RGU.L Regulatory News (RGU)

30 Oct 2012 07:00

Regus plc, the world's largest provider of flexible workspaces, today announces an update on trading for the three months ended 30 September 2012.

Regus' financial performance in the third quarter of 2012 was in line with management expectations. Group turnover in the period increased by 7.6% at constant currency to £307.3m compared with £293.5m in the corresponding period last year (an increase of 4.7% at actual rates). Group turnover for the nine months ended 30 September 2012 increased by 8.4% at constant currency to £916.0m compared with £859.0m for the same period last year (6.6% at actual rates).

In response to growing structural demand for more flexible and mobile working we remain focused on expanding our global and national networks. Principally we are adding new countries, new cities and new neighbourhoods where we have not been previously represented.

Looking forward to the full year, we had previously anticipated 200 new centre additions during 2012. We are pleased to update that we now plan to add 230 - 250 new centres. These incremental additions will have a small impact on this year's Group profitability as we absorb incremental opening costs and some initial start-up losses, but will contribute to cash flows and profitability in future years.

As at 30 September 2012 the Group had a total of 1,306 centres. The total number of workstations (including non-consolidated) increased to 219,203 as at 30 September 2012 (212,995 workstations as at 30 June 2012)¹.

The three distinct but interlinked parts of our business - Mature, New and Third Place - all continue to make good progress.

Mature performance remains strong

The performance of our mature business, which makes up over 80% of our global portfolio of centres, remains strong. Revenues for these centres (which were opened on or before 31 December 2010) were £277.1m in the three months to 30 September 2012, an increase of 1.1% at constant currency (down 1.6% at actual exchange rates). This like-for-like increase builds on the strong performance seen since the second half of 2011, reflecting continued high levels of occupancy, as well as growth in Revenue Per Occupied Workstation (REVPOW). In the quarter REVPOW improved to £1,910, an increase of 2.6% (up £49) at constant currency rates and down 0.1% (down £3) at actual rates.

The strong cash flow characteristics of our mature business continued in the third quarter. Overall, this performance continues to demonstrate the underlying strength of our business and the result of our strategy to drive mature revenues.

New Centres programme

We added 45 centres in the third quarter of 2012, bringing the total new centres so far this year to 121 compared with 81 at the same point last year. Accordingly, we now have 260 new centres (centres opened on or after 1 January 2011). In total, these centres contributed £29.9m to revenue in the three months ended 30 September 2012, compared with £7.2m in the corresponding period last year and, most importantly, they continue to develop as planned.

We anticipate a significant number of new openings in the final quarter (consistent with the opening profile of previous years), as well as the completion of a number of bolt-on acquisitions. Accordingly, as described above, we now expect to add 230 - 250 new centres in 2012, ahead of our original target of 200 new centres.

Third Place maintains early momentum

We also continue to develop our Third Place programme, signing a new deal in the quarter with SBB railways in Switzerland, adding five further locations to the Dutch rail network (taking the total to nine), and opening the first of three locations with Extra Motorway Services Group in the UK. The pipeline of opportunities continues to be strong.

Strong financial position

The Group's underlying cash flow from its mature business remains strong, allowing us to invest a further £30m in our growth programme in the three months ended 30 September 2012. This takes the total capital expenditure investment in growth since January 2012 to £94m. As a result, our net cash position decreased by £13m in the quarter to £140m at 30 September 2012. This continued strong net cash position is in line with our expectations. The incremental centre additions highlighted above will reduce the Group year end cash position compared with previous expectations.

Summary

In the face of ongoing challenging market conditions, our business has demonstrated continued resilience as more companies adopt flexible working. We enjoyed a number of notable Enterprise wins among important new customers, who are looking to use Regus for more flexible and mobile working solutions for their workforces - a trend that we are seeing across the world. We remain confident in the performance of our mature business and our new centres, as well as our plan to invest in further growth to achieve our target of 2,000 centres by end 2014. As always, however, we are ready to scale back our growth plans if macro-economic conditions dictate that it would be prudent to do so.

For the remainder of 2012, we remain confident that the Group's mature centres will deliver a result in line with our expectations, continuing to demonstrate the underlying strength of the business. As described above, the Group's statutory results for 2012 will be impacted by the extra 30-50 new centre additions, compared with previous market expectations, but will benefit Group results in the future, as they mature.

Conference call details

Regus will be hosting a call for analysts and investors at 08.30am GMT this morning. If you wish to participate please contact regus@brunswickgroup.com.

¹ Consolidated workstations as at 30 September 2012 were 208,948 (30 June 2012: 203,080 workstations)

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This interim management statement contains certain forward looking statements with respect to the operations of Regus. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that may or may not occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements and forecasts. Nothing in this announcement should be construed as a profit forecast.

About Regus

Regus is the world's largest provider of flexible workplaces, with products and services ranging from fully equipped offices to professional meeting rooms, business lounges and the world's largest network of video communication studios. Regus enables people to work their way, whether it's from home, on the road or from an office. Customers such as Google, GlaxoSmithKline, and Nokia join hundreds of thousands of growing small and medium businesses that benefit from outsourcing their office and workplace needs to Regus, allowing them to focus on their core activities.

More than a million customers a day benefit from Regus facilities spread across a global footprint of 1,300 locations in 550 cities and 97 countries, which allow individuals and companies to work wherever, however and whenever they want to. Regus was founded in Brussels, Belgium in 1989, is headquartered in Luxembourg and listed on the London Stock Exchange.

For more information please visit: www.regus.com

Copyright Business Wire 2012