Sales growth in local currency terms after adjustments for discontinued businesses was 57%, of which 26% accounted for organic growth and the balance from acquisitions. Operating profit before goodwill amortisation (EBITA) increased to GBP4,603,000 (1999: GBP1,641,000) up 180%. Profit before tax after goodwill amortisation and interest is GBP3,735,000 (1999: GBP,554,000), up 140%. After tax and minority interest basic earnings per share is calculated at 11.2p (1999: 9.4p), up 19%. Adjusted earnings per share being adjusted for goodwill amortisation and results of discontinued business is 15.5p (1999: 13.6p), up 14%.
The first six months have been a very successful period for the Group. Sales of Information Capture Software and Services in our principal division Electronic Data and Document Capture (EDC) were strong particularly at the end of the calendar year. Most of the 23 country organisations reported major project gains and were therefore able to increase their contributions significantly. As a result, most subsidiaries improved gross margins as well as operating profit margins, producing record levels for each respectively. During the first half year good progress was made in software development of VirtualReScan (VRS) and Ascent Capture products, developed by its US subsidiary Kofax. The Samsung General Agency Division (SGA) reported good results reflecting high demand for Samsung’s digital product line, primarily flat screen displays and web based communication devices. Through a number of acquisitions the Group continued to invest significantly into Information Capture software as well as into its geographical presence and service network.
The Group ended the period with net funds of GBP1.9m (£13.5m at 30 June 2000), financing growth and spending GBP7.8m on acquisitions and investments during the period.
Operating review Electronic Data and Document Capture Division (EDC)
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, where it has a market leading position. Through its world-wide sales organisation it markets and services key related products to a large number of system integrators and general contractors, whose core competence lies in solutions for Content, Document and Knowledge Management. Hence they rely on DICOM as the EDC expert to enhance the performance of their solutions. EDC achieved sales growth in local currency terms of 75% of which organic growth accounted for 23%. Services turnover grew by 72% to £5.9m (1999: £3.4m) compared to the same period of last year. Products developed by the Group and the provision of services through its world-wide network account now for 45% of the turnover in the EDC division. In total EDC contributed 61% to the Group’s sales in the six months to December 2000 (six months to December 1999: 52%).
EDC technology is used to convert different types of non-digital (e.g. paper forms) as well as digital information into a structured data stream. In high volume environments EDC is often the key component that allows applications such as content management and knowledge management to work efficiently. Typical EDC solutions include the automatic acquisition of insurance claims and applications, credit card and loan applications, publication of archival data and documents on web sites
Kofax Products (Kofax) is the centre of product development for DICOM’s proprietary products. US based Kofax was acquired in January 2000 as part of a long-term initiative to refocus DICOM’s product mix towards software and services. Kofax today operates in two areas: Ascent Capture Software and Image Processing software and algorithms.
Ascent Capture software products enhance the management of the data and document capture process. First launched in 1995 it became a broadly adopted solution for improving capture capabilities in many vertical applications. The Data and Document Internet Server (DDI), which was introduced at the end of 1999, is still the only solution that offers capture workflow management over the Internet. Its latest version 4.0 launched in June 2000 includes an XML architecture which opens the way to a much broader range of applications. The number of licenses sold and installed was increased from 12,000 to 16,300 during the six months. Sales of Ascent Capture grew to GBP6.5m ($9.5m), up 49%, reflecting major software contract awards from large firms in the financial services industry, manufacturing and government.
VirtualReScan (VRS) initially introduced as an add-on hardware product to high-end scanner was successfully introduced into the market in 1999. In December 2000 the Group announced the launch of Software VRS which is based on the existing VRS algorithms. It targets the mid-range scanner market, a segment estimated to be much larger and with higher growth rates than the existing target market for Hardware VRS. During the last six months Kofax has successfully sort to strengthen further its relationship with major OEM clients which has increased turnover of VRS. The existing Adrenaline Product line performed well after setbacks during the last fiscal year.
