FY16 RESULTS : in line (DMS)

DMS released FY16 results. Revenues reached €37.4m, EBITDA €-714k, EBIT €-1,284k and net income €-1,016k. The group had a net cash position at the end of FY16 of €2.1m, vs €1.1m at the end of FY15. Looking into FY17, the group expects the radiology segment to be supported by the agreement with NGI (see our Latest dated 12 January), while the first results of the R&D efforts at Alpha Mos should start bearing fruit in H2, while DMS Wellness should also book its first sales during H2.

Revenues were already reported in February (see our note dated 13 February 2017). As far as the results are concerned, they are fully in line with our expectations, and in fact a tick better at the EBITDA level, even if the difference is minor. More important in our view, the core DMS Imaging segment has posted a rather sound €1,084k EBITDA, while other divisions, either new (DMS Wellness, DMS Biotech) or being restructured (Alpha Mos) explain the overall negative EBITDA level, since they contributed a negative €-1,797k. As a reminder, DMS Wellness hasn’t yet generated revenues, while DMS Biotech generated only €0.5m, since both activities are new (and in the latter case burdened by the consolidation of Stemcis). As far as Alpha Mos is concerned, sales were down 9% yoy to €7.5m after the group decided to stop a number of products and product ranges. In other words, the global negative EBITDA is to be seen as the price for investments in new business areas, whereas the core business is delivering (EBITDA +26%) in line with what we were expecting. In terms of the balance sheet, the group has benefited from the €3.5m capital increase of Alpha Mos reserved to Jolt Capital, a private equity firm targeting investments in mid-sized European technology companies (see our Latest dated 3 October 2016), which has enabled the group to keep a net cash position, despite the negative free cash flow and a higher level of capex (€3.3m vs €2.3m). All in all, the numbers released are very close to ours, with an increase in DMS Imaging’s profitability, while other segments still weigh on total profits before they reach break-even, as was also expected.

Altogether, the numbers are in line with our expectations and we will most likely only fine-tune our forecasts with no significant impact on future earnings and valuation.