10.12.2015

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
(11 months)
2013/2014
(12 months)
Net income€27.0mn€48.0mn
Return on net asset value per share10.0 %15.9 %
Net asset value per share
(at reporting date)
€22.16€22.16
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
CompanySector
Broetje-Automation GmbHMechanical and plant engineering
Cleanpart Group GmbHIndustrial services
Clyde Bergemann GroupMechanical and plant engineering
DNS:NET Internet Service GmbHIT, media, telecommunication
FDG GroupIndustrial services
Formel D GmbHAutomotive suppliers
Gienanth GmbHIndustrial components
Grohmann Engineering GmbHMechanical and plant engineering
Heytex Bramsche GmbHIndustrial components
inexio Informationstechnologie und Telekommunikation KGaAIT, media, telecommunication
Infiana Group GmbHIndustrial components
JCK Holding GmbH Textil KGConsumer goods
Novopress KGMechanical and plant engineering
Oechsler AGAutomotive suppliers
Pfaudler Process Solutions GroupMechanical and plant engineering
Plant Systems & Services PSS GmbHIndustrial services
ProXES GmbHMechanical and plant engineering
Romaco GroupMechanical and plant engineering
Schülerhilfe GmbHServices
Silbitz Group GmbHIndustrial components
Spheros GmbHAutomotive suppliers
Telio Communications GmbH1IT, media, telecommunication
Unser Heimatbäcker GmbHConsumer 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.”