SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 1999
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THE DIALOG CORPORATION PLC
(formerly known as M.A.I.D plc)
(exact name of registrant as specified in its charter)
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THE COMMUNICATIONS BUILDING
48 LEICESTER SQUARE
LONDON WC2H 7DB, ENGLAND
(Address of Principal Executive Offices)
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Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F:
FORM 20-F |X| FORM 40-F |_|
Indicate by check mark whether the registrant by furnishing the
information contained in this form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934:
YES |_| NO |X|
On August 24, 1999, the Registrant issued a press release
announcing operating results for the three month period ended June 30, 1999
and its interim results for the six months ended June 30, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Date: September 1, 1999 THE DIALOG CORPORATION PLC
By: /s/ David G. Mattey
----------------------------
David G. Mattey
Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Description
99.1 Press Release, "Dialog Reports Improved Q2 Revenues, Reflecting
Growth in New Web-Based Products and Technologies," dated August
24, 1999.
EXHIBIT 99.1
DIALOG REPORTS IMPROVED Q2 REVENUES, REFLECTING
GROWTH IN NEW WEB-BASED PRODUCTS AND TECHNOLOGIES
LONDON/CARY, N.C.--Aug. 24, 1999--The Dialog Corporation plc
(NASDAQ:DIAL), a leading provider of Internet- based information,
technology and eCommerce solutions to the corporate market, today announced
its second quarter results for the three-month period ending June 30, 1999
and its interim results for the six months ending June 30, 1999. (All
figures are according to U.K. G.A.A.P. and have been converted from G.B.P.
(pound) to U.S. dollars ($) for information purposes at the prevailing
exchange rate on June 30, 1999 of (pound)1=$1.5763).
Financial Highlights
- -- Q2 revenues of $70.4 million - up 4.6% on Q1
- -- Group Internet revenues increased by 20% to over $60
million for the first half of the year (1998: $50
million)
- -- Q2 operating profit of $9.3 million - up 20% on Q1
- -- Improved gross profit margin of 61% - up 7% on Q1
- -- Q2 net profit increased to $2.0 million - up 200% over Q1
- -- Web based products in Information Services Division rose
20% Q2 over Q1
- -- Closing cash balance of $14.2 million
- -- Fujitsu contracted revenues in Q3 expected to be in
excess of $15.8 million
Allen Thomas, Chairman of The Dialog Corporation plc,
commented: "The first half of 1999 has seen a quarter-on-quarter
improvement in overall revenues, favorably assisted by growth in our
web-based products and initial revenues from Fujitsu. Current trading
demonstrates that this has continued, assisted by our alliance partners and
in particular Fujitsu, whose contracted revenues in Q3 will be in excess of
$15.8 million, and by the continuing growth of our new web-based
information and software solutions.
"The quality of Dialog's key assets, including the World's
largest database of online information, its global infrastructure and
alliance partner relationships, and its leading edge knowledge management
and eCommerce technology, means that the Group enjoys significant market
opportunities.
"Discussions continue regarding refinancing of the Group's
debt so as to release internally generated cash from operations to further
accelerate high-growth market opportunities. This process is proceeding to
plan, as our newly appointed financial advisors, The Chase Manhattan Bank
and Salomon Smith Barney, are currently in discussions with a number of
parties."
Overview
During the first half, we completed the process of
developing and releasing Internet and Intranet access to all of Dialog's
services, incorporating user-friendly interfaces and appropriate price
plans. Whereas the Group's traditional client relationships have been with
information professionals such as corporate librarians, we are now
positioned to sell all of our products directly to end users and in
collaboration with information professionals, both within the companies we
currently serve and to new customers around the world.
We have therefore recently expanded our sales operations to
focus on increasing sales into the end-user market, the benefits of which
we expect to become more apparent in the second half. In fact, revenues
from our Web based products have already been achieving double-digit
growth, derived from both new and existing customer accounts.
The widespread adoption of the Internet has also stimulated
a far greater demand for efficient search and structuring technologies such
as those used by Dialog to deliver its professional online services for
many years. In February 1999, the Company established its Web Solutions
Division to sell and promote its proprietary technologies, notably its
InfoSort structuring and Muscat search technologies. These products have
been successfully deployed in client organizations for the management of
both internal and external data, and have also been incorporated into a
pre-packaged corporate Intranet solution that was launched at the beginning
of this year. Most recently, the global alliance with Fujitsu for the
licensing of InfoSort, announced in June, represents a very powerful
endorsement of the Division's knowledge management software and expertise.
Revenues
Our increased emphasis on technology-based sales has meant
that the proportion of our revenues derived from these higher margin areas
has more than doubled in the first half, when compared to 1998 as a whole,
and now account for approximately 8% of revenues overall. With the
Internet-based product range and pricing now in place, the Group is
currently investing in sales and marketing to further increase revenues for
the second half of 1999 and beyond.
The Company is now organized into three divisions, each of
which has substantial growth opportunities; the Information Services
Division, the Web Solutions Division and the eCommerce Division.
INFORMATION SERVICES DIVISION (ISD)
ISD represents the largest division within Dialog and
provides business, research and academic users with access to the world's
largest database collection through its Dialog, DataStar and Profound
brands.
Revenue comparisons affected by 10% price reduction; sales
infrastructure recently enhanced Sales in ISD for the half-year were $127.0
million, down by 6.5% on prior half-year revenues. This reduction reflects
the impact of the planned overhaul of the traditional pricing model
following the acquisition of KRII in November 1997 and necessitated by the
move of all products to the Internet.
In addition, growth was held back earlier in the year by a
lower level of investment than we would have wished in ISD sales and
marketing. However, following receipt of funds in May from the new facility
from The Chase Manhattan Bank, Q2 saw increased investment in this area
which has already supported revenue growth of the new Internet-based
products (20% quarter-on-quarter) and will further drive revenues through
Q3 and Q4 1999.
Q2 sales of new Internet-based solutions advanced 20% over Q1
DialogSelect, a new Internet product focused at the growing
end-user community, grew 24% over Q1 1999. DialogWeb and DialogClassic.com,
Internet solutions targeted at the information professional and
corporate/academic librarian community, have grown 18% quarter-on-quarter
and now represent 8% of total ISD revenues. Sales of The Dialog Intranet
Toolkit, designed to facilitate the creation of customized corporate
intranet solutions using Dialog professional commands, have grown strongly
since its release in February of this year, and this solution is expected
to be a key revenue driver over time. As a whole, new Internet-based ISD
solutions grew 20% over Q1 and now represent 23% of total ISD revenues.
Growth in Internet-based solutions is due to two factors.
Firstly, our Internet products are attracting existing users due to
enhanced functionality, ease of use and customization that previously could
not be offered via the traditional Dialog products and is not currently
offered by other services available on the Internet. Secondly, our
Internet-based products are appealing to new users already familiar with
the Internet who have come to recognize that our comprehensive content
offering, reliability, speed of response and accuracy significantly enhance
their information gathering needs.
Fujitsu contracted revenues for Q3 to exceed $15.8 million
As part of the agreement reached in June 1999, Fujitsu is
redistributing all of Dialog's information products as part of their
solutions to customers worldwide. Revenues generated from this alliance
(principally up-front payments) are expected to be in excess of $15.8
million in Q3 1999 and will further enhance growth for this Division in the
future.
WEB SOLUTIONS DIVISION (WSD)
WSD is a provider of knowledge management and search
technologies and services, comparable entities in the market being Autonomy
(EASDAQ:AUY), Verity (NASDAQ:VRTY), and Excalibur (NASDAQ:EXCA), amongst
others. The Division develops and sells InfoSort indexing and
categorization solutions and Muscat search technology to corporations and
partners.
Revenues increased 287% year-on-year
Revenues in WSD for the half-year of $9.5 million were up
287%, compared to prior-year revenues. This Division continues to benefit
from its software licensing arrangements with the BBC and the DTI and
revenues towards the end of Q2 were significantly enhanced by the Fujitsu
technology license of InfoSort. Prospects for the Division will continue to
be enhanced by the worldwide redistribution activity undertaken by Fujitsu
and the development by Fujitsu of a Japanese version of InfoSort.
Development of powerful new Internet search engine - WebTop.com
By combining the indexing and structuring capabilities of
InfoSort, together with the 'linguistic inference' search capabilities of
Muscat, WSD is currently developing a web search engine to enable quick,
efficient access to free web-based information. The Group's client base
will be able to benefit from this enhanced web search service to ensure
that they have gathered all external knowledge relating to any specific
search on the WSD database products. WebTop.com will utilize InfoSort and
Muscat capabilities and will also generate advertising revenues and enable
business communities to share information and trade using Dialog eCommerce
tools (see below). Industry comparables to WebTop.com include About.com
(NASDAQ:BOUT), VerticalNet (NASDAQ:VERT) and Ask Jeeves (NASDAQ:ASKJ),
amongst others. WebTop.com will be showcased at the International Online
show in December 1999.
ECOMMERCE DIVISION (ECD)
ECD is comprised of two businesses: OfficeShopper, an
Internet based commercial office products marketer and distributor, and
Sparza, which sells and markets the underlying eCommerce software to allow
other companies to develop their own eCommerce businesses.
OfficeShopper - UK growth to accelerate and US launch early Q4
Following the launch of OfficeShopper in December 1998,
eCommerce revenues have grown quarter-on-quarter by 34% to achieve $1.1
million for the half-year. We expect the growth of this business in the UK
will be accelerated by our recent investment in sales staff since the
period end, and by the addition of 10,000 new product items in the software
and computer consumables area.
The Division is preparing for the launch of the US site,
anticipated before year-end. US vendors have already been signed, providing
over 30,000 products at launch, and the service is currently in the final
stages of preparation. The US office supply market is currently worth $225
billion and is highly fragmented, with over 90% serviced by small local
dealers. The Board believes this market offers significant opportunity for
the Group by disaggregating traditional retailers through the Internet.
Chemdex (NASDAQ:CMDX) is the closest publicly listed comparable due to the
similar Internet based procurement features of their online chemical supply
service.
Sparza
Sparza, which supplies the underlying technology behind
OfficeShopper, offers business-to-business eCommerce solutions for
manufacturers, wholesalers and resellers. Its innovative procurement
management system greatly simplifies supply chains and thus provides more
effective integration, control and cost savings. Although only just
launched, Sparza has now secured a license to Spicers UK and the Board
believes that the prospects in this market are considerable. Industry
comparables include Ariba (NASDAQ:ARBA) and CommerceOne (NASDAQ:CMRC).
Operating results
The Group achieved Q2 operating profit of $9.2 million
demonstrating a 20% increase over Q1.
Gross margins improved to 61% in Q2 as a result of the
increased percentage of technology-based sales, following the establishment
of the Web Solutions Division. The Company's cost base increased in the
second quarter as we started to focus our efforts on supporting our new
Internet range of services.
The Company generated positive cash flow from operations of
$8.2 million for the half-year reflecting significant improvement in the
Company's cash flow in the second quarter. EBITDA of $16.1 million for the
second quarter reflects an improvement of 12% over Q1 1999. After interest
charges of $7.2 million, the Company achieved a net profit of (pounds) 1.2
million for Q2, representing an improvement of 200% over Q1 1999.
Debt refinancing
As previously announced, the Board is addressing the current
debt structure of the Group so as to permit more effective use of business
cash flows in the high growth market opportunities of Information Services,
Web Solutions and eCommerce. Our current debt obligations amount to $22
million of annual amortization on our Senior debt facility plus interest.
$13.5 million has already been repaid so far this year. It is the Board's
intention to refinance this facility, having appointed Chase Manhattan Bank
and Salomon Smith Barney to assist with this exercise. The Board believes
that it is in the interests of existing shareholders that all financing
options are fully investigated and this process is proceeding to plan.
Outlook
Chairman Allen Thomas, commented, "Dialog continues to enjoy
significant market opportunities enhanced by it's investments in innovative
products and solutions which have considerable value albeit as yet not
significantly contributing to group revenues. Dialog's key assets,
including the world's largest database of online information, its global
infrastructure and alliance partner relationships, its leading edge data
structuring, search and eCommerce technology assets have historically been
deployed to service and support the world's largest companies' information
needs. Today, the advent of the Internet has greatly increased general
business awareness of the value of relevant information and the importance
of knowledge management, which opens up even greater opportunities for
Dialog to reach a far broader audience."
This press release contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934, which are subject to the "safe
harbor" created by those sections. The forward-looking statements can be
identified by terminology such as "may," "will," "expect," "intend,"
"estimate," "anticipate," "inevitable," "believe" or "continue" or
variations thereon, and include, among others, the launch dates of the
Company's products noted above. The Company's actual results could differ
materially from those discussed in the forward-looking statements as a
result of certain factors, including, among others, those set forth under
the caption "Risk Factors" in the Company's most recent Report on Form 20-F
or generally in the Company's Reports on Form 6-K. The Company disclaims
any obligation to update these forward-looking statements as a result of
subsequent events.
The Dialog Corporation plc
Consolidated Profit And Loss Account (unaudited) Three and six months ended
June 30, 1999 (all figures in $'000)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
Turnover $70,379 $69,275 $137,658 $139,900
Cost of sales (27,420) (29,606) (56,056) (60,313)
Gross profit 42,959 39,669 81,602 79,587
Distribution costs (9,396) (8,761) (17,141) (16,876)
Administrative expenses (20,631) (15,981) (40,413) (34,737)
Amortization of development
costs/goodwill (3,689) (4,724) (7,057) (6,999)
Exceptional restructuring
items - 1,390 - 348
Operating profit 9,243 11,593 16,991 21,323
Exceptional item - Gains
on sale of fixed
asset investment - 3,220 - 3,220
Net interest payable (7,235) (6,710) (14,313) (13,526)
Profit on ordinary
activities before
taxation 2,008 8,103 2,678 11,017
Taxation on profit on
ordinary activities (698) (876) (1,089) (1,201)
Profit on ordinary
activities after
taxation 1,310 7,227 1,589 9,816
Minority equity interests (205) (17) 8 (200)
Retained profit 1,105 7,210 1,597 9,616
Earnings per ADS (cents) 2.9 19.2 4.2 25.6
Earnings per ADS
excluding exceptional
restructuring items (cents) 10.6 17.0
ADSs used in computing
earnings per ADS
(thousands) 37,893 37,599 37,885 37,581
The financial results set forth above represent the
Company's financial results under UK GAAP translated for convenience into
US Dollars at the rate of US$:(pound)1.5763 being the rate of exchange on
June 30, 1999, the last trading day of the period.
(Balance Sheet follows)
The Dialog Corporation plc
Consolidated Balance Sheet (unaudited)
As of June 30, 1999
June 30 December 31
1999 1998
$'000 $'000
FIXED ASSETS
Intangible assets 42,233 36,497
Goodwill 11,912 12,100
Tangible assets 26,494 28,168
Investments 21,335 19,474
101,974 96,239
CURRENT ASSETS
Stocks 247 348
Debtors 78,774 67,436
Cash at bank and in hand 14,217 7,084
Assets held for resale - 1,564
93,238 76,432
CREDITORS (amounts falling
due within one year) (112,915) (92,757)
NET CURRENT LIABILITIES (19,677) (16,325)
TOTAL ASSETS LESS CURRENT
LIABILITIES 82,297 79,914
CREDITORS (amounts falling due
after more than one year) (234,226) (220,274)
Provisions for liabilities and
charges (4,877) (7,404)
(156,806) (147,764)
CAPITAL AND RESERVES
Called up share capital 2,391 2,387
Share premium account 240,146 239,799
Shares to be issued 1,524 1,524
Profit and loss account (402,681) (393,172)
Ordinary shareholders' funds (158,620) (149,462)
Minority interest 1,814 1,698
Total shareholders' funds (156,806) (147,764)
The financial results set forth above represent the Company's
financial results under UK GAAP translated for convenience into US Dollars
at the rate of US$:(pound)1.5763 being the rate of exchange on June 30,
1999, the last trading day of the period.
The Dialog Corporation plc
Consolidated Cash Flow Statement (unaudited) for the
6 months ended June 30, 1999
1999 1998
$'000 $'000
NET CASH INFLOW FROM OPERATING ACTIVITIES 7,465 13,075
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 139 476
Interest paid on bank loans and overdrafts (14,118) (13,059)
Interest paid on finance leases (8) (46)
(13,987) (12,629)
TAXATION PAID (619) (88)
CAPITAL EXPENDITURE
Payments to develop intangible assets (9,026) (7,175)
Payments to acquire tangible fixed assets (3,749) (1,830)
Receipts from sales of tangible fixed assets 102 36
(12,673) (8,969)
ACQUISITIONS AND DISPOSALS
Purchase of share in joint venture (1,368) (1,140)
Expenses in connection with purchase of
subsidiary undertakings (779) (641)
Proceeds from sale of investments 1,225 11,393
(922) 9,612
CASH (OUTFLOW)/INFLOW BEFORE THE USE OF
LIQUID RESOURCES AND FINANCING (20,736) 1,001
MANAGEMENT OF LIQUID RESOURCES
Net receipts from sales of investments
with original maturity date of less than one year - 977
FINANCING
Net proceeds on issue of Ordinary share capital - 432
Short-term borrowings 41,495 -
Repayment of loans (13,701) (10,887)
Repayment of capital element of finance leases (311) (435)
27,483 (10,890)
INCREASE/(DECREASE) IN CASH 6,747 (8,912)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT
IN NET DEBT
Increase/(decrease) in cash in the period 6,747 (8,912)
Cash used to decrease lease financing 311 435
Cash acquired from short-term borrowings (41,495) -
Cash used to repay loans 13,701 10,887
Increase in liquid resources and cash deposits
with original maturity
date of less than one year - (977)
Change in net debt from cash flows (20,736) 1,433
Other non-cash changes (875) (743)
New finance leases (3,282) -
Effect of foreign exchange rate changes (13,313) 2,513
Movement in net debt in period (38,206) 3,203
Net debt at beginning of period (227,298) (229,988)
Net debt at end of period (265,504) (226,785)
The financial results set forth above represent the
Company's financial results under UK GAAP translated for convenience into
US Dollars at the rate of US$:(pound) 1.5763 being the rate of exchange on
June 30, 1999, the last trading day of the period.
The Dialog Corporation plc Composition of Turnover (unaudited) 6 months
ended June 30, 1999
1999 1998
$'000 $'000
Information Services 127,063 136,017
Web Solutions and Internet software 9,470 2,449
eCommerce 1,125 -
Other - 1,434
137,658 139,900
These results are unaudited and do not constitute statutory accounts
within the meaning of Section 240 of the Companies Act 1985. The financial
statements for the year ended December 31, 1998 have been reported on by
the Company's auditors, PricewaterhouseCoopers, and delivered to the
Registrar of Companies. The audit report was not qualified and neither did
it contain any statements under Section 237 (2) or (3) of the Companies Act
1985. The unaudited results for the six months ended June 30, 1999 have
been prepared in accordance with the accounting policies stated in the 1998
Annual Report and Accounts.
CONTACT: The Dialog Corporation plc
David Mattey, Chief Financial Officer
011 44 171 930 6900
or
Kristian Talvitie, U.S. Investor Relations
[email protected]
212/381-1824
or
Jaffoni & Collins Incorporated
David C. Collins/Robert L. Rinderman
[email protected]
212/835-8500
