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IWG posts jump in net cash despite drop in Q3 revenues

By Alexander Bueso

Date: Tuesday 03 Nov 2020

LONDON (ShareCast) - (Sharecast News) - Flexible working outfit IWG posted a big decline in third quarter revenues but said it had seen a substantial pick up in interest from corporates and boasted of a "strong" performance that saw it move into a net cash position.
The flexible working specialist reported a 14.3% drop in total group revenues, which includes both closed and open centres, to 583.3m on actual currency basis, with its occupancy rate falling from 74.6% to 70.5% on a pre-2019 basis.

Pre-2019 terms allows for comparability by referencing only those operations opened before December 2018 and which were open throughout the period.

The firm also said that it had provided clients with 80m of support year-to-date, including through rent deferrals and indicated that amount could rise to 100m for all of 2020.

Total sales were down at a mid single-digit rate in all geographical areas outside of Europea, Middle East and Africa, were they remained positive thanks to the acquisitions carried out during the backhalf of 2019.

The firm also said that it had provided clients with 80m of support year-to-date, including through rent deferrals and indicated that amount could rise to 100m for all of 2020.

Furthermore, while sales activity in July, August and September had been "good", that was offset by customer churn and the "significant" hit to services revenues from the pandemic.

Services revenues typically accounted for about 28% of company sales, IWG said.

However, the company remained on track to deliver annualised cost savings of about 800m.

IWG had also seen "increasing" demand from corporates, with conversations with large corporates up three-fold.

It was also nearing first deployment of the capital raised during the second quarter.

The company swung from 301.2m of debt one year ago to a net cash position of 10.9m after generating 26.8m of net cash.

As at 30 June it had 15.9m of net debt.

Over the third quarter it also boosted its liquidity headroom, which includes cash and unused credit facilities, by 53.7% to 863.2m.

"Whilst market conditions remain very challenging, the future of flexible working looks very positive."

"[...] We will continue to keep a laser focus on cash to maintain the Group's strong financial position. Equally important have been the COVID-19 related actions where we have made good progress to generate significant cost savings to deliver a much-improved profitability performance in 2021 and beyond."

As of 0837 GMT, shares of IWG were 9.26% higher to 278.4p.

Note 1: Prices and trades are provided by Digital Look Corporate Solutions and are delayed by at least 15 minutes.


IWG Market Data

Currency UK Pounds
Price 303.00p
Change Today -2.00p
52 Week High 383.60p
52 Week Low 222.60p
Volume 472,242
Shares Issued 1,007.36m
Market Cap 3,052.31m

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What The Brokers Say

Strong Buy 5
Buy 1
Neutral 4
Sell 0
Strong Sell 0
Total 10
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IWG Dividends

  Latest Previous
  Interim Final
Ex-Div 05-Sep-19 25-Apr-19
Paid 04-Oct-19 24-May-19
Amount 2.15p 4.35p

Trades for 14-Jun-2021

Time Volume / Share Price
13:06 81 @ 303.00p
13:05 172 @ 303.10p
13:05 42 @ 303.10p
13:04 75 @ 303.20p
13:04 75 @ 303.20p

IWG Key Personnel

Chair Douglas Sutherland
CEO Mark Dixon
CFO Glyn Hughes