LONDON (Alliance News) - Office provider Regus PLC on Tuesday reported a rise in 2014 pretax profit and revenue, even as both measures were held back by the strength of sterling over the year, and said it would hike its dividend payout as it continued to grow its network on a relatively low level of capital expenditure.
FTSE 250 constituent Regus said its pretax profit for the year to the end of December was GBP87.1 million, up from GBP81.5 million a year earlier, despite being held back by sterling strength. At constant currencies, pretax profit rose 19%, Regus said.
Revenue increased to GBP1.68 billion from GBP1.53 billion last year, with revenue rising in both its mature and new centres. Mature locations comprise those the company acquired on or before December 31, 2012, with the new centres comprising those acquired in 2013 and 2014.
Mature centre revenue rose to GBP1.31 billion in the year against GBP1.23 billion last year, while new centre revenue improved to GBP363.9 million against GBP298.8 million.
In 2014, Regus expanded its presence to 850 towns and cities, with 166 new towns and cities added over the year, comprising 452 new locations. The company spent GBP206.6 million in total on the 452 new locations, compared to GBP260.2 million spent to add 448 locations a year earlier.
The performance was in line with the third quarter update Regus provided in October, when its shares pushed higher after analysts said it was achieve growth on a lower-than-expected level of capital expenditure.
Regus said it has a robust pipeline of new openings on its books for 2015, with visibility on GBP120 million worth of investment in 400 locations at the end of February.
But Regus said its gross margin fell to 22.9% from 24.4% last year, reflecting the impact of a relatively higher number of immature locations due to the significant investment the company has made in new sites in recent years. The company said, however, that its total overheads decreased 1% in the year, compared to a 24% increase in its network of locations. As a percentage of total revenue, total overheads therefore declined to 16.7% in 2014 from 18.5% a year earlier.
Regus increased its final dividend to 2.75 pence per share from 2.5 pence last year, meaning its total dividend for the year increases 11% to 4 pence from 3.6 pence.
"Regus is performing well. Our past investments are producing attractive returns that are well above our cost of capital. This performance gives us the confidence to continue to invest, thereby enhancing future shareholder value," said Regus Chief Executive Mark Dixon.
Regus shares were down 4.4% to 230.80 pence Tuesday afternoon, one of the worst performers in the FTSE 250.
Investec said Regus delivered a robust underlying performance for the year and looks well positioned for the new year.
The broker keeps its Buy rating on the stock and hikes its price target to 260 pence from 250 pence, saying that with its outlook looking positive and current visibility on 400 centres in 2015, Regus's growth momentum is showing no sign of abating.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
