Regus reaps rewards as firms look for more flexible approach

The group, which has four sites in Leeds and one in Sheffield, said its occupancy rate at its mature centres open before January 2010 increased to a record rate of 87 per cent.

Chief executive Mark Dixon pledged to double its network in Yorkshire and described the region as a “growth market”.

“We expect to do pretty well in difficult times as more and more companies want to cut cost and want to improve flexibility,” he said. “No one knows what the future holds and (in a downturn) we lose a little bit of business but we gain a lot more.

“It’s in a good position to benefit from uncertainty.

“What we’re seeing is a quite dramatic increase in the number of flexible workers. That means people are working from home more. Technology is allowing that to a degree that has not been seen before.”

Regus offers ready-to-use office space for as short as half a day. It currently has business centres in 88 countries and has customers including Google and Starbucks.

The group’s profits in the first six months of the year hit £13m versus £6.1m losses a year earlier. Revenues surged 10 per cent to £565.6m.

Regus invested £45.6m in growth during the first half, comprising 48 new centres and 5,674 new workstations. This takes its total workstations to 193,393, and the group expects this growth to accelerate.

“We expect to see the level of growth increase in the second half as we are still seeing very healthy levels of demand with more companies looking to cut costs and move to flexible working and we will need to open up centres to supply that demand,” said Mr Dixon. After experiencing a surge in business failures late last year, Mr Dixon said it has fared better this year.

“In places like the UK we think there has been less problems through administrations. There was a lot at the end of last year.”

The company had net cash of £197.8m at the end of June, and plans to spend some of this on new centres.

He said: “Yorkshire is very much a growth market. We’ve got a strong business in Yorkshire and we’re looking in the next couple of years to double the network there.

“There are lots of cities where we’re not represented.”

Its number of customers rose by 12.7 per cent to 904,086. Of these, more than 700,000 are home or mobile workers.

In March the company reported a 67 per cent drop in earnings but said expansion and cost-cutting will return it to growth this year.

Regus shares lifted 4.7 per cent, gaining 3p to close at 67p.

Margins from its mature business increased to 25 per cent from 22 per cent a year earlier.

Regus added it is seeing a trend of gradual price improvement, which it expects to continue this year.

In the UK it has 158 centres. Regus said conditions here improved, with mature margins recovering nearer to normalised levels.

However, pricing continued to be challenging, although with signs of improvement.

It achieved an average mature occupancy rate of 84.4 per cent in the UK versus 72.7 per cent a year earlier.

Regus said its cash generation improved by 49 per cent to £72m, allowing it to fund its expansion without reliance on bank finance.

It has also increased its range of partnerships, joining forces with airline Lufthansa and The Federation of Small Businesses.

Analysts hailed its return to profitability.

“The performance within its mature sites was a key driver behind this, while underlying cash generation was also excellent making its expansion during the period self-funded,” said analysts at stockbroker Panmure Gordon.

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