IWG PLC (LON:IWG), the global operator of leading co-work and workspace brands, today announced its interim results for the six months ended 30 June 2019
Key Highlights(1)
Continued revenue and profit growth
• Open centre revenue up 15.1%(2) to £1,275.0m
• Pre-2018(3) revenue increased 5.2%(2) to £1,154.9m
• Pre-2018(3) EBITDA up 22%(2) to £229.7m
• Profit after tax of £294.9m, including profit on Japan transaction
Excellent franchising momentum and progress
• £320m partnership transaction in Japan completed, long-term master franchise underway
• Franchise agreements signed with multiple partners, commitment of over 300 locations
• Strong interest from third parties wanting to operate IWG brands across a wide range of geographies
Strong growth in enterprise accounts
• Winning many new global clients
• Strong growth momentum with existing enterprise accounts, revenue from top 300 accounts up c.30%
Record cash generation, strong balance sheet and announcement of increased return to shareholders
• Cash flow pre-growth of £385.1m, 43.0p per share
• Proposed 10.3% increase in interim dividend to 2.15p
• £100m share repurchase programme announced
Significant capital investment in network and global platform infrastructure
• Net growth capital investment of £185.5m adding 114 new locations (all organic) and 3.0m sq. ft.
• Now in 3,334 locations worldwide, with 58.8m sq. ft. of space
• Expanded the network with 2 new countries and 22 new cities
IFRS 16
• The adoption of IFRS 16 impacts the Group’s financial reporting only
• The fundamentals of the business have not changed, with revenue, cash generation and returns unaffected
Interim Results
| £m | H1 2019(IFRS 16 basis) | H1 2019(IAS 17 basis) | H1 2018(IAS 17 basis) | % change constant currency(IAS 17 basis) | % change actual currency(IAS 17 basis) |
| Revenue | 1,302.4 | 1,302.4 | 1,159.3 | 10.3% | 12.3% |
| Open centre revenue | 1,275.0 | 1,275.0 | 1,086.7 | 15.1% | 17.3% |
| Gross profit | 293.8 | 196.3 | 183.2 | 4% | 7% |
| Overheads | (145.2) | (145.4) | (131.8) | 10% | 10% |
| Operating profit – continuing operations | 148.3 | 50.6 | 50.4 | (8)% | -% |
| Profit before tax – continuing operations | 41.4 | 42.8 | 44.7 | (4)% | |
| Profit before tax(4) | 53.4 | 55.2 | 54.3 | 2% | |
| Profit after tax – including discontinued operations | 299.8 | 294.9 | 43.4 | 579% | |
| Earnings per share – attributable to ordinary shareholders (p) | 33.5 | 32.9 | 4.8 | 585% | |
| Earnings per share – from continuing operations | 4.1 | 4.2 | 3.9 | 8% | |
| Dividend per share (p) | 2.15 | 2.15 | 1.95 | 10.3% | |
| EBITDA | 773.1 | 189.8 | 170.9 | 6% | 11% |
| Pre-2018 EBITDA | 730.6 | 229.7 | 180.5 | 22% | 27% |
| Cash flow before net growth capex, repurchases and dividends | 52.9 | 385.1 | 75.7 | 409% | |
| Net debt | 6,220.1(5) | 298.1 | 383.2 | ||
| Net debt : LTM EBITDA (x) | 4.0(6) | 0.7 | 1.1 |
(1) Results presented in accordance with pre-IFRS 16 accounting standards (as defined in Alternative performance measures section)
(2) At constant currency
(3) Pre-2018 refers to the performance in the reported period for all operations opened on or before 31 December 2017 and were open throughout the period
(4) Includes the trading profit before tax from Japan
(5) Net debt in accordance with IFRS 16 includes lease liabilities of £5,922.0m
(6) Calculated as Net debt : Annualised EBITDA
Mark Dixon, Chief Executive of IWG PLC, said:
“This has been a strong period for trading. We look forward to delivering a good result for the year.
We continue to invest in our leading platform, in our network and the resources needed to further improve customer experience and innovate new products to match evolving requirements.
We have made excellent progress in franchising and partnering in the first half, which will help us grow more rapidly in this exciting market. As previously reported, we entered into a strategic partnership with TKP in Japan, which involved the transfer of our Japanese operations and entering into an exclusive master franchise agreement for the country. We are already working very closely with our partner in Japan to continue to develop attractive growth opportunities and they have committed to a development plan that will add significantly to the network. Interest in partnering with IWG, the market leader, is high and we are in discussions with a number of prospective partners. We anticipate providing an update in the second half of the year.
We look forward to the remainder of the year with confidence. Even in this period of global, political and economic uncertainty, we expect the positive momentum to continue in our business and this is reflected in the increased proposed dividend and £100m share repurchase programme.”
Details of results presentation
Mark Dixon, Chief Executive Officer, and Eric Hageman, Chief Financial Officer, are hosting a presentation today for analysts and investors at 9.30am BST at J.P. Morgan, 60 Victoria Embankment, London EC4Y 0JP.
For those unable to attend the presentation, please contact Jessica Ayres to obtain details for the webcast or conference call: [email protected] or +44 (0) 20 7396 7466
