RNS Number:0026L
Dicom Group PLC
13 May 2003
DICOM Group plc
Results FY 2003 - Nine Months to 31 March 2003
Record Pre-Tax Profits and EDC Division Turnover
DICOM Group plc ("DICOM Group"), a global leader in the Electronic Document
Capture ("EDC") market, a growing segment of the Office Automation software
industry, announces record results for the nine months to 31 March 2003 despite
continuing adverse trading conditions in the IT sector.
Financial Highlights of the Nine Month Results (UK GAAP):
* Group turnover up 7% to #119.3m (2002: #111.8m)
* Turnover growth of 9% in local currency terms in EDC Division contributes
71% (2002: 69%) of total revenues
* Operating profits before goodwill amortisation (EBITA) down 1% to #8.6m
(2002: #8.7m), in local currency terms up 3%
* EBITA at EDC Division, up 9% in local currency terms, contributes 83%
(2002: 80%) of total EBITA
* Pre-tax profits up 308% to #6.4m (2002: #1.6m, after exceptional item)
* Adjusted Earnings per share (EPS) up 4% to 28.8p (2002: 27.7p)
* Adjusted EPS in local currency terms up 8%
* R&D spending of #5.3m
* Operating activities generated positive cash flow of #9.0m (2002: #7.4m)
Recent Developments
* US$6.4m cash acquisition, in April 2003, of Mohomine Software Inc, a leader
in the text categorisation and extraction market, extends DICOM Group's
addressable market substantially
* New product launch of VirtualReScan (VRS) 3.0, a significant upgrade to
award-winning image enhancement software
* First ever OEM agreement with Hewlett Packard
* "Best Technology" award for achievements in company growth and product
innovation
* Increased market share for Ascent Capture product; 40,400 licenses sold to
date (2002: 29,900)
Commenting, Arnold von Buren, Chief Executive Officer of DICOM Group said:
"The Group is well positioned in its core EDC market and has continued to gain
market share in all major product lines and territories. Our R&D spending, which
remains at planned levels, allows us to maintain a high rate of product
innovation. This should be further accelerated by the recent acquisition of
Mohomine, which will add new products based on leading text classification and
extraction technology. First joint customer projects have been identified."
Regarding prospects, Otto Schmid, Chairman of DICOM Group said:
"The global IT market continues to be challenging as corporate IT spending on
software and services, especially in larger projects, remains under close
scrutiny at a time of ongoing political and economic uncertainty. Even so, we
continue to see rising future order prospects for our EDC products and services
on a global scale. Despite the current weakness of the US dollar, which reduces
the reported sterling value of our US operating profits, our EDC Division's
current trading performance and future prospects enable the Directors to view
the Group's outlook with optimism."
About DICOM Group plc
DICOM Group plc ("DICOM Group") is the global leader in the Electronic Document
Capture ("EDC") market, a growth sector of the Office Automation industry. EDC
improves the performance of many business applications such as document and
content management and converts non-digital and digital documents into
structured data streams. Its implementation allows substantial increases in
office efficiency and offers high returns on investment.
DICOM Group's core competence is consulting, development and provision of EDC
products and services. More than 10,000 organisations world-wide have
implemented DICOM Group developed products, supported by 800 employees in 25
countries in Europe, the US, South East Asia and Australia.
US-based Kofax Image Products, DICOM Group's software development centre,
designs solutions to capture, transform and deliver large volumes of documents,
which result in accelerated efficiency in a broad range of business
applications.
The Ascent Capture product platform captures scanned document images, text,
forms, industry-standard XML data and Microsoft Office(R) documents. Web-based
components and server products enable organisations to capture information
wherever it enters the organisation - eliminating shipping costs and
accelerating access to that information. Its patented and award-winning
VirtualReScanTM (VRS) product improves document image quality and the scanning
process in real time.
DICOM Group's European and Asian sales and service organisation offers a broad
range of services and complementary third party EDC products. Its network of
pre-sales, after-sales and consulting organisation addresses the increasing
demand for internationally deployed EDC solutions, project management and
professional support.
The Group's Samsung General Agency (SGA) Division focuses on multimedia
visualisation products for the IT, POI and Entertainment market in Switzerland.
It operates as sole agency of Samsung's high performance flat screen display.
DICOM Group plc Binns & Co Public Relations Ltd
Christoph Loslein Executive Director Peter Binns
Dr. Bettina Moschner Investor Relations Manager Paul McManus
Tel: +44 (0) 800 6520 616 or
+49 (0) 761 45269 36
Fax: +44 (0) 1189 820 102 Tel : +44 (0) 20 7786 9600
+49 (0) 761 45269 936 Mob: +44 (0) 7980 541 893
E-mail: christoph_loeslein@dicomgroup.com paul.mcmanus@binnspr.co.uk
bettina_moschner@dicomgroup.com
Internet: http://www.dicomgroup.com http://www.binnspr.com
CHAIRMAN'S STATEMENT
RESULTS
I am pleased to report a record set of results despite continuing adverse
trading conditions in the IT sector and the global economy. Group turnover for
the nine months to 31 March 2003 was up 7% to #119.3m (2002: #111.8m). Organic
growth (excluding acquisitions and divestments) in local currency terms was up
6%. Operating profit of #6.5m (2002: #1.9m after exceptional items), increased
by 247%. Operating profit before goodwill amortisation (EBITA) decreased by 1%
to #8.6m (2002: #8.7m). Growth of EBITA in local currency terms was 3%. Profit
before tax was #6.4m (2002: #1.6m after exceptional items), an increase of 308%.
After tax and minority interests basic earnings per share is calculated at 18.9p
(2002: loss of 2.9p after exceptional items). Adjusted earnings per share,
earnings being adjusted for goodwill amortisation and exceptional items, rose 4%
to 28.8p (2002: 27.7p). Adjusted EPS in local currency terms was up by 8%. The
results in the third quarter of the previous financial year were affected by
exceptional charges amounting to #5.2m.
The nine months proved to be successful for DICOM Group's core Electronic
Document Capture (EDC) Division as it further expanded and improved its role as
industry leader by developing and providing its own products and services. As
reported at the half year, however, the continuing weakness of the US dollar (on
average 10% lower in the nine months) has adversely affected the reported
sterling results of our US operations where over half the Group's operating
profits are generated.
The Samsung General Agency (SGA) Division achieved good results both in turnover
and operating profit contribution.
FINANCIAL POSITION
DICOM Group generated cash flow from operations of #9.0m and ended the period
with net cash of #1.5m (net cash of #3.8m at 30 June 2002), after financing
organic sales growth during the period and spending #5.0m in cash on
acquisitions and other investments.
OPERATING REVIEW
Electronic Document Capture (EDC), DICOM Group's largest division, accounted for
71% (2002: 69%) of turnover and 83% (2002: 80%) of operating profits before
goodwill amortisation in the nine months to 31 March 2003. It develops software
and electronic components, provides consulting and integration services and
sells key related products to over 1,000 system integrators and software houses
world-wide. The implementation of EDC technology allows document intensive
organisations to reduce business transaction costs substantially, improve
customer service and hence achieve high returns on investment.
EDC achieved organic sales growth in local currency terms of 3%; acquisitions
contributed an additional 6% in turnover. DICOM Group's own product sales grew
by 4% in local currency terms and now account for 33% of EDC sales. The slower
rate of growth of sales of own products in the third quarter is primarily
attributable to delays in some of the larger US project opportunities. Service
income was up by 23% in local currency terms, contributing 19% to EDC sales.
Operating profit before goodwill amortisation contributed by the EDC Division
increased to #7.1m, up 3% and in local currency terms 9%.
The Ascent product family continues to grow through its broad adoption by the
world's leading system integrators and software houses. We were able to win a
significant number of small to mid sized EDC projects. Despite a strong pipeline
we have seen a slower conversion rate of larger US projects in the third
quarter, which we understand to be the result of delayed decision making rather
than cancellation. The number of Ascent Capture software licenses sold to date
has increased to over 40,400 (31 March 2002: 29,900).
Our award winning VirtualReScan (VRS) product line, which optimises both image
quality and the scan process, continues to do well. In April 2003 we announced
that Hewlett-Packard Co. ("HP") had signed an OEM agreement for Software VRS.
This is DICOM Group's first ever OEM agreement with HP and in the mid-range
scanner segment, regarded as the fastest growing area in the document scanner
market. The agreement provides for HP to integrate VRS document image
enhancement technology with their new line of business scanners for workgroups.
DICOM Group's European sales and services organisation showed growth both in
turnover and profits during the reporting period. It also continued to increase
rapidly the contribution of EDC related services, which provide the Group with
recurring business.
DICOM Group continued to increase its investment into development of application
software and algorithms. R&D spending amounted to #5.3m, representing 19% of
DICOM Group developed product turnover.
The Samsung General Agency (SGA) contributed 29% (2002: 31%) to DICOM Group
turnover and 17% (2002: 20%) to operating profits before goodwill amortisation.
The agency continued to be a distributor of Samsung flat-panel displays. These
results include 3 months of the business of Elsat, the Group's former SGA
operation in Austria, which was sold in October 2002. Organic growth of the
Swiss SGA Division was 17% in local currency terms.
STAFF
As a result primarily of the ScanOptic acquisition in October 2002 Group staff
numbers grew slightly to 818 (30 June 2002: 773). Our future prosperity is
largely dependent on the ability, energy and loyalty of our staff, whose
specialist knowledge, training and experience is key to the successful provision
of the Group's value-added services and products. Staff turnover remained at low
levels and we continue to attract high calibre people.
ACQUISITION OF MOHOMINE INC. (POST PERIOD END)
On 8 April 2003 DICOM Group announced the acquisition of Mohomine Inc. ("
Mohomine"), a San Diego based software developer specialising in automated text
categorisation and extraction, for an initial consideration of US$6.4m in cash.
An additional payment of up to US$1.0m may be payable depending on the
performance of Mohomine for the period to 31 December 2003.
Mohomine develops software that automatically classifies and extracts text from
unstructured documents, in which the location of salient information cannot be
easily predicted. Examples include e-mails, web pages, PDF files and paper
documents. According to research firm Gartner Group, approximately 80% of all
business documents are unstructured. Mohomine's algorithms and solutions are
based upon pattern recognition techniques that are language independent and have
been applied to many European languages as well as Chinese and Arabic.
Since its inception in 1999, Mohomine had primarily licensed its technologies to
enterprise software vendors such as IBM, Oracle, Peoplesoft and to security
agencies. The new integrated products will be marketed in DICOM Group's 25
operating territories throughout Europe, the US, South East Asia and Australia.
For the financial year to 31 December 2002 Mohomine reported revenues of US$1.0m
and a negative EBITDA of US$2.0m. As at 31 December 2002 the company had net
assets of US$0.1m. Mohomine is expected to contribute positively at the
operating profit level in DICOM Group's forthcoming financial year.
We are excited about the acquisition as it will extend our current addressable
market estimated at #1.2bn, by #1.5bn for non-paper based capture and
information extraction applications. Additionally it will accelerate growth in
the existing EDC market by offering solutions that have not been economically
feasible without the use of Mohomine's automatic classification and extraction
features.
The integration of Mohomine into our software development and sales
organisations is progressing well and first joint customer prospects have been
identified.
PROSPECTS
The global IT market continues to be challenging as corporate IT spending on
software and services, especially in larger projects, remains under close
scrutiny at a time of ongoing political and economic uncertainty. Even so, we
continue to see rising future order prospects for our EDC products and services
on a global scale. Despite the current weakness of the US dollar, which reduces
the reported sterling value of our US operating profits, our EDC Division's
current trading performance and future prospects enable the Directors to view
the Group's outlook with optimism.
Otto Schmid
Chairman
13 May 2003
DICOM Group plc
Preliminary Announcement of Unaudited Results
Consolidated Profit and Loss Account (UK GAAP)
9 months 9 months Year
to to to
31 March 31 March 30 June
2003 2002 2002
unaudited unaudited audited
Note #'000 #'000 #'000
Turnover 119,300 111,839 149,527
Cost of sales (76,167) (71,255) (95,158)
Gross profit 43,133 40,584 54,369
Operating expenses
Goodwill amortisation (2,023) (1,547) (2,058)
Exceptional items - (5,223) (5,237)
Other (34,570) (31,928) (43,107)
Total operating expenses (36,593) (38,698) (50,402)
Operating profit before 4 8,563 8,656 11,262
goodwill amortisation
Goodwill amortisation (2,023) (1,547) (2,058)
Exceptional items - (5,223) (5,237)
Operating profit 6,540 1,886 3,967
Share of results of
associated undertakings (54) (165) (288)
Net interest and similar
charges (99) (156) (158)
Profit on ordinary activities
before taxation 6,387 1,565 3,521
Taxation (2,522) (2,054) (2,780)
Profit/(loss) on ordinary
activities after taxation 3,865 (489) 741
Minority interests 76 (110) (8)
Profit/(loss) attributable to
ordinary shareholders 3,941 (599) 733
Dividends - equity (332) (289) (870)
Retained profit/(loss) 3,609 (888) (137)
Earnings per ordinary share 2
- basic 18.9p (2.9p) 3.5p
- adjusted 28.8p 27.7p 36.9p
- diluted 18.8p (2.9p) 3.5p
Dividend per ordinary share 1.61p 1.40p 4.2p
Statement of total recognised
gains and losses
Profit/(loss) for financial
year 3,941 (599) 733
(Loss)/Gain on currency
translation (872) 1,103 596
Total recognised gains and
losses relating to the year 3,069 504 1,329
Prior year adjustment - - 1,030
Total gains and losses recognised
since last annual report 3,069 504 2,359
DICOM Group plc
Preliminary Announcement of Unaudited Results
Consolidated Balance Sheet (UK GAAP)
At At At
31 March 31 March 30 June
2003 2002 2002
unaudited unaudited audited
Note #'000 #'000 #'000
Fixed assets
Intangible assets 39,870 34,183 35,186
Tangible assets 5,021 4,494 4,716
Investments 10,412 10,961 10,428
55,303 49,638 50,330
Current assets
Stocks 12,480 12,168 11,438
Debtors 34,353 31,959 33,965
Investments 89 195 254
Cash at bank and in hand 7,949 4,989 7,265
54,871 49,311 52,922
Creditors:
Amounts falling due within one
year (37,450) (31,958) (34,985)
Net current assets 17,421 17,353 17,937
Total assets less current
liabilities 72,724 66,991 68,267
Creditors:
Amounts falling due after more
than one year (2,550) (2,003) (1,882)
Provisions for liabilities and
charges (768) (504) (724)
Net assets 69,406 64,484 65,661
Capital and reserves
Called up share capital 2,085 2,082 2,083
Share premium account 51,792 51,739 51,762
Merger reserve 1,717 527 527
Profit and loss account 13,823 9,812 11,086
Shareholders' funds - Equity 3 69,417 64,160 65,458
Minority interests - Equity (11) 324 203
69,406 64,484 65,661
DICOM Group plc
Preliminary Announcement of Unaudited Results
Consolidated Cash Flow Statement (UK GAAP)
9 months 9 months Year
to to to
31 March 31 March 30 June
2003 2002 2002
unaudited unaudited audited
Note #'000 #'000 #'000
Cash inflow from operating 5 9,034 7,421 14,022
activities
Returns on investments and
servicing of finance (89) (128) (311)
Taxation paid (3,151) (2,614) (3,770)
Capital expenditure and
financial investment (2,358) (2,126) (3,080)
Acquisitions and disposals (5,041) (317) (1,284)
Equity dividends paid (577) (503) (791)
Cash (outflow)/inflow before
use of liquid resources and
financing (2,182) 1,733 4,786
Management of liquid
resources (2) 531 564
Financing
Issue of Ordinary Shares 30 11 28
Increase/(Decrease) in debt 3,600 (2,711) (3,395)
3,630 (2,700) (3.367)
Increase/(Decrease) in cash in
the period 1,446 (436) 1,983
Reconciliation of net cash flow
to movement in net funds
Increase/(Decrease) in cash in
the year 1,446 (436) 1,983
Cash (inflow)/outflow from (increase)/
decrease in debt and lease financing (3.600) 2,711 3,395
Cash outflow/(inflow) from
increase/(decrease) in liquid
resources 2 (531) (564)
Change in net funds resulting
from cash flows (2,152) 1,744 4,814
Loans and finance leases
acquired with subsidiaries (54) - (8)
New finance leases (105) (161) (176)
Exchange difference 49 (86) (217)
Movements in net funds in the
period (2,262) 1,497 4,413
Net funds/(debt) at start of
period 3,750 (663) (663)
Net funds at end of period 1,488 834 3,750
DICOM Group plc
Q3 2002/2003
Notes (UK GAAP)
1 Basis of preparation
The interim financial statement in accordance with UK GAAP has been prepared in
accordance with the accounting policies set out in, and is consistent with, the
Group's 2002 financial statement except that the taxation charge for the period
is based on the estimated charge for the year to 30 June 2003.
The interim financial information is unaudited and does not constitute statutory
accounts as defined in Section 240 of the Companies Act 1985. The abridged
information for the year to 30 June 2002 has been extracted from the Group's
statutory accounts for that period which have been filed with the Registrar of
Companies. The auditors' report on those accounts was unqualified and did not
contain a statement under Section 237(2) or (3) of the Companies Act 1985.
2 Earnings per share
The Earnings per share calculation is based upon Financial Reporting Standard
14. Basic Earnings per share 18.9p (loss of 2.9p) for the nine months to 31
March 2003 has been calculated based on the profit attributable to shareholders
of #3,941,000 (loss of #599,000) using the weighted average number of Ordinary
Shares in issue 20,847,495 (20,817,949) during the period.
Adjusted Earnings per share 28.8p (27.7p) for the nine months to 31 March 2003
is based on profit of #6,010,000 (#5,765,000), being adjusted by the
amortisation of goodwill in subsidiaries of #2,023,000 (#1,547,000) and
amortisation of goodwill in associates of #46,000 (#40,000) using the weighted
average number of Ordinary Shares in issue 20,847,495 (20,817,495) during the
period. The results for the previous year were adjusted for exceptional items
amounting to #5,223,000. The exceptional items have been taking into account net
of tax benefits of #446,000.
Diluted Earnings per share 18.8p (loss of 2.9p) for the nine months to 31 March
2003 is based on 21,003,738 (20,962,038) Ordinary Shares, the difference to the
basic calculation representing the additional shares that would be issued on the
conversion of all the dilutive potential Ordinary Shares. There is no material
difference to earnings if all the dilutive potential Ordinary Shares were
converted.
3 Reconciliation of movements in shareholders' funds (UK GAAP)
9 months to 9 months to Year to
31 March 2003 31 March 2002 30 June 2002
#'000 #'000 #'000
Opening shareholders' funds 65,458 63,934 63,934
Prior year adjustment - - 1,030
Opening shareholders' funds as 65,458 63,934 64,964
restated
Retained profit/(loss) for the 3,609 (888) (137)
period
(Loss)/profit on currency (872) 1,103 596
translation
New share capital issued 32 11 35
Reinstitution of merger 1,190 - -
reserve
Closing shareholders' funds 69,417 64,160 65,458
4 Segmental Reporting
9 months to 9 months to Year to
31 March 2003 31 March 2002 30 June 2002
#'000 #'000 #'000
Sales by divisions
EDC
Own products 27,685 29,072 39,385
Services 16,225 12,996 17,482
3rd party products 40,447 35,542 45,118
Total EDC 84,357 77,610 101,985
SGA 34,943 34,229 47,542
Group 119,300 111,839 149,527
Gross profit by divisions
EDC 37,806 34,825 46,869
SGA 5,327 5,759 7,500
Group 43,133 40,584 54,369
Operating profit before
goodwill amortisation and
exceptional items by
divisions
EDC 7,141 6,962 9,286
SGA 1,422 1,694 1,976
Group 8,563 8,656 11,262
5 Reconciliation of operating profit to operating cash flows
9 months to 9 months to Year to
31 March 2003 31 March 2002 30 June 2002
#'000 #'000 #'000
Operating profit 6,540 1,886 3,967
Depreciation and 3,796 3,665 4,636
amortisation
Profit on sale of fixed asset (170) - (16)
investment
Loss on sale of tangible fixed - - 9
assets
Increase in stocks (1,595) (3,050) (1,562)
(Increase)/decrease in (536) 748 3,570
debtors
Increase in creditors 1,026 4,070 4,066
Foreign exchange differences (27) 102 (648)
Net cash inflow from operating 9,034 7,421 14,022
activities
6 Exchange rate fluctuations
DICOM Group transacts its businesses in many currencies other than sterling. On
average during the nine months to March 2003 sterling was significantly stronger
against the US dollar as compared to the previous period. This adversely
affected the reported sterling results of our US operation where over half the
Group's operating profits are generated.
The table below outlines the sales and operating profit growth for the Group as
reported in sterling and sets out the growth rates in local currency terms.
Local Local
Growth and currencies # currencies #
currency 9 months to 9 months to 9 months to 9 months to
contribution 31 March 2003 31 March 2003 31 March 2002 31 March 2002
Sales 5% 7% 4% 6%
Operating
profit before
goodwill and
exceptional
items 3% (1%) 12% 15%
This information is provided by RNS
The company news service from the London Stock Exchange
END
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