Deutsche Beteiligungs AG: Net income reaches €27.0mn
- Forecast surpassed
- Investment at highest level in ten years
- Seven new portfolio companies
- Recommended dividend 1.00 euro per share
- Outlook positive: Higher portfolio value in near and medium term
Frankfurt am Main, 10 December 2015. Deutsche Beteiligungs AG (DBAG) ended its truncated 2014/2015 financial year posting net income of 27.0 million euros, thereby exceeding its forecast. The key contributor is the net result of investment activity, which totalled 29.2 million euros. Unlike the preceding year, whose result was largely determined by the sale of a major investment, the result this year is based on the value growth of the carried portfolio.
Comprehensive income reached 27.4 million euros. For the first time in three years, the fall in the discount rates, which are used to measure pension provisions, did not weigh on comprehensive income. At 10.0 percent, the return on net asset value per share, the key performance mark, clearly exceeded the cost of equity. DBAG’s balance sheet remains robust, and the Company has sufficient financial resources to meet its co-investment commitments alongside the DBAG funds. With a capital-to-assets ratio of more than 90 percent, DBAG has almost 60 million euros (30 September 2015) available for investment from the balance sheet alone.
|Key indicators (IFRS)||2014/2015|
|Return on net asset value per share||10.0 %||15.9 %|
|Net asset value per share |
(at reporting date)
|Dividend (2014/2015: recommended)||€1.00, thereof|
€0.50 base dividend
|€2.00, thereof |
€0.40 base dividend
DBAG ended the preceding 2013/2014 financial year with net income of
48.0 million euros and a return on net asset value per share of 15.9 percent. The present data is only of limited comparability with that of the preceding year: 2014/2015 was a shortened financial year of only eleven months. Moreover, a change in IFRS accounting rules additionally impedes a year-on-year comparison.
“In the truncated 2014/2015 financial year, we achieved or even surpassed our major objectives. We were successful this year yet again,” said Susanne Zeidler, Chief Financial Officer of this listed private equity company, in Frankfurt today.
Seven new portfolio companies
2014/2015 was a year of new investment: as a fund manager and advisor, DBAG initiated investment decisions on some 303 million euros. At 71.4 million euros, investment from DBAG’s balance sheet reached its highest level in ten years. That capital was spent on five new management buyouts alongside DBAG Fund VI and two new growth financings together with DBAG ECF. In addition, existing holdings were increased – to finance smaller add-on acquisitions, for example. With a view to the seven new portfolio companies and the portfolio profile, Spokesman of DBAG’s Board of Management Torsten Grede said: “Our portfolio has become more mature; about one third of our investments have been in the portfolio for four years or longer. Value growth and attractive realisations can therefore be expected in the coming years.”
DBAG improved its offering for growth financings once again. Through the fund for growth financings, it can now enter into engagements which allow for holding periods that are longer than what was previously possible. However, this flexibility will initially come at the expense of net income from fund investment services, since it is tied to a new fee scheme.
For the first time, DBAG is reporting by segments, which further enhances transparency. Pre-tax segment net income of the Private Equity Investments business line declined to 24.9 million euros, compared with 40.4 million euros in the previous year, which saw an exceptionally high gain on disposal; adjusted for this effect, Private Equity Investments recorded a substantial increase in segment net income on the previous year. The segment of Fund Investment Services reached 2.2 million euros, which compares with 8.0 million euros for the prior year. In addition to the change in the terms of the fund for growth financings, this year’s segment net income was affected, among other things, by the shorter eleven-month base used to calculate fees for management and advisory services.
Recommended dividend of 1.00 euro per share
Irrespective of the decline this past truncated financial year, fee income from fund investment services is stable and readily predictable. Its growth in recent years proves how greatly the services of the investment team are appreciated by investors in DBAG funds. That growth is reason enough for DBAG to increase the base dividend from 40 eurocents to 50 eurocents per share. Since there were no major disposals in 2014/2015, no basis exists for a surplus dividend. There is, however, a retained profit of 67.1 million euros from the realisations of recent years. For the 2014/2015 financial year, in which DBAG commemorated the 50 years of its founding and 30 years as a listed company, the Supervisory Board and the Board of Management therefore propose using the profit earned in the past for a distribution, which, in effect, would double the base dividend. In total, a dividend of 1.00 euro per share is slated for distribution, subject to shareholders’ approval at the Annual Meeting on 25 February 2016. The proposed dividend represents a dividend yield of approximately three percent based on the current share price; measured by the opening net asset value at the start of financial year 2014/2015, it equates to approximately five percent. That is above the average of the S-Dax and Dax.
New 2015/2016 financial year starts with a new investment
DBAG began its 2015/2016 financial year by entering into a new investment. The acquisition of Telio, a telecommunication provider, is expected to be completed by year-end. “We want to meet our investor’s expectations and are intensively investigating further investment opportunities,” said Spokesman of the Board of Management Grede. “In view of higher prices, we are presently working on becoming even more effective in identifying and assessing the development potential of target companies.”
|Companies in the Deutsche Beteiligungs AG portfolio|
|1 Acquisition of this company was agreed in Nov. 2015, but the transaction has not yet been completed|
|Broetje-Automation GmbH||Mechanical and plant engineering|
|Cleanpart Group GmbH||Industrial services|
|Clyde Bergemann Group||Mechanical and plant engineering|
|DNS:NET Internet Service GmbH||IT, media, telecommunication|
|FDG Group||Industrial services|
|Formel D GmbH||Automotive suppliers|
|Gienanth GmbH||Industrial components|
|Grohmann Engineering GmbH||Mechanical and plant engineering|
|Heytex Bramsche GmbH||Industrial components|
|inexio Informationstechnologie und Telekommunikation KGaA||IT, media, telecommunication|
|Infiana Group GmbH||Industrial components|
|JCK Holding GmbH Textil KG||Consumer goods|
|Novopress KG||Mechanical and plant engineering|
|Oechsler AG||Automotive suppliers|
|Pfaudler Process Solutions Group||Mechanical and plant engineering|
|Plant Systems & Services PSS GmbH||Industrial services|
|ProXES GmbH||Mechanical and plant engineering|
|Romaco Group||Mechanical and plant engineering|
|Silbitz Group GmbH||Industrial components|
|Spheros GmbH||Automotive suppliers|
|Telio Communications GmbH1||IT, media, telecommunication|
|Unser Heimatbäcker GmbH||Consumer goods|
Positive outlook: Higher portfolio value in near and medium term
For 2015/2016, the Board of Management expects a significant increase in net income compared with the preceding year. The comparative basis is net income adjusted for disposals of 25.2 million euros. “We are confident that the return on net asset value per share will significantly exceed the cost of equity – our minimum target for the long-term average,” states the Annual Report issued today.
DBAG is also set to develop positively in the medium term. Based on the rationale behind its investment decisions on the value appreciation of the portfolio companies, the Board of Management anticipates that the portfolio value will grow by more than ten percent annually. In the current and the two financial years thereafter, DBAG aims to achieve a net income that will result in a significantly higher average return on net asset value than in 2014/2015.
DBAG’s forecast implies a stable economic environment. “Our portfolio companies are not immune to cyclical effects,” said Spokesman Grede. “Distortions and a shift in stock market sentiment can change company valuations rapidly and significantly, thereby greatly impacting our annual result,” added CFO Zeidler. “Both risks have, in our estimation, increased in recent months.”