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Regus PLC (RGU)

Regus PLC

3rd Quarter & 9 Mths Results
Regus PLC
14 November 2000




 REGUS ANNOUNCES THIRD QUARTER OPERATING PROFIT OF £7.6 MILLION ON A 123 PER
                          CENT INCREASE IN TURNOVER



Chertsey, UK, 14 November 2000, Regus plc, the international serviced office
provider, (LSE:RGU.L, NASDAQ:REGS) announces its results for the three months
ended 30 September 2000.



Highlights:
                                     Three months ended 30 September
                                           2000                   1999
                                             £m                     £m

Turnover                                  115.0                   51.7    +123%

Centre contribution                        29.2                    3.3    +795%

Operating profit/(loss)*                    7.6                 (12.8)    +£20m

EPS (diluted) (p)                           0.4                  (3.4)    +3.8p

ADS (diluted) (c)                           3.1                 (27.6)   +30.7c

Average £:$                                1.48                   1.62

* before exceptional item



  * Simultaneous listings on the London Stock Exchange and NASDAQ were
    successfully completed in October, raising £239 million (net) for the
    Group.


  * Turnover up 123 per cent at £115.0 million overall, including growth of
    493 per cent in the Americas region.


  * Revenue per available workstation from established centres increased 34
    per cent to £2,459 (1999: £1,835).


  * Centre contribution up 795 per cent at £29.2 million, representing a
    centre contribution margin of 25.4 per cent (1999: 6.3 per cent).


  * In the three months, 19 new centres and two expansions incorporating
    5,129 workstations were opened bringing the total at 30 September to 306
    centres and 55,938 workstations.


Commenting on the results, Mark Dixon, Chief Executive of Regus, said:


'I am delighted to be able to report maiden profits and accelerated growth.
Most of the growth, however, remains in front of us. For many reasons, 2000
will be a landmark year for Regus'.


Enquiries:
Regus
Mark Dixon, Chief Executive                    Today:      +44 20 7269 7249
Stephen Stamp, Group Finance Director          Thereafter: +44 1932 895000

Financial Dynamics (UK enquiries)              Tel:        +44 20 7269 7249

David Yates

Richard Mountain

Sloane & Company (US enquiries)                Tel:         +1 212 446 1860
Elliott Sloane



THE 'SAFE HARBOR' STATEMENT UNDER THE PRIVATE SECURITIES REFORM ACT OF 1995.

The statements in this press release that are not historical facts are
forward-looking statements that involve risks and uncertainties, including but
not limited to risks associated with the serviced office market, the long-term
nature of the company's lease commitments, its growth ambitions, foreign
exchange and other risks and uncertainties, including those detailed in the
F-1 prospectus filed with the Securities and Exchange Commission.

Results of operations

Three months ended 30 September 2000 vs. three months ended 30 September 1999

The following table sets forth the Group's revenue, centre contribution and
workstations (i.e. weighted average number of available workstations) by
geographic region and by established centres vs. new centres:

            (in £millions, except workstations)

            1999                              2000
            Revenue   Centre   Workstations   Revenue   Centre     Workstations
                   Contribution                       Contribution


UK &        26.2       5.0         12,850      51.0      16.2         18,170
Ireland

Rest of     18.7       3.0         13,032      30.9       8.0         17,771
Europe

Americas     4.3      (2.3)         3,396      25.5       4.5         12,036

Rest of      2.5     (2.4)          2,102       7.6       0.5          4,293
World
            51.7      3.3          31,380     115.0      29.2         52,270


Established 25.0      8.1          13,622      66.4      22.9         27,007
centres

New centres 26.7     (4.8)         17,758      48.6       6.3         25,263

            51.7      3.3          31,380     115.0      29.2         52,270


Revenue

Regus' revenue on a global basis increased 123 per cent to £115.0 million in
the third quarter 2000 from £51.7 million in the third quarter 1999. The
weighted average number of available workstations increased 66.6 per cent to
52,270 from 31,380 in the same periods. In the third quarter 2000 Regus opened
19 new centres and expanded two existing centres. No centres were closed.

Revenue from established centres increased 166% to £66.4 million in the third
quarter 2000 (1999: £25.0 million). Revenue per workstation in Regus'
established centres increased to £2,459 (1999: £1,835) principally due to
increased prices and service income and assisted by a small rise in occupancy
levels. Revenue from new centres increased 82% to £48.6 million (1999: £26.7
million). Revenue per workstation in Regus' new centres increased to £1,924
(1999: £1,504) because Regus opened new centres in higher priced markets.

Revenue in the UK and Ireland increased 95% to £51.0 million (1999:£26.2
million). Revenue per workstation increased to £2,807 (1999: £2,039). In the
third quarter 2000, three new centres were opened in the UK and Ireland.

Revenue in the Rest of Europe increased 65% to £30.9 million (1999:£18.7
million). Revenue per workstation increased to £1,739 (1999: £1,435). In the
third quarter 2000, three new centres were opened in the Rest of Europe.

Revenue in the Americas increased 493% to £25.5 million (1999: £4.3 million).
Regus opened 11 new centres in the Americas, including nine in the US. An
additional two centres were opened in the US through the joint venture with
Equity Office Properties Trust.

Revenue in the Rest of the World increased 204% to £7.6 million (1999: £2.5
million).

Centre contribution

Centre contribution on a global basis increased 795% to £29.2 million in the
third quarter 2000 (1999: £3.3 million). Centre contribution from established
centres increased 183% to £22.9 million (1999: £8.1 million) and the centre
contribution margin from established centres increased to 34.5% (1999: 32.4%).
Centre contribution from new centres improved to a positive £6.3 million
(1999: negative £4.8 million) in line with Regus' strategy of focusing its new
centre opening programme on markets in which the Group already operates and
reducing start-up costs.

Centre contribution in the UK and Ireland increased 224% to £16.2 million
(1999: £5.0 million). Centre contribution margin in the UK and Ireland
increased to 31.8% in the third quarter (1999:19.1%). The UK and Ireland
continued to benefit from favourable economic conditions, particularly in
central London.

In the Rest of Europe, centre contribution increased 167% to £8.0 million
(1999: £3.0 million). Centre contribution margin in the Rest of Europe
increased to 25.9% in the third quarter (1999: 16.0%). The Group continued to
focus its opening programme on the comparatively strong markets in Western
Europe and the Nordic regions. No new centres were opened in Eastern Europe or
the CIS in the third quarter.

Centre contribution from the Americas increased to a positive £4.5 million
from a negative £2.3 million in 1999. The increase was principally
attributable to a continued maturing of centres opened in prior periods and
rapid fill rates achieved by new US centres.

Centre contribution in the Rest of the World improved to positive £0.5 million
from negative £2.4 million in 1999 primarily due to a reduction in the number
of new centre openings from four in the prior period to none in the third
quarter 2000.

Administrative expenses and exceptional item

Administrative expenses increased 37% to £22.0 million (1999: £16.0 million)
as a result of continued investment in sales, marketing and administrative
infrastructure to support Regus' expanding network of centres. Overall,
administrative expenses reduced as a percentage of revenues from 30.9% to
19.1%. In the third quarter, sales and marketing costs increased 9% to £10.5
million (1999: £9.6 million). Regional and central overheads increased 80% to
£11.5 million (1999: £6.4 million). The overall reduction in overheads as a
percentage of revenues reflects increased operational efficiency resulting
from the Group's strategy of focusing on markets in which it has existing
operations. Operations commenced in only one new country, Egypt, in the third
quarter.

The exceptional item of £1.6 million in the third quarter 1999 related to
costs in respect of a postponed IPO.

Liquidity and capital resources

Cash at bank and in hand at 30 September 2000 was £79.9 million, up from £72.1
million at 31 December 1999. Total bank indebtedness at 30 September was £
116.5 million, of which £85.7 million was due within one year and £30.8
million was due in more than one year. The £100 million senior facility
arranged by Commerzbank had been fully drawn by 30 September. In addition, at
30 September the Group had outstanding finance lease obligations of £31.0
million. The senior facility was repaid in full in October 2000 out of the IPO
proceeds (see post balance sheet event below).

Cash inflow from operating activities in the nine months ended 30 September
2000 was £69.5 million. Of this amount £7.3m (net) was paid in interest, £1.1m
in tax and £52.4 million in capital expenditure. A further £3.8 million was
invested in joint ventures.

Post balance sheet event

On 18 October 2000 Regus completed its IPO and its shares were subsequently
listed on the London Stock Exchange and, in the form of ADSs, on NASDAQ. A
total of 128.8 million shares were offered (comprising 97.6 million new shares
and 31.2 million existing shares) and raised approximately £239 million (net
of expenses) for the Group. Of the proceeds, £100 million was immediately used
to repay the senior loan in its entirety and approximately £42 million was
loaned to an ESOP trust which acquired 16.2 million shares from certain
venture capital shareholders.

Regus plc

Consolidated Profit & Loss Account

For the three months and nine months ended 30 September 2000 and 30 September
1999


                    3 months         3 months         9 months         9 months
                                                                          ended
                       ended            ended            ended
                                                                      30 Sep 99
                   30 Sep 00        30 Sep 99        30 Sep 00      (unaudited)
                                                                                
                 (unaudited)       (unaudited)      (unaudited)

                       £'000            £'000            £'000            £'000

Turnover             118,178           51,691          295,699          136,561
(including share
of joint venture)

Less: Share of       (3,131)                -          (4,725)                -
turnover of joint
venture

Turnover             115,047           51,691          290,974          136,561

Cost of sales       (85,807)         (48,425)        (228,175)        (127,523)

Gross profit          29,240            3,266           62,799            9,038

Net operating       (22,018)         (16,034)         (58,487)         (41,539)
expenses

Exceptional item           -          (1,553)                -          (1,670)
                    (22,018)         (17,587)         (58,487)         (43,209)

Group operating        7,222         (14,321)            4,312         (34,171)
profit/(loss)

Share of
operating profit/        425              (6)            (907)              (6)
(loss) in joint
venture

Total operating
profit/(loss):         7,647         (14,327)            3,405         (34,177)
Group and share
of joint venture

Net interest
payable
- Group              (2,787)          (1,383)          (7,245)          (2,267)
- Joint ventures         (3)                -              (3)                -

Profit/(loss) on
ordinary               4,857         (15,710)          (3,843)         (36,444)
activities before
tax

Tax on profit/       (2,767)            (186)          (6,675)          (1,146)
(loss) on
ordinary
activities

Profit/(loss) on
ordinary               2,090         (15,896)         (10,518)         (37,590)
activities after
tax

Minority                (18)             (27)              174               50
interests
(equity)

Retained profit/       2,072         (15,923)         (10,344)         (37,540)
(loss) for the
period

Earnings (loss)
per ordinary
share:
Basic                   0.4p           (3.4)p           (2.1)p           (8.0)p
Diluted                 0.4p           (3.4)p           (2.1)p           (8.0)p

All results arose
from continuing
operations



Regus plc

Consolidated Balance Sheets

As at 30 September 2000 and 31 December 1999


                                                           As at          As at

                                                      30 Sept 00      31 Dec 99
                                                                            
                                                      (unaudited)     (audited)
                                                                      
                                                           £'000          £'000

Fixed assets
Tangible assets                                          167,959        125,571
Investments in own shares                                  2,700              -
Interest in joint venture:
                                                          
        Share of gross assets                             12,607          1,361
                                                          
        Share of gross liabilities                       (8,268)          (155)

                                                           4,339          1,206

                                                         174,998        126,777

Current assets
Stocks                                                       273            244
Debtors: amounts falling due within one year             118,363         69,183
Debtors: amounts falling due after one year                    -              -
Cash at bank and in hand                                  79,852         72,100

                                                         198,488        141,527

Creditors: amounts falling due within one year           347,995        189,860

Net current liabilities                                (149,507)       (48,333)

Total assets less current liabilities                     25,491         78,444

Creditors: amounts falling due after more than            54,866        102,350
one year

Net (liabilities)/assets                                (29,375)       (23,906)


Capital and reserves
Share capital                                             24,154         24,061
Share premium account                                     48,890         46,283
Other reserves                                               606            606
Profit and loss account                                (102,676)       (94,681)

Equity shareholders' funds                              (29,026)       (23,731)

Minority interests                                         (349)          (175)

                                                        (29,375)       (23,906)


Note:

The net proceeds of the IPO of £239 million, which were received in October
2000, are not reflected in the 30 September balance sheet.
Regus plc

Consolidated cash flow statement

For the nine months ended 30 September 2000 and 30 September 1999


                                                       9 months        9 months
                                                          ended           ended

                                                        30 Sept         30 Sept
                                                             00              99
                                                          £'000           £'000


Cash inflow from continuing operating                    69,523           (360)
activities

Returns on investments and servicing of finance
Interest received                                         1,797           (774)
Interest paid                                           (7,015)         (1,483)
Interest paid on finance leases                         (2,053)         (1,286)
Debt arrangement fees paid                                   -               0

                                                        (7,271)         (3,543)

Tax
Tax paid                                                (1,075)           (738)

                                                        (1,075)           (738)
Capital expenditure and financial investment
Purchase of tangible fixed assets                      (52,402)        (49,205)
Sale of tangible fixed assets                               114             161

                                                       (52,288)        (49,044)

Acquisitions and disposals
Investments in joint venture                            (3,789)               -

                                                        (3,789)               -

Cash in flow/(outflow) before management of               5,100        (53,685)
liquid resources and financing

Financing                                                 (257)          41,094

Management of liquid resources                          (1,148)          12,520

Increase/(decrease) in cash in the period                 3,695            (71)




Notes


 1. Segmental reporting

    Turnover:

             Three months ended 30 September        Nine months ended 30        
                                                        September
                      2000              1999               2000           1999
                      £000              £000               £000           £000

    UK &            51,171            26,233            131,936         71,221
    Ireland
    Rest of         30,874            18,688             83,286         51,898
    Europe
    Americas        28,508             4,303             61,476          8,568
    Rest of          7,625             2,467             19,001          4,874
    World
                   118,178            51,691            295,699        136,561

    Total          115,047            51,691            290,974        136,561
    Group
    Joint            3,131                 -              4,725              -
    Venture

    Profit/(loss) before interest and tax:

                    Three months ended 30            Nine months ended 30       
                         September                       September
                         
                       2000               1999              2000          1999
                       £000               £000              £000          £000

    UK &              9,215                605            21,186           888
    Ireland
    Rest of           2,040            (2,044)             1,598        (7,654)
    Europe
    Americas        (2,560)            (5,561)          (12,980)       (12,260)
    Rest of         (1,291)            (4,489)           (6,572)       (11,583)
    World
    Other               243            (1,285)               173        (1,898)
    office
    costs
    Exceptional           -            (1,553)                 -        (1,670)
    item
                      7,647           (14,327)             3,405       (34,177)

    Total Group       7,222           (14,321)             4,312       (34,171)
    Total Joint         425                (6)             (907)            (6)
    Venture


 2. Earnings/(loss) per share

    Earnings/(loss) per share is based upon earnings for the three months
    ended 30 September 2000 and 1999 of £2,072,000 and £(15,923,000)
    respectively. Earnings per share are calculated using the following
    weighted average numbers of shares:

               Three months ended 30 September       Nine months ended 30       
                                                         September
                      2000                1999              2000          1999
                     000's               000's             000's          000's

    Ordinary
    shares         481,222             467,473           481,222        467,473

    - basic
    Ordinary
    shares         490,534             467,473           481,222        467,473

    - fully
    diluted


 3. US GAAP reconciliation


The following is a summary of the adjustments to net income/(loss) and
shareholders funds/(deficit) under US GAAP:


Net income/(loss):
                                                       Three months ended 30
                                                             September
                                                          2000             1999
                                                          £000             £000

Net profit/(loss) reported under UK GAAP                 2,072         (15,923)

US GAAP adjustments:

    Compensation expense related to options granted          -              495
    by shareholder


        Compensation expense related to other          (1,629)                -
        variable

        plan options

                                                         (515)              214
        Deferred taxes


Net loss under US GAAP                                    (72)         (15,214)


Shareholders' (deficit)/funds:
                                                            As at         As at

                                                          30 Sept        31 Dec
                                                             2000
                                                                           1999
                                                             £000          £000

Shareholders' deficit under UK GAAP                      (29,026)      (23,731)

US GAAP adjustments
Stock purchase warrants and debt discount                 (8,500)       (8,500)

    Compensation expense related to other                   1,159             -
    variable plan options

Deferred taxes                                              4,407         2,376
Employee share trust (investment in own shares)           (2,700)             -

Shareholders' deficit under US GAAP                      (34,660)      (29,855)





Data provided by FE. Care has been taken to ensure that the information is correct, but FE neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.

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