IWG third-quarter revenues rise, on track for full year

Flexible workspace provider IWG, formerly Regus, posted a jump in third-quarter revenues on Tuesday as the company said it is on track to deliver full-year results in line with management's expectations.

Revenue in the three months to 30 September were up 10.2% at constant currency to £638m, with mature business revenue 3.9% higher at constant currency at £565.1m.

The company said the improvement was reasonably broad-based, including good performances in the US, EMEA and Asia Pacific. The UK remains disappointing, it said, but actions to improve the business are firmly in place.

Year-on-year, mature occupancy for the three months improved 0.7 percentage points on a like-for-like-basis to 74.3% and IWG said its 12-month rolling return on investment came in at 17.5%.

IWG said it continues to expect to invest around £230m in net growth capital expenditure this year, representing about 275 new locations.

In addition, it continues to explore a range of potential strategic opportunities to deliver increased value and returns for shareholders.

"We will continue to take a targeted approach to growing our business, ensuring we commit resources which will deliver attractive returns. We expect increased franchising activity and our current pipeline of franchise opportunities is strong across both existing and new geographies. We are also in discussions with a number of interested parties who wish to partner with us across entire countries."

RBC Capital Markets analyst Andrew Brooke said: "We like the market position and long-term fundamentals but earnings per share momentum has been negative, private equity bids have not been forthcoming and management credibility remains low.

"The aggressive expansion continues, which is still dampening profits ensuring that the story remains jam tomorrow. We remain at 'underperform', believing risk reward is not in favour and that it will take time to rebuild confidence, although today’s statement will help in that process."

At 1105 GMT, the shares were up 7.2%