CIMdata PLM Industry Summary Online Archive

August 2004

Financial News

Delcam Plc Interim Report 2004; Interim Results for the Six Months to 30 June 2004

•  Record first half sales of £10.3 million against £9.8 million in 2003 first half, despite weak dollar
•  First half pre-tax profit of £0.66 million, up 31% on first half of 2003
•  Interim dividend increased to 1.0p
•  Continued high level of investment in R&D of £2.9 million in the period
•  Winner of Queen's Award for Enterprise in the Innovation category for second year in succession
•  Position as world's leading global supplier of specialist NC software and associated services confirmed by CIMdata
•  Successful launch of new Professional Services Group to undertake larger consultancy projects

Chairman's Statement

Financial Highlights

I am very pleased to report that, during the first half of 2004, Delcam has continued the growth in sales that was seen last year. Sales for the half year to 30 June 2004 were at a record level of £10.3 million compared with £9.8 million during the first half of 2003, an increase of 5.0%, despite the US$/£ exchange rate weakening by 11% over the same period last year.

Profit before tax of £0.66 million for the first half was 31% above the £0.50 million achieved during the first half of last year. This result has been achieved even though the Company has continued to increase its investment in research and in sales and marketing. Basic earnings per share were 8.6p compared with 6.4p in the equivalent period last year, an increase of 34%.

Dividend

With improved profitability to that in the first half of 2003, the Board proposes to pay an interim dividend of 1.0p per ordinary share. It will be paid on 7 September 2004 to shareholders on the Register as at 20 August 2004. The shares are expected to be quoted ex dividend on 18 August 2004.

Review

The first half of the year has seen the release of improved versions of all of our main software products and these have been well received by our customers. We have also undertaken further expansion of our international distribution network, both through the appointment of additional resellers and through the enlargement of our established offices. These two factors have contributed in achieving our record results.

We continue to believe that it is essential to maintain and enhance our development activity as we seek to further increase sales by having the best products in all of the sectors in which we operate. This philosophy is being welcomed by our customers, with an increasing number of our users taking out maintenance contracts to ensure that they receive regular enhancements to their software.

We plan to increase sales during the second half of the year with the same three main strategies. We are developing closer relationships with providers of machine tools, inspection equipment and other related technology so that we can act as a supplier of product development solutions. We are growing our business outside the mould and die area, both in other areas of toolmaking, in particular press tool manufacture, and in other industries such as the production of aerospace components. We are also increasing our sales to larger organisations as well as to smaller and medium-sized companies.

We were pleased to see that the latest NC Software and Related Services Market Assessment from renowned US consulting and market research firm, CIMdata, showed that Delcam was the fastest-growing of the ten leading suppliers of CAM software during 2003. As a result, the Company retained its position as the leading global supplier of specialist machining software and associated services during the year.

At the start of the year, we formed a new Professional Services Group to undertake larger consultancy projects for users of our software. The primary focus of the Group will be working with clients to improve their design and manufacturing processes, and then defining procedures for using Delcam's products to implement those improvements. The Group has already won some significant contracts and has submitted tenders for several additional large projects.

We were very pleased to win the Queen's Award for Enterprise in the Innovation category for the second year in succession. This was awarded in recognition of the continuing innovation in our PowerINSPECT inspection software, following a similar success with our ArtCAM artistic CADCAM program last year. In addition, our PowerMILL CAM system was the outright winner in the "Best software" category, at the Metalworking Production International Machine Tool Industry Awards.

Pension Provision

Like many other companies, Delcam has had to review the pension arrangements for its staff in the light of poor stock market performance, changes to the tax regulations on pension schemes and the potential for increased liabilities. Following this review, we have restructured the pension scheme to reduce the risks and the ongoing liabilities. The 1/60th scheme will be replaced by a 1/80th scheme for future accrual by current members from 1 September 2004. £1 million will be injected into the pension fund during September 2004, to significantly reduce the current deficit. In addition, a Money Purchase scheme has been set up for new employees from 1 July, following the closure of the existing scheme to new entrants in December 2003. We believe that these steps reflect a reasonable compromise by continuing to give a valuable benefit to our staff while also protecting shareholder value for the future. We estimate that the annual additional cost of these changes will be around £200,000. We consider that the reduction of uncertainty will strengthen the Company's position.

Outlook

The general outlook for the second half of the year remains promising, provided the positive trends for the manufacturing industry being seen in some of our key markets are maintained. We are reasonably confident that we can continue to achieve improved results provided the US dollar does not continue to deteriorate.

T R M KINSEY
Chairman
3 August 2004

 

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