IWG (IWG) aims to complete its shift towards a more asset-light franchising model akin to InterContinental Hotels (IHG) over the next two to three years. The sale of Japanese operations to TKP under a master franchise agreement announced in April sparked much investor excitement, but the rest of the first half of 2019 failed to produce further developments of a comparable scale. Six new franchise partners and commitments for over 180 locations were secured during the period, and, citing “strong interest from third parties”, the shared office group is promising an update in the second half.
Meanwhile, open centre revenue increased by 15.1 per cent at constant currencies to £1.28bn, with 16.8 per cent growth in the group’s largest market, the Americas. With net growth capital investment of £186m, the group added 114 new locations, giving a total of 3,334 sites. But, together with network rationalisation, this produced a £49m drag on cash profits, limiting constant-currency growth to 6 per cent, at the lower end of analyst expectations.
Broker Peel Hunt has revised its forecasts downwards, now anticipating adjusted pre-tax profit of £140m and EPS of 12.3p for the full year, rising to £155m and 13.8p in 2020.
| IWG (IWG) | ||||
| ORD PRICE: | 359p | MARKET VALUE: | £3.22bn | |
| TOUCH: | 358.5-359.5p | 12-MONTH HIGH: | 383p | LOW: 199p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 30 | |
| NET ASSET VALUE: | 89p* | NET DEBT: | 38%** | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018*** | 1.16 | 44.7 | 3.9 | 1.95 |
| 2019 | 1.30 | 41.4 | 4.1 | 2.15 |
| % change | +12 | -7 | +5 | +10 |
| Ex-div: | 5 Sep | |||
| Payment: | 4 Oct | |||
| *Includes intangible assets of £716m or 80p a share **Net debt does not include lease liabilities of £5.92bn ***Restated | ||||
