Regus H1 profit falls, ups dividend; shares rise

BANGALORE (Reuters) - Office rental company Regus' (RGU.L) pretax profit fell 7.4 percent, but boosted interim dividend and said its cash position was at a record high of 229.5 million pounds, sending its shares up to a 52-week high.

The company, which offers ready-to-use offices for rental as short as half a day, said it was cautious about its outlook but was well positioned to manage the business through an extended tough economic environment.

"Regus is a growth business in a growth market... and it is expected that in 2011 there will be over a billion mobile workers or home workers," Chief Executive Mark Dixon told Reuters.

The company sees good signs of the market stabilising and expects to see improvement in the top line by the end of this year and into 2010, Dixon said.

Brokerage Investec Securities said early signs of improvements had started to emerge, with Regus' strong financial position and its plan to accelerate growth in its business. Investec rates Regus stock at "buy."

Regus, which has been offering recession-busting products to customers to reduce their office costs, said the business for such products continued to grow throughout the downturn.

Regus' clients include American Express (AXP.N), Google (GOOG.O), Cisco Systems (CSCO.O) and GlaxoSmithKline (GSK.L).

COST SAVINGS

The company expects its 2009 cost savings to exceed the 75 million pounds it had expected earlier, Dixon said.

Regus cancelled a 100 million pounds credit facility to save costs as well as citing the cash on hand.

Regus, which operates in 76 countries, plans to expand its footprints in Asia Pacific, especially in provincial cities in India, China and Japan, Dixon said.

The company plans to continue expanding its biggest market, the United States, where it is seeing the strongest trends towards flexible and mobile working and will continue opening more centres in suburbs rather than major city centres.

For the six months ended June 30, pretax profit rose to 69 million pounds from 74.5 million pounds a year ago, while revenue rose 9.8 percent to 557.4 million pounds.

Regus said it raised interim dividend by 33 percent to 0.8 pence per share.

The group, which operates 981 centres globally, said total capacity rose 1.4 percent to 173,633 during the period, while average mature occupancy was maintained above 80 percent compared with 84.8 percent in a year ago.

Regus shares were up 7.5 percent at 89.8 pence at 11:28 a.m. on the London Stock Exchange. They touched a new 52-week high of 91 pence earlier.

(Editing by Gopakumar Warrier)