Also interesting to compare with IWG (UK competitor which owns Regus brand), much larger as it operates 65 million sq feet (around 6 m m2) vs 140,000 m2 for Servcorp.
Compared to Servcorp, IWG has 2 problems : - higher level of BE point (IWG just returned profitable at the operating level in FY 22, ending in Dec 22, with an occupancy rate of 73.5 %), - IWG has also a high level of financial leverage, so the company was still loss making in FY 22 (net finance cost of 252 m pound vs an operating profit of 147 m pound) and in H1 23 (despite the improvement of the operating performance thanks to pricing).
Looking at FY 21 and FY 22, IWG was not generating enough cash flow to finance its growth Capex (could only cover its maintenance Capex in FY 22). I suspect that the high level of debt (and increase of interest rates) and rather low cash flow may limit the expansion of IWG*, which may be another reason why Servcorp is now accelerating its development. During H1 23, IWG has clearly focused on cash flow and debt reduction, so it has reduced its growth Capex by 40 %.
* moving towards a model which is more capital light (via partnered and franchise).
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(20min delay)