CIMdata PLM Industry Summary Online Archive

March 2005

Financial News

Delcam's Preliminary Results for the year ended 31 December 2004

Record annual sales of £21.0 million against £20.5 million in 2003, despite a weaker dollar

 

• Dividend increased from 3.75p to 4p for the year with confidence for the future
• Continued high level of investment in R&D of £5.8 million in the period
• Winner of Queen's Award for Enterprise in the Innovation category for second year in succession
• Continued 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
• Acquisition of the US-based CAM software specialists, Engineering Geometry Systems, to be earnings enhancing in 2005

"The levels of sales for the opening months of 2005 are promising but we remain reliant on the positive trends for worldwide manufacturing industry being maintained. We are confident that we can continue to achieve improved results during the year provided the US dollar remains stable."

Tom Kinsey, Chairman

STATEMENT BY THE CHAIRMAN, TOM KINSEY

Financial Highlights

I am very pleased to report that, during 2004, Delcam continued the growth in sales that has been seen in recent years. Sales for the year to 31 December 2004 were at the record level of £21.0 million, compared with £20.5 million during 2003, which was itself a record year.

Profit before tax of £1.2 million for the year showed a small decline from the £1.3 million achieved in 2003, being a direct result of the fall in the US$ . Based on the 2003 US$ rate of 1.64 and with 60% of our software and maintenance sales being denominated in the US dollar it is estimated that our profit would have increased by an additional £0.5 million; a significant improvement on 2003 and ahead of market expectations. Basic earnings per share were 18.9p compared with 20.5p during last year.

Dividend

The Board proposes to pay a final dividend of 3p per ordinary share (2003 - 2.8p), making the dividend for the full year 4p per share (2003 - 3.75p). It will be paid on 13 May 2005 to shareholders on the Register as at 22 April 2005.

Review

The increased investment in product development enabled us to release improved versions of all of our main software products during the year. These have been well received by our customers and have contributed to record levels of maintenance revenue from our existing users. We have also undertaken further growth of our international distribution network, both through the appointment of additional resellers and through the expansion of our established offices. The new resellers were established in New Zealand, Singapore, and the USA, while our existing operations in China, India, Thailand, Russia and Canada have opened new, larger offices. These two factors have combined to give our record sales levels.

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. Our customers, who wish to ensure that they receive regular enhancements to their software, welcome this philosophy. It will enable us to continue with further significant new releases during 2005.

On the commercial side, we will again continue with the same three main strategies. We will develop 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 rather than just being a supplier of software. We will grow 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 components for the aerospace and autosport industries. We will also put more focus on our sales to larger organizations as well as to smaller and medium-sized companies. This produced some promising results in 2004. While these sales have not yet been unusually high in value, we are, of course, hopeful that these initial orders will lead to larger opportunities in the future.

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 have tendered for participation in a number of European Community research projects. Towards the end of the year, we were chosen to lead the Custom-Fit rapid manufacturing project, while, during the opening months of 2005, we have also been confirmed as participants in the Hipermoulding project on conformal cooling and the CEC-made-shoe project on custom-made footwear. These projects help to raise Delcam's profile throughout Europe.

We were very pleased to win a 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.

We would like to congratulate the staff of our Korean undertaking Hankook Delcam whose record performance in 2004 lead to the company becoming the first reseller to achieve higher sales of software and maintenance than our domestic market.

Pension provision

As reported in the half-year statement, Delcam has reviewed the pension arrangements for its staff in the light of poor stock market performance, changes to the tax regulations on pension schemes, and longer life expectancy. We have now completed the restructuring of the pension scheme to reduce the risk in respect of the ongoing liabilities.

Outlook

The levels of sales for the opening months of 2005 are promising but we remain reliant on the positive trends for worldwide manufacturing industry being maintained. We are confident that we can continue to achieve improved results during the year provided the US dollar remains stable.

As recently announced, we have acquired the US-based CAM software specialists Engineering Geometry Systems, the developer of the FeatureCAM software package. With this acquisition we will provide a broader range of quality products to address the worldwide need. We expect Group earnings to be enhanced by this acquisition, with further benefits in future years, as our larger distribution channel is able to increase FeatureCAM sales.

I would like to thank our staff for their hard work and dedication during the year and to warmly welcome our new employees in Salt Lake City.

T R M KINSEY

Chairman

 

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