IWG profits drop by 4% as group continues expansion

IWG, the parent company of serviced office brand Regus, has reported a 4% drop in profits for the first half of 2017. Its revenue rose 8.5% to almost £1.17bn on the same period last year but pre-tax profits fell from £84.3m to £80.8m as the FTSE 250 group, which is having to battle fiercely against growing serviced office newcomers such as WeWork, increased spending on new openings. In the six months to June, it opened in 149 new locations, bringing its total to 2,996 centres and 481,773 workstations. Mark Dixon, chief executive of IWG, said: “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. “Given the gradual improvement in revenue growth, while continuing to control costs, we anticipate strong cash generation in the second half of the year. “These trends, together with the positive outlook for our industry, are reflected in our decision to increase the interim dividend by 13%, and maintain our progressive dividend policy.” To send feedback, e-mail nick.johnstone@egi.co.uk or tweet @n_johnstone or @estatesgazette