Regus Sees Improved Performance In 2011; Eyes More Expansion

Regus PLC (RGU.LN), the world's largest provider of outsourced office space, said Monday it is confident its key U.K. business will return to operating profit in 2011 and that the company's improved performance in 2010 has continued into the new year.

The Luxembourg-based company is also looking to continue its aggressive growth program through expansion in Latin America and is targeting increased interest in flexible working at multinational corporations, Chief Executive Mark Dixon told Dow Jones Newswires.

"We've seen an improving performance in 2010, in particular during the second half, that has carried through into 2011," Dixon said.

"We are in a much happier position at the start of 2011 than 2010."

Regus has some 800,000 customers paying for access to global business centers and virtual products to aid working from home. Dixon said the company had hired sales consultants to help firms make the change to flexible working and that the company's arrangement with AT&T Inc (T), which uses Regus offices in 18 countries, demonstrated the significant interest from multinational corporations. The firm sees this as a key driver of the business.

The company spent GBP69.7 million opening 125 business centers in seven new countries last year, and Regus is looking to sustain this growth rate in 2011 with planned new schemes in Madagascar, Serbia and Cambodia. CEO Dixon said Latin America was also a key region for expansion as Regus doubled its size in Brazil last year yet "still sees significant growth."

Dixon said the company was also eyeing expansion in Vietnam and Indonesia, as well as the emerging economic powerhouse of India and China. The recent earthquake and tsunami in Japan had not significantly impacted operations in the Asia-Pacific region, and Dixon said: "We are focused on supporting business in Japan, and have been helping companies if their space has been damaged. Our center in Sendai was up and running within two days."

Regus posted full-year net profit of GBP1.5 million earlier Monday, a significant fall from GBP67 million a year earlier, but this was due to its growth program and U.K. restructuring charges. Revenue fell slightly to GBP1.04 billion from GBP1.06 billion, which was slightly ahead of market expectations.

The company also proposed a final dividend of 1.75 pence, taking the total for the year to 2.6 pence--up from 2.4 pence in 2009.

At 0916 GMT, Regus shares traded up 8 pence, or 8.4%, at 109 pence, outperforming the wider FTSE 250 index, which traded up 0.2%.

Brokerage Peel Hunt said the results were broadly in line with expectations. It previously had concerns about Regus' pace of recovery, but said the earnings guidance now suggests an acceleration of revenue. It has a hold rating and 85p price target on the stock.

By Michael Haddon, Dow Jones Newswires; michael.haddon@dowjones.com; +44 20 7842 9295;

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