Just a few weeks ago, IWG (IWG) was being courted by four potential buyers, now it has none. Private equity firm Prime Opportunities passed up the chance to buy the property group in late July, before management terminated discussions with Starwood, TDR and Terra Firma just in time for the half-year numbers to come out. Investors were not pleased with the decision, sending the shares down more than 20 per cent on the news
Given the board’s decision to strike out on its own, one would have expected the numbers to look better than they do. Analyst Peel Hunt cut profit forecasts 9 per cent based on the half-year numbers and now expects £145m for the full year, giving EPS of 12.6p (2017: £149m, 12.3p). Adverse currency movements have held the group back in the period, but even adjusting for this, operating profits fell 29 per cent on last year.
Management seem confident, however, in the long-term potential of the flexible workspace market and are investing heavily in expanding their network, refurbishing existing properties and bringing in new talent. The two focuses are increasing the number of large corporate clients and the introduction of more “Spaces” - a larger co-working format. The group opened 45 new Spaces locations in the period, bringing the total to 124.
| IWG (IWG) | ||||
| ORD PRICE: | 237p | MARKET VALUE: | £ 2.16bn | |
| TOUCH: | 236.9-237.3p | 12-MONTH HIGH: | 344p | LOW: 189p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 81p* | NET DEBT: | 52% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 1.17 | 80.8 | 6.9 | 1.75 |
| 2018 | 1.20 | 54.3 | 4.8 | 1.95 |
| % change | +3 | -33 | -30 | +11 |
| Ex-div: | 06 Sep | |||
| Payment: | 05 Oct | |||
| *Includes intangible assets of £712m, or 78p a share | ||||
