Office space provider IWG's shares fall after it reveals drop in pre-tax profits

 
Shruti Tripathi Chopra
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IWG's revenue hit £1.169bn, up 8.5 per cent compared to the same period last year (Source: Getty)

IWG's shares fell eight per cent this morning after the office space provider reported a drop in pre-tax profits in the first half of the year.

The figures

The FTSE 250 group, formerly known as Regus, saw its profit before tax fall four per cent from a year earlier to £80.8m in the six months to June.

IWG's revenue hit £1.16bn, up 8.5 per cent compared to the same period last year. Meanwhile its overheads reduced nine per cent to £124.3m during the six-month period.

The office space firm's net growth capital investment more than doubled to £179.7m in the first half of the year, including approximately £110m on properties. The company has 3,000 centres across more 900 cities.

The group also said it will increase its interim dividend by 13 per cent to 1.75p.

At the time of writing, IWG's shares were down 8.13 per cent at 343p.

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What IWG said:

Mark Dixon, Chief Executive of IWG, said:

"It is a very exciting time for our industry and, as market leader, we will continue to benefit from the structural growth in the workspace-as-a-service market globally.

"As expected the improving trend in sales activity at the beginning of the year has led to a gradual improvement in revenue growth throughout the first half, with IWG returning to growth in Q2. Current sales activity remains robust and we are therefore confident that our mature business will see growth over the second half of 2017.

"Against the backdrop of improving sales trends we have made the decision to invest in our network to deliver additional earnings growth and shareholder value creation over the medium-term. In this regard, we decided to opportunistically acquire properties as well as further accelerate our growth. The underlying capital efficiency of our business more broadly has improved as IWG is increasingly working with partners in expanding its business. This is also reflected in our pipeline.

"While IWG’s exciting category of workspace-as-a-service continues to develop at pace and attract investment on the back of growing customer demand, we remain focused on reinforcing our competitive advantage through the quality of our network, quality of service, technology and cost benefits from scale."

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