regus group plc annual report and accounts 2007
workwithoutboundaries
regus group plc annual report and accounts 2007 workwithoutboundaries
regus group plc
3000 hillswood drive
hillswood business park
chertsey
surrey kt16 0rs
united kingdom
wwwreguscom our mission
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
our vision
we aim to be the number one in all markets in which
we operate through our controlled and disciplined
expansion strategy
our values
the commitment loyalty and efforts of our team members
play a key role in differentiating us from our competitors
regus group key facts
400000
customers
155270
workstations globally
918
business centres
70 countries
83
average occupancy
4730
employees
worldwide
1 click
away from our
customers
corporate directory
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
equiniti limited
aspect house
spencer road
lancing
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
glossary
available workstations
the total number of workstations in the group also termed
inventory during the year this is expressed as a weighted
average at period ends the absolute number is used
bric economies
economies of brazil russia india and china
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
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 12month period prior to the start of
the ﬁnancial year which therefore have a full year comparative
“n11” economies
economies of bangladesh egypt indonesia iran mexico nigeria
pakistan philippines south korea turkey and vietnam
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 business
centres newly established by regus
revpaw
total revenue per available workstations revenueavailable
workstations
revpow
total revenue per occupied workstation
wipow
workstation income per occupied workstation
designed and produced by black sun plc 44 020 7736 0011 contents
annual and interim reports
in electronic format online
to receive shareholder communications
electronically in future including your
annual report and interim report visit
wwwreguscominvestor
for more information visit
wwwreguscom
directors’ report – business review
financial highlights 2
chairman’s statement 3
group overview 4
chief executive’s review 6
business review
americas 10
united kingdom 12
emea 14
asia pacific 16
corporate responsibility 18
financial review 20
directors’ report – corporate governance
board of directors 24
other statutory information 26
governance framework 28
remuneration report 35
independent auditors’ report 42
financial statements
consolidated income statement 44
consolidated balance sheet 45
consolidated cash flow statement 46
consolidated statement of changes
in equity 47
notes to the accounts 48
parent company accounts 82
shareholder information
segmental analysis
– management basis 86
five year summary 88
corporate directory and glossary ibc
reguscom financial highlights
delivering the promise
2wwwreguscom
directors’ report business review
revenue £m gross proﬁt £m operating proﬁt £m
cash from operations £m proﬁt after tax £m basic earnings per share p
200
400
600
800
1000
2007 2006 2005
60
120
180
240
300
2007 2006 2005
30
60
90
120
150
2007 2006 2005
50
100
150
200
250
2007 2006 2005
24
48
72
96
120
2007 2006 2005
4
8
12
16
20
2007 2006 2005
£8624m
268
£2519m
368
£1226m
491
£2111m
590
£1036m
259
105p
250 regus group plc annual report and accounts 2007 3
chairman’s statement
we remain focused on growth
i am pleased to report that regus has delivered another year of record results
this year surpassing £100 million of posttax earnings for the ﬁrst time
the business model continues to work well
with proﬁtability growth from our mature sites
and recent expansions driving our ability to both
return cash to stakeholders as well as invest in
further capacity growth
in the year to 31 december 2007 we grew
our average available workstations by 239
at the same time as increasing capacity we
have also returned £206 million to shareholders
and still increased our net cash balance from
£234 million to £1014 million
financial performance
group revenue has increased by 268 to
£8624 million and gross proﬁt by 368 to
£2519 million excluding the impact of new
centre growth the “like for like” improvement
was 70 and 209 respectively this overall
result was driven by average occupancy
increasing to 827 from 818 in 2006 and
revenue per available workstation “revpaw”
increasing 23 from £6340 to £6487
earnings proﬁt after tax grew by 259 to
£1036 million and basic earnings per share
increased by 250 to 105p
sustaining growth
our strategic expansion remains a controlled
blend of organic growth and carefully targeted
acquisitions during the ﬁnancial year we
opened 146 centres for a total investment
of £687 million
looking forward we expect to be able to
continue this balanced expansion programme
dividend
given this strong performance the board is
recommending a 67 increase in the total
dividend per share to 10p for the year
subject to the approval of shareholders at the
2008 agm this ﬁnal dividend will be paid on
30 may 2008 to shareholders on the register
at the close of business on 2 may 2008
our stakeholders
the group recognises its economic social
and environmental impacts on society through
its operations and interaction with all key
stakeholders including our investors
customers landlords suppliers and employees
accordingly we continue to be focused on
and committed to managing our business in
a responsible and positive manner to address
these impacts critical to achieving this will
be our people who continue to play a pivotal
role in delivering our goals and ensuring our
customers experience continually high
standards i personally want to extend my
thanks to all of our staff for their continued
commitment and efforts throughout 2007
looking forward
while clearly aware of potential adverse market
conditions we believe our business model is
capable of delivering further proﬁtable growth
in 2008
john matthews
chairman
john matthews 4wwwreguscom
directors’ report business review
group overview
we are the world’s leading provider
of outsourced workplace solutions
region
revenue
£2081 m
644
£83m
566
operating proﬁt
• investing in our centres and in targeted
marketing
• driving enquiry development and conversion
24
united kingdom
operations
the business in the uk operates in
123 centres during the year we opened
20 new centres and closed two centres
financial highlights
opportunities for growth
region
revenue
£3363m
99
£482m
118
operating proﬁt
• maximising yield in our existing centres
• growing our portfolio in key cities where
we have minimal representation
39
americas
operations
the region has 493 centres across
13 countries in north and south america
during the year we added 71 centres
and closed eight centres
financial highlights
opportunities for growth
contribution to group revenue contribution to group revenue regus group plc annual report and accounts 2007 5
expanding our footprint
new countries in 2007
• bulgaria • jordan • kenya • new zealand • qatar reguscom ﬁnd out more at
region
revenue
£777m
527
£1 25m
1049
operating proﬁt
• continue our aggressive growth plan
• improving the efficiency of our current
portfolio of centres
9
asia paciﬁc
operations
our business in asia operates in 92 centres
across 13 countries during the year we
opened 25 new centres
financial highlights
opportunities for growth
region
revenue
£2403m
227
£433m
653
operating proﬁt
• further improving occupancy and margin
in our existing centres
• expanding our network into new markets
28
emea
operations
the region has 210 centres across
41 countries during the year we opened
30 new centres and closed eight centres
financial highlights
opportunities for growth
contribution to group revenue contribution to group revenue 6wwwreguscom
directors’ report business review
chief executive’s review
a focused business model
our strategy remains one of measured and sustainable growth
by keeping focused on our consistent long term
strategy – that of measured sustainable growth
– we have been able to demonstrate our ability to
deliver continued beneﬁts for all of our stakeholders
through the ongoing implementation of our
core strategy of controlled disciplined growth
– via both organic expansion in existing and
new markets and acquisitions – the group
has delivered substantial workstation growth
in all regions during 2007 average workstations
grew 25681 or 239 to 132938 during 2007
the total number of available workstations
at 31 december 2007 was 142601 if
nonconsolidated workstations arising from
franchise operations joint ventures and
managed ofﬁces are also taken into account
the total number of workstations under
management increases to 155270
we have seen the number of centres we operate
increase by 128 including franchises joint
ventures and managed ofﬁces new locations
include kolkata in india winnipeg in canada
lille in france turin in italy and we opened our
ﬁrst centres in bulgaria qatar jordan kenya
and new zealand the largest regus centre the
regus silver centre in shanghai with over 1400
workstations opened for business in january 2007
strategy and objectives
throughout 2007 we have remained clear on
our strategic approach which at its core seeks
to ensure continued proﬁtable growth and
cash generation driven by a scalable business
model with considerable potential for further
development with a substantial existing
footprint of established performing centres
forming a network across 70 countries we
have been able to leverage these assets for
long term growth and value creation for
shareholders and also to continue to grow
in line with our strategic short and longer
term goals
central to this strategy is driving continued
improvement in
• our brand and products
• our systems and technology
• our processes
mark dixon
1
2
3
business model
a scalable business model with considerable potential
for further development
future prospects
we believe that we are in a good position to capitalise
on our flexible product offering which makes us an ideal
choice for many companies in times of uncertainty
the unique nature of our business will ensure
that we continue to drive sustainable growth
strategy
our consistent long term strategy is that of measured
sustainable growth to maximise benefits for our stakeholders
2007 has been another very successful year
for the group with excellent growth in revenues
proﬁtability earnings per share and cash
generation all resulting in a fourth successive
year of record results i am particularly pleased
to have passed for the ﬁrst time the milestone
of achieving £100 million of earnings regus group plc annual report and accounts 2007 7
and more generally in our knowledge of existing
and future markets our people will continue to
be the engineers of change in this respect
brand and product development
by continuing to develop and reﬁne our product
and service portfolio we recognise that our
customers’ needs are continually evolving
in different ways around our global network
our core business continues to be driven by
regionally targeted campaigns which focus
on local speciﬁcs but also leverage global
strategies examples of such targeted
campaigns which have driven our brand and
product recognition include 12 million mail
shots to homes in the uk and 870000 targeted
email communications to prospective ofﬁce
customers across the 41 countries in emea
in addition during 2007 we launched our
business lounge concept in both the uk
and us and have continued to invest in our
membership card initiative we are conﬁdent
that as our scale increases the ability for
regus to offer continued enhanced operational
beneﬁts to our customers will also increase
i am delighted to see our card membership
levels doubling in 2007
systems and technology
we have also continued to invest in our systems
and technology
the rollout of our internally developed inventory
reservation and billing system across our
worldwide network has proceeded well by
31 december 2007 we had 495 of our centres
utilising this technology in their day to day
operations this system will deliver tangible
improvements in our customers’ day to day
experiences with regus
the second half of 2007 saw a refresh of our
website – part of our objective of developing
further the regus brand this has already
started to show measurable improvements
in our customers’ website experience notably
in site navigation as well as driving an increase
in enquiry conversion levels globally
finally regus continues to operate the world’s
largest videoconferencing network from the
perspective of global reach we have continued
to see an increase in demand and usage for
this product during 2007 reﬂecting what we
believe to be an increasing recognition by our
customers of environmental concerns coupled
with a desire for a costeffective business driver
1
our priorities for 2008 a leading strategy for growth
expanding our network
we will continue to grow our network in key cities
where we have minimal representation expand into
new markets and within the asia pacific market
continue to consolidate and develop our position
as the largest provider of serviced offices
innovative products and services
the relaunched membership card recognises the
mobility demands of our customers and we will
continue to extol the clear benefits that this initiative
provides to our thousands of customers worldwide
investments in systems and technology
the refresh of our website has now encompassed
33 countries with another 26 in test and due for
implementation in early 2008 we anticipate the
implementation and use of our internally developed
inventory reservation and billing system within our
entire network by the end of 2008
generating
proﬁtable
growth
developing
our team
members
expanding
our
network
innovative
products
and
services
investments
in systems
and
technology
operational
excellence
developing
our brand 8wwwreguscom
directors’ report business review
2
a globally diversiﬁed business regus value proposition
mobile and home working leader
• virtual office videoconferencing
and meeting rooms
• business lounges membership
cards and day offices
for the customer
• cheaper opex
• zero capex
• flexible
• immediate no fuss
• reliable outsourced solution
• national regional global
for the landlord
• allows small customers
• market rent or better
• incubator
• amenity
• regus brand
• immediate and easy
business centre leader
• 918 centres in 70 countries
• 142601 workstations
corporate outsourcing
• training room
• managed offices
processes
during 2007 we have further developed our
business processes and procedures throughout
our network
the rollout of our internally developed inventory
reservation and billing system has been a
signiﬁcant enabler of this allowing us to drive
consistent structured processes across all our
regions of operation we see beneﬁts in this
scalable model not only to our existing centres
but also to all future new centre openings
and acquisitions
we have implemented improvements to our
human resources hr systems in certain
of our regions allowing us to capture more
effectively all hr data in one place with
substantial process beneﬁts for employees
and for managing our growing workforce an
example of this is the successful implementation
of hrnet a webenabled system throughout
emea which has allowed us to move away
from a large number of local limited functionality
manually managed hr applications
throughout the year we have also continued to
ensure our growth plans are supported by strong
administration frameworks encompassing local
ﬁnance hr procurement and operations teams
where required whilst at the same time
employing subject matter experts in regional
centres or head ofﬁce a central operations
function based in the uk and established in
2007 has also allowed us to identify areas of
operational compliance improvement throughout
our network with the result being stronger
controls and tangible revenue beneﬁts
people
our results in 2007 would not have been
possible had it not been for our 4730 team
members throughout the world and i extend
my thanks to each of them for their commitment
and enthusiasm their continued customer
focused ethos and approach have seen
improvements in operational execution and
levels of satisfaction throughout our network
we will continue to seek to employ the best
candidates and to encourage their growth and
development through vesting appropriate levels
of responsibility and challenge for each role
we recognise our employees’ achievements in a
variety of ways be it through internal recognition
or in ongoing career development within our
regional training centres during 2007 regus
invested a substantial amount in the training
and development of its people with several
signiﬁcant programmes offered including regus group plc annual report and accounts 2007 9
• structured training for newly hired general
managers “gms” and operational managers
“oms” throughout our regions over
485 gms and oms completed this threeweek
induction course during the year
• sales and operations training for gms and
oms all regions
• online learning programmes accessed and
delivered via the web
• management development for area directors
“ads” in the americas to be launched
globally in 2008 and
• general human resources and supervisory
training led by the emea hr team
the outputs of these courses have been
signiﬁcant with positive feedback from
participants coupled with tangible outputs
in increased sales levels shortly thereafter
regus has also invested in establishing
professional trainers in asia paciﬁc emea and
the uk to complement the internal training team
in the americas and we anticipate continuing to
strengthen the global training teams’ resources
and global reach during 2008
outlook
while clearly the current economic climate
remains uncertain we believe we are in a
good position to continue growing proﬁtably
our global footprint means that we can capitalise
on opportunities wherever they exist and in
particular in the developing markets our
revenues in the “bric” economies and the
“n11” grew 457 and 286 respectively in
2007 and we expect these signiﬁcant growth
rates to continue
as the business has grown inherent risk
has been extensively diversiﬁed as we have
acquired a broader range of customers across
geographies business segments and size
categories our cost base is also signiﬁcantly
more ﬂexible as we increase the number of
ﬂexible leases in our portfolio and we reduce
our exposure to longer leases
the year has started well with enquiries showing
no sign of weakness we believe that we are in
a good position to capitalise on our ﬂexible
product offering which makes us an ideal choice
for many companies in times of uncertainty
overall we look forward to generating further
proﬁtable growth in 2008
mark dixon
chief executive ofﬁcer
3
future prospects
united kingdom
• investing in our centres
and in targeted marketing
• driving enquiry development
and conversion
• attractive low risk
growth opportunities
americas
• maximising yield in our existing centres
• growing our portfolio in key cities
where we have minimal representation
• continued efficiency improvements
emea
• further improving occupancy
and margin in our existing centres
• expanding our network into low
risk low capex emerging markets
asia paciﬁc
• continue our aggressive growth
plan – adding second tier cities
• improving the efficiency of our
current portfolio of centres
• continued use of participation
leases to reduce risk
reguscom ﬁnd out more at revenue £m
80
160
240
320
400
2007 2006 2005
10wwwreguscom
directors’ report business review
business review
10wwwreguscom
americas
opportunities in 2008
maximisation of yield in our existing centres and continued
efficiency improvements within our administrative support
group strategy
the strategy for the americas is to maximise yield in our existing
centres whilst targeting growth in key cities in the usa south
america and canada
group key performance indicators 2007 2006
total contribution £1027m £865m
mature margin 34 30
mature occupancy 87 87
reguscom ﬁnd out more at
performance
our business in the americas comprises canada
usa and south america and has 493 centres
across 13 countries with our main business in
the usa operating 399 centres during the year
we added 71 centres and closed eight centres
which increased the average number of
workstations from 52611 in 2006 to 61160 in
2007 acquisitions accounted for 35 of these
new centres with the balance coming from the
opening of 36 fully owned centres the region
delivered revenues of £3363 million – up 99
on 2006 – and achieved an average mature
occupancy of 87 through the year 2006 87
outlook
looking ahead into 2008 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
trends towards ﬂexible working practices and
strengthening environmental awareness both act
to further increase the demand for our product
2007
contribution to group 41
gross proﬁt £1027m 187 workwithoutboundaries
customer mobility
americas
during 2007 we
launched our business
world concept in the us
and have continued to
invest in our membership
card initiative card
membership levels
doubled in 2007 revenue £m
50
100
150
200
250
2007 2006
12wwwreguscom
business review
12wwwreguscom
united kingdom
opportunities in 2008
to continue to drive enquiries and conversion levels combined
with targeted marketing
group strategy
to improve margins and occupancy within existing centres and
to target low risk growth opportunities
group key performance indicators 2007 2006
total contribution £414m £209m
mature margin 22 16
mature occupancy 84 77
reguscom ﬁnd out more at
performance
our business in the uk operates in 123 centres
during the year we opened 20 new centres and
closed two centres which increased the average
number of workstations from 18498 in 2006
to 27905 in 2007 acquisitions accounted for
two of these new centres with the balance of
18 coming from the opening of six fully owned
centres and 12 managed centres the region
delivered revenues of £2081 million – up 236
on the full year 2006 – and achieved an average
occupancy in the 2006 acquired centres of 84
through the year 2006 77 postacquisition
on 19 april 2006 the remaining 58 interest in
regus uk was acquired for a gross consideration
including fees of £894 million at the date of
acquisition our uk business operated 91 centres
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 84 during 2007 a restructured
management team renewed investment in our
centres and in targeted marketing and a drive
on enquiry development and conversion has
helped to achieve this improved performance
outlook
looking ahead in 2008 we will continue to drive
margin improvements through higher enquiries
and conversion levels and to pursue attractive
low risk growth opportunities
2007
contribution to group 16
gross proﬁt £414m 98
 from date of acquisition of remaining 58 interest
directors’ report business review workwithoutboundaries
product innovation
united kingdom
during 2007 we
launched our business
lounge concept in the
uk recognising the
mobility demands of
our customers revenue £m
60
120
180
240
300
2007 2006 2005
14wwwreguscom 14wwwreguscom
emea
opportunities in 2008
expansion into new emerging markets outside the existing
41 countries of the region
group strategy
to further improve occupancy and margin in our existing centres
and expand our network into low risk low capex emerging markets
group key performance indicators 2007 2006
total contribution £803m £600m
mature margin 36 32
mature occupancy 87 79
reguscom ﬁnd out more at
performance
our business in europe the middle east and
africa emea encompasses 210 centres across
41 countries during the year we opened 30
new centres and closed eight centres which
increased the average number of workstations
from 27139 in 2006 to 29125 in 2007
acquisitions accounted for three of these new
centres with the balance of 27 coming from
organic growth – 22 fully owned centres
two joint ventures and three managed centres
we opened centres in four new markets –
bulgaria qatar jordan and kenya the region
delivered revenues of £2403 million – up 227
on 2006 and achieved an average mature
occupancy of 87 through the year 2006 79
outlook
looking ahead into 2008 we look to further improve
occupancy and margin in our existing centres
and expand our network into new markets
2007
contribution to group 32
gross proﬁt £803m 338
business review
directors’ report business review workwithoutboundaries
emerging markets
emea
during 2007 we opened
centres in new markets
in bulgaria qatar jordan
and kenya revenue £m
20
40
60
80
100
2007 2006 2005
16wwwreguscom 16wwwreguscom
asia paciﬁc
opportunities in 2008
to continue our aggressive growth plan by adding second tier
cities and new countries and improving efficiency and occupancy
in our existing centres
group strategy
to consolidate and develop our position as the largest provider
of serviced offices across all asia pacific markets
group key performance indicators 2007 2006
total contribution £275m £160m
mature margin 40 36
mature occupancy 82 77
reguscom ﬁnd out more at
performance
our business in asia operates in 92 centres
across 13 countries during the year we opened
25 new centres which increased the average
number of workstations from 9009 in 2006 to
14748 in 2007 acquisitions accounted for
three of these new centres with the balance of
22 coming from the opening of 21 fully owned
centres and one managed centre during the
year we opened one centre in the new market
of new zealand the region delivered revenues
of £777 million – up 527 on 2006 – and
achieved an average mature occupancy of
82 through the year 2006 77
outlook
looking ahead into 2008 we will continue to
consolidate and develop 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
customer enquiries
2007
contribution to group 11
gross proﬁt £275m 719
business review
directors’ report business review workwithoutboundaries
global expansion
asia paciﬁc
during 2007 we opened
25 new centres including
the new market of new
zealand our largest
centre the regus silver
centre in shanghai with
over 1400 workstations
opened for business in
january 2007 18wwwreguscom
directors’ report business review
corporate responsibility
driving competitive advantage
we increasingly view corporate responsibility as central to our business strategy
and as a critical driver to the sustainable growth of our business
the global footprint which regus has established
brings with it considerable responsibilities and
we are committed to managing our business
in a responsible manner continually identifying
opportunities to make a positive contribution
to our local communities
corporate responsibility committee
in 2007 we established a formal corporate
responsibility “cr” committee to oversee cr
strategy encompassing members from a variety
of areas in our business the committee’s aim is
focused on ensuring that we take a sustainable
approach to business considering the
economic social and environmental impacts
which matter most to our key stakeholders
the remit of the committee is primarily to provide
strategic direction and guidance on all aspects
of business practice and responsibility and
ensure consistent implementation
the corporate responsibility committee will
meet at a minimum quarterly to
• assess social environmental and ethical risks
• develop cr strategy
• review our social ethical and environmental
policies and practices
• identify opportunities to improve the
effectiveness and sustainability of the business
• review agree monitor and report on corporate
responsibility key performance indicators
• improve stakeholder awareness
in 2007 we also commissioned an independent
third party report focused on identifying what cr
practices could lead to a sustainable competitive
advantage this report was primarily focused
on our uk operations but its core outputs are
scalable to our global network the underlying
conclusions of the report identiﬁed the following
people for employees career advancement
structured training worklife balance and a
clearer recognition of their efforts would lead to
greater employee cr engagement
environment and sustainability a core priority
amongst customers and suppliers is a clearly
communicated policy and the implementation
of simple tools systems and processes for
reducing the group’s environmental impact
business partners a desire in both our customers
and suppliers for building longer term relationships
which support their business and values
community clearer and more deﬁned policies
need to be implemented with respect to
philanthropic and community initiatives and
ensuring that these are communicated
accordingly partly as a result of this research
and partly due to our underlying commitment
to positive development in cr we anticipate
that our cr priorities for 2008 will include
• establishing and communicating a more formal
cr framework
• implementing an updated environmental policy
and guidelines
• continuing the development of employee
talent planningappraisal processes and
career development initiatives
• continued customer focus – maintaining high
quality services and expanding our offerings
• identifying more clearly and consistently the
core philanthropic and community initiatives
regus is committed to supporting
people
with over 4700 employees throughout our
70 countries most of whom are interfacing
directly with our customers our people are
critical to our success our goals are aligned
with those cr practices most likely to drive
employee engagement
our primary aim remains to maximise and
develop the skills of our team members regus group plc annual report and accounts 2007 19
providing clear opportunities for career
advancement and recognition whilst at the same
time ensuring an appropriate worklife balance
the global roll out of management training for
our area directors in 2008 coupled with more
local hr and supervisory training demonstrates
our commitment to a clearly deﬁned training
framework driven by a growing global training
team over the past 18 months investment in this
training has exceeded £750000 or approximately
£750 for each of the team members who have
received this formal training
a groupwide code of ethics sets out a number
of fundamental principles which all our companies
and employees are required to follow and are
complemented by local practices which recognise
regional speciﬁcs we continue to operate a
conﬁdential whistle blowing service to support
employees who want to eliminate wrongdoing
in the workplace and monitor the ﬁndings of
this service both immediately at a local level
and quarterly at a senior management level
to ensure an adequate response
environment and sustainability
the focus of our environmental efforts continues
to be to minimise potentially harmful impacts
of our business wherever we can although our
operations already have a limited impact due to
the nature of our business the product offerings
we can deliver have potentially signiﬁcant
incremental positive impacts to the environment
• videoconferencing we commenced an
assessment of the number of air miles saved
during 2007 and estimate that over 10 million
air miles were saved during the last ﬁve
months of 2007
• regional national global networks with an
increased focus on mitigating pressure on
existing transport infrastructures our network
of ofﬁces regionally and globally continues
to offer signiﬁcant scope for reducing the
environmental impact of longer distance
journeys and times
• ofﬁces we have continued to push for
enhanced use of lowwattage light bulbs
a greater array of recycling options and the
sourcing of energy and utilities from suppliers
focused on energy conservation standards
throughout our network
business partners
our customers are our business and developing
long term relationships with them is a critical
facet of our strategy we have continued to
monitor the levels of customer satisfaction
throughout our business via questionnaires
and exit interviews and this feedback forms
an integral part of our centres’ ongoing
performance tracking our “mystery shopper”
initiative continued throughout 2007 and has
driven tangible improvements in performance
attitudes and behaviour of customerfacing staff
by providing tangible feedback about each sales
person’s customer handling technique it has
also allowed us to embed greater consistency
in the standards in and around each centre
we also promote long term relationships with
our business partners and our operations work
closely with suppliers to maintain the service
expected by our customers
community
we have continued to be active supporters of
local communities and charities be this through
direct fundraising initiatives by our employees
through reduced price space provision or via
other means we are focused on providing
longer term beneﬁts through maintaining an
ongoing relationship with our charities and
communities which allows the company
participants and recipients to beneﬁt from clearly
experiencing and developing these partnerships
direct beneﬁciaries of company and employee
led initiatives during the year have included
• great causes and debra via the 2007 london
triathlon £15000 of direct contributions
• worldwide fund for nature and make a
wish foundation australia ofﬁce and service
beneﬁts at reduced or no cost
• the rainbow children’s hospice uk all funds
from recycling toner cartridges
• st michael’s school uganda computers
for schools 20wwwreguscom
directors’ report business review
financial review
market leading growth
we have produced another record performance delivering earnings of over
£100 million with our net cash also now exceeding £100 million
the business model continues to work well
in addition to seeing proﬁtability improvements
from the sites we opened and acquired in 2006
we are continuing to see the proﬁtability of
our older more mature sites improve this has
enabled us to both grow the strength of our
balance sheet while at the same time continue
our expansion programme which then forms
the basis for future proﬁtable growth
taking the business as a whole we grew its
capacity as measured by the weighted average
number of workstations by 239 to 132938
at the same time the average occupancy of
these workstations increased from 818 to
827 and we sold each one on average for 14
more this was despite the effect of adverse
exchange rate movements at constant exchange
rates the price increase would have been 53
these factors have delivered a £404 million
increase in operating proﬁt rising from
£822 million in 2006 to £1226 million in 2007
revenue and gross proﬁt centre contribution
revenue for the group rose 268 to
£8624 million 2006 £6800 million and
gross proﬁt centre contribution increased
368 to £2519 million 2006 £1841 million
this movement can be analysed in the table below
stephen gleadle
revenue
£8624m
268
average no of workstations
132938
239
average mature occupancy
87
 3 points
revpaw
£6487
23
£ million revenue gross proﬁt  of revenue
31 december 2006 6800 1841 271
impact of exchange rates 248 71
31 december 2006 at constant exchange rates 6552 1770 270
growth in mature business 611 415
growth in centres added in 2006 1157 397
growth in centres added in 2007 366 47
centres closed 62 16
31 december 2007 8624 2519 292 regus group plc annual report and accounts 2007 21
sterling strengthened in value against the us
dollar by an average of 87 in 2007 when
compared to 2006 although this was partially
offset by a weakening of sterling against the
euro this reduced our revenue by £248 million
and contribution by £71 million however this
exchange impact was then more than offset
by improvements in the underlying business
our mature or “like for like” business increased
its revenues by £611 million and contribution
by £415 million driven by improvements in
occupancy and price
centres that were added in 2006 contributed a
further £1157 million of revenue and £397 million
of contribution heavily driven by the impact of
the uk acquisition and its continued growth
the group purchased the remaining 58 interest
in regus uk and acquired full control of the
ﬁnancial and operating policies of the uk
business on 19 april 2006
the overall increase arising from 2006 centres
can be analysed
£ million revenue gross proﬁt
improvement arising
from uk 742 232
improvements elsewhere
in the group 415 165
overall improvement
from 2006 centres 1157 397
new centres added in 2007 both organic and by
acquisition contributed a further £366 million of
revenue but reduced contribution by £47 million
due to the normal startup losses incurred in
establishing new centres
the year on year impact of centre closures was to
reduce revenue by £62 million and contribution
by £16 millon
taking all this together contribution margins
improved from 271 to 292
administrative expenses
administrative expenses increased by
£274 million in 2007 compared to 2006 although
remained at a constant 15 of revenues
this investment reﬂects the year on year impact
of the uk acquisition as well as substantial and
continued investment in our infrastructure in our
people and in process efﬁciencies with a particular
focus on leveraging savings in procurement and
centre operations as our network continues to
expand in addition there has been considerable
investment in enhancing our marketing
capabilities incorporating a relaunch of our
website recruitment of a core number of sector
experts and a strengthening of our regional
teams to ensure a consistent marketing
message globally
operating proﬁt
operating proﬁt was £1226 million 2006
£822 million representing a margin of 142
2006 121
share of proﬁt in joint ventures and associates
in the 12 months ended 31 december 2007 the
share of joint venture proﬁts attributable to regus
increased to £08 million 2006 £01 million loss
this reﬂected the improving proﬁtability in mature
joint ventures in the americas and emea regions
as well as improved performance from joint
ventures in the middle east that commenced
trading at the end of 2006 these improvements
were partially offset by normal losses from new
joint ventures commenced in 2007
during the period 1 january 2006 to 19 april
2006 the uk business was equity accounted as
an associate following the acquisition of the uk
business on 19 april 2006 the business became
fully consolidated as a subsidiary 22wwwreguscom
directors’ report business review
financing costs
financing costs can be analysed as follows
£ million 2007 2006
interest payable on bank loans 44 46
interest receivable 34 18
finance lease interest 02 05
noncash amortisation of deferred ﬁnancing fees 05 04
noncash uk acquisition related 23 21
total net ﬁnancing costs 40 58
the lower interest payable reﬂects the reduction
in the group’s average debt over the year largely
offset by the impact of rising interest rates in the
group’s primary markets the average libor rate
for 2007 was 585 compared to 479 for 2006
the substantial increase in interest receivable
reﬂects a continued increase in the group’s
average free cash balance to £814 million
£497 million in 2006 and the average increase
in global interest rates year over year the
movement in the cash balance is explained
in the cash ﬂow section below
underlying ﬁnance lease costs have fallen in
line with the reduction in ﬁnance leases the
amortisation of deferred ﬁnancing fees relates
to loan arrangement costs incurred for the new
credit facilities entered into during 2006 to fund
the uk acquisition and reﬂects a full 12 months
of amortisation in 2007 compared to a partial
period in 2006 the unwinding of discounted fair
value adjustments on the regus uk acquisition
resulted in a noncash net ﬁnancing charge of
£23 million in the period to 31 december 2007
an increase compared to 2006 reﬂecting the
timing of the uk acquisition in 2006
taxation
the continued improvements in the group
results have meant that there are less
unrecognised losses available to be offset in
the income statement against rising current
tax charges consequently the group has
recognised a £158 million tax charge for the
period representing an accounting tax rate of
13 of proﬁt before tax compared to a credit
of £48 million in the comparative period
the current tax charge for the period was
£223 million 2006 £81 million charge – an
increase from 10 to 19 of proﬁt before tax
deferred tax was a £65 million credit in the
period 2006 £129 million credit which includes
the adverse impact of the reduction in the uk
corporation tax rate on the deferred tax asset
on a cash tax basis the group paid £161 million
in tax this represents approximately 135 of
proﬁt before tax compared to 85 in the same
period in 2006
earnings per share
earnings per share for the year increased
250 from 84p to 105p the average number
of shares in issue during the year reﬂected the
repurchase of 12853001 regus shares in june
and december 2007 and therefore reduced to
980961569 2006 984791524
cash ﬂow
strong operating cash ﬂow remains a prime
feature and continued objective of the group
the improvement in operating proﬁt and an
improved working capital performance resulted
in the operating cash ﬂow increasing by
£783 million to £2111 million 2006
£1328 million regus group plc annual report and accounts 2007 23
the group’s cash ﬂow statement has been summarised below
£ million 2007 2006
cash generated from operations 2111 1328
tax and net interest paid 169 101
maintenance capex 298 197
free cash ﬂow 1644 1030
new centre openings 509 267
uk acquisition – 614
other acquisitions and jv investments 178 271
loan repayment share buyback and dividend 376 230
exercises of share options 05 –
change in cash 586 108
opening cash 809 741
change in cash 586 108
effect of exchange rates on cash held 34 40
closing cash 1429 809
the strong cash performance has enabled the group to invest in growth speciﬁcally during the
year 101 new centres were opened at a cost of £509 million a further 43 business centres plus
two joint ventures were acquired for a net cash consideration of £178 million
to highlight during the year the group has
• repaid to our investors £206 million through both our share buyback and dividend activity
• reduced our debt by £170 million
and still ended the year with an increased cash position
this can be can be analysed as follows
£ million 2007 2006
cash and cash equivalents 1429 809
bank and other loans 403 542
finance leases 15 39
unamortised ﬁnancing fees 03 06
financial assets 1014 234
overall the group enters 2008 in a strong ﬁnancial position to capitalise on opportunities as they arise
stephen gleadle
chief financial ofﬁcer
overall the group enters 2008 in a strong ﬁnancial position
to capitalise on opportunities as they arise 24wwwreguscom
directors’ report corporate governance
board of directors
an experienced team
1 2
3 4
5 6
7
the board has a blend of experience demonstrating both strength and depth regus group plc annual report and accounts 2007 25
1 john matthews
c
chairman
john 63 was appointed chairman in
july 2002 and had previously been an
independent director since joining regus
in 1995 he is currently an independent
director of diploma plc minerva plc
rotork plc and sdl plc a chartered
accountant he was until 2007 chairman
of crest nicholson plc and prior to
that had been a managing director of
county natwest and deputy chairman
of beazer plc john is chairman of the
nomination committee
2 mark dixon
chief executive ofﬁcer
mark 48 founded regus in 1989 and has
been chief executive for over 18 years
leading the group’s worldwide expansion
programme and the development of
pioneering workplace solutions prior
to 2007 mark was located in the usa
overseeing the integration of the hq
global workplaces acquisition and has
now relocated to europe to oversee
the development of the business in the
uk and its full integration back into the
group prior to regus he established
businesses in the retail and wholesale
food industry
6 martin robinson
abc
independent nonexecutive director
martin 45 was appointed a
nonexecutive director of regus in
august 2002 martin is chairman of
center parcs uk chairman of alta
velocita a director of figaro llp and
a director of the supervisory board of
eurodisney sca until 2007 he was
chairman of health club holdings and
is a former ceo and chairman of center
parcs europe 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 martin is chairman of the
remuneration committee
7 stephen east
abc
independent nonexecutive director
stephen 50 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 immediate
past president of the association of
corporate treasurers he was also a
nonexecutive director of star energy
group plc until 29 february 2008
stephen became chairman of the
audit committee on 10 march 2008
3 stephen gleadle
chief financial ofﬁcer
stephen 49 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
4 rudy lobo
chief operating ofﬁcer
rudy 52 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’s 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
5 roger orf
abc
independent senior nonexecutive
director
roger 55 was appointed a nonexecutive
director of regus in 1998 roger is currently
managing director of citi 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 roger was chairman of the
audit committee until 10 march 2008
notes
a member of the audit committee
b member of the remuneration committee
c member of the nomination committee the directors present their annual report and the audited
ﬁnancial statements of the company and its subsidiaries
for the year ended 31 december 2007
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 24
and 25
details of the directors’ interests and shareholdings are given
in the remuneration report on pages 35 to 41
the corporate responsibility statement corporate governance
statement remuneration report and director statements 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 the 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
6 to 23 respectively address
• review of the company’s business pages 10 to 17
• trends and factors likely to affect the future development
performance and position of the business page 9
• development and performance during the ﬁnancial year
pages 20 to 22
• position of the business at the end of the year page 23
• principal risks and uncertainties page 30
the corporate responsibility report on pages 18 and 19 includes
the requirements of the business review in respect of
• environmental matters
• employees
• social and community issues
the corporate governance statement includes a description of the
principal risks and uncertainties facing the company on page 30
the director statements on page 34 include the statutory
statement in respect of disclosure to auditors
results and dividends
proﬁt before tax for the year was £1194 million
2006 £775 million
the directors are pleased to recommend the payment of a ﬁnal
dividend for 2007 of 10 pence per share 2006 06 pence per
share the total dividend of £95 million 2006 £59 million
is expected to be paid on 30 may 2008 to shareholders on
the register at the close of business on 2 may 2008
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 2007 the number of creditor days outstanding
for the group was 25 days 2006 19 days and the company
nil days 2006 nil days
employees with disabilities
the group treats applicants for employment with disabilities
with full and fair consideration according to their skills and
capabilities should an employee become disabled during their
employment efforts are made to retain them in their current
employment or to explore opportunities for their retraining
or redeployment elsewhere within the group
other statutory information
directors’ report corporate governance
26wwwreguscom 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 44 to 85
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 2006 £01 million
capital structure
the company’s share capital comprises 950818822 2006
984791524 issued and fully paid up ordinary shares of 5p
nominal value as at 14 march 2008 the group held 33972702
ordinary shares as treasury shares december 2006 nil all
ordinary shares excluding treasury shares have the same
rights to vote at general meetings of the company and to
participate in distributions there are no securities in issue that
carry special rights in relation to the control of the company
the company’s shares are traded on the london stock exchange
details of the role of the board and the process for the
appointment of directors can be found on pages 28 to 30
at the company’s annual general meeting on 24 may 2007
the shareholders approved a resolution giving authority for the
company to purchase in the market up to 98479152 ordinary
shares representing approximately 10 of the ordinary shares
in issue at that date
details of the company’s employee share schemes can be
found in the report of the remuneration committee on pages
35 to 41 the outstanding awards and options do not carry
any rights in relation to the control of the company
substantial interests
at 14 march 2008 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 sarl 363613783 3824
blackrock inc 90758402 955
prudential plc 89362761 940
standard life group 66921638 704
ubs global asset management 48603936 511
legal  general group plc 29560405 311
 mark dixon indirectly owns 100 of maxon investments sarl
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 annual
general meeting
approval
this report was approved by the board on 14 march 2008
on behalf of the board
tim regan
company secretary
14 march 2008
regus group plc annual report and accounts 2007 27 28wwwreguscom
directors’ report corporate governance
the board is committed to the high standards of corporate
governance set out in the combined code published in
june 2006 “the code” for ﬁnancial periods beginning after
1 november 2006 the board is accountable to the company’s
shareholders and this report describes how the board applied
the principles of good governance
the board
at 31 december 2007 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 24 and 25
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 six scheduled board meetings during 2007
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 63 41
mark dixon 6
stephen gleadle 6
rudy lobo 6
john matthews61
stephen east 63 41
roger orf 63 41
martin robinson 63 41
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 threeyear term subject to election by
shareholders at the ﬁrst annual general meeting “agm”
after their appointment
the board consider the nonexecutive directors to be
independent roger orf has been a director for over nine years
which would ordinarily render him not to be independent under
the code however having taken into account his senior role
within citigroup his sound commercial judgment and his
considerable contribution to the company and its governance
the board considers that he remains independent roger has
never received an award under any employee share scheme
operated by the company and there are no plans to make
any such award to him
company secretary
the company secretary tim regan is responsible for advising
the board through the chairman on all governance matters
governance framework regus group plc annual report and accounts 2007 29
and for ensuring that appropriate minutes are taken of all board
meetings and discussions the appointment and removal of
the company secretary is a matter reserved for the board
board committees
the board has delegated certain of its governance responsibilities
to the audit nomination and remuneration committees
the company secretary acts as secretary to all of the board
committees and minutes of meetings are circulated to all
board members
the terms of reference of 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 until 10 march 2008
stephen east chairman from 10 march 2008
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 risk
management attend each meeting
summary terms of reference
• financial reporting – provide support to the board by monitoring
the integrity of the published ﬁnancial statements of the group
and any formal announcements relating to the company’s
ﬁnancial performance and ensuring that they 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 – the committee advises the board on the
appointment reappointment remuneration and removal of
the external auditors the committee has the opportunity to
meet with the external auditors without senior management
being present
• employee concerns – the committee reviews 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 risk management to informally
discuss matters of interest
external auditors
kpmg audit plc were the company’s auditors for the year
ended 31 december 2007 for 2008 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 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
bookkeeping 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 35 to 41
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 2007 there were no changes
to the board and therefore only one formal meeting of the
nominations committee was required 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 30wwwreguscom
directors’ report corporate governance
• 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
principal risks and uncertainties
there are a number of risks and uncertainties which could have
an impact on the group’s longterm performance the group
has a risk management structure in place designed to identify
manage and mitigate business risks risk assessment and
evaluation is an essential part of the annual planning
budgeting and forecasting cycle
the directors have identiﬁed the following principal risks and
uncertainties affecting the company these do not constitute
all of the risks facing the group
economic downturn in signiﬁcant markets
the group has a signiﬁcant proportion of its centres in the
americas predominantly the usa and 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 performancebased 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
additionally in the event of a downturn the group has a
number of options for mitigating losses for example by
closing centres at lease break points
the group’s strategy also focuses its growth into emerging
markets that will reduce the proportion of the group’s revenue
generated from the usa and uk over time and provide better
protection to the group from an economic downturn in a
single country
exposure to movements in property markets
a number of the group’s lease contracts contain market rent
review clauses this means that the costs of these leases may
vary as a result of external movements in the property market
in particular in the uk lease contracts typically contain
‘upward only’ rent reviews which means that should open
market rents decrease then regus could be exposed to
paying higher than market rent in these locations
if the group is unable to pass on increased rent costs to
customers due to local property market conditions then this
could result in reduced proﬁtability or operating losses in
these markets
equally for group lease contracts without market rent review
clauses the group may beneﬁt from paying below market rent
in a market with increasing open market rents this may allow
the group to improve proﬁtability if the movements in open
market rents are passed on to clients
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
37 of the group’s revenues being attributable to the us
dollar and 20 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 risk is limited however the
translation into sterling of overseas proﬁts and net assets will
be affected by prevailing exchange rates in the event that
either the us dollar or euro were to signiﬁcantly depreciate
or appreciate against sterling this would have an adverse or
beneﬁcial impact to the group’s reported performance and
position respectively
governance framework continued regus group plc annual report and accounts 2007 31
the ﬁnancial risk management objectives and policies of the
group 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 2008 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
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 14 march 2008 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 together with regional executives
every six months 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 by senior management
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 32wwwreguscom
directors’ report corporate governance
• 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 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 the most recent global conference
was held in february 2007 delegates present the key
messages to employees who did not attend the event
monitoring effectiveness
the following key mechanisms were available to the board at
various times during the year in the conduct of its review of
internal controls
• review of the group’s monthly management accounts which
contain detailed analysis of ﬁnancial performance for the group
and each of the group’s geographic reporting segments
• an ongoing process of review through board meetings senior
management meetings and divisional reviews as well as other
management meetings for the formal identiﬁcation of
signiﬁcant operational risks and mitigating control processes
• 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 2007 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
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 independent senior
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
governance framework continued regus group plc annual report and accounts 2007 33
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 announced in augustseptember and the
preliminary ﬁnal results announced normally in march there
are programmes for the chief executive and chief financial
ofﬁcer to give presentations of these results to the company’s
institutional investors analysts and media in london and other
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 engaged the services of brunswick group
plc as their investor relations adviser
annual general meeting 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 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 2007 with the exception of the following
• provision d11 – the independent senior 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 conduit with investors rather than the independent senior
nonexecutive director the chairman participates in investor
meetings and makes himself available for questions in person
at the time of major announcements the chairman regularly
updates the board and particularly the independent senior
nonexecutive director on the results of his meetings and the
opinions of investors on this basis regus considers that the
independent senior 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 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 generally accepted
accounting practice 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 parent company
and group will continue in business
the directors are responsible for keeping proper accounting
records which 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 auditor is unaware and
• each director has taken all the steps that he ought to have
taken as a director in order to make himself aware of any
relevant audit information and to establish that the company’s
auditor is aware of that information
34wwwreguscom
directors’ report corporate governance
director statements regus group plc annual report and accounts 2007 35
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 year’s
annual general meeting
this report sets out the company’s policy on directors’
remuneration for the forthcoming year as well as information
on remuneration paid to directors during the year
information relating to the emoluments and pension contributions
to 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 four 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 during the year 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 2007 were
• to ensure that it maintains a competitive package of total
compensation commensurate with comparable packages
available with other similar companies operating in similar
markets the “comparator group”
• to make a signiﬁcant percentage of potential maximum
reward conditional on short and longterm performance
• to ensure that the interests of the executives are closely
aligned with those of the company’s shareholders through
the provision of sharebased 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 throughout 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 for each
executive director for the year ended 31 december 2007
mark dixon rudy lobo stephen gleadle
chief chief chief
executive officer operating officer financial officer
fixed 328 300 302
variable 672 700 698
remuneration report 36wwwreguscom
directors’ report corporate governance
fixed compensation comprises salary beneﬁts and pension
contributions variable compensation comprises the annual
bonus paid in relation to the year ended 31 december 2007
and the total fair value of share awards granted in the year
the main elements of the packages and the performance
conditions are described below
the committee has recently undertaken a detailed review
of the remuneration policy and structure to ensure that it is
aligned to the company’s strategy and that the executives are
appropriately motivated and retained to execute that strategy
as a result of this review the following conclusions have
been drawn
– there is a need for a greater emphasis on exceptional pay
for exceptional performance the committee believes that
executives should be focused on delivering exceptional returns
to shareholders over both the short and long term and given
the opportunity to receive exceptional levels of reward if such
performance is delivered and
– where returns are conservative then total compensation
levels will be extremely conservative
in order to bring into effect the above policy changes the
committee is intending to
– implement only inﬂationary salary rises unless there is a real
requirement for otherwise across the senior executive team
– change how the annual bonus for the year ending
31 december 2008 is operated see below and
– implement a new equity incentive further details of this
arrangement are currently being discussed with the
company’s major shareholders and will be set out in a circular
seeking formal shareholder approval of the new share scheme
the committee is of the opinion that this new policy is in line with
the company’s long term 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 yrs 6 months
roger orf 011006 3 yrs 6 months
martin robinson 011006 3 yrs 6 months
stephen east 100308 3 yrs 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 regus coinvestment plan
basic salary and beneﬁts
the basic salaries of executive directors are reviewed annually
and any increases are effective from 1 january
as part of the new remuneration policy focusing on exceptional
pay for exceptional performance the pay rise for all senior
executives for 2008 will be capped at 25 to ensure that there
is a greater weighting towards variable remuneration as such
the salaries for the chief executive ofﬁcer and chief operating
ofﬁcer will be £522750 and £280338 respectively
however in the case of the chief financial ofﬁcer the committee
has increased his salary from £250000 which was a probationary
salary agreed on his joining the company in late 2005 to
£300000 per annum
beneﬁts comprise a company car or allowance fuel private
medical insurance and a living allowance for the chief
executive ofﬁcer
annual bonus scheme
overview
the committee believes ﬁrmly in the ﬁnancial effectiveness
of shortterm incentives accordingly every employee in the
group participates in some form of incentive scheme
the committee sets bonus targets and levels of eligibility
each year
remuneration report continued regus group plc annual report and accounts 2007 37
the maximum bonus potential for the year ending 31 december
2007 was 125 of salary for the executive directors the following
table sets out the performance metrics relating to the bonus
percentage of
condition maximum bonus potential
financial and personal measures
and targets set at the beginning of
the year as well as other factors the
committee determined were relevant 80
substantially exceeding ebit targets 20
the committee were of the opinion that all ﬁnancial and
personal measures and targets were achieved by the executive
directors and as such bonuses of 100 of salary were paid
for this element 50 of this bonus payment was paid in cash
and 50 deferred to purchase shares “investment shares”
in regus group plc these shares are awarded under the
coinvestment plan with the opportunity to receive an
additional award of shares “matching shares” after a three
year period subject to certain conditions share awards will
be granted either in the form of a nil cost option or conditional
share award
although the cash element of the bonus has been paid at
the time of 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 2008 the maximum number of share awards will
be granted to the executive directors based on the price of an
ordinary share at the time of the grant and the monetary value
of investment shares will not exceed 50 of salary and 200
of salary for matching shares
in addition the company signiﬁcantly exceeded the ebit
targets set at the start of the year and as such the additional
bonus equating to 25 of salary was paid to the executive
directors for exceptional performance against budget this
part of the bonus has been paid in cash and will not attract
any matching shares under the cip 
for the year ending 31 december 2008 the committee has
decided to change the structure of the bonus plan to emphasise
its policy of exceptional pay for exceptional performance
although the standard maximum bonus potential will remain
at 100 of salary linked to the achievement of stretching short
term ﬁnancial and individual performance targets the additional
element for exceptional outperformance will be based on
a selfﬁnancing bonus “pool” system rather than a ﬁxed
percentage of 25 of salary the pool will be deﬁned by
reference to a percentage of operating proﬁts in excess of
external forecasts based on a consensus of analysts’ estimates
to ensure compliance with schedule a of the combined code
the remuneration committee will cap the amount of the pool
distributed to individuals to 200 of salary equating to a
maximum bonus for the year of 300 of salary
the committee is mindful of the commercial sensitivity of the
performance conditions applying to the bonus and considers that
more detailed disclosure is inappropriate in the circumstances
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 70 of basic salary the
committee considers that the pension beneﬁts of the executive
directors are low compared with comparative companies but
prefers to offer enhanced variable compensation rather than
a ﬁxed additional pension contribution
the group does not operate a deﬁned beneﬁt pension scheme
and has no plans to introduce such a scheme
long term incentives
overview
the company continues to operate the regus group plc
coinvestment plan “cip” which was approved by shareholders
at the 2005 agm in addition the company continues to grant
options on an ad hoc basis under the existing regus group
share option scheme to certain nonparticipants in the cip 
as noted earlier the committee intends to introduce a new
equity incentive which will enforce the concept of exceptional
pay for exceptional performance details of this new arrangement
will be contained in a shareholder circular seeking formal
approval for the scheme
this new share scheme will complement the cip and balance
the marketcompetitive levels of award under the cip linked
to the deferral of the annual bonus with exceptional levels of
reward for superlative performance
coinvestment plan “cip”
there are two elements to the cip
the ﬁrst element operates in conjunction with the annual bonus
whereby gross bonus up to 50 of salary will be taken as a
deferred award of shares to be released at the end of a three
year period with the balance paid in cash
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 38wwwreguscom
directors’ report corporate governance
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 the
committee have determined that this ratio will apply to any
payout of the annual bonus
grants during the year ending 31 december 2007
mark dixon rudy lobo stephen gleadle
cip award face value
age salary 200 200 200
fair value of cip award £713717 £382715 £349435
fair value of cip award
as a age of salary 151 151 151
 the fair value was calculated by taking the face value of the shares on the date
of award and adjusting 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
standalone whole share awards “ltip awards” without
reference to annual bonus up to a maximum of 100 of
salary per annum under the cip  an 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 2007
it is unlikely that future standalone ltip awards will be made
to existing executive directors unless there are exceptional
circumstances
the performance conditions with the associated percentage
of the award vesting for the grant of awards under the ltip and
cip are set out in the following table
for ltip and 2006 cip awards eps p for the year ended 31 december 2008
for march 2007 cip awards  increase in eps for the year ended 31 december
2009 compared to the prior year
growth in fcf 11p 12p 13p 14p
per share over 3 years 15 20 25 30
10 6 13 19 25
15 13 25 38 50
20 19 38 56 75
25 25 50 75 100
in determining whether the growth target has been met eps
for the year ending 31 december 2009 will be basic and fully
diluted as disclosed in the company’s ﬁnancial statements
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 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 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 2007 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 200 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 2008
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 2007 the executive
directors did not hold any external positions for which they
receive fees
total shareholder return tsr
the above graph shows the company’s performance measured
by tsr for the group compared with the performance of the
ftse 250 index and the ftse 350 support services index the
committee considers 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

20
40
60
80
100
120
140
dec 07 dec 06 dec 05 dec 04 dec 03
regus group plc ftse 250 index
tsr of the company against the ftse 350 support services index
ftse 350 support services index
remuneration report continued regus group plc annual report and accounts 2007 39
audited information
directors’ emoluments
the aggregate emoluments excluding pensions of the directors were as follows
2007
salary fees beneﬁts bonus total
£’000 £’000 £’000 £’000 £’000
chairman
john matthews 1900 1900
executive
mark dixon 5100 – 1015 3825 9940
rudy lobo 2735 – 134 2051 4920
stephen gleadle 2500 – 154 1875 4529
nonexecutive
roger orf 410 410
martin robinson 410 410
stephen east 350 350
10335 3070 1303 7751 22459
2006
salary fees benefits bonus total
£’000 £’000 £’000 £’000 £’000
chairman
john matthews 1900 1900
executive
mark dixon 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 325 325
9558 2995 1422 4779 18754
 in 2006 mark dixon’s salary was set in sterling but was paid in us dollars the actual salary received was 833601
mark dixon was the highest paid director in both 2007 and 2006 beneﬁts include car and fuel allowance medical insurance and
life assurance mark dixon also received a housing allowance 2007 £100000 2006 £98993
pension contributions
2007 2006
£’000 £’000
mark dixon 396 330
rudy lobo 191 177
stephen gleadle 175 162
762 669 40wwwreguscom
directors’ report corporate governance
directors’ share interests
the following directors held beneﬁcial interests in the share capital of the company at 31 december 2007 and 14 march 2008
ordinary shares of 5p
14 march 2008 31 december 2007 31 december 2006
executive
mark dixon
a
363613783 363613783 366329326
rudy lobo 4697098 4697098 4697098
stephen gleadle 121500 121500 121500
nonexecutive
john matthews 910687 894869 650212
roger orf 754954 747750 734237
martin robinson 128477 121568 58603
stephen east 35060 28914 17385
a the interests of mark dixon are held indirectly through maxon investments sarl an entity in which mark dixon controls 100 of the share capital
directors’ share options
as at 14 march 2008 the beneﬁcial interest of the directors in options granted under the regus group share option plan are
shown below
interest in options date from expiry date
and awards over exercise which of grant
director grant date ordinary shares price p exercisable or award
mark dixon 080904 1708108 6475 080907 080914
rudy lobo 080904 778378 6475 080907 080914
all options were granted at the then prevailing market price there have been no movements in the year all the options vested
and became exercisable in september 2007
directors’ interests under the long term incentive plan “ltip”
details of awards over ordinary shares in the company granted to the directors under the ltip  all for nil consideration are as follows
ltip
at 1 january 2007 and 31 december 2007
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 38
the performance period for the ltip awards is 3 november 2005 to 31 december 2008
remuneration report continued regus group plc annual report and accounts 2007 41
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 2007 shares awarded at 31 december 2007
investment shares
mark dixon 193473 179396 372869
rudy lobo 101981 96197 198178
stephen gleadle – 87832 87832
matching shares
mark dixon 773892 717584 1491476
rudy lobo 407924 384788 792712
stephen gleadle – 351328 351328
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 38
the performance period for the cip matching share awards made in 2007 is 1 january 2007 to 31 december 2009 the
midmarket price of the company’s ordinary shares at 31 december 2007 was 8275p and the range during the year was
705p to 15375p
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 20 may 2008
audit requirement
within the remuneration report the sections on director’s remuneration shareholdings and pension beneﬁts on pages 39 to 41
inclusive are audited all other sections of the remuneration report are unaudited
on behalf of the board
martin robinson
chairman remuneration committee
14 march 2008 42wwwreguscom
independent auditors’ report to the members of regus group plc
we have audited the group and parent company ﬁnancial
statements the “ﬁnancial statements” of regus group plc
for the year ended 31 december 2007 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 crossreferenced 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 2006 frc 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 judgments 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
independent auditors’ report regus group plc annual report and accounts 2007 43
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 2007 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 2007
• 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
14 march 2008 44wwwreguscom
financial statements
consolidated income statement
year ended year ended
31 dec 2007 31 dec 2006
notes £m £m
revenue 3 8624 6800
cost of sales 6105 4959
gross proﬁt centre contribution 2519 1841
administration expenses 1293 1019
operating proﬁt 5 1226 822
share of posttax profitloss of joint ventures 20 08 01
share of posttax proﬁt of associate 20 – 12
proﬁt before ﬁnancing costs 1234 833
finance expense 8 81 80
finance income 8 41 22
proﬁt before tax for the year 1194 775
tax chargecredit 9 158 48
proﬁt after tax for the year 1036 823
attributable to
equity shareholders of the parent 1031 823
minority interests 05 –
1036 823
earnings per ordinary share eps
basic p 10 105 84
diluted p 10 104 83 regus group plc annual report and accounts 2007 45
as at as at
31 dec 2007 31 dec 2006
£m £m
notes restated
noncurrent assets
goodwill 12 2230 2121
other intangible assets 13 469 510
property plant and equipment 14 1847 1272
deferred tax assets 9 468 361
other long term receivables 15 241 207
investments in joint ventures 20 16 09
5271 4480
current assets
trade and other receivables 16 1864 1482
corporation tax receivable 51 29
cash and cash equivalents 1429 809
3344 2320
total assets 8615 6800
current liabilities
trade and other payables 17 1689 1246
customer deposits 1304 1034
deferred income 960 735
corporation tax payable 332 255
obligations under finance leases 18 08 25
bank and other loans 18 155 82
provisions 19 34 31
4482 3408
net current liabilities 1138 1088
total assets less current liabilities 4133 3392
noncurrent liabilities
other payables 17 624 518
obligations under finance leases 18 07 14
bank and other loans 18 245 454
deferred tax liability 9 64 17
provisions 19 74 117
provision for deﬁcit on joint ventures 20 21 27
1035 1147
total liabilities 5517 4555
total assets less liabilities 3098 2245
total equity
issued share capital 21 492 492
treasury shares 134 –
foreign currency translation reserve 201 175
revaluation reserve 100 100
other reserves 226 226
retained earnings 3062 2054
total shareholders’ equity 3093 2245
minority interests 05 –
total equity 3098 2245
total equity and liabilities 8615 6800
 see note 2 for details of the restatement
approved by the board on 14 march 2008
mark dixon stephen gleadle
chief executive ofﬁcer chief financial ofﬁcer
consolidated balance sheet 46wwwreguscom
financial statements
consolidated cash ﬂow statement
year ended year ended
31 dec 2007 31 dec 2006
notes £m £m
proﬁt before tax for the year 1194 775
adjustments for
net finance costs 40 58
net share of profit on joint ventures and associate 08 11
depreciation charge 392 318
loss on disposal of property plant and equipment 02 04
amortisation of intangible assets 64 60
decrease in provisions 42 06
other noncash movements – share based payments 45 18
operating cash ﬂows before movements in working capital 1687 1216
increase in trade and other receivables 282 313
increase in trade and other payables 706 425
cash generated from operations 2111 1328
interest paid on finance leases 02 05
interest paid on credit facilities 40 52
tax paid 161 66
net cash inﬂow from operating activities 1908 1205
investing activities
purchase of subsidiary undertakings net of cash acquired 25 178 885
purchase of interest in joint ventures 03 –
sale of property plant and equipment 03 03
purchase of property plant and equipment 792 463
purchase of intangible assets 15 04
interest received 34 22
net cash outﬂow from investing activities 951 1327
financing activities
net proceeds from issue of loans – 627
repayment of loans 145 335
repayment of capital elements of finance leases 25 50
facility arrangement fees – 12
purchase of treasury shares 147 –
payment of ordinary dividend 59 –
exercise of share options 05 –
net cash outﬂowinﬂow from ﬁnancing activities 371 230
net increase in cash and cash equivalents 586 108
cash and cash equivalents at beginning of year 809 741
effect of exchange rate fluctuations on cash held 34 40
cash and cash equivalents at end of year 22 1429 809 regus group plc annual report and accounts 2007 47
consolidated statement of changes in equity
attributable to equity holders of the parent a
foreign
share currency
share premium treasury translation revaluation retained minority
capital account shares reserve reserve other earnings interests total equity
£m £m £m £m £m £m £m £m £m
balance at 1 january 2006 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
b
– 1535 – – – – 1535 – –
balance at 31 december 2006 492 – – 175 100 226 2054 – 2245
profit attributable to equity holders – – – – – – 1031 – 1031
profit attributable to minority interest – – – – – – – 05 05
currency translation differences – – – 26 – – – – 26
deferred tax effect of share options – – – – – – 01 – 01
total recognised income and
expense for the year 26 – – 1030 05 1009
share based payments – – – – – – 45 – 45
ordinary dividend paid – – – – – – 59 – 59
exercise of share options – – 13 – – – 08 – 05
purchase of treasury shares – – 147 – – – – – 147
balance at 31 december 2007 492 – 134 201 100 226 3062 05 3098
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
– treasury shares represent 11947702 ordinary shares of the group that were acquired for the purposes of the group’s employee
share option plans and the share buyback programme during the year 12853001 shares were purchased 905299 shares were
utilised to satisfy the exercise of share options by employees at 14 march 2008 33972702 treasury shares were held following the
purchase of a further 22025000 shares subsequent to the balance sheet date for a total consideration of £166 million as a result
of the purchase of treasury shares the distributable reserves of the group were reduced by £134 million
– the foreign currency translation reserve is used to record exchange differences arising from the translation of the ﬁnancial statements
of foreign subsidiaries and joint ventures
– the revaluation reserve arose on the restatement of the assets and liabilities of the uk associate from historic cost to fair value at the
time of the 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 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 annual general meeting dated 3 april 2006 48wwwreguscom
financial statements notes to the accounts
notes to the accounts
1 authorisation of ﬁnancial statements
the group and company ﬁnancial statements for the year ended
31 december 2007 were authorised for issue by the board of
directors on 14 march 2008 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 82 to 85
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 the associate 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 the international accounting standards board
iasb and the international financial reporting interpretations
committee ifric with an effective date from 1 january 2007
did not have a material effect on the group ﬁnancial statements
ifrs 7 “financial instruments disclosure” was applicable for
accounting periods commencing on or after 1 january 2007 the
principal impact of the adoption of ifrs 7 on the group’s ﬁnancial
statements relates to certain disclosures regarding ﬁnancial assets
and ﬁnancial liabilities and the group’s risk management strategy
ias 1 amendment “presentation of financial statements capital
disclosures” was also applicable for accounting periods commencing
on or after 1 january 2007 the principal impact of the adoption
of the amendment to ias 1 on the group’s ﬁnancial statements
relates to certain disclosures regarding capital management
certain amounts included in the ﬁnancial statements for the period
ending 31 december 2006 relating to business combinations
completed in that period were included in those ﬁnancial
statements on a provisional basis these provisional amounts
were ﬁnalised during the 12 month period following the acquisition
adjustments to the acquisition accounting have been reﬂected as
if they had been recognised at the acquisition date as a result
the following changes have been made
• the carrying value of goodwill was reduced by £04 million as
a result of the ﬁnalisation of the acquisition accounting in relation
to deferred tax assets resulting in an increase in deferred tax
assets of £07 million and an increase in deferred consideration
of £03 million
• the carrying value of goodwill was increased by £04 million as
a result of the ﬁnalisation of the fair value adjustments in relation
to property plant and equipment this reduced the carrying
value of property plant and equipment by £04 million
judgments 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 8 “operating segments” will be applicable for accounting
periods commencing on or after 1 january 2009 the standard
requires the disclosure of segmental information on the basis of
the components of an entity that management monitors in
making operating decisions therefore the adoption of ifrs 8 will
have no impact on the reported income or equity of the group
the impact on the group’s ﬁnancial statements on the initial
application of this standard is not expected to be signiﬁcant
• ifric 11 “ifrs 2 group and treasury share transactions” will
be applicable for accounting periods commencing on or after
1 march 2007 the interpretation addresses how share based
payments should be treated within a group and therefore the
adoption of ifric 11 will have no impact on the reported
income or equity of the group
basis of consolidation
subsidiaries are entities controlled by the group control exists
when the group has the power directly or indirectly to govern the
ﬁnancial and operating policies of an entity so as to obtain beneﬁts
from its activities in assessing control potential voting rights that
are currently exercisable or convertible are taken into account
the ﬁnancial statements of subsidiaries are included in the
consolidated ﬁnancial statements from the date that control
commences the results are consolidated until the date control
ceases or the subsidiary qualiﬁes as a disposal group at which
point the assets and liabilities are carried at the lower of fair value
less costs to sell and carrying value
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 regus group plc annual report and accounts 2007 49
the associate qualiﬁes as a disposal group at which point the
investment is carried at the lower of fair value less costs to sell
and carrying value
joint ventures include jointly controlled entities that are those
entities over whose activities the group has joint control
established by contractual agreement the consolidated ﬁnancial
statements include the group’s share of the total recognised gains
and losses of jointly controlled entities on an equity accounted
basis from the date that joint control commences until the date
that joint control ceases or the jointly controlled entity qualiﬁes
as a disposal group at which point the investment is carried at
the lower of fair value less costs to sell and carrying value when
the group’s share of losses exceeds its interest in a joint venture
the group’s carrying amount is reduced to nil and recognition of
further losses is discontinued except to the extent that the group
has incurred legal or constructive obligations or made payments
on behalf of a joint venture
on 19 april 2006 the group acquired the remaining 58 of the
shares of the uk business that were not already owned by the
group as a result the group fully consolidated the uk business
from that date the acquisition was accounted for through the
purchase method and as a consequence the entire assets and
liabilities of the uk business were revalued to fair value the effect
of these adjustments on the 42 of the uk business already
owned was reﬂected in the revaluation reserve
goodwill
all business combinations are accounted for using the purchase
method goodwill represents the difference between the cost of
acquisition over the share of the fair value of identiﬁable assets
including intangible assets liabilities and contingent liabilities
of a subsidiary associate 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 jointly controlled entities 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
positive goodwill is stated at cost less any provision for
impairment in value an impairment test is carried out annually
and in addition whenever indicators exist that the carrying
amount may not be recoverable positive goodwill is allocated
to cash generating units for the purpose of impairment testing
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 2007
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 cash generating unit is the smallest identiﬁable group of assets
that generates cash inﬂows that are largely independent of the
cash inﬂows from other assets or groups of assets
calculation of recoverable amount
the recoverable amount of relevant assets is the greater of their
fair value less costs to sell and value in use in assessing value
in use the estimated future cash ﬂows are discounted to their
present value using a 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 identiﬁed and measured
reliably 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 3–5 years
customer lists 1–2 years
 customer lists recognised on the acquisition of the remaining 58 interest in the
uk business are amortised over four 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 50wwwreguscom
financial statements notes to the accounts
notes to the accounts continued
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 rentfree 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 5–10 years
motor vehicles 4 years
computer hardware 3–5 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 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 the 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
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
2 accounting policies continued regus group plc annual report and accounts 2007 51
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
a provision is recognised in the balance sheet when the group has
a present legal or constructive obligation as a result of a past event
that can be estimated reliably and it is probable that an outﬂow of
economic beneﬁts will be required to settle its obligation
restructuring provisions are made for direct expenditures of a
business reorganisation where the plans are sufﬁciently detailed
and well advanced and where the appropriate communication
to those affected has been undertaken at the balance sheet date
provision is made for onerous contracts to the extent that the
unavoidable costs of meeting the obligations under a contract
exceed the economic beneﬁts expected to be delivered
discounted using an appropriate weighted average cost of capital
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
finance charges
interest charges and income are accounted for in the income
statement on an accruals basis financing transaction costs that
relate to ﬁnancial liabilities are charged to interest expense using
the effective interest rate method and are recognised within the
carrying value of the related ﬁnancial liability on the balance sheet
fees paid for the arrangement of undrawn credit facilities are
recognised as a prepayment and recognised through the ﬁnance
expense over the term of the facility in the event of a facility being
drawn the relevant unamortised portion of the fee is recognised
within the carrying value of the ﬁnancial liability and charged to
interest expense using the effective interest rate method
where assets or liabilities on the group balance sheet are carried
at net present value the increase in the amount due to unwinding
the discount is recognised as a ﬁnance expense or ﬁnance income
as appropriate
interest bearing borrowings and other ﬁnancial liabilities
financial liabilities including interest bearing borrowings are
recognised initially at fair value less attributable transaction costs
subsequent to initial recognition ﬁnancial liabilities are stated at
amortised cost with any difference between cost and redemption
value being recognised in the income statement over the period
of the borrowings on an effective interest basis
the group derecognises ﬁnancial liabilities when the group’s
obligations are discharged cancelled or expire
financial liabilities are classiﬁed as ﬁnancial liabilities at fair value
through proﬁt or loss where the liability is either held for trading
or is designated as held at fair value through proﬁt or loss on initial
recognition they are stated at fair value with any resultant gain
or loss recognised in the income statement
financial assets
financial assets are classiﬁed as either at fair value through proﬁt
or loss held to maturity investments available for sale ﬁnancial
assets or loans and receivables the classiﬁcation depends on
the nature and purpose of the ﬁnancial asset and is determined
on initial recognition
trade and other receivables that have ﬁxed or determinable
payments and are not quoted in an active market are classiﬁed
as loans and receivables loans and receivables are measured at
amortised cost using the effective interest rate method less any
impairment interest income is recognised by applying the effective
interest rate except for short term receivables when recognition
would be immaterial
derivative ﬁnancial instruments
the group’s policy on the use of derivative ﬁnancial instruments
can be found in note 23 derivative ﬁnancial instruments are
measured initially at fair value and changes in the fair value are
recognised through proﬁt or loss unless the derivative ﬁnancial
instrument has been designated as a cash ﬂow hedge whereby the
effective portion of changes in the fair value are deferred in equity
cash and cash equivalents
cash and cash equivalents comprise cash at bank and in hand
and are subject to an insigniﬁcant risk of changes in value
foreign currency translation rates
at 31 december annual average
2007 2006 2007 2006
us dollar 200 196 201 185
euro 136 148 146 147
japanese yen 224 233 236 215 52wwwreguscom
financial statements notes to the accounts
notes to the accounts continued
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
2007 2007 2007 2007 2007 2007
£m £m £m £m £m £m
revenue 3363 2403 777 2081 – 8624
gross proﬁt centre contribution 1027 803 275 414 – 2519
management fees – incomecharges 155 132 39 87 413 –
operating proﬁt 482 433 125 83 103 1226
share of profitloss of joint ventures 08 03 – 03 – 08
finance expense 81 81
finance income 41 41
proﬁt before tax 1194 1194
tax charge 158 158
proﬁt after tax – – – – 1036 1036
ebitda see note 4 828 638 209 312 305 1682
depreciation 161 70 43 116 02 392
amortisation 30 03 02 26 03 64
increase in provision for bad debts 14 11 02 04 – 31
share based payment – – – – 45 45
non recurring items see note 6 09 19 – 02 25 01
assets 2827 1019 624 2159 1986 8615
liabilities 1386 1360 446 1330 995 5517
net assetsliabilities 1441 341 178 829 991 3098
capital expenditure incurred 284 185 159 169 10 807 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 payment – – – – 18 18
assets 2419 704 398 2012 1267 6800
liabilities 1068 1083 257 1225 922 4555
net assetsliabilities 1351 379 141 787 345 2245
capital expenditure incurred 219 100 75 78 04 476
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 dec 2007 £m £m £m £m £m £m
operating proﬁt
excluding management charges 637 565 164 170 310 1226
ebit 637 565 164 170 310 1226
depreciation and amortisation 191 73 45 142 05 456
ebitda 828 638 209 312 305 1682
americas emea asia pacific united kingdom other total
year ended 31 dec 2006 £m £m £m £m £m £m
operating proﬁt
excluding management charges 491 349 89 70 177 822
ebit 491 349 89 70 177 822
depreciation and amortisation 205 58 27 85 03 378
ebitda 696 407 116 155 174 1200
note
adjusted ebit and ebitda excludes the results of the joint ventures and uk associate
regus group plc annual report and accounts 2007 53 54wwwreguscom
financial statements notes to the accounts
notes to the accounts continued
5 operating proﬁt
operating profit has been arrived at after charging
2007 2006
£m £m
depreciation on property plant and equipment
owned assets 389 310
finance leases 03 08
provision for bad debts 31 19
amortisation of intangibles 64 60
loss on disposal of fixed assets 02 04
exchange differences recognised in the income statement – gainloss 11 10
rents payable in respect of operating leases
property 2706 2245
equipment 31 23
contingent rents paid 26 56
staff costs see note 7 1546 1225
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 08
other services 01 02
due diligence on acquisitions included within cost of acquisitions 01 02
6 nonrecurring items
included in the results for the year to 31 december 2007 were nonrecurring items amounting to a credit of £01 million 2006 nil
2007 2006
£m £m
cost of sales
reversal of provision for onerous leases 10 –
10 –
administration expenses
severance pay 04 –
provision for disputed supplier agreement 23 –
reversal of provision for an indemnity claim with landlord 18 –
09 –
01 –
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 regus group plc annual report and accounts 2007 55
7 staff costs and numbers
2007 2006
£m £m
the aggregate payroll costs were as follows
wages and salaries 1286 1038
social security 202 163
pension costs 13 06
share based payments 45 18
1546 1225
2007 2006
average full time average full time
equivalents equivalents
the average number of persons employed by the group including executive
directors analysed by category and geography was as follows
centre staff 3613 2888
sales staff 333 244
finance staff 299 233
other staff 485 367
4730 3732
americas 2035 1702
emea 1246 1080
united kingdom 775 468
asia pacific 595 421
corporate functions 79 61
4730 3732
details of directors’ emoluments and interests are given in the remuneration report on pages 35 to 41
8 net ﬁnance expense
2007 2006
£m £m
interest payable and similar charges on bank loans 44 46
interest payable and similar charges of ﬁnance leases 02 05
total interest expense 46 51
deferred financing fees 05 04
unwinding of discount rates 30 25
total ﬁnance expense 81 80
total interest income 34 18
unwinding of discount rates 07 04
total ﬁnance income 41 22
net ﬁnance expense 40 58
deferred financing fees relate to loan arrangement costs on the £150 million senior credit facilities signed in march and april 2006 56wwwreguscom
financial statements notes to the accounts
notes to the accounts continued
9 taxation
a analysis of chargecredit in the year
2007 2006
£m £m
current taxation
corporate income tax 230 248
benefit from previously unrecognised tax losses and temporary differences 08 167
under provision in respect of prior years 01 –
total current taxation 223 81
deferred taxation
origination and reversal of temporary differences 227 30
previously unrecognised tax losses and temporary differences 276 162
overunder provision in respect of prior years 19 03
impact of rate changes 03 –
total deferred taxation 65 129
tax chargecredit on proﬁt 158 48
b reconciliation of taxation chargecredit
2007 2006
£m  £m 
proﬁt before tax 1194 775
tax on proﬁt at 30 2006 30 358 300 232 300
tax effects of
expenses not deductible for tax purposes 77 64 18 23
items not chargeable for tax purposes 45 37 32 41
recognition of previously unrecognised deferred tax assets 284 238 329 425
movements in temporary differences in the year not recognised
in deferred tax 33 27 24 31
adjustment to tax charge in respect of previous years 18 15 36 46
differences in tax rates on overseas earnings 37 31 03 04
158 132 48 62
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 2006
c factors that may affect the future tax charge
unrecognised tax losses to carry forward against certain future overseas corporation tax liabilities have the following expiration dates
2007 2006
£m £m
2007 – 18
2008 06 11
2009 09 17
2010 01 21
2011 13 14
2012 40 33
2013 04 07
2014 and later 222 559
295 680
available indeﬁnitely 553 440
tax losses available to carry forward 848 1120
amount of tax losses recognised in the deferred tax asset 768 859
total tax losses available to carry forward 1616 1979 regus group plc annual report and accounts 2007 57
the following deferred tax assets have not been recognised due to uncertainties over recoverability
2007 2006
£m £m
accelerated capital allowances 06 55
tax losses 281 371
short term temporary differences 86 48
373 474
d corporation tax
2007 2006
£m £m
corporation tax payable 332 255
corporation tax receivable 51 29
e deferred taxation
the movement in deferred tax is analysed below
2007 2006
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 231 129 321 142 361 219
current year movement 25 45 54 80 46 138
prior year movement – 14 – 44 30 01
deferred tax on share options
recognised directly in reserves – – – 01 01 01
acquisitions 01 – 06 01 06 09
transfers 52 08 10 44 26 01
exchange movement 05 – 02 03 – 04
at 31 december 2007 200 168 281 219 468
at 31 december 2006 231 129 321 142 361
deferred tax liability
at 1 january – 03 – 14 17 –
current year movement 10 02 02 06 – 06
prior year movement – 10 12 33 11 02
acquisitions – – – 10 10 09
transfers 54 08 10 46 26 –
at 31 december 2007 44 03 – 17 64
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 provisions deductible when paid and share based payment
at the balance sheet date the temporary difference arising from unremitted earnings of overseas subsidiaries was £390 million
2006 £267 million it is considered that no signiﬁcant tax liability would arise should these reserves be remitted due to available
overseas tax credits
the deferred tax recognised has been adjusted to reﬂect the reduction in the united kingdom corporation tax rate from 30 to 28
from 1 april 2008 58wwwreguscom
financial statements notes to the accounts
notes to the accounts continued
10 earnings per ordinary share basic and diluted
2007 2006
profit attributable to equity shareholders of the parent £1031m £823m
weighted average number of shares outstanding during the year 980961569 984791524
average market price of one share during the year 1256p 1087p
weighted average number of shares under option during the year 6995284 7261924
exercise price for shares under option during the year 6047p 6037p
proﬁt earnings per share
2007 2006 2007 2006
£m £m pence pence
basic and diluted profit for the year attributable to shareholders
and basic earnings per share 1031 823 105 84
diluted earnings per share 104 83
weighted average number of shares for basic eps number 980961569 984791524
weighted average number of shares under option during the year 6995284 7261924
weighted average number of shares that would have been issued
at average market price 3367657 4033140
weighted average number of awards under the cip 2997134 1620207
weighted average number of shares for diluted eps number 987586330 989640515
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 2007 cip are an indicative number based on the year end share price
11 dividends
2007 2006
dividends per ordinary share 10p 06p
dividends of £59 million were paid during the year 2006 nil the company has proposed to shareholders that a final dividend of
10p per share will be paid 2006 06p subject to shareholder approval the total dividend of £95 million is expected to be paid on
30 may 2008 regus group plc annual report and accounts 2007 59
12 goodwill
£m
cost
at 1 january 2006 1221
recognised on acquisition of subsidiaries 1040
exchange differences 140
at 31 december 2006 2121
at 1 january 2007 2121
recognised on acquisition of subsidiaries 120
exchange differences 11
at 31 december 2007 2230
net book value
at 1 january 2007 2121
at 31 december 2007 2230
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
2007 2006
£m £m
carrying amount of goodwill included within the americas business segment 1236 1154
carrying amount of goodwill included within the emea business segment 31 18
carrying amount of goodwill included within the asia pacific business segment 77 73
carrying amount of goodwill included within the uk business segment 886 876
2230 2121
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 2007 2006
£m £m £m £m
usa 1129 – 1129 1092
uk 886 112 998 988
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 2008 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 which does not exceed the long term average growth
rate for a similar business
– a terminal value is included in the assessment reﬂecting the group’s expectation that it will continue to operate in these markets
– a country speciﬁc pretax discount rate has been applied to future cash ﬂows for each cashgenerating unit based on an underlying
posttax discount rate of 12 grossed up by the applicable tax rate in each country the pretax rate reﬂects current market
assessments and the risks speciﬁc to such businesses in each country
the calculation of the value in use is sensitive to changes in the expected level of longterm 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
foreseeable 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 60wwwreguscom
financial statements notes to the accounts
notes to the accounts continued
13 other intangible assets
brand customer lists software total
£m £m £m £m
cost
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
at 1 january 2007 448 131 61 640
additions at cost – – 15 15
acquisition of subsidiaries – 10 – 10
disposals – – 01 01
reclassification – – 03 03
exchange rate movements 07 01 01 07
at 31 december 2007 441 140 79 660
amortisation
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
at 1 january 2007 41 42 47 130
charge for year 16 35 13 64
disposals –– 01 01
exchange rate movements 02 –– 02
at 31 december 2007 55 77 59 191
net book value
at 31 december 2007 386 63 20 469
at 31 december 2006 407 89 14 510
included with the brand value is £112 million relating to the acquisition of the remaining 58 of the uk business in the year ended
31 december 2006 the regus brand acquired in this transaction is assumed to have an indeﬁnite useful life due to the fact that the
value of the brand is intrinsically linked to the continuing operation of the group
as a result of the regus brand acquired with the uk business having an indeﬁnite useful life no amortisation is charged but the carrying
value is assessed for impairment on an annual basis the brand was tested at 31 october 2007 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 group plc annual report and accounts 2007 61
14 property plant and equipment
furniture fittings
and motor vehicles computers total
£m £m £m
cost
at 1 january 2006 2528 171 2699
additions 462 14 476
acquisition of subsidiaries 432 07 439
disposals 236 39 275
reclassifications 29 29 –
exchange rate movements 234 11 245
at 31 december 2006 2923 171 3094
at 1 january 2007 2923 171 3094
additions 829 61 890
acquisition of subsidiaries 57 – 57
disposals 53 07 60
reclassifications – 03 03
exchange rate movements 98 07 105
at 31 december 2007 3854 229 4083
accumulated depreciation
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
at 1 january 2007 1698 124 1822
charge for the year 360 32 392
disposals 47 08 55
exchange rate movements 71 06 77
at 31 december 2007 2082 154 2236
net book value
at 31 december 2007 1772 75 1847
at 31 december 2006 1225 47 1272
additions include £01 million in respect of assets acquired under ﬁnance leases 2006 £14 million additions also include £97 million
2006 nil of ﬁxed assets contributed by landlords
the net book value of furniture fittings and motor vehicles include amounts held under finance leases as follows
2007 2006
£m £m
cost 121 426
accumulated depreciation 89 378
net book value 32 48
15 other long term receivables
2007 2006
£m £m
other receivables 115 103
amounts owed by joint ventures 72 69
prepayments and accrued income 54 35
241 207 62wwwreguscom
financial statements notes to the accounts
notes to the accounts continued
16 trade and other receivables
2007 2006
£m £m
trade receivables 864 712
amounts owed by joint ventures 17 23
other receivables 308 219
prepayments and accrued income 560 436
vat recoverable 115 92
1864 1482
17 trade and other payables
2007 2006
£m £m
trade payables 372 230
other tax and social security 198 167
deferred landlord contributions 151 124
amounts owed to joint ventures 01 03
rent accruals 186 112
other accruals 663 520
other creditors 118 90
total current 1689 1246
2007 2006
£m £m
accruals and deferred income 122 06
rent accruals 493 500
other creditors 09 12
total noncurrent 624 518
18 borrowings
the group’s total loan and borrowing position at 31 december 2007 and at 31 december 2006 had the following maturity proﬁles
bank and other loans
2007 2006
£m £m
repayments falling due as follows
amounts falling due after more than one year
in more than one year but not more than two years 121 151
in more than two years but not more than five years 124 303
in more than ﬁve years – –
total noncurrent 245 454
total current 155 82
total bank and other loans 400 536 regus group plc annual report and accounts 2007 63
obligations under ﬁnance leases
the maturity of the group’s finance obligations is as follows
2007 2006
£m £m
amounts payable
within one year or on demand 09 27
in more than one year but not more than two years 06 09
in more than two years but not more than five years 02 07
in more than ﬁve years – –
17 43
less ﬁnance charges allocated to future periods 02 04
present value of future minimum lease payments 15 39
total current 08 25
total noncurrent 07 14
15 39
19 provisions
2007 2006
onerous onerous
leases and leases and
closures other total closures other total
£m £m £m £m £m £m
at 1 january 96 52 148 133 18 151
provided in the period 20 29 49 12 34 46
utilised in the period 20 – 20 12 – 12
acquired with subsidiary undertakings – – – 04 – 04
provisions released 29 42 71 40 – 40
exchange differences 02 – 02 01 – 01
at 31 december 69 39 108 96 52 148
analysed between
current 05 29 34 13 18 31
noncurrent 64 10 74 83 34 117
69 39 108 96 52 148
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 the 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 year end for which due to their nature the
maximum period over which they are expected to be utilised is uncertain as at 31 december 2007 the group was in a legal dispute
with a supplier and had provided £23 million as the best estimate of the present obligation under the dispute
20 investments in joint ventures and associate
provision for deficit in provision for deficit investments in
investment in uk associate in joint ventures joint ventures total
£m £m £m £m
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
at 1 january 2007 – 27 09 18
additions – 01 02 03
share of profit – 03 05 08
exchange rate movements – 02 – 02
at 31 december 2007 – 21 16 05 64wwwreguscom
financial statements notes to the accounts
notes to the accounts continued
20 investments in joint ventures and associate continued
ownership
2007 2006
entity country  
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 50
regus algerie sarl algeria 60 25
regus lebanon sarl lebanon 30 30
regus abu dhabi business centres llc uae 49 49
regus herengracht bv netherlands 50 –
regus al jaidah business centres llc qatar 25 –
regus jordan psc jordan 50 –
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
2007 2006
£m £m
uk associate
income statement
revenue – 485
expenses – 449
profit before tax – 36
tax – 07
proﬁt after tax – 29
the income statement presented represents the period from 1 january 2006 to 19 april 2006
joint ventures
income statement
revenue 294 223
expenses 278 225
profitloss before tax 16 02
tax – 02
proﬁtloss after tax 16 04
net liabilities
fixed assets 97 93
current assets 143 103
current liabilities 196 201
noncurrent liabilities 90 70
net liabilities 46 75 regus group plc annual report and accounts 2007 65
21 share capital
ordinary equity share capital
2007 2006
nominal value nominal value
number ‘000 £m number ‘000 £m
authorised
ordinary 5p shares 1600000000 800 1600000000 800
issued and fully paid up
at 1 january and 31 december 984791524 492 984791524 492
in the year ended 31 december 2007 the company repurchased 12853001 of its own shares in the open market and held these
shares as treasury shares during the year 905299 were utilised for the purposes of employee share option exercises at 31 december
2007 11947702 shares were held as treasury shares as at 14 march 2008 the company had repurchased a further 22025000
of its own shares
the holders of ordinary shares are entitled to receive dividends declared by the company and approved by shareholders and are
entitled to one vote per share at meetings of the company treasury shares do not carry such rights until reissued
22 analysis of ﬁnancial resources
noncash exchange
at 1 jan 2007 cash flow changes movements at 31 dec 2007
£m £m £m £m £m
cash and cash equivalents 809 586 – 34 1429
debt due after one year 454 102 109 02 245
debt due within one year 82 43 113 03 155
finance leases due after one year 14 08 01 – 07
finance leases due within one year 25 17 – – 08
575 170 05 05 415
net ﬁnancial assets 234 756 05 29 1014
cash and cash equivalents balances held by the group that are not available for use amounted to £144 million at 31 december 2007
2006 £171 million this cash serves as collateral against certain obligations of the group
cash not available for use at 31 december 2007 includes cash held on deposit of which £21 million december 2006 £55 million
relates to collateral against bank loans £102 million december 2006 £96 million relates to deposits which are held by banks and
landlords as security against lease commitments by regus operating companies and £21 million december 2006 £20 million
held by the esop trust these amounts are blocked and not available for use by the business
noncash changes comprise the issue of loan notes in relation to business acquisitions the amortisation of debt issue costs
new ﬁnance leases entered into and movements in debt maturity 66wwwreguscom
financial statements notes to the accounts
notes to the accounts continued
23 financial instruments and ﬁnancial risk management
the objectives policies and strategies applied by the group with respect to ﬁnancial instruments and the management of capital are
determined at group level the group’s board maintains overall responsibility for the risk management strategy of the group and the
chief financial ofﬁcer is responsible for policy on a day to day basis the chief financial ofﬁcer and group treasurer review the group’s
risk management strategy and policies on an ongoing basis the board has delegated to the group audit committee the responsibility
for applying an effective system of internal control and compliance with the group’s risk management policies the audit committee
is supported by the head of risk management in performing this role
exposure to credit interest rate and currency risks arise in the normal course of business the principal ﬁnancial instruments used
by the group to ﬁnance its operations are cash and loans
credit risk
credit risk could occur where a customer or counterparty defaults under the contractual terms of a ﬁnancial instrument and arises
principally in relation to customer contracts and the group’s cash deposits
a diversiﬁed customer base and requirement for customer deposits and payments in advance on workstation contracts which
contribute the majority of the group’s revenue minimises the group’s exposure to customer credit risk no single customer contributes
a material percentage of the group’s revenue the group’s policy is to provide against trade receivables when speciﬁc debts are judged
to be irrecoverable or where formal recovery procedures have commenced a provision is created where debts are more than three
months overdue which reflects the group’s historical experience of the likelihood of recoverability of these trade receivables these
provisions are reviewed on an ongoing basis to assess changes in the likelihood of recoverability
cash assets 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
the maximum exposure to credit risk for trade receivables at the reporting date analysed by geographic region is summarised below
2007 2006
£m £m
americas 199 188
emea 330 255
uk 220 197
asia paciﬁc 115 72
864 712
all of the group’s trade receivables relate to customers purchasing workplace solutions and no individual customer has a material
balance owing as a trade receivable
the ageing of trade receivables at 31 december was
gross provision gross provision
2007 2007 2006 2006
£m £m £m £m
not overdue 719 01 594 01
past due 0–30 days 102 – 85 –
past due 31–60 days 34 – 28 –
more than 60 days 46 36 38 32
901 37 745 33
during the year ended 31 december 2007 the group provided for an additional £31 million against potential bad debts
2006 £19 million and utilised £28 million directly against the balance of trade receivables 2006 £22 million
the group believes no provision is generally required for trade receivables that are not overdue as the group collects the majority
of its revenue in advance of the provision of ofﬁce services and requires deposits from its customers regus group plc annual report and accounts 2007 67
liquidity risk
the group manages liquidity risk by reviewing its global cash position on a weekly basis and expects to have sufﬁcient liquidity to
meet its ﬁnancial obligations as they fall due in addition to free cash excluding blocked cash of £1285 million 2006 £638 million
the group has a senior committed facility of £136 million
market risk
interest rate risk
the group’s debt is held at variable interest rates because further early repayment of the debt is probable surplus cash balances are
invested to achieve maximum interest returns on a day to day basis whenever possible and subject to the operational requirements
of the group cash is repatriated to the parent company and managed by the group treasury department
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
the group’s investments in subsidiaries are generally not hedged as these currency positions are considered to be long term in nature
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 2007 there were no derivative ﬁnancial
instruments outstanding 2006 none
no transactions of a speculative nature are undertaken
other market risks
the group does not hold any availableforsale equity securities and is therefore not subject to risks of changes in equity prices
capital management
the group’s parent company is listed on the uk stock exchange and the board’s policy is to maintain a strong capital base the chief
financial ofﬁcer monitors the diversity of the group’s major shareholders and further details on the group’s communication with key
investors can be found in the corporate governance report on pages 28 to 34 in 2006 the board approved the commencement
of a progressive dividend policy to enhance the total return to shareholders
the group’s chief executive ofﬁcer mark dixon is indirectly the major shareholder of the company and all members of the board
hold shares in the company details of the directors’ shareholdings can be found in the report of the remuneration committee on
pages 35 to 41 in addition the group operates various share option plans for key management and other senior employees
at the 2007 annual general meeting shareholders approved a resolution for the group to repurchase up to 10 of its issued share
capital in the market in june 2007 the group commenced a share buyback programme to meet both the need to issue shares
under the group’s share option programme and more generally as a means of returning cash to shareholders in the year ended
31 december 2007 12853001 shares were repurchased in the market and 905299 were used to satisfy obligations under the
share option programme no shares were repurchased in 2006
the group purchased a further 22025000 of its own shares between 31 december 2007 and 14 march 2008
neither the company nor any of its subsidiaries are subject to externally imposed capital requirements
the group commenced a share buyback programme during the year ended 31 december 2007 and declared a ﬁnal dividend for 2007
of 10p per share 667 higher than 2006 06p per share there were no other changes in the group’s approach to capital
management during the year
the group’s objective when managing capital equity and borrowings is to safeguard the group’s ability to continue as a going concern
and to maintain an optimal capital structure to reduce the cost of capital the board balances the higher returns possible with higher
levels of borrowings with the stability and security afforded by a sound capital position the group’s return on capital employed for
the year ended 31 december 2007 deﬁned as operating proﬁt divided by total shareholders’ equity was 396 2006 366
this compares to a weighted average interest rate on the principal group secured ﬁnancing of 74 2006 70 68wwwreguscom
financial statements notes to the accounts
notes to the accounts continued
23 financial instruments and ﬁnancial risk management continued
effective interest rates and maturity analysis
in respect of ﬁnancial assets and ﬁnancial liabilities the following table indicates their effective interest rates at the balance sheet date
and the periods in which they mature
as at 31 december 2007
total
effective carrying contractual less than more than
interest rate value cash flow 1 year 1–2 years 2–5 years 5 years
 £m £m £m £m £m £m
cash and cash equivalents 40 1429 1429 1429 –– –
trade and other receivables – 1495 1550 1339 91 120 –
finance lease liabilities 163 15 15 08 05 02 –
secured bank loans 74 357 360 120 120 120 –
other loans 90 43 43 36 03 04 –
customer deposits – 1304 1304 1304 –– –
trade and other payables – 1341 1341 1332 09 ––
net ﬁnancial liabilities 136 84 32 46 06 –
as at 31 december 2006
total
effective carrying contractual less than more than
interest rate value cash flow 1 year 1–2 years 2–5 years 5 years
 £m £m £m £m £m £m
cash and cash equivalents 29 809 809 809 – – –
trade and other receivables – 1216 1267 1078 100 89 –
finance lease liabilities 122 39 39 25 07 07 –
secured bank loans 70 495 500 50 150 300 –
other loans 85 41 41 34 03 04 –
customer deposits – 1034 1034 1034 – – –
trade and other payables – 992 992 980 12 – –
net ﬁnancial liabilities 576 530 236 72 222 –
sensitivity analysis
at 31 december 2007 it is estimated that a general increase of one percentage point in interest rates would increase the group’s proﬁt
before tax by approximately £04 million 2006 £03 million
it is estimated that a ﬁve percentage point weakening in the value of the us dollar against pounds sterling would have decreased the
group’s proﬁt before tax by approximately £31 million for the year ended 31 december 2007 2006 £30 million it is estimated that
a ﬁve percentage point weakening in the value of the euro against pounds sterling would have decreased the group’s proﬁt before
tax by approximately £10 million for the year ended 31 december 2007 2006 £08 million
it is estimated that a ﬁve percentage point weakening in the value of the us dollar against pounds sterling would have decreased
the group’s total equity by approximately £88 million for the year ended 31 december 2007 2006 £81 million it is estimated that
a ﬁve percentage point weakening in the value of the euro against pounds sterling would have increased the group’s total equity
by approximately £nil for the year ended 31 december 2007 2006 £02 million
fair value disclosures
the fair values together with the carrying amounts shown in the balance sheet are as follows
2007 2006
carrying amount fair value carrying amount fair value
£m £m £m £m
cash and cash equivalents 1429 1429 809 809
trade and other receivables 1495 1495 1216 1216
finance lease liabilities 15 12 39 33
secured bank loans 357 357 495 495
other loans 43 43 41 41
trade other payables and customer deposits 2645 2645 2026 2026
136 133 576 570
unrecognised gain 03 06 regus group plc annual report and accounts 2007 69
summary of methods and assumptions
trade and other receivablespayables and customer deposits
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 an appropriate discount rate which reﬂects
current market assessments and the risks speciﬁc to such liabilities
loans and overdrafts
the fair value of bank loans overdrafts and other loans approximates 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
committed borrowing facilities
principal available
£m £m
at 31 december 2007 1372 747
at 31 december 2006 1517 872
principal committed facilities include £1360 million 2006 £1500 million of senior credit facilities which the group entered into
in 2006 of which £747 million 2006 £872 million is available
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
2007 2006
weighted weighted
number of average exercise number of average exercise
share options price per share share options price per share
at 1 january 7261924 6037 7261924 6037
granted during the year 2855764 13522 – –
lapsed during the year 587102 13848 – –
exercised during the year 905299 5844 – –
outstanding at 31 december 8625287 8003 7261924 6037
exercisable at 31 december 6356625 6064 – –
weighted average
numbers exercise price
date of grant granted per share lapsed exercised at 31 dec 2007 exercisable from expiry date
23072004 4106981 5700 – 736842 3370139 23072007 23072014
08092004 3884170 6475 729227 168457 2986486 08092007 08092014
21032007 2148258 13150 314065 – 1834193 21032010 21032017
20042007 707506 14650 273037 – 434469 20042010 20042017
total 10846915 1316329 905299 8625287
the weighted average share price at the date of exercise for share options exercised during the period was 13259p 70wwwreguscom
financial statements notes to the accounts
notes to the accounts continued
24 share based payment continued
performance conditions for share options
the options awarded in 2004 included certain performance criteria that needed to be met in order for the share options to vest
the share options vested based on the basic earnings per share adjusted for nonrecurring items and goodwill and intangible
amortisation that exceeded the targets linked to the retail price index the basic earnings per share for performance purposes
was 1p 100 of the options awarded in july and september 2004 vested during 2007
target over performance period portion of share options vested
rpi 20
rpi  3 40
rpi  4 60
rpi  5 80
rpi  6 100
the options awarded in march and april 2007 have the same performance conditions as the cip awards granted in the same year as
described further below
the share options awarded in 2004 were valued using the black scholes model the share options awarded in 2007 are valued using
a monte carlo model the inputs to the model are as follows
grant date
20042007 21032007 23072004 08092004
share price on grant date 1465p 1315p 5700p 6475p
exercise price 1465p 1315p 5700p 6475p
expected volatility 3508 3527 5911 5906
number of simulations 200000 200000 – –
option life 3 years 3 years 3 years 3 years
expected life 5 years 5 years 3 years 3 years
expected dividend yield 040 044 nil nil
fair value of option at time of grant 554p 538p 250p 280p
risk free interest rate 536 516 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
2007 2006
number of awards number of awards
at 1 january 7568472 3723235
ltip awards granted during the year – 140184
cip awards granted during the year 4073967 3860980
lapsed during the year 263215 155927
outstanding at 31 december 11379224 7568472
plan date of grant numbers granted at 31 dec 2006 lapsed in year at 31 dec 2007 release date
ltip 03112005 3723235 3567308 120630 3446678 03112008
ltip 28092006 140184 140184 – 140184 28092009
3863419 3707492 120630 3586862
cip investment shares 21032006 772196 772196 – 772196 21032009
cip matching shares 21032006 3088784 3088784 – 3088784 21032009
cip investment shares 21032007 833823 – 28517 805306 21032010
cip matching shares 21032007 3240144 – 114068 3126076 21032010
7934947 3860980 142585 7792362
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 year end during the year ended 31 december 2007 7504655 of the
conditional share awards were converted into nil cost share options this change had no impact on the fair value of the awards
but introduced an expiry date applicable to those awards converted into options regus group plc annual report and accounts 2007 71
the ltipcip awards are valued using the monte carlo method
the inputs to the model are as follows
21032007 28092006 21032006 03112005
cip b ltip a cipb ltip a
share price on grant date 13150p 10700p 10725p 9225p
exercise price nil nil nil nil
number of simulations 200000 60000 60000 60000
number of companies 35 29 29 29
expected optionaward life 3 years 3 years 3 years 3 years
expected dividend 044 nil nil nil
fair value of award at time of grant 103p 790p 7994p 6500p
risk free interest rate 534 438 416 447
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 the ltip nil cost options have a vesting date of 3 november 2008 and 28 september 2009 and expiry date of 3 november 2015 and
28 september 2016 respectively
b the cip awards have a release date of 21 march 2009 and 21 march 2010 there is no expiry date and therefore remaining contractual life on the basis that the awards
release immediately the cip nil cost options have a vesting date of 21 march 2009 and 21 march 2010 and an expiry date of 21 march 2016 and 21 march 2017
the performance conditions for the grant of awards under the ltip and cip are set out in the following table
for november 2005 and march 2006 awards eps p for the 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
 denotes the  of ltip award which will be released at the end of the performance period
 adjusted eps
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 2008 the cash tax rate will rise as cumulative tax losses are utilised thereby
increasing progressively the challenge of achieving a 14p eps target this will then be further complicated by the need to recognise
deferred tax assets as the business strengthens reducing the accounting rate of tax in one year and increasing it in the next to
provide greater clarity and incentive to management eps will be calculated based upon the cash tax rate up to a maximum of 30
– the remuneration committee is of the opinion that the eps and free cash ﬂow performance targets are a transparent and accurate
measure of the company’s performance at this time and are the key corporate metrics for driving long term shareholder value
in addition the tsr condition will ensure that executives are encouraged to focus on ensuring that the company’s return to
shareholders is competitive compared to comparable companies 72wwwreguscom
financial statements notes to the accounts
notes to the accounts continued
24 share based payment continued
the performance conditions for the grant of awards and options under the matching share element of the cip made in march 2007
is set out below
 increase in published eps for the year ended 31 december 2009
compared to the published eps for the 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
 denotes the  of cip awards or options 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 the grant
as mentioned above awards under the cip in respect of the bonus paid for the year ended 31 december 2007 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 200 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 2008
25 acquisitions
details of all acquisitions made during 2007 are set out below all of the acquired operations are providers of outsourced workplace
solutions where no equity was acquired the group acquired all the operating assets and liabilities of the related business excluding cash
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
purchase percentage
consideration of equity and
including costs voting rights date of
name region £m acquired acquisition
equity acquisitions
insignia calgary americas 24 100 01112007
business and net asset acquisitions
interactive americas 67 na 13082007
91
in addition to the above a further £83 million of purchase consideration including costs was paid for two equity acquisitions and
18 business and net asset acquisitions regus group plc annual report and accounts 2007 73
fair value
book value adjustments fair value
£m £m £m
net assets acquired
intangible assets – 10 10
property plant and equipment 54 03 57
other noncurrent assets 04 34 38
cash 08 – 08
other current assets 20 04 24
current liabilities 33 20 53
noncurrent liabilities 10 02 12
43 29 72
total consideration
cash 159
deferred consideration 06
directly attributable costs 09
174
goodwill 102
the above fair value adjustments include the value of acquired customer lists the fair value of leasehold interests and related deferred
tax impacts
there was no contingent consideration arising on the above acquisitions that has not been recognised on the group balance sheet
if the above acquisitions had occurred on 1 january 2007 the revenue and net retained loss arising from these acquisitions would have
been £267 million and £01 million respectively in the year these acquisitions contributed revenue of £150 million and a net retained
loss of £04 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 2006 and 2005 acquisitions
additional consideration of £18 million was paid in 2007 due to improved ﬁnancial performance of acquisitions under contractual
earnout provisions and additional acquisition costs this resulted in an increase in goodwill of £18 million
details of all acquisitions completed in the year ended 31 december 2006 are set out below
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 74 – 176
consideration
cash 880 282 – 1162
deferred consideration – 21 03 24
directly attributable costs 14 16 – 30
894 319 03 1216
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 74wwwreguscom
financial statements notes to the accounts
notes to the accounts continued
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 of fair value fair value at
acquired business adjustments date of 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
1103 236 867
noncurrent liabilities
c
12 262 274
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 group plc annual report and accounts 2007 75
details of all other acquisitions made during 2006 are set out in the following table all of the acquired operations are providers of
outsourced workplace solutions where no equity was acquired the group acquired all the operating assets and liabilities of the related
business excluding cash
purchase percentage of
consideration equity and voting date of
name region including costs rights acquired acquisition
equity acquisitions
plaza asia 50 100 1 jan 2006
pinnacle americas 12 100 4 jan 2006
managed office solutions ltd uk 18 100 30 jun 2006
unico business service inc asia 20 100 1 dec 2006
longford business centres ltd uk 35 100 8 dec 2006
business and net asset acquisitions
sierra executive offices nevada americas 04 na 1 mar 2006
pro executive suites florida americas 14 na 28 apr 2006
el golf  global business solutions americas 03 na 4 may 2006
cima spain emea 03 na 1 jun 2006
gainsborough business centres uk 44 na 12 jun 2006
office concierge americas 07 na 21 jun 2006
serviced office specialists asia 04 na 1 july 2006
westgate perth asia 04 na 1 july 2006
stratis new jersey americas 16 na 6 july 2006
ceo executive suites americas 08 na 13 july 2006
hq milwaukee americas 09 na 19 july 2006
laptop lane americas 21 na 31 july 2006
business quarters americas 19 na 7 aug 2006
stratis greensboro americas 01 na 14 aug 2006
toledo executive business centres americas 02 na 31 aug 2006
sierra executive offices colorado springs americas – na 1 sept 2006
mr centre asia 04 na 1 sept 2006
hq colombia americas 10 na 1 sept 2006
charlestown business centre americas 01 na 25 oct 2006
plaza indonesia asia 04 na 1 nov 2006
regus guatamala americas 05 na 1 dec 2006
hq costa rica americas 01 na 1 dec 2006
319
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 06 63
other noncurrent assets – 13 13
cash 22 – 22
other current assets 52 – 52
current liabilities 88 – 88
noncurrent liabilities – 18 18
58 16 74 76wwwreguscom
financial statements notes to the accounts
notes to the accounts continued
25 acquisitions continued
fair value
£m
total consideration
cash 282
deferred consideration 21
directly attributable costs 16
319
goodwill 245
in addition contingent consideration up to a maximum of £03 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 £02 million respectively in the year these acquisitions contributed revenue of £211 million and a net retained
proﬁt 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
26 capital commitments
2007 2006
£m £m
contracts placed for future capital expenditure not provided in the ﬁnancial statements 69 54
these commitments are principally in respect of ﬁt out obligations on new centres opening in 2008 in addition our share of the capital
commitments of joint ventures amounted to £nil at 31 december 2007 2006 £01 million
27 noncancellable operating lease commitments
at 31 december 2007 the group was committed to make the following payments in respect of operating leases
2007 2006
motor motor
vehicles vehicles
plant and plant and
property equipment total property equipment total
£m £m £m £m £m £m
lease obligations falling due
within one year 2863 23 2886 2508 18 2526
between two and five years 8205 30 8235 7484 61 7545
after ﬁve years 3996 05 4001 3955 01 3956
15064 58 15122 13947 80 14027
28 contingent liabilities
the group has bank guarantees and letters of credit held with certain banks amounting to £253 million december 2006 £278 million
a number of lawsuits are pending against the group the outcome of which in aggregate is not expected to have a material effect on
the group
29 related parties
joint ventures
during the year ended 31 december 2007 the group received management fees of £24 million 2006 £18 million from its joint venture
entities at 31 december 2007 £88 million 2006 £89 million was due to the group from joint ventures of which £nil of this debt has
been provided for at 31 december 2007 2006 £nil regus group plc annual report and accounts 2007 77
uk associate
during the year ended 31 december 2007 the group had no interests in companies that were accounted for as associates
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 in addition regus rented ofﬁce space incurring costs of £01 million in the period prior to acquisition
prior to the acquisition regus incurred interest of £01 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
during the year ended 31 december 2007 the group acquired goods and services from a company indirectly controlled by a director
of the company amounting to £5600 2006 £nil the goods and services were acquired in arms length transactions
during the year ended 31 december 2007 maxon investments sarl a company controlled by mark dixon sold 2715443 shares
during the company’s share buyback programme
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
2007 2006
£m £m
short term employee benefits 47 32
termination payments 04 –
share based payments 34 15
85 47
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 £40 million 2006 £30 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 2007 their principal activities and countries of incorporation are set out below
 of ordinary
country of principal share and
name of undertaking incorporation activity b votes held
regus business centre sa
a
argentina i 100
regus clarence street
pty ltd
a
australia i 100
regus business centre
melbourne pty ltd
a
australia i 100
regus macquarie house
pty ltd
a
australia i 100
regus bridge street pty ltd
a
australia i 100
regus riverside pty ltd
a
australia i 100
regus north sydney pty ltd
a
australia i 100
regus 303 collins street
pty limited
a
australia i 100
regus 267 st georges
terrace pty limited
a
australia i 100
regus council house pty ltd
a
australia i 100
regus bondi junction pty ltd
a
australia i 100
regus queens road pty ltd
a
australia i 100
regus como pty ltd
a
australia i 100
regus centres pty ltd australia i 100
regus business centre gmbh
a
austria i 100
regus business centre wll bahrain i 100
regus business centre nv
a
belgium i 100
skyport bruxelles nv belgium i 100
 of ordinary
country of principal share and
name of undertaking incorporation activity b votes held
regus belgium nv belgium i 100
regus stephanie square bvba belgium i 100
regus astrid plaza bvba belgium i 100
regus schuman bvba belgium i 100
regus rubens bvba belgium i 100
regus pegasus bvba belgium i 100
regus parc atrium bvba belgium i 100
regus braine l’alleud bvba belgium i 100
regus leopold square
de meeus bvba belgium i 100
regus do brasil ltda
a
brazil iii 100
regus h holdings inc british virgin ii 100
islands
regus bulgaria eood
a
bulgaria i 100
oceanic business centre inc
a
canada i 100
guardian financial corp inc
a
canada i 100
pacific business centre inc
a
canada i 100
richmond executive centre inc
a
canada i 100
willingdon business centre inc
a
canada i 100
regus canadian holding
corporation
a
canada ii 100
rgn – toronto limited
partnership
a
canada i 100 78wwwreguscom
financial statements notes to the accounts
notes to the accounts continued
30 principal group companies continued
 of ordinary
country of principal share and
name of undertaking incorporation activity b votes held
0798853 bc ltd
a
canada ii 100
rgn – calgary limited
partnership
a
canada i 100
regus business centre ltd
a
canada ii 100
regus business centre
canada lp canada i 60
insignia partnership canada ii 100
insignia office centres
vancouver inc canada i 100
1176513 alberta ltd canada ii 100
1176515 alberta ltd canada ii 100
regus business centre
de chile sa chile i 100
regus business centre
de chile ii sa chile i 100
regus business centre
de chile iii sa chile i 100
regus business centre
de chile iv sa chile i 100
regus business centre
chile ltda
a
chile ii 100
regus business services
shanghai limited
a
china i 100
regus centres services co ltd china i 80
regus business centre
shanghai ltd china i 100
regus business services
beijing ltd china i 100
regus business services
dalian ltd china i 100
regus business services
shenzhen ltd china i 100
regus strategic consulting
shanghai ltd china i 100
regus executive serviced office
shanghai china i 100
regus business consultancy
beijing ltd china i 100
regus business  conference
centre shanghai ltd china i 100
regus business consulting
guangzhou ltd china i 100
regus executive serviced
office beijing china i 100
regus executive service
chengdu ltd china i 100
beijing huanya business 
conference centre ltd china i 100
union plaza consulting co ltd china i 100
allied pacific investment limited china i 100
huanya shang wu fu wu
limited china i 100
regus columbia ltda
a
columbia i 100
regus costa rica srl
a
costa rica i 100
 of ordinary
country of principal share and
name of undertaking incorporation activity b votes held
regus business centre
sro
a
czech republic i 100
regus empiria sro
a
czech republic i 100
regus burzovni palac
sro
a
czech republic i 100
regus brno spielberk
sro
a
czech republic i 100
regus sydhavn aps denmark i 100
regus denmark holding as denmark ii 100
regus kobenhavn aps denmark i 100
regus tuborg aps denmark i 100
regus business centre
trading fzco
a
dubai i 100
regus business centre
llc egypt egypt i 100
regus ltd
a
england ii 100
regus management ltd
a
england iii 100
regus centres ltd
a
england ii 100
regus investments ltd england ii 100
regus business centres
holding england ii 100
regus business centres
trading ltd england ii 100
regus h holdings england ii 100
regus h uk england ii 100
regus g ltd england i 100
regus management uk ltd england iii 100
regus plp uk limited england i 100
regus surrey mayfair ltd england i 100
regus centres uk ltd england ii 100
longford business centres ltd england i 100
regus holdings uk ltd england ii 100
regus uk ltd england i 100
regus business centres
uk ltd england i 100
regus city limited england i 100
regus business services ltd england i 100
mos ltd england i 100
regus gb ltd england i 100
regus south ltd england i 100
regus caledonia ltd england i 100
nuclei limited
a
england i 49
regus finland oy
a
finland i 100
regus paris sas
a
france i 100
regus roissy sas
a
france i 100
regus opera sas
a
france i 100
regus holdings france sas
a
france ii 100
regus centre d’affaires sas
a
france i 100
regus business centre sas
a
france iii 100
regus vendome sas france i 100
regus grand arch sas france i 100
regus sophie antipolis sas france i 100
regus montpellier sas france i 100
regus provence sas france i 100 regus group plc annual report and accounts 2007 79
 of ordinary
country of principal share and
name of undertaking incorporation activity b votes held
regus germany holding
gmbh  co kg
a
germany ii 100
regus gmbh  co kg germany i 100
rbc deutschland gmbh germany i 100
regus netspace germany
gmbh  co kg germany i 100
regus germany holding
gp gmbh germany ii 100
regus munchen laim gmbh germany i 100
regus hamburg spitalerhof
gmbh germany i 100
regus dusseldorfairport gmbh germany i 100
regus management gmbh germany ii 100
regus hamburg valentinskamo
gmbh  co kg germany i 100
regus munchen artemis gp
gmbh  co kg germany i 100
regus hamburg chilehaus gp
gmbh  co kg germany i 100
regus hellas sa
a
greece i 100
regus guatemala srl
a
guatemala i 100
regus guatemala ii srl
a
guatemala i 100
regus business centre ltd
a
hong kong i 100
regus business services
hong kong ltd
a
hong kong i 100
regus hong kong ltd
a
hong kong i 100
regus services
hong kong ltd
a
hong kong i 100
regus kalman kft
a
hungary i 100
regus emke kft
a
hungary i 100
regus kft hungary i 100
regus business centre
pvt ltd
a
india i 100
regus office centre services
pvt ltd
a
india i 100
regus business centre
bangalore pvt ltd
a
india i 100
regus business centre
gurgaon pvt ltd
a
india i 100
murphy road bc pvt ltd
a
india i 100
kasturba road business
centre pvt ltd
a
india i 100
regus business centre
chennai pvt ltd
a
india i 100
regus business centre
pune pvt ltd
a
india i 100
regus centre saket pvt ltd
a
india i 100
regus business centre
gurgaon pvt ltd
a
india i 100
regus suburb centre pvt ltd
a
india i 100
east india business centre pvt ltd
a
india i 100
regus centre services
bangalore pvt ltd
a
india i 100
regus business centre
hyderabad pvt ltd
a
india i 100
 of ordinary
country of principal share and
name of undertaking incorporation activity b votes held
regus midtown business
centre pvt ltd
a
india i 100
regus business centre
delhi pvt ltd
a
india i 100
regus business centre
nagpur pvt ltd
a
india i 100
regus office centre services
chennai pvt ltd
a
india i 100
regus mumbai metropoliton
bc pvt ltd
a
india i 100
regus gurgaon metro bc pvt ltd
a
india i 100
pt regus centres indonesia
a
indonesia i 100
pt regus satrio indonesia
a
indonesia i 100
regus ireland ltd
a
ireland i 100
regus franchise international ltd ireland i 100
europa business centre ltd ireland i 100
regus business centres ltd
a
israel i 100
regus business centre srl italy i 100
regus business centres
italia srl italy i 100
regus japan kk
a
japan i 100
regus business centre
nagoya kk
a
japan i 100
regus europe ltd jersey ii 100
regus luxembourg sa luxembourg i 100
regus centres sdn bhd
a
malaysia i 100
regus malaysia sdn
a
malaysia i 100
regus sentral sdn bhd
a
malaysia i 100
regus india holdings limited
a
mauritius ii 100
vantas cd de mexico
s de rl de cv mexico ii 100
regus business centre
sa de cv mexico i 100
regus services sa de cv mexico i 100
centro coporativo de mexico
sa de cv mexico i 100
centro do negocios cuidad
de mexico sa de cv mexico i 100
centro do negocios polanco
sa de cv mexico i 100
regus maroc sarl morocco i 100
regus netherlands bv
a
netherlands ii 100
regus business centres bv netherlands ii 100
satelite business centre
schipol bv netherlands i 100
skyport international bv netherlands i 100
wtc zuiplien bv netherlands i 100
skyport amsterdam bv netherlands i 100
regus amsterdam bv netherlands iii 100
regus hojel bv netherlands i 100
regus weena bv netherlands i 100
regus atrium bv netherlands i 100
regus atlas bv netherlands i 100
regus parkstraat bv netherlands i 100
regus zen bv netherlands i 100 80wwwreguscom
financial statements notes to the accounts
notes to the accounts continued
30 principal group companies continued
 of ordinary
country of principal share and
name of undertaking incorporation activity b votes held
regus eindhoven bv netherlands i 100
regus arnhem bv netherlands i 100
regus hilversum bv netherlands i 100
regus brainpark bv netherlands i 100
regus amersfoort bv netherlands i 100
regus tetra bv netherlands i 100
regus zurich tower bv netherlands i 100
regus breda bv netherlands i 100
regus schiphol rijk bv netherlands i 100
regus teleport tower bv netherlands i 100
regus amstel business
park bv netherlands i 100
regus rijswijk bv netherlands i 100
regus equinox i bv netherlands i 100
regus equinox ii bv netherlands i 100
regus nijmegen bv netherlands i 100
regus tilburg bv netherlands i 100
regus shortland street
ltd
a
new zealand i 100
regus business centre
norge as
a
norway ii 100
regus business centre
ibsen as norway i 100
regus business centre
skogen as norway i 100
regus business centre
nydalen as norway i 100
regus bahria karachi
a
pakistan i 100
regus business centre
panama sa
a
panama i 100
regus business centre
peru sa
a
peru i 100
regus net cube inc
a
philippines i 100
regus business centre inc philippines i 100
regus business centre
sp z oo
a
poland i 100
regus plaza sp z oo
a
poland i 100
regus wisniowy sp z oo
a
poland i 100
regus mokotow sp z oo
a
poland i 100
regus metropolitan sp z oo
a
poland i 100
regus business centre lda
a
portugal i 100
regus international srl
a
romania i 100
llc regus business centre
a
russia i 100
regus business centre
avrora llc
a
russia i 100
regus business centre
capital plaza llc
a
russia i 100
regus moscow city llc
a
russia i 100
st petersburg austrian
business centre llc
a
russia i 100
regus business centre
atrium llc
a
russia i 100
regus business centre
citydel llc
a
russia i 100
 of ordinary
country of principal share and
name of undertaking incorporation activity b votes held
regus singapore business
centre pte ltd
a
singapore i 100
regus centres pte ltd
a
singapore i 100
regus nac pte ltd
a
singapore i 100
regus business services
marina pte ltd
a
singapore i 100
regus business centre
bratislava sro
a
slovakia i 100
regus southern africa
pty
a
south africa i 100
regus business centre
pty ltd south africa i 100
regus business centre
sandton pty ltd south africa i 100
regus business centre
durban pty ltd south africa i 100
regus business centre
foreshore pty ltd south africa i 100
regus business centre
midrand pty ltd south africa i 100
regus business centre
mowbray pty ltd south africa i 100
regus business centre
woodmead pty ltd south africa i 100
rmg south africa pty ltd south africa iii 100
rbc century city pty ltd south africa i 100
regus korea ltd
a
south korea i 100
regus jongro ltd
a
south korea i 100
regus samsungdong
limited
a
south korea i 100
regus business centre sa
a
spain i 100
regus miraflores sl spain i 100
regus valencia sl spain i 100
business centre gothenburg
ab
a
sweden i 100
business centre sweden ab
a
sweden i 100
regus garda ab
a
sweden i 100
business centre lilla bommen
ab
a
sweden i 100
regus centre uppsala ab
a
sweden i 100
regus solna strand ab
a
sweden i 100
regus business centre sa
a
switzerland i 100
regus centres ltd
a
thailand i 100
office advantage ltd
a
thailand i 100
regus tunisie sarl
a
tunisia i 100
regus is merkezi isletmeciligi
ltd
a
turkey i 100
regus business centre
ukraine
a
ukraine i 100
regus corporation llc
a
united states ii 100
regus h holdings corp
llc united states ii 100
stratis business centers
llc united states i 100 regus group plc annual report and accounts 2007 81
 of ordinary
country of principal share and
name of undertaking incorporation activity b votes held
regus southeast
investments llc united states i 100
rgn northwest llc united states i 100
buffalo acquisitions sub
llc united states i 100
delval acquisition sub llc united states i 100
rgn – south florida llc united states i 100
florida business center
acquisition sub llc united states i 100
regus group –
north dallas llc united states i 100
rgn – new jersey llc united states i 100
rgn – midwest llc united states i 100
regus dc llc united states i 100
regus management
group llc united states iii 100
rgnll llc united states i 100
rgn – northeast llc united states i 100
rgn – chicago llc united states i 100
rgn – south east llc united states i 100
rgn – memphis llc united states i 100
rgn – winderely llc united states i 100
hq global holdings llc united states ii 100
hq global workspaces
llc united states i 100
hq subsidiaries llc united states ii 100
hq network systems llc united states i 100
regus business center
llc united states i 100
regus international
services sa uruguay ii 100
regus international
services llc uruguay iii 100
regus business centre
venezuala ca venezuala i 100
a shares held directly by regus group plc
b principal activity – i trading company ii investment holding company
iii management company
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 judgments 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
judgment has an impact on the amounts recorded include tangible
ﬁxed assets customer list intangibles and the fair market value
of leasehold assets and liabilities for signiﬁcant business
combinations management also obtain third party valuations
to provide additional guidance over the appropriate valuation
to be included in the ﬁnancial statements
valuation of intangibles and goodwill
we evaluate the fair value of goodwill and intangibles to assess
potential impairments on an annual basis or during the year if an
event or other circumstance indicates that we may not be able to
recover the carrying amount of the asset we evaluate the carrying
value of goodwill at the appropriate 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 when it is probable that future taxable proﬁts
will be available against which the losses can be used the group
considers it probable if the entity has made a taxable proﬁt in
the previous year and is forecast to continue to make a proﬁt
in the foreseeable future
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 an appropriate weighted average cost
of capital
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 when it is probable that an outﬂow will
occur and can be reliably estimated 82wwwreguscom
financial statements
regus group plc parent company accounts
company balance sheet
as at as at
31 dec 2007 31 dec 2006
uk gaap uk gaap
£m £m
notes restated
investments
investments in subsidiaries 1 3742 4336
other noncurrent assets
amounts owed by group undertakings 1452 –
deferred tax assets 2 06 –
1458 –
current assets
amounts owed by group undertakings 739 1082
deferred finance fees 08 11
cash at bank and in hand 400 102
1147 1195
total assets 6347 5531
creditors falling due within one year
corporation tax payable 02 –
trade and other payables 10 08
amounts owed to group undertakings 29 16
bank and other loans 3 120 48
161 72
total assets less current liabilities 6186 5459
creditors falling due in more than one year
bank and other loans 3 239 446
amounts owed to group undertakings 707 508
total liabilities 1107 1026
net assets 5240 4505
capital and reserves
issued share capital 4 492 492
treasury shares 134 –
other reserves 01 01
proﬁt and loss account 4881 4012
shareholder funds 5240 4505
 see accounting policies for details of the restatement
approved by the board on 14 march 2008
mark dixon stephen gleadle
chief executive ofﬁcer chief financial ofﬁcer regus group plc annual report and accounts 2007 83
accounting policies
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 frs8 and has therefore not disclosed transactions or balances
with entities which form part of the group
in accordance with frs1 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 £891 million 2006 £642 million
the following accounting policies unless otherwise stated
have been applied consistently in dealing with items which
are considered material in relation to the company’s ﬁnancial
statements the following change to accounting policies has
been applied with an effective date from 1 january 2007
comparative periods have been restated where applicable
uitf 41 – ‘scope of frs 20’ was applicable for accounting
periods beginning on or after 1 may 2006 the uitf concluded
that share based payments for which the value of the goods or
services received is less than the fair value of the share based
payment are within the scope of frs20 as a consequence
where a parent company awards shares to the employees who
provide services to a subsidiary company the parent company
should recognise the fair value of the share based payment as
an increase in the cost of investment in the subsidiary with a
corresponding movement in equity the impact of applying
uitf 41 resulted in an increase in the opening cost of investment
in subsidiaries of £28 million and a corresponding increase in
opening equity as at 31 december 2006 the impact of the change
in accounting policy in the year ended 31 december 2007 was
an increase in the cost of investment of subsidiaries and in equity
by £45 million the change in accounting policy did not have an
impact on the proﬁt and loss account it is not possible to estimate
the impact on future periods
investments
fixed asset investments are stated at cost less provision
for impairment
share based payment
the company awards share options and conditional share awards
to employees of subsidiary companies no goods or services are
received directly by the company from the employees in exchange
for the share based payment and the services are received wholly
by the subsidiary company the company accounts for the fair
value of the share based payment measured at the date of grant
as an increase in the carrying value of the investment in the
subsidiary recognised over the period during which the employees
become unconditionally entitled to the options and awards no
expense is recognised in the proﬁt and loss account of the company
for share based payment a corresponding increase in equity is
recognised for the increase in the carrying value of the subsidiary
full details of the share based payment provided by the company
can be found in note 24 to the regus group plc accounts and
the group remuneration report on pages 35 to 41
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 frs19
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
finance charges
interest charges and income are accounted for in the proﬁt and
loss account on an accruals basis deferred ﬁnance fees that
relate to ﬁnancial liabilities are charged to the proﬁt and loss
account through the interest expense using the effective interest
rate method and are recognised within the carrying value of the
related ﬁnancial liability on the balance sheet fees paid for the
arrangement of undrawn credit facilities are recognised as a
prepayment and recognised through the ﬁnance expense over
the term of the facility in the event of a facility being drawn the
relevant unamortised portion of the fee is recognised within the
carrying value of the ﬁnancial liability and charged to the interest
expense using the effective interest rate method
interest bearing borrowings
interest bearing borrowings are recognised 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 proﬁt and loss account over the period of the borrowings
on an effective interest basis
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 84wwwreguscom
financial statements
regus group plc parent company accounts continued
1 investments
£m
at 1 january 2006 3077
additions 1286
provision for impairment 55
at 31 december 2006 as published 4308
change in accounting policy for share based payment 28
at 31 december 2006 as restated 4336
at 1 january 2007 4336
additions 55
provision for impairment 03
repurchase of capital and capital distributions 691
fair value of share based payment 45
at 31 december 2007 3742
the company’s principal subsidiary undertakings at 31 december 2007 their principal activities and countries of incorporation can be
found in note 30 of the group accounts of regus group plc
2 deferred taxation
short term
property plant temporary
and equipment differences 2007 2006
£m £m £m £m
at 1 january – – – –
current year movement 04 02 06 –
at 31 december 04 02 06 –
the following deferred tax assets have not been recognised due to uncertainties over recoverability
2007 2006
£m £m
tax losses 13 –
3 financial instruments
as at 31 december 2007
fair value total less than 1 year 1–2 years 2–5 years more than 5 years
£m £m £m £m £m £m
cash at bank and in hand 400 400 400 – – –
amounts owed from group undertakings 2191 2191 739 – 501 951
bank and other loans 359 359 120 119 120 –
amounts owed to group undertakings 736 736 29 – 707 –
trade and other payables 10 10 10 – – –
net ﬁnancial assets 1486 1486 980 119 326 951
as at 31 december 2006
fair value total less than 1 year 1–2 years 2–5 years more than 5 years
£m £m £m £m £m £m
cash at bank and in hand 102 102 102 – – –
amounts owed from group undertakings 1082 1082 1082 – – –
bank and other loans 494 494 48 149 297 –
amounts owed to group undertakings 524 524 16 – 508 –
trade and other payables 08 08 08 – – –
net ﬁnancial assets 158 158 1112 149 805 –
the company is exempt from adopting frs 29 “financial instruments disclosures” under frs 29 the company is exempt from
the requirement to provide its own financial instruments’ disclosures on the grounds that these are included within note 23 of the
group accounts of regus group plc regus group plc annual report and accounts 2007 85
4 capital and reserves
profit and
share capital profit and loss reserve
share treasury premium redemption loss reserve non
capital shares account reserve distributable distributable total
£m £m £m £m £m £m £m
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 as previously reported 492 – – 01 1424 2560 4477
change in accounting policy for share based payment – – – – – 28 28
at 31 december 2006 as restated 492 – – 01 1424 2588 4505
at 1 january 2007 492 – – 01 1424 2588 4505
purchase of treasury shares
b
– 147 – – – – 147
ordinary dividend paid – – – – 59 – 59
exercise of share options – 13 – – 08 – 05
share based payment – – – – – 45 45
retained proﬁt for the year – – – – 891 – 891
at 31 december 2007 492 134 – 01 2248 2633 5240
a on 28 june 2006 the company 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 details of the scheme of arrangement were contained within the notice of the agm dated 3 april 2006
b treasury shares represent 11947702 ordinary shares of the group that were acquired for the purposes of the regus group’s employee share option plans and the share
buyback programme during the year 12853001 shares were purchased 905299 shares were utilised to satisfy the exercise of share options held by employees of
subsidiary companies at 14 march 2008 33972702 treasury shares were held following the purchase of a further 22025000 shares subsequent to the balance sheet
date for a total consideration of £166 million
c the company’s distributable reserves comprise £2114 million represented by £2248 million relating to the proﬁt and loss reserve less £134 million relating to the
purchase of treasury shares
5 capital commitments and contingent liabilities
at 31 december 2007 the company had no annual commitments under operating leases 2006 £nil capital commitments 2006 £nil
or contingent liabilities 2006 £nil
6 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 35 to 41
the company had no employees during the year 2006 £nil
7 audit fees
amounts paid to the company’s auditor and their associates in respect of services to the company other than the audit of the
company’s ﬁnancial statements have not been disclosed as the information is required instead to be disclosed on a consolidated basis 86wwwreguscom
shareholder information
segmental analysis – management basis unaudited
americas emea asia paciﬁc united kingdom other total
2007 2007 2007 2007 2007 2007
mature
workstations 50127 25968 6821 – – 82916
occupancy  869 872 819 – – 866
revenue £m 2937 2193 475 – – 5605
contribution £m 1000 785 192 – – 1977
2006 expansions
workstations 6653 1307 4732 25914 – 38606
occupancy  778 847 775 835 – 818
revenue £m 281 94 247 1968 – 2590
contribution £m 40 32 88 432 – 592
2007 expansions
workstations 4092 1520 3195 1548 – 10355
occupancy  691 544 331 638 – 550
revenue £m 130 92 55 89 – 366
contribution £m 12 19 05 11 – 47
closures
workstations 288 330 – 443 – 1061
occupancy  765 862 – 858 – 834
revenue £m 15 24 – 24 – 63
contribution £m 01 05 – 07 – 03
total
workstations 61160 29125 14748 27905 – 132938
occupancy  847 853 699 824 – 827
revenue £m 3363 2403 777 2081 – 8624
contribution £m 1027 803 275 414 – 2519
revpaw £ 5497 8251 5267 7460 – 6487 americas emea asia pacific united kingdom other total
2006 2006 2006 2006 2006 2006
mature
workstations 49429 25726 6501 – – 81656
occupancy  869 794 769 – – 835
revenue £m 2922 1889 418 – 07 5236
contribution £m 878 599 151 – 07 1635
2006 expansions
workstations 2608 479 2508 17916 – 23511
occupancy  761 551 610 772 – 750
revenue £m 96 23 91 1226 – 1436
contribution £m 13 03 09 200 – 193
2006 closures
workstations 214 307 – – – 521
occupancy  821 690 – – – 740
revenue £m 12 14 – – – 26
contribution £m 01 06 – – – 05
2007 closures
workstations 360 627 – 582 – 1569
occupancy  776 792 – 786 – 786
revenue £m 29 33 – 40 – 102
contribution £m 01 02 – 09 – 08
total
workstations 52611 27139 9009 18498 – 107257
occupancy  860 790 720 770 – 818
revenue £m 3059 1959 509 1266 07 6800
contribution £m 865 600 160 209 07 1841
revpaw £ 5813 7219 5647 6843 – 6340
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 12month comparative
– expansions include new centres opened and acquired businesses
– a 2007 closure is deﬁned as a centre closed during the 12 months period to 31 december 2007 a 2006 closure is deﬁned as a centre closed during the 12month period
to 31 december 2006
– workstation numbers are calculated as the weighted average for the year
– emea represents europe excluding uk middle east and africa
regus group plc annual report and accounts 2007 87 88wwwreguscom
shareholder information
five year summary
full year ended full year ended full year ended full year ended full year ended
31 dec 2007 31 dec 2006 31 dec 2005 31 dec 2004 31 dec 2003
ifrs ifrs ifrs ifrs uk gaap
£m £m £m £m £m
revenue 8624 6800 4633 3122 2566
cost of sales before nonrecurring costs 6105 4959 3462 2582 2397
nonrecurring cost of sales – – 01 66 –
cost of sales 6105 4959 3461 2648 2397
gross proﬁt centre contribution 2519 1841 1172 474 169
administration expenses before nonrecurring expenses 1293 1019 649 442 387
nonrecurring administration expenses – – 50 20 64
administration expenses 1293 1019 699 462 451
operating proﬁtloss 1226 822 473 12 282
share of posttax profitloss of joint ventures 08 01 02 07 02
share of posttax proﬁtloss of associate – 12 02 30 37
proﬁtloss before ﬁnancing costs 1234 833 473 25 321
profit on sale of subsidiaries – – – – 66
finance expense 81 80 108 37 44
finance income 41 22 22 13 –
proﬁtloss before tax for the year 1194 775 387 49 299
tax chargecredit 158 48 61 26 21
proﬁtloss after tax for the year 1036 823 448 23 278
attributable to
equity shareholders of the parent 1031 823 445 24 287
minority interests 05 – 03 01 09
1036 823 448 23 278
earningsloss per ordinary share eps
basic p 105p 84p 45p 03p 47p
diluted p 104p 83p 45p – –
weighted average number of shares outstanding ‘000’s 980962 984792 984792 859702 574805
balance sheet data as at 31 december
intangible assets 2699 2631 1610 1332 –
property plant and equipment 1847 1272 766 761 755
deferred tax assets 468 361 219 62 –
trade and other receivables 2172 1727 1003 760 623
cash and cash equivalents 1429 809 741 823 850
total assets 8615 6800 4339 3738 2228
current liabilities 4482 3408 2299 1824 1342
noncurrent liabilities 961 1030 433 888 342
provisions 74 117 79 89 526
equity minority interests 05 – – 06 11
equity shareholders funds’ 3093 2245 1528 943 29
total liabilities and shareholders’ funds 8615 6800 4339 3738 2228
results are presented under ifrs for 2007 2006 2005 and 2004 if the prior years were to be restated then the main adjustments
would be in respect of lease accounting our mission
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
our vision
we aim to be the number one in all markets in which
we operate through our controlled and disciplined
expansion strategy
our values
the commitment loyalty and efforts of our team members
play a key role in differentiating us from our competitors
regus group key facts
400000
customers
155270
workstations globally
918
business centres
70 countries
83
average occupancy
4730
employees
worldwide
1 click
away from our
customers
corporate directory
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
equiniti limited
aspect house
spencer road
lancing
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
glossary
available workstations
the total number of workstations in the group also termed
inventory during the year this is expressed as a weighted
average at period ends the absolute number is used
bric economies
economies of brazil russia india and china
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
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 12month period prior to the start of
the ﬁnancial year which therefore have a full year comparative
“n11” economies
economies of bangladesh egypt indonesia iran mexico nigeria
pakistan philippines south korea turkey and vietnam
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 business
centres newly established by regus
revpaw
total revenue per available workstations revenueavailable
workstations
revpow
total revenue per occupied workstation
wipow
workstation income per occupied workstation
designed and produced by black sun plc 44 020 7736 0011 regus group plc annual report and accounts 2007
workwithoutboundaries
regus group plc annual report and accounts 2007 workwithoutboundaries
regus group plc
3000 hillswood drive
hillswood business park
chertsey
surrey kt16 0rs
united kingdom
wwwreguscom


Summary:
 regus group plc annual report and accounts 2007 3
chairman’s statement
we remain focused on growth
i am pleased to report that regus has delivered another year of record results
this year surpassing £100 million of posttax earnings for the ﬁrst time
the business model continues to work well
with proﬁtability growth from our mature sites
and recent expansions driving our ability to both
return cash to stakeholders as well as invest in
further capacity growth
in the year to 31 december 2007 we grew
our average available workstations by 239
at the same time as increasing capacity we
have also returned £206 million to shareholders
and still increased our net cash balance from
£234 million to £1014 million
financial performance
group revenue has increased by 268 to
£8624 million and gross proﬁt by 368 to
£2519 million excluding the impact of new
centre growth the “like for like” improvement
was 70 and 209 respectively this overall
result was driven by average occupancy
increasing to 827 from 818 in 2006 and
revenue per available workstation “revpaw”
increasing 23 from £6340 to £6487
earnings proﬁt after tax grew by 259 to
£1036 million and basic earnings per share
increased by 250 to 105p
sustaining growth
our strategic expansion remains a controlled
blend of organic growth and carefully targeted
acquisitions during the ﬁnancial year we
opened 146 centres for a total investment
of £687 million
looking forward we expect to be able to
continue this balanced expansion programme
dividend
given this strong performance the board is
recommending a 67 increase in the total
dividend per share to 10p for the year
subject to the approval of shareholders at the
2008 agm this ﬁnal dividend will be paid on
30 may 2008 to shareholders on the register
at the close of business on 2 may 2008
our stakeholders
the group recognises its economic social
and environmental impacts on society through
its operations and interaction with all key
stakeholders including our investors
customers landlords suppliers and employees
accordingly we continue to be focused on
and committed to managing our business in
a responsible and positive manner to address
these impacts critical to achieving this will
be our people who continue to play a pivotal
role in delivering our goals and ensuring our
customers experience continually high
standards i personally want to extend my
thanks to all of our staff for their continued
commitment and efforts throughout 2007
looking forward
while clearly aware of potential adverse market
conditions we believe our business model is
capable of delivering further proﬁtable growth
in 2008
john matthews
chairman
john matthews