CHERTSEY, U.K., Nov. 6, 2002 (PRIMEZONE) -- Regus plc (LSE:RGU) (Nasdaq:REGS), the global serviced office provider) announces its results for the three months ended September 30, 2002.
Announcing the results, Chairman John Matthews commented: "Revenues have been stable for three consecutive quarters and our cost base is firmly under control. Our forward order book remains strong. By January 1, 2003, we expect to have contracted half of next year's budgeted workstation revenues. Nonetheless, these remain difficult times for the business services sector."
Key financials:
3 months ended 9 months ended
30 Sept 30 Sept 30 Sept 30 Sept
2002 2001 2002 2001
m Pound m Pound m Pound m Pound
Turnover 109.3 123.1 -11.2% 329.4 393.9 -16.4%
Centre
Contribution(a) 4.9 11.2 -56.2% 17.9 68.4 -73.8%
Operating (loss)(a) (13.1) (10.6) -2.5m (32.3) (7.3) -25m
Exceptional Item (0.9) (87.0) (0.9) (90.2)
Operating (loss) (14.0) (97.6) 83.6m (33.2) (97.5) 64.3m
EPS (basic & (2.9) (2.8) -0.1p (7.4) (4.0) -3.4p
diluted)(p)(a)
EPADS (basic & (22.6) (20.3) -2.3c (55.4) (29.0) -26.4c
diluted)(c)(b)
Average Pound:$ 1.56 1.45 1.49 1.44
(a) before exceptional
(b) based on U.K. GAAP
Operational
-- Regus operates 419 centres in more than 240 cities in 52
countries. We are the world's largest operator of business
centres.
-- Regus now has the highest number of occupied workstations in its
history with more than 57,750 customers using our centres on a
daily basis. The average number of occupied workstations in the
third quarter was up 18% on the same quarter in 2001.
Financial
-- Turnover at 109.3 million Pounds for the quarter was down 11.2% on
the third quarter of 2001 but flat compared with the second
quarter of 2002.
-- Revenue per available workstation (REVPAW) from established
centres was 1,335 pounds (2001: 1,765 pounds), down 2% on the
second quarter.
-- At 122 million pounds, costs, fixed and variable, were 3% higher
on the previous quarter.
-- Cash at bank totaled 66.9 million pounds at September 30, 2002 of
which 35.4 million pounds was free cash.
-- Although net cash increased to 20.7 million pounds at September 30
(June 30: 3.3 million pounds), cash generation remains the Board's
priority.
-- Capital expenditure in the third quarter was 2.6 million pounds,
in line with expectations.
-- There were contracted forward orders of 275 million pounds at
September 30, 2002 (based on workstation revenue but excluding
service revenue).
THE "SAFE HARBOR" STATEMENT UNDER THE US PRIVATE SECURITIES REFORMACT OF 1995
This press release contains statements concerning the Group's business, financial condition, results of operations and certain of the Group's plans, objectives, assumptions, projections, expectations or beliefs with respect to these items. These statements are intended as forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, without limitation, those concerning: the Group's future cash flow position, the Group's cost reduction programme, expectations regarding sales, trading profit and growth, the Group's possible or assumed future results of operations and/or those of the Group's associates and joint ventures, capital expenditure, adequacy of capital and liquidity, financing plans, and those preceded by, followed by, or that include the words "believe," "expect," "intend," "plan," "anticipate" or similar expressions.
The Company cautions that any forward-looking statements in this press release may and often do vary from actual results and the differences between these statements and actual results can be material. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only at their respective dates. The Company undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this press release, including, without limitation, changes in the Company's business or acquisition strategy or planned capital expenditures, or to reflect the occurrence of unanticipated events.
By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward looking statements. These factors include, among other things, the nature of the serviced office market, the long-term nature of the Company's lease commitments, its financing requirements, foreign exchange, risks of litigation, and other risks and uncertainties described in the Company's filings with the Securities and Exchange Commission.
You should read the Company's Annual Report on Form 20-F, which is available without charge at the internet site of the Securities and Exchange Commission (http://www.sec.gov), for more information regarding factors that could cause actual results and developments to differ from those expressed or implied by the forward-looking statements in this document.
Results of operations
Review of third quarter 2002
The following table sets forth the Group's revenue, centrecontribution and workstations (i.e. weighted average number ofavailable workstations) by geographic region and by establishedcentres compared with new centres:
(in millions pounds, except workstations)
2002 2001
Centre(3) Centre(3)
Revenue Contri- Work- Revenue Contri- Work-
bution stations bution stations
(re-based)(1)
U.K. &
Ireland 44.0 7.6 27,168 49.5 11.3 26,422
Rest of
Europe 35.6 1.6 31,523 37.1 3.9 28,134
Americas 22.1 (5.0) 23,956 27.9 (4.7) 23,148
Rest of
World 7.6 0.7 5,845 8.6 0.7 5,630
109.3 4.9 88,492 123.1 11.2 83,334
Established
Centres(2) 88.7 8.1 66,452 88.1 16.7 49,905
New centres
20.6 (3.2) 22,040 35.0 (5.5) 33,429
109.3 4.9 88,492 123.1 11.2 83,334
(1) At January 1, 2002 a complete review of workstation capacity was
carried out. The number of workstations in our centres increased
by 1,890 and the 2001 comparatives have been updated from those
previously reported to reflect the re-basing exercise.
(2) 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.
(3) Before exceptional items
Revenue
Regus' revenue on a global basis was 109.3 million pounds in the third quarter 2002 (123.1 million pounds in the third quarter 2001). The weighted average number of available workstations increased 6.2% to 88,492 from 83,334 (re-based) over the same period. In the third quarter 2002, Regus opened three new centres and eight centres were closed.
Revenue from established centres was 88.7 million pounds in the third quarter 2002 (2001: 88.1 million pounds). Revenue per workstation in Regus' established centres was 1,335 pounds (2001: 1,765 pounds) reflecting the impact of the new pricing model. Revenue from new centres was 20.6 million pounds (2001: 35.0 million pounds). Revenue per workstation in Regus' new centres was 935 pounds (2001: 1,047 pounds).
Revenue in the U.K. and Ireland was 44 million pounds (2001: 49.5 million pounds). Revenue per workstation was 1,620 pounds (2001: 1,873 pounds).
Revenue in the Rest of Europe was 35.6 million pounds (2001: 37.1 pounds million). Revenue per workstation was 1,129 pounds (2001: 1,319 pounds). In the third quarter 2002, two new centres were opened and four centres were closed.
Revenue in the Americas was 22.1 million pounds (2001: 27.9 million pounds). Revenue per workstation was 923 pounds (2001: 1,205 pounds). Regus opened one new centre in the quarter and closed two centres.
Revenue in the Rest of the World was 7.6 million pounds (2001: 8.6 pounds million). Revenue per workstation was 1,300 pounds (2001: 1,528 pounds). Two centres were closed in the quarter.
Centre contribution
Centre contribution on a global basis was 4.9 million pounds in the third quarter 2002 (2001: 11.2 million pounds). Centre contribution from established centres was 8.1 million pounds (2001: 16.7 million pounds) with a centre contribution margin in established centres of 9% (2001: 19%). Centre contribution from new centres improved to a negative 3.2 pounds million (2001: negative 5.5 million pounds).
Centre contribution in the U.K. and Ireland was 7.6 million pounds (2001: 11.3 million pounds). Centre contribution margin was 17% in the third quarter (2001: 23%).
In the Rest of Europe, centre contribution was 1.6 million pounds (2001: 3.9 million pounds). Centre contribution margin in the Rest of Europe was 4% in the third quarter (2001: 11%).
Centre contribution from the Americas was a negative 5 million pounds,compared with a negative 4.7 million pounds in 2001.
Centre contribution in the Rest of the World was 0.7 million pounds (2001: 0.7 million pounds) Centre contribution margin in the Rest of the World was 9% in the third quarter (2001: 8%).
Administrative expenses
Administrative expenses including goodwill amortisation decreased 20% to 16.3 million pounds (2001: 20.4 million pounds) due to the effects of the cost reduction programme. Overall, administrative expenses fell to 15% as a percentage of revenues compared to 17% in the third quarter of 2001, before exceptional items. Sales and marketing costs decreased 4% to 8.7 million pounds (2001: 9.1 million pounds), but increased as a percentage of revenue to 8% (2001: 7%) due to increased marketing activity including newspaper inserts and sponsorship of the Ryder cup. Regional and central overheads decreased to 7.5 million pounds (2001: 11.3 million pounds) and decreased as a percentage of revenue to 7% (2001: 9%).
Liquidity and capital resources
Cash at bank and in hand at September 30, 2002 was 66.9 million pounds of which 35.4 million pounds was free cash. This compares with cash at bank at June 30, 2002 of 65.4 million pounds of which 28.8 million pounds was free cash.
Total indebtedness at September 30, 2002 was 18.3 million pounds, which included 12.0 million pounds in respect of the convertible debentures issued in December 2001. The Group also had outstanding finance lease obligations of 28.0 million pounds, of which 11.6 pounds million is due within one year. Total indebtedness at June 30, 2002 was 30.9 million pounds, including 24.0 million pounds in respect of the convertible debentures.
Cash inflow from operating activities in the nine months ended September 30, 2002 was 6.6 million pounds, with working capital management contributing 4.8 million pounds. The net working capital inflow in the three months was 23.7 million pounds and comprised a reduction in debtors of 18.0 million pounds and an increase in creditors of 5.7 million pounds. Working capital in the quarter benefited from the closing out of a currency hedge in respect of short-term intra-group loans and an improvement in collections performance of 9.6 million pounds and 7.3 million pounds respectively. In addition, the closure of the hedge together with other initiatives, resulted in the release of 5.1 million pounds from blocked cash to free cash. Lastly, in the quarter, an insurance receipt of 3.8 million pounds was received in respect of the World Trade Center, New York.
Net cash outflow before management of liquid resources and financing for the nine months was 9.7 million pounds after paying tax of 3.0 pounds million, interest (net) of 2.0 million pounds and capital expenditure of 11.5 million pounds.
By the end of September, the Group had made seven of ten equal monthly repayments of 4 million pounds against the 5 per cent unsecured, senior convertible debentures issued in December 2001. Since the quarter-end, further repayments of 4 million pounds each have been made in October and November.
Net cash (cash at bank less total indebtedness and finance leases)increased from 3.3 million pounds at June 30, 2002 to 20.7 million pounds at September 30, 2002.
Notwithstanding the improvement in liquidity in the third quarter, cash generation remains the Board's priority. Accordingly, the Board continues actively to pursue means of improving the Group's liquidity including, but not limited to, continued cost reduction programmes and the sale of non-core assets.
Listing on NASDAQ
In view of the relatively small number of American Depositary Shares (ADSs) outstanding and the low levels of trading volumes on the NASDAQ National Market in the United States, we have decided to voluntarily delist our ADSs (Nasdaq:REGS) from NASDAQ. The Company's listing on the London Stock Exchange, as well as the Company's registration with the U.S. Securities and Exchange Commission, will be unaffected by this move. As a result of the voluntary delisting, the Company's ADSs will be eligible for quotation in the over-the-counter (OTC) market in the United States. The Company has sent a letter to NASDAQ requesting that the Company's ADSs be delisted from the NASDAQ National Market as of the close of business on November 7, 2002.
Quarterly reporting
In line with the proposed de-listing on NASDAQ and with a view to further cost reductions, we have decided to revert to a semi-annual reporting format with effect from next year. The change in reporting format is in accordance with all applicable U.K. and U.S. securities laws and the requirements of the London Stock Exchange.
To view this release in its entirety, including financial tables, please click the link: http://reports.huginonline.com/880518/110026.pdf