allowing business to work at home
in the office or on the road 
regus group plc annual report 2006 opening the door to a complete range 
of outsourced workplace solutions lift flap
our mission is to develop deliver 
and support outsourced workplace 
solutions that allow individuals and 
companies to work however wherever 
and whenever they need to 01 financial highlights
revenue £m
h
468

this has been another 
outstanding 12 months 
we have delivered strong disciplined growth and improved performance in all  
of our key business metrics including revenues profit and earnings per share
2005 2006
4633
6800
gross profit £m
h
57 2

2005 2006
1171
1841
operati ng profit 
£m
h
738

2005 2006
473
822
cash f rom  
operati ons £m
h
700

2005 2006
781
1328
profit after ta x 
£m
h
837

2005 2006
448
823
basic earnings
per share p
h
867

2005 2006
45
84
cont ent s
financial highlights 01
chairman’s statement 02
chief executive’s review 04
regional review 06
financial review 10
board of directors 14
directors’ report 16
corporate responsibility 18
corporate governance 22
remuneration report 27
director statements 34
independent auditors’ report 35
financial statements 36
notes to the accounts 40
parent company accounts 69
five year summary 74
corporate directory 75
glossary 76 work wherever whenever 
and however
regus is well placed to help our clients work wherever whenever and however 
they choose to from more flexible ways to have and run an office to supporting 
the emerging trend of home and mobile working regus has a full range of  
workplace solutions and support services
working at
home
working in the
offi ce
working on the
road
our
cli ent s
product s incl ude
virtual offices
virtual pa
part time offices
meeting rooms 
videoconferencing
product s incl ude
f ull time offices
corporate outsourcing
t raining rooms
meeting rooms 
videoconferencing
product s incl ude
business lounges
day offices
airport locations
meeting rooms 
videoconferencing
product highlights 16000000

sqft of space under lease
200000

customers use us each day
120108 workstations globally
4298 regus team members driving our success
3700 meeting rooms worldwide
790 centres in 64 countries
572 videoconference suites worldwide
218 business centres added during 2006
84

 yearend occupancy
28 acquisitions during the year
1global provider of outsourced workplace solutions
the world’s largest  
provider of outsourced 
workplace solutions
operational highlights chairman’s statement
john matthews
regus report  accounts 2006 02
operating profit has increased by 738 while 
at the same time we have grown the scale of 
our business measured in workstations by 
454 year on year this profitable growth 
and our strong cash conversion has enabled 
the group to fund its expansion plans with 
minimal external funding net cash was  
£234 million at 31 december 2006 2005 
£360 million 
in an industry where size and scale are  
critical in order to provide customers with the 
greatest range of product service and price 
offerings and achieve operating efficiencies 
our network at 31 december 2006 consisted 
of 790 centres in 64 countries operating  
under the respected regus and hq brands
f inancial performance
group revenue has increased by 468 to £6800 million and gross profit 
by 571 to £1841 million excluding the impact of new centre growth the 
like for like improvement was 90 and 291 respectively this overall 
result was driven by average occupancy increasing to 818 from 780 in 
2005 and revpaw increasing 76 from £5890 to £6340 earnings profit 
after tax grew by 837 to £823 million and basic earnings per share eps 
increased by 39p to 84p  
on 13 march 2006 we signed a new £100 million fiveyear revolving credit 
and letter of credit facility and in april added £50 million of term debt the 
latter was used to finance the acquisition of the uk business the new facilities 
have been negotiated on significantly more favourable terms reflecting the 
strong financial progress the business has made over the last two years  
this year’s results are 
a testament to regus’
strong business model 03 regus report  accounts 2006
our strategy remains one of 
controlled and disciplined 
growth with the aim to be 
number one in all the markets 
in which we operate
sustaining growth
we continue to implement our controlled and disciplined expansion strategy 
to supplement our strong organic growth during the financial year we  
acquired 28 businesses for a net consideration of £885 million these  
businesses have all been successfully integrated into the regus network  
in the year to 31 december 2006 our workstation capacity increased in line 
with our expansion plans by 454 to 120108 workstations december 
2005 82586 workstations with the acquisition of regus uk accounting  
for around 25000 workstations  
dividend
given the robust performance and positive outlook we are pleased to  
announce that regus will be paying a dividend subject to the approval of 
shareholders at the 2007 annual general meeting agm the final dividend 
of 06p will be paid on 1 june 2007 to shareholders on the register at the 
close of business on 27 april 2007  
the group continues to monitor its capital structure and retains flexibility  
to repurchase its shares in the market place should surplus cash resources 
be available
corporate responsibility
the board believes that the integration of corporate responsibility through
out the business and the incorporation of broader social and environmental 
issues into day to day decision making will benefit all our key stakeholders 
and better enable us to achieve our target levels of performance this year 
we will set up a formal corporate responsibility committee to oversee cr 
strategy the committee’s aim is to ensure that we take a sustainable  
approach to business – to do the right thing for our shareholders our  
customers our suppliers the community and the world around us
we will be commissioning a series of initiatives to reduce energy  
consumption through our virtual office and video conferencing services we 
will continue to promote teleworking and therefore support a longer term 
approach to tackling the impact of climate change on the environment
our stakeholders
we rely on the goodwill and commitment of our landlords suppliers  
customers and investors as we continue to maintain our record of double 
digit sales growth since 2003 the commitment loyalty and efforts of our 
team members have played a key role in our success our people are 
integral to differentiating regus from our competitors and maintaining the 
company’s position as the international leader in outsourced workplace 
solutions  
outlook
our strategy remains one of controlled and disciplined growth with the aim 
to be number one in all the markets in which we operate this well proven 
strategy has resulted in our third year of consistent growth both organically 
and through acquisitions and we expect this to continue  
we will continue to open centres wherever our research indicates there  
is a profitable opportunity to increase our geographic footprint and better 
serve our customers in addition we will continue to acquire complementary 
businesses which meet our strict investment criteria enabling us to move 
into new markets and develop a wider customer base  
john matthews 
chairman 
19 march 2007 chief executive’s review
mark dixon
expanding our network
our growth in 2006 has been exceptional during the last financial year 
we opened 218 centres inclusive of 91 centres in the uk which added a 
further 37522 workstations to our capacity our expansion programme will  
continue in 2007 with openings planned across all four regions  
in addition we will continue to add complementary businesses which meet 
our strict investment criteria several of these acquisitions have allowed us to 
move into new markets such as airport locations and corporate outsourcing 
and develop a wider customer base government and support agencies as 
well as facilitating a broader service for our existing clients  
innovative products and services
one of our core skills is our ability to anticipate the changing demands of our 
customers we therefore focus our research on developing new products 
and services which meet the future needs of our customers  
some examples of recent developments include
 network access – our membership programme which provides  
 members with immediate unlimited access to our global network of  
 business centres  
 managed office solutions – a fully outsourced office solution for larger  
 clients where we manage the day to day running of the office  
 regus express – a retailbusiness centre which caters for the needs of  
 the mobile worker currently located at airport locations within the usa  
 our intention is to implement this concept in other airports and travel hubs 
 in major cities across the world  
investment in systems and technology
the growth of the business in 2006 has emphasised the need for regus 
to have best in class systems to support its unique market position these 
systems will not only be used for the benefit of our internal needs but as a 
platform to bring a broader range of services to our client  
a flexible secure and scaleable it infrastructure is critical to our clients 
needs bandwidth on demand guaranteed quality of service increased 
security and higher service level performance are some of the benefits that 
we are now able to offer to our clients  
the scale of our operations are being brought to bear in the sourcing and 
management of our it services bringing benefits to our customers while 
providing further differentiation from our competitors  
as an example of this we are partnering with some of the leading names  
in it and telecoms to enable us to develop next generation converged  
network solutions cns the centralised nature of cns provides regus 
with economies of scale lower cost of ownership speed to market and 
a wider range of services that enable greater revenue opportunities and 
provides our customers with  better control of their cost bases  
additionally regus operates the world’s largest videoconferencing  
network in terms of geographical reach the need for our customers to 
maximise their productivity and the increasing environmental concerns 
around business travel have driven continued growth of this valuable  
service consequently we intend to make further investments in this area  
to maximise its growing importance to our clients 
regus report  accounts 2006 04
t his has been another outstanding 12 months 
for the group with record results for the 
third year in succession we have delivered 
strong disciplined growth and improved 
performance in all of our key business metrics 
including revenues profit and earnings per 
share our performance in 2006 demonstrates 
the benefits of our longer term approach to 
the development of the business we continue 
to improve financial performance through 
growing our network of business centres 
and developing new products and services 
to meet the evolving needs of our clients  
strategy and objectives 
our strategy and objectives are simple – to use 
our skills and resources to generate profitable 
growth and cash
we achieve these objectives through the following 
activities operational excellence
our commitment to operational excellence is one of our key differentiators 
our business centre staff adopt globally defined standards of business 
processes and procedures a rolling programme of quality audits are  
conducted at least annually in each centre and a scoring system helps 
ensure that centre teams focus on achieving the highest standard of  
operational excellence across our network in this way we can ensure 
clients experience a high quality and consistent level of service irrespective 
of location  
in addition to developing systems our back office teams support our client 
facing staff with the efficient administration of the business our finance 
human resource billing and procurement teams operate on a regional basis 
allowing us to realise consistency of delivery and scale efficiencies  
developing our brand
our brands and business concept are recognised and respected globally a 
consistent high quality product delivery is available in all of the world’s most 
in demand cities providing business executives the regus experience on a 
global basis 
in 2006 we invested in tv and radio advertising in the uk and usa –  
specifically targeted at building awareness of the regus brand our  
development of regus express and network access card has allowed  
us to further promote our brand  
in addition to our flagship regus brand we also operate under our hq 
brand primarily in the usa we continue to monitor options and opportunities 
for developing our products under various trademarks as part of the regus 
group network  
developing our team members
the skills enthusiasm and commitment of our people are key to regus’ 
success we recognise the need to recruit high quality individuals and to 
develop the potential of our staff in order to provide a positive customer 
experience to our clients  
our internal training programmes include regular operational updates  
online training modules and classroom based training at our global school  
of excellence in dallas usa during 2006 we trained 238 general and  
operational managers in dallas various locations across the uk and 
mexico city in addition 254 team members completed a three week  
induction course our staff have taken over 10000 online training modules 
equivalent to nearly 3000 hours of training
t he future 
the group maintained strong growth in 2006 driven by all three parts  
of our strategy our core business centre operations delivered a solid  
performance mobile and home working continues to grow at rates in  
excess of 20 and our corporate outsourcing business is poised for  
significant growth in the medium to long term looking ahead we will  
focus on driving margin improvement in our mature business and continue 
to invest in new markets and products to drive the long term growth of  
the business  
as such i am confident that the group will continue to deliver attractive 
rates of growth and cash generation in the year ahead  
mark dixon
chief executive officer
19 march 2007
05 regus report  accounts 2006
f uture industry trends 
we believe we are well placed to take advantage 
of the favourable trends in our industry and these 
will contribute to the continued development of 
group these include
 fragmented market
 regus has the only global serviced office network  
 with no other players having more than 75 centres  
 our geographic footprint spans 790 centres across  
 64 countries and we will continue to seek opportunities 
 to grow our network and acquire complementary  
 businesses enabling us to move into new markets  
 and develop a wider customer base  
 growth in home and mobile working
 the development of a mobile workforce has gathered 
 pace and employers and employees are increasingly  
 adopting flexible working practices our meeting room 
 videoconferencing and virtual office products offer  
 solutions to these workers and through our regus  
 express outlets we are bringing these solutions even  
 closer to our client base  
 continued adoption of outsourcing
 companies large and small are realising the benefits  
 of outsourcing their office management in order to  
 concentrate on their core business regus helps  
 customers to minimise the complexity of property  
 management through providing clients with a single  
 property and service provider outsourcing can help  
 our customers reduce their cost base and provide  
 them with flexibility to respond to their changing  
 business needs   americas
regional review
our business in the americas comprises canada usa and south america  
the region has 429 centres across 13 countries our main business in the 
usa operates 353 centres during the year we added 67 centres which 
increased the average number of workstations from 47311 in 2005 to 
52611 in 2006 acquisitions accounted for 58 of these new centres with 
the balance coming from the opening of nine fully owned centres the region 
delivered revenues of £3059 million – up 169 on 2005 and achieved an 
average occupancy of 86 through the year 2005 81  
looking ahead into 2007 we will continue our aim to maximise yield in our 
existing centres and look to grow our portfolio in key cities where we have 
minimal representation the adoption of flexible working and environmental 
pressures have further increased the demand for our product we also intend 
to expand our regus express concept a retailbusiness centre which caters 
for the needs of the mobile worker across other airports in the usa this 
expansion will enable us to gain brand awareness and promote and sell our 
core business  
429 centres
52611 workstations
a
13 countries
revenue gross profit 
b
£3059m £865m
2005 £2616m 2005 £615m
contribution to group contribution to group
occupancy margin
86

 28

2005 81 2005 24
a average number of workstations
b centre contribution
45

47

regus report  accounts 2006 06
top left wilmington – downtown
top right sao paulo – e tower emea
our business in emea encompasses 188 centres across 38 countries 
during the year we opened 15 new centres which increased the average 
number of workstations from 25871 in 2005 to 27139 in 2006 acquisitions 
accounted for two of these new centres with the balance of 13 coming 
from organic growth – eight fully owned centres three joint ventures one 
managed centre and one franchise operation we opened centres in new 
markets such as lebanon abu dhabi bahrain nigeria kenya and algeria 
the region delivered revenues of £1959 million – up 184 on 2005 and 
achieved an average occupancy of 79 through the year 2005 73  
looking ahead into 2007 we will continue to improve occupancy and margin 
in our existing centres and expand our network into new markets  
188 centres
27139 workstations
a
38 countries
revenue gross profit 
b
£1959m £600m
2005 £1655m 2005 £432m
contribution to group contribution to group
occupancy margin
79

 31

2005 73 2005 26
a average number of workstations
b centre contribution
29

33

07 regus report  accounts 2006
top left nairobi – purshottam square
top right frankfurt – garden towers asia pacific
regional review
continued
our business in asia operates in 67 centres across 12 countries during 
the year we opened 30 new centres which almost doubled the number of 
workstations from 5475 in 2005 to 9009 in 2006 acquisitions accounted  
for 14 of these new centres with the balance of 16 coming from the opening 
of 15 fully owned centres and one managed centre the region delivered 
revenues of £509 million – up 515 on 2005 and achieved an average  
occupancy of 72 through the year 2005 75 this decrease in occupancy 
was due to the impact of new centres which can take six to 12 months to 
achieve occupancy rates on par with mature centres  
looking ahead into 2007 we will continue to consolidate our position as 
the largest provider of serviced offices across all asia pacific markets to 
achieve this objective we plan to continue our aggressive growth plan while 
continuing to improve the efficiency of our current portfolio of centres to 
facilitate this increase in demand and capitalise on scale efficiencies we will 
be adding a new customer service centre in the philippines to handle all 
incoming enquiries 
67 centres
9009 workstations
a
12 countries
revenue gross profit 
b
£509m £160m
2005 £336m 2005 £98m
contribution to group contribution to group
occupancy margin
72

 31

2005 75 2005 29
a average number of workstations
b centre contribution
7

9

regus report  accounts 2006 08
top left hong kong – queens road
top right shanghai – silver centre on 19 april 2006 we acquired the remaining 58 interest in regus uk for 
a gross consideration including fees of £894 million £609 million net of 
cash acquired of £285 million at the date of acquisition our uk business 
operated 91 centres during the year we subsequently acquired the  
gainsborough and longford business centres and managed office solutions 
– a company specialising in property outsourcing  
at the year end our uk business operated 106 centres of which just under 
half are in the greater london area at 31 december 2006 uk capacity 
stood at 26389 workstations  
in the full year 2006 regus uk generated revenues of £1684 million since 
acquisition we have seen a significant increase in occupancy – rising from 
72 at april 2006 to a year end level of 81 a restructured management 
team renewed investment in our centres investment in marketing and a 
drive on enquiries has helped to achieve this improved performance  
during april of this year our new uk ceo nick wood will be joining us 
nick comes from dsg international where he has held several senior 
positions last of which was divisional managing director of the group’s 
communication division prior to this nick worked in venture capital and 
business development for a number of companies including 3i plc
looking ahead into 2007 we will continue to focus on new sales and  
marketing channels such as tv and radio in the first quarter of this year  
we launched a real time booking system for meeting rooms and have  
recently launched our uk training centre product specially geared to  
hosting conferences  
united kingdom
106 centres
26389 workstations
a
1 country
revenue gross profit 
b
£1266m £209m
2005 – 2005 –
contribution to group contribution to group
occupancy margin
77

 17

2005 – 2005 –
a at 31 december 2006
b centre contribution
19

11

09 regus report  accounts 2006
top left glasgow – west george street
top right london – throgmorton street our 2006 financial performance has been impressive reflecting strong like 
for like growth and the additional contribution from acquisitions and 2006 
new centre openings these results have been achieved whilst also investing 
in people infrastructure technology and marketing to secure future growth
the three key operational drivers have all been improved the weighted  
average number of workstations increased by 364 to 107257 at the 
same time average occupancy increased from 78 to 82 and average 
revenue per occupied workstation revpow increased by 24 from 
£7551 to £7732 this results in an increase in revpaw of 76 from 
£5890 to £6340  
against a relatively fixed cost base these factors have contributed to a 
£349 million increase in operating profit from £473 million in 2005 to 
£822 million in 2006  
revenue and centre contribution excluding nonrecurring items 
revenue for the group rose 468 to £6800 million 2005 £4633 million 
and centre contribution increased 572 to £1841 million 2005 £1171 
million  
this yearonyear movement can be analysed as follows  
 revenue centre contribution margin
 £m £m a 
2005  4633 1171 253
growth in mature business 399 340
subtotal 5032 1511 300
centres added in 2005 338 127
centres added in 2006 1476 202
centres closed 46 01
2006 6800 1841 271
a excludes nonrecurring items of £01 million in 2005
the mature business defined as those centres owned and operated at 
least 12 months prior to 1 january 2006 increased revenue by £399 million 
principally driven through improvements in occupancy which increased from 
79 to 84 this resulted in a £340 million increase in centre contribution
centres added in 2005 contributed a further £338 million of revenue and 
£127 million of contribution this was due to both underlying improvements 
in the performance of these sites and the impact of including them for a full 
12 months  
expansions in 2006 include the repurchase of the uk business and a 
number of bolton acquisitions and new centres these contributed a  
further £1476 million of revenue and contribution of £202 million 
taking all this together contribution margin improved from 253 to 271
administration expenses
administration expenses excluding nonrecurring items incurred in 2005 
have increased to 150 of revenue for the full year 2005 140 this 
increase arises principally from the impact of growth related investments 
incurred in the second half of 2005 and the first half of 2006 ahead of the 
full revenue impact of growth  
financial review
stephen gleadle
regus report  accounts 2006 10
£6800m
revenue 2005 £4633m
107 257
weighted average number of workstations 
2005 78657
82

average occupancy 2005 78
£7 732
revpow 
a
 2005 £7551
£6340
revpaw 
b
 2005 £5890
a average revenue per occupied workstation
b average revenue per available workstation these growth related costs focus on three main areas
 marketing costs to drive occupancy primarily in new centres
 costs to support the growing scale of the business eg country managers 
 improved systems and processes
 costs necessarily incurred to secure workstation growth in a controlled  
 and efficient manner eg business development teams to identify secure 
 and integrate new business
as the growth benefits have been delivered administration expenses as 
a proportion of revenue have fallen from 161 in the first half of 2006 to 
141 in the second half of 2006  
nonrecurring items
in 2005 the group incurred £49 million of nonrecurring costs net which 
primarily relate to the integration of hq no similar costs have been incurred 
in 2006  
operating profit
operating profit was £822 million 2005 £473 million representing a  
margin of 121 2005 102  
share of operating loss in joint ventures and associate
in the year ended 31 december 2006 the share of joint venture losses 
attributable to regus reduced to £01 million 2005 £02 million loss the 
underlying improvement in our mature joint ventures was masked by the  
impact of newly opened joint ventures which recognised losses of £03  
million in the period due to the recognition of start up costs  
during the period 1 january 2006 to 19 april 2006 the uk business was 
equity accounted as an associate our 42 shareholding resulted in a profit 
after tax for the period to 19 april of £12 million 2005 full year £02 million
f inancing costs
financing costs can be summarised as follows
  2006 2005
  £m £m
interest payable on bank loans  46 56
interest receivable  18 22
finance lease interest  05 09
non cash – deferred financing fees  04 43
non cash unwinding of discount –
uk acquisition related net  21 –
total  58 86
interest payable has fallen despite a higher average debt balance in 2006  
as a result of refinancing our senior credit facility in march 2006 on more  
favourable terms lower interest receivable reflects a decrease in the average 
free cash balance from £55 million in 2005 to £50 million in 2006  
although the group is now in an overall net cash position a net cash  
interest charge should still be anticipated for 2007 this is driven by the costs  
of commitment fees on the senior credit facility and letter of credit issuance 
fees as well as the impact of incurring a net charge from the margin between 
interest rates on our deposits and borrowings  
underlying finance lease costs have fallen in line with the reduction in finance 
leases the amortisation of deferred financing fees relates to the £21 million 
loan arrangement costs incurred on the new £150 million credit facility
11 regus report  accounts 2006
these results have been 
achieved whilst investing  
in people infrastructure  
technology and marketing  
to secure future growth the 2005 charge of £43 million included the write off of the remaining 
deferred financing fees on the us155 million credit facility repaid in march 
2006 the unwinding of discounted fair value adjustments on the regus uk  
acquisition resulted in a non cash net financing charge of £21 million in 2006
t axation
as the business performance has strengthened it has become necessary 
to recognise in the balance sheet an asset for a greater proportion of the 
value of the tax losses that the group holds accordingly in 2006 a credit  
of £129 million 2005 £150 million has been recognised in the income 
statement reflecting the increased deferred tax asset in the balance sheet 
this has been partially offset by an £81 million tax charge 2005 £89  
million which resulted in a net tax credit of £48 million 2005 £61 million 
to the income statement consequently despite being profitable the group 
has a net tax credit for the year to 31 december 2006 however on a cash 
basis the group paid £66 million 2005 £26 million of tax across a small 
number of countries this represents approximately 85 of profit before tax
as at 31 december 2006 the group had £1979 million 2005 £2702  
million of tax losses to carry forward against future corporation tax liabilities 
of which £1110 million 2005 £1720 million are in the usa  
based upon continued profitable growth and no significant changes to the 
group’s tax position the cash tax rate should be expected to rise through 
2007 to 2009 as the tax losses are progressively utilised 
earnings per share eps
basic eps for the year rose to 84p 2005 45p this is based on weighted 
average number of shares of 984792040 this is unchanged on 2005 
diluted eps rose by 38p to 83p 2005 45p  
cash flow
strong operating cash flow remains a prime feature of the group driven  
by the improvement in operating profit and an improved working capital 
performance operating cash flow increased by £547 million to £1328  
million 2005 £781 million
the group’s cash flow statement has been summarised as follows
  2006 2005
  £m £m
operating cash flow  1328 781
tax and net interest paid  101 69
maintenance capex  196 59
free cash flow  1031 653
new centre openings  267 111
acquisitions and investments  885 168
financing  230 475
other  41 19
change in cash  68 82
opening cash  741 823
closing cash  809 741
during 2006 we acquired the remaining 58 interest in regus uk and 27 
bolt on acquisitions for a net consideration of £885 million
financial review
continued
regus report  accounts 2006 12
84p
basic eps 2005 45p
£1328m
operating cash flow 2005 £781m goodwill and intangible assets relating to these acquisitions are £1037 
million and £219 million respectively 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 the intangible amount 
relates to the brand customer lists and software
in addition to these acquisitions we spent £267 million on opening 32 
owned centres – 15 in asia pacific nine in the americas and eight in emea 
we also opened a further six centres through joint venture management 
and franchise agreements
this growth has been part financed by net borrowings of £230 million
following the above the group’s net cash position can be analysed  
as follows  
  2006 2005
  £m £m
cash balance  809 741
term loan  500 225
other loans  36 74
finance leases  39 82
net cash  234 360
of the cash balance £171 million 2005 £191 million is blocked and not 
available for use by the business these amounts have mainly been used as 
collateral against loan and lease obligations of the group  
distributable reserves and dividend
during the year the company created distributable reserves by undertaking 
a court approved cancellation of our share premium account of £1535  
million this resulted in a corresponding increase in distributable reserves 
as a result the group has sufficient distributable reserves to pay dividends 
to its shareholders
given the group’s strong cash generation and its future prospects the 
board is proposing subject to shareholder approval at the 2007 agm the 
payment of a final dividend of 06p per share the total cost of this dividend 
payment will amount to £59 million this dividend is expected to be paid  
on 1 june 2007 to shareholders on the register at the close of business on 
27 april 2007 
stephen gleadle
chief f inancial officer
19 march 2007
13 regus report  accounts 2006
in addition to acquisitions  
we spent £267m on opening 
32 new centres board of directors
mark dixon
chief executive officer
mark 47 founded regus in 1989 and has been chief executive for over  
17 years leading the group’s worldwide expansion programme and the  
development of pioneering workplace solutions since 2004 mark has been 
located in the usa directly overseeing the integration of the hq global 
workplaces acquisition prior to regus he established businesses in the 
retail and wholesale food industry
stephen gleadle
chief f inancial officer
stephen 48 joined regus as chief financial officer in october 2005  
prior to regus he was group financial controller of tarmac plc and  
finance director at both synstar plc and lastminutecom plc stephen is  
a chartered accountant
rudy l obo
chief operating officer
rudy 51 joined regus in 1992 and took on the role of chief operating  
officer in october 2005 having previously been group finance director 
in his role he is responsible for commercial operations human resources 
and for directing regus’ it and ebusiness strategy rudy is also a director 
and trustee of the charity great causes ltd previously rudy was head 
of finance and group company secretary of medicom international ltd  
a publisher of medical journals rudy is a certified accountant
john matthews 
c
chairman
john 62 joined regus in 1995 as a nonexecutive director and was  
appointed chairman in july 2002 he is currently chairman of crest 
nicholson plc and an independent director of diploma plc rotork plc and 
sdl plc a chartered accountant he was previously managing director of 
county natwest and deputy chairman of beazer plc john is chairman of 
the nomination committee
regus report  accounts 2006 14 roger orf 
abc
independent senior nonexecutive director
roger 54 was appointed a nonexecutive director of regus in 1998 and is  
chairman of the audit committee roger is currently managing director of 
citigroup property investors he was formerly head of european operations 
for lone star an investment company prior to this roger made investments 
for his own account managed investments on behalf of apollo real estate 
advisors and was in charge of goldman sachs european real estate  
department
martin robinson 
abc
independent nonexecutive director
martin 44 was appointed a nonexecutive director of regus in august  
2002 and is chairman of the remuneration committee martin is currently 
chairman of center parcs uk healthclub holdings and is also a director 
of the supervisory board of eurodisney sca he has previously held senior 
management positions with scottish and newcastle plc and sara lee 
corporation and worked as a management consultant for four years with 
mckinsey  co inc
stephen east 
abc
independent nonexecutive director
stephen 49 was appointed a nonexecutive director in 2005 stephen is  
currently finance director at woolworths group plc prior to this he ran 
his own consultancy business and held senior positions with redland plc 
and mepc plc stephen is a chartered accountant and president of the 
association of corporate treasurers he is also a nonexecutive director of 
star energy group plc  
notes
a member of the audit committee
b member of the remuneration committee
c member of the nomination committee
15 regus report  accounts 2006 directors’ report
the directors present their annual report and the audited  
financial statements of the company and its subsidiaries for  
the year ended 31 december 2006
directors
the directors of the company who held office during the  
financial year were 
executive directors
mark dixon 
rudy lobo 
stephen gleadle
nonexecutive directors 
john matthews
stephen east 
roger orf 
martin robinson
biographical details for the directors are shown on pages 14 
and 15
details of the directors’ interests and shareholdings are given  
in the remuneration report on pages 27 to 33 
the corporate responsibility statement corporate governance 
statement remuneration report and director statements on 
pages 18 to 34 all form part of this report
principal activity
regus group plc is the world’s leading provider of global office 
outsourcing services 
business review
the directors have met requirements of section 234zzb of 
the companies act 1985 with regard to the presentation of a  
business review as follows
the chief executive’s review and financial review on pages 4 
to 13 respectively address
 review of the company’s business pages 6 to 9
 trends and factors likely to affect the future development  
 performance and position of the business page 5
 development and performance during the financial year  
 pages 10 to 12
 position of the business at the end of the year page 13 
 principal risks and uncertainties page 24
the corporate responsibility report on pages 18 to 21 includes 
the requirements of the business review in respect of
 environmental matters
 employees
 social and community issues
the corporate governance statement on pages 22 to 26 
includes a description of the principal risks and uncertainties 
facing the company 
the directors statements on page 34 includes the statutory 
statement in respect of disclosure to auditors  
results and dividends
profit before taxation for the year was £775 million 2005 
£387 million
the directors are pleased to recommend the payment of a  
final dividend for 2006 of 06p per share the total dividend  
of £59 million is expected to be paid on 1 june 2007 to  
shareholders on the register at the close of business on  
27 april 2007
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
 pay in accordance with contractual and other legal  
 obligations
at 31 december 2006 the number of creditor days outstanding 
for the group was 19 days 2005 27 days and the company 
nil days 2005 nil 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 36  
to 70
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 
£01 million during the year 2005 £nil
substantial interests
at 19 march 2007 the company has been notified of the  
following interests held in more than 3 of the issued share 
capital of the company
  number of  of issued
  ordinary shares share capital
maxon investments bv 
a
 366329326 3720
blackrock inc 90758402 922
prudential plc 68808146 698
standard life group 59427276 604
man financial ltd 49058108 498
morley fund management ltd 30194992 307
a mark dixon owns 100 of maxon investments bv
regus report  accounts 2006 16 auditors 
in accordance with section 384 of the companies act 1985 a 
resolution for the reappointment of kpmg audit plc as auditors 
of the company is to be proposed at the forthcoming agm 
approval
this report was approved by the board on 19 march 2007  
on behalf of the board
t im regan 
company secretary 
19 march 2007
17 regus report  accounts 2006 corporate responsibility
the responsible management of our social environmental and economic 
impact is integral to our business our commitment to corporate  
responsibility cr is not simply a response to increased market pressures 
in this area but such issues reinforce the way that our business operates  
the board believes that the integration of cr throughout the business and 
the incorporation of broader social and environmental issues into day to day 
decision making will benefit all our key stakeholders and better enable us to 
achieve our target levels of business performance  
corporate responsibility committee
in 2007 we will set up a formal corporate responsibility committee to  
oversee cr strategy the committee’s aim is to ensure that we take a  
sustainable approach to business – to do the right thing for our shareholders 
our customers our suppliers the community and the world around us  
members of the corporate responsibility committee will be drawn from 
across the business to ensure that corporate responsibility is at the heart  
of our daily operations
its remit will be to provide strategic direction and guidance on all aspects of 
business practice and responsibility and ensure consistent implementation 
across our operations the committee’s priority is to set out a clear  
framework of responsibilities that are specific to regus as well as those  
that are common to all large businesses
in 2007 we will produce a corporate responsibility report which describes 
our main impacts defines our strategy and sets out future priorities this 
report will initially be based on our uk operations with a future priority to roll 
this out to our international operations
our stakeholders
we understand the issues that matter to our customers and stakeholders 
and know that getting them right builds loyalty and makes our business 
more sustainable
the corporate responsibility committee will help ensure that social  
environmental and ethical issues are a natural part of the way we do business  
the committee’s aim will be to ensure that we take a sustainable approach 
to business – to do the right thing for our shareholders our customers our 
suppliers the community and the world around us
business integrity
a groupwide code of ethics has been in place since january 2006 this 
sets out a number of fundamental principles which all our companies and 
employees are required to follow in keeping with our decentralised approach 
businesses are required to adopt their own codes which respect local 
cultures and businesses but which also set standards that are still no less 
exacting than those detailed in the groupwide code to a large extent 
these individual codes simply underpin and endorse existing practices we 
operate a confidential whistle blowing service to support employees who 
want to eliminate wrongdoing in the workplace
environment and sustainability 
the nature of our business means that we have to recognise that we have 
an impact on the environment we are committed to managing the way in 
which activities affect the environment by
 optimising the use of energy
 ensuring efficient use of materials 
 encouraging re use and recycling 
 incorporating the principle of sustainable development
regus report  accounts 2006 18
 our people
 we rely on our people to provide the high quality of  
 service our customers expect in return we work hard  
 to look after our people our aim is to maximise and  
 develop their skills provide opportunities for personal  
 development and achieve high rates of employee  
 satisfaction
 equal opportunities
 we value our international reputation and respect the  
 communities in which we operate we uphold the  
 principal of equal opportunities and strive to meet  
 high ethical standards
 health safety and security
 we are committed to providing a healthy and safe  
 environment for our employees customers and for all 
 visitors to our premises we aim for best practice in  
 health and safety throughout all our operations we  
 support a proactive culture of risk management to  
 ensure accidents and incidents remain as low as is  
 reasonably practicable
 environment and sustainability
 we recognise that our activities have an impact on the 
 world around us we are committed to protecting the  
 environment through the prevention of pollution and  
 efficient use of resources we will strive for continual  
 improvement of our environmental performance
 business practice
 our internal codes of practice require business  
 professionalism honesty and integrity in all that we do 
 we seek to comply with all relevant legislation and to  
 maintain good relationships with all our stakeholders 
 customers
 our customers are our business in order to maintain  
 high levels of satisfaction we are constantly assessing 
 the views of our customers and delivering improvements 
 to our service and product offering
 products and services
 we continually strive to improve the quality of our  
 products and services and their delivery to our  
 customers we work to minimise as far as possible  
 any negative impacts associated with our business  
 activities we will take account of the views of our  
 stakeholders on all aspects of our product development 
 and service delivery
 business partners and supply chain
 we promote long term development with our business 
 partners and our operations work closely with landlords 
 and suppliers to maintain the integrity and continuity  
 of service expected by our customers
 communities and charities
 we believe in social investment and encourage our  
 operations to become active members of the societies 
 in which they operate supporting employee involvement 
 wherever possible we encourage charitable fundraising 
 and support charitable initiatives throughout the world environmental policy 
it is our policy to
 minimise the extent of the environmental impacts of operations within  
 our influence
 strive to minimise any emissions or effluents in our business centres  
 which may cause environmental damage
 conserve energy through minimising consumption and maximising  
 efficiency
 promote efficient purchasing which will both minimise waste and allow  
 materials to be recycled where appropriate
 employ sound waste management practices
 implement procedures and support information that enables compliance  
 with the law regulations and code of practice relating to environmental  
 issues
 monitor environmental performance make regular reviews of the policy  
 and make improvements where possible
environmental impacts
the main environmental impacts of running our businesses are the generation 
of carbon emissions through the consumption of electricity gas and transport 
activities including business travel and commuting
some of our locations operate a recycling and energy waste reduction 
policy where possible we liaise with property owners and our clients to 
ensure that any recyclable waste from our operation – from waste paper 
to print and toner cartridges – is collected and recycled also wherever 
possible we ensure that lighting heating and air conditioning meet energy 
conservation standards and the noncore items or equipment are timed to 
switch off automatically
carbon emissions are produced as a result of the consumption of electricity 
gas and transport usage key factors in minimising the generation of carbon 
emissions include the design fabric and management of office premises to 
maximise energy efficiency
our people
we rely on our 4300 employees to provide the high quality of service our 
customers and visitors expect in return we work hard to look after our 
people our aim is to maximise and develop the skills of our staff provide 
opportunities for personal development and achieve high rates of employee 
satisfaction
talent attraction and retention 
regus has a reputation for attracting and retaining exceptional people 
– people who are successorientated spirited and driven to help others and 
themselves achieve more 
our people are at the heart of our business so it is vital that they are  
trained to the highest competency we provide a career path designed to 
allow individuals to achieve their very best within the regus group whether 
they choose to stay in their region or aspire to take advantage of our  
international locations 
19 regus report  accounts 2006
we are committed to managing 
the way in which our activities 
affect the environment corporate responsibility
continued
training and development 
group policy is to provide opportunities for personal development at all 
levels in the organisation we ensure that
 employees are provided with adequate and appropriate training to allow  
 them to fulfil their job description
 appropriate opportunities and resources for the training and development 
 of employees are made to all staff 
 employees are rewarded appropriately for improving their skills and  
 capabilities
 training and development of employees is recorded and reviewed on at  
 least an annual basis as part of the performance management system
worklife balance
we promote a healthy lifestyle and where possible encourage a healthy 
worklife balance we recognise that the health and welfare of our team 
members is important to the effectiveness of the business and the need 
for employees to maintain a healthy worklife balance is encouraged in our 
centres we operate flexible working practices which give us the edge in  
retaining experienced and well trained staff and allows us to align our team 
members’ hours to the evolving needs of the business and our customer 
requirements 
turning smartideas into reality
via smartideas
©
 – regus suggestion scheme our team members  
are encouraged to submit ideas that enhance the way we do business 
suggestions can be made on any area of the business the potential of 
each idea is assessed many are developed into projects and the most  
innovative ones are rewarded with prizes 
communication
the company is committed to enhancing twoway communication through 
the process of team meetings which our managers will hold on a regular 
basis through team meetings and information cascaded down from the 
senior team employees are encouraged to feed back comments and  
opinions through their manager on any aspect of the business
information about the business
our team members value communication each month our regional  
ceos distribute “focus” – an ezine which covers regional performance 
achievements and priorities in addition on a quarterly basis the group 
chief executive mark dixon emails to each team member a copy of  
“in touch” – an ezine which summarises the latest news from around the 
world the content – although varied month on month includes inter alia 
team member recognition of great customer service vip visitors to the 
regus group and new location openings
pages of information at our people’s fingertips
the regus group’s intranet smart has been designed to ensure that 
every team member can instantly access a wealth of information 247 
that helps them to serve our clients to the best of their ability with content 
tailored to a team member’s region and function smart is an integral tool 
to our open communications strategy it is updated round the clock by 
dedicated helpdesk team with each member logging in at least once  
every working day
regus report  accounts 2006 20
we recognise that the health  
and welfare of our team 
members is important health and safety
regus is committed to maintaining a secure health and safety working 
environment and accepts no compromise on health and safety issues this 
is not only driven by legal responsibility but also by the ethical desire to 
protect employees customers and visitors
the company has developed a health and safety manual that sets out the 
obligations of team members to ensure a safe working environment for our 
team members and clients a breach of the health and safety manual will 
result in disciplinary action
under the health and safety frame work local management must have 
suitable procedures in place to ensure compliance with applicable laws and 
regulations and wherever possible employ best practice 
the company is required to ensure that sufficient team members are 
trained as first aiders and fire wardens they are volunteers and undergo 
regular training 
we are proactive in our approach to health and safety by monitoring  
proposed changes in legislation and implementing policies accordingly
customers
our customers are our business in order to maintain high levels of customer 
satisfaction we are constantly assessing the views of our customers through 
customer service questionnaires and exit interviews all our centres are 
monitored and targeted on the levels of customer satisfaction and the levels 
of satisfaction have remained high over the last few years
in addition we conduct mystery shopping which has helped increase the 
likelihood of repeat purchases and recommendations
business partners
we promote long term relationships with our business partners and our  
operations work closely with suppliers to maintain the integrity and continuity 
of service expected by our customers 
regus uk have been working on a robust approach to managing ethical 
and environmental standards in the supply chain as a result regus uk 
only work with certified suppliers a reasonable expectation would be to 
integrate these standards into our global procurement processes over the 
next two years initial concentration will be on major suppliers areas of high 
risk and renewednew contracts
communities and charities
notwithstanding the international nature of the business regus around the 
world continues to operate with a high degree of autonomy we recognise our 
responsibility to invest in the communities in which our business operates 
and to act as a good corporate citizen the group supports charities relevant 
to the countries and to the locations in which its business operate these 
charities are wideranging and cover health welfare education civic and 
community projects as well as culture and the arts
21 regus report  accounts 2006
 inspiring innovation – new startup grants
 to date regus has helped launch more than one  
 million new startups across the world selected new  
 startups choosing to launch their business with regus 
 can apply for a grant designed to help them with the  
 provision of space and services at a reduced cost
 donating facilities and space
 where possible support is given to our chosen charities  
 through the provision of space at no charge either for  
 administration purposes or fundraising events
 european women of achievement awards euw
 euw is an independent european organisation which 
 supports women in all aspects of political civic and  
 professional life for the past two years regus has  
 supported the women of achievement awards by  
 providing rooms and refreshments at no cost 
 the beacon fellowship
 the beacon fellowship trust beacon is an  
 organisation set up to encourage individual  
 contributions to charitable and social causes and  
 to celebrate and showcase best practice in giving 
 beacon awards annual prizes to individuals and  
 organisations who have made exceptional  
 contributions to charitable causes winners to  
 date include zac goldsmith john profumo and  
 jamie oliver
 to date regus has assisted in setting up the charity  
 and providing free office space
 london triathlon
 regus with partners and clients fielded 14 teams and  
 five individuals for the 2006 london triathlon with the  
 aim of having fun firming up bonds and raising funds  
 for two charities – great causes and debra they  
 succeeded on all three counts and the event secured  
 £13400 for great causes and £15000 for debra
 great causes raised a further £9400 which increased 
 their donation to sightsavers to £22800 the donation 
 was used to support the cuttack district comprehensive 
 eye services project in rural india where eye services  
 are not accessible to most of the people
 our goal in 2007 is to enter 400 competitors for the  
 london triathlon and raise £200000 for three charities 
 – great causes debra and unicef
 ashley giles’ and cure leukaemia charity
 as part of ashley giles’ benefit year and cure leukaemia  
 charity regus hosted a celebrity golfing experience  
 which raised £2449
 nspcc
 through organising a christmas raffle regus uk  
 employees raised £5200 for the nspcc
 variety club of great britain
 regus uk donated £21000 to part fund the purchase 
 of a sunshine coach for disabled and disadvantaged  
 children corporate governance
the board is committed to the high standards of corporate 
governance set out in the combined code published in july 2003 
“the code” for financial periods beginning after 1 november 
2003 the board is accountable to the company’s shareholders 
and this report describes how the board applied the principles 
of good governance
t he board
at 31 december 2006 the board of directors was made up  
of seven members comprising the chairman three executive 
directors and three nonexecutive directors biographical details 
of the directors are set out on pages 14 and 15 
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 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 have authority to make decisions in their areas  
of expertise 
frequency of meetings
there were nine scheduled board meetings during 2006
the number of meetings of the board and committees and 
individual attendance by the directors are shown below
  main audit remuneration nomination
  board committee committee committee
total meetings 9 3 5 1
mark dixon 9 – – –
stephen gleadle 9 – – –
rudy lobo 9 – – –
john matthews 9 – – 1
stephen east 8 2 5 1
roger orf 9 3 5 1
martin robinson 8 3 5 1
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 £1 million
 material contracts annual value in excess of £5 million
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
john matthews 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 nonexecutive directors and constructive 
relations between the executive directors and nonexecutive 
directors 
the chairman together with the company secretary are 
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 not deemed to be independent because he 
has been a nonexecutive director for more than ten years 
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 
nonexecutive directors
the nonexecutive directors each bring their own senior level 
of experience and objectivity to the board the independent 
counsel brought to the group by the nonexecutives enhances 
the overall decision making of the board nonexecutives are 
appointed for an initial three year term subject to election by 
shareholders at the first agm after their appointment  
the board consider the nonexecutive directors to be  
independent the senior independent director and chairman 
of the audit committee roger orf has served on the board for 
over eight years his ongoing independence will be reviewed in 
accordance with the code later this year  
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 
regus report  accounts 2006 22 the terms of reference of these committees have been  
documented and approved by the board and are available on 
the company’s website wwwreguscom a brief summary of 
the members activities and terms of reference of the board 
committees is provided below 
audit committee
roger orf chairman
stephen east 
martin robinson 
the board has delegated the responsibility for applying an 
effective system of internal control and compliance accurate 
external financial reporting fulfilling its obligations under law 
and the combined code and managing the relationship with 
the company’s external auditors to the audit committee the 
committee consists entirely of nonexecutive directors
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 head  
of internal audit attend each meeting
summary terms of reference
 financial reporting – provide support to the board by  
 monitoring the integrity of 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 committee ensures that these arrangements  
 allow proportionate and independent investigation and  
 appropriate follow up action 
the committee also meets independently with the company’s 
auditors and with the head of internal audit to informally discuss 
matters of interest
external auditors
kpmg audit plc were the company’s auditors for the year 
ended 31 december 2006 for 2007 the committee has  
recommended to the board that a resolution to reappoint 
kpmg audit plc as the company’s auditors be proposed at 
the agm the 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 nonaudit work undertaken by the 
company’s external auditor is monitored by and above certain 
thresholds requires prior approval from the committee to 
ensure that the provision of nonaudit 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
martin robinson chairman
roger orf
stephen east 
details of the remuneration committee are set out in the  
remuneration report on pages 27 to 33 
nomination committee
john matthews chairman
roger orf
stephen east 
martin robinson
the committee meets as required during the year to  
consider matters delegated to it during 2006 there were no 
changes to the board and therefore only one formal meeting  
of the nominations committee was required to approve the  
reappointment of john matthews roger orf and martin  
robinson for further three year terms board effectiveness 
performance and leadership were discussed informally by  
the board as a whole 
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 reappointment to the board for the purpose 
 of ensuring a balanced 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 – assist the chairman with the annual  
 performance evaluation to assess the overall and individual  
 performance and effectiveness of the board 
 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 
23 regus report  accounts 2006 corporate governance
continued
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 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 uk 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 
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 
 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 
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 by 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 
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 39 of the group’s  
revenues being attributable to the dollar and 19 to the euro 
respectively 
given that transactions generally take place in the functional 
currency of group companies the group’s exposure to  
transactional foreign exchange rate risk is limited however  
the translation to 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 
company together with an analysis of the exposure to such 
risks as required by the companies act 1985 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 expense and assets and liabilities in the 
same currency the group does not hedge profit translation 
exposure since such hedges only have a temporary effect 
internal controls
the board has ultimate responsibility for maintaining a sound 
system of internal control and for periodically reviewing its  
effectiveness 
in accordance with the guidance set out in the turnbull report 
“internal control 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
 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 2007 have been set by the 
executive directors and are regularly reviewed by the main 
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 these 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 
costbenefit 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 
regus report  accounts 2006 24 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
 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 procedures manuals and guidelines are readily  
 accessible through the group’s intranet site
 operational audit and selfcertification 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 
the group has also established an externally hosted whistle
blowing channel to all staff to report issues and concerns in 
confidence 
control processes
the company has had procedures in place throughout the year 
and up to 19 march 2007 the date of approval of this annual 
report which accord with the internal control guidance for 
directors on the combined code these include the following
 the board normally meets with regional executives every  
 six months together to carry out a wideranging 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 rollup at a 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 groupwide application these are available  
 to all staff on the group’s intranet system
 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  
 review 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 purchase orders must be  
 obtained in advance for all purchases in excess of £1000 
 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 
sales or management conferences at which information on 
operational issues is shared additionally in 2006 a senior  
management conference provided a platform for sharing  
the group’s overall strategy delegates presented 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 
 internal audit reviews of key risk areas the findings  
 and recommendations of each review are reported to  
 management and the audit committee
 quarterly postinvestment reviews are presented to the  
 audit committee to allow appraisal of the effectiveness  
 of investment activity 
 a biannual internal control selfassessment 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
other matters
board performance evaluation
during 2006 a formal annual performance evaluation has been 
conducted in respect of the board its committees and of each 
individual director by means of an internally produced written 
questionnaire this required performance to be scored on a 
scale of 1 to 5 against a number of criteria with 1 representing
25 regus report  accounts 2006 corporate governance
continued
a need for urgent improvement in performance 3 representing 
adequate performance and 5 representing excellent  
performance 
the results of these evaluations were consolidated by the 
chairman and presented to the board for formal consideration  
all criteria were scored as adequate or better and therefore  
no formal corrective actions have been initiated the senior 
independent nonexecutive director reviewed the chairman’s  
performance 
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 at which together with site 
visits increases the nonexecutive directors understanding of 
the business and sector 
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
regus reports formally to shareholders twice a year with the 
interim results normally announced in september and the  
preliminary final results normally announced 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 
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 nonexecutive 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 interim report and the agm
the company has appointed brunswick group plc as their 
investor relations adviser  
agm
the agm is held normally in may in london 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 given the opportunity to meet the 
directors informally afterwards 
notice of the agm together with any related documents are 
mailed to shareholders at least 20 working days before the 
meeting and separate resolutions are proposed on each issue  
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 by a show of hands  
financial and other information is made available on the  
company’s website wwwreguscom
reelection of the board 
all directors submit themselves for reelection by shareholders 
at least every three years and directors appointed during the 
period are required to seek reelection at the next agm
nonexecutive directors are subject to the reelection  
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 1 of the combined code throughout the year ended  
31 december 2005 with the exception of the following
 provision d11 – the senior independent nonexecutive  
 director roger orf does not have regular meetings with  
 major external shareholders 
the board considers it appropriate for the chairman to be the 
main nonexecutive conduit for investors rather than the senior 
independent nonexecutive director the chairman makes 
himself available for questions in person at the time of major 
announcements and may be contacted by investors at any 
time the chairman updates the board and particularly the 
senior independent nonexecutive director on the results of his 
meetings and the opinions of investors on this basis regus 
considers that the senior independent nonexecutive 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
 
regus report  accounts 2006 26 the report has been prepared by the remuneration committee 
the “committee” of regus group plc and approved by the 
board of directors of regus group plc the report complies 
with the uk directors’ remuneration report regulations 2002 
and in compliance with such regulations a separate resolution  
approving this report is being put to shareholders at this  
years agm 
information relating to the emoluments and pension contributions 
of the directors directors’ interests in the company’s shares 
and under employee share plans has been audited 
unaudited information
membership and responsibilities of the committee 
the members of the committee throughout the year were the 
company’s independent nonexecutive directors roger orf 
stephen east and the chairman of the committee martin 
robinson
the committee met five times during the year
the committee has responsibility for making recommendations 
to the board on the compensation of senior executives and 
determining within agreed terms of reference the specific 
remuneration packages for each of the executive directors
the board has delegated to the committee responsibility to
 make recommendations to the board in respect of  
 remuneration policy for the executive directors and the  
 group’s other senior management
 approve any new service agreement entered into between  
 the group and any executive director
 make recommendations to the board on the implementation 
 of the group’s performance bonus schemes and share  
 schemes
the committee receives advice on executive remuneration from 
halliwell consulting an external consultancy which has wide 
experience of executive remuneration in uk listed companies 
halliwell consulting has no other connection with the company  
directors are not permitted under regus group plc’s articles 
of association to vote on their own terms and conditions of 
remuneration 
the committee’s terms of reference are available on the  
company’s website wwwreguscom the members of the 
remuneration committee attend the company’s agm 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 code 
during the year 
remuneration policy 
the principal objective of the committee’s remuneration policy 
is 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 
shareholder value 
the guiding principles which the committee has regard to and 
balances as far as is practicable in determining policy and 
objectives for 2006 and future years are
 to ensure that it maintains a competitive package of total  
 compensation commensurate with comparable packages  
 available with other similar companies operating in similar  
 markets for 2006 compensation was benchmarked against 
 a group of 22 uk and us quoted companies with similar  
 corporate attributes to the company for the uk quoted  
 companies these were drawn from the commercial services 
 support services and real estate management services  
 industrial sectors us companies were selected from the  
 commercial services and real estate services sector  
 the comparator group
 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 incentives
 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 around  
 the group
in order to achieve the above policy the committee sets the 
fixed elements of the executives’ compensation package at  
a conservative level taking into account the median level of 
salaries in the comparator group this is balanced with the  
opportunity for overall compensation packages to be in the  
upper quartile of the comparator group dependent upon  
the degree to which the associated stringent performance  
conditions attached to the short and long term incentive 
schemes have been satisfied
the table below illustrates the balance between fixed and 
performance related variable compensation and the total 
expected value of the remuneration package for each executive 
director for the year ended 31 december 2006
  mark dixon rudy lobo stephen gleadle
  chief executive officer chief operating office chief financial officer
    
fixed 37 34 69
variable 63 66 31
remuneration report
27 regus report  accounts 2006 remuneration report
continued
balance between fixed and performance based
compensation £m
fixed compensation comprises salary benefits and pension 
contributions variable compensation comprises the annual 
bonus paid in relation to the year ended 31 december 2006 
and the fair value of the regus group plc coinvestment plan 
the “cip” awards granted in march 2006
the main elements of these packages and the performance 
conditions are described below 
the committee will continue to review the policy on an annual 
basis to ensure that it is in line with the company’s objectives 
and shareholders’ interests
nonexecutive 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 nonexecutive directors do not 
receive any pension or other benefits other than appropriate 
expenses nor do they participate in any bonus or share option 
schemes
martin robinson stephen east and roger orf have chosen 
until further notice to use the whole of their directors’ fees  
net of tax to purchase regus shares in the open market on a  
quarterly basis in addition john matthews has chosen to use 
part of his fees to purchase regus shares in the open market
service contracts
details of contracts currently in place for directors are as follows
     notice period and
     maximum provision
   date of contract term for compensation
executive
mark dixon  280205 – 12 months
rudy lobo  040305 – 12 months
stephen gleadle  191005 – 12 months
nonexecutive
john matthews  011006 3 years 6 months
roger orf  011006 3 years 6 months
martin robinson  011006 3 years 6 months
stephen east  110305 3 years 6 months
remuneration packages 
the remuneration for executive directors during the year  
comprised a basic salary a benefit package an annual  
performance based short term incentive award paid partly in 
cash and partly in shares and participation in the company’s 
share incentive arrangement the cip 
basic salary and benefits 
when determining the salaries of the executive directors the 
committee takes into consideration
 the levels of base salary for similar positions prevailing in  
 the employment market generally for executive directors  
 of companies of comparable status and market value in  
 particular the median salary levels of the those companies  
 within the comparator group
 the performance of the individual executive director
 the performance of the company
 the individual executive director’s experience and  
 responsibilities and
 pay and conditions throughout the company
basic salaries are reviewed annually and any increases are  
effective from 1 january
the salaries of the chief executive chief operating officer  
and chief financial officer will be £509215 £273500 and 
£250000 respectively effective from 1 january 2007 this 
equates to an increase of 8 for each executive director based 
on their salaries as at 31 december 2006 it is the opinion  
of the committee that such rises were necessary to reflect  
the performance of the individuals and to ensure that their  
respective salaries remain at a competitive level 
benefits comprise a company car or allowance fuel private 
medical insurance and a living allowance for the chief executive
annual bonus scheme
overview
the committee believes firmly in the financial effectiveness 
of short term incentives accordingly every employee in the 
group participates in some form of incentive scheme 
as for 2005 maximum individual bonuses payable to executive 
directors and senior management were capped at 100 of 
basic annual salary of which a maximum 50 could be taken 
as cash and 50 deferred to purchase shares “investment 
shares” in regus group plc these shares are awarded under 
the cip with the opportunity to receive an additional award of 
shares “matching shares” after a three year period subject to 
certain conditions 
for the year ended 31 december 2006 the executive  
directors satisfied the stretching ebit targets in full as such  
the total bonus payable will be 100 of salary in reporting  
the calculation of awards the committee is mindful of the  
commercial sensitivity of the structure of the group’s bonus  
arrangements and considers that more detailed disclosure is 
inappropriate in the circumstances as stated above 50 of  
the total bonus payable will be paid in cash and 50 will be 
used to purchase investment shares however at the time of 
0 02 06 08 12 10 18
0 02 06
04
04 08 12
14
14
16
16 10 18
stephen gleadle
rudy lobo
mark dixon
fixed compensation variable compensation
regus report  accounts 2006 28 the drafting of this report the award of investment shares and  
associated matching shares has not been made due to the 
company being in a close period the committee will provide 
full details of the award and relevant performance conditions in 
its remuneration report for the year ending 31 december 2007 
the maximum number of awards granted to the executive 
directors will be based on the price of an ordinary share at the 
time of the grant and the monetary value will not exceed 50 
of the total bonus paid
bonus targets are reviewed and agreed by the committee  
at the beginning of each financial year the performance  
measures for the bonus are reviewed annually by the committee 
to ensure that they are appropriate to the current market  
conditions and position of the company and to confirm that 
they remain challenging the structure of the bonus targets 
for the year ending 31 december 2007 will be similar to those 
operated for 2006
the maximum bonus potential available for the executive  
directors for the year ending 31 december 2007 will be  
increased to 125 of basic annual salary the rationale for  
this increase is to ensure that
 short term available remuneration is competitive against  
 the comparator group given the policy of setting executive  
 salaries at or below the median and
 a greater element of the executive’s remuneration is  
 performancerelated 
although the bonus targets for 2007 are similar to those operating 
in 2006 the committee has increased the level of performance 
which must be achieved against for full bonuspayout as such 
the committee will continue to ordinarily cap the bonus at 
100 of base salary and will only pay any part of the additional 
bonus which in any event will not attract any matching shares 
of up to 25 in the event of a substantial overperformance 
against the 2007 ebit budget  
bonuses are nonpensionable 
nonexecutive directors do not receive a bonus 
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 an enhanced variable short term bonus to  
compensate rather than a fixed additional pension contribution
the group does not operate a defined benefit pension scheme 
and has no plans to introduce such a scheme
long term incentives
overview
the committee continues to believe that the interests of  
shareholders and executives are aligned through the long term 
incentive policy the cip which was approved by shareholders at 
the 2005 agm the committee will not grant any further awards 
under the company’s existing arrangements to executives who
participate in the cip although it does intend to grant options 
in the future on an ad hoc basis under the regus group share 
option scheme to certain nonparticipants in the cip
the committee views the cip introduced in 2005 as the  
most appropriate vehicle for long term incentivisation for the 
executive directors and other senior executives details of the 
awards made to executive directors during the year are set  
out below
there are two elements to the cip
the first element operates in conjunction with the annual  
bonus whereby 50 of any gross bonus payment will be  
paid in cash with the other 50 taken as a deferred award  
of shares to be released at the end of a three year period 
matching shares will be awarded linked to the number of  
investment shares awarded and will vest depending on the 
company’s growth in free cash flow per share fcf eps 
targets and relative total shareholder return tsr measured 
against the ftse 350 support services index matching 
shares are awarded at no cost to participants
the maximum number of matching shares which can be 
awarded to a participant in the cip is 200 of salary as  
such the maximum number of matching shares which can  
be awarded based on investment shares awarded is 41 
however this level of award is subject to full payout of the  
annual bonus in order to ensure that the executive directors 
and senior executives are motivated to consistently perform on 
an annual basis the maximum matching ratio will only apply to 
participants who receive a bonus payout of 50 of salary or 
more for bonus payout of less than 50 of salary the matching 
participants will only be eligible to receive two matching shares 
to one investment share 
grants during the year ending 31 december 2006
    mark dixon rudy lobo
cip award face value
age of salary   200 200
fair value of cip award 
a
  £618350 £326012
fair value of cip award as
a age of salary   131 129
a the fair value was calculated by taking the face value of the shares on the  
 date of award and discounting this value by the probability of the performance 
 condition being satisfied at this date in accordance with the principles of ifrs 2
the second element is that the committee may also make stand 
alone whole share awards “ltip awards” without reference to 
annual bonus up to a maximum of 100 of salary per annum 
under the cip under the ltip award is a conditional right over 
a whole 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 the ltip award is 
made are satisfied 
no ltip award was made in 2006
29 regus report  accounts 2006 remuneration report
continued
it is unlikely that future standalone ltip awards will be made 
to existing executive directors unless there are exceptional 
circumstances 
the performance conditions for the grant of awards under the 
cip in 2006 and ltip in 2005 are set out in the following table
  adjusted eps p for the year ending 31 december 2008
  11p 12p 13p 14p
growth in fcf
per share
10 6 13 19 25
15 13 25 38 50
20 19 38 56 75
25 25 50 75 100
in addition no awards will be released unless the company’s 
tsr is at least at the median when compared against that of 
the companies comprising the ftse 350 support services 
sector at the date of grant 
the adjusted eps target is derived from basic eps adjusted to 
take into account factors such as
 in a growth company such as regus costs are necessarily 
 incurred in one year to drive profits in future years as such  
 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 oneoff or exceptional costs will be excluded and
 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  
 a maximum cash tax rate of 30
the committee will retain the discretion to take into account 
other factors in its determination of adjustment eps however 
when exercising its discretion the committee will ensure that 
the adjustments are made to reflect the underlying real earnings 
of the company and not for the benefit of the executive directors 
the committee is of the opinion that the adjusted 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  
as mentioned above awards under the cip in respect of  
the bonus paid for the year ended 31 december 2006 will be  
made subsequent to the publication of this report however the 
maximum number of awards granted to the executive directors 
will be based on the price of an ordinary share at the time of 
grant and the monetary value will not exceed 50 of basic  
salary full details of the levels of award and performance 
conditions will be disclosed in the committee’s remuneration 
report for the year ending 31 december 2007
details of share options granted to executive directors prior to 
the introduction of the cip are set out in the audited section of 
this report
external appointments
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 are retained directly 
by the relevant executive director at 31 december 2006 the 
executive directors did not hold any external positions for which 
they receive fees
tsr
the graph below shows the company’s performance  
measured by tsr for the group compared with the performance 
of the ftse 250 index and the ftse 350 support services index 
the committee consider the ftse 250 index relevant since it 
is an index of companies of similar size to regus group plc as 
detailed earlier in the report the company considers its tsr 
performance for share awards under the cip in comparison to 
that of the ftse 350 support services index
tsr of the company against the ftse 250 and the  
ftse 350 support services index 
regus report  accounts 2006 30
ftse 250 index
ftse 350 support services index
0
40
60
80
100
120
140
0
40
20 20
60
80
100
120
140
2003 2004 2005 2006
regus group plc audited information
directors’ emoluments
the aggregate emoluments excluding pensions of the directors were as follows
         2006
     salary fees benefits bonus total
     £’000 £’000 £’000 £’000 £’000
chairman
john matthews    – 1900 – – 1900
executive
mark dixon 
a
    4718 – 1138 2359 8215
rudy lobo    2530 – 127 1265 3922
stephen gleadle    2310 – 157 1155 3622
nonexecutive
roger orf    – 385 – – 385
martin robinson    – 385 – – 385
stephen east 
b
    – 325 – – 325
     9558 2995 1422 4779 18754
         2005
     salary fees benefits bonus total
     £’000 £’000 £’000 £’000 £’000
chairman
john matthews    – 1900 – – 1900
executive
mark dixon    4150 – 1268 2075 7493
rudy lobo    2188 – 129 1094 3411
stephen gleadle 
b
    350 – 22 1575 1947
nonexecutive
roger orf    – 360 – – 360
martin robinson    – 360 – – 360
stephen east 
b
    – 242 – – 242
     6688 2862 1419 4744 15713
a mark dixon’s salary is set in sterling but paid in us dollars for 2006 the actual salary received was 833601
b stephen gleadle was appointed on 31 october 2005 stephen east was appointed on 11 march 2005
mark dixon was the highest paid director in both 2006 and 2005 benefits include car and fuel allowance medical insurance and 
life assurance mark dixon also received a housing allowace 2006 £98993 2005 £108330
31 regus report  accounts 2006 remuneration report
continued
pension contributions
        2006 2005
        £’000 £’000
mark dixon       330 291
rudy lobo       177 153
stephen gleadle       162 24
        669 468
directors’ share interests
the following directors held beneficial interests in the share capital of the company at 31 december 2005 and 19 march 2006
         ordinary shares of 5p
      at 31 december 2006 and 19 march 2007 31 december 2005
executive
mark dixon 
a
      366329326  366329326
rudy lobo      4697098  4697098
stephen gleadle      121500  –
nonexecutive
john matthews      650212  577678
roger orf      734237  712617
martin robinson      58603  37617
stephen east      17385  –
a the interests of mark dixon are held indirectly through maxon investments bv an entity in which mark dixon holds 100 of the share capital 
directors’ share options
as at 19 march 2007 the beneficial interest of the directors in options granted under the regus group share option plan are  
shown below 
      interest in
      options and
      awards over exercise price date from which expiry date of
     grant date ordinary shares p exercisable grant or award
mark dixon    080904 1708108 6475 080907 080914
ruby lobo    080904 778378 6475 080907 080914
all options were granted at the then prevailing market price there have been no movements in the year
directors’ interests under the ltip
details of awards over ordinary shares in the company granted to the directors under the ltip all for nil consideration are as follows 
         ltip
       at 1 january 2006 and 31 december 2006
mark dixon        337398
rudy lobo        186992
stephen gleadle        325203
no ltip awards vested or were granted during the year the entitlement to shares under the ltip is subject to achieving the  
performance conditions referred to in the ltip section on page 30 
the performance period for the ltip awards is 3 november 2005 to 31 december 2008
regus report  accounts 2006 32 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 
         cip
   at 1 january 2006 investment shares awarded matching shares awarded at 31 december 2006
mark dixon  –  193473  773892  967365
rudy lobo  –  101981  407924  509905
stephen gleadle  –  –  –  –
no cip awards vested during the year the entitlement to matching shares under the cip is subject to achieving the performance 
conditions referred to in the cip section on page 30 
the performance period for the cip matching share awards is 1 january 2006 to 31 december 2008 the mid market price of  
the company’s ordinary shares at 31 december 2006 was 1245p and the range during the year was 935p to 12575p
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 24 may 2007
audit requirement 
within the remuneration report the sections on director’s remuneration shareholdings and pension benefits on pages 31 to 33 
inclusive are audited all other sections of the remuneration report are unaudited
on behalf of the board
martin robinson 
chairman remuneration committee 
19 march 2007
33 regus report  accounts 2006 director statements
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 ifrss as adopted by the eu 
and applicable law and have elected to prepare the parent 
company financial statements in accordance with uk accounting 
standards and applicable law 
the group financial statements are required by law and ifrss 
as adopted by the eu to present fairly the financial position and 
performance of the group the companies act 1985 provides 
in relation to such financial statements that references in the  
relevant part of that act to financial statements giving a true and 
fair view are references to their achieving a fair presentation  
the parent company financial statements are required by law 
to give a true and fair view of the state of affairs of the parent 
company  
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 judgments 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 financial statements state whether  
 applicable uk accounting standards have been followed  
 subject to any material departures disclosed and explained  
 in the parent company financial statements and
 prepare the financial statements on the going concern basis  
 unless it is inappropriate to presume that the company and  
 group will continue in business
the directors are responsible for keeping proper accounting 
records that disclose with reasonable accuracy at any time the 
financial position of the parent company and to enable them to 
ensure that its financial statements comply with the companies 
act 1985 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 corporate governance statement that comply 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 website legislation in the uk governing the 
preparation and dissemination of financial statements may  
differ from legislation in other jurisdictions
statutory statement as to disclosure to auditors
the directors who held office at the date of approval of this 
directors’ report confirm that so far as they are aware there is 
no relevant audit information of which the company’s auditors 
are unaware and each director has taken all the steps that they 
ought to have taken as a director to make themselves aware  
of any relevant audit information and to establish that the  
company’s auditors are aware of that information 
regus report  accounts 2006 34 we have audited the group and parent company financial 
statements the “financial statements” of regus group plc  
for the year ended 31 december 2006 which comprise the 
consolidated income statement the consolidated and parent 
company balance sheets the consolidated cash flow  
statement the consolidated statement of changes in equity 
and the related notes these financial statements have been 
prepared under the accounting policies set out therein we have 
also audited the information in the directors’ remuneration 
report that is described as having been audited
this report is made solely to the company’s members as 
a body in accordance with section 235 of the companies 
act 1985 our audit work has been undertaken so that we 
might state to the company’s members those matters we are 
required to state to them in an auditor’s report and for no other 
purpose to the fullest extent permitted by law we do not  
accept or assume responsibility to anyone other than the  
company and the company’s members as a body for our 
audit work for this report or for the opinions we have formed
respective responsibilities of directors and auditors
the directors’ responsibilities for preparing the annual  
report and the group financial statements in accordance with 
applicable law and international financial reporting standards 
ifrss as adopted by the eu and for preparing the parent 
company financial statements and the directors’ remuneration 
report in accordance with applicable law and uk accounting 
standards uk generally accepted accounting practice are set 
out in the statement of directors’ responsibilities on page 34
our responsibility is to audit the financial statements and the 
part of the directors’ remuneration report to be audited in 
accordance with relevant legal and regulatory requirements and 
international standards on auditing uk and ireland
we report to you our opinion as to whether the financial  
statements give a true and fair view and whether the financial 
statements and the part of the directors’ remuneration report 
to be audited have been properly prepared in accordance with 
the companies act 1985 and as regards the group financial 
statements article 4 of the ias regulation we also report to you 
whether in our opinion the information given in the directors’ 
report is consistent with the financial statements the information 
given in the directors’ report includes that specific information 
presented in the chief executive’s review the financial review 
and the corporate responsibility report that is cross referenced 
from the business review section of the directors’ report we  
also report to you if in our opinion the company has not kept 
proper accounting records if we have not received all the  
information and explanations we require for our audit or if  
information specified by law regarding directors’ remuneration 
and other transactions is not disclosed
we review whether the corporate governance statement  
reflects the company’s compliance with the nine provisions  
of the 2003 financial reporting council combined code  
specified for our review by the listing rules of the financial 
services authority and we report if it does not we are not  
required to consider whether the board’s statements on internal 
control cover all risks and controls or form an opinion on the 
effectiveness of the group’s corporate governance procedures 
or its risk and control procedures
we read the other information contained in the annual report 
and consider whether it is consistent with the audited financial 
statements we consider the implications for our report if  
we become aware of any apparent misstatements or material  
inconsistencies with the financial statements our responsibilities 
do not extend to any other information
basis of audit opinion
we conducted our audit in accordance with international 
standards on auditing uk and ireland issued by the auditing 
practices board an audit includes examination on a test basis 
of evidence relevant to the amounts and disclosures in the  
financial statements and the part of the directors’ remuneration 
report to be audited it also includes an assessment of the 
significant estimates and judgements made by the directors  
in the preparation of the financial statements and of whether 
the accounting policies are appropriate to the group’s and 
company’s circumstances consistently applied and adequately 
disclosed
we planned and performed our audit so as to obtain all the  
information and explanations which we considered necessary in 
order to provide us with sufficient evidence to give reasonable 
assurance that the financial statements and the part of the  
directors’ remuneration report to be audited are free from 
material misstatement whether caused by fraud or other  
irregularity or error in forming our opinion we also evaluated 
the overall adequacy of the presentation of information in the 
financial statements and the part of the directors’ remuneration 
report to be audited
opinion
in our opinion
 the group financial statements give a true and fair view  
 in accordance with ifrss as adopted by the eu of the state  
 of the group’s affairs as at 31 december 2006 and of its  
 profit for the year then ended
 the group financial statements have been properly prepared  
 in accordance with the companies act 1985 and article 4 of  
 the ias regulation
 the parent company financial statements give a true and  
 fair view in accordance with uk generally accepted  
 accounting practice of the state of the parent company’s  
 affairs as at 31 december
 the parent company financial statements and the part of the  
 directors’ remuneration report to be audited have been  
 properly prepared in accordance with the companies act  
 1985 and
 the information given in the directors’ report is consistent  
 with the financial statements
kpmg audit plc 
chartered accountants and registered auditor
8 salisbury square london ec4y 8bb
19 march 2007
independent auditors’ report  
to the members of regus group plc
35 regus report  accounts 2006 	 	 	 	 	 	 	 	 year ended	 year	ended
	 	 	 	 	 	 	 	 31 dec 2006	 31	dec	2005
	 	 	 	 	 notes	 	 	 £m	 £m
revenue    3   6800 4633
cost	of	sales	before	nonrecurring	costs	 	 	 	 	  4959	 3462
nonrecurring	cost	of	sales	 	 	 	 6	  – 01
cost	of	sales	 	 	 	 	  4959	 3461
gross profit centre contribution       1841	 1172
administration	expenses	before	nonrecurring	expenses	 	 	 	  1019	 649
nonrecurring	administration	expenses	 	 	 	 6   –	 50
administration	expenses	 	 	 	 	  1019	 699
operating profit    5   822 473
share	of	posttax	loss	of	joint	ventures	 	 	 	 20	 	 	 01	 02
share	of	posttax	profit	of	associate	 	 	 	 20	 	 	 12 02
profit before financing costs       833 473
finance	expense	 	 	 	 8   80	 108
finance	income	 	 	 	 8	 	 	 22 22
profit before tax for the year       775 387
tax	credit	 	 	 	 9   48 61
profit after tax for the year       823 448
attributable	to
equity	shareholders	of	the	parent	 	 	 	 	 	 	 823 445
minority	interests	 	 	 	 	 	 	 – 03
	 	 	 	 	 	 	 	 823 448
earnings per ordinary share eps
basic	p	 	 	 	 10	 	 	 84 45
diluted	p	 	 	 	 10	 	 	 83 45
consolidated income statement
regus report		accounts	2006 36 consolidated balance sheet
	 	 	 	 	 	 	 	 as at	 as	at
	 	 	 	 	 	 	 	 31 dec 2006	 31	dec	2005
	 	 	 	 	 	 	 	 	 restated a
	 	 	 	 	 notes	 	 	 £m	 £m
noncurrent assets
goodwill	 	 	 	 12	 	 	 2121 1221
other	intangible	assets	 	 	 	 13 	 	 510 389
property	plant	and	equipment	 	 	 	 14 	 	 1276 766
deferred	tax	assets	 	 	 	 9 	 	 354 219
other	long	term	receivables	 	 	 	 15	 	 	 207	 118
investments	in	joint	ventures	 	 	 	 20	 	 	 09 07
	 	 	 	 	 	 	 	 4477	 2720
current assets
trade	and	other	receivables	 	 	 	 16 	 	 1482 853
corporation	tax	receivable	 	 	 	 	 	 	 29	 25
cash	and	cash	equivalents	 	 	 	 	 	 809 741
	 	 	 	 	 	 	 	 2320 1619
total assets     	 	 6797 4339
current liabilities
trade	and	other	payables	 	 	 	 17	 	 	 1243	 738
customer	deposits	 	 	 	 	 	 1034	 617
deferred	income	 	 	 	 	 	 735	 456
corporation	tax	payable	 	 	 	 	 	 	 255	 123
obligations	under	finance	leases	 	 	 	 18	 	 	 25	 48
bank	and	other	loans	 	 	 	 18	 	 	 82	 245
provisions	for	liabilities	and	charges	 	 	 	 19	 	 	 31	 72
	 	 	 	 	 	 	 	 3405	 2299
net current liabilities     	 	 1085	 680
total assets less current liabilities     	 	 3392 2040
noncurrent liabilities
trade	and	other	payables	 	 	 	 17	 	 	 518	 279
obligations	under	finance	leases	 	 	 	 18	 	 	 14	 34
bank	and	other	loans	 	 	 	 18	 	 	 454	 54
deferred	tax	liabilities	 	 	 	 9	 	 	 17	 –
provisions	for	liabilities	and	charges	 	 	 	 19	 	 	 117	 79
provision	for	deficit	on	joint	ventures	 	 	 	 20	 	 	 27	 28
provision	for	deficit	on	associate	 	 	 	 20	 	 	 –	 38
	 	 	 	 	 	 	 	 1147	 512
total liabilities     	 	 4552	 2811
total assets less liabilities     	 	 2245 1528
total equity
issued	share	capital	 	 	 	 21 	 	 492 492
share	premium	account	 	 	 	 	 	 – 1535
foreign	currency	translation	reserve	 	 	 	 	 	 	 175	 50
revaluation	reserve	 	 	 	 	 	 	 100	 –
other	reserves	 	 	 	 	 	 226	 226
retained	earnings	 	 	 	 	 	 2054	 323
total equity     	 	 2245 1528
total equity and liabilities     	 	 6797 4339
a	see	note	2	for	details	of	the	restatement
approved	by	the	board	on	19	march	2007
mark dixon  stephen gleadle
chief	executive	officer	 	 chief	financial	officer
37 regus report		accounts	2006 consolidated cash flow statement
	 	 	 	 	 	 	 	 year ended	 year	ended
	 	 	 	 	 	 	 	 31 dec 2006	 31	dec	2005
	 	 	 	 	 notes	 	 	 £m	 £m
profit before tax for the year	 	 	 	 	 	 	 775 387
adjustments	for
net	finance	costs	 	 	 	 	 	 	 58 86
net	share	of	profit	on	joint	ventures	and	associate	 	 	 	 	 	 11	 –
depreciation	charge	 	 	 	 	 	 	 318 256
loss	on	disposal	of	fixed	assets	 	 	 	 	 	 	 04 03
amortisation	of	intangible	assets	 	 	 	 	 	 	 60 38
decrease	in	provisions	 	 	 	 	 	 	 06	 57
operating cash flows before movements in working capital	 	 	 	 	 1198 713
increase	in	trade	and	other	receivables	 	 	 	 	 	 	 313	 178
increase	in	trade	and	other	payables	 	 	 	 	 	 	 425 238
other	noncash	movements	–	share	based	payments	 	 	 	 	 	 18	 08
cash generated from operations	 	 	 	 	 	 	 1328 781
interest	paid	on	finance	leases	 	 	 	 	 	 	 05	 10
interest	paid	on	credit	facilities	 	 	 	 	 	 	 52	 55
tax	paid	 	 	 	 	 	 	 66	 26
net cash inflow from operating activities		 	 	 	 	 	 1205 690
investing activities
purchase	of	subsidiary	undertakings	net	of	cash	acquired	 	 	 25	 	 	 885	 167
purchase	of	interest	in	joint	ventures	 	 	 	 	 	 	 –	 01
sale	of	tangible	fixed	assets	 	 	 	 	 	 	 03 02
purchase	of	tangible	fixed	assets	 	 	 	 	 	 	 463	 170
purchase	of	intangible	assets	 	 	 	 	 	 	 04	 05
interest	received	 	 	 	 	 	 	 22 22
net cash outflow from investing activities	 	 	 	 	 	 1327	 319
financing activities
net	proceeds	from	issue	of	loans	 	 	 	 	 	 	 627	 –
repayment	of	loans	 	 	 	 	 	 	 335	 394
repayment	of	capital	elements	of	finance	leases	 	 	 	 	 	 50	 81
facility	arrangement	fees	 	 	 	 	 	 	 12	 –
net cash inflowoutflow from financing activities	 	 	 	 	 	 230	 475
net	increasedecrease	in	cash	and	cash	equivalents	 	 	 	 	 	 108	 104
cash	and	cash	equivalents	at	beginning	of	year	 	 	 	 	 	 741 823
effect	of	exchange	rate	fluctuations	on	cash	held	 	 	 	 	 	 40 22
cash and cash equivalents at end of year	 	 	 22	 	 	 809 741
regus report		accounts	2006 38 consolidated statement of changes  
in equity
     attributable to equity holders of the parent	a
	 	 	 	 	 foreign
	 	 	 	 share	 currency
	 	 	 	 premium	 translation	 revaluation	 	 retained	 minority
	 	 	 share	capital	 account	 reserve	 reserve	 other	 earnings	 interests	 total	equity
	 	 	 £m	 £m	 £m	 £m	 £m	 £m	 £m	 £m
balance at 1 january 2005 493 1535 83 – 227 775 06 937
profit	 attributable	 to	 equity	 holders	 –	 –	 –	 –	 –	 445	 –	 445
profit	 attributable	 to	 minority	 interest	 –	 –	 –	 –	 –	 –	 03	 03
currency	translation	differences	 –	 –	 133	 –	 –	 –	 01	 132
liquidation	of	subsidiary	 –	 –	 –	 –	 –	 –	 06	 06
acquisitions	 b
	 –	 –	 –	 –	 –	 –	 02	 02
total	recognised	income	and	 	 expense	for	the	year	 –	 –	 133	 –	 –	 445	 06	 584
share	based	payments	 –	 –	 –	 –	 –	 08	 –	 08
redemption	of	preference	shares	 01	 –	 –	 –	 01	 01	 –	 01
balance at 31 december 2005 492 1535 50 – 226 323 – 1528
profit	attributable	to	equity	holders	 –	 –	 –	 –	 –	 823	 –	 823
currency	translation	differences	 –	 –	 225	 –	 –	 –	 –	 225
acquisitions	see	note	25	 –	 –	 –	 100	 –	 –	 –	 100
deferred	tax	effect	of	share	options	 –	 –	 –	 –	 –	 01	 –	 01
total	recognised	income	and	 	 expense	for	the	year	 –	 –	 225	 100	 –	 824	 –	 699
share	based	payments	 –	 –	 –	 –	 –	 18	 –	 18
scheme	of	arrangement	 c
	 –	 1535	 –	 –	 –	 1535	 –	 –
balance at 31 december 2006 492 – 175 100 226 2054 – 2245
a	total	reserves	attributable	to	equity	holders	of	the	parent
	 	share	capital	and	share	premium	account	represents	the	net	proceeds	both	the	nominal	value	and	any	premium	paid	on	the	issue	of	the	company’s	equity	share	capital
	 	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	to	fair	value	at	the	time	of	the	acquisition	of	the	 outstanding	58	interest	 	 	 	 see	note	25
	 	other	reserves	include	£292	million	arising	from	the	scheme	of	arrangement	undertaken	in	2003	partly	offset	by	£65	million	relating	to	merger	reserves	and	£01	million	 	 	 	 to	the	redemption	of	preference	shares
b	during	the	year	ended	31	december	2005	the	group	acquired	the	minority	interest	of	subsidiaries	in	south	africa	and	italy
c	on 	 28	 june	 2006	 the	 group	 executed	 a	 court	 order	 granting	 the	 cancellation	 of	 the	 share	 premium	 account	 under	 a	 scheme	 of	 arrangement	 the	 effect	 of	 this	 was	 to	 increase	 	 	 by	the	same	amount	the	distributable	reserves	for	the	group	the	cancellation	was	undertaken	in	the	books	of	regus	group	plc	where	the	share	premium	was	held	details	of	 	 	 the	scheme	of	arrangement	were	contained	within	the	notice	of	the	agm	dated	3	april	2006
39 regus report		accounts	2006 1 authorisation of financial statements
the	 group	 and	 company	 financial	 statements	 for	 the	 year	 ended	 	 31	december	2006	were	authorised	for	issue	by	the	board	of	directors 	 on	19	march	2007	and	the	balance	sheets	were	signed	on	the	board’s 	 behalf	by	mark	dixon	and	stephen	gleadle	regus	group	plc	is	a	public	 limited	company	incorporated	and	domiciled	in	england	and	wales	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	eu	“adopted	ifrss”	the	company	has	elected	to	 prepare	its	parent	company	financial	statements	in	accordance	with	uk	 gaap	these	are	presented	on	pages	69	to	70
2 accounting policies
basis of preparation
the	group	financial	statements	consolidate	those	of	the	company	and	 its	subsidiaries	together	referred	to	as	the	“group”	and	equity	account	 the	 group’s	 interest	 in	 associates	 and	 jointly	 controlled	 entities	 the	 parent	 company	 financial	 statements	 present	 information	 about	 the	 company	 	 as	a	separate	entity	and	not	about	its	group
the	 accounting	 policies	 set	 out	 below	 have	 unless	 otherwise	 stated	 been	 applied	 consistently	 to	 all	 periods	 presented	 in	 these	 group	 	 financial	 statements	 amendments	 to	 adopted	 ifrss	 issued	 by	 	 international	accounting	standards	board	iasb	and	the	international	 financial	reporting	interpretations	committee	ifric	with	an	effective	 date	from	1	january	2006	did	not	have	a	material	effect	on	the	group	 financial	statements
in	addition	in	order	to	provide	more	detailed	disclosures	the	group	has	 made	 certain	 presentational	 changes	 to	 the	 financial	 statements	 for	 	 2006	and	has	restated	the	comparative	information	for	2005	so	that	the	 accounts	are	presented	on	a	comparative	basis	 the	following	changes	have	been	made
	 £07	million	relating	to	the	share	of	net	assets	of	joint	ventures	has	 	 	 been	reclassified	from	provision	for	deficits	in	joint	ventures	to	assets 	 	 £118	million	relating	to	long	term	assets	principally	landlord	deposits	 	 	 have	been	reclassified	from	current	assets
judgements	 made	 by	 the	 directors	 in	 the	 application	 of	 these	 accounting	 policies	 that	 have	 significant	 effect	 on	 the	 financial	 statements	 and	 	 estimates	with	a	significant	risk	of	material	adjustment	in	the	next	year	 are	discussed	in	note	31
the	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	group	and	company	financial	statements	are	presented	in	pounds	 sterling	 and	 all	 values	 are	 in	 million	 pounds	 rounded	 to	 one	 decimal	 place	except	where	indicated	otherwise
adopted ifrss not yet applied
the	following	adopted	ifrss	were	available	for	early	application	but	have	 not	been	applied	by	the	group	in	these	financial	statements
ifrs	 7	 “financial	 instruments	 disclosure”	 applicable	 for	 accounting	 	 periods	 commencing	 on	 or	 after	 1	 january	 2007	 the	 impact	 on	 the	 group’s	 financial	 statements	 on	 the	 initial	 application	 of	 this	 standard	 	 is	not	expected	to	be	significant
ias	 1	 amendment	 “presentation	 of	 financial	 statements	 capital	 	 disclosures”	applicable	for	accounting	periods	commencing	on	or	after	 1	january	2007	the	impact	of	this	amendment	on	the	group’s	financial	 statements	is	not	expected	to	be	significant
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	 discontinued	 operation	 or	disposal	group	at	which	point	the	assets	and	liabilities	are	carried	at	 fair	value
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	 discontinued	 operation	 or	 disposal	 group	 at	 which	 point	 the	 investment	 is	 carried	 at	 fair	 value	 when	 the	 group’s	 share	 of	 losses	 exceeds	 its	 interest	 in	 an	 associate	 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	 an	 	 associate
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	 discontinued	 operation	 or	 disposal	 group	 at	 which	 point	 	 the	investment	is	carried	at	fair	value
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
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	 net	 assets	 including	 intangible	 	 assets	of	a	subsidiary	associate	or	jointly	controlled	entity	at	the	date	of 	 acquisition	 identifiable	 intangibles	 are	 those	 which	 can	 be	 sold	 separately	 or	 which	 arise	 from	 legal	 rights	 regardless	 of	 whether	 those	 rights	 are	 separable	goodwill	arising	on	the	acquisition	of	interests	in	associates	 	 or	joint	ventures	is	reflected	in	the	carrying	value	of	the	investment
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
notes to the accounts
regus report		accounts	2006 40 2 accounting policies continued
positive	 goodwill	 is	 stated	 at	 cost	 less	 any	 provision	 for	 impairment	 in	 value	an	impairment	test	is	carried	out	annually	and	in	addition	when 
ever	 indicators	 exist	 that	 the	 carrying	 amount	 may	 not	 be	 recoverable	 positive	 goodwill	 is	 allocated	 to	 cashgenerating	 units	 for	 the	 purpose	 	 of	impairment	testing
impairment
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	 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	2006
an	 impairment	 loss	 is	 recognised	 whenever	 the	 carrying	 amount	 of	 	 an	 asset	 or	 its	 cashgenerating	 unit	 exceeds	 its	 recoverable	 amount	 impairment	losses	are	recognised	in	the	income	statement
impairment	losses	recognised	in	respect	of	cashgenerating	units	are	 allocated	first	to	reduce	the	carrying	amount	of	any	goodwill	allocated	to	 the	cashgenerating	unit	and	then	to	reduce	the	carrying	amount	of	the	 other	assets	in	the	unit	on	a	pro	rata	basis	a	cashgenerating	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	 net	 selling	 price	 and	 value	 in	 use	 in	 assessing	 value	 in	 use	 the	 estimated	 future	 cash	flows	are	discounted	to	their	present	value	using	a	pretax	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	cashgenerating	unit	to	which	the	asset	belongs
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	 measured	 on	initial	recognition
intangible	 assets	 are	 amortised	 on	 a	 straightline	 basis	 over	 the	 estimated	 useful	life	of	the	assets	as	follows
brand	–	regus	brand	 indefinite	life
brand	–	other	acquired	brands		 20	years
computer	software		 35	years
customer	lists		 12	years
amortisation	of	intangible	assets	is	expensed	through	administration	 expenses	in	the	income	statement
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	 straightline	 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	 noncancellable	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	 nonguaranteed	 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
nonrecurring items
nonrecurring	items	are	those	significant	items	which	are	separately	 	 disclosed	 by	 virtue	 of	 their	 size	 or	 incidence	 to	 enable	 a	 full	 understanding	 of	the	group’s	financial	performance	transactions	which	may	give	rise	 to	nonrecurring	items	are	restructuring	integration	costs	and	onerous	 commitments
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	 straightline	basis	over	the	estimated	useful	life	of	the	assets	as	follows
fixtures	and	fittings	 over	the	shorter	of	the	lease	term	and	10	years
furniture	 10	years
office	equipment	and	telephones	 510	years
motor	vehicles	 4	years
computer	hardware	 35	years
revenue
revenue	from	the	provision	of	services	to	customers	is	measured	at	the	 fair	value	of	consideration	received	or	receivable	excluding	sales	taxes
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
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
41 regus report		accounts	2006 2 accounting policies continued
provided	during	the	period	of	the	agreement	are	recognised	as	revenue	 as	the	services	are	provided	or	the	rights	used
these	categories	represent	all	material	sources	of	revenue	earned	from	 the	provision	of	global	workplace	solutions
employee benefits
the	group’s	contributions	to	defined	contribution	plans	and	other	paid	 and	unpaid	benefits	earned	by	employees	are	charged	to	the	income	 statement	as	incurred	 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	 black	 scholes	 valuation	 model	 or	 the	 monte	 carlo	 method	 taking	 into	 account	 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	liability	is	remeasured	at	 each	balance	sheet	date	and	at	settlement	date	and	any	change	in	fair	 value	recognised	in	profit	or	loss	spread	equally	over	the	vesting	period
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	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
provisions	are	recognised	when	an	obligation	exists	for	a	future	liability 	 in	respect	of	a	past	event	and	where	the	amount	of	the	obligation	can	be	 reliably	estimated
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
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	nonmonetary 	 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	overseas	operations	are	translated	using	 the	closing	rate	with	all	exchange	differences	arising	on	consolidation	 being	recognised	in	the	foreign	currency	translation	reserve	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
foreign	currency	differences	arising	on	the	retranslation	of	a	financial	 liability	designated	as	a	hedge	of	a	net	investment	in	a	foreign	operation 	 are	 recognised	 directly	 in	 equity	 in	 the	 foreign	 currency	 translation	 reserve	 to	the	extent	that	the	hedge	is	effective	to	the	extent	that	the	hedge	is	 ineffective	such	differences	are	recognised	in	profit	or	loss	when	the	 hedged	net	investment	is	disposed	of	the	cumulative	amount	in	equity	 	 is	 transferred	 to	 profit	 or	 loss	 as	 an	 adjustment	 to	 the	 profit	 or	 loss	 	 on	disposal
finance charges
interest	charges	and	income	are	accounted	for	in	the	income	statement 	 on	an	accruals	basis	deferred	finance	fees	are	charged	to	the	income 	 statement	through	the	interest	expense	using	the	effective	rate	method	 where	 assets	 or	 liabilities	 on	 the	 group	 balance	 sheet	 are	 carried	 at	 	 a	 discounted	 amount	 the	 increase	 in	 the	 amount	 due	 to	 unwinding	 	 the	 discount	 is	 recognised	 as	 a	 finance	 expense	 or	 finance	 income	 as	 appropriate
regus report		accounts	2006 42
notes to the accounts
continued 2 accounting policies continued
interest bearing borrowings
interest	bearing	borrowings	are	recognized	initially	at	fair	value	less	attributable	transaction	costs	subsequent	to	initial	recognition	interest	bearing	 	 borrowings	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	 cash and cash equivalents
cash	and	cash	equivalents	comprise	cash	at	bank	and	in	hand
foreign currency translation rates
	 	 	 	 	 	 	 at	31	december	 	 annual	average
	 	 	 	 	 	 2006	 2005	 2006	 2005
us	dollar	 	 	 	 	 196	 173	 185	 181
euro	 	 	 	 	 148	 146	 147	 146
japanese	yen	 	 	 	 	 233	 203	 215	 200
3 segmental analysis – statutory basis
segment	 information	 is	 presented	 in	 respect	 of	 the	 group’s	 geographical	 segments	 the	 group’s	 primary	 activity	 and	 only	 business	 segment	 is	 the	 provision	 of	 global	 workplace	 solutions	 segment	 results	 assets	 and	 liabilities	 include	 items	 directly	 attributable	 to	 a	 segment	 as	 well	 as	 those	 that	 	 can	 be	 allocated	 on	 a	 reasonable	 basis	 there	 is	 no	 intersegment	 trading	 management	 fees	 are	 in	 consideration	 of	 subsidiaries	 use	 of	 intellectual	 property	 and	 group	 services	 including	 but	 not	 limited	 to	 business	 development	 services	 purchasing	 information	 technology	 sales	 and	 marketing	 finance	and	treasury	human	resources	and	legal	services	unallocated	items	comprise	mainly	interest	bearing	loans	borrowings	and	expenses	and	 	 corporate	assets	and	expenses	segment	capital	expenditure	is	the	total	cost	calculated	on	an	accruals	basis	incurred	during	the	period	to	acquire	 segment	assets	that	are	expected	to	be	used	for	more	than	one	year	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	was	 	 added	 following	 the	 acquisition	 on	 19	 april	 2006	 of	 the	 remaining	 58	 of	 the	 share	 capital	 of	 the	 uk	 business	 see	 note	 25	 the	 united	 kingdom	 	 segment	 does	 not	 include	 the	 group’s	 nontrading	 head	 office	 and	 holding	 companies	 that	 are	 based	 in	 the	 uk	 these	 are	 shown	 as	 unallocated	 	 the	results	of	business	centres	in	each	of	these	regions	form	the	basis	for	reporting	geographical	results
	 	 	 	 americas	 emea	 asia	pacific	 united	kingdom	 unallocated	 total
    2006 2006	 2006	 2006	 2006	 2006
    £m £m	 £m	 £m	 £m	 £m
revenue 	 3059 1959 509 1266 07 6800
gross profit centre contribution 	 865 600 160 209 07 1841
management	fees	–	incomecharges	 	 60 87 28 17 192 –
operating profit 	 431 262 61 53 15 822
share	of	profitloss	of	joint	ventures	 	 02 02 – 01 – 01
share	of	profit	of	uk	associate	 	 – – – – 12 12
finance	expense	 	     80 80
finance	income	 	     22 22
profit before tax	 	     775 775
tax	credit	 	     48 48
profit after tax 	 – – – – 823 823
ebitda	see	note	4	 	 696 407 116 155 174 1200
depreciation	 	 168 55 25 69 01 318
amortisation	 	 37 03 02 16 02 60
provision	for	bad	debts	 	 12 06 – 01 – 19
share	based	payments	 	 – – – – 18 18
assets	 	 	 2419 704 398 2009 1267 6797
liabilities	 	 	 1068 1083 257 1222 922 4552
net assetsliabilities 	 	 1351 379 141 787 345 2245
capital	expenditure	incurred	 	 	 219 100 75 78 04 476
43 regus report		accounts	2006 3 segmental analysis – statutory basis continued
	 	 	 	 americas	 emea	 asia	pacific	 united	kingdom	 unallocated	 total
	 	 	 	 2005	 2005	 2005	 2005	 2005	 2005
	 	 	 	 £m	 £m	 £m	 £m	 £m	 £m
revenue	 	 	 2616	 1655	 336	 –	 26	 4633
gross profit centre contribution	 	 	 615	 432	 98	 –	 27	 1172
management	fees	–	incomecharges	 	 	 01	 83	 21	 –	 105	 –
operating profitloss	 	 	 325	 157	 30	 –	 39	 473
share	of	profitloss	of	joint	ventures	 	 	 03	 01	 –	 –	 –	 02
share	of	profit	of	uk	associate	 	 	 –	 –	 –	 –	 02	 02
finance	expense	 	 	 	 	 	 	 108	 108
finance	income	 	 	 	 	 	 	 22	 22
profit before tax	 	 	 	 	 	 	 387	 387
tax	credit	 	 	 	 	 	 	 61	 61
profit after tax	 	 	 	 	 	 	 448	 448
ebitda	see	note	4	 	 	 548	 293	 69	 –	 94	 816
depreciation	 	 	 184	 53	 18	 –	 01	 256
amortisation	 	 	 38	 –	 –	 –	 –	 38
provision	for	bad	debts	 	 	 16	 09	 –	 –	 –	 25
share	based	payments	 	 	 –	 –	 –	 –	 08	 08
assets	 	 	 2629	 616	 260	 –	 834	 4339
liabilities	 	 	 921	 1103	 220	 –	 567	 2811
net assetsliabilities	 	 	 1708	 487	 40	 –	 267	 1528
capital	expenditure	incurred	 	 	 82	 53	 58	 –	 01	 194
assets	 and	 liabilities	 within	 the	 unallocated	 category	 comprise	 financing	 and	 tax	 items	 which	 are	 used	 across	 the	 group	 and	 cannot	 be	 allocated	 to	 	 segments	on	a	meaningful	basis	 unallocated	revenue	represents	management	fees	earned	from	the	uk	business	prior	to	the	acquisition	of	the	remaining	58	interest	and	therefore	it	is	 	 not	considered	meaningful	to	include	this	within	the	united	kingdom	segment
4 reconciliation of operating profit to adjusted ebit and ebitda
	 	 	 	 americas	 emea	 asia	pacific	 united	kingdom	 other	 total
year ended 31 december 2006  	 £m	 £m	 £m	 £m	 £m	 £m
operating	profit	excluding	management	charges	 	 491 349 89 70 177 822
nonrecurring	items	 	 	 – – – – – –
adjusted ebit	 	 	 491 349 89 70 177 822
depreciation	and	amortisation	 	 	 205 58 27 85 03 378
ebitda	 	 	 696 407 116 155 174 1200
regus report		accounts	2006 44
notes to the accounts
continued 45 regus report		accounts	2006
4 reconciliation of operating profit to adjusted ebit and ebitda continued
	 	 	 	 americas	 emea	 asia	pacific	 united	kingdom	 other	 total
year	ended	31	december	2005	 	 	 £m	 £m	 £m	 £m	 £m	 £m
operating	profit	excluding	management	charges	 	 326	 240	 51	 –	 144	 473
nonrecurring	items	 	 	 –	 –	 –	 –	 49	 49
adjusted ebit	 	 	 326	 240	 51	 –	 95	 522
depreciation	and	amortisation	 	 	 222	 53	 18	 –	 01	 294
ebitda	 	 	 548	 293	 69	 –	 94	 816
notes
	 adjusted	ebit	and	ebitda	excludes	the	results	of	the	joint	ventures	and	uk	associate
5 operating profit
operating	profit	has	been	arrived	at	after	charging
        2006	 2005
        £m	 £m
depreciation	on	property	plant	and	equipment
	 owned	assets	 	 	 	 	 	 	 310 206
	 finance	leases	 	 	 	 	 	 	 08 50
provision	for	bad	debts	 	 	 	 	 	 	 19 25
amortisation	of	intangibles	 	 	 	 	 	 	 60	 38
loss	on	disposal	of	fixed	assets	 	 	 	 	 	 	 04 03
exchange	differences	recognised	in	the	income	statement		 	 	 	 	 10	 09
rents	payable	in	respect	of	operating	leases
	 property	 	 	 	 	 	 	 2245 1655
	 equipment	 	 	 	 	 	 	 23	 29
	 contingent	rents	paid	 	 	 	 	 	 	 56	 26
staff	costs	see	note	7	 	 	 	 	 	 	 1225 886
fees	payable	to	the	group’s	auditor	for	the	audit	of	the	group	accounts	 	 	 	 	 02	 02
fees	payable	to	the	group’s	auditor	and	its	associates	for	other	services
	 the	audit	of	the	company’s	subsidiaries	pursuant	to	legislation	 	 	 	 	 08	 05
	 other	services	 	 	 	 	 	 	 02	 –
	 due	diligence	on	acquisitions	included	within	cost	of	acquisitions	 	 	 	 	 02	 01
6 nonrecurring items
included	in	the	results	for	the	year	to	31	december	2006	were	nonrecurring	items	amounting	to	£nil	2005	£49	million
        2006	 2005
        £m	 £m
cost of sales
onerous	leases	related	closure	and	restructuring	costs	 	 	 	 	 	 – 01
	 	 	 	 	 	 	 	 – 01
administration expenses
costs	relating	to	the	integration	of	hq	 	 	 	 	 	 	 –	 47
release	of	surplus	provisions	relating	to	chapter	11	and	scheme	of	arrangement	 	 	 	 –	 15
indemnity	claim	with	landlord	 	 	 	 	 	 	 –	 18
	 	 	 	 	 	 	 	 –	 50
nonrecurring items       –	 49
the	 above	 items	 have	 been	 reported	 as	 nonrecurring	 items	 and	 are	 disclosed	 separately	 as	 they	 are	 relevant	 to	 the	 understanding	 of	 the	 group’s	 financial	performance 7 staff costs and numbers
        2006	 2005
        £m	 £m
the aggregate payroll costs were as follows
wages	and	salaries	 	 	 	 	 	 	 1038 755
social	security	 	 	 	 	 	 	 163	 119
pension	costs	 	 	 	 	 	 	 06	 04
share	based	payments	 	 	 	 	 	 	 18	 08
	 	 	 	 	 	 	 	 1225	 886
        2006	 2005
        average full	 average	full
        time equivalents	 time	equivalents
the average number of persons employed by the group including executive directors
 analysed by category and geography was as follows
centre	staff	 	 	 	 	 	 	 2888	 2043
sales	staff	 	 	 	 	 	 	 244	 209
finance	staff	 	 	 	 	 	 	 233	 170
other	staff	 	 	 	 	 	 	 367	 183
	 	 	 	 	 	 	 	 3732	 2605
americas	 	 	 	 	 	 	 1702	 1443
emea	 	 	 	 	 	 	 1080	 909
united	kingdom	 	 	 	 	 	 	 468	 –
asia	pacific	 	 	 	 	 	 	 421 208
corporate	functions	 	 	 	 	 	 	 61 45
	 	 	 	 	 	 	 	 3732	 2605
details	of	directors’	emoluments	and	interests	are	given	in	the	remuneration	report	on	pages	27	to	33
8 net finance expense
        2006	 2005
        £m	 £m
interest	payable	and	similar	charges	on	bank	loans	 	 	 	 	 	 46	 56
interest	payable	and	similar	charges	on	finance	leases	 	 	 	 	 	 05	 09
total interest expense       51	 65
deferred	financing	fees	 	 	 	 	 	 	 04	 43
unwinding	of	discount	rates	 	 	 	 	 	 	 25	 –
total finance expense	 	 	 	 	 	 	 80	 108
total interest income	 	 	 	 	 	 	 18	 22
unwinding	of	discount	rates	 	 	 	 	 	 	 04	 –
total finance income	 	 	 	 	 	 	 22	 22
net finance expense       58	 86
deferred	financing	fees	relate	to	loan	arrangement	costs	on	the	£150	million	senior	credit	facilities	signed	in	march	and	april	2006	 regus report		accounts	2006 46
notes to the accounts
continued 9  taxation
a analysis of credit in the year
         2006	 2005
	 	 	 	 	 	 	 	 	 restated
         £m	 £m
current taxation
corporate	income	tax	 	 	 	 	 	 	 248	 164
benefit	from	previously	unrecognised	tax	losses	and	temporary	differences	 	 	 	 167	 88
under	provision	in	respect	of	prior	years	 	 	 	 	 	 	 –	 13
total current taxation       81	 89
deferred taxation
origination	and	reversal	of	temporary	differences	 	 	 	 	 	 30	 –
benefit	from	previously	unrecognised	tax	losses	and	temporary	differences	 	 	 	 162	 128
underover	provision	in	respect	of	prior	years	 	 	 	 	 	 03	 22
total deferred taxation	 	 	 	 	 	 	 129	 150
tax credit on profit on ordinary activities       48	 61
b reconciliation of taxation credit
        2006	 	 2005
       £m  £m	 
profit before tax	 	 	 	 	 775	 	 387	
tax on profit at 30 2005 30	 	 	 	 	 232 300	 116	 300
tax	effects	of
expenses	not	deductible	for	tax	purposes	 	 	 	 	 18 23	 27	 69
items	not	chargeable	for	tax	purposes	 	 	 	 	 32 41	 15	 39
recognition	of	previously	unrecognised	deferred	tax	assets	 	 	 329 425	 216	 558
movements	in	temporary	differences	in	the	year	not	recognised	in	deferred	tax	 	 24 31	 18	 47
differences	in	tax	rates	on	overseas	earnings	 	 	 	 36 46	 18	 47
adjustment	to	tax	charge	in	respect	of	previous	years	 	 	 	 03 04	 09	 23
       48 62 61	 157
the	 applicable	 tax	 rate	 is	 determined	 based	 on	 the	 tax	 rate	 in	 the	 uk	 which	 is	 the	 effective	 tax	 rate	 applicable	 in	 the	 country	 of	 domicile	 of	 the	 parent	 company	of	the	group	and	is	unchanged	from	2005
c factors that may effect the future tax charge
unrecognised	tax	losses	to	carry	forward	against	certain	future	overseas	corporation	tax	liabilities	have	the	following	expiration	dates
         2006	 2005
         £m	 £m
2006	 	 	 	 	 	 	 –	 12
2007	 	 	 	 	 	 	 18	 21
2008	 	 	 	 	 	 	 11	 46
2009	 	 	 	 	 	 	 17	 37
2010	 	 	 	 	 	 	 21	 22
2011	 	 	 	 	 	 	 14	 10
2012	 	 	 	 	 	 	 33	 29
2013	and	later	 	 	 	 	 	 	 566	 1461
	 	 	 	 	 	 	 	 	 680	 1638
available	indefinitely	 	 	 	 	 	 	 440	 649
unrecognised tax losses available to carry forward      1120	 2287
amount	of	tax	losses	recognised	in	the	deferred	tax	asset	 	 	 	 	 	 859	 415
total tax losses available to carry forward	 	 	 	 	 	 1979	 2702
the	following	deferred	tax	assets	have	not	been	recognised	due	to	uncertainties	over	recoverability
         2006	 2005
         £m	 £m
accelerated	capital	allowances	 	 	 	 	 	 	 55	 33
tax	losses	 	 	 	 	 	 	 371	 765
short	term	timing	differences	 	 	 	 	 	 	 48	 109
	 	 	 	 	 	 	 	 	 474	 907
47 regus report		accounts	2006 9  taxation continued
d corporation tax
         2006	 2005
         £m	 £m
corporation	tax	payable	 	 	 	 	 	 	 255	 123
corporation	tax	receivable	 	 	 	 	 	 	 29	 25
e deferred taxation
the	movement	in	deferred	tax	is	analysed	below
	 	 	 	 	 	 	 	 	 2006	 2005
        short term
      property plant  temporary
     intangibles and equipment tax losses differences total	 total
     £m £m £m £m £m	 £m
deferred tax asset
at	1	january	 	 	 173	 150	 157	 85	 219	 62
current	year	movement	 	 	 15	 07	 181	 21	 138	 128
prior	year	movement	 	 	 01	 19	 23	 04	 01	 22
deferred	tax	recognised	directly	in	reserves	on	shares	options	 –	 –	 –	 01	 01	 –
acquisitions	 	 	 58	 17	 –	 77	 02	 02
transfers	 	 	 06	 –	 –	 05	 01	 03
exchange	movement	 	 	 22	 16	 01	 09	 04	 02
at 31 december 2006   231 129 314 142 354
at	31	december	2005	 	 	 173	 150	 157	 85	 	 219
deferred tax liability
at	1	january	 	 	 –	 –	 –	 –	 –	 –
current	year	movement	 	 	 –	 03	 –	 03	 06	 –
prior	year	movement	 	 	 –	 –	 –	 02	 02	 –
acquisitions	 	 	 –	 –	 –	 09	 09	 –
at 31 december 2006   – 03 – 14 17 –
deferred	tax	assets	recognised	on	short	term	temporary	differences	consist	predominantly	of	rental	income	recognised	for	tax	purposes	in	different	 periods	and	also	provisions	deductible	when	paid	and	share	based	payment
at	the	balance	sheet	date	the	temporary	difference	arising	from	unremitted	earnings	of	overseas	subsidiaries	was	£267	million	2005	£170	million 	 it	is	considered	that	no	significant	tax	liability	would	arise	should	these	reserves	be	remitted	due	to	available	overseas	tax	credits
10  earnings per ordinary share basic and diluted
        2006 	 2005
profit	attributable	to	ordinary	equity	shareholders	of	the	parent	 	 	 	 £823m	 	 £445m
weighted	average	number	of	shares	outstanding	during	the	year	 	 	 	 984792040	 	 984792040
average	market	price	of	one	share	during	the	year	 	 	 	 	 1087p	 	 998p
weighted	average	number	of	shares	under	option	during	the	year	 	 	 	 7261924	 	 7261924
exercise	price	for	shares	under	option	during	the	year	 	 	 	 	 6037p	 	 6037p
	 	 	 	 	 	 	 	 profit	 	 earnings	per	share
	 	 	 	 	 	 	 2006	 2005	 2006	 2005
	 	 	 	 	 	 	 £m	 £m	 pence	 pence
basic	and	diluted	profit	for	the	year	attributable	to	shareholders	and	basic	earnings	per	share	 823	 445	 84	 45
diluted	earnings	per	share	 	 	 	 	 	 	 83	 45
weighted	average	number	of	shares	for	basic	eps	number	 	 	 	 	 984792040 984792040
weighted	average	number	of	shares	under	option	during	the	year	 	 	 	 	 7261924	 7261924
weighted	average	number	of	shares	that	would	have	been	issued	at	average	market	price	 	 	 4033140	 4392809
weighted	average	number	of	awards	under	the	cip	 	 	 	 	 	 1620207	 772196
weighted	average	number	of	shares	for	diluted	eps	number	 	 	 	 	 989641031 988433351
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	the	number	of	awards	granted	 	 under	the	2006	cip	are	an	indicative	number	based	on	the	yearend	share	price
regus report		accounts	2006 48
notes to the accounts
continued 11 dividends
the	company	has	proposed	to	shareholders	that	a	final	dividend	of	06	pence	per	share	will	be	paid	2005	nil	subject	to	shareholder	approval	it	is	 	 expected	that	the	dividend	will	be	paid	by	1	june	2007
12 goodwill
	 	 	 	 	 	 	 	 	 	 £m
cost
at	1	january	2005	 	 	 	 	 	 	 	 960
recognised	on	acquisition	of	subsidiaries	 	 	 	 	 	 	 	 153
exchange	differences	 	 	 	 	 	 	 	 108
at 31 december 2005        1221
at	1	january	2006	 	 	 	 	 	 	 	 1221
recognised	on	acquisition	of	subsidiaries	 	 	 	 	 	 	 	 1040
exchange	differences	 	 	 	 	 	 	 	 140
at 31 december 2006        2121
net book value
at	1	january	2006	 	 	 	 	 	 	 	 1221
at 31 december 2006        2121
cashgenerating	 units	 comprising	 individual	 business	 centres	 are	 grouped	 by	 country	 of	 operation	 for	 the	 purpose	 of	 carrying	 out	 impairment	 reviews	 	 of	 noncurrent	 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	cashgenerating	units	the	goodwill	attributable	to	the	reportable	 business	 segments	is	as	follows
         2006	 2005
         £m	 £m
carrying	amount	of	goodwill	included	within	the	americas	business	segment	 	 	 	 1150	 1188
carrying	amount	of	goodwill	included	within	the	emea	business	segment		 	 	 	 18 22
carrying	amount	of	goodwill	included	within	the	asia	pacific	business	segment	 	 	 	 73 11
carrying	amount	of	goodwill	included	within	the	united	kingdom	business	segment	 	 	 	 880 –
	 	 	 	 	 	 	 	 	 2121 1221
specific	groups	of	cashgenerating	units	for	which	the	carrying	amount	of	goodwill	and	indefinite	life	intangible	assets	is	significant	are	as	follows
       goodwill	 intangible	assets 2006	 2005
       £m £m £m	 £m
usa	 	 	 	 	 1088	 –	 1088	 1147
uk		 	 	 	 	 880	 112	 992 –
the	recoverable	amount	of	each	of	the	groups	of	cashgenerating	units	above	has	been	determined	based	on	their	value	in	use	calculated	as	the	 present	 value	of	future	cash	flows	attributable	to	the	group	 the	following	key	assumptions	have	been	used	in	calculating	value	in	use	for	each	group	of	cashgenerating	units
	 future	cash	flows	are	based	on	budgets	for	2007	approved	by	the	board	thereafter	a	prudent	growth	rate	not	exceeding	3	has	been	applied	to	 	 	 revenues	for	the	first	five	years	with	0	growth	thereafter	 	 a	terminal	value	is	included	in	the	assessment	reflecting	the	group’s	expectation	that	it	will	continue	to	operate	in	these	markets
	 a	pretax	discount	rate	has	been	applied	to	future	cash	flows	for	each	group	of	cashgenerating	units	based	on	an	underlying	posttax	discount	 	 	 rate	of	12	grossed	up	by	the	applicable	tax	rate	in	each	country
the	 calculation	 of	 the	 value	 in	 use	 is	 sensitive	 to	 changes	 in	 the	 expected	 level	 of	 long	 term	 profitability	 and	 the	 discount	 rate	 applied	 to	 the	 future	 cash	 flows	 the	 trading	 conditions	 in	 which	 the	 group	 operates	 is	 subject	 to	 competitive	 and	 economic	 pressures	 that	 can	 have	 a	 material	 effect	 on	 the	 operating	 performance	of	the	business	 forseeable	 events	 are	 unlikely	 to	 result	 in	 a	 change	 in	 the	 projections	 of	 a	 significant	 nature	 so	 as	 to	 result	 in	 a	 cashgenerating	 units	 carrying	 amount	 	 to	 exceed	 its	 recoverable	 amount	 a	 fall	 of	 more	 than	 12	 in	 the	 future	 cash	 flows	 would	 be	 required	 to	 result	 in	 the	 carrying	 amount	 exceeding	 the	 	 recoverable	amount
there	is	no	goodwill	relating	to	the	group’s	joint	ventures
49 regus report		accounts	2006 13 other intangible assets
	 	 	 	 	 	 	 brand	 customer	lists	 software	 total
	 	 	 	 	 	 	 £m	 £m	 £m	 £m
cost
at	1	january	2005	 	 	 	 	 342	 20	 81	 443
additions	at	cost	 	 	 	 	 –	 –	 05	 05
acquisition	of	subsidiaries	 	 	 	 	 –	 11	 –	 11
disposals	 	 	 	 	 –	 –	 02	 02
exchange	rate	movements	 	 	 	 	 37	 02	 05	 44
at 31 december 2005     379 33 89 501
at	1	january	2006	 	 	 	 	 379	 33	 89	 501
additions	at	cost	 	 	 	 	 –	 –	 04	 04
acquisition	of	subsidiaries	 	 	 	 	 112	 101	 06	 219
disposals	 	 	 	 	 –	 –	 31	 31
exchange	rate	movements	 	 	 	 	 43	 03	 07	 53
at 31 december 2006     448 131 61 640
amortisation
at	1	january	2005	 	 	 	 	 07	 03	 61	 71
charge	for	the	year	 	 	 	 	 19	 11	 08	 38
exchange	rate	movements	 	 	 	 	 –	 01	 02	 03
at 31 december 2005     26 15 71 112
at	1	january	2006	 	 	 	 	 26	 15	 71	 112
charge	for	the	year	 	 	 	 	 18	 29	 13	 60
disposals	 	 	 	 	 –	 –	 31	 31
exchange	rate	movements	 	 	 	 	 03	 02	 06	 11
at 31 december 2006     41 42 47 130
net book value
at 31 december 2006     407 89 14 510
at	31	december	2005	 	 	 	 	 353	 18	 18	 389
included	with	the	brand	value	is	£112	million	relating	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	 31	 october	 2006	 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
regus report		accounts	2006 50
notes to the accounts
continued 14 property plant and equipment
	 	 	 	 	 	 	 	 furniture
	 	 	 	 	 	 	 	 fittings	and
	 	 	 	 	 	 	 	 motor	vehicles	 computers	 total
	 	 	 	 	 	 	 	 £m	 £m	 £m
cost
at	1	january	2005	 	 	 	 	 	 2340	 154	 2494
additions	 	 	 	 	 	 177	 17	 194
acquisition	of	subsidiaries	 	 	 	 	 	 23	 –	 23
disposals	 	 	 	 	 	 153	 05	 158
exchange	rate	movements	 	 	 	 	 	 141	 05	 146
at 31 december 2005      2528 171 2699
at	1	january	2006	 	 	 	 	 	 2528	 171	 2699
additions	 	 	 	 	 	 462	 14	 476
acquisition	of	subsidiaries	 	 	 	 	 	 436	 07	 443
disposals	 	 	 	 	 	 236	 39	 275
reclassifications	 	 	 	 	 	 29	 29	 –
exchange	rate	movements	 	 	 	 	 	 234	 11	 245
at 31 december 2006      2927 171 3098
accumulated depreciation
at	1	january	2005	 	 	 	 	 	 1597	 136	 1733
charge	for	the	year	 	 	 	 	 	 241	 15	 256
disposals	 	 	 	 	 	 138	 02	 140
exchange	rate	movements	 	 	 	 	 	 79	 05	 84
at 31 december 2005      1779 154 1933
at	1	january	2006	 	 	 	 	 	 1779	 154	 1933
charge	for	the	year	 	 	 	 	 	 299	 19	 318
disposals	 	 	 	 	 	 228	 39	 267
exchange	rate	movements	 	 	 	 	 	 152	 10	 162
at 31 december 2006      1698 124 1822
net book value
at 31 december 2006      1229 47 1276
at	31	december	2005	 	 	 	 	 	 749	 17	 766
additions	include	£14	million	in	respect	of	assets	acquired	under	finance	leases	2005	£19	million
the	net	book	value	of	furniture	fittings	and	motor	vehicles	include	amounts	held	under	finance	leases	as	follows
         2006	 2005
         £m	 £m
cost	 	 	 	 	 	 	 426 519
accumulated	depreciation	 	 	 	 	 	 	 378	 456
net book value	 	 	 	 	 	 	 48	 63
15 other long term receivables
       	 	 2006	 2005
	 	 	 	 	 	 	 	 	 restated a
	 	 	 	 	 	 	 	 £m	 £m
other	receivables	 	 	 	 	 	 	 103	 92
amounts	owed	by	joint	ventures	 	 	 	 	 	 	 69	 –
prepayments	and	accrued	income	 	 	 	 	 	 	 35	 26
  	 	 	 	 	 	 	 207	 118
a	see	note	2	for	details	of	the	restatement
51 regus report		accounts	2006 16 trade and other receivables
       	 	 2006	 2005
	 	 	 	 	 	 	 	 	 restated a
	 	 	 	 	 	 	 	 £m	 £m
trade	receivables	 	 	 	 	 	 	 712	 461
amounts	owed	by	joint	ventures	and	associate	 	 	 	 	 	 23	 55
other	receivables	 	 	 	 	 	 	 219	 150
prepayments	and	accrued	income	 	 	 	 	 	 	 436	 155
vat	recoverable	 	 	 	 	 	 	 92	 32
 	 	 	 	 	 	 	 	 1482	 853
a	see	note	2	for	details	of	the	restatement
17 trade and other payables
     	 	 	 	 2006	 2005
       	 	 £m	 £m
trade	payables	 	 	 	 	 	 	 230	 200
other	tax	and	social	security	 	 	 	 	 	 	 167	 71
deferred	landlord	contributions	 	 	 	 	 	 	 124	 20
amounts	owed	to	joint	ventures	 	 	 	 	 	 	 03	 –
rent	accruals	 	 	 	 	 	 	 112	 64
other	accruals	 	 	 	 	 	 	 520	 275
other	creditors	 	 	 	 	 	 	 87	 108
total current	 	 	 	 	 	 	 1243	 738
       	 	 2006	 2005
       	 	 £m	 £m
accruals	and	deferred	income	 	 	 	 	 	 	 06	 17
rent	accruals	 	 	 	 	 	 	 500	 256
other	creditors	 	 	 	 	 	 	 12	 06
total noncurrent	 	 	 	 	 	 	 518	 279
18 borrowings
the	group’s	total	loan	and	borrowing	position	at	31	december	2006	and	at	31	december	2005	had	the	following	maturity	profiles
bank and other loans
       	 	 2006	 2005
       	 	 £m	 £m
repayments falling due as follows
amounts	falling	due	after	more	than	one	year
in	more	than	one	year	but	no	more	than	two	years	 	 	 	 	 	 151	 01
in	more	than	two	years	but	not	more	than	five	years	 	 	 	 	 	 303	 03
in	more	than	five	years	 	 	 	 	 	 	 –	 50
total noncurrent	 	 	 	 	 	 	 454	 54
total current	 	 	 	 	 	 	 82	 245
total bank and other loans	 	 	 	 	 	 	 536	 299
regus report		accounts	2006 52
notes to the accounts
continued 18 borrowings continued
obligations under finance leases
the	maturity	of	the	group’s	finance	obligations	is	as	follows
       	 	 2006	 2005
       	 	 £m	 £m
amounts payable
within	one	year	or	on	demand	 	 	 	 	 	 	 27	 52
in	more	than	one	year	but	not	more	than	two	years	 	 	 	 	 	 09	 27
in	more	than	two	years	but	not	more	than	five	years	 	 	 	 	 	 07	 11
in	more	than	five	years	 	 	 	 	 	 	 –	 01
	 	 	 	 	 	 	 	 	 43	 91
less	finance	charges	allocated	to	future	periods	 	 	 	 	 	 04	 09
present	value	of	future	minimum	lease	payments	 	 	 	 	 	 39	 82
total current	 	 	 	 	 	 	 25	 48
total noncurrent	 	 	 	 	 	 	 14	 34
	 	 	 	 	 	 	 	 	 39	 82
19 provisions for liabilities and charges
	 	 	 	 	 	 	 2006	 	 	 2005
     onerous leases  	 onerous	leases
     and closures other total	 and	closures	 other	 total
     £m £m £m	 £m	 £m	 £m
at 1 january	 	 	 133 18 151	 219	 –	 219
provided	in	the	period	 	 	 12 34 46 05	 18	 23
utilised	in	the	period	 	 	 12 – 12	 72	 –	 72
acquired	with	subsidiary	undertakings	 	 	 04 – 04	 –	 –	 –
provisions	released	 	 	 40 – 40	 20	 –	 20
exchange	differences	 	 	 01 – 01	 01	 –	 01
at 31 december	 	 	 96 52 148	 133	 18	 151
analysed	between
current	 	 	 13	 18	 31	 72	 –	 72
noncurrent	 	 	 83	 34	 117	 61	 18	 79
	 	 	 	 	 96	 52	 148	 133	 18	 151
provisions	for	onerous	leases	and	closure	costs	relate	to	the	estimated	future	costs	on	centre	closures	and	onerous	property	leases	the	maximum 	 period	over	which	these	provisions	are	expected	to	be	utilised	expires	by	31	december	2012	 other	provisions	include	the	estimated	costs	of	claims	against	the	group	outstanding	at	the	yearend	due	to	their	nature	the	maximum	period	over	 which	these	provisions	are	expected	to	be	utilised	is	uncertain
20 investments in joint ventures and associate
	 	 	 	 	 	 	 provision	for	deficit
	 	 	 	 	 	 	 in	investment	in	 provision 	 for	 deficit	 investments
	 	 	 	 	 	 	 uk	associate	 in	joint	ventures	 in	joint	ventures	 total
	 	 	 	 	 	 	 £m	 £m	 £m	 £m
at	1	january	2005     40	 23	 05	 58
additions	 	 	 	 	 –	 01	 –	 01
share	of	profitlosses	 	 	 	 	 02	 04	 02	 –
exchange	rate	movements	 	 	 	 	 –	 02	 –	 02
at 31 december 2005     38 28 07 59
at	1	january	2006     38	 28	 07	 59
additions	 	 	 	 	 –	 –	 01	 01
share	of	profitlosses	 	 	 	 	 12	 02	 01	 11
acquisition	of	the	remaining	58	of	the	uk	business	 	 	 	 26	 –	 –	 26
exchange	rate	movements	 	 	 	 	 –	 03	 –	 03
at 31 december 2006     – 27 09 18
53 regus report		accounts	2006 20 investments in joint ventures and associate continued
	 	 	 	 	 	 	 	 	 	 ownership
	 	 	 	 	 	 	 	 	 2006	 2005
entity	 	 	 country	 	 	 	 	 
associate
regus	holdings	uk	limited	 	 	 england	 	 	 	 –	 42
joint ventures
regus	equity	business	centers	llc	 	 	 usa	 	 	 	 50	 50
skyport	international	ing	vastgoed	beleggingen	wtc1	 	 netherlands	 	 	 	 50	 50
skyport	international	ing	vastgoed	beleggingen	wtc2	 	 netherlands	 	 	 	 50	 50
regus	istanbul	is	merkezi	isletmeciligi	as	 	 	 turkey	 	 	 	 30	 30
park	business	centres	limited	 	 	 england	 	 	 	 50	 –
regus	algerie	sarl	 	 	 algeria	 	 	 	 25	 –
regus	lebanon	sal	 	 	 lebanon	 	 	 	 30	 –
regus	abu	dhabi	business	centres	llc	 	 	 uae	 	 	 	 49	 –
the	following	information	is	given	in	respect	of	regus	holdings	uk	limited	which	became	an	associate	on	31	december	2002	and	ceased	to	be	an	 	 associate	 on	 19	 april	 2006	 when	 the	 remaining	 58	 of	 equity	 not	 owned	 by	 the	 group	 was	 acquired	 from	 alchemy	 partners	 and	 the	 company	 became	 a	subsidiary	of	the	group
the	 results	 of	 the	 associate	 and	 joint	 ventures	 below	 are	 the	 full	 results	 of	 the	 uk	 associate	 prior	 to	 the	 acquisition	 and	 joint	 ventures	 and	 do	 not	 	 represent	the	effective	share
       	 	 2006	 2005
       	 	 £m	 £m
uk associate
income statement
revenue	 	 	 	 	 	 	 485	 1614
expenses	 	 	 	 	 	 	 449	 1609
profit	before	tax	 	 	 	 	 	 	 36	 05
tax	 	 	 	 	 	 	 	 07	 –
profit after tax	 	 	 	 	 	 	 29	 05
net liabilities
fixed	assets	 	 	 	 	 	 	 –	 362
current	assets	 	 	 	 	 	 	 –	 726
current	liabilities	 	 	 	 	 	 	 –	 1160
noncurrent	liabilities	 	 	 	 	 	 	 –	 19
net liabilities	 	 	 	 	 	 	 –	 91
the	income	statement	presented	represents	the	period	from	1	january	2006	to	19	april	2006
       	 	 2006	 2005
       	 	 £m	 £m
joint ventures
income statement
revenue	 	 	 	 	 	 	 223	 130
expenses	 	 	 	 	 	 	 225	 135
loss	before	tax	 	 	 	 	 	 	 02	 05
tax	 	 	 	 	 	 	 	 02	 –
loss after tax	 	 	 	 	 	 	 04	 05
net liabilities
fixed	assets	 	 	 	 	 	 	 93	 53
current	assets	 	 	 	 	 	 	 103	 46
current	liabilities	 	 	 	 	 	 	 201	 140
noncurrent	liabilities	 	 	 	 	 	 	 70	 01
net liabilities	 	 	 	 	 	 	 75	 42
regus report		accounts	2006 54
notes to the accounts
continued 21 share capital
ordinary equity share capital
        2006	 	 2005
        nominal value	 	 nominal	value
       number £m	 number	 £m
authorised
ordinary	5p	shares	 	 	 	 	1600000000 800	1600000000	 800
issued and fully paid up
at 1 january and 31 december     984792040 492	 984792040	 492
22 analysis of financial resources
	 	 	 	 	 	 	 	 noncash	 exchange
	 	 	 	 	 	 at	1	jan	2006	 cash	flow	 changes	 movements	 at 31 dec 2006
	 	 	 	 	 	 £m	 £m	 £m	 £m	 £m
cash and cash equivalents	 	 	 	 741	 108	 –	 40	 809
debt	due	after	one	year	 	 	 	 54	 452	 49	 03	 454
debt	due	within	one	year	 	 	 	 245	 160	 02	 05	 82
finance	leases	due	after	one	year	 	 	 	 34	 19	 04	 05	 14
finance	leases	due	within	one	year	 	 	 	 48	 31	 10	 02	 25
	 	 	 	 	 	 381	 242	 33	 15	 575
net financial assets    360	 134	 33	 25 234
cash	 and	 cash	 equivalents	 balances	 held	 by	 the	 group	 that	 are	 not	 available	 for	 use	 amounted	 to	 £171	 million	 in	 2006	 2005	 £191	 million	 this	 cash	 serves	as	collateral	against	certain	obligations	of	the	group
cash	not	available	for	use	at	31	december	2006	includes	cash	held	on	deposit	of	which	£55	million	2005	£31	million	relates	to	collateral	against	 bank	 loans	 £96	 million	 2005	 £141	 million	 relates	 to	 deposits	 which	 are	 held	 by	 banks	 and	 landlords	 as	 security	 against	 lease	 commitments	 by	 regus	operating	companies	and	£20	million	2005	£19	million	held	by	the	esop	trust	these	amounts	are	blocked	and	not	available	for	use	by	 	 the	business
noncash	changes	comprise	new	finance	leases	changes	due	to	business	acquisitions	and	movements	between	categories
23 financial instruments
the	objectives	policies	and	strategies	applied	by	the	group	with	respect	to	financial	instruments	are	determined	at	group	level	exposure	to	credit	 	 interest	rate	and	currency	risks	arise	in	the	normal	course	of	business	the	principal	financial	instruments	used	by	the	group	to	finance	its	operations	 are	cash	and	loans
credit risk
a	 diversified	 customer	 base	 and	 requirement	 for	 customer	 deposits	 and	 payments	 in	 advance	 on	 workstation	 contracts	 minimizes	 the	 group’s	 	 exposure	to	customer	credit	risk
cash	assets	borrowings	and	derivative	financial	instruments	are	only	transacted	with	counterparties	of	sound	credit	ratings	and	management	does	 	 not	expect	any	counterparty	to	fail	to	meet	its	obligations
interest rate risk
the	 group’s	 debt	 is	 held	 at	 variable	 interest	 rates	 because	 further	 early	 repayment	 of	 the	 debt	 is	 probable	 finance	 leases	 are	 generally	 held	 at	 fixed	interest	rates	surplus	cash	balances	are	invested	to	achieve	maximum	interest	returns	on	a	day	to	day	basis
foreign currency risk
the	 group’s	 exposure	 to	 currency	 risk	 at	 a	 transactional	 level	 is	 minimal	 as	 the	 majority	 of	 day	 to	 day	 transactions	 of	 overseas	 subsidiaries	 are	 carried	 	 out	in	local	currency
the	majority	of	the	group’s	net	assets	are	in	pounds	sterling	us	dollars	and	euros	the	group	does	not	hedge	the	translation	effect	of	exchange	rate	 	 movements	on	the	income	statement
derivative financial instruments
historically	the	group	has	occasionally	used	derivative	financial	instruments	to	hedge	its	exposure	to	foreign	currency	and	interest	rate	fluctuations	 	 although	 natural	 hedges	 limit	 the	 exposure	 to	 these	 risks	 at	 31	 december	 2006	 there	 were	 no	 derivative	 financial	 instruments	 outstanding	 2005	 none	 no	transactions	of	a	speculative	nature	are	undertaken
55 regus report		accounts	2006 23 financial instruments continued
effective interest rates and repricing analysis
in	respect	of	incomeearning	assets	and	interestbearing	financial	liabilities	the	following	table	indicates	their	effective	interest	rates	at	the	balance	 sheet	date	and	the	periods	in	which	they	reprice
as at 31 december 2006
	 	 	 	 	 effective	 	 less	than	 	 	 more	than
	 	 	 	 	 interest	rate	 total	 1	year	 12	years	 25	years	 5	years
	 	 	 	 	 	 £m	 £m	 £m	 £m	 £m
cash	and	cash	equivalents	 	 	 29	 809	 809	 –	 –	 –
finance	lease	liabilities	 	 	 122	 39	 25	 07	 07	 –
secured	bank	loans	 	 	 70	 500	 50	 150	 300	 –
other	loans	and	debt	issue	costs	 	 	 85	 36	 32	 01	 03	 –
net financial assets    234 702 158 310 –
as	at	31	december	2005
	 	 	 	 	 effective	 	 less	than	 	 	 more	than
	 	 	 	 	 interest	rate	 total	 1	year	 12	years	 25	years	 5	years
	 	 	 	 	 	 £m	 £m	 £m	 £m	 £m
cash	and	cash	equivalents	 	 	 30	 741	 741	 –	 –	 –
loan	payable	to	uk	associate	 	 	 86	 50	 –	 –	 –	 50
finance	lease	liabilities	 	 	 86	 82	 48	 24	 09	 01
secured	bank	loans	 	 	 99	 225	 225	 –	 –	 –
other	loans	 	 	 93	 24	 20	 01	 03	 –
net financial assets    360 448 25 12 51
sensitivity analysis
at	31	december	2006	it	is	estimated	that	a	general	increase	of	one	percentage	point	in	interest	rates	would	increase	the	group’s	profit	before	tax	by	 	 approximately	£03	million	2005	£04	million
it	is	estimated	that	a	one	percentage	point	weakening	in	the	value	of	the	us	dollar	against	pounds	sterling	would	have	decreased	the	group’s	profit	 	 before	 tax	 by	 approximately	 £04	 million	 for	 the	 year	 ended	 31	 december	 2006	 2005	 £03	 million	 it	 is	 estimated	 that	 a	 one	 percentage	 point	 	 weakening	in	the	value	of	the	euro	against	pounds	sterling	would	have	decreased	the	group’s	profit	before	tax	by	approximately	£01	million	for	the	 	 year	ended	31	december	2006	2005	£02	million	 fair value disclosures
the	fair	values	together	with	the	carrying	amounts	shown	in	the	balance	sheet	are	as	follows
        2006	 	 2005
	 	 	 	 	 	 	 carrying amount	 fair value	 carrying	amount	 fair	value
	 	 	 	 	 	 	 	 restated a	 restated a
	 	 	 	 	 	 £m	 £m	 £m	 £m
cash	and	cash	equivalents	 	 	 	 	 809 809	 741	 741
trade	and	other	receivables	 	 	 	 	 1482 1482	 853	 853
loan	payable	to	uk	associate	 	 	 	 	 – –	 50	 50
finance	lease	liabilities	 	 	 	 	 39 33	 82	 70
secured	bank	loans	net	of	debt	issue	costs	 	 	 	 495 495	 225	 225
other	loans	and	overdrafts	 	 	 	 	 41 41	 24	 24
trade	and	other	payables	 	 	 	 	 1243 1243	 738	 738
	 	 	 	 	 	 	 473 479	 618	 630
unrecognised	gain	 	 	 	 	 	 06	 	 12
a	see	note	2	for	details	of	the	restatement
summary of methods and assumptions
trade and other receivablespayables
for	receivablespayables	with	a	remaining	life	of	less	than	one	year	the	notional	amount	is	deemed	to	reflect	the	fair	value
finance lease liabilities
the	fair	value	of	finance	leases	has	been	calculated	by	discounting	future	cash	flows	at	the	group’s	weighted	average	cost	of	capital
loans and overdrafts
the	 fair	 value	 of	 bank	 loans	 overdrafts	 and	 other	 loans	 approximates	 to	 the	 carrying	 value	 because	 interest	 rates	 are	 at	 floating	 rates	 where	 payments	 are	reset	to	market	rates	at	intervals	of	less	than	one	year
regus report		accounts	2006 56
notes to the accounts
continued 23 financial instruments continued
committed borrowing facilities
	 	 	 	 	 	 	 	 	 principal	 available
	 	 	 	 	 	 	 	 	 £m	 £m
at 31 december 2006       1517 872
at	31	december	2005	 	 	 	 	 	 	 440	 150
principal	committed	facilities	include	£1500	million	2005	us	640	million	of	senior	credit	facilities	which	the	group	entered	into	in	2006	of	which	 	 £870	million	2005	us	250	million	is	available	 on	13	march	2006	the	group	signed	a	new	five	year	£100	million	revolving	credit	facility	agreement	on	19	april	2006	this	was	amended	to	include	a 	 £50	million	four	year	term	loan	to	help	finance	the	acquisitions	of	the	uk	business
foreign currency exposure as at 31 december 2006
to	 mitigate	 the	 effect	 of	 the	 currency	 exposures	 arising	 from	 its	 net	 investments	 overseas	 the	 group	 borrows	 where	 appropriate	 in	 the	 local	 	 currencies	arising	from	its	net	investments	gains	and	losses	arising	on	net	investments	overseas	are	recognised	in	the	consolidated	statement	of	 changes	in	equity
the	 tables	 below	 show	 the	 extent	 to	 which	 group	 companies	 have	 monetary	 assets	 and	 liabilities	 in	 currencies	 other	 than	 their	 local	 currency	 foreign	 exchange	differences	on	retranslation	of	these	assets	and	liabilities	are	taken	to	the	income	statement	of	the	group	companies	and	the	group
	 	 	 	 	 	 	 net	foreign	currency	monetary	assetsliabilities
	 	 	 	 	 	 euro	 sterling	 us	dollar	 others	 total
	 	 	 	 	 	 £m	 £m	 £m	 £m	 £m
31 december 2006
functional currency of group operations
euro    – – 03 20 23
sterling    28 – 118 74 220
us	dollar    – – – 45 45
others    19 – 54 118 191
      09 – 67 21 97
31	december	2005
functional	currency	of	group	operations
euro	 	 	 	 –	 –	 06	 07	 13
sterling	 	 	 	 36	 –	 36	 14	 14
us	dollar	 	 	 	 03	 02	 –	 29	 24
others	 	 	 	 06	 –	 67	 36	 37
	 	 	 	 	 	 45	 02	 25	 58	 14
24 share based payment
regus group share option plan
during	2004	the	group	established	the	regus	group	share	option	plan	which	entitles	executive	directors	and	certain	employees	to	share	options	in	 	 regus	group	plc
the	 table	 below	 presents	 the	 options	 outstanding	 and	 their	 exercise	 price	 together	 with	 an	 analysis	 of	 the	 movements	 in	 the	 number	 of	 options	 during	 	 the	year
	 	 	 	 	 	 weighted
	 	 	 	 	 	 average
	 	 	 	 	 	 exercise	price
	 	 	 	 	 	 per	share
	 	 	 	 date	of	grant	 numbers	granted	 pence	 lapsed	 at	31	dec	2006	 exercisable	from	 expiry	date
	 	 	 	 23072004	 4106981	 5700	 nil	 4106981	 23072007	 23072014
	 	 	 	 08092004	 3884170	 6475	 729227	 3154943	 08092007	 08092014
total   7991151 6037 729227 7261924
57 regus report		accounts	2006 24 share based payment continued
performance conditions for share options
the	plan	includes	certain	performance	criteria	that	need	to	be	met	in	order	for	share	options	to	vest	a	proportion	of	the	share	options	vest	as	shown	 	 below	 should	 the	 basic	 earnings	 per	 share	 adjusted	 for	 nonrecurring	 items	 and	 goodwill	 and	 intangible	 amortisation	 exceed	 targets	 linked	 to	 the	 retail	 price	index	rpi	the	basic	earnings	per	share	for	perfomance	purposes	was	1p	no	options	are	exercisable	at	the	yearend
target	over	performance	period	 portion	of	share	options	vested
rpi	 	 	 20
rpi		3	 	 40
rpi		4	 	 60
rpi		5	 	 80
rpi		6	 	 100
the	share	options	are	valued	using	the	black	scholes	model	the	inputs	to	the	model	are	as	follows
	 	 	 	 	 	 	 	 	 	 grant	date
	 	 	 	 	 	 	 	 	 july	2004	 september	2004
share	price	on	grant	date	 	 	 	 	 	 	 5700p	 6475p
exercise	price	 	 	 	 	 	 	 5700p	 6475p
expected	volatility	 	 	 	 	 	 	 5911	 5906
option	life	 	 	 	 	 	 	 3	years	 3	years
expected	dividend	 	 	 	 	 	 	 nil	 nil
fair	value	of	option	at	time	of	grant	 	 	 	 	 	 	 250p	 280p
risk	free	interest	rate	 	 	 	 	 	 	 51	 51
the	expected	volatility	is	based	on	the	historic	volatility	adjusted	for	any	abnormal	movement	in	share	prices
regus group plc coinvestment plan cip and long term incentive plan ltip
	 	 	 	 	 	 	 number	of
	 	 	 	 	 	 	 awards	granted
plan		 	 	 date	of	grant	 at	31	dec	2005	 in	year	 lapsed	in	year	 at	31	dec	2006	 release	date
ltip	 	 	 03112005	 3723235	 –	 155927	 3567308	 03112008
ltip	 	 	 28092006	 –	 140184	 –	 140184	 28092009
	 	 	 	 	 	 3723235	 140184	 155927	 3707492
cip	investment	shares	 	 	 21032006	 –	 772196	 –	 772196	 21032009
cip	matching	shares	 	 	 21032006	 –	 3088784	 –	 3088784	 21032009
	 	 	 	 	 	 –	 3860980	 –	 3860980
the	 fair	 value	 of	 services	 received	 in	 return	 for	 share	 based	 payments	 are	 measured	 by	 reference	 to	 the	 fair	 value	 of	 the	 equity	 instruments	 granted	 	 no	awards	are	exercisable	at	the	yearend
the	ltipcip	awards	are	valued	using	the	monte	carlo	method
the	inputs	to	the	model	are	as	follows
        2006	 	 2005
	 	 	 	 	 	 	 	 ltip a	 cip	 ltip	a
share	price	on	grant	date	 	 	 	 	 
10700p	 10725p	 9225p
exercise	price	 	 	 	 	 	 nil	 nil	 nil
number	of	simulations	 	 	 	 	 60000	 60000	 60000
number	of	companies	 	 	 	 	 29	 29	 29
award	life	 	 	 	 	 3 years	 3	years	 3	years
expected	dividend	 	 	 	 	 nil	 nil	 nil
fair	value	of	award	at	time	of	grant	 	 	 	 	 
790p	 7994p	 6500p
risk	free	interest	rate	 	 	 	 	 	 438	 416	 447
a	the 	 ltip	 awards	 have	 a	 release	 date	 of	 3	 november	 2008	 and	 28	 september	 2009	 there	 is	 no	 expiry	 date	 and	 therefore	 remaining	 contractual	 life	 on	 the	 basis	 that	 the	 	 	 awards	release	immediately
regus report		accounts	2006 58
notes to the accounts
continued 24 share based payment continued
the	performance	conditions	for	the	grant	of	awards	under	the	ltip	and	cip	are	set	out	in	the	following	table
for	november	2005	awards	eps	p	for	year	ended	31	dec	2008	 	 	 	 11p	 12p	 13p	 14p
for	september	2006	awards		increase	in	eps	for	year	ended	30	june	2009	compared	to	eps	of	prior	year	 	 15	 20	 25	 30
growth	in	free	cash	flow	per	share
10	 	 	 	 	 6	 13	 19	 25
15	 	 	 	 	 13	 25	 38	 50
20	 	 	 	 	 19	 38	 56	 75
25	 	 	 	 	 25	 50	 75	 100
note		denotes	the		of	award	which	will	be	released	at	the	end	of	the	performance	period
in	 addition	 no	 awards	 will	 be	 released	 unless	 the	 company’s	 tsr	 is	 at	 least	 at	 the	 median	 when	 compared	 against	 that	 of	 the	 companies	 comprising	 	 the	ftse	350	support	services	sector	at	the	date	of	grant
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	 as	 such	 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	oneoff	or	nonrecurring	costs	will	be	excluded
	 it 	 is	 expected	 that	 in	 the	 period	 between	 2006	 and	 2009	 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		 as	 mentioned	 above	 awards	 under	 the	 cip	 in	 respect	 of	 the	 bonus	 paid	 for	 the	 year	 ended	 31	 december	 2006	 will	 be	 made	 subsequent	 to	 the	 	 publication	 of	 this	 report	 however	 the	 maximum	 number	 of	 awards	 granted	 will	 be	 based	 on	 the	 price	 of	 an	 ordinary	 share	 at	 the	 time	 of	 grant	 and	 the	 monetary	 value	 will	 not	 exceed	 50	 of	 basic	 salary	 full	 details	 of	 the	 levels	 of	 award	 and	 performance	 conditions	 will	 be	 disclosed	 in	 the	 committee’s	 remuneration	report	for	the	year	ending	31	december	2007
25 acquisitions
the	principal	acquisition	in	the	year	was	that	of	the	58	interest	in	the	regus	uk	business	not	already	owned	all	other	acquisitions	in	the	year	were	 	 individually	immaterial	and	have	been	grouped	together	for	disclosure	purposes	a	minor	adjustment	has	been	made	to	the	provisional	acquisition	 	 accounting	in	2005	the	impact	of	the	group’s	acquisitions	on	the	financial	statements	is	summarised	in	the	table	further	details	of	the	acquisitions	 	 can	be	found	below	the	table
	 	 	 	 	 	 	 regus	uk	 other	2006	 prior	years
	 	 	 	 	 	 	 58	 100	 100	 total
	 	 	 	 	 	 	 £m	 £m	 £m	 £m
net assets acquired     102	 71	 – 173
consideration
cash	 	 	 	 	 880	 282	 –	 1162
deferred	consideration	 	 	 	 	 –	 18	 03	 21
directly	attributable	costs	 	 	 	 	 14	 16	 –	 30
	 	 	 	 	 	 	 894	 316	 03	 1213
goodwill	 	 	 	 	 792	 245	 03	 1040
net cash outflow arising on acquisition
cash	consideration	and	directly	attributable	costs	 	 	 	 894	 298	 –	 1192
less	cash	and	cash	equivalents	acquired	 	 	 	 	 285	 22	 –	 307
	 	 	 	 	 	 	 609	 276	 –	 885
59 regus report		accounts	2006 25 acquisitions continued
acquisition of the remaining interest in the uk business
on	 19	 april	 2006	 the	 acquisition	 date	 the	 group	 purchased	 the	 remaining	 58	 equity	 share	 in	 the	 uk	 associate	 regus	 holdings	 uk	 limited	 from	 	 rex	 2002	 limited	 a	 company	 controlled	 by	 funds	 managed	 by	 alchemy	 partners	 for	 a	 cash	 consideration	 of	 £880	 million	 this	 entity	 has	 been	 fully	 	 consolidated	into	the	group’s	results	since	the	acquisition	date
the	net	assets	of	the	uk	business	on	acquisition	and	the	fair	values	were	as	follows
	 	 	 	 	 	 	 	 book	values		 	 fair	value
	 	 	 	 	 	 	 	 of	acquired	 fair	value	 at	date	of
	 	 	 	 	 	 	 	 business	 adjustments	 acquisition
	 	 	 	 	 	 	 	 £m	 £m	 £m
intangible	assets	–	brand	 a
	 	 	 	 	 	 –	 112	 112
customer	list	and	software	 	 	 	 	 	 03	 74	 77
property	plant	and	equipment	 b
	 	 	 	 	 	 352	 24	 376
other	noncurrent	assets	 	 	 	 	 	 66	 37	 103
cash	and	cash	equivalents	 	 	 	 	 	 285	 –	 285
other	current	assets	 	 	 	 	 	 348	 16	 364
current	liabilities	 c
	 	 	 	 	 	 863	 04	 867
noncurrent	liabilities	 c
	 	 	 	 	 	 252	 22	 274
net assets at acquisition date	 	 	 	 	 	 61	 237 176
net assets acquired 58 of net assets at acquisition date      102
consideration
cash	 	 	 	 	 	 	 	 880
directly	attributable	costs	 	 	 	 	 	 	 	 14
	 	 	 	 	 	 	 	 	 	 894
goodwill        792
all	consideration	was	paid	in	cash	there	was	no	deferred	consideration
the	fair	value	adjustments	include
a	a	valuation	of	the	uk	brand	was	conducted	at	the	date	of	acquisition	“relief	from	royalty”	approach	was	used	as	the	valuation	method	under	this	method	the	fair	value	is	 	 	 equal	to	the	amount	saved	through	the	avoidance	of	royalty	payments	in	perpetuity	a	1	royalty	rate	and	12	weighted	average	cost	of	capital	was	used	for	the	valuation
b	the	valuation	of	property	plant	and	equipment	was	based	on	a	market	valuation	approach	unless	market	values	were	not	available	in	which	case	a	depreciated	replacement 	 	 cost	method	was	used
c	leasehold	interest	valuations	were	based	on	the	difference	between	contract	rent	and	market	rent	over	the	lease	term	discounted	to	net	present	value	at	a	weighted	average	 	 	 cost	of	12
the	 group’s	 42	 shareholding	 in	 the	 uk	 associate	 has	 been	 revalued	 in	 the	 course	 of	 accounting	 for	 the	 acquisition	 a	 revaluation	 of	 £100	 million	 	 representing	 42	 of	 the	 fair	 value	 adjustments	 of	 £237	 million	 has	 been	 applied	 to	 the	 group’s	 existing	 shareholding	 in	 the	 uk	 associate	 with	 a	 	 corresponding	revaluation	reserve	of	£100	million	being	created	in	equity
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
summary of results of the uk business prior to acquisition see also note 20
set	out	below	are	summary	profit	and	loss	accounts	of	the	uk	business	the	preacquisition	period	has	been	restated	under	ifrs
	 	 	 	 	 	 	 	 1	jan	2006	to	 20	april	2006	to
	 	 	 	 	 	 	 	 19	april	2006	 31	dec	2006	 total
	 	 	 	 	 	 	 	 £m	 £m	 £m
revenue	 	 	 	 	 	 485	 1199	 1684
operating	expenses	 	 	 	 	 	 453	 1148	 1601
operating profit	 	 	 	 	 	 32	 51	 83
interest	 	 	 	 	 	 04	 04	 –
profit before tax	 	 	 	 	 	 36	 47	 83
tax	 	 	 	 	 	 	 07	 01	 06
profit attributable to shareholders	 	 	 	 	 	 29	 48	 77
share	of	profit	recognised	prior	to	the	acquisition	42	of	preacquisition	profit	after	tax	 	 	 12	 	 the	uk	business	contributed	£166	million	to	the	group’s	net	operating	cash	flows	and	paid	£95	million	for	capital	expenditure	in	the	post	acquisition	 	 period	ending	31	december	2006
there	were	no	other	recognised	gains	and	losses	other	than	those	recognised	in	the	profit	and	loss	account
regus report		accounts	2006 60
notes to the accounts
continued 25 acquisitions continued
details	of	all	other	acquisitions	made	during	2006	are	set	out	in	the	following	table	all	of	the	acquired	operations	are	providers	of	global	workplace	 solutions	where	no	equity	was	acquired	the	group	acquired	all		 the	operating	assets	and	liabilities	of	the	related	business	excluding	cash	 	 	 	 	 	 	 	 	 purchase
	 	 	 	 	 	 	 	 consideration	 percentage	of
	 	 	 	 	 	 	 	 including	costs	 equity	and	voting	 date	of
name	 	 	 	 	 region	 £m	 rights	aquired	 acquisition
equity acquisitions
plaza	 a
	 	 	 	 	 asia	pacific	 50	 100	 01012006
pinnacle	 b
	 	 	 	 	 americas	 12	 100	 04012006
managed	office	solutions	ltd	 	 	 	 united	kingdom	 18	 100	 30062006
unico	business	service	inc	 	 	 	 	 asia	pacific	 20	 100	 01122006
longford	business	centres	ltd	 	 	 	 united	kingdom	 32	 100	 08122006
business and net assets acquistions
sierra	executive	offices	nevada	 	 	 	 	 americas	 04	 na	 01032006
pro	executive	suites	florida	 	 	 	 	 americas	 14	 na	 28042006
el	golfglobal	business	solutions	 	 	 	 	 americas	 03	 na	 04052006
cima	spain	 	 	 	 	 emea	 03	 na	 01062006
gainsborough	business	centres	 	 	 	 united	kingdom	 44	 na	 12062006
office	concierge	 	 	 	 	 americas	 07	 na	 21062006
serviced	office	specialists	 	 	 	 	 asia	pacific	 04	 na	 01072006
westgate	perth	 	 	 	 	 asia	pacific	 04	 na	 01072006
stratis	new	jersey	 	 	 	 	 americas	 16	 na	 06072006
ceo	executive	suites	 	 	 	 	 americas	 08	 na	 13072006
hq	milwaukee	 	 	 	 	 americas	 09	 na	 19072006
laptop	lane	 	 	 	 	 americas	 21	 na	 31072006
business	quarters	 	 	 	 	 americas	 19	 na	 07082006
stratis	greensboro	 	 	 	 	 americas	 01	 na	 14082006
toledo	executive	business	centres	 	 	 	 	 americas	 02	 na	 31082006
sierra	executive	offices	colorado	springs	 	 	 	 	 americas	 –	 na	 01092006
mr	centre	 	 	 	 	 asia	pacific	 04	 na	 01092006
hq	colombia	 	 	 	 	 americas	 10	 na	 01092006
charlestown	business	centre	 	 	 	 	 americas	 01	 na	 25102006
plaza	indonesia	 	 	 	 	 asia	pacific	 04	 na	 01112006
regus	guatamala	 	 	 	 	 americas	 05	 na	 01122006
hq	costa	rica	 	 	 	 	 americas	 01	 na	 01122006
	 	 	 	 	 	 	 	 316
a	comprises	res	beijing	huanya	co	ltd	union	plaza	consulting	co	ltd	allied	pacific	investment	limited	and	huanya	shang	wu	fu	wu	limited
b	comprises	oceanic	business	centre	guardian	financial	corp	pacific	business	centre	inc	richmond	business	centre	inc	and	willingdon	business	centre	inc	 the	 acquisitions	 above	 have	 been	 aggregated	 as	 no	 single	 acquisition	 is	 material	 all	 transactions	 have	 been	 accounted	 for	 using	 the	 purchase	 method	 	 of	accounting
	 	 	 	 	 	 	 	 	 fair	value
	 	 	 	 	 	 	 	 book	value	 adjustments	 fair	value
	 	 	 	 	 	 	 	 £m	 £m	 £m
net assets acquired
intangible	assets	 	 	 	 	 	 03	 27	 30
property	plant	and	equipment	 	 	 	 	 	 69	 02	 67
other	noncurrent	assets	 	 	 	 	 	 –	 06	 06
cash	 	 	 	 	 	 22	 –	 22
other	current	assets	 	 	 	 	 	 52	 –	 52
current	liabilities	 	 	 	 	 	 88	 –	 88
noncurrent	liabilities	 	 	 	 	 	 –	 18	 18
	 	 	 	 	 	 	 	 58	 13	 71
total consideration
cash	 	 	 	 	 	 	 	 282
deferred	consideration	 	 	 	 	 	 	 	 18
directly	attributable	costs	 	 	 	 	 	 	 	 16
	 	 	 	 	 	 	 	 	 	 316
goodwill        245
61 regus report		accounts	2006 25 acquisitions continued
in	addition	contingent	consideration	up	to	a	maximum	of	£06	million	has	not	been	recognised	in	the	balance	sheet	due	to	the	uncertain	nature	of	the	 	 future	events	on	which	the	payments	are	contingent	upon	the	above	fair	values	are	provisional
if	the	above	acquisitions	had	occurred	on	1	january	2006	the	revenue	and	net	retained	loss	arising	from	these	acquisitions	would	have	been	£429	 	 million	and	£05	million	respectively	in	the	year	these	acquisitions	contributed	revenue	of	£211	million	and	a	net	retained	loss	of	£03	million
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
adjustments to provisional fair values for 2005 acquisitions
additional	 consideration	 of	 £03	 million	 was	 paid	 in	 january	 2007	 due	 to	 improved	 financial	 performance	 of	 acquisitions	 under	 contractual	 earnout	 	 provisions	this	resulted	in	an	increase	in	goodwill	of	£03	million
acquisitions completed after the balance sheet date
the	following	acquisitions	were	completed	after	31	december	2006
	 on	8	january	2007	the	group	acquired	the	assets	of	hq	san	antonio	in	the	usa	for	consideration	of	£06	million
	 on	1	february	2007	the	group	acquired	the	assets	of	elite	business	centres	in	the	usa	for	consideration	of	£11	million
	 on	28	february	2007	the	group	acquired	the	share	capital	of	agora	business	center	deutschland	gmbh	agora	business	center	lairn	gmbh	 	 	 and	agora	business	center	spitalerhof	gmbh	in	germany	for	consideration	of	£10	million
details	of	all	acquisitions	made	during	the	year	ended	31	december	2005	are	set	out	in	the	following	table
	 	 	 	 	 	 	 	 purchase
	 	 	 	 	 	 	 	 consideration	 percentage	of
	 	 	 	 	 	 	 	 including	costs	 equity	and	voting	 date	of
name	 	 	 	 	 region	 £m	 rights	aquired	 acquisition
regus	shui	on	center	hong	kong	 	 	 	 	 asia	pacific	 02	 100	 01012005
regus	jongro	ltd	south	korea	 	 	 	 	 asia	pacific	 –	 100	 01032005
vantas	ciudad	de	mexico	s	de	rl	de	cv	 	 	 	 	 americas	 30	 100	 06052005
buffalo	acquisition	sub	llc	 	 	 	 	 americas	 03	 100	 01092005
delval	acquisition	sub	llc	 	 	 	 	 americas	 62	 100	 01092005
eos	holdings	sas	formerly	hq	france	 	 	 	 	 emea	 07	 100	 30092005
regus	strategic	consulting	shanghai	ltd	 	 	 	 	 asia	pacific	 01	 100	 30092005
florida	business	centers	acquisition	sub	llc	 	 	 	 americas	 18	 100	 01112005
hq	global	workplaces	inc	formerly	sienna	 	 	 	 americas	 02	 100	 01122005
insignia	acquisition	sub	llc	and	insignia	office	centres	vancouver	inc	 	 americas	 21	 100	 01122005
regus	executive	serviced	office	shanghai	ltd	 	 	 	 asia	pacific	 03	 100	 06122005
all	of	the	acquisitions	above	are	providers	of	fully	serviced	business	centres
on	28	february	2005	the	group	acquired	the	35	minority	interest	holding	in	regus	business	centres	italia	spa	now	regus	business	centres	italia	 srl	for	£05	million	on	22	november	2005	the	group	acquired	the	40	minority	interest	holding	of	regus	international	holding	bv	for	£13	million
all	 acquisitions	 made	 in	 the	 year	 have	 been	 aggregated	 as	 no	 single	 acquisition	 is	 material	 these	 transactions	 have	 been	 accounted	 for	 using	 the	 	 purchase	method	of	accounting
	 	 	 	 	 	 	 	 	 fair	value
	 	 	 	 	 	 	 	 book	value	 adjustments	 fair	value
	 	 	 	 	 	 	 	 £m	 £m	 £m
property	plant	and	equipment	 	 	 	 	 	 22	 01	 23
fair	value	of	lease	adjustments	 	 	 	 	 	 –	 05	 05
customer	list	 	 	 	 	 	 –	 11	 11
trade	and	other	receivables	 	 	 	 	 	 29	 –	 29
trade	and	other	payables	 	 	 	 	 	 56	 –	 56
bank	loans	 	 	 	 	 	 04	 –	 04
deferred	tax	assets	 	 	 	 	 	 02	 –	 02
other	 	 	 	 	 	 05	 –	 05
	 	 	 	 	 	 	 	 02	 17	 15
goodwill        153
total consideration
satisfied	by
cash	 	 	 	 	 	 	 	 167
directly	attributable	costs	 	 	 	 	 	 	 	 01
	 	 	 	 	 	 	 	 	 	 168
the	above	fair	values	were	provisional
regus report		accounts	2006 62
notes to the accounts
continued 25 acquisitions continued
	 	 	 	 	 	 	 	 	 	 fair	value
	 	 	 	 	 	 	 	 	 	 £m
net cash outflow arising on acquisition
cash	consideration	and	directly	attributable	costs	 	 	 	 	 	 	 168
cash	and	cash	equivalents	acquired	 	 	 	 	 	 	 	 01
	 	 	 	 	 	 	 	 	 	 167
if	the	above	acquisitions	had	occurred	on	1	january	2005	the	revenue	and	net	retained	loss	arising	from	these	acquisitions	would	have	been	£96	 	 million	and	£06	million	respectively	in	the	year	ending	31	december	2005	these	acquisitions	contributed	revenue	of	£57	million	and	a	net	retained	 	 loss	of	£02	million
26 capital commitments
      	 	 	 2006	 2005
      	 	 	 £m	 £m
contracts	placed	for	future	capital	expenditure	not	provided	in	the	financial	statements	 	 	 	 54 51
these	commitments	are	principally	in	respect	of	fit	out	obligations	on	new	centres	opening	in	2007	in	addition	our	share	of	the	capital	commitments	 	 of	joint	ventures	amounted	to	£01	million	at	31	december	2006	2005	£nil	 27 noncancellable operating lease commitments
at	31	december	2006	the	group	was	committed	to	make	the	following	payments	in	respect	of	operating	leases
       2006	 	 	 2005
      motor vehicles 	 	 motor	vehicles	
      plant and 	 	 plant	and	
     property equipment total	 property	 equipment	 total
     £m £m £m	 £m	 £m	 £m
leases which expire
within	one	year	 	 2508 18 2526	 1900	 56	 1956
between	two	and	five	years	 	 7484 61 7545	 5142	 46	 5188
after	five	years	 	 3955 01 3956	 1519	 –	 1519
	 	 	 	 13947 80 14027	 8561	 102	 8663
28 contingent liabilities
the	 group	 has	 bank	 guarantees	 and	 letters	 of	 credit	 held	 with	 certain	 banks	 amounting	 to	 £278	 million	 december	 2005	 £248	 million	 a	 number	 of	 	 lawsuits	which	have	not	been	provided	for	are	pending	against	the	group	the	outcome	of	which	in	the	aggregate	is	not	expected	to	have	a	material	 effect	on	the	group
29 related parties
joint ventures
during	 the	 year	 ended	 31	 december	 2006	 the	 group	 received	 management	 fees	 of	 £18	 million	 2005	 £12	 million	 from	 its	 joint	 venture	 entities	 	 at	31	december	2006	£89	million	2005	£67	million	was	due	to	the	group	from	joint	ventures	of	which	£nil	million	of	this	debt	has	been	provided	 	 for	at	31	december	2006	2005	£03	million
uk associate
in	 the	 period	 1	 january	 2006	 and	 19	 april	 2006	 prior	 to	 the	 acquisition	 of	 the	 remaining	 shares	 in	 the	 uk	 associate	 the	 group	 received	 management	 	 fees	of	£07	million	2005	full	year	£24	million	in	addition	regus	rented	office	space	incurring	costs	of	£01	million	in	the	period	prior	to	acquisition	 	 2005	 full	 year	 £02	 million	 prior	 to	 the	 acquisition	 regus	 incurred	 interest	 of	 £01	 million	 2005	 full	 year	 £04	 million	 on	 a	 £50	 million	 loan	 from	 	 its	associate
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	need	to	 	 be	disclosed	in	accordance	with	the	requirements	of	schedule	6	of	the	companies	act	1985
63 regus report		accounts	2006 29 related parties continued
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
       	 	 2006	 2005
       	 	 £m	 £m
short	term	employee	benefits	 	 	 	 	 	 	 32	 25
share	based	payments	 	 	 	 	 	 	 15	 09
	 	 	 	 	 	 	 	 	 47	 34
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	 	 £30	million	2005	£10	million	these	awards	are	subject	to	performance	conditions	and	vest	three	years	from	the	award	date	 30 principal group companies
the	group’s	principal	subsidiary	undertakings	at	31	december	2006	their	principal	activities	and	countries	of	incorporation	are	set	out	below
name	of	undertaking	 	 	 country	of	incorporation	 principal	activity	 	of	ordinary	share	and	votes	held
regus	business	centre	sa 	 a
	 	 	 argentina	 trading	 100
regus	clarence	street	pty	ltd 	 a
	 	 	 australia	 trading	 100
regus	business	centre	melbourne	pty	ltd 	 a
	 	 australia	 trading	 100
regus	macquarie	house	pty	ltd 	 a
	 	 	 australia	 trading	 100
regus	bridge	street	pty	ltd 	 a
	 	 	 australia	 trading	 100
regus	north	sydney	pty	ltd 	 a
	 	 	 australia	 trading	 100
regus	303	collins	street	pty	limited 	 a
	 	 	 australia	 trading	 100
regus	267	st	georges	terrace	pty	limited 	 a
	 	 australia	 trading	 100
regus	council	house	pty	ltd 	 a
	 	 	 australia	 trading	 100
regus	centres	pty	ltd	 	 	 australia	 trading	 100
regus	business	centre	gmbh 	 a
	 	 	 austria	 trading	 100
regus	business	centre	wll	 	 	 bahrain	 trading	 100
regus	business	centre	nv 	 a
	 	 	 belgium	 trading	 100
skyport	bruxelles	nv	 	 	 belgium	 trading	 100
regus	belgium	nv	 	 	 belgium	 trading	 100
regus	stephanie	square	bvba	 	 	 belgium	 trading	 100
regus	boulevard	office	park	bvba	 	 	 belgium	 trading	 100
regus	astrid	plaza	bvba	 	 	 belgium	 trading	 100
regus	schuman	bvba	 	 	 belgium	 trading	 100
regus	rubens	bvba	 	 	 belgium	 trading	 100
regus	pegasus	bvba	 	 	 belgium	 trading	 100
regus	parc	atrium	bvba	 	 	 belgium	 trading	 100
regus	braine	l ’alleud	bvba	 	 	 belgium	 trading	 100
regus	do	brasil	ltda 	 a
	 	 	 brazil	 management	 100
regus	h	holdings	inc	 	 	 british	virgin	islands	 holding	 100
bulgaria	immonbul 	 a
	 	 	 bulgaria	 trading	 100
oceanic	business	centre	inc 	 a
	 	 	 canada	 trading	 100
guardian	financial	corp	inc 	 a
	 	 	 canada	 trading	 100
pacific	business	centre	inc 	 a
	 	 	 canada	 trading	 100
richmond	executive	centre	inc 	 a
	 	 	 canada	 trading	 100
willingdon	business	centre	inc 	 a
	 	 	 canada	 trading	 100
regus	canadian	holding	corporation	 	 	 canada	 holding	 100
regus	business	centres	canada	limited	partnership	 	 canada	 trading	 59
insignia	office	centres	vancouver	inc	 	 	 canada	 trading	 100
regus	business	centre	de	chile	sa 	 a
	 	 	 chile	 trading	 100
regus	business	centre	chile	ltda		 	 	 chile	 trading	 100
regus	business	services	shanghai	ltd 	 a
	 	 	 china	 trading	 100
regus	business	services	co	ltd		 	 	 china	 trading	 80
regus	business	centre	shanghai	ltd	 	 	 china	 trading	 100
regus	business	centre	beijing	ltd	 	 	 china	 trading	 100
regus	business	service	dalian	ltd	 	 	 china	 trading	 100
regus	business	service	shenzhen	ltd	 	 	 china	 trading	 100
regus	strategic	consulting	shanghai	ltd	 	 	 china	 trading	 100
regus	executive	serviced	office	shanghai	ltd	 	 china	 trading	 100
regus report		accounts	2006 64
notes to the accounts
continued 30 principal group companies continued
name	of	undertaking	 	 	 country	of	incorporation	 principal	activity	 	of	ordinary	share	and	votes	held
regus	business	consultancy	beijing	ltd	 	 	 china	 trading	 100
beijing	huanya	business		conference	centre	ltd	 	 china	 trading	 100
union	plaza	consulting	co	ltd	 	 	 china	 trading	 100
allied	pacific	investment	limited	 	 	 china	 trading	 100
huanya	shang	wu	fu	wu	limited	 	 	 china	 trading	 100
regus	columbia	ltda 	 a
	 	 	 columbia	 trading	 100
regus	costa	rica	srl 	 a
	 	 	 costa	rica	 trading	 100
regus	business	centre	sro 	 a
	 	 	 czech	republic	 trading	 100
regus	empiria	sro 	 a
	 	 	 czech	republic	 trading	 100
regus	holding	denmark	as	 	 	 denmark	 holding	 100
regus	sydhavn	aps	 	 	 denmark	 trading	 100
regus	kobenhavn	aps	 	 	 denmark	 trading	 100
regus	tuborg	aps	 	 	 denmark	 trading	 100
regus	business	centre	trading	fzco 	 a
	 	 	 dubai	 trading	 100
regus	business	centre	llc	egypt 	 a
	 	 	 egypt	 trading	 100
regus	ltd 	 a
	 	 	 england	 holding	 100
regus	management	ltd 	 a
	 	 	 england	 management	 100
regus	centres	ltd 	 a
	 	 	 england	 holding	 100
regus	investments	ltd	 	 	 england	 holding	 100
regus	business	centres	holding	ltd	 	 	 england	 holding	 100
regus	business	centres	trading	ltd	 	 	 england	 holding	 100
regus	h	holdings	ltd	 	 	 england	 holding	 100
regus	h	uk	 	 	 england	 holding	 100
regus	g	ltd	 	 	 england	 trading	 100
mos	holdings	ltd	 	 	 england	 trading	 100
regus	management	uk	ltd	 	 	 england	 management	 100
regus	centres	uk	ltd	 	 	 england	 holding	 100
longford	business	centres	ltd	 	 	 england	 trading	 100
regus	holdings	uk	ltd	 	 	 england	 holding	 100
regus	uk	ltd	 	 	 england	 trading	 100
regus	business	centres	ltd	 	 	 england	 trading	 100
regus	city	limited	 	 	 england	 trading	 100
regus	business	services	ltd	 	 	 england	 trading	 100
mos	ltd	 	 	 england	 trading	 100
regus	gb	ltd	 	 	 england	 trading	 100
regus	south	ltd	 	 	 england	 trading	 100
regus	caledonia	ltd	 	 	 england	 trading	 100
regus	finland	oy 	 a
	 	 	 finland	 trading	 100
regus	paris	sas 	 a
	 	 	 france	 trading	 100
regus	roissy	sas 	 a
	 	 	 france	 trading	 100
regus	opera	sas 	 a
	 	 	 france	 trading	 100
hq	global	france	sarl 	 a
	 	 	 france	 holding	 100
regus	centre	d’affaires	sas 	 a
	 	 	 france	 trading	 100
regus	business	centre	sas 	 a
	 	 	 france	 trading	 100
vendome	sas	 	 	 france	 trading	 100
grand	arch	sas	 	 	 france	 trading	 100
antipolis	sas	 	 	 france	 trading	 100
montpellier	sas	 	 	 france	 trading	 100
provence	sas	 	 	 france	 trading	 100
regus	gmbh		co	kg 	 a
	 	 	 germany	 trading	 100
regus	business	centre	deutschland	gmbh 	 a
	 	 germany	 trading	 100
regus	netspace	germany	gmbh 	 a
	 	 	 germany	 trading	 100
regus	hellas	sa 	 a
	 	 	 greece	 trading	 100
regus	guatamala	srl 	 a
	 	 	 guatamala	 trading	 100
regus	business	centre	ltd 	 a
	 	 	 hong	kong	 trading	 100
regus	business	services	hong	kong	ltd 	 a
	 	 hong	kong	 trading	 100
regus	hong	kong	ltd 	 a
	 	 	 hong	kong	 trading	 100
regus	kalman	kft 	 a
	 	 	 hungary	 trading	 100
regus	emke	kft 	 a
	 	 	 hungary	 trading	 100
regus	kft		 	 	 hungary	 trading	 100
65 regus report		accounts	2006 30 principal group companies continued
name	of	undertaking	 	 	 country	of	incorporation	 principal	activity	 	of	ordinary	share	and	votes	held
regus	business	centre	pvt	ltd 	 a
	 	 	 india	 trading	 100
regus	office	centre	services	pvt	ltd 	 a
	 	 	 india	 trading	 100
regus	business	centre	bangalore	pvt	ltd 	 a
	 	 india	 trading	 100
regus	business	centre	gurgaon	pvt	ltd 	 a
	 	 	 india	 trading	 100
murphy	road	bc	pvt	ltd 	 a
	 	 	 india	 trading	 100
kasturba	road	bc	pvt	ltd 	 a
	 	 	 india	 trading	 100
regus	business	centre	chennai	pvt	ltd 	 a
	 	 	 india	 trading	 100
regus	business	centre	rectangle	pvt	ltd 	 a
	 	 india	 trading	 100
regus	business	centre	dynasty	pvt	ltd 	 a
	 	 	 india	 trading	 100
pt	regus	centres	indonesia 	 a
	 	 	 indonesia	 trading	 100
regus	ireland	ltd 	 a
	 	 	 ireland	 trading	 100
regus	franchise	international	ltd		 	 	 ireland	 trading	 100
europa	business	centre	ltd		 	 	 ireland	 trading	 100
regus	business	centres	ltd 	 a
	 	 	 israel	 trading	 100
regus	business	centre	srl		 	 	 italy	 trading	 100
regus	business	centres	italia	srl		 	 	 italy	 trading	 100
regus	japan	kk 	 a
	 	 	 japan	 trading	 100
regus	business	centre	nagoya	kk 	 a
	 	 	 japan	 trading	 100
regus	europe	ltd	 	 	 jersey	 holding	 100
regus	luxembourg	sa		 	 	 luxembourg	 trading	 100
regus	centres	sdn	bhd 	 a
	 	 	 malaysia	 trading	 100
regus	malaysia	sdn 	 a
	 	 	 malaysia	 trading	 100
regus	india	holdings	limited 	 a
	 	 	 mauritius	 holding	 100
vantas	cd	de	mexico	s	de	rl	de	cv	 	 	 mexico	 holding	 100
regus	business	centre	sa	de	cv	 	 	 mexico	 trading	 100
regus	services	sa	de	cv	 	 	 mexico	 trading	 100
centros	corporativos	de	mexico	sa	de	cv	 	 	 mexico	 trading	 100
centro	de	negocios	ciudad	de	mexico	sa	de	cv	 	 mexico	 trading	 100
centro	de	negocios	polanco	sa	de	cv	 	 	 mexico	 trading	 100
regus	maroc	sarl		 	 	 morocco	 trading	 100
regus	netherlands	bv 	 a
	 	 	 netherlands	 holding	 100
regus	business	centres	bv	 	 	 netherlands	 holding	 100
regus	international	holdings	bv	 	 	 netherlands	 trading	 100
satellite	business	centre	schiphol	bv	 	 	 netherlands	 trading	 100
skyport	international	bv	 	 	 netherlands	 trading	 100
wtc	zuiplien	bv	 	 	 netherlands	 trading	 100
skyport	amsterdam	bv	 	 	 netherlands	 trading	 100
regus	amsterdam	bv	 	 	 netherlands	 management	 100
regus	hojel	bv	 	 	 netherlands	 trading	 100
regus	weena	bv	 	 	 netherlands	 trading	 100
regus	atrium	bv	 	 	 netherlands	 trading	 100
regus	atlas	bv	 	 	 netherlands	 trading	 100
regus	parkstraat	bv	 	 	 netherlands	 trading	 100
regus	zen	bv	 	 	 netherlands	 trading	 100
regus	eindhoven	bv	 	 	 netherlands	 trading	 100
regus	arnhem	bv	 	 	 netherlands	 trading	 100
regus	hilversum	bv	 	 	 netherlands	 trading	 100
regus	brainpark	bv	 	 	 netherlands	 trading	 100
regus	amersfoort	bv	 	 	 netherlands	 trading	 100
regus	tetra	bv	 	 	 netherlands	 trading	 100
regus	zurich	tower	bv	 	 	 netherlands	 trading	 100
regus	breda	bv	 	 	 netherlands	 trading	 100
regus	schiphol	rijk	bv	 	 	 netherlands	 trading	 100
regus	teleport	tower	bv	 	 	 netherlands	 trading	 100
regus	amstel	business	park	bv	 	 	 netherlands	 trading	 100
regus	rijswijk	bv	 	 	 netherlands	 trading	 100
regus	equinox	i	bv	 	 	 netherlands	 trading	 100
regus	equinox	ii	bv	 	 	 netherlands	 trading	 100
regus	business	centre	norge	as 	 a
	 	 	 norway	 trading	 100
regus	business	centre	ibsen	as	 	 	 norway	 trading	 100
regus	business	centre	skogen	as	 	 	 norway	 trading	 100
regus	business	centre	nydalen	as	 	 	 norway	 trading	 100
regus report		accounts	2006 66
notes to the accounts
continued 30 principal group companies continued
name	of	undertaking	 	 	 country	of	incorporation	 principal	activity	 	of	ordinary	share	and	votes	held
regus	business	centre	panama	sa 	 a
	 	 	 panama	 trading	 100
regus	business	centre	peru	sa 	 a
	 	 	 peru	 trading	 100
regus	business	centre	inc	 	 	 philippines	 trading	 100
regus	business	centre	sp	z	oo 	 a
	 	 	 poland	 trading	 100
regus	plaza	sp	z	oo 	 a
	 	 	 poland	 trading	 100
regus	wisniowy	sp	z	oo 	 a
	 	 	 poland	 trading	 100
regus	mokotow	sp	z	oo 	 a
	 	 	 poland	 trading	 100
regus	metropolitan	sp	z	oo 	 a
	 	 	 poland	 trading	 100
regus	business	centre	lda 	 a
	 	 	 portugal	 trading	 100
llc	regus	business	centre 	 a
	 	 	 russia	 trading	 100
regus	business	centre	avrora	llc 	 a
	 	 	 russia	 trading	 100
regus	business	centre	capital	plaza	llc 	 a
	 	 russia	 trading	 100
regus	embankment	tower	llc 	 a
	 	 	 russia	 trading	 100
regus	business	centre	atrium	llc 	 a
	 	 	 russia	 trading	 100
regus	singapore	business	centre	pte	ltd 	 a
	 	 singapore	 trading	 100
regus	centres	pte	ltd 	 a
	 	 	 singapore	 trading	 100
regus	nac	pte	ltd 	 a
	 	 	 singapore	 trading	 100
regus	business	services	marina	pte	ltd 	 a
	 	 	 singapore	 trading	 100
regus	business	centre	bratislava	sro 	 a
	 	 	 slovakia	 trading	 100
regus	southern	africa	pty 	 a
	 	 	 south	africa	 trading	 100
regus	business	centre	pty	ltd	 	 	 south	africa	 trading	 100
regus	international	holdings	bv	 	 	 south	africa	 trading	 100
regus	business	centre	sandton	pty	ltd	 	 	 south	africa	 trading	 100
regus	business	centre	durban	pty	ltd	 	 	 south	africa	 trading	 100
regus	business	centre	foreshore	pty	ltd	 	 	 south	africa	 trading	 100
regus	business	centre	midrand	pty	ltd	 	 	 south	africa	 trading	 100
regus	business	centre	mowbray	pty	ltd	 	 	 south	africa	 trading	 100
regus	business	centre	woodmead	pty	ltd		 	 south	africa	 trading	 100
rmg	south	africa	ltd	 	 	 south	africa	 management	 100
regus	korea	ltd 	 a
	 	 	 south	korea	 trading	 100
regus	jongro	ltd 	 a
	 	 	 south	korea	 trading	 100
regus	samsungdong	limited 	 a
	 	 	 south	korea	 trading	 100
regus	business	centre	sa 	 a
	 	 	 spain	 trading	 100
regus	miraflores	sl	 	 	 spain	 trading	 100
business	centre	gothenburg	ab 	 a
	 	 	 sweden	 trading	 100
business	centre	sweden	ab 	 a
	 	 	 sweden	 trading	 100
regus	garda	ab 	 a
	 	 	 sweden	 trading	 100
regus	lilla	bommen	ab 	 a
	 	 	 sweden	 trading	 100
regus	uppsala	ab 	 a
	 	 	 sweden	 trading	 100
regus	solna	strand	ab 	 a
	 	 	 sweden	 trading	 100
regus	business	centre	s	sa 	 a
	 	 	 switzerland	 trading	 100
regus	centres	thailand	ltd 	 a
	 	 	 thailand	 trading	 100
office	advantage	ltd 	 a
	 	 	 thailand	 trading	 100
regus	tunisie	sarl 	 a
	 	 	 tunisia	 trading	 100
regus	is	merkezi	isletmeciligi	ltd 	 a
	 	 	 turkey	 trading	 100
regus	business	centres 	 a
	 	 	 ukraine	 trading	 100
regus	corporation	llc 	 a
	 	 	 usa	 holding	 100
regus	h	holdings	corp	 	 	 usa	 holding	 100
stratis	business	centers	llc	 	 	 usa	 trading	 100
regus	southeast	investments	llc	 	 	 usa	 trading	 100
insignia	acquisitions	sub	llc	 	 	 usa	 trading	 100
buffalo	acquisitions	sub	llc	 	 	 usa	 trading	 100
delval	acquisition	sub	llc	 	 	 usa	 trading	 100
rgn	–	south	florida	llc	 	 	 usa	 trading	 100
florida	business	center	acquisition	sub	llc	 	 usa	 trading	 100
regus	group	–	north	dallas	llc	 	 	 usa	 trading	 100
rgn	–	new	jersey	llc	 	 	 usa	 trading	 100
rgn	–	midwest	llc	 	 	 usa	 trading	 100
regus	dc	llc	 	 	 usa	 trading	 100
regus	management	group	llc	 	 	 usa	 management	 100
rgn	–	ll	llc	 	 	 usa	 trading	 100
67 regus report		accounts	2006 30 principal group companies continued
name	of	undertaking	 	 	 country	of	incorporation	 principal	activity	 	of	ordinary	share	and	votes	held
rgn	–	northeast	llc	 	 	 usa	 trading	 100
hq	global	holdings	llc	 	 	 usa	 holding	 100
hq	global	workplaces	llc	 	 	 usa	 trading	 100
hq	subsidiaries	llc	 	 	 usa	 holding	 100
hq	network	systems	inc	 	 	 usa	 trading	 100
regus	business	center	llc	 	 	 usa	 trading	 100
regus	international	services	sa	 	 	 uruguay	 holding	 100
regus	international	services	llc	 	 	 uruguay	 management	 100
regus	business	centre	venezuela	ca	 	 	 venezuela	 trading	 100
regus	centre	vietnam	ltd 	 a
	 	 	 vietnam	 trading	 100
a	shares	held	directly	by	regus	group	plc
investments	 in	 group	 subsidiaries	 are	 held	 at	 cost	 all	 of	 which	 are	 included	 within	 the	 consolidated	 results	 the	 principal	 activity	 of	 all	 trading	 	 companies	is	the	provision	of	global	workplace	solutions	 31 key judgmental 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	noncurrent	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	noncurrent	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	carrying	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	 cashgenerating	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	fair	value
deferred tax assets 
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	if	 	 the	entity	has	made	a	taxable	profit	in	the	previous	year	and	is	forecast	to	make	a	profit	in	the	forthcoming	year	deferred	tax	assets	are	generally	not	 	 recognised	for	the	period	in	excess	of	12	months	from	the	yearend
onerous lease provisions
we	have	identified	certain	poor	performing	centres	where	the	lease	is	considered	onerous	ie	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	 exit	 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	that	can	be	measured	with	certainty	at	31	december	2006
regus report		accounts	2006 68
notes to the accounts
continued 69 regus report		accounts	2006
company balance sheet
	 	 	 	 	 	 	 	 as at	 as	at
	 	 	 	 	 	 	 	 31 dec 2006	 31	dec	2005
	 	 	 	 	 	 	 	 uk gaap	 uk	gaap
	 	 	 	 	 notes	 	 	 £m	 £m
investments
investment	in	subsidiaries	 	 	 	 1	  4308	 3077
current assets
debtors	 	 	 	 	  1082	 930
deferred	finance	fees	 	 	 	 	 	 	 11	 –
cash	at	bank	and	in	hand	 	 	 	 	  102	 96
	 	 	 	 	 	 	 	 1195	 1026
total assets       5503	 4103
creditors falling due within one year    2   72	 12
total assets less current liabilities       5431	 4091
creditors falling due in more than one year      	 loans	 	 	 	 	 	 	 446	 –
amounts owed to group undertakings       508	 256
total liabilities       1026	 268
net assets       4477	 3835
capital and reserves	 	 	 	 3
share	capital	 	 	 	 	 	 	 492	 492
share	premium	account	 	 	 	 	 	 	 –	 1535
other	reserves	 	 	 	 	 	 	 01	 01
profit	and	loss	account	 	 	 	 	 	 	 3984	 1807
shareholder funds	 	 	 	 	 	 	 4477	 3835
accounting policies
the	 following	 accounting	 policies	 have	 been	 applied	 consistently	 in	 dealing	 with	 items	 which	 are	 considered	 material	 in	 relation	 to	 the	 company’s	 	 financial	statements
basis of preparation
the	 financial	 statements	 have	 been	 prepared	 in	 accordance	 with	 applicable	 united	 kingdom	 accounting	 standards	 and	 under	 the	 historical	 cost	 	 accounting	rules
the	company	is	included	in	the	consolidated	accounts	of	regus	group	plc
the	 company	 has	 taken	 advantage	 of	 the	 exemption	 contained	 in	 frs	 8	 and	 has	 therefore	 not	 disclosed	 transactions	 or	 balances	 with	 entities	 which	 	 form	part	of	the	group
in	accordance	with	frs	1	revised	the	company	is	exempt	from	the	requirement	to	prepare	a	cash	flow	statement	within	these	financial	statements	 	 as	 permitted	 by	 section	 230	 of	 the	 companies	 act	 1985	 the	 profit	 and	 loss	 account	 of	 the	 company	 has	 not	 been	 included	 as	 part	 of	 these	 accounts	 	 the	company’s	profit	for	the	financial	year	was	£642	million	2005	£07	million
investments
fixed	asset	investments	are	stated	at	cost	less	provision	for	impairment
taxation
the	 charge	 for	 taxation	 is	 based	 on	 the	 profit	 for	 the	 year	 and	 takes	 into	 account	 taxation	 deferred	 because	 of	 timing	 differences	 between	 the	 treatment	 	 of	 certain	 items	 for	 taxation	 and	 accounting	 purposes	 deferred	 tax	 is	 recognised	 without	 discounting	 in	 respect	 of	 all	 timing	 differences	 between	 the	 	 treatment	of	certain	items	for	taxation	and	accounting	purposes	which	have	arisen	but	not	reversed	by	the	balance	sheet	date	except	as	otherwise	 	 required	by	frs	19
regus group plc  
parent company accounts accounting policies continued
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	rate	ruling	at	the	balance	sheet	date	and	the	gains	or	losses	on	translation	are	included	 in	the	profit	and	loss	account
financial guarantee contracts
where	 the	 company	 enters	 into	 financial	 guarantee	 contracts	 to	 guarantee	 the	 indebtedness	 or	 liabilities	 of	 other	 companies	 within	 its	 group	 the	 company	considers	these	to	be	insurance	arrangements	and	accounts	for	them	as	such	in	this	respect	the	company	treats	the	guarantee	contract	 as	a	contingent	liability	until	such	time	as	it	becomes	probable	that	the	company	will	be	required	to	make	a	payment	under	the	guarantee
1 investments
	 	 	 	 	 	 	 	 	 £m
at	1	january	2005	 	 	 	 	 	 	 	 3043
additions	 	 	 	   	 44
provision	for	impairment	 	 	 	   	 10
at 31 december 2005        3077
at	1	january	2006	 	 	 	 	 	 	 	 3077
additions	 	 	 	   	 1286
provision	for	impairment	 	 	 	   	 55
at 31 december 2006        4308
the	 company’s	 principal	 subsidiary	 undertakings	 at	 31	 december	 2006	 their	 principal	 activities	 and	 countries	 of	 incorporation	 can	 be	 found	 in	 note	 30	 	 of	the	group	accounts	of	regus	group	plc
2 creditors falling due within one year
	 	 	 	 	 	 	 	 2006	 2005
	 	 	 	 	 	 	 	 £m	 £m
amounts	due	to	group	undertakings	 	 	 	   16	 10
loans	 	 	 	 	 	 	 48	 other	creditors	 	 	 	   08	 02
        72	 12
3 capital and reserves
	 	 	 	 	 share	 capital	 profit	and	 profit	and
	 	 	 	 share	 premium	 redemption	 loss	reserve	 loss	reserve
	 	 	 	 capital	 account	 reserve	 distributable	 nondistributable	 total
	 	 	 	 £m	 £m	 £m	 £m	 £m	 £m
at	1	january	2005	 	 	 493	 1535	 –	 10	 1791	 3829
preference	share	redemption	 	 	 01	 –	 01	 01	 –	 01
retained	profit	for	year	 	 	 –	 –	 –	 07	 –	 07
at 31 december 2005   492 1535 01 16 1791 3835
at	1	january	2006	 	 	 492	 1535	 01	 16	 1791	 3835
conversion	of	share	premium	into	distributable	reserves	 a
		 –	 1535	 –	 1535	 –	 –
retained	profit	for	year	 	 	 –	 –	 –	 127	 769	 642
at 31 december 2006   492 – 01 1424 2560 4477
a	on 	 28	 june	 2006	 the	 company	 executed	 a	 court	 order	 granting	 the	 cancellation	 of	 the	 shore	 premium	 account	 under	 a	 scheme	 of	 arrangement	 the	 effect	 of	 this	 was	 to	 	 	 increase	by	the	same	amount	the	distributable	reserves	details	of	the	scheme	of	arrangement	were	contained	within	the	notice	of	the	agm	dated	3	april	2006
regus report		accounts	2006 70
regus group plc  
parent company accounts continued 71 regus report		accounts	2006
4 capital commitments and contingent liabilities
at	 31	 december	 2006	 the	 company	 had	 no	 annual	 commitments	 under	 operating	 leases	 2005	 £nil	 capital	 commitments	 2005	 £nil	 or	 contingent	 	 liabilities	2005	£nil
5 directors and employees
the	 remuneration	 of	 all	 the	 directors	 was	 borne	 by	 regus	 management	 limited	 details	 are	 available	 in	 the	 group	 remuneration	 report	 on	 pages	 	 27	to	33	 the	company	had	no	employees	during	the	year	2005	nil	 regus report		accounts	2006 72
	 	 	 	 americas	 emea	 asia	pacific	 united	kingdom	 other	 total
    2006 2006	 2006	 2006	 2006	 2006
mature
workstations	 	 	 45911 24626 4281 – – 74818
occupancy		 	 	 87 79 82 – – 84
revenue	£m	 	 	 2764 1782 299 – 07 4852
contribution	£m	 	 	 831 553 117 – 07 1508
2005 expansions
workstations	 	 	 3878 1727 2220 – – 7825
occupancy		 	 	 85 81 67 – – 79
revenue	£m	 	 	 187 140 119 – – 446
contribution	£m	 	 	 48 44 34 – – 126
2006 expansions
workstations	 	 	 2608 479 2508 18498 – 24093
occupancy		 	 	 76 55 61 77 – 75
revenue	£m	 	 	 96 23 91 1266 – 1476
contribution	£m	 	 	 13 03 09 209 – 202
closures
workstations	 	 	 214 307 – – – 521
occupancy		 	 	 82 69 – – – 74
revenue	£m	 	 	 12 14 – – – 26
contribution	£m	 	 	 01 06 – – – 05
total
workstations   52611 27139 9009 18498 – 107257
occupancy    86 79 72 77 – 82
revenue £m   3059 1959 509 1266 07 6800
contribution £m   865 600 160 209 07 1841
revpaw £   5813 7219 5647 6843 – 6340
segmental reporting –  
management basis 73 regus report		accounts	2006
	 	 	 	 americas	 emea	 asia	pacific	 united	kingdom	 other	 total
	 	 	 	 2005	 2005	 2005	 2005	 2005	 2005
mature
workstations	 	 	 45825	 24291	 4407	 –	 –	 74523
occupancy		 	 	 81	 73	 79	 –	 –	 79
revenue	£m	 	 	 2548	 1590	 289	 –	 26	 4453
contribution	£m	 	 	 607	 433	 102	 –	 26	 1168
2005 expansions
workstations	 	 	 1054	 450	 935	 –	 –	 2439
occupancy		 	 	 70	 61	 50	 –	 –	 61
revenue	£m	 	 	 44	 27	 37	 –	 –	 108
contribution	£m	 	 	 04	 –	 05	 –	 –	 01
closures
workstations	 	 	 –	 122	 133	 –	 –	 255
occupancy		 	 	 –	 56	 87	 –	 –	 72
revenue	£m	 	 	 –	 03	 10	 –	 –	 13
contribution	£m	 	 	 –	 –	 01	 –	 –	 01
2006 closures
workstations	 	 	 432	 1008	 –	 –	 –	 1440
occupancy		 	 	 91	 63	 –	 –	 –	 72
revenue	£m	 	 	 24	 35	 –	 –	 –	 59
contribution	£m	 	 	 04	 01	 –	 –	 –	 03
total
workstations   47311 25871 5475 – – 78657
occupancy    81 73 75 – – 78
revenue £m   2616 1655 336 – 26 4633
contribution £m   615 432 98 – 26 1171
revpaw £   5529 6397 6137 – – 5890
notes
	 the	mature	business	is	defined	as	those	centres	owned	and	operated	at	least	12	months	prior	to	1	january	2006	and	therefore	have	a	full	12	month	comparative
	 expansions	include	new	centres	opened	and	acquired	businesses
	 workstation	numbers	are	calculated	as	the	weighted	average	for	the	year
	 the	results	above	exclude	nonrecurring	items	which	are	analysed	in	note	6	contribution	after	nonrecurring	items	was	£1841	million	2005	£1172	million regus report		accounts	2006 74
	 	 	 	 	 full year ended	 full	year	ended	 full	year	ended	 full	year	ended	 full	year	ended
	 	 	 	 	 31 dec 2006	 31 	 dec	 2005	 31 	 dec	 2004	 31 	 dec	 2003	 31 	 dec	 2002
	 	 	 	 	 ifrs	 ifrs	 ifrs	 uk 	 gaap	 uk 	 gaap
	 	 	 	 	 £m	 £m	 £m	 £m	 £m
revenue	 	 	 	 6800	 4633	 3122	 2566	 4356
cost	of	sales	before	nonrecurring	costs	 	 	 	 4959	 3462	 2582	 2397	 4133
nonrecurring	cost	of	sales	 	 	 	 –	 01	 66	 –	 570
cost	of	sales	 	 	 	 4959	 3461	 2648	 2397	 4703
gross profitloss centre contribution	 	 	 	 1841	 1172	 474	 169	 347
administration	expenses	before	nonrecurring	expenses	 	 	 1019	 649	 442	 387	 611
nonrecurring	administration	expenses		 	 	 	 –	 50	 20	 64	 351
administration	expenses	 	 	 	 1019	 699	 462	 451	 962
operating profitloss	 	 	 	 822	 473	 12	 282	 1309
share	of	posttax	loss	of	joint	ventures	 	 	 	 01	 02	 07	 02	 55
share	of	posttax	profitloss	of	associate	 	 	 	 12	 02	 30	 37	 –
profitloss before financing costs	 	 	 	 833	 473	 25	 321	 1364
profit	on	sale	of	subsidiaries	 	 	 	 –	 –	 –	 66	 227
finance	expense	 	 	 	 80	 108	 37	 44	 54
finance	income	 	 	 	 22	 22	 13	 –	 –
profitloss before tax for the year	 	 	 	 775	 387	 49	 299	 1191
tax	creditcharge	 	 	 	 48	 61	 26	 21	 55
profitloss after tax for the year	 	 	 	 823	 448	 23	 278	 1246
attributable	to
equity	shareholders	of	the	parent	 	 	 	 823	 445	 24	 287	 1258
minority	interests	 	 	 	 –	 03	 01	 09	 12
	 	 	 	 	 823	 448	 23	 278	 1246
earningsloss per ordinary share eps
basic	p	 	 	 	 84p	 45p	 03p	 47p	 219p
diluted	p	 	 	 	 83p	 45p	 –	 –	 –
weighted	average	number	of	shares	outstanding	thousands	 	 984792	 984792	 859702	 574805	 564052
balance sheet data as at 31 december
intangible	assets	 	 	 	 2631	 1610	 1332	 –	 –
property	plant	and	equipment	 	 	 	 1276	 766	 761	 755	 1063
deferred	tax	assets	 	 	 	 354	 219	 62	 –	 –
trade	and	other	receivables	 	 	 	 1727	 1003	 760	 623	 593
cash	and	cash	equivalents	 	 	 	 809	 741	 823	 850	 586
total assets	 	 	 	 6797	 4339	 3738	 2228	 2242
current	liabilities	 	 	 	 3405	 2299	 1824	 1342	 1493
noncurrent	liabilities	 	 	 	 1030	 433	 888	 342	 501
provisions	for	liabilities	and	charges	 	 	 	 117	 79	 89	 526	 572
equity	minority	interests	 	 	 	 –	 –	 06	 11	 02
equity	shareholders	funds’deficit	 	 	 	 2245	 1528	 943	 29	 322
total liabilities and shareholders’ funds 	 	 	 	 6797	 4339	 3738	 2228	 2242
results	are	presented	under	ifrs	for	2006	2005	and	2004	if	the	prior	years	were	to	be	restated	then	the	main	adjustments	would	be	in	respect	of	 	 lease	accounting
five year summary 75 regus report		accounts	2006
secretary and registered office
tim	regan	company	secretary
regus	group	plc
3000	hillswood	drive	 hillswood	business	park
chertsey	 surrey	kt16	0rs	 registered number 
4868977
registrars 
lloyds	tsb	registrars
the	causeway
worthing
west	sussex	bn99	6da
auditor 
kpmg	audit	plc	 8	salisbury	square	 london	ec4y	8bb	 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  
us law 
davis	polk		wardwell	 99	gresham	street	 london	ec2v	7ng	 corporate stockbrokers 
dresdner	kleinwort	wasserstein	 20	fenchurch	street
london	ec3p	3db
credit	suisse	first	boston
one	cabot	square
london	e14	4qj
reservations
uk	telephone	 0870	880	8484
us	telephone	 1877regus87	or
	 001	954	331	 1647
websites
wwwreguscom
wwwhqcom
corporate directory regus report		accounts	2006 76
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
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 	 workstation	expressed	as	a	percentage
occupied workstations
workstations	 which	 are	 in	 use	 by	 clients	 this	 is	 expressed	 as	 a	 weighted	 average	 	 for	the	year	 organic growth
growth	attributable	to	the	mature	portfolio 	 and	from	new	business	centres	established 	 by	regus
revpaw
total	 revenue	 per	 available	 workstations	 revenueavailable	workstations
revpow
total	revenue	per	occupied	workstation
wipow
workstation	 income	 per	 occupied	 workstation
glossary designed		produced	by																																wwwforepointcouk
the regus group brands
printed	by	ctd	an	iso	14001	registered	company
on	 revive	 5050	 silk	 –	 supplied	 by	 robert	 horne	 paper	 co
an	 fsc	 certified	 product	 which	 contains	 50	 recycled	 fibre
the	fsc	logo	identifies	products	which	contain	wood	from
well	managed	forests	certified	in	accordance	with	the	rules	 of	the	forest	stewardship	council regus group plc
3000 hillswood drive
hillswood business park
chertsey
surrey kt16 0rs
united kingdom
wwwreguscom


Summary:
 chief executive’s review
mark dixon
expanding our network
our growth in 2006 has been exceptional during the last financial year 
we opened 218 centres inclusive of 91 centres in the uk which added a 
further 37522 workstations to our capacity our expansion programme will  
continue in 2007 with openings planned across all four regions  
in addition we will continue to add complementary businesses which meet 
our strict investment criteria several of these acquisitions have allowed us to 
move into new markets such as airport locations and corporate outsourcing 
and develop a wider customer base government and support agencies as 
well as facilitating a broader service for our existing clients  
innovative products and services
one of our core skills is our ability to anticipate the changing demands of our 
customers we therefore focus our research on developing new products 
and services which meet the future needs of our customers  
some examples of recent developments include
 network access – our membership programme which provides  
 members with immediate unlimited access to our global network of  
 business centres  
 managed office solutions – a fully outsourced office solution for larger  
 clients where we manage the day to day running of the office  
 regus express – a retailbusiness centre which caters for the needs of  
 the mobile worker currently located at airport locations within the usa  
 our intention is to implement this concept in other airports and travel hubs 
 in major cities across the world  
investment in systems and technology
the growth of the business in 2006 has emphasised the need for regus 
to have best in class systems to support its unique market position these 
systems will not only be used for the benefit of our internal needs but as a 
platform to bring a broader range of services to our client  
a flexible secure and scaleable it infrastructure is critical to our clients 
needs bandwidth on demand guaranteed quality of service increased 
security and higher service level performance are some of the benefits that 
we are now able to offer to our clients  
the scale of our operations are being brought to bear in the sourcing and 
management of our it services bringing benefits to our customers while 
providing further differentiation from our competitors  
as an example of this we are partnering with some of the leading names  
in it and telecoms to enable us to develop next generation converged  
network solutions cns the centralised nature of cns provides regus 
with economies of scale lower cost of ownership speed to market and 
a wider range of services that enable greater revenue opportunities and 
provides our customers with  better control of their cost bases  
additionally regus operates the world’s largest videoconferencing  
network in terms of geographical reach the need for our customers to 
maximise their productivity and the increasing environmental concerns 
around business travel have driven continued growth of this valuable  
service consequently we intend to make further investments in this area  
to maximise its growing importance to our clients 
regus report  accounts 2006 04
t his has been another outstanding 12 months 
for the group with record results for the 
third year in succession we have delivered 
strong disciplined growth and improved 
performance in all of our key business metrics 
including revenues profit and earnings per 
share our performance in 2006 demonstrates 
the benefits of our longer term approach to 
the development of the business we continue 
to improve financial performance through 
growing our network of business centres 
and developing new products and services 
to meet the evolving needs of our clients  
strategy and objectives 
our strategy and objectives are simple – to use 
our skills and resources to generate profitable 
growth and cash
we achieve these objectives through the following 
activities operational excellence
our commitment to operational excellence is one of our key differentiators 
our business centre staff adopt globally defined standards of business 
processes and procedures a rolling programme of quality audits are  
conducted at least annually in each centre and a scoring system helps 
ensure that centre teams focus on achieving the highest standard of  
operational excellence across our network in this way we can ensure 
clients experience a high quality and consistent level of service irrespective 
of location  
in addition to developing systems our back office teams support our client 
facing staff with the efficient administration of the business our finance 
human resource billing and procurement teams operate on a regional basis 
allowing us to realise consistency of delivery and scale efficiencies  
developing our brand
our brands and business concept are recognised and respected globally a 
consistent high quality product delivery is available in all of the world’s most 
in demand cities providing business executives the regus experience on a 
global basis 
in 2006 we invested in tv and radio advertising in the uk and usa –  
specifically targeted at building awareness of the regus brand our  
development of regus express and network access card has allowed  
us to further promote our brand  
in addition to our flagship regus brand we also operate under our hq 
brand primarily in the usa we continue to monitor options and opportunities 
for developing our products under various trademarks as part of the regus 
group network  
developing our team members
the skills enthusiasm and commitment of our people are key to regus’ 
success we recognise the need to recruit high quality individuals and to 
develop the potential of our staff in order to provide a positive customer 
experience to our clients  
our internal training programmes include regular operational updates  
online training modules and classroom based training at our global school  
of excellence in dallas usa during 2006 we trained 238 general and  
operational managers in dallas various locations across the uk and 
mexico city in addition 254 team members completed a three week  
induction course our staff have taken over 10000 online training modules 
equivalent to nearly 3000 hours of training
t he future 
the group maintained strong growth in 2006 driven by all three parts  
of our strategy our core business centre operations delivered a solid  
performance mobile and home working continues to grow at rates in  
excess of 20 and our corporate outsourcing business is poised for  
significant growth in the medium to long term looking ahead we will  
focus on driving margin improvement in our mature business and continue 
to invest in new markets and products to drive the long term growth of  
the business  
as such i am confident that the group will continue to deliver attractive 
rates of growth and cash generation in the year ahead  
mark dixon
chief executive officer
19 march 2007
05 regus report  accounts 2006
f uture industry trends 
we believe we are well placed to take advantage 
of the favourable trends in our industry and these 
will contribute to the continued development of 
group these include
 fragmented market
 regus has the only global serviced office network  
 with no other players having more than 75 centres  
 our geographic footprint spans 790 centres across  
 64 countries and we will continue to seek opportunities 
 to grow our network and acquire complementary  
 businesses enabling us to move into new markets  
 and develop a wider customer base  
 growth in home and mobile working
 the development of a mobile workforce has gathered 
 pace and employers and employees are increasingly  
 adopting flexible working practices our meeting room 
 videoconferencing and virtual office products offer  
 solutions to these workers and through our regus  
 express outlets we are bringing these solutions even  
 closer to our client base  
 continued adoption of outsourcing
 companies large and small are realising the benefits  
 of outsourcing their office management in order to  
 concentrate on their core business regus helps  
 customers to minimise the complexity of property  
 management through providing clients with a single  
 property and service provider outsourcing can help  
 our customers reduce their cost base and provide  
 them with flexibility to respond to their changing  
 business needs