Delcam Plc Interim Report 2008
Interim Results for the six months to 30 June 2008
- Record half-year sales of £16.9m (2007: £14.5m) – reflecting benefits of acquisitions of additional software ranges
- Pre-tax profit rose by 13% to £1.42 million (2007: £1.26 million)
- Recurring maintenance revenues increased by 16% to £5.1m (2007: £4.4m)
- Balance sheet remains strong with net cash of £6.4m at 30 June 2008
- Interim dividend increased by 8% to 1.35p (2007: 1.25p)
- Continued high level of investment in software R&D, £4.5m in the period
- Independent industry analysts, CIMdata, confirms Delcam’s position as largest specialist supplier of Numerical Control (“NC”) software and services
- Board remains positive about long term prospects
Peter Miles, Chairman, commented,
“I am pleased to report encouraging results for the first half of the year to 30 June 2008, despite a backdrop of increasing global economic uncertainty. These results include a new sales record for a six-month period.
While we remain optimistic of continuing good progress this year, the worsening global economic uncertainty makes it harder than usual to predict with certainty how well the Company will perform in the second half.
However, the quality of our software product offering and the spread of our activities across a range of manufacturing industries and geographic territories will help to underpin our performance. Looking further ahead, we continue to view long term prospects for the Company positively.”
I am pleased to report encouraging results for the first half of the year to 30 June 2008, despite a backdrop of increasing global economic uncertainty. These results include a new sales record for a six-month period. They demonstrate the benefits of the strategy we have been pursuing over the last three years to acquire complementary software ranges which enhance our product offering and which we can leverage through our international distribution network. The results also reflect the benefit of our investment in research and development which helps to ensure that our software is industry-leading in our chosen areas.
Sales for the six months to 30 June 2008 increased by 17% to £16.9 million compared with £14.5 million in the first half of last year. Profit before tax for the period rose by 13% to £1.42 million against £1.26 million. With net cash inflow from operating activities of £1.3 million in the first six months, the balance sheet remains robust with net cash of £6.4 million excluding finance leases of £0.6 million.
The Company continues to increase its investment in product development, with £4.5 million invested in R&D over the period compared with £4.1 million in the first half of 2007. I am pleased to highlight the continuing growth in the Company’s recurring maintenance revenues, which have increased by 16% to £5.1 million from £4.4 million last year.
We propose to raise our interim dividend payment from 1.25p in 2007 to 1.35p. This will be paid on 26 September 2008 to shareholders on the Register as at 5 September 2008.
To meet the needs of our current growth and to plan for the future, a number of changes have been made to the plc Board during the period. Clive Martell has been given an expanded role as Operations Director and two additional appointments have been made; Bart Simpson, in a new role as Commercial Director, and Steve Hobbs, Development Director responsible for our manufacturing products.
In addition, we have expanded our Operating Board with the addition of Chris Edwards, who is responsible for European Business Development, and Glenn McMinn, who is President of our North American operations based in Salt Lake City.
I am pleased to report sales growth across the full range of Delcam products. Our strategy to expand the sales of FeatureCAM and PartMaker, acquired in 2005 and 2006 respectively, is continuing to show results.
Sales growth has continued in our European subsidiaries, with Germany and Italy performing especially strongly.
Sales in the emerging territories of Brazil, Russia, India and China did well increasing by 28%. We have seen a good recovery by our joint venture in Korea after its disappointing results last year. By contrast, the results from Japan and Australia have been below expectations.
Our business in North America has remained steady despite the worsening economic conditions over the period. While US sales in our traditional toolmaking market are still being affected by continuing problems in the local automotive industry, this has been balanced by our increased focus on new markets, especially in the medical and aerospace sectors.
We have made good progress in the shoe industry following our acquisition, at the end of 2006, of the Crispin range of footwear design and manufacture software. The software has broadened our offering within this marketplace, as well as added to our customer base, and makes Delcam the leading supplier of product development software to the footwear industry.
During the period, we continued to make significant investments in our research and development activities. As we have demonstrated, this will benefit future sales of our software as well as supporting our maintenance revenues. We expect the resulting products to extend our leadership within our established markets, whilst also creating new opportunities for us, particularly in the medical and the metrology industries.
A key element of the Delcam business model is the strong technical support we are able to provide to our customers and we have increased significantly the levels of training being given to our worldwide sales and support channel. This will help to support both the sales of new software and on-going customer maintenance contract income.
Our Professional Services Group continues to work closely with the Tooling Services Division to provide process development and pre-production manufacturing services. These services continue to be used mainly by the aerospace industry but we are also seeing new business from the power generation sector.
We are pleased that the latest industry rankings, published by independent global consulting analysts, CIMdata, show that we have maintained our position as the world’s leading specialist supplier of NC software and services.
While we remain optimistic of continuing good progress this year, the worsening global economic uncertainty makes it harder than usual to predict with certainty how well the Company will perform in the second half. However, we believe that the quality of our software product offering and the spread of our activities across a range of manufacturing industries and geographic territories will help to underpin our performance. Indeed, increased competitive pressures on our customers are often the driver for their purchases of Delcam’s products in order to improve the performance and efficiency of their own products and manufacturing processes.
Looking further ahead, we continue to view long term prospects for the Company positively.
28 August 2008