Serviced office provider Regus had a strong first half, though not quite as strong as the numbers imply. Profits were actually boosted by accounting changes - Regus has started to capitalise some office set-up costs it used to expense through the income statement. Adjust for these changes and pre-tax profit for the period rose 64 per cent to £21.3m.
It achieved this partly by good yield management, but mainly by cutting costs. Occupancy in its mature centres (those opened in 2010 or before) rose slightly from 84.4 per cent to 85.9 per cent, while revenue per occupied workstation - a measure of average price - increased by 1.3 per cent to £3,800. That boosted sales by 2.6 per cent. Crucially, however, its mature revenues this year were much more profitable - the gross margin rose from 24.3 per cent to 27 per cent (adjusting for the accounting changes) and overheads fell from £101m to £85.1m. Accordingly, operating profits from the mature centres more than doubled. This more than compensated for increased losses from the 215 centres added this year and last. Chief executive Mark Dixon wants to expand Regus's portfolio to 2,000 by 2014, from 1,268 now.
Broker Investec Securities expects adjusted full-year pre-tax profit of £90m, giving EPS of 8p (from £49.3m and 4.4p in 2011).
REGUS (RGU) | ||||
|---|---|---|---|---|
| ORD PRICE: | 98p | MARKET VALUE: | £923m | |
| TOUCH: | 97.95-98p | 12-MONTH HIGH: | 120p | 63p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 54p* | NET CASH: | £153m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 566 | 13.8 | 2.70 | 0.90 |
| 2012** | 609 | 32.2 | 2.90 | 1.00 |
| % change | +8 | +133 | +7 | +11 |
Ex-div: 5 Sep Payment: 5 Oct *Includes intangible assets of £333m, or 35p a share **After accounting changes | ||||
