Following its positive end-August trading statement, IG Design Group’s H1 update to end September confirms it has achieved double digit year-on-year growth in both revenue and operating profit. Cash generation has remained strong and year-end average leverage is expected to reduce to 1.1x from the prior year figure of 1.3x. With high levels of orders going into H2 and a strong pipeline of commercial initiatives, operational efficiency gains and acquisition opportunities underpinning future development, the group is on track both to deliver FY20E market expectations and to position it strongly for further growth in FY21E. Our forecasts are therefore unchanged ahead of the interim results.
Against a background of increasing economic challenges and uncertainties, IG Design Group has confirmed the positive H1 trading performance indicated in its end-August trading update. Both revenue and operating profit are quantified as having delivered double-digit yearon-year growth. While this growth benefits from the full year effect of the acquisition of Impact in August 2018 (now therefore anniversaried), the combined underlying performance of its other geographic markets must also have been robust in our view. With the momentum of high levels of orders continuing into H2, the group is firmly on track to meet full year market expectations for FY20E.
This H1 performance is testament to the group’s clear strategic focus, built on leveraging its core strengths and grasping market opportunities. Despite topical challenges including Brexit, trade tariffs and lower global economic growth rates, the group’s focus on its three key strategic drivers (working with winners, design & innovation, efficiency & scale) has continued to deliver strong growth, which is set to continue in FY20E and beyond. The group’s geographic diversification spreads and reduces commercial risk, and its policy of working with winners mitigates downside risk in those local markets facing structural and economic challenges. Given this unerring strategic focus, an active acquisition pipeline, and with the cross-selling opportunities and benefits from the Impact acquisition yet to be fully realised, the outlook for FY21E and beyond is for continued strong growth and market share gains.
The interim results will be announced on 26 November.