Regus Group Plc Annual Report 2012

FY2012 Annual Report · Regus Group Plc
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Regus plc Annual Report and Accounts 2012

Enabling the 
future of work

The world’s largest provider 
of ﬂ exible workplaces

Regus is the major player in the fast developing industry 
of ﬂ exible work provision – the platform of choice from 
which businesses of all sizes operate. 

Over a million customers a day beneﬁ t from our locations 
spread across almost 100 countries. With our ever 
expanding range of innovative products and services 
we enable people to work their way, whether it’s from 
home, on the road or from an ofﬁ ce.

Inside this report

Directors’ report: 
Business review

Regus is a well-managed, established 
business operating in a growing market. 
It continues to perform well and produce 
strong shareholder returns. The structural 
shift to ﬂ exible work presents the Group 
with signiﬁ cant opportunities for continued 
proﬁ table growth.

Directors’ report: 
Corporate governance

The Board is committed to the high 
standards of corporate governance as set 
out in the UK Corporate Governance Code. 

Financial statements

This section of the Report contains statutory 
ﬁ nancial information for the year ended 
31 December 2012.

Our business and 2012 performance 
Our market; our opportunity 
Why customers choose Regus 
Chairman’s statement 
Our strategy 
Chief Executive’s review 
Implementing the strategy  
Chief Financial Ofﬁ cer’s review 
Corporate responsibility 

Board of directors 
Other statutory information 
Corporate governance 
Directors’ statements 
Remuneration report 
Auditors’ report 

Consolidated income statement 
Consolidated statement of 
comprehensive income 
Consolidated statement of 
changes in equity 
Consolidated balance sheet 
Consolidated statement of cash ﬂ ows 
Notes to the accounts 
Parent company accounts 

Shareholder and 
other information

This section contains information 
for shareholders, including contacts 
and glossary.

Segmental analysis 
Five year summary 
Shareholder information 

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Visit us online at www.regus.com/investors

www.regus.com/investors 1

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S

 
 
 
 
Our business

Regus is a well-managed, established business operating 
in a growing market. It continues to perform well and 
produce strong shareholder returns. 

243 

new locations 
in 2012

£175.3m

invested in growth

99 

countries now 
included in 
the network 

37%

increase in 
membership up 
to more than 1.3m

5

countries now
covered by 
Third Place 

The Regus connected network of more 
than 1,400 locations, across almost 100 
countries, gives businesses, large and 
small, the high quality environments they 
need to do business: from city centre, urban 
and suburban to business parks and travel 
hubs. Our workspaces provide people with 
a convenient, high-quality, fully resourced 
space to work, whether they need it for a 
few minutes or a few years; giving them 
what they need, when they need it. 

Businesses come to Regus because we 
help them work more productively and more 
effectively; increasingly we are helping them 
deal with the challenges and opportunities 
presented by the structural shift to ﬂ exible 
working. This mega trend sees businesses 
turning more of their employees into mobile 
workers. There are currently more than 
a billion mobile workers worldwide and 
the proliferation of smartphones, tablets, 
laptops and cloud-based systems means 
that this number will only increase. 

Yet too many businesses are ﬁ nding growth 
in this new mobile world of business too 
difﬁ cult; technology and equipment aren’t 
enough to make people more productive. 
Making a ﬂ exible and mobile business work 
well is hard, which is why Regus exists. 

Regus pioneered ﬂ exible workspaces more 
than 20 years ago and we now lead the 
world in helping businesses make mobility 
work for them.

We are part of the future of modern mobile 
working. We enable businesses to be ﬂ exible 
about where they do business, where their 
people work from and how they reduce 
costs. Regus puts companies in control 
of how and where they work, allowing them 
to be more productive but ensuring they 
only pay for workspace when and where 
they need it. In doing so we have built a 
respected, proﬁ table, world class business 
which is set for further growth and success.

To achieve our ambitions we organise 
our business into three distinct but 
interlinked segments:-

•  A well-established and consistently high 
performing Mature Centres business. 
Cash generation is strong and continues 
to demonstrate robust year-on-year 
improvements. This part of our business 
is actively managed to achieve high 
margin returns;

•  A fast growing New Centres business 
which is closely managed to deliver 
ﬁ nancial maturity as quickly as possible, 
delivering cash and proﬁ ts in line with 
the rest of the mature estate. These new 
centres then join the mature ones within 
two years of opening thereby driving 
growth in that business; and

•  Third Place locations creating new 

avenues for growth. We continue to 
experience strong end user demand 
to place our facilities within third party 
networks such as motorway service 
stations, railway stations and retail 
outlets. What these locations share is an 
increased use by mobile workers making 
it a natural ﬁ t with our capabilities. Whilst 
early in its development, this opportunity 
is exciting and has signiﬁ cant potential. 

Growth in our mature estate, achieved 
through the maturing of new centres, 
generates the returns which enable us 
to re-invest to drive further proﬁ table 
growth. At the same time, the larger 
we become, the greater our economies 
of scale. The result is that increased 
revenues and lower unit costs combine 
to drive stronger shareholder returns. 

2 Regus plc Annual Report and Accounts 2012

Our 2012 performance at a glance

Strong, sustained and proﬁ table results across all areas 
of our business.

Key highlights

• Group revenue growth of 9.2%, Mature like-for-like 
revenue growth of 2.9%, both at constant currency

• Mature operating profit up 65% to £170.5m with 
a mature operating margin improvement to 15.2%

• Group operating profit increased 66% to £90.2m 

(2011: £54.5m) 

• Net cash of £120.0m at year end

• Full year dividend increased 10% to 3.2p (2011: 2.9p)

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Number of centres split mature and new

Mature operating proﬁt

Mature operating margin

1,411

£170.5m

15.2%

382

1,029

255

948

164

920

220

758

128
855

167.5

170.5

19.1

96.6

106.8

63.7

15.2

10.2

10.3

6.5

08

09

10

11

12

08

09

10

11*

12

08

09

10

11*

12

Mature free cash ﬂow

£144.3m

Mature notional earnings per share

Net investment in growth

14.0p

£175.3m

144.3

14.1

14.0

175.3

137.6

117.1

70.3

55.1

8.1

8.6

5.4

86.4

71.4

26.2

08

18.2

09

10

11*

12

08

09

10

11*

12

08

09

10

11*

12

Mature

New

*  These ﬁ gures are prepared on a consistent basis, i.e. the Mature Centre business adjusted results for 2012 reﬂ ect only the performance of centres that were open 

on or before 31 December 2010. 2011 Mature Centres are those that were open on or before 31 December 2009.

www.regus.com/investors 3

 
Our market; our opportunity

The structural shift to ﬂ exible work presents the 
Group with signiﬁ cant opportunities for continued 
proﬁ table growth.

How and where people work is being 
inﬂ uenced by a wide variety of factors, 
including, but not limited to, technological 
advancements, globalisation and changing 
workforce dynamics. Add to that an era 
of corporate belt-tightening and economic 
volatility and the task of structuring an 
effective and productive work environment 
becomes even more complex. How a 
business, irrespective of its size, goes about 
organising itself to work will determine proﬁ t 
or loss, expansion or contraction, success 
or failure. 

The mainstreaming of mobile technology, 
smartphones and tablets, has made work 
something one does rather than a place to 
go. No longer tethered to a ﬁ xed location, 
customers and prospects, partners and 
suppliers, advisers and colleagues are 
geographically dispersed. As a result, heavy 
reliability on virtual interactions from home, 
on the road or at third party locations, 
diminishes the role of long-term ﬁ xed 
ofﬁ ce space. Various studies estimate that 
there are some 1.3bn mobile workers.

The simple fact is that the traditional 
approach to corporate real estate is unable 
to deal with the challenges and signiﬁ cant 
opportunities which the shift to ﬂ exible 
work is creating. As a result, the mismatch 
between these new ways of working and 
traditional corporate real estate is causing 
excessive waste for businesses – at a time 
when they can ill afford it. In some cases 
as much as 90% of the costs of providing 
workspace within a business are currently 
wasted. 

The more time workers spend away from 
their company-owned ofﬁ ces, the more 
money a company wastes on unused 
space, energy and technology. Regus is 
beneﬁ ting from a desire of organisations 
of all sizes and from all sectors to divest 
corporate real estate and provide workers 
with anytime, anywhere, pay-as-you-go, 
high-quality touchdown space. 

This structural shift to ﬂ exible work presents 
the Group with signiﬁ cant opportunities 
for continued proﬁ table growth. The larger 
and deeper our network becomes, the more 
attractive our proposition is and the greater 
our ability to capitalise fully as this new 
market grows and matures.

Work today

3.1bn

Workers in the world

12.8bn

Hours wasted annually by 
US commuters

4 Regus plc Annual Report and Accounts 2012

1.3bn

Mobile workers

66%

Of workers would consider a 
paycut for more ﬂ exible work 
conditions

72%

Of workers say ﬂ exible working 
makes them more productive

90%

Potential cost saving from 
ﬂ exible vs ﬁ xed work

“ Flexible working both meets 
the needs of employees and 
improves companies’ capacity 
to serve customers…and, 
in doing so, it secures 
competitive advantage.”

BT: Flexible working – can your company 
compete without it?

“ There are strong 
indications that 
employers can improve 
the productivity of their 
employees by allowing 
them to work ﬂ exibly.”

Microsoft: Attitudes to 
ﬂ exible working

ssor

this picture.

“ The best available evidence suggests 
that encouraging more ﬁ rms to 
consider adopting ﬂ exible practices 
can potentially boost productivity, 
improve morale, and beneﬁ t the U.S. 
economy…it is critical for the 21st 
century U.S. workplace to be organised 
for the 21st century workforce.”

USA: Executive ofﬁ ce of the President, Council of 
Economic Advisers – work-life balance and the 
economics of workplace ﬂ exibility

QuickTime™ and a
are needed to see this picture.
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“ ...companies should seriously 
consider expanding the 
use of these [ﬂ exible work] 
practices as numerous 
beneﬁ ts exist for the 
company, the employee 
and the larger community.”

School of Management Sciences, 
Pretoria, South Africa: Flexible work 
practices – an effective instrument in 
the retention of talent

“ [For employers] ﬂ exible working 
can help retain staff, widen the 
[available] talent pool…increase 
commitment and loyalty of staff 
members. This can in turn translate 
into improved productivity and by 
extension improved proﬁ tability.”

UK Department for Work and 
Pensions Taskforce

“ Workplace ﬂ exibility is believed to have 
an overwhelmingly positive effect on 
engagement, motivation and satisfaction. 
Seven to eight of every 10 respondents 
believe their workforce would say there 
is a positive or extremely positive effect 
of ﬂ exibility programmes on employee 
engagement (72%), employee motivation 
(71%) and employee satisfaction (82%).”

World of Work: Survey on workplace ﬂ exibility

www.regus.com/investors 5

 
Why customers 
choose Regus

We offer value, scale, great customer service 
and are easy to deal with.

“We chose Regus because 
the range of services allows 
us to concentrate on business 
and growth.”

Matthias Wilberg, Commercial Director, 

Heinz Switzerland

•  Network – anywhere business happens, 
a Regus isn’t far away; be that a central 
business district or a town, a railway 
station or retail outlet, we provide the 
very best places, and locations from 
which people can work, efﬁ ciently and 
effectively. Regardless of who they are or 
what they do, we enable our customers 
to beneﬁ t from and leverage our 
geographic scale, which exceeds most 
of the world’s very largest companies. 
And as our network grows by at least one 
new location a day, our ability to be even 
closer to the customer increases as well.

•  Innovation – our scale means our 

innovation leads the industry and over the 
last 20 years we have become sensitive 
to the precise needs of business. From 
the launch in 2007 of our mobile work 
membership scheme, Businessworld, 
through to our latest innovation, 
DocumentStation, a cloud based printing 
service, we are constantly adding to the 
products and services that customers 
can access ‘Only at Regus’.

Ultimately customers work with us because 
they believe they have a better chance of 
success than if they didn’t. Our job is to 
make sure that we are 100% focused on 
making sure this happens.

Customers come to Regus because they 
want to conduct their business operations 
efﬁ ciently, simply and with minimal hassle. 
They come to us because they need help 
in moving to a more ﬂ exible way of working. 
They come to us because they want to 
focus on their business rather than where 
they run it from. They stay because we are 
far more cost effective than traditional ways 
of working and because we provide an 
excellent service.

We are committed to providing our 
customers with the right workplace at the 
right time, in the right location every time. 
We provide space for just a few minutes to 
many years; space to drop-in and catch up 
on emails between meetings, to a network 
of ﬁ xed locations around the globe. Across 
all sectors and budgets we have shaped 
our products and services to deliver against 
our customers’ needs, when they need it. 
Over the last 23 years we have honed our 
approach so that we are acutely aware of 
the needs of business.

At the heart of our customer offer is 
our team; dedicated, hard-working, 
passionate people who help make sure 
that our customer’s success is our success. 
We make signiﬁ cant investments in training 
and development through our School of 
Excellence programme which equips our 
front-line team members with the right skills 
to ﬂ ourish. As a growing business those that 
are successful often ﬁ nd themselves either 
training and developing new members of 
our team or developing other parts of the 
business; the way we help our people grow 
ensures we attract and retain the very best. 

Aside from our great people, the core of 
our offer to customers is based around 
two principal differentiators – our network 
and our ability to innovate:

1

2

3

4

1  Staples, Reading, UK
2  Extra Motorway Services, Cobham, UK
3  Amersfoort Railway Station, Netherlands
4  Extra Motorway Services, Cobham, UK
5  Laren Community Centre, Netherlands

6 Regus plc Annual Report and Accounts 2012

“Simple, cost effective and 
does not require a long-term 
commitment. Regus makes 
setting up in a new country 
risk and hassle free.”

Wolfgang Gollub, Senior Manager, 
administration – general affairs 
Toshiba Europe GmbH

“The great beneﬁ t of being with 
Regus is it’s so easy to expand. 
Every day they evolve their 
service as they learn more 
about how we do things 
differently at Google.”

Dr Paul Barreto, Country Manager, 

Google Portugal

“We needed instant availability 
on ﬂ exible terms, a prestigious 
location and high quality 
ofﬁ ces that were in keeping 
with our own quality image. 
We looked at a number of 
buildings and providers, but 
nothing came close to Regus.”

Bernard Carey, Director, BMW

5

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www.regus.com/investors 7

 
Chairman’s statement

We are pleased to report another year of strong 
results for Regus, building on our performance 
of the last few years.

Douglas Sutherland
Chairman

Group revenues grew 9.2% at constant 
currency rates to £1,244.1m (2011: 
£1,162.6m), operating proﬁ ts, beneﬁ ting 
in part from disciplined cost management, 
improved by 66% to £90.2m (2011: £54.5m), 
and earnings per share increased from 
4.3p to 7.5p. 

On a like-for-like basis, revenues in our 
Mature business improved by 2.9% at 
constant currency to £1,124.1m (2011: 
£1,114.3m), while operating proﬁ t increased 
by 65% to £170.5m (2011: £103.6m) as 
gross margins increased to 29.0% (2011: 
25.9%). Additionally, our Mature Centres 
continued to be highly cash generative, 
with free cash ﬂ ow (after tax, ﬁ nance costs 
and maintenance capital expenditure) of 
£144.3m, representing a mature free cash 
ﬂ ow yield of 12.8% or 15.3p per share. 

Alongside our focus on Mature Centre 
performance, we continued with our 
strategy to expand Regus’ global network, 
in order to serve the growing demand for 
our products and services. Our strategic 
expansion includes both targeted organic 
growth and carefully selected acquisitions. 
During 2012 we added 243 centres, taking 
us to a year-end total of 1,411. 

Strategy
Regus’ strategy is to serve and proﬁ t from the 
structural shift towards ﬂ exible work by being 
the platform of choice from which business 
operates. The structural shift towards ﬂ exible 
work is taking place on a global scale and 
across all business sectors. The step-up 
of investment in our network in response to 
growing demand for our services will, together 
with continued innovations in product offerings 
and customer service, enable us to maintain 
our market leading position. We continue to 
build our management capabilities in line 
with our growth objectives through the 
development of our people, processes and 
systems, supplemented by the strategic 
hiring of experienced professionals. 
Consistent with management’s priorities, 
execution of our strategy includes continuing 
to improve the proﬁ tability of our mature 
centres, investing for attractive returns and 
growing long-term earnings per share. 

Growth of our Mature business is achieved 
primarily through the maturing of our new 
centres. Our mature centres are highly cash 
generative and this allows us to continue 
to expand through organic growth and 
carefully selected acquisitions, enabling 
us to better serve our existing customers 

Board composition 
and performance 

With a view to the future development of the Group as well as a 
desire to continue to enhance diversity and succession planning for 
Board roles, we plan to increase the size of the Board over time. 
The Nomination Committee has implemented an ongoing programme 
of engagement with highly qualiﬁ ed potential Non-Executive 
Directors of varied backgrounds and gender to support this process. 
A formal external evaluation of the performance of the Board was 
carried out during the year by an independent leadership consultancy 
with experience in conducting such reviews. The external evaluation 
results were reviewed by the Board and are being addressed in 
our efforts to continuously improve the processes and effectiveness 
of the Board. No reportable matters were noted by the evaluation 
and we continue to have full conﬁ dence in the Board’s members 
and processes. 

8 Regus plc Annual Report and Accounts 2012

as well as attract new customers in new 
markets. Based on Regus’ strong ﬁ nancial 
performance, we are conﬁ dent these 
investments will translate into future proﬁ ts. 

Overall, this set of results again reﬂ ects our 
resilient business model and the continued 
success of our growth strategy. The Group 
has again proved itself capable of delivering 
strong and sustainable growth and returns.

Our people
As a growth orientated company, the 
Board is only too aware of how important 
a committed and motivated workforce is to 
us achieving our aspirations. As such, we 
remain focused on maintaining high levels 
of employee engagement, training and 
development. I would like to place on record 
my thanks to all our team members around 
the world for their continued hard work and 
dedication. The strong results we present 
are a testament to their endeavours.

Dividend
Given the strong performance of the 
business, the Board is recommending 
a ﬁ nal dividend of 2.2p. Subject to the 
approval of shareholders at the 2013 
AGM, this will be paid on 31 May 2013 to 
shareholders on the register at the close 
of business on 3 May 2013. This represents 
an increase in the full year dividend of 10% 
to 3.2p (2011: 2.9p).

Douglas Sutherland
Chairman

5 March 2013

Our strategy

Regus aims to serve and proﬁ t from the structural shift to 
ﬂ exible work by being the platform of choice from which 
businesses operate.

Our strategic aims

Our approach

What we did in 2012

Grow mature revenues 
and margin 

Expand our network

Revenue growth achieved primarily through 
addition of maturing new centres, but also 
through incremental new revenue sources. 
Active management of the mature estate 
delivers high occupancy and usage. 
Together with lower relative overheads, 
this improves margins.

2010 new centres matured well with 
no overall dilutive effect on our Mature 
business and delivered a post-tax return 
on gross investment that exceeded 27%. 
Like-for-like revenues were up 2.9% and 
mature REVPOW increased by 2.4%, 
both at constant currency. 

Growth is demand led, though we are 
always mindful of the risk and return with 
each opportunity. We extend our network 
into new markets; both in-country and new 
country, only growing in existing locations 
where we have excessive demand. 

243 new locations added across all 
continents (including openings in ﬁ ve 
new countries) which contributed to a 
17% increase in network reach.

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Accelerate product and 
service innovation

Our scale means we are the only industry 
player that can constantly innovate. Much 
is market led, responding to, as well as 
anticipating, customer needs. Our approach 
to new product development is referred to 
as ‘Only at Regus’.

Major investment into an upgrade of 
our technology infrastructure to support 
new initiatives such as: ten-fold increase 
in bandwidth available to customers; 
launching Voice over IP; new cloud 
printing service.

Maximise the strengths 
of our brand and network

Growth of the network into locations 
nearer where people live and work drives 
awareness and interaction. Continued 
investment in focused, targeted local 
marketing to attract new customers. 

Multiple new channels through 
partnerships with organisations such 
as BMW. Record levels of new customer 
leads. Third Place agreements now in 
place across ﬁ ve countries – UK, France, 
Germany, Netherlands and Switzerland. 

Strengthen management

Make sure we have the right people 
in the right places; empowering local 
management and delegating decision 
making. This provides better intelligence 
and insight as well as faster and more 
appropriate response times.

We now have country managers in place 
for all our countries and at the same time 
have made key strategic hires within our 
Group function. 

Control overheads 

Achieved through operational excellence, 
scale and innovation. As our network grows 
so we achieve signiﬁ cant scale beneﬁ ts and 
operational leverage. Smarter purchasing 
then adds additional beneﬁ t.

Decrease in overheads per centre: 
whilst our network grew by 17.3%, 
overhead costs increased by only 4.1% 
at constant currency. 

www.regus.com/investors 9

 
Chief Executive’s review

A robust performance with improvements 
across the board.

I am delighted to be yet again reporting 
another set of excellent results, made all the 
more satisfying given the challenging macro 
economy. We have increased revenue, 
improved proﬁ t margins and delivered 
strong cash generation. As demand has 
continued to grow, we undertook a 
signiﬁ cant acceleration of new centre 
expansion, with 243 new centres added. 
This contributed to a 17% growth in our 
network, on top of 11% in the prior year. 
As the structural shift to ﬂ exible work 
accelerates, we see signiﬁ cant additional 
opportunities to invest in expanding and 
improving our offer to customers and 
are conﬁ dent this will deliver excellent 
returns for shareholders. This conﬁ dence 
is underpinned by the encouraging 
performance of our new centres and 
the strong results from our growing 
mature estate.

“ Healthy occupancy and 
increasing REVPOW are 
driving margin improvements.”

Mark Dixon
Chief Executive Ofﬁ cer

Over the period Group revenues increased 
by 7.0% to £1,244.1m (2011: £1,162.6m), 
operating proﬁ t increased to £90.2m 
(2011: £54.5m), EPS increased by 74% to 
7.5p and, subject to shareholder approval, 
we will increase the ﬁ nal dividend by 10% 
to 2.2p, making a total of 3.2p for the year 
(2011: 2.9p). Our balance sheet remains 
strong with net cash of £120.0m and 
during the year we secured a £200m 
revolving credit facility, providing us with 
further funding ﬂ exibility. 

As previously announced the reported 
results have beneﬁ ted from the accounting 
changes we implemented with effect from 
1 January 2012. Accordingly, we set 
out in the table below the impact of 
these changes to highlight the strong 
adjusted performance. 

In our Mature Centres business, operating 
proﬁ ts rose by 65% to £170.5m, with 
free cashﬂ ow (after tax, ﬁ nance costs 
and maintenance capital expenditure) at 
£144.3m (15.3p per share), on the back 
of revenues up 2.9% at constant currency 
rates to £1,124.1m. Customer numbers 
were up 37%; our network increased by 
17%; and we opened in four new countries. 
In total we invested £175.3m in our New 
Centres business during 2012 compared 
with £103.4m last year. Our New Centres 
continue to perform as expected, as they 
progress towards ﬁ nancial maturity. 
This, combined with the performance 
of our mature centres, demonstrates 
the underlying strength of our business. 

£m
Revenue
Gross proﬁ t 
(centre contribution)
Gross margin
Operating proﬁ t
Operating margin
Proﬁ t before tax
Taxation
Proﬁ t for the period
Earnings per share (p)
EBITDA
EBITDA Margin

Reported
2012
1,244.1

Accounting 
Changes
–

Adjusted
2012
1,244.1

Adjusted
2011
1,162.6

Accounting 
Changes
–

Reported
2011
1,162.6

320.7
25.8%
90.2
7.3%
85.1
(14.2)
70.9
7.5
159.4
12.8%

(21.6)

(21.6)

(21.6)
–
(21.6)

(8.2)

299.1
275.2
24.0% 23.7%
68.6
50.6
5.5%
4.4%
63.5
45.5
(14.2)
(8.9)
49.3
36.6
5.2
4.0
151.2
124.1
12.2% 10.7%

(3.9)

(3.9)

(3.9)
0.1
(3.8)

(5.2)

279.1
24.0%
54.5
4.7%
49.4
(9.0)
40.4
4.3
129.3
11.1%

10 Regus plc Annual Report and Accounts 2012

The market opportunity – a structural 
shift towards ﬂ exible work 
Regus’ business model is ﬁ rmly focused 
on serving and proﬁ ting from the structural 
shift towards ﬂ exible work by being the 
platform of choice from which businesses 
operate. The way in which people work 
is changing at an accelerating rate, driven 
by a wide variety of factors including 
technological change, globalisation and 
changing workforce dynamics, with growing 
recognition from large organisations that 
these changes can underpin substantial 
productivity, capital expenditure and 
cost improvements. 

As this trend develops the demand for 
high quality, short-term, drop-in space and 
the services which go with them, continues. 
This plays perfectly to our business model. 
Our step-up in investment reﬂ ects the 
growth in demand, with customers seeking 
work locations ranging from traditional 
business centres, railway stations, 
motorway service stations, to airports 
and retail outlets. 

Our business
We look at our business as three discrete 
but interlinked segments, all of which made 
strong progress over the course of the year.

Mature Centre business (centres open 
on or before 31 December 2010)
The performance of our Mature Centres 
business remains fundamental to the 
Group. In 2012 the business continued 
to move forward. We remain pleased with 
the levels of occupancy we are achieving 
(which averaged 85.8% through the year) 
and the improvement to REVPOW, which 
increased to £7,565, an improvement of 
2.4% (up £183) at constant currency 
rates and 0.4% (up £32) at actual rates, a 
continued sign of robust yield management. 
This healthy occupancy and increased 
REVPOW were the principal drivers of the 
improvement in adjusted mature gross proﬁ t 
margin to 27.9% (2011: 26.0%). The 2010 
new centres, which joined the mature estate 
in 2012, generated strong margins in line 
with the rest of the mature estate after 
being open less than two years on average. 
Moreover, for the year in question the 
2010 centres achieved a post-tax return 
on the gross investment in excess of 27%.

We continue with our active management 
of the mature network to deliver high 
occupancy and usage. This, when coupled 
with lower relative overheads, generates 
improved operating proﬁ t margins. 
To achieve this, we focus on the following:

•  Improving portfolio balance 

and diversiﬁ cation

 – Widening the reach of our network into 

new countries 

 – Deepening the network within countries

•  Diversifying the customer base

 – Assisting large Enterprise organisations 
in transitioning to more ﬂ exible work 
models. Over the year agreements 
were signed with Telefonica, Aviva 
and ABN Amro amongst others 

 – Developing new channels – for 

example we signed a deal with BMW 
in the UK whereby MINI ﬂ eet drivers 
will be provided with a Businessworld 
membership allowing them on-demand 
access to the Regus network 

•  Expanding the product offering

 – Major improvements to our technology 

infrastructure to meet customer 
demands for improved performance, 
reliability and self-service. Key projects 
included: upgrading internet performance 
tenfold; the development and launch 
of CallStream VoIP platform; and an 
innovative mobile cloud printing service 
called DocumentStation

•  Yield management

 – Providing the right space to the customer 

to maximise the revenue generated

•  Network optimisation

 – Ensuring that locations remain viable 
and taking action where they are 
not performing 

•  Lease management

 – Ensuring we have sufﬁ cient ﬂ exibility 

within our portfolio. Currently over 82% 
of leases associated with our Mature 
business are either ﬂ exible or variable

Making progress against 
our strategy

Our strategic aims:

Our focus for 2013:

Grow mature 
revenues 
and margin

Expand 
our network

Accelerated 
product and 
service innovation

Maximise the 
strengths of 
our brand 
and network

Strengthen 
management

Ensure our 2011 centres 
further mature, add to 
the overall Mature business 
performance and deliver similar 
ROIs to those opened in 2010; 
make additional incremental 
improvements to mature 
margins and mature REVPOW.

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As we aim for a network of at 
least 2,000 locations by 2014, 
we will continue to grow in 
response to customer demand 
and local market opportunities. 

Working on signiﬁ cant 
enhancements to the co-working, 
Virtual Ofﬁ ce and Businessworld 
products, as well as developing 
additional value added business 
services for customers. Continue 
with global deployments of new 
technology, voice and cloud 
printing platforms.

New teams focused on driving 
additional incremental revenue 
and opportunities from the 
network. Third Place to rapidly 
develop as we work with 
more partners.

Focus on bedding in new 
structure and developing 
in-country management. 
Strengthen Group functions 
to provide best possible 
support framework. 

Control overheads Achieve additional decreases 
in overheads per workstation 
through scale beneﬁ ts and 
smarter purchasing.

www.regus.com/investors 11

 
Chief Executive’s Review continued

Increased investment for future cash ﬂ ow

Why is growth so important?

•  Continued customer demand

•  Substantial opportunities to 
invest above our hurdle rate

•  Scale drives reduction in 
overheads per centre

•  Further strengthening of 

the network

What we delivered in 2012

•  17% growth of centre network 
(2011: 11%) – 243 new centres

•  Strong 2010 and 2011 centre 
performance endorsed Regus’ 
growth strategy

Net increase in size of network

+208

Net openings

+101

+119

+208

+589

2,000

1,411

1,203

1,084

983

09

10

11

12

Medium
term target

Net annual growth of estate

+17.3%

+17.3

+10.3

+11.0

+0.5

09

10

11

12

New Centres (open on or after 
1 January 2011)
We closely manage new locations. Our goal 
is for them to generate cash and proﬁ ts in 
line with the rest of the mature estate as 
soon as possible. 

Speciﬁ cally:

•  Our 2011 centres ﬁ nancial proﬁ le is 

in line with expectations. Totalling 139 
new openings, these generated £74.0m 
of revenue and made a positive centre 
contribution of £3.8m. In the months 
following opening a signiﬁ cant amount of 
sales and marketing effort is required to 
support occupancy growth. Consequently, 
after application of overhead, the drag on 
operating proﬁ t of these centres in 2012 
was £16.6m, although this ﬁ gure in 
H2 2012 was only £3.6m as they were 
maturing. As in previous years we expect 

12 Regus plc Annual Report and Accounts 2012

these centres to contribute to operating 
proﬁ t as they enter the mature estate. 

•  The 243 centres that we added during 

2012 generated revenues of £39.0m and 
made a negative centre contribution of 
£8.7m, in line with our expectations. 
These additions contributed to a 17% 
increase in our overall network. The heavy 
overhead investment required to open 
and support these new centres, as well 
as the negative gross proﬁ t as they open, 
resulted in a drag of £62.5m on the 
Group’s operating proﬁ t.

The current economic climate and 
weakness in the commercial property 
market continue to present us with excellent 
opportunities to grow our network on 
preferred terms and with a lower risk proﬁ le. 
As well as enabling us to respond to the 
strong demand we are experiencing across 

almost all markets, growth builds our 
network effect, ﬁ lling in portfolio gaps and 
allowing us to beneﬁ t from economies of 
scale – whilst our network grew by 17% 
over the period in question, our total Group 
overhead costs increased by 4.1% at 
constant currency (2.4% at actual rates). 

We remain focused on opportunities, both 
organic and through acquisition, that are 
prudent and capable of delivering sustainable 
returns. Acquisitions must meet the same 
exacting investment criteria that we apply 
to organic openings. Our management 
team has signiﬁ cant experience of integrating 
acquisitions, making rapid operational and 
ﬁ nancial improvements and then taking 
those acquired businesses to the next 
stage of their development, thereby further 
enhancing returns.

Third Place
Our move into Third Place is a direct 
result of strong customer demand and from 
partner organisations inviting us to develop 
service offerings within their networks. 
These spaces, such as motorway service 
stations and railway stations, are ones from 
which people are increasingly likely to work 
when on the move; enabled primarily by 
mobile technology. We continue to respond 
proactively to and be led by end-user 
demand in this exciting new ﬁ eld. 

Achievements of note during 2012 include the 
expansion of our locations on the Dutch rail 
network with NS Trains; a new deal signed 
in the third quarter with SBB Railways in 
Switzerland; the opening of the ﬁ rst business 
centre locations on the UK motorway service 
network at three Extra locations; and facilities 
within four Staples stores in the UK. Since 
year end we have extended our relationship 
with Shell to cover 69 locations (ranging from 
drop-in business lounges to wiﬁ  hotspots) 
across the Berlin Metropolitan area and 
signed an agreement to add additional 
locations to the UK motorway network with 
Welcome Break. It should be noted that the 
capital expenditure involved in third place 
locations is signiﬁ cantly lower than for our 
core Mature and New Centre businesses.

While the potential of our Third Place 
business is exciting – wherever people 
may ﬁ nd themselves working, there is an 
opportunity for Regus to improve that 

experience – it is important to stress that 
it remains small and embryonic at this 
stage and is currently immaterial in the 
context of our core centre operations.

Improving our management team
As the network grows so our ability to 
deliver at the local level becomes far 
more dependent on the strength of our 
local, in-country management teams. In 
2012 we continued to see the beneﬁ ts of 
our approach to recruiting ahead of our 
growth curve. The process is ongoing and 
we are making signiﬁ cant hires at a country 
management level to ensure that the 
improvement in our results continues. 
At the same time we appointed several 
highly experienced professionals to 
occupy strategic roles within the Group.

Operational review
Over the year the Group opened 243 new 
centres (2011: 139) with the total number 
as of 31 December 2012 standing at 
1,411 (2011: 1,203). This growth resulted 
in an increase in total workstation capacity 
(including non-consolidated workstations) 
of 17.7% to 240,131 and the number of 
consolidated workstations as at 31 December 
2012 by 18.4% to 229,615. Over the period 
customer numbers increased by 37% to 
approximately 1.35 million.

To review our business more meaningfully, 
we will concentrate on our mature 
business performance development, 
which represents like-for-like business:

Americas 
Our Americas business posted another 
strong performance. Mature revenues 
were up 4.1% at constant currency to 
£480.0m (up 3.6% at actual rates), with 
average mature occupancy of 88.6% 
during the period (2011: 87.7%). On an 
adjusted basis mature gross margins 
improved to 31.1% (2011: 28.7%). During 
the year, we added 126 centres, including 
our ﬁ rst in Halifax, Canada; Vitoria, Brazil; 
and Pasadena, USA, as well as entering 
Ecuador. This growth contributed to a 
13% increase in the average number of 
consolidated workstations from 80,064 
in 2011 to 90,617 in 2012.

EMEA
The region delivered mature revenues of 
£275.2m, an increase of 1.6% at constant 

On a regional basis, mature revenues and contribution can be analysed as follows:

Revenue

Contribution

Reported Mature* 
Margin (%)

Adjusted** Mature 
Margin (%)

£m
Americas
EMEA
Asia Paciﬁ c
UK
Other
Total

2012
 480.0 
 275.2 
 163.4 
204.2
 1.3 

2011 
463.3 
 288.8 
 159.8 
200.7 
 1.7 
 1,124.1   1,114.3 

2012
 152.9 
 80.1 
 53.5 
37.9 
 1.3 
 325.7 

2012

2012

2011 

2011 

2011 
 132.7  31.9% 28.6% 31.1% 28.7%
 75.2  29.1% 26.0% 27.8% 26.1%
 45.1  32.7% 28.2% 30.6% 28.5%
32.1  18.6% 16.0% 17.9% 16.1%
–
 3.3 
 288.4  29.0% 25.9% 27.9% 26.0%

–

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*  The mature business comprises centres owned and operated on or before 31 December 2010

**  The adjusted mature margin is before the impact of accounting changes implemented from 1 January 2012

currency, and achieved an average mature 
occupancy of 82.4% (2011: 83.8%). Mature 
gross margin, adjusted to remove the impact 
of the accounting changes, improved over the 
period to 27.8% (2011: 26.1%). During the 
year, we added 33 centres which contributed 
to a 7% increase in the average number of 
consolidated workstations from 38,473 in 
2011 to 41,531 in 2012. We opened our 
ﬁ rst centres in Port Elizabeth, South Africa; 
Stavanger, Norway; and Antananarivo, 
Madagascar, as well as opening in Zambia.

Asia Paciﬁ c
This business delivered mature revenues 
of £163.4m, up 3.1% on constant currency 
(up 2.3% at actual rates) and achieved 
an average mature occupancy of 86.0% 
(2011: 84.3%). Adjusted mature gross 
margins improved to 30.6% (2011: 28.5%). 
During the year we added 79 new centres 
including Wellington, New Zealand; Sapporo, 
Japan; and Tianjin, China, as well as opening 
in Cambodia and Sri Lanka. This contributed 
to a 25% increase in the average number 
of consolidated workstations from 27,757 
in 2011 to 34,557 in 2012.

UK
Our UK business delivered mature revenues 
of £204.2m, up 1.7% on 2011. Adjusted 
mature gross margins improved to 17.9% 
(2011: 16.1%), and average mature 
occupancy remained robust at 83.0% 
(2011 84.1%). Over the period there was 
a modest reduction of 1.5% in the average 
number of consolidated workstations to 
37,754 (2011: 38,346) following a small 
net closure of centres. 

Outlook 
Mature proﬁ tability and building long-term 
earnings per share and shareholder value 
through targeted growth remain our core 
focus areas. Accordingly, we will continue 
to focus on improving margins in our Mature 
business and investing in new centres which 
will deliver incremental returns over the 
medium term. 

It remains our intention to achieve a 
global network of at least 2,000 centres 
by the end of 2014. We expect to add at 
least 350 centres, including 64 from the 
acquisition of MWB Business Exchange, 
in 2013. This number may increase if we 
ﬁ nd additional compelling opportunities or, 
alternatively, decrease if we cannot ﬁ nd 
enough opportunities that meet our strict 
ﬁ nancial returns criteria. 

Current trading since the year end has 
been good and in line with our expectations. 
As such, we look to the year ahead 
with conﬁ dence. 

Mark Dixon
Chief Executive Ofﬁ cer

5 March 2013

www.regus.com/investors 13

 
Implementing the strategy; 
delivering on our plan

Our approach to planning is systematic and rigorous, 
our country managers focused on delivery.

In an organisation that covers 99 countries 
and more than 200 deﬁ ned geographic 
areas, having a systematic and rigorous 
approach to how we turn our strategy into 
reality is critical to business success. Each 
country has a comprehensive plan that is 
owned by the country manager. At a high 
level the aim of the plan is to clearly deﬁ ne 
how the mature margin and growth targets 
will be delivered, what resources will be 
required, the people development plan, and, 
crucially, how best to serve the customer.

Each plan takes our six strategic principles 
(outlined on page 9) as its core reference 
point, but with speciﬁ c focus on mature 
margin and network growth. These 
transcend the Group and are against which 
all activities must be aligned to ensure 
success. Goals are agreed through a 
two way dialogue with the central senior 
management which ensures buy-in and 
transparency. It is this open culture and 
accountability which then ensures the goals 
have the best chance of being achieved.

The plan clearly states what high level 
actions will be needed to achieve the goals 
and speciﬁ cally what resources will be 
required from the Group. At the heart of 
each plan is the customer – consideration 
of their needs, the opportunities we have 
to better serve them and where they are 
looking for us for more support. From this 
comes the team structure: how we will 
make sure we have the right people, in 
the right place, at the right time, focused 
on the right things. 

Supporting this are the central functions, 
such as IT and Procurement, which are 
there to act as enablers for each country 
plan. The purpose of the centre is to align 
itself behind the country goals and enable 
them to be successful. It creates the 
supporting infrastructures that make 
success more likely, for example shared 
procurement that reduces costs on a per 
centre basis therefore helping the country 
achieve its margin targets. It is the 
responsibility of the central functions to 
also ensure that their plan articulates how 
their goals are aligned with and support 
the Group’s core strategic objectives.

14 Regus plc Annual Report and Accounts 2012

“ Each plan takes our six 
strategic principles as its 
core reference point, but 
with speciﬁ c focus on mature 
margin and network growth.” 

A wide variety of tools exists to support the 
delivery of the plan, as well as to monitor 
performance. A process of regular reviews 
and implementation checks ensure timely 
delivery, primarily through holding teams 
accountable in a transparent way. This 
formal business review process is a broad 
mechanism to review progress, understand 
issues and provide course corrections. 
The identiﬁ cation of issues not only ensures 
the country can take prompt action on 
those areas of the plan which are failing, 
but also helps the centre know how well 
the strategy is playing out so that course 
corrections can be made in a timely fashion 
and implemented in other geographies 
if appropriate. 

The process of review is essential to check 
the appropriateness and effectiveness of the 
goals, the strategic pillars and performance, 
as well as to allow for adjustment due to 
changing market dynamics. However, 
ultimately, the successful execution of the 
plan rests on the quality of our people as 
they act as the critical link between it and 
delivery of the strategy.

Our business review process

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3 .

 
 
 
 
Chief Financial
Ofﬁ cer’s review

A strong ﬁ nancial performance in a year 
of signiﬁ cant progress.

Dominique Yates
Chief Financial Ofﬁ cer

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The Group has delivered strong, proﬁ table 
growth, in line with expectations, despite 
prevailing currency headwinds and 
an uncertain economic environment 
throughout 2012. 

We improved the performance of our 
Mature Centres business, increasing 
like-for-like revenues by 2.9% at constant 
currency rates. At actual rates this was 
an increase of 0.9%, from £1,114.3m to 
£1,124.1m. Similarly as the table below 
shows, margin performance advanced 
with the mature adjusted gross margin 
increasing from 26.0% to 27.9% and, 
with a strong focus on controlling absolute 
overheads and improving efﬁ ciency, adjusted 
operating margin improved still further from 
9.4% to 14.1%. This delivered a 51% growth 
in mature adjusted operating proﬁ t from 
£104.8m to £158.5m. Average mature 
occupancy was up to 85.8% from 85.6% 
in 2011 and REVPOW grew by 2.4% over 
2011 at constant currency rates. 

Cash conversion remains a strong feature 
of the Mature Centres business. Over the 
course of the year £144.3m of free cash 
ﬂ ow was generated, equivalent to a free 
cash ﬂ ow margin of 12.8%, or 15.3p per 
share. This has allowed the Group to 
accelerate investment into attractive growth 
opportunities in order to meet the growing 
demand for the products and services that 
the Group supplies. Overall we invested 

£175.3m in our New Centres business and 
during 2012 we added 243 new centres. 
As expected, the fourth quarter was a 
particularly active period with 122 centres 
added to the network. Many of these came 
via bolt-on acquisitions. 

Notwithstanding this signiﬁ cant investment 
in our business, we ended the year in 
a strong ﬁ nancial position. Net cash at 
31 December 2012 stood at £120.0m 
(2011: £188.3m). To increase the Group’s 
ﬂ exibility for further growth a four-year, 
£200m revolving credit facility was signed 
on 6 August 2012. 

Reﬂ ecting the ﬁ nancial and operational 
progress the Group has made, we are 
recommending a 10% increase in the 
full year dividend from 2.9p to 3.2p. 

Segmental presentation
To fully understand the fundamental 
underlying performance of the business 
it is necessary to look at our mature and 
new centres separately. This highlights the 
changing ﬁ nancial characteristics of the 
centres over time, with new ones negatively 
impacting proﬁ tability, particularly in their 
opening year.

from 1 January 2012) to better reﬂ ect the 
underlying economic reality of the business 
in the ﬁ nancial statements. As expected 
these changes have materially beneﬁ ted 
reported proﬁ tability for 2012. We have, 
where appropriate, highlighted the net 
impact of these changes on the Group’s 
performance. These changes had no 
impact on Group cash ﬂ ow. Given that 
year-on-year comparisons will again be 
like-for-like at the level of reported ﬁ gures, 
it is not the Board’s intention to carry this 
additional disclosure into 2013.

Mature Centres business (centres 
open on or before 31 December 2010)
The table below shows the strong 
development of the mature performance.

At the end of December 2012 there were 
1,029 centres in the mature estate, which 
represented approximately 73% of our 
global portfolio. Our focus here has remained 
resolutely on driving the margin forward at 
the centre level (gross proﬁ t), by providing 
the right space to the customer to maximise 
the revenue generated, and delivering 
additional overhead efﬁ ciency to generate 
growth in operating margins.

Accounting changes 
As announced during the year and 
following a review of our accounting policies 
on asset capitalisation and depreciation, 
we implemented two changes (effective 

Our Mature Centres made good progress 
against both goals during the year, which 
is pleasing given the near absence of 
favourable macro trends. Revenue from 
these centres was £1,124.1m, an increase 

Mature Centre performance

£m
Revenue
Gross proﬁ t 
(centre contribution)
Gross margin
Overheads
Joint ventures
Operating proﬁ t
Operating margin
EBITDA
EBITDA margin

Reported
2012
1,124.1

Accounting 
Changes
–

Adjusted
2012
1,124.1

Adjusted
2011
1,114.3

Accounting 
Changes
–

Reported
2011
1,114.3

Adjusted % 
increase
0.9%

Reported % 
increase
0.9%

325.7
29.0%
(154.9)
(0.3)
170.5
15.2%
223.1
19.8%

(12.0)

–
–
(12.0)

313.7
27.9%
(154.9)
(0.3)
158.5
14.1%
223.1
19.8%

289.6
26.0%
(184.9)
0.1
104.8
9.4%
173.1
15.5%

1.2

–
–
1.2

288.4
25.9%
(184.9)
0.1
103.6
9.3%
173.1
15.5%

8%

16%

51%

29%

13%

16%

65%

29%

www.regus.com/investors 15

 
Chief Financial Ofﬁ cer’s Review continued

of 2.9% at constant currency (up 0.9% at 
actual exchange rates). This performance 
reﬂ ects average occupancy, at 85.8%, 
being consistently maintained at the high 
levels achieved in 2011, as well as growth 
in REVPOW. Mature REVPOW for the year 
improved to £7,565, an increase of 2.4% 
(up £183) at constant currency rates and up 
0.4% (up £32) at actual rates. Not only does 
this like-for-like revenue growth build on the 
strong performance experienced since the 
second half of 2011 but we ended the year 
strongly, with REVPOW increasing 2.6% 
year-on-year in the fourth quarter on a 
constant currency basis. 

Reported gross proﬁ t (centre contribution) 
increased 13% to £325.7m from £288.4m. 
Excluding the impact of the accounting 
changes, there was an underlying 
improvement of 11% at constant currency 
(up 8% at actual rates), reﬂ ecting the 
operational leverage beneﬁ t of higher 
revenue and strong discipline over managing 
centre costs. Accordingly, the adjusted gross 
margin has increased from 26.0% to 27.9%.

Overheads allocated to the mature estate 
reduced from £184.9m in the corresponding 
period to £154.9m which was a very 
pleasing result. This continues the sequential 
half yearly decline seen over the last few 
years as the Group continues to beneﬁ t 
from strong cost discipline across the entire 

business and the ability to leverage this 
overhead base over a signiﬁ cantly larger 
number of centres. Accordingly, overheads 
as a percentage of revenues have continued 
to decline from 16.6% of mature revenues 
in 2011 to 13.8% for 2012.

As a result, our reported mature operating 
proﬁ t increased 65% from £103.6m to 
£170.5m, improving the operating margin 
from 9.3% to 15.2%. Excluding the impact 
of the accounting changes, adjusted 
operating proﬁ ts increased 51% from 
£104.8m to £158.5m. Reported mature 
EBITDA increased from £173.1m to 
£223.1m with the margin improving 
from 15.5% to 19.8%.

The table below sets out a notional EPS 
calculation for our mature business on 
both a reported and on an adjusted basis. 
The increase in notional adjusted mature 
EPS provides a more representative picture 
of the development in operating performance 
of the business, given the accounting 
changes outlined above.

Commensurate with the strong advance 
in operating proﬁ t, notional adjusted 
mature EPS has improved by 67% with 
the reported mature EPS reaching 14.0p.

Mature Centres cash ﬂ ow 
Another attractive characteristic of the 
Mature business is its cash generation 

and, once again, the conversion of mature 
proﬁ tability into cash has been strong, 
continuing to make a signiﬁ cant contribution 
to the funding of our new centre growth. 

Mature Centre cash ﬂ ow

£m 
EBITDA
Working capital 
(estimated)
Maintenance capital 
expenditure
Other items
Finance costs (all 
allocated to Mature)
Taxation*
Mature free 
cash ﬂ ow

2012
 223.1

2011
173.1

 6.7

 31.2

 (48.1)
(1.9) 

 (46.9)
(1.5) 

(2.4) 
(33.1) 

(0.9) 
(19.9) 

 144.3 

 135.1 

* Tax at 20% of proﬁ t before tax

Maintenance capital expenditure for the 
year was little changed at £48.1m (2011: 
£46.9m), representing 4.3% of annual 
mature revenues, in line with our guidance 
of 4-5%. 

As anticipated, after a working capital 
outﬂ ow in the ﬁ rst half of £7.8m we saw 
this reverse and ﬁ nished with a full year 
inﬂ ow. Mature free cash ﬂ ow generation 
for 2012 represents a very creditable 
15.3p per share. 

Notional Mature earnings per share

 £m
Mature operating proﬁ t
Net interest
Taxation
Notional mature
proﬁ t after tax
Notional mature EPS

Reported
2012
170.5
(5.1)
(33.1)

Accounting 
Changes
(12.0)
0.0
2.4

132.3
 14.0 

(9.6)

Adjusted
2012
158.5
(5.1)
(30.7)

122.7
 13.0 

Adjusted
2011
104.8
(5.1)
(20.0)

79.7
 8.5 

Accounting 
Changes
1.2
0.0
(0.3)

0.9

Reported
2011
103.6
(5.1)
(19.7)

78.8
 8.4 

Adjusted % 
increase
51%

Reported % 
increase
65%

54%

68%

53%

67%

16 Regus plc Annual Report and Accounts 2012

 
New Centres (open on or after 
1 January 2011)
Responding to strong and growing 
customer demand, we continue to invest 
in growing our network. In line with the 
updated guidance we issued in October 
2012, the business opened 243 new 
centres. At the end of December 2012 
we had 382 new centres, comprising 
27% of the total number of centres.

We are realising the beneﬁ t of the substantial 
investment made to support our growth 
strategy. During the ﬁ rst half of the year we 
opened 76 centres, a signiﬁ cant increase 
compared to the 48 that were opened in the 
corresponding period of 2011. During the 
second half this rate of expansion accelerated 
with the addition of 167 centres (H2 2011: 
91 centres). 

The proﬁ t and cash ﬂ ow proﬁ le of new 
centres can vary considerably in the early 
months inﬂ uenced by factors such as their 
location and whether they are acquired 
or organic openings. Their impact on the 
reported results also depends on the timing 
of the opening within the year.

Overall, these new centres have represented 
a material investment and, with the increase 
in the pace of openings, represent a 
material drag on the Group’s income 
statement. This arises from the signiﬁ cant 
investment into central overheads and 

the initial negative gross margin while 
occupancy builds. The performance of 
our new centres continues to be in line 
with management expectations. 

We view new centres as our future mature 
estate. For example, consistent with our 
maturity classiﬁ cation, on 1 January 2012 
the centres opened during 2010 joined the 
Mature business. In line with our expectations, 
the 2010 openings continued to mature 
over the course of 2012 and narrow the 
performance gap with the longer established 
Mature 2009 business (centres opened on 
or before 31 December 2009). In 2012, the 
2010 openings achieved a gross margin 
before depreciation and amortisation 
(CBITDA) of 30.2%, compared to 33.4% 
on the 2009 Mature Centres business. 
Using the measure of CBITDA eliminates 
the higher level of depreciation incurred 
by the 2010 openings compared to older 
centres in the Mature 2009 business and 
provides a more meaningful comparison 
of operational performance. At the same 
time, the 2010 centres achieved a post-tax 
cash return of over 27% on gross investment 
during 2012. We over anticipate that, in due 
course, the new 2011 and 2012 openings 
will deliver a similarly strong performance. 

The table below illustrates the impact 
on the income statement of these new 
openings as well as the impact of the 
accounting changes implemented.

New Centre performance

£m
2011 Openings
2012 Openings
Revenue
2011 Openings
2012 Openings
Gross proﬁ t 
(centre 
contributions)
Overheads
Operating proﬁ t
EBITDA

Reported
2012
74.0
39.0
113.0
3.8
(8.7)

Accounting 
Changes
–
–
–
(1.5)
(8.1)

Adjusted
2012
74.0
39.0
113.0
2.3
(16.8)

Adjusted
2011
20.1
–
20.1
(13.6)
–

(4.9)
(74.2)
(79.1)
(63.1)

(9.6)
–
(9.6)
8.2

(14.5)
(74.2)
(88.7)
(71.3)

(13.6)
(36.1)
(49.7)
(46.1)

Accounting 
Changes
–
–

(5.2)
–

(5.2)
–
(5.2)
(5.3)

Reported
2011
20.1
–
20.1
(8.4)
–

(8.4)
(36.1)
(44.5)
(40.8)

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The 2011 openings continued to progress 
to maturity in line with management’s 
expectations. As described above, the 
initial ﬁ nancial proﬁ le of a new centre can 
be inﬂ uenced by a number of factors. In 
the case of our 2011 openings, these were 
weighted towards the end of the year. As 
the anticipated build in occupancy occurred, 
so the expected ﬁ nancial performance 
materialised. The 2011 openings contributed 
a positive gross proﬁ t by the second quarter 
of 2012. This momentum continued and 
generated a gross proﬁ t for the year of 
£3.8m. By the fourth quarter these centres 
were close to operating proﬁ t break even.

Also, as anticipated, the openings in 2012 
delivered a negative gross proﬁ t of £8.7m 
and, as is normal, attracted a signiﬁ cant 
level of overhead costs, resulting in 
an overall drag of £62.5m on Group 
operating proﬁ t. 

We set out below the cash ﬂ ow impact 
of the investment in new centres:

Investment in new centres

£m 
EBITDA
Working capital 
(estimated)
Growth capital 
expenditure
Taxation
New investment 
in growth

2012
(63.1)

2011
(40.8)

 39.7

 19.6

 (171.1)
19.2 

 (91.4)
9.2 

(175.3) 

(103.4) 

During 2012 the Group signiﬁ cantly 
increased its investment into growing the 
business from £103.4m to £175.3m. New 
centres continue to have a positive impact 
on working capital. Every potential new 
centre location is rigorously evaluated by 
the investment committee and has to meet 
stringent ﬁ nancial hurdles before being 
approved. This is a process we continue 
to focus on.

Closures
In addition to the normal expiry of lease 
commitments we constantly review 
our portfolio of centres against strong 
performance criteria. Accordingly, during 
2012 we closed or relocated 26 centres 
(2011: 20). These centres contributed an 

www.regus.com/investors 17

 
Chief Financial Ofﬁ cer’s Review continued

operating loss of £1.2m in 2012, against a 
loss of £4.6m in the corresponding period.

Third Place
Our Third Place business has gained 
momentum during 2012 and the pipeline 
of potential opportunities is strong. While 
we are encouraged with progress made 
to date, it still remains too early to evaluate 
the full ﬁ nancial potential, both in terms of 
investment and returns. As such, we have 
continued to report the results within our 
‘New Centre’ segment. When the business 
becomes more meaningful, we will separate 
out the results. As previously stated, there 
is no relaxation of our investment criteria 
in appraising these opportunities. 

Overheads
In a year when we have signiﬁ cantly 
increased our network, we have maintained 
a strong focus on cost management. 
Total overhead costs increased just 4.1% 
at constant currency (2.5% at actual rates) 
to £230.2m (2011: £224.7m). Our network 
increased by 17% in the same period and 
our overhead per available workstation was 
back below the level in 2010. As a result, 
total Group overheads as a percentage of 
revenue have fallen to 18.5% (2011: 19.3%).

This has been achieved whilst increasing 
investment in areas which differentiate us 
from other market participants: in the product 
development team to drive innovation; and 
in our property team to drive accelerated 
growth, which in itself drives additional 
overhead costs as new centres require a 
higher investment in sales and marketing 
than Mature Centres. Other costs continue 
to be rigorously controlled which, along with 
efﬁ ciency and productivity improvement, 
ensures that we continue to realise the 
beneﬁ ts of economies of scale.

The methodology by which we have 
allocated overheads to the various elements 
of our business is consistent with that used 
in presenting the results for 2011. There are 
four elements to the allocation:

•  It is estimated that 90% of property 
team costs are spent on supporting 
our growth programme;

•  On average, each additional centre 
costs £130,000. This reﬂ ects the 
cost of management time, sales and 
marketing set-up costs (which are 
deducted before the allocation of sales 
and marketing costs as outlined below), 

Group operating proﬁ t reconciliation

£m
Revenue
Cost of sales
Centre contribution
Overheads
Share of proﬁ t on JV
Operating proﬁ t
EBITDA

£m
Revenue
Cost of sales
Centre contribution
Overheads
Share of proﬁ t on JV
Operating proﬁ t
EBITDA

Mature centres 
2012
1,124.1
(798.4)
325.7
(154.9)
(0.3)
170.5
223.1

New centres 
2012
113.0
(117.9)
(4.9)
(74.2)
–
(79.1)
(63.1)

Closed centres 
2012
7.0
(7.1)
0.1
(1.1)
–
(1.2)
(0.7)

Mature centres 
2011
1,114.3
(825.9)
288.4
(184.9)
0.1
103.6
173.1

New centres 
2011
20.1
(28.5)
(8.4)
(36.1)
–
(44.5)
(40.8)

Closed centres 
2011
28.2
(29.1)
(0.9)
(3.7)
–
(4.6)
(2.4)

Total
2012
1,244.1
(923.4)
320.7
(230.2)
(0.3)
90.2
159.3

Total
2011
1,162.6
(883.5)
279.1
(224.7)
0.1
54.5
129.3

18 Regus plc Annual Report and Accounts 2012

human resources, recruitment and 
training costs, administrative and ﬁ nance 
set-up costs and professional costs 
associated with acquisitions;

•  For the remainder of the sales and 

marketing costs, the principle is that the 
allocation is made on the basis of new 
workstation sales as the nature of the 
spend is to generate new enquiries and 
to convert these into new sales; and,

•  For all other overhead costs we follow 
the principle of allocating the costs 
pro-rata by reference to time-apportioned 
available workstation numbers.

Group operating proﬁ t reconciliation
The tables below reconcile the elements 
of our business by maturity to the Group 
consolidated income statement down to 
operating proﬁ t and including EBITDA.

Overall, Group revenues increased 7.0% 
from £1,162.6m to £1,244.1m (a 9.2% 
increase at constant currency rates). 
Reported gross proﬁ t increased 15% 
from £279.1m to £320.7m and, with 
the operational leverage enjoyed by the 
business, operating proﬁ t advanced 66% 
from £54.5m to £90.2m. 

Net ﬁ nance costs
Although the Group remains in a strong 
net cash position despite the signiﬁ cant 
investment into New Centre growth, a net 
ﬁ nance charge of £5.1m was incurred 
(2011: £5.1m). As expected, the net charge 
was impacted in the second half by £2.2m 
of costs related to the new four-year, £200m 
revolving credit facility and the renewal of 
our £85m guarantee facility for a further four 
years. The Group also incurred a notional 
interest charge of £1.4m (2011: £2.0m) 
relating to the accounting treatment of a fair 
value adjustment on an acquisition in 2006. 

Tax
The tax charge for the year was 16.7% 
(2011: 18.2%). As previously highlighted, 
this is low as a result of the accounting 
changes outlined above, which had a 
material positive impact on reported 
proﬁ tability but limited implications 
for taxation. 

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The Board continues to believe that 20% 
remains the long-term underlying effective 
tax rate for the Group.

Earnings per share
The Group earnings per share increased 
to 7.5p (2011: 4.3p). 2012 saw a signiﬁ cant 
increase in the centre network and, as 
previously highlighted, our new centres 
create a signiﬁ cant drag on proﬁ ts, which 
impacts the statutory earnings per share 
for the Group. 

The weighted average number of shares in 
issue remained broadly unchanged at 
941,921,816 (2011: 941,898,916). No 
shares were purchased by the Group during 
the period.

Cash ﬂ ow and funding
The table below reﬂ ects the Group’s 
cash ﬂ ow.

Underlying cash generation from the 
Mature business remains strong with a 
mature free cash ﬂ ow of £144.3m. Again, 
the mature cash ﬂ ow has largely funded the 
uplift in investment in new centre openings. 
During 2012, £175.3m was invested in 
new centres compared to £103.4m in 
the corresponding period.

Notwithstanding this growth investment, 
the Group remained in a healthy ﬁ nancial 
position. At 31 December 2012 the Group 
had net cash of £120.0m (2011: £188.3m). 

Group cash ﬂ ow

£m
Mature cash ﬂ ow
New investment in new centres
Closed centres cash ﬂ ow
Exceptional items
Total net cash ﬂ ow from operations
Dividends
Corporate ﬁ nancing activities
Change in cash & cash equivalents
Opening net cash
Exchange movements
Closing net cash

To provide additional ﬂ exibility, on 6 August 
2012 the Group signed a four-year, £200m 
revolving credit facility with a consortium 
of six banks. 

our stringent returns criteria. Accordingly, 
we have always indicated that we can shut 
off growth very quickly in the event that we 
determine a need to do so. 

As our business grows (we have opened 
382 centres over the last two years to stand 
at 1,411 centres at 31 December 2012), 
the underlying operational cash generation 
increases further, as does our ability to fund 
growth from internal cash generation.

We estimate that, all other things 
being equal, we would be able to fund 
approximately 250 new centres in 2013 
from internally generated funds. Currently, 
however, we expect to add at least 350 
centres during 2013 (including 64 through 
the acquisition of MWB Business Exchange). 
If we achieve this level of new centre 
openings, we would anticipate ending 2013 
with a modest, positive net cash position.

We believe that the combination of 
our strong net cash position, increased 
operational cash generation and access to 
the revolving credit facility, provide the 
Group with the appropriate ﬁ nancial 
headroom to execute our strategy and 
remain focused on maintaining a robust 
capital structure.

The Group is driven by risk-adjusted 
returns and will only continue to invest if the 
environment and centre performance meet 

2012
 144.3 
(175.3) 
(6.4) 
–

 (37.4) 
 (28.2)
 (0.3)
 (65.9) 
 188.3 
 (2.4)
 120.0 

2011
 135.1 
(103.4) 
(4.5) 
(1.9) 
 25.3 
 (25.0)
 0.1
0.4
 191.5 
 (3.6)
 188.3

Risk management
The principal risks and uncertainties 
affecting the Group remain unchanged. 
A detailed assessment of the principal risks 
and uncertainties which could impact the 
Group’s long-term performance and the risk 
management structure in place to identify, 
manage and mitigate such risks can be 
found in the corporate governance section 
(pages 24 to 30). 

We continue to monitor the attempts by the 
International Accounting Standards Board 
to ﬁ nd a solution to the perennial debate on 
lease accounting. Until the second Exposure 
Draft is published it remains unclear how 
this debate will conclude. Regardless, it will 
have no impact on the underlying commercial 
dynamics of our business. Timing around 
the publication of the second Exposure 
Draft remains ﬂ uid.

Related parties
Details of related party transactions that 
have taken place in the period can be found 
in note 30 to the 2012 Annual Report and 
Accounts. There have been no changes to 
the type of related transaction entered into 
by the Group that had a material effect 
on the ﬁ nancial statements for the period 
ended 31 December 2012.

Dividends
Subject to shareholder approval, we will 
increase the ﬁ nal dividend for 2012 by 
10% to 2.2p (2011: 2.0p). This will be 
paid on Friday 31 May 2013, to shareholders 
on the register at the close of business 
on Friday 3 May 2013. This represents 
an increase in the full year dividend of 10%, 
taking it from 2.9p for 2011 to 3.2p for 2012.

Dominique Yates
Chief Financial Ofﬁ cer

5 March 2013

www.regus.com/investors 19

 
Corporate responsibility

Reducing our environmental impact; 
supporting our communities.

Our Portuguese team supported the 
Portuguese Association for the Rights of 
Children and Family, collecting toys, clothes, 
food and school equipment for disadvantaged 
children. Similarly in Argentina our centres 
collected and donated toys for the Isidro 
Children’s Hospital in Buenos Aires.

In China our teams joined forces with the 
Concordia Welfare and Education Foundation 
which helps to educate children in parts 
of Asia Paciﬁ c where education can be 
prohibitively expensive. 

Our UK business continued its long 
association with Macmillan Cancer Support 
and DeBra, a charity for children with a 
genetic skin condition, raising £12,000 
through an annual rafﬂ e.

Environmental
Regus are currently in the ﬁ nal stages of 
appointing a global energy consultancy to 
manage, monitor and maintain the Group’s 
global carbon footprint with respect to 
Scope 1 and Scope 2 carbon reporting. 
The primary driver of this is to help the 
business accurately understand its carbon 
footprint and then put in place targets 
and plans to reduce. In doing so we aim 
to replicate the success of our pilot UK 
programme across our global network.

In line with our published Environmental 
Policy, we have for the past few years 
actively reduced our carbon emissions 
(particularly through our use of gas and 
electricity) and we are pleased to report 
that the overall reduction of our UK carbon 
footprint from our base line of 2007 has 
been maintained at 29% and we remain on 
target to achieve a 50% reduction by 2020. 
Given the rapid progress made in 2010 
and 2011, especially with building voltage 
optimisation, new chiller and boiler controls 
and behavioural changes, we found it difﬁ cult 
to make further savings to achieve an 
additional 5% reduction for 2012. Stronger 
progress was made with regards to our dry 
mixed recycling programme, which, with 
the focus of our in-centre Greener Working 
Champions, meant we achieved our 2012 
target of a 35% reduction. 

We continue to be full participants in the UK 
government’s Carbon Reporting Commitment 
(CRC), having successfully purchased and 
surrendered 34,072 carbon allowances for 
2011/12. It was also pleasing to note that 
despite 2012 being a year of consolidation 
we still managed to reduce our carbon 
allowance requirement by 2.6% from last 
year’s 34,969. 

Charitable activities
Our team members are active participants 
in their local communities and in 2012 
with the support of the business achieved 
great things. 

Following the devastating ﬂ oods in the 
Philippines, Regus donated a total of 
£20,000 of which £4,000 came directly 
from team members. These monies were 
provided to the Philippine charity Gawad 
Kalinga and are being used to build new 
homes for families affected by the ﬂ ood. 
Building commenced this month and will 
be completed before the next ﬂ ood season 
in June 2013.

Over the last two years our US team has 
supported the Susan G Komen foundation 
raising in excess of US$100,000. This has 
provided more than 12,000 screening 
mammograms and supported more than 
2,000 women with case management and 
treatment assistance. 

Our progress this year

Regus UK YTD Rolling kg CO2 pa per Occupied Workstation 

Reduction of the UK carbon footprint

29%

since 2007

Target achieved

35%

dry mixed recycling

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190

180

170

160

150

140

130

120

110

100

90

20 Regus plc Annual Report and Accounts 2012

Actual reduction of 10.3% by Dec 2010

Actual reduction of circa 29% by end Dec 2012

34% expected reduction by Dec 2013 (from Dec 2007 baseline)

2008

2009

2010

2011

2012

2013

 Actual reduction

Original target reduction

Revised target reduction

 
 
 
 
 
Board of directors

The role of the Board is to provide entrepreneurial 
leadership and to review the overall strategic 
development of the Group.

Douglas Sutherland (N)
Chairman

Lance Browne (A, N, R)
Senior Independent Non-Executive Director

Douglas Sutherland was appointed Non-Executive Director of 
Regus on 27 August 2008 and was appointed Non-Executive 
Chairman on 18 May 2010. Douglas was Chief Financial Ofﬁ cer 
of Skype during its acquisition by eBay and was also Chief Financial 
Ofﬁ cer at SecureWave during its acquisition by PatchLink. Prior 
to this, Douglas was previously an Arthur Andersen Partner with 
international management responsibilities. He has served as a 
director of companies in several jurisdictions and was the founding 
Chairman of the American Chamber of Commerce in Luxembourg. 
Douglas is currently also a Director of Median Kliniken S.à r.l. and 
Median Gruppe S.à r.l.

Lance Browne was appointed Non-Executive Director of Regus 
on 27 August 2008, became Senior Independent Director on 
18 May 2010 and Chairman of the Nomination Committee on 
27 September 2012. Lance is Vice Chairman of Standard 
Chartered Bank (China) Limited, Chairman of Travelex (China), and 
Non-Executive Director of G3. He was previously Non-Executive 
Director of IMI plc, Senior Advisor to the City of London, Chairman 
of China Goldmines plc, and Director of Business Development at 
Powergen International (HK).

Mark Dixon
Chief Executive Ofﬁ cer

Elmar Heggen (A, N, R)
Independent Non-Executive Director

Chief Executive Ofﬁ cer and founder, Mark Dixon is one of Europe’s 
best known entrepreneurs. Since founding Regus in Brussels, 
Belgium in 1989, he has achieved a formidable reputation for 
leadership and innovation. Prior to Regus he established businesses 
in the retail and wholesale food industry. A recipient of several 
awards for enterprise, Mark has revolutionised the way business 
approaches its property needs with his vision of the future of work.

Elmar Heggen was appointed Non-Executive Director of Regus on 
1 June 2010 and was appointed Chairman of the Audit Committee 
on 27 September 2012. Elmar has extensive management 
experience and is currently Chief Financial Ofﬁ cer and Head of the 
Corporate Centre at RTL Group, the leading European entertainment 
network, where he has held various roles since 2000. Elmar began 
his career at the Felix Schoeller Group, becoming Vice President & 
General Manager of Felix Schoeller Digital Imaging in the UK in 1999.

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Dominique Yates 
Chief Financial Ofﬁ cer

Alex Sulkowski (A, N, R)
Independent Non-Executive Director

Dominique Yates was appointed Chief Financial Ofﬁ cer on 
1 September 2011. Previously he served as Chief Financial Ofﬁ cer 
at both LM Windpower, the Netherlands-headquartered renewable 
energy company, and Symrise AG, the MDAX listed speciality 
chemicals company. He also held senior positions at Imperial 
Tobacco Group plc, including Group Financial Controller, General 
Manager of France, Switzerland, Italy and Malta, and Group Business 
Development Director. He is a qualiﬁ ed chartered accountant.

Alex Sulkowski was appointed Non-Executive Director of Regus 
on 1 June 2010; he also serves as Chairman of the Remuneration 
Committee, having been appointed on 27 September 2012. 
Alex has over 30 years of experience in international ﬁ nance 
structures, private equity, tax advice and real estate. He is currently 
the Managing Director of Third Millennium Investments SA and 
is a founding member of Taxand, the largest global network of 
independent tax advisers. Prior to this Alex enjoyed a career with 
Arthur Andersen, responsible for the Belgium and Luxembourg 
tax practices, prior to joining Ernst and Young in 2002 as the 
Partner responsible for the Luxembourg tax practice and then 
serving as the Managing Partner of Atoz Tax Advisors from 2004 
through 2009.

Notes
(A)  Member of the Audit Committee

(N)  Member of the Nomination Committee

(R)  Member of the Remuneration Committee

www.regus.com/investors 21

 
Other statutory information

Directors’ Report 
The Directors of Regus plc (société anonyme) (the ‘Company’) 
present their Annual Report and the audited financial statements  
of the Company and its subsidiaries (together the ‘Group’) for the 
year ended 31 December 2012.  

Directors 
The Directors of the Company who held office during the financial 
year were: 

Executive Directors 
Mark Dixon 
Dominique Yates  

Non-Executive Directors  
Douglas Sutherland  
Lance Browne 
Elmar Heggen  
Alex Sulkowski 

Biographical details for the Directors are shown on page 21. 

Details of the Directors’ interests and shareholdings are given in  
the Remuneration Report on pages 32 to 41.  

The Corporate Responsibility Statement, Corporate Governance 
Statement, Remuneration Report and Director Statements on 
pages 20 to 41 all form part of this report. 

Principal activity 
The Company is the world’s leading provider of global office 
outsourcing services.  

Business review 
The Directors have presented a business review as follows: 

The Chief Executive’s Review and Financial Review on pages 10  
to 19 respectively address: 
•  review of the Company’s business (pages 10 to 14); 
•  trends and factors likely to affect the future development, 

performance and position of the business (pages 10 to 14); 

•  development and performance during the financial year  

(pages 15 to 19); and 

•  position of the business at the end of the year (page 18 to 19). 

The Corporate Responsibility Report, on page 20, includes the 
sections of the Business Review in respect of: 
•  environmental matters; 
•  employees; and 
•  social and community issues. 

The Corporate Governance Statement, on pages 24 to 30,  
includes a description of the principal risks and uncertainties  
facing the Company.  

The Directors’ Statements on page 31 includes the statutory 
statement in respect of disclosure to auditors.  

The Directors do not consider any contractual or other relationships 
with external parties to be essential to the business of the Group. 

Results and dividends 
Profit before taxation for the year was £85.1m (2011: £49.4m).  

The Directors are pleased to recommend a final dividend of  
£20.7m (2011: £18.8m), being 2.2 pence per share (2011:  
2.0 pence per share). The total dividend for the year will therefore 
be 3.2 pence per share, made up of the interim dividend of  
1.0 pence per share paid in October 2012 (2011: 0.9 pence  
per share) and, assuming the final dividend is approved by 
shareholders at the forthcoming AGM, an additional 2.2 pence  
per share (2011: 2.0 pence per share) which is expected to be  
paid on 31 May 2013 to shareholders on the register at the close  
of business on 3 May 2013. 

Policy and practice on payment of creditors  
The Group does not follow a universal code dealing specifically with 
payments to suppliers but, where appropriate, our practice is to: 
•  agree the terms of payment upfront with the supplier; 
•  ensure that suppliers are made aware of these terms of  

payment; and 

•  pay in accordance with contractual and other legal obligations. 

At 31 December 2012, the number of creditor days outstanding for 
the Group was 22 days (2011: 30 days) and for the Company was 
41 days (2011: 34 days). 

Going concern  
The Directors, having made appropriate enquiries, have a 
reasonable expectation that the Group and the Company have 
adequate resources to continue in operational existence for the 
foreseeable future. For this reason they continue to adopt the  
going concern basis in preparing the Accounts on pages 43 to 89. 

In adopting the going concern basis for preparing the financial 
statements, the Directors have considered the further information 
included in the business activities commentary as set out on  
page 13, as well as the Group’s principal risks and uncertainties  
as set out on pages 26 and 27. Based on the performance of  
the Group, its financial position and cash flows, the Board is 
satisfied that the Group is well placed to manage its business  
risks successfully. 

Further details on the going concern basis of preparation can be 
found in note 23 of the notes to the accounts on page 71. 

Employees 
The Group treats applicants for employment with disabilities with  
full and fair consideration according to their skills and capabilities. 
Should an employee become disabled during their employment, 
efforts are made to retain them in their current employment or to 
explore opportunities for their retraining or redeployment elsewhere 
within the Group. 

Political and charitable donations  
It is the Group’s policy not to make political donations either in the 
UK or overseas. The Group made charitable donations of £30,000 
during the year (2011: £30,000). 

22
22 Regus plc Annual Report and Accounts 2012

Capital structure 
The Company’s share capital comprises 950,969,822 issued  
and fully paid up ordinary shares of 1p nominal value in Regus plc 
(2011: 950,969,822). All ordinary shares have the same rights  
to vote at general meetings of the Company and to participate in 
distributions. There are no securities in issue that carry special rights 
in relation to the control of the Company. The Company’s shares 
are traded on the London Stock Exchange.  

Details of the role of the Board of Directors (the ‘Board’) and the 
process for the appointment of directors can be found on pages 24 
to 26. 

At the Company’s Annual General Meeting held on 15 May 2012 
the shareholders of the Company approved a resolution giving 
authority for the Company to purchase in the market up to 
94,194,574 ordinary shares representing approximately 10% of the 
issued share capital (excluding Treasury shares) as at 13 April 2012. 
No shares were purchased pursuant to this authority during  
the year.  

Details of the Company’s employee share schemes can be found  
in the report of the Remuneration Committee on pages 32 to 41. 
The outstanding awards and options do not carry any rights in 
relation to the control of the Company. 

Substantial interests 
At 5 March 2013, the Company has been notified of the following 
interests held in the issued share capital of the Company. 

Estorn Limited* 
Prudential plc 
Odey Asset Management 
Blackrock Inc 
Standard Life Group 
Ameriprise Financial Inc 

Number of 
ordinary shares 

322,744,607 
158,450,222 
48,533,069 
47,764,890 
46,538,104 
46,441,761 

% of issued 
share capital

34.26%
16.82%
5.15%
5.07%
4.93%
4.93%

* Mark Dixon indirectly owns 100% of Estorn Limited 

Auditors  
In accordance with Luxembourg law, a resolution for the 
reappointment of KPMG Luxembourg S.à r.l. as auditors of  
the Company is to be proposed at the forthcoming Annual  
General Meeting.  

Approval 
This report was approved by the Board on 26 February 2013. 

On behalf of the Board 

Tim Regan  
Company Secretary  

5 March 2013 

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www.regus.com/investors 23

 
 
 
Corporate governance

The Board is committed to the high standards of corporate 
governance as set out in the UK Corporate Governance Code 
(formerly the Combined Code) published in May 2010 (the ‘Code’) 
for financial periods beginning after 29 June 2010. The new edition 
of the Code was published in September 2012 and applies to 
reporting periods beginning on or after 1 October 2012 (the 
‘Revised Code’). Although not yet officially applicable to the 
Company, the Board considers it good practice for the Company  
to comply with the Revised Code as far as is practical for a 
Luxembourg company to do so. The Code and the Revised Code 
are both available at www.frc.org.uk. The Board is accountable to 
the Company’s shareholders and this report describes how the 
Board applied the principles of good governance.  

The Board 
At 31 December 2012, the Board of Directors was made up of six 
members comprising the Chairman, two Executive Directors and 
three Non-Executive Directors. Biographical details of the Directors 
are set out on page 21. 

The Board is mindful of the benefits of strength and diversity in  
the Board. Our aim is to have a Board which is reflective of the 
broad range of skills, backgrounds and experience necessary to 
properly serve our shareholders. We have pursued this objective  
by engaging Board members whom, while several have a financial 
background, have had broad executive responsibilities and bring 
very different and complementary personal experiences and 
approaches to matters including the evaluation of opportunities  
and management of risks. Our Board members represent four 
different nationalities and five countries of residence. Along with 
their international operational experience, they also bring a depth  
of working knowledge covering multiple industries, business 
models, corporate cultures, organisational models, functional areas 
and business issues. The Nomination Committee’s decisions are 
based on merit while reflecting our intent to increase diversity, 
including gender diversity. The Board considers that its current 
balance ensures that no individual or group dominates its decision 
making process. 

Role of the Board 
The primary role of the Board is to provide entrepreneurial 
leadership and to review the overall strategic development  
of the Group. The Board approves the corporate plan and the 
annual budget and reviews performance against targets at every 
meeting. Capable management and relevant technical expertise  
in the business are critical to the implementation of the strategy. 
Individuals with strategic responsibilities are invited to present to 
and discuss with the Board on a rotating periodic basis. Through 
the Audit Committee, the Directors ensure the integrity of financial 
information and the effectiveness of financial controls and the 
internal control and risk management system. The Board has 
delegated authority to the Remuneration Committee to set the 
remuneration policy for Directors and senior management. The 
Nomination Committee recommends the appointment of Board 
Directors and has responsibility for succession planning at Board 
level. The various Board Committees (the ‘Committees’) have 
authority to make decisions in their areas of expertise.  

Frequency of meetings 
There were nine main Board meetings during 2012.  

The number of meetings of the Board and Committees and 
individual attendance by the Directors are shown below. 

Main Board

Audit 
Committee 

Nomination 
Committee

Remuneration 
Committee

Total meetings 
Douglas 
Sutherland 
Mark Dixon 
Dominique 
Yates 
Lance Browne 
Elmar Heggen 
Alex Sulkowski 

9

9
9

9
8
9
9

6 

6 
6 
6 

5

5

5
5
5

5

5
5
5

Matters reserved for the Board 
The Board has a formal schedule of matters reserved to it for its 
decision, to ensure that no one individual has unfettered powers  
of decision. These include: 
•  approval of regulatory announcements including the interim  

and annual financial statements; 

•  terms of reference and membership of the Board and  

its Committees; 

•  changes to the Group’s capital structure; 
•  changes to the Group’s management and control structure; 
•  capital investment in excess of £5m; and 
•  material contracts (annual value in excess of £5m). 

Minutes are taken of all Board discussions and decisions and all 
Directors are encouraged to request inclusion of any unresolved 
concerns that they may have in the Board minutes.  

Roles of Board members 
There is a clear division of responsibilities between the Chairman 
and the Chief Executive. 

The Chairman 
Douglas Sutherland is responsible for leadership of the Board, 
setting its agenda and monitoring its effectiveness. He ensures 
effective communication with shareholders and that the Board  
is aware of the views of major shareholders. He facilitates  
both the contribution of the Non-Executive Directors and 
constructive relations between the Executive Directors and  
Non-Executive Directors. 

The Chairman, together with the Company Secretary, is responsible 
for ensuring all Directors are properly briefed on issues arising  
at Board meetings and that they have full and timely access  
to relevant information. 

The Chairman is considered by the Board to be independent  
in character and judgement. 

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24 Regus plc Annual Report and Accounts 2012

 
 
 
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The Chief Executive 
Mark Dixon is responsible for formulating strategy and for its 
delivery once agreed by the Board. He creates a framework  
of strategy, values, organisation and objectives to ensure the 
successful delivery of key targets, and allocates decision making 
and responsibilities accordingly.  

Non-Executive Directors 
The Non-Executive Directors each bring their own senior level of 
experience and objectivity to the Board. The independent counsel 
brought to the Group by the Non-Executive Directors enhances  
the overall decision making of the Board. Non-Executive Directors 
are appointed for an initial three year term are subject to election  
by shareholders at each Annual General Meeting (‘AGM’) 
after their appointment. 

Company Secretary  
The Company Secretary, Tim Regan, is responsible for advising the 
Board, through the Chairman, on all governance matters and for 
ensuring that appropriate minutes are taken of all Board meetings 
and discussions. The appointment and removal of the Company 
Secretary is a matter reserved for the Board. 

Board Committees 
The Board has delegated certain of its governance responsibilities 
to the Audit, Nomination and Remuneration Committees.  
The Company Secretary acts as secretary to all of the Board 
Committees and minutes of meetings are circulated to all  
Board members. 

The terms of reference of the Committees have been documented 
and approved by the Board and are available on the Company’s 
website: www.regus.com. A brief summary of the members, 
activities and terms of reference of the Committees is  
provided below. 

Audit Committee 
Elmar Heggen (Chairman) 
Lance Browne  
Alex Sulkowski  

The Board has delegated to the Audit Committee the responsibility 
for applying an effective system of internal control and compliance, 
accurate external financial reporting, fulfilling its obligations  
under law and the Code; and managing the relationship with  
the Company’s external auditors. The Committee consists entirely 
of Non-Executive Directors, all of whom are considered by the 
Board to be independent in character and judgement, and are 
competent in accounting and/or auditing. 

The Audit Committee meets at least three times a year. At the 
request of the Chairman, the external auditors, the Executive 
Directors, the Company Secretary and the Group Head of Internal 
Audit and Risk Management attend each meeting. 

Summary terms of reference: 
•  Financial reporting – provide support to the Board by monitoring 
the integrity of financial reporting and ensuring that the published 
financial statements of the Group and any formal announcements 
relating to the Company’s financial performance comply fully with 
the relevant statutes and accounting standards. 

•  Internal control and risk systems – review the effectiveness of the 

Group’s internal controls and risk management systems. 
•  Internal audit – monitor and review the annual internal audit 

programme ensuring that the internal audit function is adequately 
resourced and free from management restrictions, review and 
monitor responses to the findings and recommendations of  
the internal auditors. 

•  External audit – advise the Board on the appointment, 
reappointment, remuneration and removal of the  
external auditors.  

•  Employee concerns – review the Company’s arrangements  

under which employees may in confidence raise any concerns 
regarding possible wrongdoing in financial reporting or other 
matters. The Audit Committee ensures that these arrangements 
allow proportionate and independent investigation and 
appropriate follow-up action.  

The Audit Committee also meets independently with the 
Company’s auditors and with the Group Head of Internal Audit  
and Risk Management to informally discuss matters of interest. 

External auditors 
KPMG Luxembourg S.à r.l. were the Company’s auditors for the 
year ended 31 December 2012. For 2013, the Audit Committee  
has recommended to the Board that a resolution to reappoint 
KPMG Luxembourg S.à r.l. as the Company’s auditors be 
proposed at the AGM. The Audit Committee will continue to  
keep under review the independence and objectivity of the external 
auditors, the effectiveness of the audit process and the rotation  
of the lead audit partner. 

The scope and extent of non-audit work undertaken by the 
Company’s external auditors is monitored by and, above certain 
thresholds, requires prior approval from the Audit Committee to 
ensure that the provision of non-audit services does not impair  
their independence or objectivity. During the year, KPMG performed 
due diligence work on certain acquisitions. KPMG is prohibited  
from providing services that would be considered to jeopardise  
their independence such as book keeping services, valuations  
and system design. 

Remuneration Committee 
Alex Sulkowski (Chairman)  
Lance Browne 
Elmar Heggen 

Details of the Remuneration Committee and its activities during the 
year are set out in the Remuneration Report on pages 32 to 41. 

Nomination Committee 
Lance Browne (Chairman) 
Elmar Heggen 
Alex Sulkowski 
Douglas Sutherland 

The Nomination Committee meets as required during the year  
to consider matters delegated to it under its terms of reference. 
Board effectiveness, performance and leadership were discussed 
informally by the Board as a whole.  

25
www.regus.com/investors 25

 
 
 
Corporate governance continued

Summary terms of reference: 
•  Board appointment and composition – to regularly review  
the structure, size and composition of the Board and make 
recommendations on the role and nomination of Directors for 
appointment and re-appointment to the Board for the purpose  
of ensuring a balanced and diverse Board in respect of skills, 
knowledge and experience.  

•  Board Committees – to make recommendations to the Board  
in relation to the suitability of candidates for membership of the 
Audit and Remuneration Committees. The appointment and 
removal of Directors are matters reserved for the full Board.  
•  Board effectiveness – to assess the role of Chairman and Chief 

Executive and make appropriate recommendations to the Board. 

•  Board performance – to assist the Chairman with the annual 
performance evaluation to assess the performance and 
effectiveness of the overall Board and individual Directors.  

•  Leadership – to remain fully informed about strategic issues and 
commercial matters affecting the Company and to keep under 
review the leadership needs of the organisation to enable it to 
compete effectively. 

Principal risks and uncertainties 
There are a number of risks and uncertainties which could have  
an impact on the Group’s long-term performance. The Group  
has a risk management structure in place designed to identify, 
manage and mitigate business risks. Risk assessment and 
evaluation is an essential part of the annual planning, budgeting  
and forecasting cycle. 

The Directors have identified the following principal risks and 
uncertainties affecting the Company. These do not constitute  
all of the risks facing the Group. 

Economic downturn in significant markets 
The Group has a significant proportion of its centres in the  
Americas (predominantly the USA) and Europe. An economic 
downturn in these markets could adversely affect the Group’s 
operating revenues thereby reducing operating performance or,  
in an extreme downturn, resulting in operating losses. 

Generally, the terms on which the Group earns revenues from 
customers and pays its suppliers (principally landlords) are  
matched to reduce working capital needs. However, a reduction  
in revenues, with no immediate decline in the cost base, could 
result in significant funding shortfalls in the business. Any funding 
shortfall may require the Group to seek external funding or sell 
assets in the longer term. 

In addition, competition may increase as a result of landlords 
offering surplus space at discounted prices and companies seeking 

to reduce their costs by sub-letting space. These factors could 
result in reduced revenue for the Group as the prices it is able  
to charge customers would be reduced. 

The Group has taken a number of actions to mitigate this risk: 
•  the Group has entered into performance-based leases with 
landlords where rent costs vary with revenues earned by  
the centre;  

•  building lease contracts include break clauses at periodic 

intervals to allow the Group to exit leases should they become 
onerous. In cities with a number of centres this allows the Group 
to stagger leases such that an orderly reduction in exposure  
to the location may be facilitated; and  

•  the profile of clients in a centre is continually reviewed to avoid 
undue reliance on a particular client or clients in a particular 
industry group. 

Additionally, in the event of a downturn, the Group has a number  
of options for mitigating losses, for example by closing centres at 
lease break points. 

The Group’s strategy also focuses its growth into emerging markets 
that will reduce the proportion of the Group’s revenue generated 
from the USA and Europe over time and provide better protection 
to the Group from an economic downturn in a single market. 

Exposure to movements in property markets 
A number of the Group’s lease contracts contain market rent review 
clauses. This means that the costs of these leases may vary as a 
result of external movements in the property market. In particular,  
in the UK, lease contracts typically contain ‘upward only’ rent 
reviews which means that should open market rents decrease,  
then Regus could be exposed to paying higher than market rent  
in these locations.  

If the Group is unable to pass on increased rent costs to customers 
due to local property market conditions then this could result  
in reduced profitability or operating losses in these markets. 

Equally, for Group lease contracts without market rent review 
clauses, the Group may benefit from paying below market rent  
in a market with increasing open market rents. This may allow the 
Group to improve profitability if the movements in open market 
rents are passed on to clients. 

The length of the Group’s leases (or the period after which the Group 
can exercise any break option in the leases) is usually significantly 
longer than the duration of the Group’s contracts with its customers. 
If demand falls, the Group may be unable to increase or maintain 
occupancy or price levels and if revenue declines the Group may be 
unable to reduce the lease cost base. Additional costs could be 
incurred if the Group disposes of unprofitable centres. 

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26 Regus plc Annual Report and Accounts 2012

Changes in assumptions underlying the carrying value of certain 
Group assets could result in impairment 
Regus completes a review of the carrying value of its assets 
annually to assess whether those carrying values can be supported 
by the net present value of future cash flows derived from such 
assets. This review examines the continued appropriateness of the 
assumptions in respect of which the carrying values of certain of the 
Group’s assets are based. This includes an assessment of discount 
rates and long-term growth rates, and timing and quantum of future 
capital expenditure. Due to the Group’s substantial carrying value  
of goodwill under IFRS, the revision of any of these assumptions to 
reflect current or anticipated changes in operations or the financial 
condition of the Group could lead to an impairment in the carrying 
value of certain assets in the Group. While impairment does not 
impact reported cash flows, it does result in a non-cash charge in 
the consolidated income statement and thus no assurance can be 
given that any future impairments would not affect the Company’s 
reported distributable reserves and therefore its ability to make 
distributions to its shareholders or repurchase its shares. 

The Group’s geographic expansion may increase exposure to 
unpredictable economic, political and legal risks 
Political, economic and legal systems in emerging markets have 
historically been less predictable than in countries with more 
developed institutional structures. As the Group increasingly enters 
into emerging markets, the value of the Group’s investments may 
be adversely affected by political, economic and legal developments 
which are beyond the Group’s control. 

Exposure to movements in exchange rates 
The Group has significant overseas operations whose businesses 
are generally conducted in the currency of the country in which they 
operate. The principal exposures of the Group are to the US dollar 
and the euro with approximately 35% of the Group’s revenues 
being attributable to the US dollar and 15% to the euro.  

Given that transactions generally take place in the functional 
currency of Group companies, the Group’s exposure to 
transactional foreign exchange risk is limited. However, the 
translation into sterling of overseas profits and net assets will be 
affected by prevailing exchange rates. In the event that either the 
US dollar or euro were to significantly depreciate or appreciate 
against sterling, this would have an adverse or beneficial impact  
to the Group’s reported performance and position respectively. 

The financial risk management objectives and policies of the Group, 
together with an analysis of the exposure to such risks, are set out 
in note 23 of the Accounts. Wherever possible, the Group attempts 
to create natural hedges against currency exposures through 
matching income and expenses, and assets and liabilities, in the 
same currency.  

Given the continued volatility in exchange rates since January 2009 
the Board has approved a policy which allows the Group to hedge, 
subject to strict limits, the rates at which overseas earnings are 
translated. This will enable the Group to have more certainty over 
the sterling value of these earnings.  

Group Structure 
As a Jersey-incorporated company having its place of central 
administration (head office) in Luxembourg and being tax resident  
in Luxembourg, the Company is required to comply with both 
Jersey law and Luxembourg law, where applicable. In addition,  
the Company’s ordinary shares are listed on the Official List of the 
UK Listing Authority and admitted to trading on the main market of 
the London Stock Exchange. It is possible that conflicts may arise 
between the obligations of the Company under the laws of each of 
these jurisdictions or between the applicable laws and the Listing 
Rules. If an irreconcilable conflict were to occur then the Company 
may not be able to maintain its status as a company tax resident  
in Luxembourg. 

The Group manages the risk that a significant tax liability could  
arise by taking appropriate advice, both in carrying out the Group 
reorganisation and on an ongoing basis. In addition, the Group 
believes that under current laws and regulations the risk of 
irreconcilable conflicts between current laws and regulations 
impacting Regus plc is also low. 

All shareholders are paid dividends directly from Regus plc  
SA (‘plc’). All dividend payments are made without deduction  
of Luxembourg withholding tax, regardless of the residence  
of the recipient. 

In general terms, UK resident shareholders receiving dividends  
from plc should be taxed in the same way as if they had received a 
dividend from a UK company. Tax outcomes do, however, depend 
on the specific circumstances of shareholders and any shareholder 
in doubt about their tax position (including, in particular, UK resident 
but non-UK-domiciled individuals who have elected to be taxed on 
a remittance basis) should consult their own professional adviser. 

Centrally managed applications and systems 
All of the Group’s systems and applications are housed in a central 
data centre. Should the data centre be impacted as a result of 
circumstances outside of the Group’s control there could be an 
adverse impact on the Group’s operations and therefore its financial 
results. This risk is managed through a detailed service arrangement 
with our external data centre provider which incorporates 
appropriate back-up procedures and controls. 

Internal controls 
The Board has ultimate responsibility for maintaining a  
sound system of internal control and for periodically reviewing  
its effectiveness. 

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Corporate governance continued

In accordance with the revised guidance set out in the Turnbull 
Report ‘Internal Control: Revised Guidance for Directors on the 
Combined Code’, an ongoing process has been established for 
identifying, managing and evaluating the risks faced by the Group. 
The Group’s system of internal controls is designed to: 
•  facilitate the effective and efficient response to risks which might 

affect the achievement of the Group’s objectives; 

•  safeguard assets from inappropriate use or from loss or fraud; 
•  help ensure the quality of internal and external financial  

reporting; and 

•  help ensure compliance with applicable laws and regulations. 

No system of internal control can provide absolute assurance 
against material misstatement or loss. The Group’s system of 
controls helps to manage, rather than eliminate, the risk of failure  
to achieve business objectives, and can only provide reasonable 
assurance that potential problems will normally be prevented or  
will be detected in a timely manner for appropriate action. 

Strategy and risk management 
The Board conducts regular reviews of the Group’s strategic 
direction. Country and regional strategic objectives, quarterly plans 
and performance targets for 2013 have been set by the Executive 
Directors and are regularly reviewed by the Board in the context  
of the Group’s overall objectives.  

There is an ongoing process for identifying, evaluating and 
managing the risks faced by the Group. Major business risks  
and their financial implications are appraised by the responsible 
executives as a part of the budget process and are endorsed by 
regional management. Key risks are reported to the Board and the 
Audit Committee. The appropriateness of controls is considered by 
the executives, having regard to cost, benefit, materiality and the 
likelihood of risks crystallising. Key risks and actions to mitigate 
those risks are regularly considered by the Board and are formally 
reviewed and approved by the Board annually.  

Control environment 
High standards of behaviour are demanded from staff at all levels in 
the Group. The following procedures are in place to support this: 
•  a clearly defined organisation structure with established 

responsibilities; 

•  the induction process is used to educate new team members on 
the standards required from them in their role, including business 
ethics and compliance, regulations and internal policies; 

•  all team members are provided with a copy of the ‘Team Member 

Handbook’ which contains detailed guidance on employee 
policies and the standards of behaviour required of staff; 

•  policies and procedure manuals and guidelines are readily 

accessible through the Group’s intranet site; and 

•  operational audit and self-certification tools which require 

individual centre managers to confirm their adherence to Group 
policies and procedures.  

To underpin the effectiveness of controls, it is the Group’s policy  
to recruit and develop appropriately skilled management and staff  
of high calibre, integrity and with appropriate disciplines.  

Whistle-blowing policy 
The Company has an externally hosted whistle-blowing channel 
(‘EthicsPoint’), which is available to all employees via email, and  
on the Company’s Intranet website. The aim of the policy is to 
encourage all employees, regardless of seniority, to bring matters 
that cause them concern to the attention of the Audit Committee. 

The Business Assurance Director, where appropriate in consultation 
with the executive management team, decides on the appropriate 
method and level of investigation. The Audit Committee is notified  
of all material disclosures made and receives reports on the results 
of investigations and actions taken. The Audit Committee has the 
power to request further information, conduct its own inquiries  
or order additional action as it sees fit. 

Control processes 
The Company has had procedures in place throughout the year  
and up to 5 March 2013, the date of approval of this Annual Report, 
which accord with the Revised Internal Control Guidance for 
Directors in the Code. These include the following: 
•  the Board normally meets with regional executives every six 

months to carry out a wide-ranging review of Group and regional 
financial performance, business development opportunities, 
Group infrastructure and general Group management issues; 
•  the annual budget process is driven from senior management 
meetings. Budgets are prepared at a detailed level by business 
centre and roll-up at country and regional level. The Executive 
Directors review regional budgets to ensure consistency with 
regional strategic objectives and the final budget is reviewed and 
approved by the Board. The approved budget forms the basis  
of business management throughout the year; 

•  operational reports and financial reports are prepared and 

distributed to the Board on a monthly basis. Actual results are 
reviewed against budget and forecast, and explanations are 
received for all material movements; 

•  key policies and control procedures (including finance, 

operations, and health and safety) are documented in manuals 
having Group-wide application. These are available to all staff  
via the Group’s intranet system; 

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28 Regus plc Annual Report and Accounts 2012

 
 
•  the Board has formal procedures in place for the review and 
approval of investment and acquisition projects. The Group 
Investment Committee (comprising the Executive Directors) 
reviews all investments prior to approval by the Board. 
Additionally the form and content of investment proposals  
is standardised to facilitate the review process; 

•  the Group has clearly delegated authority limits with regard to  

the approval of transactions; and 

•  numerous reports are generated from the Group’s sales and 
operating systems on a daily, weekly and monthly basis to 
provide management at all levels with performance data for their 
area of responsibility which helps them to focus on operational 
issues that may require their input. 

Information and communications processes 
The senior management team are integrally involved in the business 
and to this extent regularly discuss and address issues and 
opportunities with regional and functional teams. Formal business 
review meetings, chaired by Mark Dixon, are held with the regional 
teams and functional heads on a monthly basis. 

Regular staff communications include general information on the 
business from senior management as well as operational guidance 
on changes in policies and procedures. 

Sales staff and operational management periodically attend  
regional sales or management conferences at which information  
on operational issues is shared. Delegates present the key 
messages to employees who did not attend the event. 

Monitoring effectiveness 
The following key mechanisms were available to the Board  
at various times during the year in the conduct of its review  
of internal controls: 
•  review of the Group’s monthly management accounts which 

contain detailed analysis of financial performance for the Group 
and each of the Group’s geographic reporting segments; 

•  an ongoing process of review, through Board meetings, senior 
management meetings and divisional reviews as well as other 
management meetings, for the formal identification of significant 
operational risks and mitigating control processes; 

•  delivery of centrally coordinated assurance programme by the 
Internal Audit department that includes key business risk areas. 
The findings and recommendations of each review are reported 
to management and the Audit Committee to support the Board  
in its role of ensuring a sound control environment; 

•  monthly reporting on the development of the profitability of  

new centres to allow appraisal of the effectiveness of investment 
activity; and 

•  annual internal control self-assessment and management 

certification exercise covering the effectiveness of financial and 
operational controls. This is based on a comprehensive internal 
control questionnaire collated and reviewed by Internal Audit. 
Results and any necessary mitigating action plans are presented 
to senior management and the Board. 

Succession 
Our efforts to increase our management capacity and capabilities 
through continuing development of our people and supplemented 
by the hiring of experienced professionals not only supports our 
ability to execute our growth strategy but also enables us to 
address succession in a more robust way throughout the Group. 
Beginning in 2013, succession planning discussions are an integral 
part of our business planning and review processes. 

With a view to the future development of the Group as well  
as the desire to continue to enhance diversity and succession 
planning for Board roles, we plan to increase the size of the  
Board over time. The Nomination Committee has implemented  
an ongoing programme of engagement with highly qualified 
potential Non-Executive Directors of varied backgrounds and 
gender to support this process.  

Other matters 
Board performance evaluation 
A formal external evaluation of the performance of the Board  
was carried out during the year by an independent leadership 
consultancy, Panthea, with experience in conducting such reviews. 
The evaluation was conducted over a three-month period and 
consisted of a series of one-to-one interviews, a questionnaire  
and attendance by the evaluator at a Board meeting.  

The external evaluation results were reviewed by the Board and 
Nomination Committee and are being addressed in our efforts  
to continuously improve the processes and effectiveness of the 
Board. No reportable matters were noted by the evaluation and  
we continue to have full confidence in the Board’s members  
and processes. 

Training and resources  
Appropriate training is made available for all new Directors to assist 
them in the discharge of their responsibilities. Training is provided 
on an ongoing basis to meet particular needs with the emphasis  
on governance and accounting developments. 

During the year the Company Secretary, Tim Regan, provided 
updates to the Board on relevant governance matters, whilst the 
Audit Committee regularly considers new accounting developments 
through presentations from management, internal audit and the 
external auditors. The Board programme includes presentations 
from management in addition to the Executive Directors which, 
together with site visits, increase the Non-Executive Directors’ 
understanding of the business and sector. 

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29
www.regus.com/investors 29

 
 
 
 
 
Non-Executive Directors are also subject to the re-election 
requirements and serve the Company under letters of appointment, 
which have an initial three-year term. 

Compliance statement 
The Company has complied with the provisions set out in section E 
of the Code throughout the year ended 31 December 2012, with 
the exception of the following: 
•  Provision E.1.1 – The Senior Independent Non-Executive Director 

Lance Browne does not have regular meetings with major 
external shareholders.  

The Board considers it appropriate for the Chairman to be the  
main conduit with investors, rather than the Senior Independent 
Non-Executive Director. The Chairman participates in investor 
meetings and makes himself available for questions, in person, at 
the time of major announcements. The Chairman regularly updates 
the Board and particularly the Senior Independent Non-Executive 
Director on the results of his meetings and the opinions of investors. 
On this basis, the Board considers that the Senior Independent 
Non-Executive Director is able to gain full awareness of the issues 
and concerns of major shareholders. Notwithstanding this policy,  
all Directors have a standing invitation to participate in meetings 
with investors. 

Corporate governance continued

All Directors have access to the advice and services of the 
Company Secretary, who is responsible for ensuring that Board 
procedures, corporate governance and regulatory compliance are 
followed and complied with. Should a Director request independent 
professional advice to carry out his duties, such advice is available 
to him at the Company’s expense. 

Directors and officers insurance 
The Group’s insurance programme is reviewed annually and 
appropriate insurance cover is obtained to protect the Directors  
and senior management in the event of a claim being brought 
against any of them in their capacity as Directors and officers  
of the Company. 

Dialogue with shareholders  
The Company reports formally to shareholders twice a year, with 
the half year results typically announced in August or September 
and the preliminary final results announced normally in March. There 
are programmes for the Chief Executive and Chief Financial Officer 
to give presentations of these results to the Company’s institutional 
investors, analysts and media in London and other key locations. 
The Chief Executive and Chief Financial Officer maintain a close 
dialogue with institutional investors on the Company’s performance, 
governance, plans and objectives. These meetings also serve to 
develop an ongoing understanding of the views and any concerns 
of the Company’s major shareholders. 

The Non-Executive Directors are given regular updates as to the 
views of the institutional shareholders and the Chairman is available 
to meet with these shareholders on request. The principal 
communication with private shareholders is through the Annual 
Report, the half year results and the AGM. 

The Company continues to engage the services of Brunswick as its 
investor relations adviser. 

AGM 
The AGM each year is held in May in Luxembourg and is attended, 
other than in exceptional circumstances, by all members of the 
Board. In addition to the formal business of the meeting, there is 
normally a trading update and shareholders are invited to ask 
questions and are also given the opportunity to meet the Directors 
informally afterwards. 

Notice of the AGM together with any related documents are 
required to be mailed to shareholders at least 30 clear days before 
the meeting and separate resolutions are proposed on each issue. 
The voting in respect of all resolutions to be put to the AGM is 
conducted by means of a poll vote. 

The level of proxy votes cast and the balance for and against each 
resolution, together with the level of abstentions, if any, are 
announced to the meeting following voting on a poll.  

Financial and other information is made available on the Company’s 
website: www.regus.com. 

Re-election of the Board  
As required by the Code, all Directors submit themselves for  
re-election by shareholders annually and Directors appointed  
during the period since the last AGM are required to seek election 
at the next AGM under the Company’s articles of association. 

30
30 Regus plc Annual Report and Accounts 2012

Directors’ statements

Statutory statement as to disclosure to auditor 
The Directors who held office at the date of approval of this 
Directors’ Report confirm that: 
•  so far as they are each aware, there is no relevant audit 

information of which the Company’s auditor is unaware; and  
•  each Director has taken all the steps that he ought to have taken 
as a Director in order to make himself aware of any relevant audit 
information and to establish that the Company’s auditor is aware 
of that information. 

These annual accounts have been approved by the Directors  
of the Company. The Directors confirm that the annual accounts 
have been prepared in accordance with applicable law and 
regulations and that they include a fair review of the development 
and performance of the business and the position of the parent 
company and the undertakings included in the consolidation  
taken as a whole, together with a description of the principal  
risks and uncertainties that they face. 

We, the Directors of the Company, confirm that to the best  
of our knowledge:  
•  the financial statements prepared in accordance with the 

applicable set of accounting standards, give a true and fair view 
of the assets, liabilities, financial position and profit or loss of the 
Company and the undertakings included in the consolidation  
as a whole; and  

•  the Directors’ Report, including content contained by reference, 
includes a fair review of the development and performance of the 
business and the position of the Company and the undertakings 
included in the consolidation taken as a whole, together with a 
description of the principal risks and uncertainties that they face. 

By order of the Board 

Mark Dixon 
Chief Executive Officer 

Dominique Yates 
Chief Financial Officer 

5 March 2013 

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Statement of Directors’ responsibilities in respect of the 
annual report and financial statements 
The Directors are responsible for preparing the Annual Report and 
the Group and parent company financial statements in accordance 
with applicable law and regulations. 

Company law requires the Directors to prepare Group and parent 
company financial statements for each financial year. Under that 
law, they are required to prepare the Group financial statements  
in accordance with International Financial Reporting Standards 
(‘IFRSs’) as adopted by the EU and applicable law and have elected 
to prepare the parent company financial statements in accordance 
with Luxembourg Generally Accepted Accounting Practice and 
applicable law. 

Under company law, the Directors must not approve the financial 
statements unless they are satisfied that they give a true and fair 
view of the state of affairs of the Group and parent company and 
their profit or loss for the period.  

In preparing each of the Group and parent company financial 
statements, the Directors are required to:  
•  select suitable accounting policies and then apply  

them consistently;  

•  make judgements and estimates that are reasonable  

and prudent;  

•  for the Group financial statements, state whether they have  

been prepared in accordance with IFRSs as adopted by the EU;  

•  for the parent company annual accounts, state whether 
applicable Luxembourg accounting standards have been 
followed, subject to any material departures disclosed and 
explained in the parent company annual accounts; and  
•  prepare the financial statements on the going concern basis 
unless it is inappropriate to presume that the Group and the 
parent company will continue in business. 

The Directors are responsible for keeping adequate accounting 
records that are sufficient to show and explain the Company’s 
transactions and which disclose with reasonable accuracy at any 
time the financial position of the parent company and to enable 
them to ensure that it’s financial statements comply with applicable 
law and regulations. They have general responsibility for taking such 
steps as are reasonably open to them to safeguard the assets of 
the Group and to prevent and detect fraud and other irregularities. 

Under applicable law and regulations, the Directors are also 
responsible for preparing a Directors’ Report, a Remuneration 
Report and a Corporate Governance Statement that complies  
with that law and those regulations. 

The Directors are responsible for the maintenance and integrity  
of the corporate and financial information included on the 
Company’s websites. 

Legislation in the UK governing the preparation and  
dissemination of financial statements may differ from  
legislation in other jurisdictions. 

31
www.regus.com/investors 31

 
 
 
 
Remuneration report

The Committee also assessed performance for the awards to  
Mr Dixon under the Regus plc 2008 Value Creation Plan. As the 
share price targets had not been met by 31 March 2012, no VCP 
Entitlements vested during 2012. The final Measurement Date  
for awards under this plan is 31 March 2013, and it is currently 
anticipated that the award will lapse in full. 

2013 Matching Share awards 
In 2013, the Committee intends to make Matching Share awards  
to the executive directors and other senior executives under the  
Co-Investment Plan, based on the Investment Shares deferred from 
2012. This will be the first award since 2010. These awards will vest 
in equal tranches over three, four and five years subject to achieving 
stretching Earnings Per Share and Total Shareholder Return targets 
over these periods. The Committee believes that these performance 
conditions help to align the reward of our Executive Directors  
and senior executives with the delivery of significant value for  
our shareholders.  

Agenda for 2013 
During the course of 2013, the Committee will be preparing for  
the new executive remuneration reporting requirements being 
introduced in the UK. 

We look forward to receiving your support for the Directors’ 
Remuneration Report at the 2013 AGM. 

Alex Sulkowski 
Chairman of the Remuneration Committee  

5 March 2013 

Letter from the Remuneration Committee Chairman  
Dear Shareholder 

I am pleased to be writing to you in my capacity as the new 
chairman of the Remuneration Committee (the ‘Committee’).  
This is the first year that Regus has provided such a letter from  
the Committee to shareholders – it is my intention to provide an 
overview of the main aspects of the work of the Committee every 
year to be read in conjunction with the main Remuneration Report 
(the ‘Report’) below. 

I hope that you will note that we have revised the format and  
level of disclosure of the Report to take into account shareholder 
comments and views which we have received during the year. 

Executive pay and remuneration packages continue to make 
headlines and I am fully aware that you, as shareholders, will be 
reading both this letter and the Report with these in mind. At Regus, 
we have always linked salary, bonuses and long-term incentives 
with performance. We need to provide remuneration packages that 
will attract, retain and motivate people of the highest calibre and 
experience but we seek to ensure that pay outs are proportionate 
and are made only if performance demands it. 

This philosophy can be seen in action in this Report: 

2013 base salary decisions 
During 2012, the Committee decided to award Mark Dixon a base 
salary increase of 3.9% with effect from 1 January 2013. The 
Committee felt the salary increase for Mr Dixon was appropriate  
and was in line with the range of salary increases awarded to higher 
achievers within the wider workforce. 

No salary increase has been awarded to Mr Yates for 2013 as the 
Committee determined that his base salary continues to be both 
competitive and reasonable. 

2012 annual bonus out-turns 
Given the financial performance of the business in 2012, in 
particular the increase in operating profit referred to in page 10, the 
Committee considered it appropriate to award the Chief Executive 
Officer and Chief Financial Officer a maximum bonus equal to 100% 
of salary.  

50% of this bonus will be deferred into Investment Shares under the 
Regus Co-Investment Plan. 

Long-term incentives 
2012 out-turns 
The Committee assessed performance for certain Matching  
Shares and LTIP awards previously made to Mr Dixon under  
the Co-Investment Plan in 2008, 2009 and 2010 and determined 
that 25% of the relevant awards should vest based on EPS 
performance. The remainder of these awards will lapse.  

32 Regus plc Annual Report and Accounts 2012

Remuneration Report 
This report has been prepared by the Remuneration Committee  
(the ‘Committee’) of Regus plc (société anonyme) (the ‘Company’) 
and approved by the Company’s Board of Directors (the ‘Board’). 
The report complies with the requirements of Schedule 8 of the 
Large and Medium-sized Companies and Groups (Accounts  
and Reports) Regulations 2008 and, in compliance with such 
regulations, a separate resolution approving this report will be  
put to shareholders at this year’s Annual General Meeting. 

This report sets out the Company’s policy on Directors’ 
remuneration for the forthcoming year as well as information  
on remuneration paid to Directors during the year. 

Unaudited Information 
Membership and responsibilities of the Committee  
The Committee, which met five times during the year, is made  
up of three Independent Non-Executive Directors and chaired  
by Alex Sulkowski, who replaced Elmar Heggen as Chairman  
on 27 September 2012. During the year the members of the 
Committee were: 
•  Alex Sulkowski  
•  Lance Browne 
•  Elmar Heggen 

The Committee has responsibility for determining, in consultation 
with the Chairman and/or Chief Executive as appropriate, the  
total remuneration package of the Executive Directors and senior 
managers, including bonuses, incentive payments and share 
options or other share awards. 

The Board has delegated to the Committee responsibility to: 
•  determine and agree with the Board the remuneration policy for 
the Executive Directors and other senior management positions 
within the Regus Group (the ‘Group’); and 

•  approve the design of, and determine targets for, any 

performance-related pay schemes operated by the Company and 
approve the total annual payments made under such schemes.  

During the year, the Committee received ad-hoc advice on 
executive remuneration from Deloitte LLP. Deloitte also provided 
unrelated tax advice to Regus during 2012. The Committee is 
comfortable that the Deloitte LLP engagement partner and team, 
that provide remuneration advice to the Committee, do not have 
connections with Regus that may impair their independence. 

Deloitte is a member of the Remuneration Consultant’s Group and, 
as such, voluntarily operates under the code of conduct in relation 
to executive remuneration consulting in the UK. 

The Committee’s terms of reference are available on the Company’s 
website: www.regus.com. The members of the Committee attend 
the Company’s Annual General Meeting and are available to answer 
shareholders’ questions about Directors’ remuneration. 

Compliance with the best practice provisions 
In accordance with the Board’s commitment to maintaining high 
standards of Corporate Governance, the Committee has complied 
with all remuneration-related aspects of the revised UK Corporate 
Governance Code during the year. 

Remuneration policy  
The principal objectives of the Committee’s remuneration policy are: 
•  to focus on rewarding exceptional pay for exceptional 

performance: executives should be focused on delivering 
exceptional returns to shareholders over both the short and long 
term and be given the opportunity to receive exceptional levels of 
reward if such performance is delivered. Conversely, if returns are 
conservative, compensation levels should be conservative; and 

•  to provide remuneration packages that will attract, retain and 

motivate people of the highest calibre and experience needed  
to shape and execute the Company’s strategy and to deliver 
exceptional shareholder value. 

The guiding principles which the Committee has regard to and 
balances, as far as practicable, in determining policy and objectives 
for 2013 and future years are: 
•  to maintain a competitive package of total compensation, 
commensurate with comparable packages available with  
similar companies operating in similar markets; 

•  to make a significant percentage of potential maximum reward 

conditional on short and long-term performance; 

•  to ensure that the interests of the executives are closely aligned 
with those of the Company’s shareholders through the provision 
of share-based incentives (including bonus deferral and long-term 
incentives over a period of up to five years); 

•  to link reward to the satisfaction of targeted objectives which  

are the main drivers of shareholder value; and 

•  to be sensitive in determining Executive Directors’ remuneration 

to pay and employment conditions throughout the Group. 

An overview of the main elements of the packages and  
the performance conditions are set out in the table below.  
Further details are provided in the remainder of the Report. 

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www.regus.com/investors 33

 
 
 
 
Remuneration report continued

Element 

Base salary 

Purpose / policy 

Operation in 2013 

Set at a level which reflects the relative market  
value of an individual’s role, their position and  
sustained performance. 

Benefits 

Provide monetary and non-monetary benefits  
that are competitive. 

With effect from 1 January 2013, base salaries for 
Executive Directors are: 
•  CEO – £587,000 
•  CFO – CHF 495,000 

In 2013, benefits include: 
•  Company car/allowance (CEO only); 
•  Fuel allowance (CEO only); 
•  Private health insurance; 
•  Housing allowance (CFO only); and 
•  Representation allowance (CFO only). 

Pension 

Provide retirement benefits in a way that does not create 
an unnecessary level of financial risk for the business.  

During 2013, Executive Directors will participate in the 
Company’s money purchase scheme. 

Set at a relatively low level compared to market to 
enable a focus on variable pay rather than fixed pay. 

Under this scheme, the Company will match contributions 
of up to a maximum of 7% of salary.  

Annual bonus 

Supports and rewards the delivery of the annual 
business strategy and financial performance. 

To enhance the link to long-term shareholder value 
creation, up to 50% of the annual bonus can be 
deferred into the CIP as Investment Shares which  
are subject to a three-year holding period (and may  
be matched under the CIP, see below). 

Co-Investment  
Plan (CIP) 

Supports the delivery of the long-term business strategy 
and the enhancement of shareholder value. 

First element 
In return for deferring part of their bonus, Executive 
Directors are eligible to receive an award of  
Matching Shares, which are subject to a three-year 
performance period.  

The maximum number of Matching Shares that  
can be awarded to a participant in any one year  
is 200% of salary (i.e. a maximum ratio of 4:1 for  
each Investment Share). 

Second element 
The Committee can also make stand-alone long-term 
incentive awards (LTIP awards) under the CIP. Maximum 
LTIP awards are 100% of salary. 

Maximum bonus opportunities for 2013 will be: 
•  CEO – 100% of salary 
•  CFO – 100% of salary 

First element 
As Executive Directors will defer 50% of their 2012 bonus 
as Investment Shares they will be eligible to receive 
Matching Share awards of 200% of salary, which will 
follow a three-year performance period, on the basis  
of the following measures: 
•  Earnings Per Share; and 
•  Total Shareholder Return 

Second element 
No LTIP awards will be made in 2013.  

Shareholding 
guidelines 

Firmly aligns the Executive Directors interests  
with shareholders. 

Executive Directors are expected to build up a 
shareholding equivalent to 200% of salary.  

34 Regus plc Annual Report and Accounts 2012

 
 
 
 
The table below illustrates the balance between fixed and 
performance-related (variable) compensation for the Executive 
Directors for 2013: 

Fixed 
Variable 

Mark Dixon  
CEO 

Dominique Yates 
CFO

28% 
72% 

28%
72%

Fixed compensation comprises salary, benefits and pension 
contributions. Variable compensation includes the maximum bonus 
opportunity and a maximum award of Matching Shares under the 
Regus Co-Investment Plan (CIP).  

Non-Executive Directors are remunerated with fees, set at levels 
that are sufficient to attract and retain their services and are in line 
with market rates. The Non-Executive Directors do not receive any 
pension or other benefits, other than appropriate expenses, nor do 
they participate in any bonus or share option schemes. 

Service contracts 
Details of contracts currently in place for Directors are as follows: 

Executive Officer, the Committee re-balanced his package to 
increase the level of fixed remuneration, whilst maintaining a 
reduced but sufficient performance related element. In line with  
this, the Chief Executive Officer’s base salary was increased to 
£565,000 for 2012. 

For 2013, the Committee has decided to award the Chief Executive 
Officer an increase in his base salary of 3.9% taking his base salary 
to £587,000 with effect from 1st January 2013. The increase 
awarded to the CEO is in line with the range of increases made  
to higher achievers within the wider workforce. 

The Committee is not proposing to make any changes to the base 
salary of the Chief Financial Officer. His base salary will therefore 
continue to be CHF 495,000 for 2013. As previously disclosed,  
if there is a material change in the Swiss Franc / Pound Sterling 
exchange rate, there will be an adjustment to the salary of the  
Chief Financial Officer.  

Benefits include a company car or allowance and fuel allowance 
(Chief Executive Officer only), housing allowance and representation 
allowance (Chief Financial Officer only) and private health insurance. 

Effective date 
of contract 

Term 

Notice period 
and maximum 
provision for 
compensation

Annual bonus scheme 
The Committee believes firmly in the effectiveness of short-term 
incentives as a mechanism for incentivising and rewarding annual 
financial performance for shareholders. Accordingly, incentive 
schemes are widely used across the business. 

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Executive 
Mark Dixon 
Dominique Yates 
Non Executive 
Lance Browne  
Elmar Heggen  
Alex Sulkowski 
Douglas Sutherland 

14.10.08
01.09.11

27.08.08
01.06.10
01.06.10
27.08.08

– 
– 

12 months
12 months

3 yrs 
3 yrs 
3 yrs 
3 yrs 

6 months
6 months
6 months
6 months

For Executive Directors termination payments, which may be made 
as a payment in lieu of notice, are limited to 12 months’ base salary 
in the case of the Chief Executive Officer and 12 months’ base 
salary and benefits in the case of the Chief Financial Officer.  

Remuneration packages  
The remuneration for the Executive Directors during the year 
comprised a basic salary, a benefit package and participation in the 
annual bonus scheme.  

As disclosed last year, in order to ensure that the interests of the 
Executive Directors continue to be closely aligned with those of the 
Company’s shareholders, the Committee re-introduced the Regus 
plc Co-Investment Plan (the ‘CIP’), which had first been approved by 
shareholders at the 2005 Annual General Meeting and subsequently 
reapproved in 2008 for 2012. Awards are expected to be made in 
March 2013. 

Basic salary and benefits  
As noted last year, given the personal shareholding of the Chief 

The Committee sets bonus targets and eligibility each year.  
In 2012, in re-balancing and simplifying the remuneration package 
for Executive Directors, the maximum bonus potential for the 
Executive Directors for the year was reduced from 200% of annual 
salary (consisting of a standard bonus and a discretionary bonus)  
to 100% of annual salary.  

The 2012 annual bonus was based on stretching operating profit 
targets. Based on performance in the year (discussed in more detail 
on pages 16 to 19), the Committee determined that the target was 
met in full and, as such, the Chief Executive Officer and Chief 
Financial Officer will each receive a bonus equal to 100% of salary, 
in respect of the year. For the purposes of measuring performance, 
the positive impact of the changes in accounting policy and 
estimates, implemented during 2012, were excluded. 

Half of this bonus is paid in cash and half will be awarded in  
the form of ‘Investment Shares’ in the Company, the vesting of 
which will be deferred for three years, under the rules of the CIP 
(discussed in more detail below).  

The number of Investment Shares to be awarded will depend  
on the Company’s share price on the date of award (immediately 
subsequent to the publication of this report). The monetary value  
of Investment Shares will not exceed 50% of salary.  

For 2013, the maximum annual bonus opportunity for Executive 
Directors will remain at 100% of base salary, and will continue to  
be based on stretching operating profit targets. 

Bonuses are non-pensionable.  

Non-Executive Directors do not receive a bonus.  

www.regus.com/investors 35

 
 
 
 
 
Remuneration report continued

Pension benefits 
The Executive Directors participate in the Company’s Money 
Purchase (Personal Pension) Scheme. The Company matches 
contributions up to a maximum of 7% of basic salary. The 
Committee considers that the pension benefits of the Executive 
Directors are low compared with comparative companies but 
prefers to offer enhanced variable compensation (rather than  
a fixed additional pension contribution). 

The Group does not operate a group-wide defined benefit pension 
scheme (with the exception of Switzerland, where pension schemes 
are treated as such for accounting purposes) and has no plans to 
introduce such a scheme. 

Long Term Incentives 
Overview 
The Company operates three long-term incentive plans: the CIP, 
the Regus plc Share Option Scheme and the Regus plc 2008 Value 
Creation Plan. During 2013, it is currently intended that awards will 
only be made under the CIP. 

Co-Investment Plan (‘CIP’) 
The Committee is keen to encourage Executive Directors to build 
significant shareholdings in relation to their remuneration.  

As a condition of participation in the CIP, it is expected that 
members will, over time, build up a shareholding equivalent to  
two times their salary using shares acquired from the scheme.  

There are two elements to the CIP: 

The first element operates in conjunction with the annual bonus 
whereby a gross bonus of up to 50% of basic annual salary is 
awarded as a deferred amount of shares (‘Investment Shares’) 
to be released at the end of a defined period of not less than  
three years.  

The participant may then earn additional shares (‘Matching Shares’) 
based on the number of Investment Shares awarded and the 
Company’s future performance over the long term. 

The maximum number of Matching Shares which can be awarded 
to a participant in any calendar year under the CIP is 200% of 
salary. As such the maximum number of Matching Shares which 
can be awarded, based on Investment Shares awarded, is in the 
ratio of 4:1. 

The second element of the CIP provides for the Committee to  
make stand-alone long-term incentive awards (‘LTIPs’) without 
reference to Investment Shares up to a maximum of 100% of  
salary per calendar year. An LTIP is a conditional right over a 
specified number of shares with the release being dependent  
on the extent to which (if at all) the challenging performance 
conditions set by the Committee at the time of the LTIP award  
are satisfied. 

No awards (of either Matching Shares or LTIPs) were made under 
the CIP to Executive Directors in 2012 or 2011. 

Awards of Matching Shares to be made in 2013  
In 2013, the Committee intends to make awards of Matching 
Shares under the CIP (no LTIP awards will be made).  

As noted above, the Executive Directors deferred 50% of their 2012 
annual bonus in to the CIP as Investment Shares. In return, and 
subject to the future performance of the Company, they will be 
eligible to receive up to four Matching Shares for each Investment 
Share. This is equivalent to a maximum award of 200% of salary.  

Subject to the following performance conditions below, the 
Matching Shares awarded in March 2013 will vest in three equal 
tranches after three, four and five years (i.e. in March 2016,  
March 2017 and March 2018, respectively).  

75% of the award will be based on Earnings Per Share (EPS) 
performance in the final year of each respective performance 
period, in accordance with the following schedule: 

Vesting scale 

25% 

50% 

75% 
100% 

EPS performance in year ending 
2015 

2016

12.0p 

12.6p 

13.3p 
14.0p 

14.0p

14.6p

15.3p
16.0p

2017

16.0p

16.6p

17.3p
18.0p

Straight-line vesting between these points. No vesting for below  
the threshold performance level. 

The Committee believes EPS is the most appropriate measure of the 
financial and operational performance delivered for shareholders.  

For the purposes of this assessment, EPS will be defined as basic 
EPS of the Group as adjusted to take into account one-off 
exceptional items which do not appropriately reflect underlying 
performance of the Group.  

The equivalent EPS figure for 2012 would be 7.5p, and therefore  
the targets represent at the maximum approximately 19% growth 
per annum, which the Committee believes is very stretching in the 
current environment.  

The remaining 25% of the award will be based on Total Shareholder 
Return (TSR) performance over each respective performance 
period, in accordance with the following schedule: 

Vesting scale 

Regus TSR vs the FTSE All Share Index

0% 
25% 
100% 

Below index
Equal to index
Equal to index + 15% p.a.

Straight-line vesting between these points. TSR will be measured 
using a three month averaging period at the start and end of each 
performance period. 

The Committee believes that the use of TSR ensures that an 
appropriate element of reward is based on value delivered for 
shareholders. Measurement against a broad equity market index  
is considered appropriate given the lack of an obvious comparator 
group for Regus.  

36 Regus plc Annual Report and Accounts 2012

 
Awards vesting based on performance in respect of 2012 
Mark Dixon received Matching Share awards in 2008 and 2009  
and a further LTIP award in 2010, in each case under the CIP. 

The vesting for the first tranche of each of the 2008 and 2009 
awards (i.e. one third of each award) and for the full 2010 LTIP 
award were based on EPS (75% of the award) and TSR (25% of the 
award) performance targets to be measured to 31 December 2012. 

The Committee has assessed performance against the EPS  
targets set at the time of award and concluded that based on an 
adjusted EPS of 15.3p, which reflects underlying performance, 
adjusted to exclude the positive impact of the changes in 
accounting policy and estimates implemented during 2012, and 
excluding certain growth costs and one-off exceptional items, in 
accordance with the terms of the original award, 25% of the first 
tranche of the 2008 and 2009 awards and the 2010 LTIP award 
should vest. This reflected partial achievement against the EPS 
component. The remainder of these awards (including the TSR 
component) will lapse in full. 

Regus plc Share Option Plan (the ‘SOP’) 
The SOP was introduced in 2008 in order to assist in the 
recruitment and retention of key employees and directors. Under 
the SOP, participants are granted options to buy shares in the 
Company at no less than the market value of the shares at the 
 grant date. Such options may be either options to subscribe for 
new shares or options to purchase existing shares to be satisfied 
from an employee trust. Options may also be granted subject to  
a performance target which must then, in normal circumstances,  
be met before the option may be exercised. 

As long as Executive Directors participate in the CIP, they will not 
be eligible to receive any share option awards.  

The only outstanding grant made to Executive Directors under this 
plan was made in 2011 to aid the recruitment of the Chief Financial 
Officer. On joining the Company, the Chief Financial Officer was 
granted market value options (i.e. with an exercise price equal to  
the value of the shares at the time of the grant) over 1 million shares. 
The performance condition attached to this award required that  
the Company achieve an operating profit target in 2012. Based on 
operating profit achieved in 2012, the Committee has determined 
that 91% of the option award will, subject to continued employment, 
vest and become exercisable in equal tranches in 2014, 2015  
and 2016.  

Regus plc 2008 Value Creation Plan (the ‘VCP’)  
The VCP was introduced in 2008 as a one-off award with the 
objective of delivering exceptional rewards to participants provided 
absolute returns to shareholders are exceptional. 

The VCP operates over a five year period, and will end in March 2013. 
Participants in the VCP are granted entitlements (‘VCP Entitlements’) 
to receive a maximum number of shares which shall be earned by 
the conversion of the VCP Entitlements into an option or series of 
options (the ‘VCP Options’) which may be granted on certain dates 
(the ‘Measurement Dates’) based on the Company’s share price 

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performance. The exercise price for VCP Options will be the closing 
share price on the date of the Company’s 2008 AGM. 

VCP Entitlements granted in 2008: 

Number of shares subject to VCP Entitlement* 

*VCP Entitlements hold no value. 

Mark Dixon

3.5m

The share price of the Company will be calculated at each 
Measurement Date and compared against a matrix of extremely 
stretching fixed share price targets to determine the number of 
shares subject to the VCP Entitlement which a VCP Option will be 
granted over. If a lower share price target is achieved, a VCP Option 
shall be granted over a lesser number of shares with the ability for 
the balance to be received at a subsequent measurement date 
subject to relevant share price targets being achieved. 

The share price targets for the VCP Entitlements granted in 2008 
are as set out in the following table: 

Measurement date 
31/03/11 

31/03/10 
(Shares awarded less shares already awarded) 

31/03/12

31/03/13

Share price is less 
than £2.60 
Share price is more 
than £2.60 but less 
than £3.50 
Share price is more 
than £3.50 but less 
than £4.50 
Share price £4.50 or 
more 

– 

– 

–

–

2.5m 

1.8m 

1.2m

0.6m

3.5m 

2.5m 

1.8m

1.2m

– 

3.5m 

2.5m

1.8m

In respect of the first, second and third Measurement Dates  
(31 March 2010, 31 March 2011 and 31 March 2012 respectively),  
the Company’s share price was below the target and no VCP 
Entitlements vested. It is anticipated that the final tranche, based  
on the Measurement Date of 31 March 2013, will lapse in full. 

www.regus.com/investors 37

 
 
Remuneration report continued

The final Measurement Date for awards under the plan is  
31 March 2013. If a minimum share price of £2.60 is not  
achieved at this date, no VCP Entitlements will vest and the  
Plan will terminate. 

Chairman and Non-Executive Directors 
The fees for the Chairman are determined by the Remuneration 
Committee and the fees for the Non-Executive Directors are 
determined by the Chairman and the Executive Directors. 

Fees are set at levels that are sufficient to attract and retain 
individuals with the required skills, experience and knowledge to 
allow the Board to effectively carry out its duties. The fees recognise 
the responsibility of the role and the time commitments required.  

No increase in the fees for the Chairman or Non-Executive Directors 
was made in 2012 and no increases are currently planned for 2013. 
The only change made to the fee structure in 2012 was to introduce 
a £6,000 p.a. Committee Chairmanship fee for the Chairman of the 
Nomination Committee which is effective from 27 September 2012.  

The following table summarises Non-Executive fees for 2013: 

Chairman fee 
Non-Executive Director fee 
Additional fees: 
Senior Independent Director 
Chair of the Remuneration Committee 
Chair of the Audit Committee 
Chair of the Nomination Committee 

£165,000
£42,000

£6,000
£8,000
£8,000
£6,000

The Chairman and the Non-Executive Directors do not receive 
pension or other benefits, other than appropriate expenses,  
nor do they participate in any bonus or share option schemes. 

The fees paid during the year to each Non-Executive Director  
are shown in the table on page 39. 

Total Shareholder Return (TSR)

60

50

40

30

20

10

0

-10

-20

-30

-40

-50

Dec 07

Dec 08

Dec 09

Dec 10

Dec 11

Dec 12

 Regus

FTSE 250

FTSE All Share

The above graph shows the Company’s performance, measured  
by TSR for the Group compared with the performance of the FTSE 
250 Index and the All Share Index. The Committee consider the 
FTSE 250 Index relevant since it is an index of companies of similar 
size to the Company. As detailed earlier in the report, the Company 
considers its TSR performance for share awards under the CIP in 
comparison to that of the All Share Index. 

External appointments 
As at 31 December 2012, the Executive Directors did not hold  
any external positions for which they received fees. Executive 
Directors are permitted to accept appointments on external  
boards or committees so long as these are not deemed to interfere 
with the business of the Group. Any fees received in respect of 
these appointments would be retained directly by the relevant 
Executive Director.  

38 Regus plc Annual Report and Accounts 2012

 
 
–

165.0

1,181.0
822.9

57.0
50.0
50.0
2,325.9

2011

Total 
£’000

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Directors’ emoluments 
The aggregate emoluments, excluding pensions, of the Directors were as follows: 

Salary 
£’000

Fees 
£’000

Benefits
£’000

Compensation 
for loss  
of office 
£’000 

Bonus*
£’000

2012

Total 
£’000

Chairman 
Douglas Sutherland 
Executive 
Mark Dixon 
Dominique Yates 
Non-Executive  
Lance Brown 
Elmar Heggen 
Alex Sulkowski 

–

165.0

–

565.0
334.6

–
–
–
899.6

–
–

57.0
50.0
50.0
322.0

51.0
153.7

–
–
–
204.7

– 

– 
– 

– 
– 
– 
– 

* Half of the bonus was paid in cash and half in Investment Shares, deferred for three years under the CIP 

565.0
334.6

–
–
–
899.6

Salary 
£’000

Fees 
£’000

Benefits 
£’000

Compensation 
for loss  
of office  
£’000 

Bonus 
£’000

Chairman 
Douglas Sutherland 
Executive 
Mark Dixon 
Dominique Yates(a) 
Stephen Gleadle(b) 
Non-Executive  
Lance Brown 
Elmar Heggen 
Alex Sulkowski 

–

152.5

522.8
110.0
200.0

–
–
–
832.8

–
–
–

54.7
48.3
48.3
303.8

–

48.1
42.0
26.2

–
–
–
116.3

– 

–

152.5

– 
– 
300.0 

– 
– 
– 
300.0 

522.8
110.0
150.0

–
–
–
782.8

1,093.7
262.0
676.2

54.7
48.3
48.3
2,335.7

(a) Dominique Yates joined the Board with effect from 1 September 2011 

(b) Stephen Gleadle stepped down from the Board with effect from 31 August 2011 

Mark Dixon was the highest paid Director in both 2012 and 2011. Benefits include car and fuel allowance, representation allowance, 
medical insurance and life assurance. For the CFO, they also include a housing allowance, but do not include car and fuel allowance. 

www.regus.com/investors 39

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Remuneration report continued

Pension contributions 

£’000 

Mark Dixon 
Stephen Gleadle 
Dominique Yates 

2012

39.5
n/a
9.6
49.1

2011

36.6
12.1
n/a
48.7

Directors’ share interests  
The following Directors held beneficial interests in the share capital of the Company at 31 December 2011, 31 December 2012 and  
5 March 2013. 

5 March 2013 
Ordinary  
Shares of 1p 

31 December 
2012
Ordinary 
Shares of 1p

31 December 
2011
Ordinary 
Shares of 1p

Executive 
Mark Dixon(a) 
Dominique Yates 
Non-Executive 
Lance Browne 
Elmar Heggen 
Alex Sulkowski 
Douglas Sutherland 

322,744,607  322,744,607 322,028,792
641,989

641,989 

641,989

– 
– 
– 
400,000 

–
–
–
400,000

–
–
–
400,000

(a) The interests of Mark Dixon are held indirectly through Estorn Limited, an entity in which Mark Dixon controls 100% of the share capital.  

Directors’ share options 
As at 31 December 2012, the beneficial interest of the Directors in options granted under the Regus plc Share Option Plan are  
shown below.  

Dominique Yates 

At 1  
January 2012 

Awards 
Granted 2012

1,000,000 

–

Awards 
Exercised 
2012

–

Awards 
Lapsed 2012

At 31 
December 
2012

Exercise price 
of grant (p) 

Date first 
exercisable

Expiry 
date

–

1,000,000

74.35  1/09/2014 02/09/2021

Share Options

Directors’ interests under the Long Term Incentive Plan (‘LTIP’) 
Details of awards over ordinary shares in the Company granted to the Directors under the LTIP, as nil cost options, are as follows: 

Mark Dixon 

At 1 
January 
2012

520,149

Awards 
Granted
2012

–

Awards 
Lapsed  
2012 

– 

Awards 
Exercised
2012

LTIP

At 31 
December 
2012

–

520,149

40 Regus plc Annual Report and Accounts 2012

 
 
 
 
 
 
 
 
 
Directors’ interests under the CIP 
Details of awards over ordinary shares in the Company granted to the Directors under the CIP, all for nil consideration, are as follows: 

Investment Shares 
Mark Dixon 
Dominique Yates 
Matching Shares 
Mark Dixon 
Dominique Yates 

At 1 
January 
2012

Investment 
Awards 
exercised
2012

Awards 
lapsed 
2012

Matching 
Awards 
exercised 
2012 

CIP

Awards 
made 
2012

At 31 
December 
2012

715,815
–

715,815
–

2,863,260
–

–
–

–
–

–
–

– 
– 

– 
– 

–
–

–
–

–
–

2,863,260
–

The market price of the Company’s ordinary shares at 28 December 2012, the last dealing day of 2012, was 108.2p and the range  
during the year was 82.65p to 117.5p. 

None of the Directors had a beneficial interest in any contract of any significance in relation to the business of the Company or its 
subsidiaries at any time during the financial year. 

Annual resolution 
Shareholders will be given the opportunity to approve the Remuneration Report at the AGM on 21 May 2013. 

Audit requirement  
Under Luxembourg law and regulations there is no requirement for the sections on Directors’ remuneration, shareholdings and pension 
benefits on pages 39 to 40 inclusive to be audited; therefore all sections of the Remuneration Report are unaudited. 

On behalf of the Board 

Alex Sulkowski 
Chairman, Remuneration Committee  

5 March 2013 

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www.regus.com/investors 41

 
 
 
 
 
Opinion 
In our opinion, the consolidated financial statements, as set out on 
pages 43 to 89, give a true and fair view of the consolidated financial 
position of Regus plc (société anonyme) as of 31 December 2012, 
and of its consolidated financial performance and its consolidated 
cash flows for the year then ended in accordance with International 
Financial Reporting Standards as adopted by the European Union. 

Report on other legal and regulatory requirements 
The consolidated Directors’ report, including the corporate 
governance statement, which is the responsibility of the Board of 
Directors, is consistent with the consolidated financial statements 
and includes the information required by the law with respect to  
the Corporate Governance Statement.  

KPMG Luxembourg S.à r.l. 
Cabinet de révision agréé 
Thierry Ravasio 
Luxembourg, 5 March 2013 

Auditors’ report

To the Shareholders of  
Regus plc S.A. 
26, Boulevard Royal 
L-2449 Luxembourg 

REPORT OF THE REVISEUR D’ENTREPRISES AGREE 
Report on the consolidated financial statements 
We have audited the accompanying consolidated financial 
statements of Regus plc (société anonyme), which comprise  
the consolidated balance sheet as at 31 December 2012 and  
the consolidated statements of income, comprehensive income, 
changes in equity and cash flows for the year then ended, and a 
summary of significant accounting policies and other explanatory 
information, as set out on pages 43 to 89. 

Board of Directors’ responsibility for the consolidated 
financial statements  
The Board of Directors is responsible for the preparation and  
fair presentation of these consolidated financial statements in 
accordance with International Financial Reporting Standards as 
adopted by the European Union, and for such internal control  
as the Board of Directors determines is necessary to enable the 
preparation of consolidated financial statements that are free  
from material misstatement, whether due to fraud or error. 

Responsibility of the Réviseur d’Entreprises agréé 
Our responsibility is to express an opinion on these consolidated 
financial statements based on our audit. We conducted our audit  
in accordance with International Standards on Auditing as adopted 
for Luxembourg by the Commission de Surveillance du Secteur 
Financier. Those standards require that we comply with ethical 
requirements and plan and perform the audit to obtain reasonable 
assurance about whether the consolidated financial statements are 
free from material misstatement. 

An audit involves performing procedures to obtain audit evidence 
about the amounts and disclosures in the consolidated financial 
statements. The procedures selected depend on the judgement  
of the Réviseur d’Entreprises agréé, including the assessment of  
the risks of material misstatement of the consolidated financial 
statements, whether due to fraud or error. In making those risk 
assessments, the Réviseur d’Entreprises agréé considers internal 
control relevant to the entity’s preparation and fair presentation  
of the consolidated financial statements in order to design audit 
procedures that are appropriate in the circumstances, but not  
for the purpose of expressing an opinion on the effectiveness  
of the entity’s internal control. An audit also includes evaluating  
the appropriateness of accounting policies used and the 
reasonableness of accounting estimates made by the Board  
of Directors, as well as evaluating the overall presentation  
of the consolidated financial statements.  

We believe that the audit evidence we have obtained is sufficient 
and appropriate to provide a basis for our audit opinion. 

42 Regus plc Annual Report and Accounts 2012

 
Consolidated income statement

Continuing operations 

Revenue 
Cost of sales 
Gross profit (centre contribution) 
Administration expenses  
Share of (loss)/profit on joint ventures 
Operating profit 
Finance expense 
Finance income 
Profit before tax for the year 
Tax charge  
Profit after tax for the year 

Profit attributable to: 
Equity shareholders of the parent 
Non-controlling interests 
Profit for the year 

Earnings per ordinary share (EPS) after exceptional items: 
Basic (p) 
Diluted (p) 

* Restatement described in note 2 

Year ended
31 Dec
2012

Total
£m

1,244.1
(923.4)
320.7
(230.2)
(0.3)
90.2
(5.9)
0.8
85.1
(14.2)
70.9

70.9
–
70.9

7.5
7.5

Notes 

3 

20 
5 
8 
8 

9 

10 
10 

Year ended
31 Dec 
2011 
(Restated*)
Total
£m

1,162.6
(883.5)
279.1
(224.7)
0.1
54.5
(6.4)
1.3
49.4
(9.0)
40.4

41.7
(1.3)
40.4

4.3
4.3

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www.regus.com/investors 43

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated statement 
of comprehensive income

Profit for the year 
Other comprehensive income: 
Actuarial loss for the year 
Foreign currency translation differences for foreign operations, net of income tax 
Other comprehensive income for the year, net of income tax 
Total comprehensive income for the year 

Total comprehensive income attributable to: 
Equity shareholders of the parent 
Non-controlling interests 
Total comprehensive income for the year 

* Restatement described in note 2 

Notes 

25 

Year ended
31 Dec 2012
£m

Year ended
31 Dec 2011
£m 
(Restated*)

70.9

(0.1)
(14.5)
(14.6)
56.3

56.3
–
56.3

40.4

(0.1)
(4.1)
(4.2)
36.2

37.5
(1.3) 
36.2

44
44 Regus plc Annual Report and Accounts 2012

 
 
 
 
 
 
 
 
 
 
 
 
Consolidated statement 
of changes in equity

Attributable to equity holders of the parent (a) 

Balance at 1 January 2011 
Impact of change in accounting policy** 
Restated balance at 1 January 2011 
Total comprehensive income for the year: 
Profit for the year (Restated*) 
Other comprehensive income: 
Actuarial loss for the year (note 25) 
Foreign currency translation differences for 
foreign operations, net of tax 
Total other comprehensive income, net 
Total comprehensive income for the year  
Transactions with owners, recorded 
directly in equity 
Share-based payments 
Ordinary dividend paid 
Acquisition of non-controlling interest 
Settlement of share awards 
Restated balance at 31 December 2011 
Total comprehensive income for the year: 
Profit for the year 
Other comprehensive income: 
Actuarial loss for the year (note 25) 
Foreign currency translation differences for 
foreign operations, net of tax 
Total other comprehensive income, net 
Total comprehensive income for the year  
Transactions with owners, recorded 
directly in equity 
Share-based payments 
Ordinary dividend paid 
Acquisition of non-controlling interest 
Settlement of share awards 

Share 
capital
£m

Treasury 
shares
£m

9.5 
–
9.5

(7.1)
–
(7.1)

– 

– 

– 
– 
– 

– 

– 

– 
– 
– 

– 
– 
–
–
9.5 

– 
– 
–
 –
(7.1)

–

– 

– 
– 
– 

– 
– 
– 
–

–

– 

– 
– 
– 

–
–
–
0.1

Foreign 
currency 
translation 
reserve
£m

52.6 
–
52.6

– 

–

(4.1)
(4.1)
(4.1)

– 
– 
–
–
 48.5

–

–

(14.5)
(14.5)
(14.5)

–
–
–
–

Revaluation 
reserve
£m

10.5 
–
10.5

Other
£m

15.3 
–
15.3

Retained 
earnings 
£m 

404.9  
8.2 
413.1 

Total equity 
attributable 
to equity 
holders 
£m 

Non-
controlling 
interests
£m

485.7  
8.2 
493.9 

0.1 
–
0.1

Total 
equity
£m

485.8 
8.2
494.0

– 

– 

– 
– 
– 

– 

– 

– 
– 
– 

41.7 

41.7 

(1.3)

40.4

(0.1) 

(0.1) 

–

(0.1)

– 
(0.1) 
41.6 

(4.1) 
(4.2) 
37.5 

–
–
(1.3)

(4.1)
(4.2)
36.2

– 
– 
–
–
10.5 

– 
– 
–
–
15.3 

 0.6 
(25.0) 
(5.1) 
 (1.2) 
424.0 

 0.6 
(25.0) 
(5.1) 
(1.2) 
500.7 

– 
– 
1.2
–
– 

 0.6
(25.0)
(3.9)
(1.2)
500.7

70.9

(0.1)

(14.5)
(14.6)
56.3

0.6
(28.2)
–
(2.0)

527.4

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–

–

– 
–
–

–
–
–
–

–

–

– 

– 
– 
– 

–
–
–
–

–

– 

– 
– 
– 

–
–
–
–

70.9 

70.9 

(0.1) 

(0.1) 

–  
(0.1) 
70.8 

(14.5) 
(14.6) 
56.3 

0.6 
(28.2) 
– 
(2.1) 

0.6 
(28.2) 
– 
(2.0) 

Balance at 31 December 2012 

9.5

(7.0)

34.0

10.5

15.3

465.1 

527.4 

*  Restatement described in note 2 

**  Net of foreign exchange impact 

(a) Total reserves attributable to equity holders of the parent 

•  Share capital represents the net proceeds (the nominal value) on the issue of the Company’s equity share capital. 
•  At 31 December 2012 Treasury shares represent 8,982,139 (2011: 9,070,906) ordinary shares of the Group that were acquired for the 

purposes of the Group’s employee share option plans and the share buy-back programme. During the period, nil shares were purchased 
in the open market and 88,767 Treasury shares held by the Group were utilised to satisfy the exercise of share awards by employees.  
As at 5 March 2013, 8,982,139 Treasury shares were held. 

•  The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of 

foreign subsidiaries and joint ventures.  

•  The revaluation reserve arose on the restatement of the assets and liabilities of the UK associate from historic to fair value at the time of  

the acquisition of the outstanding 58% interest on 19 April 2006. 

•  Other reserves include £37.9m arising from the Scheme of Arrangement undertaken on 14 October 2008, £6.5m relating to merger 

reserves and £0.1m to the redemption of preference shares partly offset by £29.2m arising from the Scheme of Arrangement undertaken 
in 2003. 

45
www.regus.com/investors 45

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated balance sheet

As at  
31 Dec 2012 
£m 

As at
31 Dec 2011
£m
(Restated*)

As at
1 Jan 2011
£m
(Restated*)

Notes

12
13
14
9
15
20

16
9

22

17

9
18
18
19

17
18
18
9
19
20
25

21

317.0 
46.9 
437.5 
33.9 
35.7 
1.7 
872.7 

290.8 
5.7 
– 
132.3 
428.8 
1,301.5 

(447.7) 
(151.1) 
(6.8) 
(0.6) 
(4.8) 
(1.5) 
(612.5) 
(183.7) 
689.0 

(147.4) 
(0.1) 
(6.8) 
(1.3) 
(4.6) 
(1.2) 
(0.2) 
(161.6) 
(774.1) 
527.4 

9.5 
(7.0) 
34.0 
10.5 
15.3 
465.1 
527.4 
– 
527.4 
1,301.5 

285.4 
45.9 
333.5 
32.2
37.9 
2.6 
 737.5

271.3
7.4
–
197.5 
476.2 
1,213.7 

(425.1)
(141.6)
(6.3)
(1.5)
(0.9)
(3.0)
(578.4)
(102.2)
 635.3

(117.8)
(0.8)
(6.0) 
(0.5)
(8.2)
(1.2)
(0.1)
(134.6)
(713.0)
500.7

9.5 
(7.1)
48.5
10.5
15.3
424.0
500.7 
 –
500.7
1,213.7

282.4
48.4
279.5
36.6
34.0
3.9
684.8

248.7
13.3
10.4
194.2
466.6
1,151.4

(388.4)
(125.8)
(17.0)
(2.3)
(5.5)
(2.8)
(541.8)
(75.2)
609.6

(99.1)
(1.9)
(3.4)
(0.1)
(9.8)
(1.3)
–
(115.6)
(657.4)
494.0

9.5
(7.1)
52.6
10.5
15.3
413.1
493.9 
0.1
494.0
1,151.4

Non-current assets 
Goodwill 
Other intangible assets 
Property, plant and equipment 
Deferred tax assets 
Other long-term receivables 
Investments in joint ventures  

Current assets 
Trade and other receivables 
Corporation tax receivable 
Liquid investments  
Cash and cash equivalents 

Total assets 
Current liabilities 
Trade and other payables (incl. customer deposits) 
Deferred income 
Corporation tax payable 
Obligations under finance leases 
Bank and other loans 
Provisions  

Net current liabilities 
Total assets less current liabilities 
Non-current liabilities 
Other payables 
Obligations under finance leases 
Bank and other loans 
Deferred tax liability 
Provisions  
Provision for deficit on joint ventures 
Retirement benefit obligations 

Total liabilities  
Total assets less liabilities 
Total equity 
Issued share capital 
Treasury shares 
Foreign currency translation reserve 
Revaluation reserve 
Other reserves 
Retained earnings 
Total shareholders’ equity 
Non-controlling interests 
Total equity 
Total equity and liabilities 

* Restatement described in note 2 

Approved by the Board on 5 March 2013 

Mark Dixon 
Chief Executive Officer 

Dominique Yates 
Chief Financial Officer 

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46 Regus plc Annual Report and Accounts 2012

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated statement of cash ﬂ ows

Profit before tax for the year 
Adjustments for: 
Net finance costs 
Share of loss/(profit) after tax on joint ventures 
Depreciation charge 
Loss on disposal of property, plant and equipment 
Amortisation of intangible assets 
Loss on disposal of intangible assets 
Decrease in provisions 
Share-based payments 
Other non-cash movements 
Operating cash flows before movements in working capital 
(Increase)/decrease in trade and other receivables 
Increase/(decrease) in trade and other payables 
Cash generated from operations (before exceptional items) 
Cash inflow/(outflow) from exceptional items 
Cash generated from operations (after exceptional items) 
Interest paid on finance leases 
Interest paid on credit facilities 
Tax paid 
Net cash inflow from operating activities 

Investing activities 
Purchase of subsidiary undertakings (net of cash acquired) 
Disposal of subsidiary undertakings (net of cash disposed of) 
Dividends received from joint ventures 
Proceeds on sale of property, plant and equipment 
Purchase of property, plant and equipment 
Purchase of intangible assets 
Interest received 
Decrease in liquid investments 
Net cash outflow from investing activities 

Financing activities 
Net proceeds from issue of loans 
Repayment of loans 
Repayment of capital elements of finance leases 
Acquisitions of non-controlling interests 
Settlement of share awards 
Payment of ordinary dividend 
Net cash outflow from financing activities 

Net (decrease)/increase in cash and cash equivalents 
Cash and cash equivalents at beginning of year 
Effect of exchange rate fluctuations on cash held 
Cash and cash equivalents at end of year 

* Restatement described in note 2

Year ended
31 Dec 2012
£m

Year ended
31 Dec 2011
£m 
(Restated*)

85.1

49.4

5.1
0.3
63.6
0.1
5.5
0.1
(5.1)
0.6
(3.8)
151.5
(24.9)
71.3
197.9
–
197.9
(0.1)
(3.0)
(13.9)
180.9

(43.3)
–
0.8
1.5
(169.2)
(6.8)
0.7
–
(216.3)

6.4
(1.9)
(1.4)
–
(2.0)
(28.2)
(27.1)

(62.5)
197.5
(2.7)
132.3

5.1 
(0.1)
 68.1
1.2 
6.7 
–
(1.4) 
0.6 
(2.0)
127.6 
(29.1) 
79.9
178.4 
(1.9) 

176.5
(0.2)
(1.9)
(10.6)
 163.8

(6.2) 
(1.8)
1.4 
–
(124.1)
(3.9)
 1.2
10.4
(123.0)

 0.2
(1.3)
(2.0)
(3.9)
(1.2)
(25.0)
(33.2)

7.6
194.2
(4.3)
 197.5

Notes 

8 
20 
5, 14 

5, 13 

19 

26 

20 

14 
13 
8 

26 

11 

22 

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Notes to the accounts

1. Authorisation of financial statements 
The Group and Company financial statements for the year ended 31 December 2012 were authorised for issue by the Board of Directors 
on 5 March 2013 and the balance sheets were signed on the Board’s behalf by Mark Dixon and Dominique Yates. Regus plc S.A. is a 
public limited company incorporated in Jersey and registered and domiciled in Luxembourg. The Company’s ordinary shares are traded  
on the London Stock Exchange. 

The Group financial statements have been prepared and approved by the Directors in accordance with International Financial  
Reporting Standards as adopted by the European Union (‘Adopted IFRSs’). The Company prepares its parent Company annual  
accounts in accordance with Luxembourg GAAP; extracts from these are presented on page 90. 

2. Accounting policies 
Basis of preparation 
The Group financial statements consolidate those of the parent Company and its subsidiaries (together referred to as the ‘Group’) and 
equity account the Group’s interest in the associate and jointly controlled entities. The extract from the parent Company annual accounts 
presents information about the Company as a separate entity and not about its Group. 

The accounting policies set out below have been applied consistently to all periods presented in these Group financial statements. 
Amendments to adopted IFRSs issued by the International Accounting Standards Board (IASB) and the International Financial Reporting 
Interpretations Committee (IFRIC) with an effective date from 1 January 2012 did not have a material effect on the Group financial statements. 

IAS 12 Income Taxes (Amendment) – Deferred Taxes: Recovery of Underlying Assets introduces a rebuttable assumption that deferred  
tax on investment properties measured at fair value will be recognised on a sale basis, unless an entity has a business model that would 
indicate the investment property will be consumed in business. The adoption of this amendment has no impact on the financial position  
or performance of the Group.  

IFRS 1 First-time Adoption of International Financial Reporting Standards (Amendment) – Severe Hyperinflation and Removal of Fixed Dates 
for First-time Adopters provides guidance on how an entity should resume presenting IFRS financial statements when its functional currency 
ceases to be subject to severe hyperinflation. The amendment also removes the legacy fixed dates in IFRS 1 relating to derecognition and 
day one gain or loss transactions. In the amended standard these dates coincide with the date of transition to IFRS. The adoption of this 
amendment has no impact on the financial position or performance of the Group. 

IFRS 7 Financial instruments Disclosures (Amendment) requires additional quantitative and qualitative disclosures relating to the transfer  
of assets, when financial assets are derecognised in their entirety, but the entity has a continuing involvement in them, and when financial 
assets are not derecognised in their entirety. The adoption of this amendment has no impact on the financial position or performance of  
the Group. 

Judgements made by the Directors in the application of these accounting policies that have significant effect on the consolidated financial 
statements and estimates with a significant risk of material adjustment in the next year are discussed in note 32. 

The consolidated financial statements are prepared on a historical cost basis, with the exception of certain financial assets and liabilities  
that are measured at fair value.  

The Directors, having made appropriate enquiries, have a reasonable expectation that the Group and the Company have adequate 
resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern  
basis in preparing the consolidated financial statements on pages 43 to 89. 

In adopting the going concern basis for preparing the consolidated financial statements, the Directors have considered the further information 
included in the business activities commentary as set out on pages 10 to 13 as well as the Group’s principal risks and uncertainties as set 
out on pages 26 and 27. 

Further details on the going concern basis of preparation can be found in note 23 to the notes to the accounts on page 71. 

These Group consolidated financial statements are presented in pounds sterling (£), which is Regus plc’s functional currency, and  
all values are in million pounds, rounded to one decimal place, except where indicated otherwise. 

The attributable results of those companies acquired or disposed of during the year are included for the periods of ownership. 

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies.  
The consolidated financial statements include the Group’s share of the total recognised income and expense of associates on an equity 
accounted basis, from the date that significant influence commences until the date that significant influence ceases or the associate 
qualifies as a disposal group at which point the investment is carried at the lower of fair value less costs to sell and carrying value.  

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48 Regus plc Annual Report and Accounts 2012

Joint ventures include jointly controlled entities that are those entities over whose activities the Group has joint control, established by 
contractual agreement. The consolidated financial statements include the Group’s share of the total recognised gains and losses of jointly 
controlled entities on an equity accounted basis, from the date that joint control commences until the date that joint control ceases or the 
jointly controlled entity qualifies as a disposal group at which point the investment is carried at the lower of fair value less costs to sell and 
carrying value.  

When the Group’s share of losses exceeds its interest in a joint venture, the Group’s carrying amount is reduced to nil and recognition of 
further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf 
of a joint venture. 

On 19 April 2006 the Group acquired the remaining 58% of the shares of the UK business that were not already owned by the Group.  
As a result the Group fully consolidated the UK business from that date. The acquisition was accounted for through the purchase method 
and as a consequence the entire assets and liabilities of the UK business were revalued to fair value. The effect of these adjustments on  
the 42% of the UK business already owned was reflected in the revaluation reserve. 

On 14 October 2008, Regus plc acquired the entire share capital of Regus Group plc in exchange for the issue of new shares of Regus plc 
on the basis of one share in Regus plc for one share held previously in Regus Group plc. At the date of the transaction, Regus plc had 
nominal assets and liabilities and therefore the transaction was accounted for as a reverse acquisition of Regus plc by Regus Group plc. 
Consequently no fair value acquisition adjustments were required and the aggregate of the Group reserves have been attributed to  
Regus plc. 

IFRSs not yet effective 
The following IFRSs have been issued but have not been applied by the Group in these consolidated financial statements as they are 
effective for years beginning on or after 1 January 2013 or have not yet been endorsed by the European Union. Their adoption is not 
expected to have a material effect on the consolidated financial statements unless otherwise indicated: 

IAS 1 Financial Statement Presentation introduces amendments to improve the presentation of the components of other comprehensive 
income. This statement is effective for years beginning on or after 1 July 2012. 

IAS 19 Employee Benefits (Amendment) requires significant changes to the recognition and measurement of defined benefit pension 
expense and termination benefits, and to the disclosures for all employee benefits. The adoption of this amendment is not expected to have 
an impact on the financial position or performance of the Group. This statement is effective for years beginning on or after 1 January 2013. 

IAS 28 Investments in Associates and Joint Ventures (Revised) – As a consequence of the New IFRS 11 Joint Arrangements, and IFRS 12 
Disclosure of Interests in Other Entities, IAS 28 Investments in Associates, has been renamed IAS 28 Investments in Associates and Joint 
Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates. The revised standard 
becomes effective for annual periods beginning on or after 1 January 2014. 

IAS 32 Financial Instruments: Presentation – The amendments do not change the current offsetting model in IAS 32. The amendments 
clarify that the right of set-off must be available today – that is, it is not contingent on a future event. This statement is effective for years 
beginning on or after 1 January 2014. 

IFRS 1 First-time Adoption of International Financial Reporting Standards (Amendment) aligns IFRS 1 with the IAS 20 requirements  
(after its revision in 2008) to prospectively fair value government loans with a below-market rate of interest. The statement has added an 
exception that allows a first-time adopter to use its previous GAAP carrying amount for such loans on transition to IFRS. The exception 
applies to recognition and measurement only. Management should use the requirements of IAS 32, ‘Financial instruments: Presentation’,  
to determine whether government loans are classified as equity or as a financial liability. This statement is effective for years beginning  
on or after 1 January 2013. 

IFRS 7 Financial Instruments Disclosure – The amendment requires an entity to disclose information about rights of set-off and related 
arrangements. This statement is effective for years beginning on or after 1 January 2013. 

IFRS 9 Financial Instruments – Classification and Measurement addresses the classification and measurement of financial assets and 
liabilities as defined in IAS 39. This statement will be effective for years beginning on or after 1 January 2015. 

IFRS 10 Consolidated Financial Statements replaces IAS 27 Consolidated and Separate Financial Statements by changing whether an 
entity is consolidated by revising the definition of control. It also addresses the issues raised in SIC-12 Consolidation – Special Purposes 
Entities. The statement also provided a number of clarifications on applying this new definition of control. This statement will be effective  
for years beginning on or after 1 January 2014. 

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Notes to the accounts continued

2. Accounting policies (continued) 
IFRS 11 Joint Arrangements established principles for the financial reporting by parties to a joint arrangement. Joint control is defined as  
the contractually agreed sharing on control of an arrangement, which exists only when the decisions about the relevant activities require  
the unanimous consent of the parties sharing control. This statement will be effective for years beginning on or after 1 January 2014. 

IFRS 12 Disclosure of Interests in Other Entities combines, enhances and replaces the disclosure requirements for subsidiaries,  
joint arrangements, associated and unconsolidated structured entities. This statement will be effective for years beginning on or  
after 1 January 2014. 

IFRS 13 Fair Value Measurement establishes a single source of guidance for all fair value measurements. IFRS 13 does not change when  
an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required  
or permitted. This statement will be effective for years beginning on or after 1 January 2013. 

The Group did not adopt any standards, interpretations and amendments to standards which were available for optional early adoption  
and relevant to the Group. The Group will adopt the above standards or amendments in the year in which they become effective and/ 
or endorsed by the European Union, whichever is later. 

Change in accounting policy 
On 1 January 2012 the Group changed its accounting policy with respect to the treatment of new centre costs. The Group believes that the 
capitalisation of these costs more accurately reflects the cost of bringing its assets to their usable condition. Certain related costs previously 
expensed will be capitalised as part of property, plant and equipment. 

This change in accounting policy was applied retrospectively. The effects on the consolidated balance sheet were as follows: 

£m 

Balance as reported at 1 January 2011 
Net effect of costs capitalised on 1 January 2011 
Restated balance at 1 January 2011 

£m 

Balance as reported at 31 December 2011 
Net effect of costs capitalised on 1 January 2011 
Net effect during the year 
Restated balance at 31 December 2011 

£m 

Net effect of costs capitalised on 1 January 2012 
Net effect during the year 
Net impact at 31 December 2012 

The effects on the consolidated statement of comprehensive income were as follows: 

£m 

Costs capitalised 
Depreciation of costs capitalised 
Tax expense  
Net effect during the year 

Property, plant & 
equipment 

Deferred tax 
asset

270.8 
8.7 
279.5 

 37.1
 (0.5)
 36.6

Property, plant & 
equipment 

Deferred tax 
asset

320.9 
8.7 
3.9 
333.5 

 32.8
 (0.5)
 (0.1)
 32.2

Property, plant & 
equipment 

Deferred tax 
asset

12.6 
6.3 
18.9 

 (0.6)
–
 (0.6)

Retained 
Earnings

404.9
8.2
413.1

Retained 
Earnings/
Income 
Statement

412.0
8.2
3.8
424.0

Retained 
Earnings/
Income 
Statement

12.0
6.3
18.3

Year ended
31 Dec 2012

Year ended
31 Dec 2011

8.2 
 (1.9)
–
6.3 

5.2
(1.3)
(0.1)
3.8

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50 Regus plc Annual Report and Accounts 2012

 
 
 
The effects on the earnings per share were as follows: 

Basic (p) 
Diluted (p) 

Year ended
31 Dec 2012

Year ended
31 Dec 2011

0.7 
0.7

0.3
0.3

Basis of consolidation 
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial 
and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently 
exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial 
statements from the date that control commences. The results are consolidated until the date control ceases or the subsidiary qualifies  
as a disposal group at which point the assets and liabilities are carried at the lower of fair value less costs to sell and carrying value. 

Impairment of non-financial assets 
The carrying amounts of the Group’s assets other than deferred tax assets are reviewed at each balance sheet date to determine whether 
there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. 

For goodwill, intangible assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable 
amount was estimated at 31 October 2012 and updated at 31 December 2012. 

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. 
Impairment losses are recognised in the income statement. 

Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated 
to the cash-generating unit and then to reduce the carrying amount of the other assets in the unit on a pro rata basis. A cash-generating 
unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets 
or groups of assets. 

Calculation of recoverable amount 
The recoverable amount of relevant assets is the greater of their fair value less costs to sell and value in use. In assessing value in use,  
the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments 
of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the 
recoverable amount is determined for the cash-generating unit to which the asset belongs. 

Goodwill 
All business combinations are accounted for using the purchase method. Goodwill represents the difference between the cost of acquisition 
over the share of the fair value of identifiable assets (including intangible assets), liabilities and contingent liabilities of a subsidiary, associate, 
asset deal acquisition or jointly controlled entity at the date of acquisition. 

Positive goodwill is stated at cost less any provision for impairment in value. An impairment test is carried out annually and, in addition, 
whenever indicators exist that the carrying amount may not be recoverable. Positive goodwill is allocated to cash-generating units for  
the purpose of impairment testing.  

Business combinations that took place prior to the Group’s transition date to IFRS on 1 January 2004 have not been restated under  
the requirements of IFRS. 

Intangible assets 
Intangible assets acquired separately from the business are capitalised at cost. Intangible assets acquired as part of an acquisition of a 
business are capitalised separately from goodwill if their fair value can be identified and measured reliably on initial recognition. 

The Group conducted a review of the estimated useful life for other intangible assets. During 2012, the expected useful life for certain asset 
categories were adjusted prospectively to more accurately reflect the period in which the intangible assets are expected to be available for 
the Group. Intangible assets are amortised on a straight-line basis over the estimated useful life of the assets as follows: 

Brand – Regus brand 
Brand – Other acquired brands 
Computer software 
Customer lists 
Management agreements 

Amortisation of intangible assets is expensed through administration expenses in the income statement. 

Indefinite life
20 years
5 years
2 years
Minimum duration of the contract

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Notes to the accounts continued

2. Accounting policies (continued) 
Acquisitions of non-controlling interests 
Acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners and therefore no goodwill 
is recognised as a result. Adjustments to non-controlling interests arising from transactions that do not involve the loss of control are based 
on a proportionate amount of the net assets of the subsidiary. 

Leases 
Plant and equipment leases for which the Group assumes substantially all of the risks and rewards of ownership are classified as finance 
leases. All other leases, including all of the Group’s property leases, are categorised as operating leases. 

Finance leases 
Plant and equipment acquired by way of a finance lease is capitalised at the commencement of the lease at the lower of its fair value and 
the present value of the minimum lease payments at inception. Future payments under finance leases are included in creditors, net of any 
future finance charges. Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. 
Finance charges are recognised in the income statement over the lease term so as to produce a constant periodic rate of interest on the 
remaining balance of the liability. 

Operating leases 
Minimum lease payments under operating leases are recognised in the income statement on a straight-line basis over the lease term.  
Lease incentives and rent free periods are included in the calculation of minimum lease payments. The commencement of the lease term  
is the date from which the Group is entitled to use the leased asset. The lease term is the non-cancellable period of the lease, together with 
any further periods for which the Group has the option to continue to lease the asset and when at the inception of the lease it is reasonably 
certain that the Group will exercise that option. 

Contingent rentals include rent increases based on future inflation indices or non-guaranteed rental payments based on centre turnover or 
profitability and are excluded from the calculation of minimum lease payments. Contingent rentals are recognised in the income statement 
as they are incurred. 

Onerous lease provisions are an estimate of the net amounts payable under the terms of the lease to the first break point, discounted at  
an appropriate weighted average cost of capital. 

Exceptional Items 
Exceptional items are those items which are separately disclosed by virtue of their size or incidence to enable a full understanding of the 
Group’s financial performance. Such items are included within the income statement caption to which they relate, and are separately 
disclosed either in the notes to the consolidated financial statements or on the face of the consolidated income statement. 

Property, plant and equipment 
Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Depreciation is calculated on a 
straight-line basis over the estimated useful life of the assets as follows: 

Buildings 
Fixtures and fittings 

Furniture 
Office equipment and telephones 
Motor vehicles 
Computer hardware 

Year ended  
31 Dec 2012 

50 years 
10 years 

10 years 
5 years 
4 years 
3 – 5 years 

Year ended 
31 Dec 2011

20 years
Over the shorter 
of the lease term 
and 10 years
10 years
5 – 10 years
4 years
3 – 5 years

The useful life of certain plant, property and equipment were revised in 2012 (refer to note 14). 

Revenue 
Revenue from the provision of services to customers is measured at the fair value of consideration received or receivable (excluding  
sales taxes). Where rent free periods are granted to customers, rental income is spread on a straight-line basis over the length of the 
customer contract. 

Workstations 
Workstation revenue is recognised when the provision of the service is rendered. Amounts invoiced in advance are deferred and recognised 
as revenue upon provision of the service. 

Customer service income 
Service income (including the rental of meeting rooms) is recognised as services are rendered. In circumstances where Regus acts as  
an agent for the sale and purchase of goods to customers, only the commission fee earned is recognised as revenue. 

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52 Regus plc Annual Report and Accounts 2012

Management and franchise fees 
Fees received for the provision of initial and subsequent services are recognised as revenue as the services are rendered. Fees charged  
for the use of continuing rights granted by the agreement, or for other services provided during the period of the agreement, are recognised 
as revenue as the services are provided or the rights used. 

Membership card income 
Revenue from the sale of membership cards is deferred and recognised over the period that the benefits of the membership card are 
expected to be provided. 

These categories represent all material sources of revenue earned from the provision of global workplace solutions. 

Employee benefits 
The Group’s major pension plans are of the defined contribution type. For these plans the Group’s contribution and other paid and unpaid  
benefits earned by the employees are charged to the income statement as incurred. 

For the defined benefit obligation plans, the employer’s portion of past and current services cost is charged to operating profit, with the 
interest cost net of expected return on assets in the plans reported within other finance costs. Actuarial gains or losses are recognised  
in full, directly in other comprehensive income such that the balance sheet reflects the plan’s deficits as at the balance sheet date. 

The defined benefit obligation is calculated annually by external actuaries using the projected unit credit method. An actuarial valuation 
involves making various assumptions that may differ from actual developments in the future. These include the determination of the 
discount rate, future salary increases, mortality rates and future pension increases. Due to the complexity of the valuation, the underlying 
assumptions and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions  
are reviewed at each reporting date. 

The present value of the defined benefit obligation is determined by discounting the estimated future cash flows using an appropriate 
discount rate. In determining this discount rate, management considers the interest rates of corporate bonds in the respective currency  
with at least AA rating, with extrapolated maturities corresponding to the expected duration of the defined benefit obligation. The mortality 
rate is based on publicly available mortality tables for the specific country. Future salary increases and pension increases are based on 
expected future inflation rates for the respective country. 

Further details about the assumptions used are given in note 25. 

Share-based payments 
The share option programme entitles certain employees and Directors to acquire shares of the ultimate parent company; these awards are 
granted by the ultimate parent. 

The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured 
at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the 
options granted is measured using the Black-Scholes valuation model or the Monte Carlo method, taking into accounts the terms and 
conditions upon which the options were granted. 

The amount recognised as an expense is adjusted to reflect the actual number of share options that vest except where forfeiture is due  
only to share prices not achieving the threshold for vesting. 

Share appreciation rights (CIP) are also granted by the Company to certain employees. The fair value of the amount payable to the 
employee is recognised as an expense with a corresponding increase in equity. The fair value is initially recognised at grant date and  
spread over the period during which the employees become unconditionally entitled to payment. The fair value of the share appreciation 
rights is measured based on the Monte Carlo valuation model, taking into account the terms and conditions upon which the instruments 
were granted.  

The Group also operates a Value Creation Plan which awards entitlements to certain employees and Directors of the Group. These 
entitlements are convertible into options over ordinary shares subject to the Group’s share price reaching certain targets.  

The fair value of the amount payable to the employee is recognised as an expense with a corresponding increase in equity. The fair value  
is initially recognised at the date of the award of the entitlements and spread over the period during which the entitlements are convertible 
into ordinary shares. 

The fair value of the entitlements is based on the Monte Carlo valuation model, taking into account the terms and conditions upon which  
the instruments were granted. 

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Notes to the accounts continued

2. Accounting policies (continued) 
Taxation 
Tax on the profit for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it 
relates to items recognised directly in equity, in which case it is recognised in equity. 

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance 
sheet date, and any adjustment to tax payable in respect of previous years. 

Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes  
and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill;  
the initial recognition of assets and liabilities that affect neither accounting nor taxable profit other than in a business combination; and 
differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount  
of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities,  
using tax rates enacted or substantively enacted at the balance sheet date. 

A deferred tax asset is recognised for all unused tax losses only to the extent that it is probable that future taxable profits will be available 
against which the asset can be utilised. 

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities 
and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and 
liabilities on a net basis. 

Provisions 
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event  
that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. 

Restructuring provisions are made for direct expenditures of a business reorganisation where the plans are sufficiently detailed and well 
advanced and where the appropriate communication to those affected has been undertaken at the balance sheet date. 

Provision is made for onerous contracts to the extent that the unavoidable costs of meeting the obligations under a contract exceed the 
economic benefits expected to be delivered, discounted using an appropriate weighted average cost of capital. 

Net finance expenses 
Interest charges and income are accounted for in the income statement on an accruals basis. Financing transaction costs that relate  
to financial liabilities are charged to interest expense using the effective interest rate method and are recognised within the carrying value  
of the related financial liability on the balance sheet. Fees paid for the arrangement of credit facilities are recognised as a prepayment and 
recognised through the finance expense over the term of the facility. In the event of a facility being drawn the relevant unamortised portion 
of the fee is recognised within the carrying value of the financial liability and charged to the interest expense using the effective interest  
rate method. 

Where assets or liabilities on the Group balance sheet are carried at net present value, the increase in the amount due to unwinding the 
discount is recognised as a finance expense or finance income as appropriate. 

Costs arising on bank guarantees and letters of credit and foreign exchange gains or losses have been classified as other finance costs. 

Interest bearing borrowings and other financial liabilities 
Financial liabilities, including interest bearing borrowings, are recognised initially at fair value less attributable transaction costs. Subsequent 
to initial recognition, financial liabilities are stated at amortised cost with any difference between cost and redemption value being 
recognised in the income statement over the period of the borrowings on an effective interest basis. 

The Group derecognises financial liabilities when the Group’s obligations are discharged, cancelled or expire. 

Financial liabilities are classified as financial liabilities at fair value through profit or loss where the liability is either held for trading or is 
designated as held at fair value through profit or loss on initial recognition. Financial liabilities at fair value through profit or loss are stated  
at fair value with any resultant gain or loss recognised in the income statement. 

Financial assets 
Financial assets are classified as either at fair value through profit or loss, held to maturity investments, available for sale financial assets or 
loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined on initial recognition. 

Trade and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and 
receivables. Loans and receivables are measured at amortised cost using the effective interest rate method, less any impairment. Interest 
income is recognised by applying the effective interest rate, except for short-term receivables when recognition would be immaterial. 

Liquid investments consist of held to maturity bonds and deposits. 

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Foreign currencies 
Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets and 
liabilities denominated in foreign currencies are translated using the closing rate of exchange at the balance sheet date and the gains  
or losses on translation are taken to the income statement. Non-monetary assets and liabilities that are measured in terms of historical  
cost in a foreign currency are translated using the exchange rate at the date of the transaction. The results and cash flows of overseas 
operations are translated using the average rate for the period. Assets and liabilities, including goodwill and fair value adjustments, of  
foreign operations are translated using the closing rate with all exchange differences arising on consolidation being recognised other 
comprehensive income, and presented in the foreign currency translation reserve in equity. Exchange differences are released to the 
income statement on disposal. Under the transition requirements of IFRS, cumulative translation differences for all foreign operations  
have been set to zero at 1 January 2004. 

Cash and cash equivalents 
Cash and cash equivalents comprise cash at bank and in hand and are subject to an insignificant risk of changes in value. 

Derivative financial instruments 
The Group’s policy on the use of derivative financial instruments can be found in note 23. Derivative financial instruments are measured 
initially at fair value and changes in the fair value are recognised through profit or loss unless the derivative financial instrument has been 
designated as a cash flow hedge whereby the effective portion of changes in the fair value are deferred in equity. 

Foreign currency translation rates 

US dollar 
Euro 
Japanese yen 

At 31 December 

Annual average 

2012

1.62
1.23
140

2011 

1.55  
1.20  
 120 

2012

1.59
1.23
128

2011

1.61
1.15 
128 

3. Segmental analysis – statutory basis 
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur 
expenses, including those that relate to transactions with other operating segments. An operating segment’s results are reviewed regularly 
by the chief operating decision maker (the Board of Directors of the Group) to make decisions about resources to be allocated to the 
segment and assess its performance, and for which discrete financial information is available. 

The business is run on a worldwide basis but managed through four principal geographical segments: Americas; Europe, Middle East and 
Africa (EMEA); Asia Pacific; and the United Kingdom. The United Kingdom segment does not include the Group’s non-trading holding and 
corporate management companies that are based in the UK and the EMEA segment does not include the Group’s non-trading head office 
and holding companies that are based in Luxembourg and Switzerland. The results of business centres in each of these regions form the 
basis for reporting geographical results to the chief operating decision maker. All reportable segments are involved in the provision of global 
workplace solutions. 

The Group’s reportable segments operate in different markets and are managed separately because of the different economic characteristics 
that exist in each of those markets. Each reportable segment has its own discrete senior management team responsible for the performance 
of the segment. 

The accounting policies of the operating segments are the same as those described in the Annual Report and Accounts for Regus plc  
for the year ended 31 December 2011. The performance of each segment is assessed on the basis of the segment operating profit  
which excludes certain non-recurring items (including provisions for onerous contracts and asset write-downs), exceptional gains and 
losses, internal management charges and foreign exchange gains and losses arising on transactions with other operating segments. 

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Notes to the accounts continued

3. Segmental analysis – statutory basis (continued) 

Americas 
2012 
£m 

2011 
£m 

EMEA 

2012 
£m 

2011
£m

Asia Pacific 
2012
£m

2011
£m

United Kingdom 

2012
£m

2011
£m

All other operating 
segments 
2012 
£m 

2011 
£m 

Total 

2012
£m

2011
£m

533.9 

477.5 

301.2 

301.7

195.9

169.1

211.8

212.6

1.3 

1.7  1,244.1

1,162.6

0.2 
534.1 

– 
477.5 

0.3 
301.5 

0.7
302.4

–
195.9

–
169.1

1.6
213.4

1.5
214.1

– 
1.3 

– 

2.1
1.7  1,246.2

2.2
1,164.8

150.5 

130.3 

76.8 

69.2

55.5

44.6

36.6

31.7

1.2 

1.4 

320.6

277.2

72.2 

53.2 

26.2 

18.4

31.7

22.9

12.4

3.7

(1.9) 

(0.3) 

140.6

97.9

– 
(0.3) 
– 

– 
(0.2) 
– 

0.9 
– 
0.1 

1.0
(0.2)
0.3

–
(0.5)
0.3

–
(0.7)
0.4

(1.2)
(1.6)
0.1

(0.9)
(2.3)
0.1

– 
– 
– 

– 
– 
– 

(0.3)
(2.4)
0.5

0.1
(3.4)
0.8

33.2 

32.1 

12.0 

14.8

10.3

12.8

11.3

13.2

1.9 

0.7 

68.7

73.6

(1.1) 
683.7 
(399.1) 

(1.2) 
593.4 
(323.0) 

9.1 
296.2 
(334.5) 

(2.1)
287.6
(310.0)

6.3
201.3
(178.7)

9.3
176.4
(165.7)

(2.6)
316.7
(306.6)

1.6
300.5
(285.7)

2.5 
1.7 
(0.6) 

14.2
1.4 
1.6  1,499.6
(0.6) (1,219.5)

9.0
1,359.5
(1,085.0)

284.6 

270.4 

(38.3) 

(22.4)

22.6

10.7

10.1

14.8

1.1 

1.0 

280.1

274.5

99.0 

74.1 

24.0 

22.0

28.6

19.7

11.4

9.3

– 

– 

163.0

125.1

Revenues from 
external customers 
Revenues from internal 
customers 
Segment revenues 
Gross profit  
(centre contribution) 
(Restated*) 
Reportable segment 
profit (Restated*) 
Share of profit/(loss) of 
joint ventures 
Finance expense 
Finance income 
Depreciation and 
amortisation 
(Restated*) 
Taxation 
(income)/charge 
(Restated*) 
Assets (Restated*) 
Liabilities 
Net assets/(liabilities) 
(Restated*) 
Non-current asset 
additions (Restated*) 

* Restatement described in note 2 

Revenue in the other segmental category is generated from services related to the provision of workplace solutions including fees earned 
from franchise agreements and commissions earned from the sale of outsourced workplace solution products. Revenue from internal 
customers is determined by reference to current market prices. 

£m 

Reportable segment results 
Exclude: Internal revenue 
Corporate overheads 
Foreign exchange gains and losses 
Published Group total 

Revenue 

1,246.2 
(2.1) 
– 
– 
1,244.1 

Gross 
profit (centre 
contribution)

Operating 
profit

Share of JV 
profit

Finance 
expense

Finance 
income 

2012

Depreciation 
and 
amortisation

Profit before 
tax

320.6
(2.1)
2.2
–
320.7

140.6
–
(50.0)
(0.1)
90.5

(0.3)
–
–
–
(0.3)

(2.4)
–
(2.2)
(1.3)
(5.9)

0.5 
– 
0.3 
– 
0.8 

68.7
–
0.4
–
69.1

138.4
–
(51.9)
(1.4)
85.1

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£m 

Reportable segment results 
Exclude: Internal revenue 
Corporate overheads 
Foreign exchange gains and losses 
Published Group total 

* Restatement described in note 2 

Gross 
profit (centre 
contribution)

277.2
(2.2)
4.1
–
279.1

Revenue 

1,164.8 
(2.2) 
– 
– 
1,162.6 

Operating 
profit

Share of JV 
profit

Finance 
expense

Finance 
income 

2011 (Restated*)

Depreciation 
and 
amortisation

Profit before 
tax

97.9
–
(43.3)
(0.2)
54.4

0.1
–
–
–
0.1

(3.4)
–
(0.4)
(2.6)
(6.4)

0.8 
– 
0.5 
– 
1.3 

73.6
–
–
1.2
74.8

95.4
–
(43.2)
(2.8)
49.4

£m 

Reportable segment results 
Exclude: Segmental inter-company amounts 
Corporate overheads assets and liabilities (excluding amounts due to/from reportable segments) 
Cash 
Deferred Taxation 
Other 
Published Group total 

Assets 

Liabilities

1,499.6 
(324.6) 

(1,219.5)
465.7

73.0 
22.0 
31.5 
1,301.5 

–
–
(20.3)
(774.1)

£m 

Reportable segment results 
Exclude: Segmental inter-company amounts 
Corporate overheads assets and liabilities (excluding amounts due to/from reportable segments) 
Cash 
Deferred Taxation* 
Other 
Published Group total 

Assets 

Liabilities

1,359.5 
(291.4) 

(1,085.0)
382.8

113.4 
19.0 
13.2 
1,213.7 

–
–
(10.8)
(713.0)

* Restatement described in note 2 

2012

Net assets/
(liabilities)

280.1
141.1

73.0
22.0
11.2
527.4

2011 
(Restated*)
Net assets/
(liabilities)

274.5
91.4

113.4
19.0
2.4
500.7

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Notes to the accounts continued

4. Segmental analysis – entity-wide disclosures 
The Group’s primary activity and only business segment is the provision of global workplace solutions and therefore all revenue is attributed 
to a single group of similar products and services. It is not meaningful to separate this group into further categories of products. Revenue is 
recognised where the service is provided. 

The Group has a diversified customer base and no single customer contributes a material percentage of the Group’s revenue. 

The Group’s revenue from external customers and non-current assets analysed by foreign country is as follows: 

External revenue

2012   

Non-current   
assets(a) 

  2011 (Restated*)  

External revenue 

Non-current   
assets(a)

3.0
400.6
213.0
627.5
1,244.1

0.6   
373.8   
163.6   
300.8   
838.8   

3.4 
365.1 
213.0 
581.1 
1,162.6 

0.6  
320.6  
165.2  
218.9  
705.3  

£m 

Country of domicile – Luxembourg 
United States of America 
United Kingdom 
All other countries 

(a) Excluding deferred tax assets 

*  Restatement described in note 2 

5. Operating profit 
Operating profit has been arrived at after charging/(crediting): 

Depreciation on property, plant and equipment 

Owned assets 
Finance leases 

Amortisation of intangibles 
Provision for bad debts 
Loss on disposal of property, plant and equipment  
Loss on disposal of intangibles  
Exchange losses recognised in the income statement 
Rents payable in respect of operating leases 

Property 
Contingent rents paid 
Equipment 

Amortisation of UK acquisition fair value adjustments 
Staff costs 

* Restatement described in note 2 

Fees payable to the Group’s auditor for the audit of the Group accounts 
Fees payable to the Group’s auditor and its associates for other services: 

The audit of the Company’s subsidiaries pursuant to legislation 
Other services pursuant to legislation 
Tax services 
Other services 

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Notes 

14 
14 
13 

13 
7 

2012
£m

62.7
0.9
5.5
 2.2
0.1
0.1
0.4

 430.6
 15.5
 1.5
(4.1)
257.4

2012
£m

0.3

 1.3

–
–

2011  
£m  
(Restated*)  

66.2  
1.9   
6.7   
 5.1  
1.2   
–  
0.4  

 414.9  
 14.9  
 1.5  
(4.6)  
232.7  

2011  
£m  

 0.2  

 1.3  

 0.1  
0.1  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
6. Exceptional items 

Administration expenses: 
2011 Restructuring plan (charge) 
2010 Restructuring plan release/(charge) 

2012 
£m 

– 
– 
–  

2011
£m

(2.5)
2.5
– 

No exceptional items were incurred during the year ended 31 December 2012. 

During the year ended 31 December 2011 the Group completed the restructuring of specific entities within the Group at a net cost of 
£2.5m. This balance consists of expenditure arising on the following categories: asset write-down, reorganisation costs and other costs. 
There is no provision recognised at year end. 

7. Staff costs  

The aggregate payroll costs were as follows: 
Wages and salaries 
Social security 
Pension costs 
Share-based payments 

The average number of persons employed by the Group (including Executive Directors),  
analysed by category and geography, was as follows: 
Centre staff 
Sales & marketing staff 
Finance staff 
Other staff 

Americas 
EMEA 
Asia Pacific 
United Kingdom 
Corporate functions 

Details of Directors’ emoluments and interests are given on pages 32 to 41 in the Remuneration Report. 

2012 
£m 

216.2 
37.5 
3.1 
0.6 
257.4 

2011
£m

194.1
35.2
2.8
 0.6
232.7

2012 
Average full time 
equivalents 

2011
Average full time 
equivalents

4,478 
943 
827 
890 
7,138 

2,701 
1,668 
991 
881 
897 
7,138 

3,984
871 
774 
823 
6,452 

2,483 
1,610 
960 
976 
423 
6,452 

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2012
£m

(0.9)
(0.1)
(1.0)
(3.5)
(1.4)
(5.9)
0.7
0.1
0.8
(5.1)

2012
£m

(19.9)
4.4 
(0.2)
(15.7)

(6.7)
9.0
(0.8)
1.5
(14.2)

2011
£m

(1.2)
(0.2)
(1.4)
(3.0)
(2.0)
(6.4)
 1.2
0.1
1.3
(5.1)

2011
£m
(Restated*)

(13.5)
1.5 
7.4
(4.6)

(7.3)
4.4
(1.5)
(4.4)
(9.0)

Notes to the accounts continued

8. Net finance expense 

Interest payable and similar charges on bank loans  
Interest payable and similar charges of finance leases 
Total interest expense 
Other finance costs 
Unwinding of discount rates 
Total finance expense 
Total interest income 
Unwinding of discount rates 
Total finance income 
Net finance expense 

9. Taxation 
(a) Analysis of charge in the year 

Current taxation 
Corporate income tax 
Previously unrecognised tax losses and temporary differences 
(Under)/over provision in respect of prior years 
Total current taxation 
Deferred taxation 
Origination and reversal of temporary differences 
Previously unrecognised tax losses and temporary differences 
(Under)/over provision in respect of prior years 
Total deferred taxation 
Tax charge on profit 

* Restatement described in note 2 

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60 Regus plc Annual Report and Accounts 2012

 
 
(b) Reconciliation of taxation charge 

Profit before tax 
Tax on profit at 28.8% (2011: 28.8%) 
Tax effects of: 
Expenses not deductible for tax purposes 
Items not chargeable for tax purposes 
Recognition of previously unrecognised deferred tax assets  
Movements in temporary differences in the year not recognised  
in deferred tax 
Other movements in temporary differences 
Adjustment to tax charge in respect of previous years 
Differences in tax rates on overseas earnings 

* Restatement described in note 2 

2012 

% 

(28.8) 

(10.1) 
23.0 
15.7 

(18.3) 
0.4 
(1.2) 
2.6 
(16.7) 

2011  
(Restated*)  
%  

(28.8)  

(12.9)  
 41.3  
 11.9  

(26.5)  
 (14.5)  
 11.9  
(0.6)  
(18.2)  

£m

 49.4
(14.2)

(6.4)
 20.4
 5.9

(13.1)
 (7.2)
 5.9
 (0.3)
(9.0)

£m

85.1
(24.5)

(8.6)
19.6
 13.4

(15.6)
 0.3
 (1.0)
 2.2
(14.2)

The applicable tax rate is determined based on the tax rate in Luxembourg which was the statutory tax rate applicable in the country  
of domicile of the parent Company of the Group for the financial year. 

In 2011 the Group benefited from a credit in relation to the settlement of a number of tax audits in respect of previous years. 

(c) Factors that may affect the future tax charge 
Unrecognised tax losses to carry forward against certain future overseas corporation tax liabilities have the following expiration dates: 

2012 
2013 
2014 
2015 
2016 
2017 
2018 
2019 
2020 and later 

Available indefinitely 
Tax losses available to carry forward 
Amount of tax losses recognised in the deferred tax asset* 
Total tax losses available to carry forward 

* Restatement described in note 2 

The following deferred tax assets have not been recognised due to uncertainties over recoverability. 

Intangibles 
Accelerated capital allowances 
Tax losses 
Rent 
Short-term timing differences 

* Restatement described in note 2 

2012
£m

–
 1.0
 1.3
0.8
3.2
10.6
3.9
1.6
 83.6

 106.0
 152.2
 258.2
 120.6
 378.8

2012
£m

41.8
 10.1
 73.6
5.5
 9.0
 140.0

2011  
£m  

 2.3  
 1.3  
 3.7  
0.5  
3.7  
4.2  
3.6  
–  
100.1  

 119.4  
 139.4  
 258.8  
 100.4  
 359.2  

2011*
£m  

 44.9  
 11.8  
 78.9  
0.2  
 7.5  
143.3  

Estimates relating to deferred tax assets, including assumptions about future profitability, are re-evaluated at the end of each  
reporting period. 

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Notes to the accounts continued

9. Taxation (continued) 
(d) Corporation tax 

Corporation tax payable 
Corporation tax receivable 

(e) Deferred taxation 
The movement in deferred tax is analysed below: 

Deferred tax asset 
At 1 January 2011 
Change in accounting policy* 
At 1 January 2011 (restated*) 
Current year movement 
Prior year movement 
Direct reserves movement 
Transfers 
Exchange movement 
At 1 January 2012 (restated*) 
Current year movement 
Prior year movement 
Direct reserves movement 
Transfers 
Exchange movement 
At 31 December 2012 

Deferred tax liability 
At 1 January 2011 
Current year movement 
Prior year movement 
Acquisitions 
Transfers 
Exchange movement 
At 1 January 2012 
Current year movement 
Prior year movement 
Transfers 
Exchange movement 
At 31 December 2012 

* Restatement described in note 2 

2012
£m

(6.8)
5.7

2011
£m

(6.3)
7.4

Intangibles
£m

Property,
 plant and 
equipment
£m
(Restated*)

Tax losses
£m
(Restated*)

Rent 
£m 
(Restated*) 

Short term 
temporary 
differences
£m
(Restated*)

Total
£m
(Restated*)

(21.1)
–
(21.1)
(13.1)
(0.3)
–
0.1
 0.6
(33.8)
(4.4)
–
–
0.1
2.4
(35.7)

(0.2)
–
–
–
(0.1)
–
(0.3)
(0.1)
–
(0.1)
–
(0.5)

28.1 
(2.9)
25.2 
(0.5) 
 0.4
–
–
(0.6)
 24.5
(1.6)
(0.8)
–
0.6
(0.9)
21.8

–
–
–
–
–
–
–
0.1
–
(0.6)
–
(0.5)

15.0 
1.5
16.5
(4.2)
15.9
–
 0.1
(0.3)
 28.0
7.8
(0.2)
–
–
0.2
35.8

– 
 –
0.1
–
(0.1)
–
–
–
–
–
–
–

18.8  
0.1 
18.9  
3.8 
0.4 
– 
0.3 
(0.4) 
 23.0 
0.1 
0.2 
– 
(0.1) 
(1.3) 
21.9 

0.2 
0.1 
– 
– 
(0.3) 
– 
– 
– 
– 
0.1 
– 
0.1 

(3.7) 
0.8
(2.9) 
11.0
 (18.1)
–
 0.2
0.3
 (9.5)
0.5
–
–
0.1
(1.0)
(9.9)

(0.1)
–
0.1
–
(0.2) 
–
(0.2)
(0.1)
–
(0.1)
–
(0.4)

37.1 
(0.5)
36.6 
(3.0)
 (1.7)
– 
0.7
(0.4)
 32.2
2.4
(0.8)
–
0.7
(0.6)
33.9

(0.1)
 0.1
0.2
–
 (0.7)
–
(0.5)
(0.1)
–
(0.7)
–
(1.3)

The movement in deferred taxes included above are after the offset of deferred tax assets and deferred tax liabilities where there is a legally 
enforceable right to set off and they relate to income taxes levied by the same taxation authority. 

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Deferred tax assets recognised on short-term temporary differences consist predominantly of provisions deductible when paid and share-
based payments. Deferred tax assets have been recognised in excess of deferred tax liabilities on the basis that there are forecast taxable 
profits in the entities concerned. 

At the balance sheet date, the temporary difference arising from unremitted earnings of overseas subsidiaries was £172.3m (2011: 
£182.1m (restated)). The only tax that would arise on these reserves would be non-creditable withholding tax. 

10. Earnings per ordinary share (basic and diluted) 

2012

2011
(Restated*)

Profit attributable to equity shareholders of the parent (£m) 
Weighted average number of shares outstanding during the year 
Average market price of one share during the year 
Weighted average number of shares under option during the year 
Exercise price for shares under option during the year 

* Restatement described in note 2 

2012
£m

70.9

Basic and diluted profit for the year attributable to shareholders and  
basic earnings per share 
Diluted earnings per share 
Weighted average number of shares for basic EPS (number) 
Weighted average number of shares under option during the year 
Weighted average number of shares that would have been issued at average 
market price 
Weighted average number of awards under the CIP and LTIP 
Weighted average number of shares for diluted EPS (number) 

* Restatement described in note 2 

70.9

40.4
941,921,816 941,898,916
94.79p
3,674,249
58.23p

100.12p
10,778,358
68.56p

Profit 
2011 
£m 
(Restated*) 

2012 
pence

Earnings per share
2011 
pence
(Restated*)

40.4 

 7.5
 7.5

 4.3
4.3
  941,921,816 941,898,916
 3,674,249

10,778,358

(8,037,963)
1,207,103

(2,286,139)
 2,465,389
  945,869,314 945,752,415

Options are considered dilutive when they would result in the issue of ordinary shares for less than the market price of ordinary shares in the 
period. The amount of the dilution is taken to be the average market price of shares during the period minus the issue price.  

11. Dividends 

Dividends per ordinary share proposed  
Interim dividends per ordinary share declared and paid during the year  

2012

2.2p 
1.0p

2011

2.0p 
0.9p

Dividends of £28.2m were paid during the year (2011: £25.0m). The Company has proposed to shareholders that a final dividend of  
2.2p per share will be paid (2011: 2.0p). Subject to shareholder approval it is expected that the dividend will be paid on 31 May 2013. 

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Notes to the accounts continued

12. Goodwill 

Cost 
At 1 January 2011 
Recognised on acquisition of subsidiaries 
Exchange differences 
At 1 January 2012 

Recognised on acquisition of subsidiaries 
Exchange differences 
At 31 December 2012 

Net book value 
At 1 January 2012 
At 31 December 2012 

£m

282.4 
4.6
(1.6)
285.4

39.3
(7.7)
317.0

285.4
317.0

Cash generating units (CGUs), comprising individual business centres, are grouped by country of operation for the purpose of carrying out 
impairment reviews of non-current assets as this is the lowest level at which goodwill can be assessed. Goodwill acquired through business 
combinations is held at a country level and is subject to impairment reviews based on the cash flows of these CGUs. 

The goodwill attributable to the reportable business segments is as follows: 

Carrying amount of goodwill included within the Americas business segment 
Carrying amount of goodwill included within the EMEA business segment 
Carrying amount of goodwill included within the Asia Pacific business segment 
Carrying amount of goodwill included within the UK business segment 

2012
£m

185.3
10.3
25.1
96.3
317.0

2011
£m

171.3
5.9
11.9
96.3
285.4

The carrying value of goodwill and indefinite life intangibles allocated to two CGUs, the USA and UK, is material relative to the total carrying 
value comprising 90% of the total. The remaining 10% of the carrying value is allocated to a further 20 countries (20 cash generating units). 
The goodwill and indefinite life intangibles allocated to the USA and the UK cash generating units are set out below: 

USA 
UK 
Other cash generating units 

Goodwill
£m

158.8
96.3
61.9
317.0

Intangible  
assets 
£m 

– 
11.2 
– 
11.2 

2012
£m

158.8
107.5
61.9
328.2

2011
£m

149.5
107.5
39.6
296.6

The indefinite lived intangible asset relates to the brand value arising from the acquisition of the remaining 58% of the UK business in the 
year ended 31 December 2006 (see note 13). 

The recoverable amount of each of the CGUs above has been determined based on their value in use, calculated as the present value  
of future cash flows attributable to the unit. 

The value in use for each CGU has been determined using a model which derives the individual value in use for each unit from the value in 
use of the Group as a whole. Although the model includes budgets and forecasts prepared by management it also reflects external factors, 
such as capital market risk pricing as reflected in the market capitalisation of the Group and prevailing tax rates, which have been used  
to determine the risk adjusted discount rate for the Group. Management believe that the projected cash flows are a reasonable reflection  
of the likely outcomes over the medium to long term. In the event that trading conditions deteriorate beyond the assumptions used in the 
projected cash flows, it is also possible that impairment charges could arise in future periods. 

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The following key assumptions have been used in calculating value in use for each group of CGUs: 
•  Future cash flows are based on the budget for 2013 approved by the Board. The model excludes cost savings and restructurings  
that are anticipated but had not been committed to at the date of the determination of the value in use. Thereafter forecasts have  
been prepared by management for a further four years from 2013 that reflect an average annual growth rate of 3% (2011: 3% to 5.6%).  

•  These forecasts exclude the impact of both organic and acquisitive growth expected to take place in future periods. Management 

consider these projections to be a reasonable projection of margins expected at the mid-cycle position reflecting the current uncertain 
global economic conditions. Cash flows beyond 2017 have been extrapolated using a 2% growth rate which management believe  
is a reasonable long-term growth rate for any of the markets in which the relevant CGUs operate. A terminal value is included in  
the assessment reflecting the Group’s expectation that it will continue to operate in these markets and the long-term nature of  
the businesses. 

•  The Group applies a country specific pre-tax discount rate to the pre-tax cash flows for each CGU. The country specific discount rate is 
based on the underlying weighted average cost of capital (WACC) for the Group. Based on a very conservative set of assumptions, the 
Group WACC is then adjusted for each CGU to reflect the assessed market risk specific to that country. The Group WACC increased 
marginally to 14% in 2012 (2011: 13%). The market risk adjustment has been set between 16% and 20% (2011: 13% to 19%). 

The trading conditions in which the Group operates are subject to competitive and economic pressures that can have a material effect on 
the operating performance of the business. Current market conditions remain challenging for the Group and the current global conditions 
make forecasting medium-term cash flows more difficult than is traditionally the case. The forecast cash flows used to derive the value  
in use are sensitive to changes in revenues (driven by changes in prices, occupancy or a combination of both), costs and discount rates 
(including the market assessment of the risks of the Group reflected in the Group’s market capitalisation). Actual conditions could result  
in either better or worse cash flows than included in the value in use calculation. Should current economic conditions prove to be more 
prolonged or to deteriorate greater than currently expected this would adversely impact the forecast cash flows and could result in 
impairments to goodwill and indefinite lived intangible assets in future periods. 

The amount by which the value in use exceeds the carrying amount of the CGUs are sufficiently large to enable the Directors to conclude 
that a reasonably possible change in the key assumptions would not result in an impairment charge in any of the CGUs. Foreseeable events 
are unlikely to result in a change in the projections of such a significant nature as to result in the CGUs carrying amount exceeding their 
recoverable amount. 

The key assumptions used in the US model are prudent in 2013 and forecast the centre contribution to drop to 25% from 28%. Revenue and 
costs grow at 3% per annum from 2012 maintaining a terminal 2017 centre gross margin of 25%. Thereafter a 2% long-term growth rate is 
assumed on revenue and cost into perpetuity. The cash flows have been discounted using a pre-tax discount rate of 19% (2011: 18%). 

The UK model assumes an ongoing recovery reverting to mid-cycle revenue and occupancy being achieved in 2017 prior to the application 
of the long-run growth rate and discount rates used. This model forecasts a 2013 centre contribution of 22%, with an average centre 
contribution of 21% over the next five years. Thereafter a 2% long-term growth rate is assumed on revenue and cost into perpetuity.  
The cash flows have been discounted using a pre-tax discount rate of 15% (2011: 13%). 

Management has considered the following sensitivities: 

Market growth and WIPOW – Management has considered the impact of a variance in market growth and WIPOW. The value in use 
calculation shows that if the long-term growth rate was reduced to nil, the recoverable amount of the US and UK CGUs would still be 
greater than their carrying value. 

Discount rate – Management has considered the impact of an increase in the discount rate applied to the calculation. The value-in-use 
calculation shows that for the recoverable amount of the CGU to be less than its carrying value, the pre-tax discount rate would have  
to be increased to 28% (2011: 25%) for the US CGU and 28% (2011: 17%) for the UK CGU. 

There is no goodwill relating to Group’s joint ventures. 

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Notes to the accounts continued

13. Other intangible assets 

Cost 
At 1 January 2011 
Additions at cost 
Acquisition of subsidiaries 
Disposals 
Exchange rate movements 
At 1 January 2012 

Additions at cost 
Acquisition of subsidiaries 
Disposals 
Exchange rate movements 
At 31 December 2012 

Amortisation 
At 1 January 2011 
Charge for the year 
Disposals 
Exchange rate movements 
At 1 January 2012 

Charge for year 
Disposals 
Exchange rate movements 
At 31 December 2012 

Net book value 
At 1 January 2011 

At 31 December 2011 

At 31 December 2012 

Brand 
£m

Customer  
lists 
£m 

Software 
£m

53.8 
–
–
–
–
53.8

–
–
–
(1.7)
52.1

13.8 
2.0
–
–
15.8

2.1
–
(0.6)
17.3

40.0

38.0

34.8

22.1  
0.1 
0.4 
– 
– 
22.6 

0.2 
1.1 
– 
(0.5) 
23.4 

17.0  
2.6 
– 
– 
19.6 

1.3 
– 
(0.3) 
20.6 

5.1 

3.0 

2.8 

16.3 
3.8 
–
–
(0.2) 
19.9 

6.6
–
–
(0.5)
26.0

13.0 
2.1 
–
(0.1) 
15.0

2.1
–
(0.4)
16.7

3.3

4.9

9.3

Total 
£m

92.2 
3.9 
0.4 
–
(0.2)
96.3 

6.8
1.1
–
(2.7)
101.5

43.8 
6.7 
–
(0.1)
 50.4

5.5
–
(1.3)
54.6

48.4

45.9 

46.9

Included with the brand value is £11.2m relating to the acquisition of the remaining 58% of the UK business in the year ended  
31 December 2006. The Regus brand acquired in this transaction is assumed to have an indefinite useful life due to the fact that the  
value of the brand is intrinsically linked to the continuing operation of the Group. 

As a result of the Regus brand acquired with the UK business having an indefinite useful life no amortisation is charged but the carrying 
value is assessed for impairment on an annual basis. The brand was tested at the balance sheet date against the recoverable amount  
of the UK business segment at the same time as the goodwill arising on the acquisition of the UK business (see note 12). 

The remaining amortisation life for non-indefinite life brands is 12 years. 

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14. Property, plant and equipment  

Cost 
At 1 January 2011 
Change in accounting policy 
At 1 January 2011 (Restated*) 
Additions 
Acquisition of subsidiaries 
Disposals 
Exchange rate movements 
Change in accounting policy 
At 1 January 2012 (Restated*) 

Additions 
Acquisition of subsidiaries 
Disposals 
Exchange rate movements 
At 31 December 2012 

Accumulated depreciation 
At 1 January 2011 
Change in accounting policy 
At 1 January 2011 (Restated*) 
Charge for the year 
Disposals 
Exchange rate movements 
Change in accounting policy 
At 1 January 2012 (Restated*) 

Charge for the year 
Disposals 
Exchange rate movements 
Balance at 31 December 2012 

* Restatement described in note 2 

Net book value 
At 1 January 2011 (Restated*) 

At 31 December 2011 (Restated*) 

At 31 December 2012 

* Restatement described in note 2 

Additions include £nil in respect of assets acquired under finance leases (2011: £nil).  

The net book value of furniture, fittings and motor vehicles includes amounts held under finance leases as follows: 

Cost 
Accumulated depreciation 
Net book value 

Land and 
buildings
£m

Furniture,  
fittings and  
motor vehicles 
£m 
(Restated*) 

Computer 
hardware
£m

Total
£m
(Restated*)

5.6 
–
5.6
–
– 
– 
– 
– 
5.6

2.5
–
–
–
8.1

– 
–
– 
0.3 
– 
– 
– 
0.3

0.3
–
–
0.6

5.6

5.3

7.5

672.7  
11.9 
684.6 
112.6 
2.5  
(8.1) 
(9.4) 
5.2  
787.4  

155.2 
12.0 
(17.0) 
(28.0) 
909.6 

416.1  
3.2 
419.3 
61.0  
(6.8) 
(5.9) 
1.3  
468.9 

57.4 
(15.3) 
(17.6) 
493.4 

265.3 

318.5 

416.2 

42.5 
–
42.5
6.3 
–
(1.4)
(0.4)
–
47.0 

11.5
0.4
(0.2)
(4.2)
54.5

33.9 
–
33.9
5.5 
(1.4)
(0.7)
–
37.3

5.9
(0.2)
(2.3)
40.7

8.6

9.7 

13.8

2012
£m

22.7
(18.3)
4.4

720.8 
11.9
732.7
118.9 
2.5 
(9.5)
(9.8)
5.2 
840.0 

169.2
12.4
(17.2)
(32.2)
972.2

450.0 
3.2
453.2
66.8
(8.2)
(6.6)
1.3 
506.5

63.6
(15.5)
(19.9)
534.7

279.5

333.5

437.5

2011
£m

24.4 
(18.4)
6.0 

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Notes to the accounts continued

14. Property, plant and equipment (continued) 
Change in estimate 
The Group conducted a review of the estimated useful life for property, plant and equipment. On 1 January 2012, the expected useful life 
for certain asset categories was adjusted to more accurately reflect the period over which the assets are expected to be available for use by 
the Group. The effect of these changes on the depreciation expense, recognised in costs of sales, in current period and expected in future 
years is as follows: 

£m 

Impact on the income statement 

15. Other long-term receivables 

2012

15.3

2013

9.8

2014

4.4

2015 

(0.4) 

Deposits held by landlords against rent obligations 
Amounts owed by joint ventures 
Prepayments and accrued income 

16. Trade and other receivables 

Trade receivables 
Amounts owed by joint ventures  
Other receivables 
Deposits held by landlords against rent obligations 
Prepayments and accrued income 
VAT recoverable 

17. Trade and other payables 

Trade payables 
Other tax and social security 
Customer deposits 
Deferred landlord contributions 
Amounts owed to joint ventures 
Rent accruals 
Other accruals 
Other payables 
Total current 

Deferred landlord contributions 
Rent accruals 
Other payables 
Total non-current 

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2016

(4.9)

2012
£m

30.9
2.8
2.0
35.7

2012
£m

115.4
2.9
27.0
20.7
92.7
32.1
290.8

2012
£m

46.1
42.7
198.6
19.8
0.6
43.2
75.4
21.3
447.7

2012
£m

76.0
67.9
3.5
147.4

After

(24.2)

2011
£m

34.3 
1.9 
1.7 
 37.9

2011
£m

105.7 
4.0
28.4 
15.4 
91.2
26.6 
271.3

2011
£m

61.6 
31.9
184.3
16.4 
0.7 
43.1 
69.6 
17.5 
425.1

2011
£m

58.8 
56.5 
2.5 
117.8 

 
 
 
 
 
 
 
 
18. Borrowings 
The Group’s total loan and borrowing position at 31 December 2012 and at 31 December 2011 had the following maturity profiles: 

Bank and other loans 

Repayments falling due as follows: 
Amounts falling due after more than one year: 
In more than one year but not more than two years 
In more than two years but not more than five years 
In more than five years  
Total non-current 
Total current 
Total bank and other loans 

Obligations under finance leases 
The maturity of the Group’s finance obligations is as follows: 

Amounts payable 
Within one year or on demand 
In more than one year but not more than two years 
In more than two years but not more than five years 

Less: finance charges allocated to future periods 
Present value of future minimum lease payments 
Total current 
Total non-current 

19. Provisions 

At 1 January 
Provided in the period 
Utilised in the period 
Provisions released 
Exchange differences 
At 31 December 

Analysed between: 
Current 
Non-current 
At 31 December 

Onerous 
leases and 
closures 
£m 

Restructuring
£m

8.5 
0.9 
(1.8) 
(2.2) 
(0.1) 
5.3 

0.9 
4.4 
5.3 

0.9
–
(0.6)
(0.2)
(0.1)
–

–
–
–

Other
£m

1.8
0.3
(1.1)
(0.2)
–
0.8

0.6
0.2
0.8

2012

Total
£m

11.2
1.2
(3.5)
(2.6)
(0.2)
6.1

1.5
4.6
6.1

Onerous 
leases and 
closures
£m

Restructuring 
£m 

10.7
0.4
(2.0)
(0.5)
(0.1)
8.5

1.4 
7.1 
8.5 

0.7 
 0.3 
(0.1) 
– 
– 
0.9  

0.9  
– 
0.9 

2012
£m

2.1
4.7
–
6.8
4.8
11.6

2012
£m

0.6
0.1
–
0.7
–
0.7
0.6
0.1
0.7

Other
£m

1.2
0.7
(0.1)
– 
– 
1.8

 0.7
1.1 
 1.8

2011
£m

 3.4
2.6
–
6.0
0.9
6.9 

2011
£m

 1.5
 0.9
 –
2.4 
(0.1)
2.3
 1.5
 0.8
2.3

2011

Total
£m

12.6
1.4
(2.2)
(0.5)
(0.1)
 11.2

3.0 
8.2 
11.2 

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Notes to the accounts continued

19. Provisions (continued) 
Onerous leases and closures 
Provisions for onerous leases and closures costs relate to the estimated future costs on centre closures and onerous property leases.  
The maximum period over which the provisions are expected to be utilised expires by 31 December 2022. 

Restructuring  
The restructuring provision was fully utilised during the financial year (2011: £0.9m). 

Other  
Other provisions include the estimated costs of claims against the Group outstanding at the year end, of which, due to their nature,  
the maximum period over which they are expected to be utilised is uncertain. 

20. Investments in joint ventures  

Total
£m

2.6 
(1.4)
0.1
0.1
1.4 
(0.8)
(0.3)
0.2
–
0.5

2011
£m

20.0
(17.5)
2.5 
(0.3)
2.2

7.3 
16.0 
(17.7)
(5.0)
0.6

At 1 January 2011 
Dividends paid  
Share of profit/(loss) 
Exchange rate movements 
At 1 January 2012 
Dividends paid  
Share of profit/(loss) 
Other 
Exchange rate movements 
At 31 December 2012 

Investments  
in joint ventures 
£m 

Provision for 
deficit in joint 
ventures
£m

3.9  
(1.4) 
0.1  
– 
2.6  
(0.8) 
(0.3) 
0.2 
– 
1.7 

(1.3)
– 
–
0.1 
(1.2)
–
–
–
–
(1.2)

The results of the joint ventures below are the full results of the joint ventures and do not represent the effective share: 

2012
£m

25.4
(24.6)
0.8
(0.4)
0.4

7.2
15.2
(17.9)
(7.1)
(2.6)

Income statement 
Revenue 
Expenses 
Profit before tax for the year 
Tax charge 
Profit after tax for the year 
Net (liabilities)/assets 
Fixed assets 
Current assets 
Current liabilities 
Non-current liabilities 
Net (liabilities)/assets 

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21. Share capital 
Ordinary equity share capital 

Authorised 
Ordinary 1p shares at 1 January & 31 December 
Issued and fully paid up 
Ordinary 1p shares at 1 January & 31 December  

2012 

Nominal value 
£m 

Number

2011

Nominal value
£m

Number  

8,000,000,000 

80.0   8,000,000,000  

950,969,822 

9.5  

950,969,822  

80.0 

9.5 

Treasury share transactions involving Regus plc shares 
As at 1 January 2012, 8,982,139 (2011: 9,070,906) shares were held as Treasury shares. During the year ended 31 December 2012,  
Regus plc repurchased nil (2011: nil) of its own shares in the open market and utilised 88,767 (2011: nil) Treasury shares held by the  
Group to satisfy the exercise of share awards by employees. 

The holders of ordinary shares in Regus Group plc were entitled to receive dividends as were declared by the Company and were  
entitled to one vote per share at meetings of the Company. Treasury shares do not carry such rights until reissued. 

22. Analysis of financial assets 

Cash and cash equivalents 
Gross cash 
Debt due within one year 
Debt due after one year 
Finance leases due within one year 
Finance leases due after one year 

Net financial assets 

At
1 Jan 2012
£m

Cash flow
£m

Non-cash  
changes 
£m 

Exchange 
movements
£m

At
31 Dec 2012
£m

197.5
197.5
(0.9)
(6.0)
(1.5)
(0.8)
(9.2)
188.3

(62.5)
(62.5)
(3.9)
(0.9)
0.8
0.6
(3.4)
(65.9)

– 
– 
– 
– 
– 
– 
– 
– 

(2.7)
(2.7)
–
0.1
0.1
0.1
0.3
(2.4)

132.3
132.3
(4.8)
(6.8)
(0.6)
(0.1)
(12.3)
120.0

Cash and cash equivalent balances held by the Group that are not available for use amounted to £64.7m at 31 December 2012 (2011: 
£25.5m). Of this balance, £19.9m (2011: £19.8m) is pledged as security against outstanding bank guarantees and a further £44.8m  
(2011: £5.7m) is pledged against various other commitments of the Group, including £40.0m cash held in escrow against the eventual 
acquisition of the MWB Business Exchange Plc. 

Non-cash changes comprise the amortisation of the debt issue costs, new finance leases entered into and movements in debt maturity. 

23. Financial instruments and financial risk management 
The objectives, policies and strategies applied by the Group with respect to financial instruments and the management of capital are 
determined at Group level. The Group’s Board maintains responsibility for the risk management strategy of the Group and the Chief 
Financial Officer is responsible for policy on a day-to-day basis. The Chief Financial Officer and Group Treasurer review the Group’s risk 
management strategy and policies on an ongoing basis. The Board has delegated to the Group Audit Committee the responsibility for 
applying an effective system of internal control and compliance with the Group’s risk management policies. The Audit Committee is 
supported by the Head of Risk Management in performing this role. 

Exposure to credit, interest rate and currency risks arise in the normal course of business. 

Going concern 
The Business Review on pages 2 to 20 of the Annual Report and Accounts sets out the Group’s strategy and the factors that are likely  
to affect the future performance and position of the business. The financial review on pages 15 to 19 within the Business Review reviews 
the trading performance, financial position and cash flows of the Group. During the year ended 31 December 2012 the Group made a 
significant investment in growth and the Group’s net cash position declined by £68.3m to £120.0m as at 31 December 2012. In addition  
to the Group’s strong cash flow generated from its mature centres, the Group established a new four year £200m revolving credit facility 
with a group of relationship banks. 

After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational 
existence for the foreseeable future and accordingly continue to adopt the going concern basis in preparing the Annual Report  
and Accounts. 

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Notes to the accounts continued

23. Financial instruments and financial risk management (continued) 
Credit risk 
Credit risk could occur where a customer or counterparty defaults under the contractual terms of a financial instrument and arises 
principally in relation to customer contracts and the Group’s cash deposits. 

A diversified customer base and requirement for customer deposits and payments in advance on workstation contracts, which contribute 
the majority of the Group’s revenue, minimise the Group’s exposure to customer credit risk. No single customer contributes a material 
percentage of the Group’s revenue. The Group’s policy is to provide against trade receivables when specific debts are judged to be 
irrecoverable or where formal recovery procedures have commenced. A provision is created where debts are more than three months 
overdue which reflects the Group’s historical experience of the likelihood of recoverability of these trade receivables. These provisions are 
reviewed on an ongoing basis to assess changes in the likelihood of recoverability. 

The maximum exposure to credit risk for trade receivables at the reporting date, analysed by geographic region, is summarised below. 

Americas 
EMEA 
Asia Pacific 
UK 

2012
£m

26.2
42.2
21.7
25.3
115.4

2011
£m

21.9
41.7 
17.5
24.6 
105.7 

All of the Group’s trade receivables relate to customers purchasing workplace solutions and no individual customer has a material balance 
owing as a trade receivable.  

The ageing of trade receivables at 31 December was: 

Not overdue 
Past due 1 – 30 days 
Past due 31 – 60 days 
More than 60 days 

Gross
2012
£m

82.0
22.9
5.3
11.0
121.2

Provision
2012
£m

–
–
(0.1)
(5.7)
(5.8)

At the year end 31 December 2012, the Group maintained a provision of £5.8m against potential bad debts (2011: £11.8m) arising from 
trade receivables. The Group had provided £2.2m (2011: £5.1m) in the year and utilised £8.2m (2011: £5.0m). Customer deposits of 
£198.6m (2011: £184.3m) are held by the Group, mitigating the risk of default. 

The Group believes no provision is generally required for trade receivables that are not overdue as the Group collects the majority of its 
revenue in advance of the provision of office services and requires deposits from its customers.  

Cash investments and derivative financial instruments are only transacted with counterparties of sound credit ratings, and management 
does not expect any of these counterparties to fail to meet their obligations.  

Liquidity risk 
The Group manages liquidity risk by reviewing its global cash position on a weekly basis and expects to have sufficient liquidity to meet  
its financial obligations as they fall due. The Group has free cash and liquid investments (excluding blocked cash) of £67.6m (2011: 
£172.0m) which the Directors consider adequate to meet the Group’s day to day requirements. 

In August 2012, the Group signed a new £200m four year unsecured revolving credit facility with a consortium of six relationship banks.  
In addition, the Group renegotiated the £100m Bank Guarantee and Letter of Credit facility provided by one bank to align the conditions 
and the maturity with the £200m facility. Both facilities are subject to financial covenants relating to operating cash flow, net debt to 
EBITDA, and EBITDA plus rent to interest plus rent. The Group is in compliance with all covenant requirements. 

Although the Group has net current liabilities of £183.7m (2011: £102.2m), the Group does not consider that this gives rise to a liquidity 
risk. A large proportion of the net current liabilities comprise non-cash liabilities such as deferred income which will be recognised in future 
periods through the income statement. Although the Group holds customer deposits of £198.6m (2011: £184.3m) these are spread across 
a large number of customers and no deposit held for an individual customer is material. Therefore the Group does not believe the balance 
represents a liquidity risk. 

The net current liabilities, excluding deferred income, were £32.6m at 31 December 2012 (2011 net current assets: £39.5m).  
It is considered appropriate to exclude deferred income in assessing the liquidity of the Group as it reflects the future non-refundable 
contractual revenue of the Group to be recognised as revenue in future periods. 

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72 Regus plc Annual Report and Accounts 2012

 
 
 
 
Market risk 
The Group is exposed to market risk primarily related to foreign currency exchange rates, interest rates, and the market value of our 
investments in financial assets. These exposures are actively managed by the Regus treasury in accordance with a written policy approved 
by the Board of Directors and subject to internal controls. We do not use financial derivatives for trading or speculative reasons. 

Interest rate risk 
The Group manages its exposure to interest rate risk through the relative proportions of fixed rate debt and floating rate debt, as well as 
investment in financial assets. Our surplus cash balances are invested short term, and at the end of 2012 no cash was invested for a period 
exceeding three months. The Board of Directors believes that the Group has no material exposure to interest rate fluctuations as the Group 
does not have any significant interest bearing loans or long-term financial investments. 

Foreign currency risk 
The Group presents its consolidated financial statements in GBP. As a consequence the Group is exposed to foreign currency exchange 
rate movements. The majority of day-to-day transactions of overseas subsidiaries are carried out in local currency and the underlying 
foreign exchange exposure is small. Transactional exposures do arise in some countries where it is local market practice for a proportion of 
the payables or receivables to be in other than the functional currency of the affiliate. Intercompany charging, funding and cash 
management activity may also lead to foreign exchange exposures. It is the policy of the Group to seek to minimise such transactional 
exposures through careful management of non-local currency assets and liabilities, thereby minimising the potential volatility in the income 
statement. Net investments in Regus affiliates with a functional currency other than GBP are of a long-term nature and the Group does not 
normally hedge such foreign currency translation exposures. 

From time to time the Group uses short-term derivative financial instruments to manage its transactional foreign exchange exposures where 
these exposures cannot be eliminated through balancing the underlying risks. 

No transactions of a speculative nature are undertaken. 

Other market risks 
The Group does not hold any available-for-sale equity securities and is therefore not subject to risks of changes in equity prices in the  
income statement. 

Capital management 
The Group’s parent Company is listed on the UK stock exchange and the Board’s policy is to maintain a strong capital base. The Chief 
Financial Officer monitors the diversity of the Group’s major shareholders and further details of the Group’s communication with key 
investors can be found in the Corporate governance report on pages 24 to 30. In 2006, the Board approved the commencement of a 
progressive dividend policy to enhance the total return to shareholders. 

The Group’s Chief Executive Officer, Mark Dixon, is the major shareholder of the Company and all executive members of the Board hold 
shares in the Company. Details of the Directors’ shareholdings can be found in the report of the Remuneration Committee on pages 32  
to 41. In addition the Group operates various share option plans for key management and other senior employees. 

At the 2008 Annual General Meeting shareholders approved a resolution for the Group to re-purchase up to 10% of its issued share capital 
in the market. In June 2007, the Group commenced a share buyback programme to meet both the need to issue shares under the Group’s 
share option programme and, more generally, as a means of returning cash to shareholders. 

In the year ended 31 December 2012 Regus plc purchased 1,765,783 (2011: 1,212,797) of its own shares in the open market and utilised 
these to satisfy employee share awards. Regus plc did not re-purchase any of its own shares in the open market to hold as Treasury 
shares. As at 5 March 2013, 8,982,139 shares were held as Treasury shares. 

The Company declared an interim dividend of 1.0p per share (2011: 0.9p) during the year ended 31 December 2012 and proposed a final 
dividend of 2.2p per share (2011: 2.0p per share), a 10% increase on the 2011 dividend.  

The Group’s objective when managing capital (equity and borrowings) is to safeguard the Group’s ability to continue as a going concern 
and to maintain an optimal capital structure to reduce the cost of capital. The Group holds minimal debt and is in a strong cash position 
therefore it is majority equity funded. The Board balances the higher returns possible with higher levels of borrowings with the stability and 
security afforded by a sound capital position as well as the strategy of accelerated organic growth. 

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Notes to the accounts continued

23. Financial instruments and financial risk management (continued) 
Effective interest rates  
In respect of financial assets and financial liabilities, the following table indicates their effective interest rates at the balance sheet date and  
the periods in which they mature. Interest payments are excluded from the table. 

The undiscounted cash flow of these instruments is not materially different from the carrying value. 

As at 31 December 2012 

Cash and cash equivalents 
Trade and other receivables 
Financial assets(b) 

Finance lease liabilities 
Bank loans 
Other loans  
Customer deposits 
Trade and other payables  
Foreign currency swaps 

Financial liabilities 

As at 31 December 2011 

Cash and cash equivalents 
Trade and other receivables 
Financial assets(b) 

Finance lease liabilities 
Bank loans 
Other loans  
Customer deposits 
Trade and other payables  
Foreign currency swaps 

Financial liabilities 

Effective    
interest rate   
%(a) 

Carrying value
£m

Contractual 
cash flow
£m

Less than 
1 year
£m

1-2 years 
£m 

2-5 years
£m

More than 
5 years
£m

0.4   
–   
–   

3.3   
8.6   
6.8   
–   
–   
–   

–   

132.3
231.8
364.1

(0.7)
(7.0)
(4.6)
(198.6)
(187.8)
–

(398.7)

132.3
237.5
369.8

(0.7)
(7.4)
(4.6)
(198.6)
(187.8)
(16.4)

(415.5)

Effective    
interest rate   
%(a) 

Carrying value
£m

Contractual 
cash flow
£m

0.6   
–   
–   

3.1   
8.1   
5.5   
–   
–   
–   

–   

197.5
216.4
413.9

(2.3)
(6.3)
(0.7)
(184.4)
(188.8)
–

(382.5)

197.5
228.1
425.6

(2.3)
(6.6)
(0.7)
(184.4)
(188.8)
(2.2)

(385.0)

132.3
204.0
336.3

(0.6)
(0.4)
(4.6)
(198.6)
(184.3)
(16.4)

(404.9)

Less than 
1 year
£m

197.5
191.9
389.4

(1.5)
(0.3)
(0.7)
(184.4)
(186.3)
(2.2)

(375.4)

– 
15.4 
15.4 

(0.1) 
(2.2) 
– 
– 
(3.5) 
– 

(5.8) 

–
18.1
18.1

–
(4.8)
–
–
–
–

(4.8)

–
–
–

–
–
–
–
–
–

–

1-2 years 
£m 

2-5 years
£m

More than 
5 years
£m

– 
17.3 
17.3 

(0.7) 
(3.5) 
– 
– 
(2.5) 
– 

(6.7) 

–
18.9
18.9

(0.1)
(2.8)
–
–
–
–

(2.9)

–
–
–

–
–
–
–
–
–

–

(a) All financial instruments are classified as variable rate instruments 

(b) Financial assets are all held at amortised cost 

74
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Sensitivity analysis 
At 31 December 2012 it is estimated that a general increase of one percentage point in interest rates would increase the Group’s profit 
before tax by approximately £1.3m (2011: £1.7m) with a corresponding increase in total equity. 

It is estimated that a five percentage point weakening in the value of the US dollar against pounds sterling would have decreased the 
Group’s profit before tax by approximately £2.8m for the year ended 31 December 2012 (2011: £1.2m). It is estimated that a five 
percentage point weakening in the value of the euro against sterling would have decreased the Group’s profit before tax by approximately 
£0.7m for the year ended 31 December 2012 (2011: £0.5m). 

It is estimated that a five percentage point weakening in the value of the US dollar against pounds sterling would have decreased the 
Group’s total equity by approximately £9.4m for the year ended 31 December 2012 (2011: £7.3m). It is estimated that a five percentage 
point weakening in the value of the euro against pounds sterling would have decreased the Group’s total equity by approximately £0.1m  
for the year ended 31 December 2012 (2011: £0.4m). 

Fair value disclosures 
The fair values together with the carrying amounts shown in the balance sheet are as follows: 

Cash and cash equivalents 
Trade and other receivables 
Finance lease liabilities 
Bank loans 
Other loans  
Customer deposits 
Trade and other payables 

Unrecognised gain 

Carrying 
amount
£m

132.3
231.8
(0.7)
(7.0)
(4.6)
(198.6)
(187.8)
(34.6)

2012 

Fair value 
£m 

132.3 
231.8 
(0.7) 
(7.0) 
(4.6) 
(198.6) 
(187.8) 
(34.6) 
– 

Carrying 
amount
£m

197.5
216.4
(2.3)
(6.3)
(0.7)
(184.4)
(188.8)
31.4

2011

Fair value
£m

 197.5
216.4 
(2.0)
(6.3)
(0.7)
(184.4)
(188.8)
31.7
 0.3

Summary of methods and assumptions: 
Cash and cash equivalents, trade and other receivables/payables and customer deposits 
For cash and cash equivalents, receivables/payables with a remaining life of less than one year and customer deposits, the book value 
approximates the fair value because of their short-term nature. 

Finance lease liabilities 
The fair value of finance leases has been calculated by discounting future cash flows at an appropriate discount rate which reflects current 
market assessments and the risks specific to such liabilities. 

Loans and overdrafts 
The fair value of bank loans, overdrafts and other loans approximates the carrying value because interest rates are at floating rates where 
payments are reset to market rates at intervals of less than one year. 

Derivative financial instruments 
The following table summarises the notional amount of the open contracts as at 31 December 2012: 

Foreign exchange contracts 

Committed bank facilities 

At 31 December 2012 
At 31 December 2011 

2012
CHF m

– 

2012 
EUR m 

20.1 

2011 
CHF m 

2.9 

2011
EUR m

0.2 

Principal 
£m 

290.0 
100.0

Available
£m

200.5 
13.3 

In August 2012, the Group signed a new £200m four year unsecured revolving credit facility with a consortium of six relationship banks.  
In addition, the Group renegotiated the £100m Bank Guarantee and Letter of Credit facility provided by one bank to align the conditions 
and the maturity with the £200m facility. Both facilities are subject to financial covenants relating to operating cash flow, net debt to 
EBITDA, and EBITDA plus rent to interest plus rent. The Group is in compliance with all covenant requirements. 

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Notes to the accounts continued

24. Share-based payment 
There are three share-based payment plans, details of which are outlined below: 

Plan 1: Regus Group Share Option Plan 
During 2004 the Group established the Regus Group Share Option Plan that entitles Executive Directors and certain employees to 
purchase shares in Regus plc (previously Regus Group plc). In accordance with this programme, holders of vested options are entitled  
to purchase shares at the market price of the shares at the day before the date of grant. 

The Regus Group also operates the Regus Group Share Option Plan (France) which is included within the numbers for the Regus Share 
Option Plan disclosed above. The terms of the Regus Share Option Plan (France) are materially the same as the Regus Group Share Option 
Plan with the exception that they are only exercisable from the fourth anniversary of the date of grant assuming the performance conditions 
have been met. 

Reconciliation of outstanding share options 

At 1 January 
Granted during the year 
Lapsed during the year 
Exercised during the year 
Outstanding at 31 December 

Exercisable at 31 December 

2012 

Weighted 
average 
exercise price 
per share 

96.22  
84.95 
107.74 
– 
89.53 

Number of 
share options

7,814,746 
13,867,539 
(950,379)
–
20,731,906

57.00  

3,170,139 

2011

Weighted 
average 
exercise price 
per share

80.19 
106.00
107.09 
–
96.22 

57.00 

Number of 
share options

20,731,906
11,269,000
(4,789,407)
–
27,211,499

3,170,139 

Date of grant 

Numbers granted 

Weighted 
average exercise 
price per share

Lapsed

Exercised

At 31 Dec 2012  Exercisable from

Expiry date

23/07/2004 
18/05/2010 
28/06/2010 
01/09/2010 
01/04/2011 (Grant 1) 
01/04/2011 (Grant 2) 
30/06/2011 
31/08/2011 
02/09/2011 
06/10/2011 
30/06/2012 
Total 

4,106,981  
3,986,000 
617,961 
160,646 
2,100,000 
300,000 
9,867,539 
300,000 
1,000,000 
300,000 
11,269,000 
34,008,127 

57.00 
100.50
75.00
69.10
114.90
114.90
109.50
67.00
74.35
64.10
84.95
91.69

–
(385,000)
(54,751)
–
(654,402)
(300,000)
(3,992,633)
– 
– 
– 
(473,000)
(5,859,786)

(936,842)
–
–
–
– 
– 
– 
– 
– 
– 
–
(936,842)

3,170,139   23/07/2007
23/03/2013
3,601,000 
28/06/2013
563,210 
01/09/2013
160,646 
01/04/2014
1,445,598 
01/04/2014
– 
30/06/2014
5,874,906 
31/08/2014
300,000 
01/09/2014
1,000,000 
01/10/2014
300,000 
10,796,000 
13/06/2015
27,211,499 

23/07/2014
23/03/2020
28/06/2020
01/09/2020
01/04/2021
01/04/2021
30/06/2021
31/08/2021
02/09/2021
01/10/2021
13/06/2022

230,000 options awarded during the year under the Regus Share Option Plan (France) are included in the above table (2011: 404,015), 261,560 lapsed during the year 
(2011: 353,186) and none were exercised during the year (2011: nil). 

Performance conditions for share options 
The options awarded in 2004 included certain performance criteria that needed to be met in order for the share options to vest. The share 
options vested based on the basic earnings per share (adjusted for non-recurring items and goodwill and intangible amortisation) that 
exceeded the targets linked to the Retail Price Index. The basic earnings per share for performance purposes was 1p. 100% of the options 
awarded in July 2004 vested during 2007. 

The options awarded in April, June and September 2010 contain the following performance conditions. 50% of the options will be eligible to 
vest if the Regus Total Shareholder Return (‘TSR’) % achieved relative to FTSE All Share Total Return index is at least at the median over 
the performance period. The remaining 50% of the options will be eligible to vest subject to the EPS conditions in the table below: 

76
76 Regus plc Annual Report and Accounts 2012

 
 
Vesting Scale 

25% 
50% 
75% 
100% 

Once performance conditions are satisfied those options that are eligible to vest will vest as follows: 

March 2013 
March 2014 
March 2015 

EPS Target Y/E 2012

15p
16p
17p
18p

Proportion to Vest

1/3
1/3
1/3

The performance targets for the options awarded in April 2011 (Grant 1), based on pre-growth profit for the year ending 31 December 2011, 
were partially met. Those options that are eligible to vest will vest as follows: 

April 2014 
April 2015 
April 2016 

Proportion to Vest

1/3
1/3
1/3

The Group and regional performance targets for the options awarded in June 2011, based on pre-growth profit for the year ending  
31 December 2011, were partially met. Those options that are eligible to vest will vest as follows: 

April 2014 
April 2015 
April 2016 

Proportion to Vest

1/3
1/3
1/3

The options awarded in April (Grant 2), August and October 2011 are conditional on the ongoing employment of the related employees for 
a specified period of time. Once this condition is satisfied those options that are eligible to vest will vest as follows: 

April 2014 
April 2015 
April 2016 

Proportion to Vest

1/3
1/3
1/3

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31 December 2012, such that the number of shares vesting will be subject to the satisfaction of a pre-determined operating profit target  
in 2012. 

Once performance conditions are satisfied those options that are eligible to vest will vest as follows: 

April 2014 
April 2015 
April 2016 

Proportion to Vest

1/3
1/3
1/3

The options awarded in June 2012 are subject to Group performance targets based on pre-growth profit for the year ending  
31 December 2012, such that the number of shares vesting will be determined as follows: 

Vesting Scale 

Good 
Better 
Best 

Pre-growth profit

£105m
£120m
£135m

77
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Notes to the accounts continued

24. Share-based payment (continued) 
Once performance conditions are satisfied those options that are eligible to vest will vest as follows: 

April 2014 
April 2015 
April 2016 

Proportion to Vest

1/3
1/3
1/3

Measurement of fair values 
The fair value of the rights granted through the employee share purchase plan was measured based on Monte Carlo simulation or the 
Black-Scholes formula. The expected volatility is based on the historic volatility adjusted for any abnormal movement in share prices. 

The inputs to the model are as follows: 

Share price on grant date 
Exercise price 
Expected volatility 

Number of simulations 
Number of companies 
Option life 
Expected dividend 
Fair value of option at time  
of grant 
Risk free interest rate 

June 2012 

October 2011 September 2011

August 2011

June 2011 

88.55p 
84.95p 
47.87% –
52.74% 
30,000 
– 
3 – 5 years 
3.27% 
29.88p – 
31.12p 
0.65% –
1.11% 

68.30p
64.10p
46.55% – 
53.26%
30,000
–
3 – 5 years
3.88%
23.04p – 
22.43p
1.15% – 
1.67%

72.50p
74.35p
46.08% – 
52.59%
30,000
–
3 – 5 years
3.66%
22.89p – 
22.71p
1.16% – 
1.75%

75.90p
67.00p
46.13% – 
52.61%
30,000
–
3 – 5 years
3.49%
27.32p – 
27.01p
1.29% – 
1.91%

110.70p 
109.50p 
44.99% – 
51.55% 
30,000 
– 
3 – 5 years 
2.35% 
39.41p – 
40.96p 
1.81% –  
2.57% 

April 2011 
(Grant 2)

110.70p
114.90p
45.41% – 
52.18%
30,000
–
3 – 5 years
2.35%
38.27p – 
39.80p
1.70% – 
2.48%

April 2011 
(Grant 1)

116.30p
114.90p
45.54% – 
51.23%
30,000
–
3 – 5 years
2.24%
42.19p – 
44.80p
2.33% –
3.04%

Share price on  
grant date 
Exercise price 
Expected volatility 

Number of simulations 
Number of companies 

Option life 
Expected dividend 
Fair value of option  
at time of grant 
Risk free interest rate 

September 2010 

EPS

TSR

June 2010 
EPS

TSR 

March 2010 
EPS

TSR

70.60p
69.10p
45.61% – 
50.28%
30,000
FTSE All 
Share Index
3 – 5 years
3.40%
22.80p –
23.60p
1.51% –
2.17%

70.60p
69.10p
45.61% – 
50.28%
30,000
FTSE All
Share Index
3 – 5 years
3.40%
21.51p –
21.51p
1.51% –
2.17%

73.20p
75.00p
46.18% –
54.32%
30,000
FTSE All
Share Index
3 – 5 years
3.28%
35.20p –
42.70p
2.76% – 
3.05%

73.20p 
75.00p 
46.99% –
56.36% 
30,000 
FTSE All 
Share Index 
3 – 5 years 
3.28% 
12.40p – 
17.40p 
2.76% – 
3.05% 

94.00p
100.50p
47.02% – 
64.82%
30,000
FTSE All
Share Index
3 – 5 years
2.55%
45.49p –
61.77p
3.07% – 
3.38%

94.00p
100.50p
46.74% – 
55.98%
30,000
FTSE All
Share Index
3 – 5 years
2.55%
19.50p –
26.30p
3.07% – 
3.38%

Plan 2: Regus plc Co-Investment Plan (CIP) and Long Term Incentive Plan (LTIP) 
The CIP operates in conjunction with the annual bonus whereby a gross bonus of up to 50% of basic annual salary will be taken as  
a deferred amount of shares (‘Investment Shares’) to be released at the end of a defined period of not less than three years, with the 
balance paid in cash. Awards of Matching Shares are linked to the number of Investment Shares awarded and will vest depending on the 
Company’s future performance. The maximum number of Matching Shares which can be awarded to a participant in any calendar year 
under the CIP is 200% of salary. As such the maximum number of Matching Shares which can be awarded, based on Investment Shares 
awarded, is in the ratio of 4:1. 

The LTIP provides for the Remuneration Committee to make stand-alone long-term incentive awards without reference to the annual bonus 
up to a maximum of 100% of salary per calendar year. 

78
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Reconciliation of outstanding share options 

At 1 January 
CIP awards granted during the year 
LTIP awards granted during the year 
Lapsed during the year 
Exercised during the year 
Outstanding at 31 December 

Exercisable at 31 December 

2012

Number of 
awards

16,597,482
–
–
–
(1,854,550)
14,742,932

2011

Number of 
awards

21,114,781 
–
– 
(3,304,502)
(1,212,797)
16,597,482 

4,447,433

 654,497

The weighted average share price at the date of exercise for share awards and options exercised during the year ended 31 December 2012 
was 114.66p (2011: 77.67p). 

Plan 

LTIP 
LTIP* 

Date of grant

03/11/2005
23/03/2010

Numbers 
granted

3,723,235 
2,900,472
6,623,707 

Lapsed

Exercised 

(1,092,819)
(515,415) 
(1,608,234)

(2,551,331) 
–  
(2,551,331) 

At
31 Dec 2012

79,085 
2,385,057
2,464,142 

Release date

03/11/2008
23/03/2013

* Of the awards of investments and matching shares under the LTIP on 23 March 2010, 1,028,539 were conditional share awards and 1,871,933 were nil cost options. 

Plan 

CIP: Investment shares 
CIP: Matching shares 
CIP: Investment shares 
CIP: Matching shares 

Date of grant

18/03/2008
18/03/2008
23/03/2009
23/03/2009

Numbers 
granted

1,557,391 
5,922,916 
2,212,734 
8,614,284 
18,307,325 

Lapsed

Exercised 

(86,956)
(1,182,796)
(172,835)
(1,607,368)
(3,049,955)

(1,300,560) 
–  
(1,678,020) 
–  
(2,978,580) 

At
31 Dec 2012

169,875
4,740,120 
361,879 
7,006,916 
12,278,790 

Release date

18/03/2011
* See below
23/03/2012
* See below

* As indicated in the Remuneration Report in the Annual Report for the year ended 31 December 2009, the Remuneration Committee felt it inappropriate to set specific 

performance conditions for Matching Shares under the CIP which were awarded in March 2008 and March 2009. 

Measurement of fair values 
The fair value of the rights granted through the employee share purchase plan was measured based on Monte Carlo simulation. 

The inputs to the model are as follows: 

Share price on grant date 
Exercise price 
Number of simulations 
Number of companies 
Award life 
Expected dividend 
Fair value of award at time of grant 
Risk free interest rate 

23/03/2010  
LTIP(a)

23/03/2009   
CIP(b) 

18/03/2008  
CIP(b)

03/11/2005  
LTIP(c)

108.10p 
Nil 
250,000 
32 
3 years 
2.22% 
47.00p 
1.86% 

65.50p  
Nil  
200,000   
32   
3 years  
2.72%  
47.97p  
1.92%  

80.50p 
Nil 
200,000  
36  
3 years 
1.19% 
61.21p 
3.86% 

92.25p 
Nil 
60,000 
29 
3 years 
Nil 
65.00p 
4.47% 

(a) The LTIP awards have a release date of 23 March 2013. There is no expiry date and therefore remaining contractual life is on the basis that the awards release 
immediately. The LTIP nil cost options have a vesting date of 23 March 2013 and an expiry of 23 March 2020. The performance conditions are set out below. 

(b) The CIP Matching Shares and Share Option Plan awards made in 2008 and 2009 did not have performance conditions set by the Remuneration Committee at  

the date of the award. A valuation was performed for those awards based on the terms that applied to similar awards made in previous years. The Remuneration 
Committee set the performance conditions for the awards made in 2008 and 2009 effective from 22 March 2010 and the valuation of these awards was updated  
in the year ended 31 December 2010 

(c) The LTIP Awards of 3 November 2005 had a release date of 3 November 2008. There was no expiry date and therefore remaining contractual life is on the basis  

that the awards release immediately. The LTIP nil cost options had a vesting date of 3 November 2008 and an expiry date of 3 November 2015.  

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Notes to the accounts continued

24. Share-based payment (continued) 
It is recognised by the Remuneration Committee that the additional EPS targets represent a highly challenging goal and consequently in 
determining whether they have been met the Committee will exercise its discretion. The overall aim is that the relevant EPS targets must 
have been met on a run rate or underlying basis. As such an adjusted measure of EPS will be calculated designed to assess the underlying 
performance of the business. 

While the Remuneration Committee reserves the right to adjust EPS as it sees fit at the time, by way of example, the following adjustments 
are currently anticipated: 
•  In a growth company such as Regus, costs are necessarily incurred in one year to drive profits in future years. Thus it is important to 

ensure management is not incentivised to cut back on these investments to meet EPS targets in any one year. Accordingly those costs, 
incurred in the vesting year, which it considers necessary to drive future growth, will be excluded from the EPS calculation. These would 
include, inter alia, the costs of the business development departments, excess marketing expenditures and current year losses from 
investing in new locations. 

•  Any one-off or non-recurring costs will be excluded. 
•  It is expected that in the period between 2006 and 2008 the cash tax rate will rise as cumulative tax losses are utilised thereby increasing 
progressively the challenge of achieving a 14p EPS target. This will then be further complicated by the need to recognise deferred tax 
assets as the business strengthens reducing the accounting rate of tax in one year and increasing it in the next. To provide greater clarity 
and incentive to management EPS will be calculated based upon the cash tax rate up to a maximum of 30%. 

•  The Remuneration Committee is of the opinion that the EPS and free cash flow performance targets are a transparent and accurate 

measure of the Company’s performance at this time and are the key corporate metrics for driving long-term shareholder value. In addition, 
the TSR condition will ensure that executives are encouraged to focus on ensuring that the Company’s return to shareholders is 
competitive compared to comparable companies. 

The performance conditions are as follows: 
The Remuneration Committee agreed to the following modifications to the awards made in 2008 and 2009 and that the following 
performance conditions would apply to these awards effective from 22 March 2010. 

The total number of awards made in 2008 and 2009 to each participant was divided into three separate equal amounts and was subject to 
future performance periods of three, four and five years respectively. Thus, conditional on meeting the performance targets, the first amount 
vests in March 2013, the second vests in March 2014 and the third vests in March 2015. These vesting dates relate to the financial years 
ending 31 December 2012, 31 December 2013 and 31 December 2014 respectively. The vesting of these awards is subject to the 
achievement of challenging corporate performance targets. 75% of each of the three amounts is subject to defined earnings per share 
(EPS) targets over the respective performance periods. The remaining 25% of each will be subject to relative total shareholder return (TSR) 
targets over the respective periods. The targets are as follows: 

% of awards eligible for vesting 

25% 
50% 
75% 
100% 

EPS targets for the financial years ending 
2014
2013
2012 

15p 
16p 
17p 
18p 

17p
20p
23p
26p

18p
22p
26p
30p

No shares will vest in each respective year unless the minimum EPS target for that year is achieved. 

% of awards eligible for vesting 

Nil 
25% 
Increments of 0.75% 
100% 

(a) over three, four or five year performance period. 

Regus TSR % achieved relative to FTSE All Share Total Return index(a)

100% 
Above 100% but below 101% 
For each complete 1% above 100% 
200% or above 

Plan 3: Regus plc Value Creation Plan 
The VCP was introduced in 2008 as a one-off award with the objective of delivering exceptional rewards to participants provided absolute 
returns to shareholders are exceptional. The VCP operates over a five year period from May 2008 to March 2013. Participants in the VCP 
are granted entitlements (‘VCP Entitlements’) to receive a maximum number of shares which shall be earned by the conversion of the VCP 
Entitlements into an option or series of options (the ‘VCP Options’) which may be granted on certain dates (the ‘Measurement Dates’) 
based on the Company’s share price performance. The exercise price for VCP Options is the closing share price on the date of the 
Company’s 2008 AGM. 

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Reconciliation of outstanding share options 

At 1 January 
VCP entitlements awarded during the year 
Lapsed during the year 
Outstanding at 31 December 

Plan 

VCP Tier 1 awards 
VCP Tier 2 awards 
VCP Tier 3 awards 
VCP Tier 4 awards 

2012

2011

Number of 
entitlements

12,857,142 
– 
(3,599,999) 
9,257,143 

Number of 
entitlements

21,000,000 
– 
(8,142,858)
12,857,142

Date of 
award

Numbers 
awarded

Lapsed

Exercised  At 31 Dec 2012

20/05/2008
20/05/2008
20/05/2008
20/05/2008

3,500,000 
6,000,000 
10,000,000 
3,000,000 

(1,700,000) 
(4,457,143)
(4,857,143)
(2,228,571)

22,500,000 

(13,242,857)

– 
– 
– 
– 

– 

1,800,000 
1,542,857 
5,142,857 
771,429 

9,257,143 

Measurement 
date

–
–
–
–
31/03/2010 – 
31/03/2013

The exercise price for VCP Options is the closing share price on the date of the Company’s 2008 AGM. No awards were exercisable at the 
year end (2011: nil). 

Measurement of fair values 
The fair value of the rights granted through the employee share purchase plan was measured based on Monte Carlo. 

The inputs to the model are as follows: 

Share price on award date 
Exercise price 
Number of simulations 
Number of companies 
Award life 
Expected dividend 
Total fair value of awards at time of grant 

Risk free interest rate 

21/05/2008
VCP

107.00p
107.00p
200,000 
36 
1.86 yrs – 4.86 yrs
0.93%
£1.3m

4.71%

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Notes to the accounts continued

24. Share-based payment (continued) 
The performance conditions are as follows: 

Number of shares earned less those 
earned at any prior measurement date 

Tier 1 awards

Tier 2 awards 

Tier 3 awards

Tier 4 awards

First measurement 
date 31/03/2010 

Second measurement 
date 31/03/2011 

Third measurement 
date 31/03/2012 

Fourth measurement 
date 31/03/2013 

Share price less than £2.60 
Share price is £2.60 or more but less than £3.50 
Share price is £3.50 or more 

– 
2,500,000 
3,500,000 

–
– 
4,285,714  
7,142,857 
6,000,000   10,000,000 

–
2,142,857 
3,000,000 

Share price less than £2.60 
Share price is £2.60 or more but less than £3.50 
Share price is £3.50 or more but less than £4.50 
Share price is £4.50 or more 

Share price less than £2.60 
Share price is £2.60 or more but less than £3.50 
Share price is £3.50 or more but less than £4.50 
Share price is £4.50 or more 

Share price less than £2.60 
Share price is £2.60 or more but less than £3.50 
Share price is £3.50 or more but less than £4.50 
Share price is £4.50 or more 

–
1,800,000 
2,500,000 
3,500,000 

–
1,200,000 
1,800,000 
2,500,000 

–
600,000 
1,200,000 
1,800,000

–
– 
5,142,857 
3,085,714  
7,142,857 
4,285,714  
6,000,000   10,000,000 

– 
2,057,143  
3,085,714  
4,285,714  

– 
1,028,571  
2,057,143  
3,085,714 

–
3,428,571 
5,142,857 
7,142,857 

–
1,714,286 
3,428,571 
5,142,857

–
1,542,857 
2,142,857 
3,000,000 

–
1,028,571 
1,542,857 
2,142,857 

–
514,285 
1,028,571 
1,542,857

The VCP awards have measurement dates of 31 March 2010, 31 March 2011, 31 March 2012 and 31 March 2013. If at the measurement 
dates, the share price targets have been met the eligible VCP entitlements will be converted into options over ordinary shares. The options 
are not subject to further performance conditions but are exercisable on the following basis: 

Percentage of entitlements converted to options at the 31/03/2010 
measurement date that can be exercised 
Percentage of entitlements converted to options at the 31/03/2011 
measurement date that can be exercised 
Percentage of entitlements converted to options at the 31/03/2012 
measurement date that can be exercised 
Percentage of entitlements converted to options at the 31/03/2013 
measurement date that can be exercised 

In year ended 
31/12/2010

In year ended 
31/12/2011 

In year ended 
31/12/2012

In year ended 
31/12/2013

40%

– 

– 

–

20% 

40% 

– 

– 

20%

30%

40%

20%

30%

60%

–

100%

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82 Regus plc Annual Report and Accounts 2012

 
 
 
 
 
 
 
 
 
 
 
 
 
 
25. Retirement Benefit Obligations 
The Group accounts for the Swiss pension plans as defined benefit plans under IAS 19. The Group has recognised £0.5m (2011: £0.4m)  
of pension costs in the income statement, together with a loss of £0.1m (2011: £0.1m) in other comprehensive income. 

Reconciliation of balance sheet movements 
The reconciliation of assets and liabilities recognised in the balance sheet are as follows: 

£m 

Fair value of plan assets 
Present value of obligations 
Net funded obligations 

31.12.2012

31.12.2011

2.7
(2.9)
(0.2)

2.4
(2.5)
(0.1)

As required by IAS 19 liabilities for benefit obligations are determined using the projected unit credit actuarial valuation method. This is  
an accrued benefits valuation method that discounts the best estimate of future cash flows and makes allowance for projected earnings. 

The Group does not operate any unfunded defined benefit pension plans. 

Changes in present value of defined benefit obligations and fair value of plan assets 
Changes in the present value of the defined benefit obligation were as follows: 

£m 

At 1 January 
Current service costs 
Plan participants’ contributions 
Benefit payments 
Interest cost 
Net insurance premiums and expenses 
Actuarial (gain)/loss for the year 
Exchange rate differences 
At 31 December 

Changes in the fair value of plan assets were as follows: 

£m 

At 1 January 
Employer contributions 
Plan participants’ contributions 
Benefit payments 
Expected return on plan assets 
Actuarial gain/(loss) for the year 
Net insurance premiums and expenses 
Exchange rate differences 
At 31 December 

31.12.2012

31.12.2011

(2.5)
(0.5)
(0.3)
0.3
–
0.2
(0.1)
–
(2.9)

(1.1)
(0.4)
(0.3)
(0.8)
–
0.2
(0.1)
–
(2.5)

31.12.2012

31.12.2011

2.4
0.3
0.5
(0.3)
–
–
(0.2)
–
2.7

1.1
0.4
0.3
0.8
–
–
(0.2)
–
2.4

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Notes to the accounts continued

25. Retirement Benefit Obligations (continued) 
Income and expenses 
The amounts that have been recognised in the income statement and other comprehensive income for the year ended 31 December 2012 
are as follows: 

£m 

31.12.2012

31.12.2011

Analysis of amounts (charged)/credited to the income statement: 
Service cost component (net of plan participants’ contributions) 
Interest cost component 
Expected return on plan assets 
Total (charge)/credit to operating profit 

Analysis of amounts recognised in other comprehensive income: 

At 1 January 
Net actuarial gains/(losses) recognised for the year 
At 31 December 

(0.5)
–
–
(0.5)

(0.1)
(0.1)
(0.2)

(0.4)
–
–
(0.4)

–
(0.1)
(0.1)

Current service costs have been included in administrative expenses. Interest costs and expected return on plan assets have been included 
in finance expenses. 

The actual return on plan assets was £33,000 (2011: £36,000). 

Major assumptions 
The major assumptions, adopted by the Group, when valuing the defined benefit obligations under IAS 19 are as follows: 

Discount rate 
Inflation rate 
Expected return on plan assets 
Future salary increase 
Future pension increase  
Average remaining years of service life  

31.12.12

01.01.12

1.75%
1.00%
1.75%
1.00%
0.00%
10.5

2.25%
1.00%
2.25%
1.00%
0.00%
10.9

Life expectancy is reflected in the defined benefit obligations by using up-to-date mortality tables. The mortality and invalidity assumptions,  
adopted by the Group, are based on the LPP 2010 tables as follows: 

Mortality tables 

LPP 2010 

Analysis of scheme assets 
The major categories of plan assets as a percentage of total plan assets are as follows: 

Money market 
Fixed income 
Equity 
Real Estate 
Other 
Total 

Life expectancy 
at age 65
2012

Life expectancy 
at age 65
2011

Male 
Female 

19.56
21.89

19.56
21.89

31.12.12

01.01.12

1.3%
82.7%
0.6%
11.8%
3.6%
100%

4.3%
75.3%
0.6%
12.4%
7.4%
100%

Sensitivities 
An increase of 0.25% in the discount rate would decrease the defined benefit obligation by 4.2%. A decrease of 0.25% in the discount rate  
would increase the defined benefit obligation by 4.5%. 

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26. Acquisitions 
During the year ended 31 December 2012 the Group made a number of immaterial acquisitions for a total consideration of £49.6m. 

Net assets acquired 
Intangible assets (note 13)* 
Property, plant and equipment (note 14) 
Other assets 
Current liabilities 
Non-current liabilities 

Goodwill arising on acquisitions 
Total consideration 
Deferred consideration 

Cash flow on acquisition 
Cash paid 

Net cash outflow 

Book value 
£m 

Provisional
Fair value 
adjustments
£m

Provisional 
Fair value
£m

– 
5.1  
3.8 
(4.1) 
(2.9) 
 1.9 

1.1
7.3 
–
–
–
 8.4

1.1
12.4 
3.8
(4.1)
(2.9)
 10.3
39.3
49.6
6.3

43.3

43.3

43.3

* Intangible assets comprise the fair value of customer contracts or, in the case of managed centres, the fair value of the management contract acquired  

The goodwill arising on the above acquisitions reflects the anticipated future benefits Regus can obtain from operating the businesses more 
efficiently, primarily through increasing occupancy and the addition of value adding products and services. £20.0m of the above goodwill is 
expected to be deductible for tax purposes. 

There was no material contingent consideration arising on the above acquisitions. 

The acquisition costs associated with these transactions were £0.9m, recorded within administration expenses within the consolidated 
income statement. 

During the year ended 31 December 2011 the Group made a number of immaterial acquisitions for a total consideration of £6.5m. 

Book value 
£m 

Final 
Fair value 
adjustments 
£m 

Fair value
£m

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Intangible assets (note 13)* 
Property, plant and equipment (note 14) 
Current liabilities 
Non current liabilities 

Goodwill arising on acquisitions 
Total consideration 
Deferred consideration 

Cash flow on acquisition 
Cash paid 
Net cash outflow 

–  
1.3  
(0.7) 
(0.3) 
0.3 

0.4 
1.2 
– 
– 
1.6 

0.4 
2.5 
(0.7)
(0.3)
1.9
4.6 
6.5
0.3
6.2

 6.2
 6.2

* Intangible assets comprise the fair value of customer contracts or, in the case of managed centres, the fair value of the management contract acquired 

The goodwill arising on the above acquisitions reflects the anticipated future benefits Regus can obtain from operating the businesses more 
efficiently, primarily through increasing occupancy and the addition of value adding services. £1.6m of the above goodwill is expected to be 
deductible for tax purposes. 

There was no contingent consideration arising on the above acquisitions. 

The acquisition costs associated with these transactions were £0.3m, recorded within administration expenses within the consolidated  
income statement. 

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Notes to the accounts continued

26. Acquisitions (continued) 
Acquisition of non-controlling interests 
On 31 May 2011, the Group acquired the remaining 40.95% interest in Regus Business Centres Canada Limited for £3.9m. The carrying 
amount of Regus Business Centres Canada Limited’s net assets on the date of acquisition was a net liability of £2.9m. 

There were no non-controlling interests acquired during the year ended 31 December 2012. 

27. Capital commitments 

Contracts placed for future capital expenditure not provided in the financial statements 

2012
£m

22.8

2011
£m

11.8 

These commitments are principally in respect of fit out obligations on new centres opening in 2012. In addition our share of the capital 
commitments of joint ventures amounted to £nil at 31 December 2012 (2011: £nil). 

28. Non-cancellable operating lease commitments 
At 31 December 2012 the Group was committed to make the following payments in respect of operating leases: 

Lease obligations falling due: 
Within one year 
Between two and five years 
After five years 

Motor vehicles, 
plant and 
equipment
£m

0.3
0.4
 –
0.7

Property
£m

437.5
1,092.3
407.3
1,937.1

2012

Total
£m

437.8
1,092.7
407.3
1,937.8

Motor vehicles, 
plant and 
equipment
£m

0.3 
0.1 
 –
0.4 

Property 
£m 

410.3 
993.4 
376.0 
1,779.7 

2011

Total
£m

410.6
993.5
376.0
1,780.1

Non-cancellable operating lease commitments exclude future contingent rental amounts such as the variable amounts payable under 
performance based leases where the rents vary in line with a centre’s performance. 

29. Contingent assets and liabilities 
The Group has bank guarantees and letters of credit held with certain banks amounting to £101.4m (2011: £103.7m). There are no material 
lawsuits pending against the Group. 

30. Related parties 
Parent and subsidiaries entities 
The financial statements include the results of the Group and the subsidiaries listed in note 31. 

Joint ventures 
The following table provides the total amount of transactions that have been entered into with related parties for the relevant financial year. 

£m 

2012 
Joint Ventures 
2011 
Joint Ventures 

Management 
fees received 
from related 
parties 

Amounts owed 
by related party

Amounts owed 
to related party

1.9 

1.5 

5.3

6.7

5.0

6.3

As at 31 December 2012, £nil of the amounts due to the Group have been provided for (2011: £nil). 

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Key management personnel 
No loans or credit transactions were outstanding with Directors or officers of the Company at the end of the year or arose during the year,  
that are required to be disclosed.  

Compensation of key management personnel (including Directors):  
Key management personnel include those personnel (including Directors) that have responsibility and authority for planning, directing and  
controlling the activities of the Group: 

Short-term employee benefits 
Share-based payments 

2012
£m

6.3 
0.3
6.6

2011
£m

5.3 
0.2
 5.5

Share-based payments included in the table above reflect the accounting charge in the year. The full fair value of awards granted in the  
year was £1.1m (2011: £1.9m). These awards are subject to performance conditions and vest over three, four and five years from the 
award date. 

Transactions with related parties 
During the year ended 31 December 2012 the Group acquired goods and services from a company indirectly controlled by a Director of  
the Company amounting to £30,073 (2011: £7,807). The goods and services were acquired in arm’s-length transactions. There was a nil 
balance outstanding at the year end (2011: nil). 

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Notes to the accounts continued

31. Principal Group companies 
The Group’s principal subsidiary undertakings at 31 December 2012, their principal activities and countries of incorporation are set out 
below: 

Name of undertaking 
Principal activity –  
Trading companies 

Country of 
incorporation 

% of 
ordinary 
share and 
votes held

Name of undertaking 
Principal activity –  
Holding companies 

Country of 
incorporation 

% of 
ordinary 
share and 
votes held

British Virgin Islands

Denmark 
England 
England 
England 

England 
England 
England 
England 
France 
Germany 

Regus H Holdings Inc 
RGN General Partner Holdings Corp  Canada 
RGN Limited Partner Holdings Corp  Canada 
Canada 
Insignia Partnership 
Canada 
RGN Services Limited 
Regus Management de Chile Ltda  Chile 
Regus Denmark Holding AS 
Regus Group Limited 
Regus Investments Limited 
Regus Business Centres (Holding) 
Regus Business Centres (Trading) 
Limited 
Regus H Holdings 
Regus H (UK)  
Regus Holdings UK Limited 
Regus Holdings SAS 
Regus Deutschland GmbH 
Regus Germany Holding GmbH  
& Co. KG 
Regus Management GmbH 
Pathway IP S.àr.l. (formerly Regus 
No.2 S.à.r.l.) 
RBW Global Holding S.àr.l.  
(formerly Regus Businessworld 
(Luxembourg) S.à.r.l.) 
Regus Middle East S.àr.l. 
Regus India Holdings Limited 
Regus Pakistan Holdings Limited 
Regus Mexico S. de RL de CV 
Regus Netherlands BV 
Regus Business Centres BV 
Regus Business Centre Norge AS  Norway 
Regus Holding GmbH 
Regus Corporation LLC 
Regus Holdings LLC 
Regus H Holdings LLC 
Regus International Services SA 

Germany 
Germany 

Luxembourg 
Luxembourg 
Mauritius 
Mauritius 
Mexico 
Netherlands 
Netherlands 

Switzerland 
United States 
United States 
United States 
Uruguay 

Luxembourg 

100
100
100
100
100
100
100
100
100
100

100
100
100
100
100
100

100
100

100

100
100
100
100
100
100
100
100
100
100
100
100
100

Regus do Brasil Ltda 
HQ Do Brazil Administracao de bens  
e servicos  
ABC Business Centres Ltd  
Regus Paris SAS 
Regus GmbH & Co. KG 
Regus Business Centres Italia Srl 
Regus Japan KK 
Regus Management de Mexico, SA  
de CV 
Regus Amsterdam BV 
Regus Business Centre SA 
HQ Global Workplaces, LLC 
Regus Business Center LLC 
Regus Management Singapore Pte Ltd 

Brazil 

Brazil 
England 
France 
Germany 
Italy 
Japan 

Mexico 
Netherlands 
Switzerland 
United States
United States
Singapore 

Principal activity –  
Management companies 

Regus Australia Management Pty Limited  Australia 
Belgium 
Regus Belgium SA 
Colombia 
Regus Colombia Limitada 
Croatia 
Regus Poslovni Centar d.o.o 
Czech 
Republic 
Denmark 
England 

Regus Management s.r.o 
Regus Management Aps 
Regus Group Services Ltd 
Business Centres Management  
Estonia OU 
Regus Asia Pacific Management Limited  Hong Kong 
Latvia 
Regus Management Latvia 
UAB Regus Management Lithuania 
Lithuania 
Regus Management Malaysia Sdn Bhd  Malaysia 
Regus Malta Management Ltd 
Regus Amsterdam BV 
Regus Management Singapore Pte Ltd 
Regus Management Group (Pty) Ltd 
Regus Management Espana SL 
Regus Global Management Centre SA 
Regus Yonetim ve Danismanlik Ltd Sirketi  Turkey 
Regus Vietnam Assets Management 

Malta 
Netherlands 
Singapore 
South Africa 
Spain 
Switzerland 

Vietnam 

Estonia 

100

100
100
100
100
100
100

100
100
100
100
100
100

100
100
100
100

100
100
100

100
100
100
100
100
100
100
100
100
100
100
100
100

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88 Regus plc Annual Report and Accounts 2012

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
32. Key judgemental areas adopted in preparing these accounts 
The preparation of financial statements in accordance with IFRS requires management to make certain judgements and assumptions that 
affect reported amounts and related disclosures. 

Fair value accounting for business combinations 
For each business combination, we assess the fair values of assets and liabilities acquired. Where there is not an active market in the 
category of the non-current assets typically acquired with a business centre, or where the books and records of the acquired company  
do not provide sufficient information to derive an accurate valuation, management calculate an estimated fair value based on available 
information and experience.  

The main categories of acquired non-current assets where management’s judgement has an impact on the amounts recorded include 
tangible fixed assets, customer list intangibles and the fair market value of leasehold assets and liabilities. For significant business 
combinations management also obtain third party valuations to provide additional guidance over the appropriate valuation to be included  
in the financial statements.  

Valuation of intangibles and goodwill 
We evaluate the fair value of goodwill and intangibles to assess potential impairments on an annual basis, or during the year if an event  
or other circumstance indicates that we may not be able to recover the carrying amount of the asset. We evaluate the carrying value of 
goodwill at the appropriate cash-generating unit level and make that determination based upon future cash flow projections, which assume 
certain growth projections which may or may not occur. We record an impairment loss for goodwill when the carrying value of the intangible 
asset is less than its estimated recoverable amount. Further details of the methodology and assumptions applied to the impairment review 
in the year ended 31 December 2012, including the sensitivity to changes in those assumptions, can be found in note 12. 

Tax assets and liabilities 
We base our estimate of deferred tax assets and liabilities on current tax laws and rates and, in certain cases, business plans and other 
expectations about future outcomes. Changes in existing laws and rates, and their related interpretations, and future business results may 
affect the amount of deferred tax liabilities or the valuation of deferred tax assets over time. Our accounting for deferred tax consequences 
represents management’s best estimate of future events that can be appropriately reflected in the accounting estimates. It is current Group 
policy to recognise a deferred tax asset when it is probable that future taxable profits will be available against which the assets can be used. 
The Group considers it probable if the entity has made a taxable profit in the previous year and is forecast to continue to make a profit in the 
foreseeable future. Where appropriate the Group assesses the potential risk of future tax liabilities arising from the operation of its business 
in multiple tax jurisdictions and includes provisions within tax liabilities for those risks that can be estimated reliably. Changes in existing  
tax laws can affect large international groups similar to Regus and could result in significant additional tax liabilities over and above those 
already provided for. 

Onerous lease provisions 
We have identified certain poor performing centres where the lease is considered onerous, i.e. the Group does not expect to recover the 
unavoidable lease costs up to the first break point. The accounts include a provision for our estimate of the net amounts payable under  
the terms of the lease to the first break point, discounted at the Group weighted average cost of capital, where appropriate. 

Dilapidations 
Certain of our leases with landlords include a clause obliging the Group to hand the property back in the condition as at the date of signing 
the lease. The costs to bring the property back to that condition are not known until the Group exits the property so the Group estimates 
the costs at each balance sheet date. However, given that landlords often regard the nature of changes made to properties as improvements, 
the Group estimates that it is unlikely that any material dilapidation payments will be necessary. Consequently provision has been made only 
for those potential dilapidation payments when it is probable that an outflow will occur and can be reliably estimated. 

33. Subsequent event 
On 20 February 2013, the Group acquired control of MWB Business Exchange Plc from MWB Property Limited. Due to the timing of this 
transaction, it is not practical to disclose the information associated with the initial accounting for this acquisition. 

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Parent company accounts

Summarised extract of company balance sheet (prepared under Luxembourg GAAP) 

Assets 
C. Fixed assets 
III. Financial assets 

1. Shares in affiliated undertakings 
2. Loans to affiliated undertakings 
4. Loans to undertakings with which the company is linked by virtue of participating interests 

D. Current assets 
II. Debtors 

2. Amount owed by affiliated undertakings  

a) becoming due and payable within one year 

III. Transferable securities 

2. Own shares  

(8,982,139 shares of £0.01 per share (2011: 9,070,906 shares)) 

IV. Cash at bank and in hand 
E. Deferred charges 
Total assets 
Liabilities 
A. Capital and reserves 
I. Subscribed capital 
II. Share premium and similar premiums 
IV. Reserves 

1. Legal reserve 
2. Reserve for own shares 
4. Other reserves 

V. Results brought forward 
VI. Results for the financial year 
VII. Interim dividends 

C. Provisions  

2. Provisions for taxation 
3. Other provisions 

D. Non-subordinated debts 

4. Trade creditors  

a) becoming due and payable within one year 

6. Amounts owed to affiliated undertakings  

a) becoming due and payable within one year  

Total liabilities 

Approved by the Board on 5 March 2013 

Mark Dixon 
Chief Executive Officer 

Dominique Yates 
Chief Financial Officer 

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90 Regus plc Annual Report and Accounts 2012

As at
31 Dec 2012
(Luxembourg 
GAAP)
£m

As at
31 Dec 2011
(Luxembourg 
GAAP)
£m

750.0
–
–

1.1

7.0

–
0.2
758.3

9.5
53.7

0.9
7.0
513.0
186.8
(9.9)
(9.4)
751.6

0.1
–

1.2

5.4
6.6

758.3

778.2
0.3
0.3

14.9

7.1

0.1
0.2
801.1

9.5
53.7

0.9
7.1
512.9
221.0
(6.8)
(8.5)
789.8

–
0.3

0.3 

10.7
11.0

801.1

 
 
 
 
 
 
Accounting policies 
Basis of preparation 
The annual accounts have been prepared in accordance with Luxembourg legal and regulatory requirements under the historical cost 
convention which differ in material respects from IFRS in both the measurement and presentation of certain transactions. 

The Company is included in the consolidated financial statements of Regus plc. 

The balance sheet has been extracted from the full accounts of Regus plc for the period ended 31 December 2012 which are available  
from the Company’s registered office, 26 Boulevard Royal, Luxembourg and which will be filed with both the Luxembourg Chamber of 
Commerce and the Jersey Register of Companies. 

Financial assets 
Shares in affiliated undertakings are valued at purchase price including acquisition costs. Where any permanent diminution in value is 
identified, value adjustments are recorded in the profit and loss account. These value adjustments are not continued if the reasons which 
caused their initial recording cease to apply. 

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Segmental analysis

Segmental analysis – management basis (unaudited) 

Mature1 
Workstations4 
Occupancy (%) 
Revenue (£m) 
Contribution (£m) 
REVPOW 

2011 Expansions2 
Workstations4 
Occupancy (%) 
Revenue (£m) 
Contribution (£m) 

2012 Expansions2 
Workstations4 
Occupancy (%) 
Revenue (£m) 
Contribution (£m) 

Closures3 
Workstations4 
Occupancy (%) 
Revenue (£m) 
Contribution (£m) 

Total 
Workstations4 
Occupancy (%) 
Revenue (£m) 
Contribution (£m) 
Unallocated contribution (£m) 
REVPAW (£) 

Period End workstations5 
Mature 
2011 Expansions 
2012 Expansions 
Total 

Americas 
2012

EMEA 
2012

Asia Pacific
2012

76,312
88.6
480.0
152.9
7,099

8,853
74.1
34.1
0.8

5,382
56.3
18.6
(3.9)

70
97.1
1.2
0.7

90,617
85.3
533.9
150.5
–
5,892

76,443
8,805
20,939
106,187

35,987
82.4
275.2
80.1
9,280

3,358
62.7
16.8
(1.4)

1,834
47.9
6.5
(2.6)

352
83.4
2.7
0.7

41,531
79.3
301.2
76.8
–
7,252

40,576
4,603
4,807
49,986

24,909
86.0
163.4
53.5
7,629

5,268
70.3
21.2
4.2

4,271
46.2
10.8
(2.4)

109
87.0
0.5
0.2

34,557
78.7
195.9
55.5
–
5,669

25,181
5,327
12,416
42,924

United 
Kingdom 
2012 

36,016 
83.0 
204.2 
37.9 
6,827 

489 
81.5 
1.9 
0.2 

492 
82.8 
3.1 
0.3 

757 
66.9 
2.6 
(1.8) 

37,754 
82.7 
211.8 
36.6 
– 
5,610 

40,253 
451 
330 
41,034 

Other
2012

Total
2012

–
–
1.3
1.2
–

173,224
85.8
1,124.1
325.6
7,565

–
–
–
–

–
–
–
–

–
–
–
–

–
–
1.3
1.2
–
–

–
–
–
–

17,968
71.0
74.0
3.8

11,979
52.5
39.0
(8.6)

1,288
74.8
7.0
(0.2)

204,459
82.5
1,244.1
320.6
0.1
6,085

182,453
19,186
38,492
240,131

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Segmental analysis – management basis (unaudited) 

Americas 
2011

EMEA 
2011

Asia Pacific
2011

Mature1 
Workstations4 
Occupancy (%) 
Revenue (£m) 
Contribution (£m) 
REVPOW 

2011 Expansions2 
Workstations4 
Occupancy (%) 
Revenue (£m) 
Contribution (£m) 

2011 Closures3 
Workstations4 
Occupancy (%) 
Revenue (£m) 
Contribution (£m) 

2012 Closures3 
Workstations4 
Occupancy (%) 
Revenue (£m) 
Contribution (£m) 

Total 
Workstations4 
Occupancy (%) 
Revenue (£m) 
Contribution (£m)6  
Unallocated contribution (£m) 
REVPAW (£) 

Notes: 

75,716
87.7
463.3
132.7
6,977

2,856
59.0
7.7
(2.7)

1,054
72.3
1.1
(0.5)

438
94.9
5.4
0.8

80,064
86.5
477.5
130.3
–
5,964

35,765
83.8
288.8
75.2
9,636

1,606
44.4
5.3
(4.3)

780
73.8
3.3
(0.9)

322
81.6
4.3
(0.8)

38,473
81.6
301.7
69.2
–
7,842

24,896
84.3
159.8
45.1
7,614

2,187
47.5
5.9
(1.0)

432
72.7
2.2
(0.1)

242
85.9
1.2
0.6

27,757
81.6
169.1
44.6
–
6,092

United  
Kingdom 
2011 

35,669 
84.1 
200.7 
32.1 
6,691 

349 
73.6 
1.2 
(0.4) 

400 
63.5 
0.7 
0.2 

1,928 
83.8 
10.0 
(0.2) 

38,346 
83.7 
212.6 
31.7 
– 
5,544 

Other
2011

–
–
1.7
1.4
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–
1.7
1.4
–
–

Total
2011

172,046
85.6
1,114.3
286.5
7,566

6.998
52.8
20.1
(8.4)

2,666
71.5
7.3
(1.3)

2,930
84.3
20.9
0.4

184,640
84.2
1,162.6
277.2
1.9
6,297

1  The mature business comprises centres not opened in the current or previous financial year 

2  Expansions include new centres opened and acquired businesses 

3  A 2012 closure is defined as a centre closed during the 12 months ended 31 December 2012. A 2011 closure is defined as a centre closed during the 12 months 

ended 31 December 2011 

4  Workstation numbers are calculated as the weighted average for the year 

5  Workstation available at period end 

6  Restatement described in note 2

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Five year summary

Revenue 
Cost of sales before non-recurring costs 
Non-recurring cost of sales 
Cost of sales 
Gross profit (centre contribution) 
Administration expenses before non-recurring expenses 
Non-recurring administration expenses 
Administration expenses 
Operating profit 
Exceptional income from legal settlement 
Operating profit (after exceptional) 
Share of post-tax (loss)/profit of joint ventures  
Share of post-tax profit of associate 
Profit before financing costs 
Finance expense 
Finance income 
Profit before tax for the year 
Tax charge 
Profit after tax for the year 

Attributable to: 
Equity shareholders of the parent 
Minority interests 

Earnings per ordinary share (EPS): 
Basic (p) 
Diluted (p) 
Weighted average number of shares outstanding (‘000’s) 
Balance sheet data (as at 31 December) 
Intangible assets 
Property, plant and equipment 
Deferred tax assets 
Trade and other receivables 
Cash, cash equivalents and liquid investments 
Total assets 
Current liabilities 
Non-current liabilities 
Provisions 
Equity minority interests 
Equity shareholders funds’ 
Total liabilities and shareholders’ funds 

* Restatement described in note 2 

Full year ended
31 Dec 2012
£m

Full year ended
31 Dec 2011
£m 
(Restated*)

Full year ended 
31 Dec 2010 
£m  
(Restated*) 

Full year ended
31 Dec 2009
£m 
(Restated*)

Full year ended
31 Dec 2008
£m 
(Restated*)

 1,244.1
(923.4)
–
(923.4)
 320.7
(230.2)
–
(230.2)
90.5
–
90.5
(0.3)
–
90.2
(5.9)
0.8
85.1
(14.2)
70.9

70.9
–
70.9

7.5p
7.5p
941,922

363.9
437.5
33.9
333.9
132.3
1,301.5
612.5
157.0
4.6
–
527.4
1,301.5

1,162.6
(883.5)
–
(883.5)
279.1
(224.7)
–
(224.7)
54.4
–
54.4
0.1
–
54.5
(6.4)
1.3
49.4
(9.0)
40.4

41.7
(1.3)
40.4

1,040.4 
(823.1) 
(11.9) 
(835.0) 
217.3 
(193.3) 
(3.9) 
(197.2) 
24.0 
 – 
8.2 
1.3  
–  
9.5 
(2.1) 
 1.8 
9.2 
(5.9) 
3.3 

2.9 
 0.4 
 3.3 

1,055.1 
(819.8)
–
(819.8)
235.3
(166.1)
(2.6)
(168.7)
69.2
18.3 
84.9
2.0 
– 
86.9
(3.6)
3.3 
86.6
(19.2)
67.4

66.7 
0.7 
67.4 

1,077.2 
(769.6)
–
(769.6)
307.6 
(161.7)
–
(161.7)
145.9 
–
145.9 
2.3 
– 
148.2
(3.4)
6.3 
151.1
(34.3)
116.8

115.8 
1.0 
116.8 

4.3p
4.3p
941,899

0.3p 
0.3p 
 947,463 

7.1p
7.0p
948,204 

12.2p
12.0p
950,320 

331.3
333.5
32.2
319.2
197.5
1,213.7
578.4
126.4
8.2
–
500.7
1,213.7

330.8  
279.5 
36.6 
299.9 
204.6 
1,151.4 
541.8  
105.8 
9.8  
0.1  
493.9 
1,151.4 

307.4 
247.8
65.1 
250.3 
245.1 
1,115.7
504.5 
96.6 
8.2 
– 
506.4
1,115.7

330.3 
285.7
79.0 
282.4 
219.5 
1,196.9
592.3 
108.1 
8.5 
0.3 
487.7
1,196.9

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Shareholder information

Corporate directory 
Secretary and Registered Office 
Tim Regan, Company Secretary 
Regus plc (Société Anonyme) 
Registered Office:   
Lime Grove Street   
Green Street 
St Helier 
Jersey 
JE1 2ST 

Registered Head Office: 
26 Boulevard Royal 
L-2449 Luxembourg 

Registered Number 
Jersey 
101523 

Luxembourg 
R.C.S. B 141 159 

Registrars 
Capita (Registrars) Jersey Limited 
12 Castle Street 
St Helier 
Jersey JE2 3RT 

Auditor 
KPMG Luxembourg S.à r.l. 
9 Allée Scheffer 
L-2520 Luxembourg 

Legal advisers to the Company as to English law 
Slaughter and May 
One Bunhill Row 
London EC1Y 8YY 

Legal advisers to the Company as to Luxembourg law 
MNKS 
Vertigo Polaris Building 
2 – 4 rue Eugene Ruppert 
L-2453 Luxembourg 

Corporate Stockbrokers 
Investec Bank plc 
2 Gresham Street 
London EC2V 7QP  

Goldman Sachs 
Peterborough Court 
133 Fleet Street 
London EC4A 2BB 

Reservations 
UK telephone: 
US telephone: 

Websites 
www.regus.com 
www.hq.com 

0870 880 8484 
1.877.REGUS.87 or 
001 954 331 1647 

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Shareholder information continued

Glossary 
Available workstations 
The total number of workstations in the Group (also termed 
Inventory). During the year, this is expressed as a weighted  
average. At period ends the absolute number is used.  

Centre Contribution 
Gross profit comprising centre revenues less direct operating 
expenses but before administrative expenses 

EBITDA 
Earnings before interest, tax, depreciation and amortisation 

EBITDAR 
Earnings before interest, tax, depreciation, amortisation and rent 

Enquiries 
Client enquiries about Regus products or services 

Expansions 
A general term which includes new business centres established  
by Regus and acquired centres in the year 

Forward Order Book 
The future workstation revenue already contracted with clients  
at a point in time 

Like for like 
The financial performance from centres owned and operated for a 
full 12 months prior to the start of the financial year which therefore 
have a full year comparative 

Mature business 
Operations owned for a full 12 month period prior to the start  
of the financial year which therefore have a full year comparative 

Occupancy 
Occupied workstations divided by available workstations expressed 
as a percentage 

Occupied workstations 
Workstations which are in use by clients. This is expressed  
as a weighted average for the year.  

REVPAW 
Total revenue per available workstations  
(Revenue/Available workstations) 

REVPOW 
Total revenue per occupied workstation 

WIPOW 
Workstation income per occupied workstation  

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96 Regus plc Annual Report and Accounts 2012

 The Forest Stewardship Council® (FSC) is an international network 
which promotes responsible management of the world’s forests. 
Forest certiﬁ cation is combined with a system of product labelling 
that allows consumers to readily identify timber-based products 
from certiﬁ ed forests.

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Printed in England by the Pureprint Group

Regus plc S.A.
26 Boulevard Royal
L-2449 Luxembourg
www.regus.com

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