 2% Revenue from JV 1.9 1.5 0.4 27% Net profit before tax 42.9 17
Slide 38: Segment
SEGMENT FY24 Total FY23 Total Adj. Total Revenue from Adj. from status Revenue from Revenue from Other FY24 Mature Revenue from Revenue from Other FY23 Mature new floors pre- changes since new floors pre- Continuing adjustments Revenue Continuing Continuing adjustments Revenue maturity FY23* maturit
Slide 39: KPI Tracker
350.0 60.0 KPI TRACKER 300.0 50.0 250.0 40.0 EPS (cents) 200.0 #039;m Statutory Revenue Underlying NPBIT Underlying EPS 30.0 150.0 #039;m #039;m cents 20.0 FY21 275.7 30.0 24.4 100.0 FY22 275.6 31.0 26.1 50.0 10.0 FY23 295.5 47.8 38.4 FY24 317.0 56.6 53.3 - - FY21 FY22 FY23 FY24 Statutory Revenue Underlying
Slide 40: Stats vs Underlying Tracker
STATS vs UNDERLYING TRACKER Statutory Revenue vs. Revenue from continuing operations and other income* Revenue Revenue from 360.0 $317.0 Statutory continuing $295.5 310.0 $275.7 $275.6 Revenue operations & $0.6 260.0 $3.4 other income $0.4 $6.5 #039;m #039;m 210.0 FY21 275.7 275.3 #039;m 160.0 $316.5 $275.3
Slide 41: Definitions
STATS vs UNDERLYING TRACKER 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 DPS Dividend per share EME Europe & the Midd