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DMGT continues to streamline portfolio

The owner of the Daily Mail has been focusing its asset portfolio
December 5, 2019

Daily Mail and General Trust (DMGT) continued to rationalise its portfolio through increased M&A activity in the year to September.

IC TIP: Hold at 812p

In April, it gave up its stake of around 49 per cent in Euromoney (ERM) by distributing this to DMGT shareholders. Together with a £200m special dividend, the total amount paid out was £862m. A month later, the group offloaded its 40 per cent stake in US-based Real Capital Analytics (RCA) for $89m (£68m). Midway through 2019, it sold its German-based business On-geo, and in October – post-period-end – it disposed of the energy information business Genscape for $364m. It follows that DMGT has, over the past three years, whittled down the number of sectors that it operates in from 10 to five. It now constitutes just eight companies, down from 40.

That’s not to say the group has only been selling assets. Indeed, just under a week before these results were published, we learnt that it had acquired the ‘i’ UK newspaper and website from JPI Media for £50m. While DMGT expects this to be reviewed by the Competition and Markets Authority (CMA), it sees the deal as “strategically and financially compelling”. At the time – ostensibly in anticipation of questions to this effect – DMGT chairman Lord Rothermere said “we are committed to preserving its [the i’s] distinctive, high quality and politically independent editorial style”.

In any case, for the period under review, a significant decline in statutory earnings reflected gains on disposals recorded during the previous year. On an adjusted, like-for-like basis, revenues edged up by 2 per cent and pre-tax profits increased by 19 per cent. Meanwhile, the group had net cash of £82m as at September – or £247m on a pro-forma basis, including the proceeds from Genscape and excluding £117m made available to pension schemes.

Bloomberg, consensus estimates are for adjusted EPS of 38.7p for September 2020.

DAILY MAIL AND GENERAL TRUST (DMGT) 
ORD PRICE:812pMARKET VALUE:£ 1.71bn
TOUCH:811-814p12-MONTH HIGH:897pLOW: 541p
DIVIDEND YIELD:2.9%PE RATIO:21
NET ASSET VALUE:368p*NET CASH:£82m
Year to 30 SepTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20151.8421646.221.4
20161.5120248.622.0
20171.56-112-49.322.7
20181.3470719823.3
20191.3413438.323.9
% change-0.3-81-81+3
Ex-div:12 Dec   
Payment:07 Feb   
*Includes intangible assets of £321m or 153p a share