DMG Information (DMGI) produced excellent results with operating profits increasing sharply. The business to business division had another outstanding year, increasing its profits by over 40%, whilst the careers division made encouraging progress on its recovery from the downturn of the previous year.
Risk Management Solutions increased its profits substantially and its operating margin improved significantly as its insurance and reinsurance company clients focused on their risk controls. In addition, the substantial investment in RMS’s data and models paid dividends. It was another busy year on the product side with the launch of major upgrades to the core catastrophe models of US hurricane and earthquake. Both models incorporated new mathematical and scientific approaches and, as a result, caused important changes to the risk analysis of many client portfolios. The model releases were managed using a new web-based customer relationship management system which helped to ensure a rapid and wide adoption by the insurance industry.
The new urban risk concentration database, mentioned in last year’s report as being in development, was launched. This product was created jointly with DMGI’s Sanborn Map Company. RMS’s early work in terrorism risk assessment culminated in the launch of a terrorism model for the USA during the year. In addition to healthy sales growth in the USA, penetration of the Lloyd’s of London insurance market increased sharply and rapid grow this being experienced in Continental European markets.
All three companies in the property information group had a successful year. In the USA, Environmental Data Resources achieved a record profit despite the continuation of a weak commercial real estate market, although the first signs of an upturn were felt in the final quarter. The company successfully introduced a number of new database features into its products. Property & Portfolio Research, which was acquired in early October 2002, had an excellent year and fully met DMGI’s growth expectations, despite weaker market conditions than originally expected. Towards the end of the year, encouraging progress was being made in sales of the relatively new loan default models being marketed to lenders.
In the UK, the high revenue growth at Landmark was maintained. Profit was held back by an increase of investment in building the organisational structure and systems improvements. In mid-September, the company completed the acquisition of Sitescope which underpins expectations for another high growth year in 2004.
Dolphin Software had a flat year. Market conditions continued to be difficult with US industry holding back on capital expenditures, although there were signs of some upturn as the year ended.
The company launched a new product aimed at offering customers the tools to undertake a comprehensive analysis of their chemical management process.
RMSI in India achieved its target for the year. Investments were made in establishing sales organisations in the USA and in the UK, with the latter already producing positive results. In addition, RMSI’s relationship with Landmark achieved considerable success in winning a number of large UK government-related geographic information contracts.
At Sanborn, the downward trend in demand mentioned in last year’s report continued through into this year. The principal cause was the fiscal deficits being experienced by US state and local governments and, although opportunities are expected to arise from Homeland Security work, funding has only recently started to flow.
At Hobsons, the restructuring carried out at the end of 2002 in response to a sharp fall in the graduate recruitment market it serves in the UK and Germany, helped to return the company to profitability despite there still being no upturn in the market.
The theme of weak graduate recruitment markets was also felt, albeit to a lesser extent, in France, Belgium and Australia. However in France, Editions Go had a satisfactory year, as did the Good Guides Group in Australia due to their leading market positions in the higher educational recruitment market.
In the USA, where Hobsons is not exposed to the graduate recruitment market, the company had a record year, with the product diversification efforts in the higher education recruitment market of earlier years paying off.
Study Group achieved highly creditable results in a year when international student travel was adversely affected by the war in Iraq and by the outbreak of SARS. Once again the UK and Australian operations posted record profits and a successful operation was opened in Auckland, New Zealand. In the USA, recovery was slower than anticipated as a result of a tightening of visa requirements and a continuing reluctance on the part of students from some countries to travel to the USA. However, the cost cutting carried out in 2002, helped to improve results there.
Investment in the worldwide sales and marketing organisation was maintained, as was the commitment to the programme of providing outstanding facilities. For example, construction has started on a new purpose built college at Greenwich in London. The benefits of these investments and the breadth and geographic spread of the courses offered are becoming more visible in the market place, with Study Group as a consequence steadily improving its competitive position.