The boast of IWG is that it responds to customers’ needs by providing them with flexible office space. As the it shifts to a new accounting regime investors will require a similarly adaptable attitude. The business, previously known as Regus, revealed that accounting changes under the IFRS 16 standard will make it appear more indebted and less profitable. A group that was difficult to value will become even more so.

Under the new rules, IWG will be forced to shift any assets and liabilities related to the buildings it leases on to its balance sheet. As a result net debt would have leapt to £6.7bn last year, instead of £460m. Even after a nearly fourfold adjustment to ebitda, its net debt against this cash flow proxy would have jumped to a heady 4.8 times, against 1.2 times under the previous system. Pre-tax profits would have dropped by a third. Earnings multiples are distorted by these changes.

Perhaps IWG should be valued on revenues, which are unaffected. In that case, at less than one times revenues IWG’s valuation looks a bargain compared to its SoftBank-backed rival WeWork at almost 20 times. IWG’s Spaces division, a direct competitor to WeWork, is roughly the same size.

Though operating cash flows rose £44m last year to £259m, free cash flow was negative as IWG continued to invest for growth. The company, led by founder Mark Dixon, continues to add debt to pay dividends and buy back shares. Even with an expected positive swing in free cash flow to £45m, the shares yield just 2 per cent, rising to only 3 per cent on 2020 estimates.

All these moving parts mean IWG is difficult to value. No wonder the share price has tracked sideways for two years. And the London office market is showing top of the cycle behaviour.

Flexible office operators need occupancy rates of at least 70 per cent to cover fixed costs, thinks Berenberg. IWG is rushing to expand with debt, partly to chase WeWork. That can only reduce IWG’s flexibility going forward. Leave this space vacant.

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