Founder buys more stock as Regus slips deeper into the red

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The Independent Online

Shares in Regus, the serviced office provider, tumbled 15 per cent yesterday as it warned of a tricky year ahead and revealed its founder and chief executive, Mark Dixon, bought £240,000 of stock.

Regus posted fourth-quarter operating losses of £11.7m as turnover in the period fell 9 per cent on the previous year to £118m. Annual pre-tax losses widened from £39.9m to £110m amid hefty restructuring charges as sales climbed 22 per cent to £513m. The business commits itself to long-term leases while offering its customers shorter-term lets, making itself especially vulnerable to turns in the economic cycle.

Exceptional charges rose from £9.5m in 2000 to £90.5m.

Mr Dixon warned that the company was heading for an equally difficult time in 2002, but moved to reassure investors that the hefty restructuring seen during 2001 was over and the group was adequately financed.

"We have stabilised the business and we are starting to see one or two positive indications out there in terms of prices and occupancy. We don't see 2002 as being an easy year, but we're a great deal better placed for the challenges ahead than we were," he said.

The order book stood at its strongest ever after the company offered discounts to customers signing longer-term contracts.

Regus shares fell as much as 10p, or 31 per cent, to 22p before recovering to close down 4.5p at 27.25p after Mr Dixon moved to raise his stake to more than 63 per cent. He also bought shares when the company released second-quarter figures. The shares hit a high of 392p early last year.

Paul Ginocchio, an analyst at Deutsche Bank, said the company had met projections for cashflow. "The fall in the shares is overdone," he added.

Regus, which employs about 54,000 people worldwide, cut almost a quarter of its staff last year as part of moves to strip its cost base by £60m, or 50 per cent. It indicated that the US remained its most problematic market.

While there would be no more restructuring, the group was exploring ways of becoming more efficient by renegotiating some of its fixed costs.

Cash at the bank totalled £117m at 31 December, including £40m from the issue of a convertible bond at the end of last year.