Serviced office operator Regus (RGU) opened 243 new centres last year, expanding its network by 17 per cent. New centres are a major drag on the bottom line, yet the company still managed to grow adjusted operating profits by 36 per cent to £68.6m, thanks largely to improved margins at its cash-generative mature centres.
Adjusting for accounting changes, the mature centres (which include all those opened before 2011) posted an eye-catching operating margin of 14.1 per cent - up from 9.4 per cent last year. The improvement was consistent across all geographic regions, so that even depressed Europe, where revenues fell, posted strong profit growth.
Aiming to add at least 350 centres this year - including 64 from the recent acquisition of MWB Business Exchange - chief executive Mark Dixon wants 2,000 centres by the end of 2014. "We like to expand when times are tough as it's a little easier to get property," he says. He expects to spend most of the £120m year-end cash pile on the expansion programme, leaving Regus with its £200m credit facility for further growth.
Broker Investec has trimmed its current year EPS forecast to 8.4p, reflecting management's renewed focus on expansion, while increasing its 2014 forecast to 12.5p.
REGUS (RGU) | ||||
|---|---|---|---|---|
| ORD PRICE: | 143p | MARKET VALUE: | £1.34bn | |
| TOUCH: | 142-143p | 12-MONTH HIGH: | 143p | LOW: 82p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 56p* | NET CASH: | £120m | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 1.08 | 149.2 | 12.0 | 1.8 |
| 2009 | 1.06 | 86.9 | 7.1 | 2.4 |
| 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 |
| % change | +7 | +72 | +74 | +10 |
Ex-div: 1 May Payment: 29 May *Includes intangible assets of £364m, or 39p a share | ||||
