Strong financial performance at Group level
Group revenue increased 16.9% at constant currency to £804.7m
Operating profit rose by 41% at constant currency to £39.9m
Total overheads (excluding R&D) as a % of sales reduced from 19.2% to 16.8%
Net debt of £161.3m reflecting significant investment in growth
Additional financing secured through issuance of £170m loan notes
14% increase in interim dividend to 1.25p (H1 2013: 1.1p), reflecting strong underlying performance and prospects
Mature Centres business remains revenue and profit engine for the Group
Mature revenue growth of 3.2% at constant currency to £647.5m
Gross margin improves to 27.2% underpinned by 2.3% increase at constant currency in revenue per occupied workstation (REVPOW) to £3,523
Mature operating profit up 44% at constant currency to £93.0m.
Economies of scale and overhead efficiencies driving an increase in mature operating margin to 14.4% (H1 2013: 10.6%)
Strong cash generation, with mature free cash flow representing 7.6p per share (11.1% free cash flow margin)
Continue to invest in the business to ensure sustainable, long-term returns
£148.5m invested in growth adding 194 new centres and three new countries, building on our successful investment history, with 2010 and 2011 centres earning post-tax returns of 25%
Continued progress made with Third Place:
o Landmark deal signed with Singapore Government
o New Third Place locations opened in Heathrow and Gatwick airports
Due to strong deal pipeline we now expect to open at least 450 business centres in 2014
Mark Dixon, Chief Executive of Regus, said:
"Regus has had a strong half year. We have grown our network at an impressive rate and improved earnings. Our Mature centres continue to deliver good returns and continue to convert earnings into cash. Our New centres are also progressing well.
The rapid pace of change within the world of work presents many opportunities for us to help businesses be more successful. We continue to find compelling opportunities to invest and generate returns well in excess of our cost of capital. These returns underpin our growth strategy and accordingly, given the scale of the opportunity and our ambition, we now plan to add at least 450 business centres in 2014. While this will lead to additional opening costs and initial operating losses which will impact the Group's full year results, we remain confident that our strategy to make significant investments this year will drive future revenue, profit and cash flow.
Overhead control remains a core focus for the Group and we are pleased with further progress in this area. We are constantly shaping our structure and processes to ensure this continues.
Overall, our underlying momentum is strong. We remain confident about the rest of the year, although our reported results will reflect the strength of sterling."