Making It In Medical
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- Delcam Plc Interim Report 2002
Delcam Plc Interim Report 2002
Interim Results for the six months to 30 June 2002
- Record half-year sales of £9.5 million against £9.0 million in 2001
- Pre-tax interim profit of £0.5 million, up £0.4 million on second half of 2001
- Interim dividend of 0.95p maintained as directors remain confident for continued recovery into second half of 2002
- Strong growth in maintenance revenues in first half
- Continued high level of investment in product development
- Position as world's leading international specialist supplier of NC software and services confirmed by CIMdata
- Outright winner in "Best Software" category at Metalwork Production International Machine Tool Awards
Chairman's Statement
Financial Highlights
I am very pleased to report that, during the first half of 2002, Delcam has seen a strong recovery from the difficulties experienced by the Company during the second half of last year. Sales for the half year to 30 June 2002 were £9.5 million compared with £9.0 million during the first half of 2001, an increase of 6%, despite general trading conditions being more difficult than in the equivalent period of 2001.
Profit before tax of £0.5 million was 29% lower than the first half of last year but represents an improvement of £0.4 million on the second half of 2001, while the Company has continued to increase its investment in product development and in sales and marketing. Basic earnings per share were 6.1p compared with 8.9p in the equivalent period last year.
There has been a £0.7 million improvement in cash generation over the first six months of last year, further reducing gearing to 21% since the year end.
The increase in sales and the results of our additional investment give us confidence in the future profitability of the Company. As a result, the Board proposes to maintain an interim dividend of 0.95p per ordinary share. It will be paid on 16 September 2002 to shareholders on the Register as at 30 August 2002. The shares are expected to be quoted ex dividend on 28 August 2002.
Review
Despite the somewhat gloomy economic news, which has resulted in a loss of confidence and delays in investment decisions by many of our customers, we have managed to improve sales in most countries. The most significant exceptions were in the UK and in South America. In contrast, our sales have recovered particularly well in North America.
Given the overall growth achieved, we might have expected stronger profits. However, costs have also increased as, in spite of the current economic uncertainty, we continue to take the long-term view with regard to our investments in product development, sales and marketing.
Service income has shown strong growth, in particular the maintenance revenues paid by our customers to receive newer versions of our software. This reflects our customers' satisfaction with the significant improvements we are continuing to make to our products. Overall, our software continues to be very competitive. While this is difficult to measure in absolute terms, I believe we have moved ahead of our competitors in key areas, including high-value machining operations such as high-speed machining and five-axis machining.
Delcam is focused on organic growth but this does not mean we exclude the possibility of acquiring other companies servicing the same market, if we are convinced that this might enhance shareholder value.
Over the last few years we have investigated possible acquisitions but, so far, we have not been confident of achieving the enhancement in shareholder value that we desired. With the current general reduction in company market capitalisation, it is clear that better opportunities might present themselves.
Outlook
The general outlook for the second half of the year is satisfactory. In normal circumstances, our second half produces better results than the first half. This was not the case during 2001 but we believe that our normal trading pattern will return this year, unless there is a further deterioration in global manufacturing activity.
T R M KINSEY
Chairman
21 August 2002
