Essex: Office rental group Regus plans further expansion
OFFICE rental group Regus, founded by Essex-born entrepreneur Mark Dixon, said today it plans to open 200 new sites during 2012 as companies increasingly use its services to make cost savings.
But Regus warned that the UK market, where it has about 140 centres, “remains tough” amid high property prices, suggesting that the bulk of its expansion will again be overseas.
The group, which has 1,200 sites worldwide serving customers including Google, GlaxoSmithKline and Nokia, opened 139 new locations last year but only three of these were in the UK. Group profits more than doubled to �50.6million in 2011 after it grew sales by 12%, helped by the opening of new sites and through cost savings as it renegotiated leases.
In the UK, gross profits nearly doubled to �29.7million, which it said was evidence of its turnaround after it found �15 million of cost savings the previous year.
Regus, which has already opened 19 new sites so far this year and plans to have 2,000 worldwide by 2014, is benefiting as firms increasingly use its premises rather than pay for their own in order to make cost savings.
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Mark Dixon, went to school in Chelmsford, founded Regus in 1989 after selling his first major business, which supplied bread rolls to fast food vendors. That venture followed an early business career which included supplying sandwiches and selling hot dogs and burgers from road-side vans in Essex and London.
The Regus network of office facilities in the UK includes sites in Chelmsford and Brentwood in Essex, and others in Cambridge and Norwich.
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Mr Dixon, who remains chief executive of Regus, said today: “The group continues to see significant opportunities in the structural move toward flexible work and as such we remain committed to building a network of 2,000 locations by 2014, of which we anticipate 200 will open in 2012.”
Regus has also been increasingly looking at alternative sites with wi-fi access for people working on the move, including railway stations and motorway service stations.
It has already signed a “landmark” deal with French rail operator SNCF and Shell motorway service stations in France and is increasingly looking at new locations for this side of its business, which it believes has potential for “exciting” growth.
Robert Morton, an analyst at Investec Securities, said the results were “very good”, with profits higher than City expectations.
He believes the group is well placed to increase profits over the next three or four years but he reduced his profit forecasts slightly for the next two years to reflect the higher costs of opening more sites.
Mr Morton added: “The group has come through a tough trading environment, with the mature estate improving occupancy, profitability and cash flow.”