FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For February 27, 2002
Regus plc
(Translation of registrant's name into English)
3000 Hillswood Drive
Chertsey, KT16 0RS
England
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F X Form 40-F
--- ---
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
--- ---
Regus plc
INDEX TO EXHIBITS
Item
1. Press Release dated February 27, 2002 with Full Year and Fourth Quarter
Results to end December 2001.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Regus plc
Date: February 27, 2002 By: /s/ Stephen Stamp
------------------------------
Name: Stephen Stamp
Title: Group Finance Director
Item 1
[GRAPHIC OMITTED][GRAPHIC OMITTED]
PRESS RELEASE
Embargoed until 12:00 noon GMT, 7:00 am EST Wednesday 27 February 2002
FULL YEAR & FOURTH QUARTER RESULTS
TO END DECEMBER 2001
Chertsey, UK, 27 February 2002, Regus plc, the international serviced office
provider (LSE:RGU.L, NASDAQ:REGS), announces its preliminary results for the
year and the three months ended 31 December 2001.
Announcing the results, Chairman George Gray commented: "2001 was a challenging
year for the global economy and for Regus. Focusing on pricing, occupancy and
cost, we took swift, radical action to take some (pound)60 million out of the
company's cost base - effectively halving our overheads.
"We remain tightly focused on the fundamentals of our business, particularly in
the United States where our operations have been most affected by the global
slowdown in business activity. We continue to explore ways of further reducing
our cost base, including re-negotiation of fixed costs.
"We entered 2002 with the strongest forward order book in our history - as we
continued the strategy of discounting prices for longer-term contracts. The
Regus proposition remains compelling and a growing number of companies, large
and small, are using us for the cost-effective outsourcing of their office
requirements.
"2002 looks likely to be another difficult year for the global economy and for
Regus. The company today is lean and fit. We have readied ourselves for
challenges ahead".
Key financials:
3 months ended Year ended
31 Dec 31 Dec 31 Dec 31 Dec
2001 2000 2001 2000
(pound)m (pound)m (pound)m (pound)m
Turnover 118.7 130.2 -9% 512.6 421.1 +22%
Operating (loss)/profit* (11.7) 9.0 -20.7m (19.0) 12.4 -31.4m
Exceptional items (0.3) (9.5) (90.5) (9.5)
Operating (loss)/profit (12.0) (0.5) -11.5m (109.5) 2.9 -112.4m
EPS (basic & diluted)(p)* (1.2) 0.9 -2.1p (5.2) (1.1) -4.1p
EPADS (basic & diluted)(c)*+ (8.5) 6.6 -15.1c (37.5) (8.4) -29.1c
Average(pound):$ 1.44 1.46 1.44 1.52
* before exceptional items
+ based on UK GAAP
1
o There was a record contracted forward order book of(pound)269 million at 31
December 2001 (based on workstation revenue but excluding service revenue).
o Despite tough trading conditions in many markets, there has been a marked
trend towards global outsourcing of office requirements by corporates
during the year -- the (pound)23.9 million contract with Compaq being the
largest and longest-term outsourcing deal in Regus' history.
o Landmark franchise deals were completed in the Middle East, the US and UK.
o Regus now serves more than 5,800 customers across 50 countries. A record
number of people, almost 54,000, work in Regus centres on a daily basis.
o In the fourth quarter, 3,632 workstations were added to the Regus network.
This brought the total at 31 December 2001 to 92,232 workstations across
411 centres in 50 countries (including joint ventures and franchises).
o The overall cash position was strong - with cash at bank totalling
(pound)117.1 million at 31 December 2001 (which includes (pound)40 million
from the issue of a convertible bond at 28 December 2001).
o Capital expenditure in the fourth quarter 2001 was cut by some(pound)4.5
million, ahead of expectations.
o Regus was cash positive at the operating level for the year. Net cash
inflow from operating activities was (pound)0.3 million in the fourth
quarter and (pound)44.0 million inflow in the year.
o Turnover was up 22% at(pound)512.6 million (2000:(pound)421.1 million) for
the year but down 9% in the fourth quarter at(pound)118.7 million
(2000:(pound)130.2 million).
o There was a 48% increase in contract length reflecting the success of our
strategy of discounting price for longer-term contracts. However, revenue
per available workstation (REVPAW), from established centres decreased 36%
to (pound)1,675 (2000: (pound)2,615), reflecting the impact of economic
downturn.
o Exceptional one-time charge of(pound)90.5 million in the year. This relates
to:
o Major restructuring of workforce (approx. 24% reduction in staff);
o Reduction in workstation capacity (11% of available total), of which
40% is in the US;
o Asset write-downs;
o Abortive acquisition costs.
Enquiries:
Regus
Mark Dixon, Chief Executive Today: +44 20 8895 4630
Stephen Stamp, Group Finance Director Thereafter: +44 1932 895000
Stephen Jolly, Group Communications Adviser +44 1932 895138
Financial Dynamics
David Yates/Richard Mountain Tel: +44 20 7269 7116
2
THE "SAFE HARBOR" STATEMENT UNDER THE US 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
Annual Report Form 20-F filed with the Securities and Exchange Commission.
3
Results of operations
Review of 2001
During 2001, we added another 71 centres and our first 16 franchised centres. We
increased the number of countries in which we operate to 50 (2000: 48). We added
23,502 workstations and 775 franchised workstations during this period. We also
added 3,885 new workstations through the expansion of existing centres, bringing
the year-end total to 92,232 (2000: 64,070).
The bulk of the growth was in the US, where we added 8,102 workstations, with
the balance mainly in the major towns and cities in which we already operated.
We also entered Canada and the United Arab Emirates for the first time.
Although 2001 was a challenging year for the global economy and for Regus,
revenues in 2001 increased 22% to (pound)512.6 million (2000: (pound)421.1
million). Revenue per available workstation (REVPAW) from established centres
decreased by 17% to (pound)7,910 (2000: (pound)9,489) and REVPAW from new
centres decreased by 37% to (pound)4,137 (2000: (pound)6,575). The rapid
deterioration in global economic conditions resulted in customers becoming
increasingly price sensitive and taking longer to make decisions. In response to
the worsening economic environment, we introduced a new strategy of discounting
prices for longer-term contracts. This had the effect of increasing the number
of occupied workstations and strengthening the forward order book but, in the
short term, reducing margins. Accordingly, overall centre contribution decreased
22% to (pound)77.8 million in 2001 (2000: (pound)100.3 million), with a
contribution margin from established centres of 25% (2000: 31%).
Faced with a rapid deterioration in global economic conditions, we reassessed
our business model and we took swift, radical action to take some (pound)60
million out of the company's cost base - effectively halving our overhead run
rate between April and September. As a result, administrative expenses before
exceptional items fell as a percentage of turnover to 18% (2000: 21%) and we
recorded an operating loss before exceptional items of (pound)19.0 million
(2000: profit of (pound)12.4 million) and EBITDA before exceptional items of
(pound)45.1 million (2000: (pound)53.0 million).
The results include an exceptional one-time charge of (pound) 90.5 million. This
related to the costs of a major restructuring of our business including a
reduction in workstation capacity (11% of available total), of which 40% is in
the US; various asset write-downs; a rationalisation of the workforce and, the
costs of the abortive acquisition of HQ Global Workplaces.
After exceptional items, the Group's operating loss for the year was(pound)109.5
million (2000: profit of(pound)2.9 million). The Group's EBITDA for the year was
negative(pound)45.4 million (2000: positive(pound)43.5 million).
Cash flow from operating activities was (pound)41.0 million (2000: (pound)117.9
million). The Group continues to be cash positive at the operating level
notwithstanding the tough trading conditions. Capital expenditure in 2001 was
(pound)105.6 million (2000: (pound)88.1 million) and is expected to fall very
sharply in 2002.
In the second half, Regus redoubled its efforts in support of its franchising
strategy and signed landmark deals with the HAK Group in the Middle East and
Business Spark in the UK.
In summary, during 2001, Regus recognised the challenges confronting the
serviced office sector and took swift, radical action to meet them. As a result,
the company was able to simplify and re-price its business offering, cut costs,
re-engineer systems and ready itself for the economic conditions forecast for
2002.
4
Review of fourth quarter 2001
The following table sets forth the Group's revenue, centre contribution before
exceptional items and workstations (i.e. weighted average number of available
workstations) by geographic region and by established centres compared with new
centres:
(in(pound)millions, except workstations)
2000 2001
------------------------------------------------- -------------------------------------------------
Centre Centre
Revenue Contribution* Workstations Revenue Contribution* Workstations
UK & Ireland 56.8 22.1 18,966 49.1 10.5 24,779
Rest of Europe 35.7 9.9 19,663 36.4 3.9 29,438
Americas 29.6 7.2 14,290 25.4 (6.5) 24,021
Rest of World 8.1 (1.7) 4,746 7.8 1.6 5,885
------------ -------------- -------------- ------------ --------------- --------------
130.2 37.5 57,665 118.7 9.5 84,123
------------ -------------- -------------- ------------ --------------- --------------
Established
centres** 81.7 27.0 31,247 88.0 15.3 52,551
New centres 48.5 10.5 26,418 30.7 (5.8) 31,572
------------ -------------- -------------- ------------ --------------- --------------
130.2 37.5 57,665 118.7 9.5 84,123
------------ -------------- -------------- ------------ --------------- --------------
*Centre contribution before exceptional items.
**Established centres are those open for 18 months or more at the period end,
new centres are those open for less than 18 months at the period end.
Revenue
Regus' revenue on a global basis decreased 9% to (pound)118.7 million in the
fourth quarter 2001 from (pound)130.2 million in the fourth quarter 2000. The
weighted average number of available workstations increased 46% to 84,123 from
57,665 over the same period. In the fourth quarter 2001, Regus opened 10 new
centres including one joint venture centre. Three centres were closed.
Revenue from established centres increased 7.7% to(pound)88.0 million in the
fourth quarter 2001 (2000:(pound)81.7 million). Revenue per workstation in
Regus' established centres was(pound)1,675 (2000:(pound)2,615) reflecting lower
occupancy rates and the impact of the new pricing model. Revenue from new
centres was(pound)30.7 million (2000: (pound)48.5 million). Revenue per
workstation in Regus' new centres decreased to(pound)972 (2000:(pound)1,836)
reflecting the new pricing model and the focus of the rollout program in the
USA.
Revenue in the UK and Ireland decreased 14% to(pound)49.1 million
(2000:(pound)56.8 million). Revenue per workstation was (pound)1,982
(2000:(pound)2,995). In the fourth quarter 2001, one new centre was opened in
the UK and Ireland.
Revenue in the Rest of Europe increased 2% to(pound)36.4 million
(2000:(pound)35.7 million). Revenue per workstation was (pound)1,236
(2000:(pound)1,816). In the fourth quarter 2001, five new centres were added in
the Rest of Europe.
Revenue in the Americas decreased 14% to(pound)25.4 million (2000:(pound)29.6
million). Revenue per workstation decreased to(pound)1,057 (2000:(pound)2,071).
Regus opened three new centres in the Americas, including two in the US and one
centre in Brazil.
5
Revenue in the Rest of the World decreased 4% to(pound)7.8 million
(2000:(pound)8.1 million). Revenue per workstation decreased to(pound)1,325
(2000:(pound)1,707). One new centre was opened in the fourth quarter 2001 in the
Philippines.
Centre contribution
Centre contribution on a global basis was (pound)9.5 million in the fourth
quarter 2001 (2000: (pound)37.5 million). Approximately 50% of the fall in
centre contribution was attributable to the Americas and 40% attributable to UK
& Ireland. The other principal factor influencing centre contribution was the
roll-out of the new pricing model in which customers are offered more
competitive prices in return for entering into longer-term contracts. Centre
contribution from established centres decreased 43% to (pound)15.3 million
(2000: (pound)27.0 million) with a centre contribution margin in established
centres of 17% (2000: 33%). Centre contribution from new centres fell to a
negative (pound)5.8 million (2000: positive (pound)10.5 million) as a result of
lower occupancy and the new pricing model.
Centre contribution in the UK and Ireland was(pound)10.5 million
(2000:(pound)22.1 million). Centre contribution margin in the UK and Ireland
decreased to 21% in the fourth quarter (2000: 39%).
In the Rest of Europe, centre contribution was(pound)3.9 million
(2000:(pound)9.9 million). Centre contribution margin in the Rest of Europe
decreased to 11% in the fourth quarter (2000: 28%).
Centre contribution from the Americas decreased to a negative (pound)6.5 million
from a positive (pound)7.2 million in 2000.
Centre contribution in the Rest of the World improved to positive (pound)1.6
million from negative (pound)1.7 million in 2000.
Administrative expenses
Administrative expenses including goodwill amortisation decreased 32%
to(pound)19.4 million (2000:(pound)28.4 million) due to the effects of the cost
reduction programme. Overall, administrative expenses fell to 16% as a
percentage of revenues compared to 22% in the fourth quarter of 2000. Sales and
marketing costs decreased 17% to (pound)10.6 million (2000:(pound)12.8 million)
and fell as a percentage of revenue to 9% (2000: 10%). Regional and central
overheads decreased 44% to(pound)8.8 million (2000:(pound)15.6 million) and fell
as a percentage of revenue to 7% (2000: 12%).
6
Liquidity and capital resources
Cash at bank and in hand at 31 December 2001 was (pound)117.1 million. Total
bank indebtedness at 31 December 2001 was (pound)46.0 million and the Group had
outstanding finance lease obligations of (pound)38.0 million.
Cash inflow from operating activities in the three months ended 31 December 2001
was (pound)0.3 million. Net cash outflow before financing was (pound)0.1 million
after capital expenditure in the quarter of (pound)4.5 million.
Cash inflow from operating activities in the twelve months ended 31 December
2001 was (pound)44.0 million. The group received (pound)0.3 million interest
(net), (pound)6.3 million was paid in tax and (pound)105.6 million in capital
expenditure. A further (pound)5.7 million was used in acquisitions and
(pound)5.6 million was invested in joint ventures.
Taking into account the uncertain economic outlook for the global economy in
2002, we decided to further strengthen the Group's financial position by issuing
a (pound)40 million convertible bond in December 2001. The 5 per cent unsecured,
senior convertible debentures are to be repaid in 10 equal instalments from
March 2002 until December 2002. At the Company's option, the convertible
debentures may be either redeemed for cash or (subject to some conditions)
converted at 95 per cent of the average share price during the instalment month,
subject to any floor price the Company may specify. The Company may (subject to
some conditions) elect to redeem the convertible debentures early at 105 per
cent of the outstanding principal, plus accrued and unpaid interest.
At the option of the holder, the convertible debentures may be converted at any
time at a fixed price of 86.32p per share, representing a premium of 60 per cent
to the share price at the close of business on 27 December 2001. Holders of the
convertible debentures will also receive warrants over 5 million shares with an
exercise price of 5p per share. The Directors will closely monitor the trading
performance and projected cash flows in order to be able to make an early
decision to convert the bond if conditions require.
Exceptional charges
Included in the results for the twelve months ended 31 December 2001 are
exceptional charges totalling (pound)90.5 million of which (pound)3.2 million
had been recognised in the six months ended 30 June 2001. The exceptional
charges fall into the following categories:
Restructuring and redundancy costs ((pound)5.4m)
As part of an aggressive attack on its cost base, the Group has reviewed
staffing levels across all regions and all functions. Headcount has been reduced
by 800, representing approximately 24% of the total workforce. The Group has set
itself a target of entering 2003 with an overhead run rate of 10 -12% of
revenues.
Reduction in workstation capacity ((pound)37.4m)
The Group has reviewed the prospects for each of its centres in light of current
market conditions. Regus has decided to reduce capacity by 9,700 workstations,
representing 11% of the network. The exceptional charge includes costs
associated with onerous leases and asset impairments.
7
Write-down of investment in own shares ((pound)32.6m)
As mentioned in the second quarter results, the Directors have determined that,
in the circumstances, the carrying value of the investment in own shares should
be written down to 21p a share, the market value on 30 September 2001. This is
counterbalanced by a writeback for the reduced cost of granting reward options.
Write-down of software development assets ((pound)4.6m)
The Directors have reviewed the estimated useful life of external development
costs and determined that it would be prudent, in the circumstances, to write
off the remainder of these costs.
Fees in respect of aborted merger with HQ Global Workplaces ((pound)3.3m) This
exceptional charge had been made in the Group's second quarter results.
Write-down of acquisition goodwill ((pound)4.9m)
The Directors have determined that there has been an impairment to the value of
goodwill arising from acquisitions and, accordingly, it is prudent that the
goodwill be written down.
Non-recoverable Ryder Cup expenditure ((pound)2.3m)
On the basis that the Group is unlikely to benefit from the expenditure, the
Directors consider it appropriate to recognise the unrecoverable expenditure as
an exceptional charge.
Outlook
Despite continuing economic uncertainty, it is our belief that the Regus
proposition remains a compelling one. The flexibility, cost-effectiveness, ease
of use, quality and global coverage provided by Regus offer proven benefits to a
wide variety of customers - from start-ups to SMEs and major corporates -
looking for solutions, both long- and short-term, to their property needs.
Our new strategy of trading price against term has led to a significant
lengthening in our average customer tenancy period. At the same time, a number
of global customers have begun to use Regus structurally - preferring to
outsource their property requirements across the board rather than investing in
costly and inflexible conventional space. At 31 December 2001, the number of
occupied workstations had risen to a record 50,527 (2000: 43,469).
Overall, we ended the year ready for challenges ahead. The company is fit and
has the best forward order book in its history. We look forward to building on
the many long-term relationships we have established with our customers and
continuing our quest to offer them the very best solutions to their workspace
requirements.
8
Regus plc
Consolidated profit and loss account
For the 3 months and 12 months ended 31 December 2001 and 31 December 2000
3 months 3 months 12 months 12 months
ended ended ended ended
31 Dec 2001 31 Dec 2000 31 Dec 2001 31 Dec 2000
(unaudited) (unaudited) (unaudited) (audited)
(pound)'000 (pound)'000 (pound)'000 (pound)'000
Turnover (including share of joint ventures) 121,671 133,501 524,622 429,200
Less: Share of turnover of joint ventures (2,986) (3,350) (11,989) (8,075)
-------------- ------------- ------------ -------------
Turnover 118,685 130,151 512,633 421,125
- -------------------------------------------------------- -------------- ------------- ------------ -------------
Cost of sales (centre costs) before exceptional items (109,195) (92,657) (434,787) (320,832)
Exceptional items (419) - (37,955) -
- -------------------------------------------------------- -------------- ------------- ------------ -------------
Cost of sales (centre costs) after exceptional items (109,614) (92,657) (472,742) (320,832)
-------------- ------------- ------------ -------------
Gross profit (centre contribution) 9,071 37,494 39,891 100,293
- -------------------------------------------------------- -------------- ------------- ------------ -------------
Administration expenses before exceptional items (19,392) (28,372) (91,255) (86,859)
Exceptional items 86 (9,501) (52,591) (9,501)
- -------------------------------------------------------- -------------- ------------- ------------ -------------
Administration expenses after exceptional items (19,306) (37,873) (143,846) (96,360)
-------------- ------------- ------------ -------------
Group operating (loss)/profit (10,235) (379) (103,955) 3,933
Share of operating loss in joint ventures (1,757) (120) (5,572) (1,027)
-------------- ------------- ------------ -------------
Total operating (loss)/profit: Group and share of (11,992) (499) (109,527) 2,906
joint ventures
Net interest (payable)/receivable
- - Group (823) 492 (304) (6,753)
- - Joint ventures (80) (7) (250) (10)
-------------- -------------- ------------- --------------
Loss on ordinary activities before tax (12,895) (14) (110,081) (3,857)
Tax on loss on ordinary activities 5,310 (3,251) (10,090) (9,926)
-------------- -------------- ------------- --------------
Loss on ordinary activities after tax (7,585) (3,265) (120,171) (13,783)
Minority interests (equity) 650 79 1,933 253
-------------- -------------- ------------- --------------
Retained loss for the period (6,935) (3,186) (118,238) (13,530)
============== ============== ============= ==============
(Loss) / earnings per ordinary share: Restated
Basic (p) (1.2) (0.6) (21.0) (2.7)
Diluted (p) (1.2) (0.6) (21.0) (2.7)
Basic (p) (before exceptionals) (1.2) 0.9 (5.2) (1.1)
Diluted (p) (before exceptionals) (1.2) 0.9 (5.2) (1.1)
All results arose from continuing operations
9
Regus plc
Consolidated balance sheets
As at 31 December 2001 and 31 December 2000
As at As at
31 Dec 2001 31 Dec 2000
(unaudited) (audited)
(pound)'000 (pound)'000
Fixed assets
Intangible assets 4,307 -
Tangible assets 242,299 193,453
Investments
Investments in own shares 3,805 47,021
Other investments 33 -
Interest in joint ventures:
------------------ -----------------
Share of gross assets 15,656 13,601
Share of gross liabilities (14,562) (9,461)
------------------ -----------------
1,094 4,140
------------------ -----------------
Total investments 4,932 51,161
------------------ ----------------
251,538 244,614
------------------ -----------------
Current assets
Stock 392 279
Debtors: amounts falling due within one year 114,288 129,677
Debtors: amounts falling due after one year 3,000 0
Cash at bank and in hand 117,074 169,821
------------------ -----------------
234,754 299,777
Creditors: amounts falling due within one year (344,392) (317,883)
Provisions for liabilities and charges due within one year (19,953) -
------------------ -----------------
Net current liabilities (129,591) (18,106)
------------------ -----------------
Total assets less current liabilities 121,947 226,508
Creditors: amounts falling due after more than one year (24,806) (23,050)
Provisions for liabilities and charges due after more than one year (8,349) (794)
------------------ -----------------
Net assets 88,792 202,664
================== =================
Capital and reserves
Called up share capital 29,106 29,034
Share premium account 279,765 279,858
Other reserves 4,056 615
Profit and loss account (224,482) (106,417)
------------------ -----------------
Equity shareholders' funds 88,445 203,090
Equity minority interests 347 (426)
------------------ -----------------
88,792 202,664
================== =================
10
Regus plc
Consolidated cash flow statement
For the twelve months ended 31 December 2001 and 31 December 2000
12 months 12 months
ended ended
31 Dec 01 31 Dec 00
(unaudited) (audited)
(pound)'000 (pound)'000
Cash inflow from continuing operating activities
Net cash inflow before exceptional items 56,140 117,899
Outflow related to exceptional items (12,144) -
----------------- -----------------
Net cash inflow from continuing operating activities 43,996 117,899
----------------- -----------------
Returns on investments and servicing of finance
Interest received 3,906 3,851
Interest paid (252) (7,993)
Interest paid on finance leases (3,351) (2,861)
----------------- -----------------
303 (7,003)
----------------- -----------------
Taxation
Tax paid (6,275) (2,224)
----------------- -----------------
(6,275) (2,224)
----------------- -----------------
Capital expenditure and financial investment
Purchase of tangible fixed assets (105,633) (88,078)
Sale of tangible fixed assets 3,052 1,506
Purchase of own shares - (42,500)
Purchase of investments (26) -
----------------- -----------------
(102,607) (129,072)
----------------- -----------------
Acquisitions and disposals
Purchase of subsidiary undertakings (5,712) -
Investments in joint ventures (5,631) (3,789)
----------------- -----------------
(11,343) (3,789)
----------------- -----------------
Cash outflow before management of liquid resources and financing (75,926) (24,189)
Management of liquid resources 45,643 (78,712)
Financing 22,714 118,766
----------------- -----------------
(Decrease)/increase in cash in the period (7,569) 15,865
================= =================
11
Regus plc
Statement of total recognised gains and losses For the twelve months ended 31
December 2001 and 31 December 2000
12 months 12 months
ended ended
31 Dec 2001 31 Dec 2000
(unaudited) (audited)
(pound)'000 (pound)'000
Retained loss for the financial period (118,238) (13,530)
Currency translation differences 197 2,675
Tax charge on exchange differences - (872)
------------------ -----------------
Total recognised gains and losses for the period (118,041) (11,727)
================== =================
Reconciliation of movements in consolidated shareholders' funds
12 months 12 months
ended ended
31 Dec 2001 31 Dec 2000
(unaudited) (audited)
(pound)'000 (pound)'000
Retained loss for the financial period (118,238) (13,530)
Ordinary shares issued net of issue costs 3,396 238,548
Currency translation differences 197 2,675
Tax charge on currency translation differences - (872)
------------------ ----------------
(Decrease)/increase in shareholders' funds (114,645) 226,821
Shareholders' funds/(deficit) at 1 January 203,090 (23,731)
------------------ ----------------
Shareholders' funds at 31 December 88,445 203,090
================== ================
12
Notes
1. Segmental reporting
Turnover:
3 months ended 12 months ended
31 December 31 December
2001 2000 2001 2000
(unaudited) (unaudited) (unaudited) (audited)
(pound)'000 (pound)'000 (pound)'000 (pound)'000
UK & Ireland 49,903 56,926 215,188 188,862
Rest of Europe 36,429 35,647 151,879 118,933
Americas 27,508 32,820 124,096 94,296
Rest of World 7,831 8,108 33,459 27,109
----------------- --------------- ---------------- ---------------
121,671 133,501 524,622 429,200
----------------- --------------- ---------------- ---------------
Total Group 118,685 130,151 512,633 421,125
Total joint ventures 2,986 3,350 11,989 8,075
(Loss)/profit before interest and tax:
3 months ended 12 months ended
31 December 31 December
2001 2000 2001 2000
(unaudited) (unaudited) (unaudited) (audited)
(pound)'000 (pound)'000 (pound)'000 (pound)'000
UK & Ireland (1,668) 12,534 32,413 33,720
Rest of Europe 5,067 (465) (7,712) 1,133
Americas (1,680) (3,282) (58,289) (16,262)
Rest of World 3,522 (5,217) (1,221) (11,789)
Other office costs (17,233) (4,069) (74,718) (3,896)
----------------- --------------- ---------------- ---------------
(11,992) (499) (109,527) 2,906
----------------- --------------- ---------------- ---------------
Total Group (10,235) (379) (103,955) 3,933
Total joint ventures (1,757) (120) (5,572) (1,027)
13
2. Exceptional charges
Included in the results for the twelve months ended 31 December 2001 are
exceptional charges totaling (pound)90.5 million of which (pound)3.2 million had
been recognised in the six months ended 30 June 2001. The charges relate to fees
in respect of the aborted merger with HQ Global Workplaces ((pound)3.3m);
write-down of investment in own shares ((pound)32.6m); write-down of software
assets ((pound)4.6m); non-recoverable Ryder Cup expenditure ((pound)2.3m);
restructuring and redundancy costs ((pound)5.4m); write down of acquisition
goodwill ((pound)4.9m); costs associated with reducing workstation capacity
((pound)37.4m).
3. (Loss)/profit per share
Loss per share after exceptional items is based upon losses for the three months
ended 31 December 2001 and 2000 of (pound)(6,935,000) and (pound)(3,186,000)
respectively. (Loss)/profit per share before exceptional items is based on
losses for the three months ended 31 December 2001 of (pound)(6,602,000) and
profits for the three months ended 31 December 2000 of (pound)4,807,000. Losses
per share are calculated using the following weighted average numbers of shares:
3 months ended 12 months ended
31 December 31 December
2001 2000 2001 2000
000's 000's 000's 000's
Ordinary shares
- - basic 563,983 548,255 563,528 497,889
Ordinary shares
- - fully diluted 563,983 562,875 563,528 497,889
4. (a) Reconciliation of operating profit to net cash inflow from operating
activities
12 months 12 months
ended ended
31 Dec 01 31 Dec 00
(unaudited) (audited)
(pound)'000 (pound)'000
Continuing operations
Operating (loss)/profit (103,955) 3,933
Depreciation charge 63,887 40,546
Goodwill amortisation 196 -
(Profit)/Loss on disposal of fixed assets (32) 1,520
Impairment of goodwill 4,916 -
Impairment of fixed assets 12,166 -
Impairment of investment in own shares 41,395 -
Increase in provisions 28,165 -
Increase in stocks (109) (33)
Decrease/(increase) in debtors 17,208 (58,228)
(Decrease)/increase in creditors (19,841) 130,161
---------------- -----------------
Net cash inflow from continuing operations 43,996 117,899
================ =================
The cash inflow for 2001 includes a (pound)12.1 million outflow relating to the
exceptional item charged during the year (note 2).
14
4. (b) Financing and management of liquid resources
12 months 12 months
ended ended
31 Dec 01 31 Dec 00
(unaudited) (audited)
(pound)'000 (pound)'000
Management of liquid resources
New cash deposits (50,981) (95,897)
Repayment of cash deposits 96,624 17,185
-------------- ---------------
45,643 (78,712)
============== ===============
Financing
New loans 42,180 13,945
Repayment of loans (4,566) (116,325)
Payment of principal under finance leases (16,793) (14,702)
Funding from minority interest - -
Issue of equity shares 1,985 253,756
Issue costs (92) (17,908)
-------------- ---------------
22,714 118,766
============== ===============
4. (c) Reconciliation of net cash flow to movement in net funds/(borrowings)
12 months 12 months
ended ended
31 Dec 01 31 Dec 00
(unaudited) (audited)
(pound)'000 (pound)'000
(Decrease)/increase in cash in the period (7,569) 15,865
Cash (inflow)/outflow from change in borrowings and finance leases (20,821) 117,082
Cash (inflow)/outflow from change in liquid resources (45,643) 78,712
-------------- ---------------
Change in net funds/borrowings from cash flows (74,033) 211,659
Acquisitions (783) -
Other non-cash items:
New finance leases (22,901) (23,574)
Translation difference (1,267) 1,830
-------------- ---------------
Movement in net funds/borrowings in the period (98,984) 189,915
Net funds/(borrowings) at 1 January 130,013 (59,902)
-------------- ---------------
Net funds at 31 December 31,029 130,013
============== ===============
15
4. (d) Analysis of changes in net funds
At 31
At Non-cash Exchange Dec
1 Jan 2001 Cashflow Acquisitions changes movement 2001
(pound)'000 (pound)'000 (pound)'000 (pound)'000 (pound)'000 (pound)'000
Cash at the bank and in hand 31,432 (5,983) - - (1,202) 24,247
Overdrafts (1,203) (1,586) - - 8 (2,781)
------------- ------------ ----------- ------------- -------------- ------------
30,229 (7,569) - - (1,194) 21,466
Debt due after 1 year (1,487) 91 - 36 29 (1,330)
Debt due within 1 year (5,354) (37,705) (783) (83) (35) (43,961)
Finance leases due after 1 year (21,150) 11,430 - (13,235) (109) (23,064)
Finance leases due within 1 year (10,614) 5,363 - (9,619) (39) (14,909)
------------- ------------ ----------- ------------- -------------- ------------
(38,605) (20,821) (783) (22,901) (154) (83,264)
Liquid resources 138,389 (45,643) - - 81 92,827
------------- ------------ ----------- ------------- -------------- ------------
130,013 (74,033) (783) (22,901) (1,267) 31,029
============= ============ =========== ============= ============== ============
Liquid Resources at 31 December 2001 include cash held on deposit of which
(pound)3.2 million (December 2000: (pound)5.5 million) relates to collateral
against bank loans and (pound)28.4 million (December 2000: (pound)35.4 million)
relates to deposits which are held by banks as security for the issuance of bank
guarantees to support lease commitments by Regus operating companies. These
amounts are blocked and are not available for use by the business.
Non-cash changes comprise new finance leases and reclassifications between
categories.
16
4. (e) Consolidated cash flow statement for the three months ended 31
December 2001
3 months
ended
31 Dec 01
(unaudited)
(pound)'000
Cash inflow/(outflow) from continuing operating activities
Net cash inflow before exceptional items 5,055
Outflow related to exceptional items (4,726)
------------
Net cash inflow from continuing operating activities 329
------------
Returns on investments and servicing of finance
Interest received 288
Interest paid (9)
Interest paid on finance leases (862)
------------
(583)
------------
Taxation
Tax refund 2,711
------------
2,711
------------
Capital expenditure and financial investment
Purchase of tangible fixed assets (4,527)
Sale of owned tangible fixed assets 2,997
Sale of leased tangible fixed assets 38
Purchase of investments (26)
Purchase of own shares
------------
(1,518)
------------
Acquisitions and disposals
Investments in joint ventures (1,000)
------------
(1,000)
------------
Cash outflow before management of liquid resources
and financing (61)
Management of liquid resources (35,660)
Financing 35,809
------------
Increase in cash in the period 88
============
17
5. US GAAP reconciliation
The following is a summary of the adjustments to net (loss)/profit and
shareholders funds in accordance with US GAAP:
Net loss:
Three months ended 31
December
2001 2000
(unaudited) (audited)
(pound)'000 (pound)'000
Net loss reported in accordance with UK GAAP (6,935) (3,186)
US GAAP adjustments:
Franchise revenue recognition (682) -
Compensation expense related to other variable plan options (966) 6,242
Provision for closure costs (2,213) -
Deferred taxes 4,568 (2,505)
--------------- ---------------
Net (loss)/profit in accordance with US GAAP (6,228) 551
--------------- ---------------
Shareholders' funds:
As at As at
31 Dec 31 Dec
2001 2000
(unaudited) (audited)
(pound)'000 (pound)'000
Shareholders' funds in accordance with UK GAAP 88,445 203,090
US GAAP adjustments
Franchise revenue recognition (682) -
Compensation expense related to other variable plan options 595 10,778
Provision for closure costs 27,446 -
Deferred taxes 7,341 1,902
Employee share trust (investment in own shares) (47,021) (47,021)
--------------- ----------------
Shareholders' funds in accordance with US GAAP 76,124 168,749
--------------- ----------------
6. Auditor's statement
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 December 2001 or 2000. The financial
information for 2000 is derived from the statutory accounts for 2000 which have
been delivered to the registrar of companies. The auditor's have reported on the
2000 accounts; their report was unqualified and did not contain a statement
under section 237(2) or (3) of the Companies Act 1985. The statutory accounts
for 2001 will be finalised on the basis of the financial information presented
by the Directors in this preliminary announcement and will be delivered to the
registrar of companies following the Company's annual general meeting.
18
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the United
States Private Securities Litigation Reform Act of 1995. The U.S. Private
Securities Litigation Reform Act of 1995 provides a "safe harbor" for
forward-looking statements. This Form 6-K may contain certain forward-looking
statements. Actual operational and financial results may differ materially from
the Company's expectations contained in the forward-looking statements as a
result of various factors, many of which are beyond the control of the Company.
These factors include: the impact of heightened competition, changes in the
Company's strategic alliances, a decline in the US or world economy, acceptance
of and demand for serviced offices, changes in the structure of the property
industry, changes in work practices, changes in exchange rates, changes in the
political, regulatory or fiscal regime in Regus's area of activity and general
economic conditions in the countries in which Regus operates. For a discussion
of these and other factors which may have a material impact upon Regus's
financial condition, results of operation and liquidity, see "Risk Factors" and
"Operating Results" of the Company's Annual Report on Form 20-F.