DICOM is a leader in its core market of "batch capture", or document archiving. But with 43 per cent of licence sales depending on a 40 per cent share of a market where growth is slowing, other divisions have to work doubly hard to show through. So even though the "transactional capture" market, which caters to front-office "knowledge workers", is growing three times as fast, the recent sub-prime mortgage problems were enough to slow DICOM's overall revenue growth to a crawl. "Our target of double-digit growth in the software business for 2008 does not assume a rapid turnaround in mortgages," says outgoing chief executive Rob Klatell.
Even if the short-term outlook is shaky, recent changes to DICOM's product positioning and channels to market leave it ready for a new chief executive to push into gear. Some observers have suggested Pat Sueltz, currently completing SurfControl's sale to Websense, may rejoin her former chairman, Greg Lock. "New management teams have been overlaid on situations far worse than this [in the IT sector], and we have seen significant re-ratings," says Jefferies International analyst Milan Radia. He expects EPS of 14.4p in 2008 (2007: 13.4p).
DICOM (DCM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 164p | MARKET VALUE: | £145.8m | |
| TOUCH: | 164-166p | 12-MONTH HIGH: | 268p | LOW: 156p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 110p* | NET CASH: | £38.2m | |
| Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2003 | 156 | 8.80 | 6.5 | 1.21 |
| 2004 | 156 | 7.80 | 4.7 | 1.39 |
| 2005 | 180 | 11.9 | 9.4 | 1.60 |
| 2006 | 160 | 9.64 | 8.7 | 1.84 |
| 2007 | 160 | 10.1 | 9.1 | 2.12 |
| % change | - | +5 | +5 | +15 |
Ex-div:14 Nov Payment:14 Dec *includes intangible assets of £68.0m or 77p per share | ||||
