(Alliance News) - IWG PLC on Tuesday reported noticeably lower revenue for the third quarter of 2020 amid the "challenging environment" created by Covid-19.
Shares in IWG were up 8.4% at 276.20 pence in London in afternoon trading.
For the three months ended September 30, FTSE 250-listed office space provider IWG reported group revenue of GBP583.3 million, down 14% from GBP680.3 million in the same quarter of 2019 and down 10% at constant currency.
Revenue across its open centres fell 5.5% at constant currency to GBP573.9 million and was 9.8% lower at actual currency from GBP636.0 million.
"As anticipated, the third quarter has been a challenging environment for the group as a result of the Covid-19 pandemic. This has also created difficulties for many of our customers whom we have supported with measures worth approximately GBP80 million so far this year, including rent deferrals. This support will continue during the fourth quarter and could rise to approximately GBP100 million for the full year," said IWG.
The company's said the pandemic's impact was worse than it imagined but its platform was "resilient" and IWG has acted to cut costs, as well as to improve liquidity and cash flow.
This resulted in continue monthly cash generation in the third quarter and move IWG into a GBP10.9 million positive net cash position with liquidity headroom totalling GP863.2 million at the end of September.
"We have experienced good sales activity levels in July, August and September but this is being offset by customer churn and the significant impact the pandemic has on service revenue, which historically accounts for approximately 28% of our revenue," IWG noted.
The company said it is on course to achieve annualised cost savings of GBP200 million and has an "attractive pipeline of opportunities" with a "number of large management agreements signed". It is also close to the first deployment of capital raised in its second quarter, with deals now in the last stages of due diligence,
Moreover, its Covid-19 related network rationalisation programme is progressing as expected, with a net reduction of 22 locations in the third quarter, reducing the worldwide total to 3,359 locations.
For the nine months to September 30, total group revenue was GBP1.90 billion, down from GBP1.96 billion.
Looking forward, IWG said: "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. There is still much to be done and we appreciate people working with us to secure further cost savings in the fourth quarter.
"2020 has presented the toughest challenge the group has experienced since its formation 31 years ago. It is an unprecedented storm, but with the decisive actions we have taken across the business we are navigating its impact and look forward to entering 2021 as a stronger, more profitable business capable of increased cashflow generation supplemented with potential revenue recovery."
By Anna Farley; annafarley@alliancenews.com
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