GHE/DWF etc.

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DWF Group – COVID 19 Update

Share Price 102p

Mkt Cap £331m

Conflict Disclosure: No Holding

  • Update – Revenue to April 20 below expectations. £10m cost savings for 2021, £13.5m in 2022. Dividend decision deferred.  Slower ramp up for new joiners. Net debt higher than anticipated. Expects to operate within the £80m debt facility limit. Seeking additional contingency facilities. Well placed.
  • Balance Sheet – NAV £41m and the statement says that debt could reach £80m, which compares to £48m at April 2019 and £69m at October 2019. Forecast was for £42m PBT to April 20. Debtor days at October were 105, absorbing £170m of capital.

Gresham House Plc – New Contract

Share price 412p

Mkt Cap £153m

Conflict Disclosure: I Hold

  • Contract Gresham House is appointed investment manager of SEC plc, which will transfer to the Aberdeen Standard JV once regulatory and other approvals are complete. Gresham House will manage the assets while ASI will use its marketing and sales force. SEC plc is the vehicle set up by Tony Dalwood while at SVG in 2005 and has a market cap of £100m while the NAV at Dec 2019 was £181m
  • Estimates No mention of fee rates is provided but the market cap of SEC is c 3% of Gresham House’s £3bn AUM. The greater sensitivity is perhaps what the ASI distribution can bring in going forward.
  • Valuation EV/AUM 4.5%. PE 16.
  • Conclusion With most of the AUM being 20 year fixed life closed ended funds this is a good place to hide, but in this market, my its pricey.

Other COVID-19 Updates

  • Keystone Law -Trading in line but last two weeks impact.  Net cash £4.4m, Guidance withdrawn or year to Jan 21. Variable cost model makes company resilient.
  • Provident Financial – Home collected is encouraging payments to be made through post office, web and card payments.  Accelerating roll out of Provident Direct.  Withdraws guidance for 2020. Dividend suspended.  Regulatory headroom of £200m and committed headroom of £230m. Confident in medium term opportunity.
  • Mattioli Woods – Anticipates a disruption to trading linked to lower AUM, advice and banking. Rate reduction means last year’s banking revenue of £0.4m will be negligible. Ian Mattioli reduces salary to zero and other board members by 50%. Likely to be no bonuses for staff.  May 20 remains in line with expectations. Significant cash balances.

jeremy@charltonillingworth.co.uk