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27 October 2016 · 2 min read

Deutsche Beteiligungs proposes €1.20 per share dividend for FY16

Recommended increase in FY16 dividend to €1.20 from €1.00 in FY15

Deutsche Beteiligungs (DBAG) announced today that at the Annual Meeting of Shareholders on 22 February 2017, a dividend of €1.20 per share will be proposed for the year to 30 September 2016 (FY16), representing a 20% increase from the €1.00 per share FY15 total dividend.

On 17 October 2016, DBAG announced preliminary unaudited results for FY16 that are significantly ahead of the prior year’s results, with net income of €48-52m compared with €27m in FY15. This net income translates into a dividend-adjusted return on NAV of more than 15% for FY16, compared with DBAG’s 14.3% pa average return over the previous 10 financial years. DBAG’s final results for FY16 are scheduled for publication on 15 December 2016.

These preliminary results were ahead of management’s guidance for FY16 net income to exceed the €27m reported for FY15 by at least 20%, with the anticipation that FY16 net income could reach €40m following the first quarter’s €10m contribution from the sale of Spheros and a realisation by the DBG Eastern Europe II buyout fund, which had not been included in the original guidance. Management states the primary reason for the results exceeding guidance as the improvement in stock market multiples used to value portfolio companies, noting that at the financial year end on 30 September 2016, the multiples for nearly all peer groups surpassed the levels recorded at the preceding valuation date on 30 June 2016, thereby recouping the declines recorded during the third quarter of DBAG’s financial year.

Change in dividend policy
In August 2016, DBAG announced a change in its dividend policy effective from the current financial year, with the intention of paying a stable or rising annual dividend. The policy of paying a sustainable annual base dividend of €0.50 per share from retained profits, supplemented by a surplus dividend dependent on the gains realised in each financial year has been discontinued; the board will recommend payment of a single dividend from FY16. Although a surplus dividend was paid in nine of the last 10 years, the total dividend has varied significantly, notably declining by 50% in 2015, creating uncertainty for shareholders over the dividend income they can expect to receive. Under the new policy, shareholders should expect a smoother progression of the dividend payment each year.

Read Edison’s most recent research report on DBAG here.

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