Trading Update

RNS Number : 6809D

IWG PLC

01 February 2018

 

IWG: Trading update - 1 February 2018

IWG plc, the global leader in the fast-growing Workspace-as-a-Service (WaaS) sector, today issues a trading update for the period ended 31 December 2017

Highlights:

·      Revenue growth for open centres accelerated from 4.4% in the third quarter 2017 to 7.5% in the fourth quarter

·      Mature centre revenues returned to growth in the fourth quarter

·      Strong network growth planned for 2018 as previously indicated

Update:

As anticipated, the final months of 2017 saw an improvement in trading and the results for the year ended 31 December 2017 are expected to be in line with previous guidance. Revenue growth for all our open centres (excluding closed centres) accelerated from 4.4% in the third quarter 2017 to 7.5% in the fourth quarter, at constant currency. Growth in total Group revenues (including closed centres) accelerated from 2.5% in the third quarter to 5.9% in the fourth quarter, at constant currency. The revenue growth acceleration was driven by all regions except for the UK, where revenues stabilised sequentially throughout the quarter. This Group revenue performance reflects the strong uplift in sales activity since October. Sales activity trends remain good which should lead to improved revenue growth during 2018.

As we said at the third quarter trading update, we believed that the recovery in the growth rate of the Mature business would be partly a timing issue and current trading supports this view. The strong uplift in sales activity also helped the Mature business. Mature revenues have returned to growth in the fourth quarter, with a 0.5% year-on-year improvement at constant currency rates (compared with a 1.8% decline for the third quarter) and sustained improvements throughout the period. This was primarily driven by improvements in the Americas and Asia Pacific. The continuation of these sales activity trends reinforces our view that mature revenues will improve in 2018. Additionally, we expect mature revenues will benefit from the maturation of the 2016 group location openings (230 locations), which were incorporated into the Mature business on 1 January 2018.

Throughout 2017 we continued to develop our industry leading network and formats, with the opening of 314 locations, including 56 Spaces locations, and the addition of c. 5.5m sq. ft. of workspace worldwide. We are now in 3,125 locations worldwide, with a total of c. 52.0m sq. ft. of workspace. There remain significant attractive opportunities to deploy capital and we finished 2017 strongly with 119 additions in the fourth quarter. We expect the rate of growth to increase markedly in 2018 based on the increased momentum at the end of 2017 and the increase in demand levels. We will provide more details about our pipeline visibility when we update the market more fully with the publication of our 2017 full-year results on 6 March 2018. Our ability to adapt our growth plans to reflect changing market conditions remains an important aspect of our capability to manage risk through the economic cycle.

The Board remains excited about the prospects for IWG, given its leading position in the fast-growing Workspace-as-a-Service (WaaS) sector. Our industry is becoming more mainstream, with major global trends driving long-term demand for flexible workspace. Digitalisation is changing how people work, people are increasingly wanting the personal lifestyle and productivity benefits, and businesses want to capture the strategic and financial advantages. With our unrivalled networks and format offerings, we are continuing to gain traction with major corporations that wish to benefit from these trends.

For further information, please contact: IWG plc Tel: + 41 (0) 41 723 2353 Mark Dixon, Chief Executive Officer Dominik de Daniel, Chief Financial Officer & Chief Operating Officer Wayne Gerry, Group Investor Relations Director

Brunswick Tel: + 44 (0) 20 7404 5959 Nick Cosgrove Simone Selzer

This trading update is prepared on preliminary financials and contains certain forward looking statements with respect to the operations of IWG plc. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that may or may not occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements and forecasts. Nothing in this announcement should be construed as a profit forecast.

 

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