GB : DWF Group - FY 21 pre-close exactly in line, net debt remains too high

FY 21 pre-close guides to trading exactly in line with our expectations, or c.15% ahead of consensus, noting the very wide consensus range. Within the update DWF has announced two small acquisitions, Zing365 and BCA, for total combined consideration of £4m. We leave FY 21 EPS of 8.0p unchanged, and also leave outer years unchanged, noting some upside pressure. Management guides to FY 21 net debt (excluding leases) of £61m, or net debt/EBITDA of 1.4x, versus an extended covenant of 1.75x. We nudge up net debt from £60m to £61m in FY 21, but leave FY 22 unchanged. Progress since Sir Nigel took over has been very encouraging, but leverage remains too high in our view. We remain HOLD, but increase our target price from 90p to 105p.

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