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Office Freedom
Office Freedom
  • 1 Minute Read
  • 28th March 2008

Emerging markets help Regus to post record profits

Serviced office provider Regus is aiming to take advantage of the downturn in the financial and property markets after posting record annual profits.

In a confident statement on the back of its 2007 results, Regus said that take-up and profits had not been hit by the credit crunch, and had, in fact, improved as the year wore on.

Chief executive, Mark Dixon, said he expected the downturn in the property market to reduce rents in the UK over the next 18 months, which would enable Regus to step up expansion by signing more leases.

‘We have been cautious about growing in the UK, especially in London,’ he said. ‘We think rents in the West End especially could come down over the next 18 months and we will have the opportunity to add more stock in London.’

In 2007 Regus achieved a 54% rise in pretax profits to £120m. Revenue rose 27% to £862m. Excluding the impact of new centres, revenue growth was 7% and profit growth was 21%. This was driven by an increase in average occupancy rates from 81.8% to 82.7%. The full-year dividend was raised by two-thirds to 1p a share.

The number of available workstations rose by 24% to 133,000, as it opened a further 146 centres, and revenue per available workstation increased 2.3% to £6,487.

Emerging markets were the driver of growth, as revenue increased by 40% to £113.9m. The company opened its largest centre, in Shanghai, which has 1,400 workstations, and it is set to open in Malta and Mauritius.

‘We’ll see growth throughout the business, but weighted towards emerging markets, especially in Africa,’ said Dixon.

‘Multinational companies are increasingly operating there because of the natural resources located there, and the fact that there is now, relatively, more political stability. It’s the last true emerging market.’

Dixon claimed Regus was well placed to withstand the effects of the credit crunch: ‘Quarter four saw a steady improvement and continued increase in margins, and the second half ended better than it began, even in America’.

‘Customers don’t want to enter into fixed arrangements, and they don’t want to put down capital, so they appreciate the lower costs of flexible space,’ he added.

In the UK, Dixon said he would not be replacing chief executive Nick Wood, who left in November. Dixon took over as UK chief, but has now stepped back.

Mike Phillips, Property Week, 20.03.08