Regus chiefs waive their pay as losses spiral

Mark Dixon, Regus's chief executive, and Stephen Stamp, the finance director, have waived their salaries in a desperate attempt to stop the troubled serviced-offices provider haemorrhaging cash.

Both men have worked for free since August and will continue to do so until the end of the year. Mr Dixon was being paid £400,000 a year while Mr Stamp earned £160,000.

The move accompanied redundancies for a quarter of Regus's staff and an across-the-board pay cut of 40 per cent, helping to slash £60m from the company's cost base.

Shares in Regus soared 87 per cent to 36p, buoyed by signs that the group's strategy shift to longer-term contracts was working. Mr Dixon, who owns 60 per cent of Regus's share capital, bought a further one million shares at 30p each. His share holding is worth £121m, down from more than £1.3bn earlier this year.

Mr Dixon said the cost-cutting action, prompted by a catastrophic profits warning in July following a downturn in Regus's business, should mean the company is cash-flow positive by next year. "We are guardedly optimistic about the future," he said.

Regus cut 800 jobs in the last three months, including 287 in Britain, and halted its new centres opening programme. It has reduced monthly cash expenditure from about £12m a month through to September to a forecast of £1.2m by December.

Analysts remained cautious about the group's ability to increase its cashflow next year after it discounted fees to win back tenants. Businesses can rent a Regus workspace for as little as £8 a day in the provinces and £19 a day in London.

While Regus said that its order book had reached a record level in September, fears remain about how well the business will fare in increasingly difficult economic conditions. Demand for Regus's US workstations has plummeted.

Regus reported a pre-tax loss of £11m for the three months to 30 September, compared with a profit of £4.9m a year earlier. The company took an exceptional charge of £87m, mostly in relation to its efforts to cut overheads.

It had gross cash assets of £107m as of 30 September.