Trend for flexible working proving a bonus for Regus

The group, which has sites in Leeds and Sheffield, now spans 96 countries and was driven by strong performance in its Americas business.

Pre-tax profits hit £32.2m in the first six months of the year, versus £13.8m a year earlier. Revenues increased almost eight per cent to £608.6m.

Regus said its mature business – centres opened before the end of 2010 which form the ‘backbone’ of the company – sustained high occupancy levels at 85.9 per cent, up from 84.4 per cent a year earlier.

“Our mature business saw strong demand across all geographies and customer types, with profitability more than doubling on the back of improvements in occupancy and yield management,” said chief executive Mark Dixon.

The group invested £65.1m in new centres during the half, adding 76 sites. That was up from the £37m it spent on 48 new sites in the first half of 2011 – sites which are already contributing to profit.

Regus plans to add at least 200 new centres this year as it targets 2,000 in total by 2014, compared with its current 1,268 centres.

“We continue to invest to satisfy this growth in demand,” said Mr Dixon. “Our new centres are performing well, endorsing our growth strategy.

“At the same time, Regus continues to innovate, developing new products and services. This maximises revenues from our existing centres and gives customers more reasons to come to Regus.”

Regus said a “structural shift towards mobile and flexible working” is leading to continued demand for its products and services. But the UK market remains “challenging”, it said. “Whilst our business is profitable, progress in improving its financial performance remains slow despite operational improvements to the underlying business,” it said. The group’s 155 UK centres delivered gross margins of 14.8 per cent, up from 14.7 per cent a year earlier.

By contrast, its Americas business earned gross margins of 30.4 per cent, up from 27.1 per cent in 2011.

Regus hiked its interim dividend 11 per cent to 1p per share.

It recently secured a new £200m revolving credit facility, which it said offers more scope for growth.

Robert Morton, analyst at Investec Securities, said it was a good half but cut his forecast due to higher finance charges and foreign exchange movements.

“The group has traded well in the first half of the year, although as usual there is a lot to do in the second half,” he said in a note to clients. “Our full-year forecast looks a little ambitious and we are reducing our forecasts for this year.

“Nevertheless, we remain positive about medium-term growth prospects and maintain our buy recommendation with a maintained cash flow-based target price.”