Daily Mail & General Trust reports 1,169% CAPEX growth in 2018 while 14.3% Revenue decline
29 Nov 2018 • About Daily Mail & General Trust (
$DMGT) • By InTwits
Daily Mail & General Trust reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Daily Mail & General Trust is a company in decline: FY2018 revenue growth was -14.3%, 5 years revenue CAGR was -4.3%
- EBITDA Margin is quite volatile: 8.2% in FY2018, -3.7% in FY2017, 9.8% in FY2016, 14.3% in FY2015, 12.9% in FY2014
- Daily Mail & General Trust has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.2%. At the same time it's a lot of higher than industry average of 4.0%.
- CAPEX is quite volatile: £268m in FY2018, £21m in FY2017, £27m in FY2016, £29m in FY2015, £29m in FY2014
- The company has potentially unprofitable business model: ROIC is 2.9%
- It operates with medium-size leverage: Net Debt/EBITDA is -0.1x while industry average is -1.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue dropped on 14.3%. Revenue decline was accelerating on average at -6.5 pp per annum in FY2014-FY2018. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 11.9 pp from -3.7% to 8.2% in FY2018.
Net Income margin jumped on 29.3 pp from 22.1% to 51.4% in FY2018. During FY2014-FY2018 Net Income margin bottomed in FY2016 at 10.7% and was growing since that time. The efficient tax rate was 1.1% in FY2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 20.0% in FY2018. Daily Mail & General Trust showed fast CAPEX/Revenue growth of 18.4 pp from 1.6% in FY2015 to 20.0% in FY2018. It's average CAPEX/Revenue for the last three years was 7.6%. Daily Mail & General Trust has spent a lot to CAPEX (244% of EBITDA) which didn't stop revenue from falling. During FY2014-FY2018 CAPEX as a % of Revenue bottomed in FY2017 at 1.3%.
Daily Mail & General Trust has spent £21m on M&A in FY2018 which accounts for 1.6% of revenue.
Return on investment
The company operates at good ROE (53.6%) while ROIC is low (2.9%). ROIC surged on 14.0 pp from -11.1% to 2.9% in FY2018. ROE decreased slightly on 1.2 pp from 54.8% to 53.6% in FY2018. ROE followed a declining trend at -12.5 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.1x and Debt / EBITDA is 3.9x. Debt dropped on 10.8% while cash surged on 2,899%.
Daily Mail & General Trust has questionable short term financial stability: Interest coverage ratio (ICR) is only 1.4x. Daily Mail & General Trust has no short term refinancing risk: cash is higher than short term debt (196.9%).
Average interest expence charged on company's debt was 8.4% in FY2018.
Valuation and dividends
Daily Mail & General Trust's trades at EV/EBITDA 17.0x and P/E 2.7x.
The company paid 11.7% of Net Income as dividends in FY2018.
Management team
Paul A Zwillenberg is a Daily Mail & General Trust's CEO. Paul A Zwillenberg is a founder and has spent 3 years with the company. CEO total compensation was £3,735,000 in FY2018 which included £1,494,000 salary and £1,159,000 annual bonus. Daily Mail & General Trust's CFO Tim G Collier has spent 2 years with the company.
Insider ownership is 37.8%.
At the end of financial year the company had 6,267 employees. Average revenue per employee in FY2018 was £213,962.
Financial and operational results
FY ended 30 Sep 2018
Daily Mail & General Trust ($DMGT) key annual financial indicators| mln. £ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 1,811 | 1,843 | 1,917 | 1,564 | 1,341 | -14.3% |
| SG&A | | | 59 | | | |
| EBITDA | 234 | 264 | 188 | -59 | 110 | |
| EBIT | | | | | 50 | |
| Interest expence | | | | | 36 | |
| Tax | | | | | 8 | |
| Net Income | 263 | 217 | 204 | 345 | 689 | 99.7% |
| Stock Based Compensation | | | | | 11 | |
Balance Sheet
|
|---|
| Cash | 29 | 32 | 26 | 15 | 438 | 2,898.6% |
| Inventory | | | | | 32 | |
| Short Term Debt | 156 | 3 | 17 | 9 | 222 | 2,264.9% |
| Long Term Debt | 476 | 727 | 694 | 470 | 206 | -56.3% |
Cash flow
|
|---|
| Capex | 29 | 29 | 27 | 21 | 268 | 1,168.7% |
| Dividends | | | | | 81 | |
| Acquisitions | | | | | 21 | |
Ratios
|
|---|
| Revenue growth | 8.2% | 1.7% | 4.0% | -18.4% | -14.3% | |
| EBITDA growth | -25.9% | 12.9% | -28.9% | -131.2% | -287.7% | |
|
|---|
| EBITDA Margin | 12.9% | 14.3% | 9.8% | -3.7% | 8.2% | 11.9% |
| EBIT Margin | | | | | 3.7% |
| SG&A, % of revenue | | | 3.1% | | | |
| SBC, % of revenue | | | | | 0.8% |
| Net Income Margin | 14.5% | 11.8% | 10.7% | 22.1% | 51.4% | 29.3% |
| CAPEX, % of revenue | 1.6% | 1.6% | 1.4% | 1.3% | 20.0% | 18.6% |
|
|---|
| ROIC | 21.1% | 21.4% | 11.4% | -11.1% | 2.9% | 14.0% |
| ROE | 106.0% | 75.0% | 62.3% | 54.8% | 53.6% | -1.2% |
| Net Debt/EBITDA | 2.6x | 2.7x | 3.7x | | -0.1x |
| Interest coverage ratio (ICR) | | | | | 1.4x |
| Interest expence / Average debt | | | | | 8.4% | |
People
|
|---|
| Insider ownership | | | | | 37.8% | |
| Employees | | | | | 6,267 | |
| Revenue/Employee, th. £ | | | | | 214 | |
Peers in Media
Below we provide Daily Mail & General Trust benchmarking against other companies in Media industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Marimedia Ltd ($MARI) | 45.7% | 20.1% | 66.0% | 67.6% | |
| Future ($FUTR) | | -9.4% | -1.3% | 43.1% | 47.6% |
| Grupo Clarin Sa ($GCLA) | 39.8% | -57.9% | 37.2% | 24.4% | |
| Jaywing ($JWNG) | | 26.6% | 6.5% | 23.8% | 6.7% |
| Tla Worldwide ($TLA) | 6.3% | 130.0% | 10.6% | 23.4% | |
| |
|---|
| Median (24 companies) | 0.6% | 0.8% | 3.4% | 3.1% | 9.8% |
|---|
| Daily Mail & General Trust ($DMGT) | | 1.7% | 4.0% | -18.4% | -14.3% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Porta Communications ($PTCM) | 83.4% | 79.0% | 80.1% | 84.9% | |
| Jaywing ($JWNG) | 81.0% | 89.0% | 88.4% | 80.8% | 77.2% |
| Tla Worldwide ($TLA) | 99.9% | 78.8% | 75.5% | 68.1% | |
| Spaceandpeople ($SAL) | 62.2% | 58.8% | 57.2% | 66.1% | |
| Reed Elsevier ($REL) | 65.3% | 64.3% | 63.9% | 64.2% | |
| |
|---|
| Median (23 companies) | 43.8% | 41.8% | 40.2% | 40.2% | 42.5% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Haynes Publishing Group ($HYNS) | 38.8% | 33.5% | 15.4% | 35.0% | 36.8% |
| Reed Elsevier ($REL) | 32.7% | 32.7% | 33.9% | 34.4% | |
| Nahl Group ($NAH) | 28.8% | 29.5% | 34.9% | 27.4% | |
| Uls Technology ($ULS) | 16.7% | 21.1% | 19.8% | 21.2% | 13.8% |
| Spaceandpeople ($SAL) | 10.5% | 11.2% | 1.6% | 17.2% | |
| |
|---|
| Median (24 companies) | 14.8% | 11.2% | 7.0% | 6.8% | 9.7% |
|---|
| Daily Mail & General Trust ($DMGT) | 12.9% | 14.3% | 9.8% | -3.7% | 8.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Trader Media East ($TME) | 3.8% | 2.3% | | 47.5% | |
| Dods(Group ($DODS) | 0.6% | 0.4% | 0.6% | 12.7% | 1.3% |
| Grupo Clarin Sa ($GCLA) | 12.8% | 1.6% | 2.7% | 2.7% | |
| Naspers ($NPSN) | | 4.0% | 3.1% | 2.5% | 2.0% |
| Ite Group ($ITE) | 1.7% | 1.3% | 1.8% | 2.1% | |
| |
|---|
| Median (24 companies) | 1.5% | 1.1% | 0.7% | 0.8% | 1.1% |
|---|
| Daily Mail & General Trust ($DMGT) | 1.6% | 1.6% | 1.4% | 1.3% | 20.0% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Uls Technology ($ULS) | 44.1% | 39.6% | 39.3% | 31.3% | 19.1% |
| Independent News & Media ($INM) | 29.6% | 65.1% | 118.5% | 24.4% | |
| Marimedia Ltd ($MARI) | 39.0% | 6.4% | 39.6% | 23.9% | |
| Reed Elsevier ($REL) | 21.0% | 21.4% | 21.4% | 21.4% | |
| Nahl Group ($NAH) | 31.5% | 26.0% | 23.0% | 17.3% | |
| |
|---|
| Median (26 companies) | 7.8% | 6.7% | 1.4% | 0.8% | 3.8% |
|---|
| Daily Mail & General Trust ($DMGT) | 21.1% | 21.4% | 11.4% | -11.1% | 2.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Ite Group ($ITE) | 0.3x | 1.4x | 6.3x | 7.3x | |
| Porta Communications ($PTCM) | 3.4x | 2.7x | | 5.0x | |
| Quarto Group Inc ($QRT) | 1.4x | 1.1x | 1.8x | 3.9x | |
| Reed Elsevier ($REL) | 1.9x | 1.9x | 2.2x | 2.0x | |
| Future ($FUTR) | | 1.6x | | 1.9x | 1.3x |
| |
|---|
| Median (18 companies) | 0.8x | 1.1x | -0.1x | 0.6x | -0.0x |
|---|
