News
AJ Bell directors sold £26m shares yesterday at 400p/share yesterday. PE 44X but very close to the 405p screen price.Merian Chrysalis invests in Wefox to bring the fund to 75% invested.IG Group New chairman Mike McTighe appointed. Ex Cable & Wireless, Phillips & Motorola.Saga appoints Euan Sutherland CEO. Ex CEO Superdry and Co-op.Ratesetter changes terms & conditions allowing it to suspend access to funds to manage liquidity.DWF Group – H1 Results & Acquisition
Share Price 120p
Mkt Cap £361m
Conflict Disclosure: No Holding
Results.Revenues were up 10% to £146.8m while the gross margin tempered to 50.2% gicing an 8% increase in gross profit. EBITDA was up 4% to £15.5m but adjusted EBITDA was up 19% to £20.1m. The largest adjusting item here is share based payments of £4.4m which is questionable. Insurance services revenues were up10%, Connected Services revenues up 18%, International up 28%, and Commercial was flat. Net debt was £49.5m. H2 is expected to be stronger following H1 investments and the company has a strong pipeline of M&A targets.Acquisition Spanish law firm RCD is acquired for £42.5m of which £6.2m is payable in cash up front. That is 1.3X revenue or 6.25X adjusted EBITDA.Estimates. H1 revenues were 47% of the full year so underlying trading looks in line with expectations.Valuation. The company trades at a PER of 11.3X and yields 6%. 7.4X EBITDA adjusted and 1.2X revenue. The acquisition looks earnings neutral or possibly modestly enhancing but not materially due to the relatively small amount of cash consideration.Conclusion. It all appears to be doing what it says on the tin. There is one partner with 5m shares being released from IPO lock ups due to personal circumstances. Probably good for another year or two but with debt increasing and a strong M&A pipeline it wouldn’t surprise to see a placing in the next 6 months.
