DICOM is a product developer, sales and service provider for the Information Capture Sector and operates in 23 countries in Europe, the United States, South East Asia and Australia.
Regarding the results, current trading and prospects, Otto Schmid, Chairman and Chief Executive of DICOM said:
The third quarter was highly successful. Strong growth of our software and services business reflect continuing high demand for IT solutions from customers seeking improved operating efficiencies. Increased market share was gained for Kofax Ascent Capture through our ongoing effort to encourage partners to integrate and remarket our components. A major release of our flagship product Ascent Capture was launched earlier than planned, targeting the fast growing market for hybrid information capture solutions.
The strategic investments in two US companies, Cardiff Software Inc. and Entelagent Software Corp., were successfully completed during the period under review, providing us with further technology ideally complementing our existing product offering. These equity stakes purchased for cash allow DICOM to benefit from future growth segments in the electronic forms and e-mail capture market.
The three months of trading in terms of turnover, operating profits, pre-tax profits and earnings per share have proved to be the best performing third quarter in DICOM’s history. DICOM’s strong trading performance has been achieved despite the significant slow down in the global economy generally and more particularly in IT expenditure in the E-commerce and Internet segment. The current position of our international sales and service operations and the strong market response to our latest product launches indicate good prospects for the remainder of our financial year and beyond. The directors view the outlook with optimism.
Following the strong first half year the third quarter has been very successful for the Group and the best performing third quarter in DICOM’s history. The major contributor to the strong improvement in profitability has been the Group’s core Electronic Data and Document Capture (EDC) division which experienced good growth across Europe and in the United States. All 23 country organisations were able to report project gains and increased their contribution to the Group’s results. During the third quarter good progress was made in the development of new Kofax products both in the Ascent Capture Software, as well as in the IP (Image Processing) business unit, both of which had successful market launches.
The Group ended the period with net debt of GBP2.4m (net funds of GBP13.5m at 30 June 2000) after financing organic sales growth and spending £18.4m in cash on acquisitions and investments during the period.
The Group continues to seek opportunities for investments and acquisitions, to further improve DICOM’s core competence and strengthen its leading position in the EDC market.
Operating review
Electronic Data and Document Capture Division (EDC) is the Group’s largest division, developing products, providing consulting and integration services for the Information Capture market. Through its world-wide sales organisation it markets and services key related products to a substantial number of system integrators and general contractors. US based Kofax Image Products is the centre of product development of DICOM’s proprietary products.
EDC achieved sales growth in local currency terms of 77% (25% excluding acquisitions) and accounted for 62% of the Group’s sales in the nine months to 31 March 2001. Solid growth was achieved across Europe and in the United States, with an improved performance in all major territories.
The launch of the award winning Kofax Ascent Capture Software version 5 was announced on 19 March 2001. At the beginning of May 2001 it was presented to a wider audience in New York, at the AIIM show (Association for Information and Image Management), where it received very favourable market feedback. We are also pleased to report that the IP (Image Processing) business, the unit that develops scanner enhancement soft- and hardware, was able to increase its turnover significantly. IP could benefit from capitalising on our leading position in this segment by launching additional, derivative products such as Software VRS and new versions of our high speed document scanner enhancement engines Adrenaline.
In the period under review we successfully completed strategic investments in two US companies. In January we acquired a 7 per cent shareholding in Entelagent Software Corp. for a total consideration of US$1m. In March we purchased an additional 13 per cent of the total equity of Cardiff Software Inc. for US$9.3m which increased our holding to 19 per cent. These equity stakes purchased for cash allow DICOM to benefit from future growth segments in the electronic forms and e-mail capture market and provide us with further technology ideally complements our existing product offering.
The continuing emphasis on the provision of consultancy, integration and maintenance services has greatly improved the quality and quantity of service revenues. Service income generated in the nine months under review is up by 81% compared to the same period of last year.
The Group’s Samsung General Agency Division (SGA) is the official and sole representative of Samsung Electronics in Switzerland and Austria, achieved sales growth in local currency terms of 37% in the nine months to 31 March 2001.
Prospects
The three months of trading in terms of turnover, operating profits, pre-tax profits and earnings per share have proved to be the best performing third quarter in DICOM’s history. DICOM’s strong trading performance has been achieved despite the significant slow down in the global economy generally and more particularly in IT expenditure in the E-commerce and Internet segment. The current position of our international sales and service operations and the strong market response to our latest product launches indicate good prospects for the remainder of our financial year and beyond. The directors view the outlook with optimism.
