Workplace provider Regus (RGU) accelerated its network expansion programme during 2014. The group increased the size of its estate by almost a quarter, adding 452 locations - far more than the 300 initially planned.
What's more, its overheads increased by just 4 per cent at constant currencies. Chief executive Mark Dixon said it managed to do this by partnering with other companies, mainly in the property sector, to deliver projects. It is also opening offices in smaller cities and locations with lower start-up costs, such as railway stations.
Stripping out currency headwinds, operating profits rose by more than a quarter to £104m, fuelled by rising employer demand for flexible workspaces. Locations opened in 2012 and 2013 continue to gain traction, with gross margins more than doubling to 17 and 10 per cent, respectively.
Regus plans to expand the network to 20,000 locations, said Mr Dixon, which would take 11 years at the current pace of expansion. But he stressed that securing a good return on its investment was key, and the company was not going to "slaughter the balance sheet to do it". Management calculates the average return on investment for those locations opened before 2011 at 20.9 per cent.
Broker Investec Securities expects adjusted EPS of 10.9p this year, up from 7.4p in 2014.
REGUS (RGU) | ||||
|---|---|---|---|---|
| ORD PRICE: | 230p | MARKET VALUE: | £2.2bn | |
| TOUCH: | 230-230.4p | 12-MONTH HIGH: | 243p | LOW: 160p |
| DIVIDEND YIELD: | 1.7% | PE RATIO: | 31 | |
| NET ASSET VALUE: | 57p* | NET DEBT: | 26% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 1.04 | 7.8 | 0.2 | 2.6 |
| 2011 | 1.16 | 49.4 | 4.3 | 2.9 |
| 2012 | 1.24 | 85.1 | 7.5 | 3.2 |
| 2013 | 1.53 | 81.5 | 7.1 | 3.6 |
| 2014 | 1.68 | 87.1 | 7.4 | 4.0 |
| % change | +9 | +7 | +4 | +11 |
Ex-div: 30 Apr Payment: 29 May *includes intangible assets of £550m, or 59p a share | ||||
