Delcam Plc Interim Report 2001

Interim Results for the six months to 30 June 2001


  • Record half-year sales of £9.0 million against £8.3 million in 2000
  • Record pre-tax interim profits for first half of year at £0.7 million, being 20% increase over same period last year
  • Interim dividend of 0.95p, up 12%
  • Customer base broadened
  • Software sales up 19% in first half
  • CIMdata confirms Delcam's position as world's leading specialist supplier of NC software and services
  • New versions of core software products launched and more launches planned in the second half 2001
 

Chairman's Statement


Financial Highlights

I am very pleased to report that Delcam's growth has been maintained despite the current economic climate. Continued improvement in our products and sales network has more than offset the economic difficulties affecting our customers in some of the 50 countries in which we operate. Sales for the half year to 30 June 2001 were £9.0 million compared with £8.3 million during the first half of 2000, an increase of 8%. Sales of software have shown a further improvement, rising by 19% compared with the first six months of last year. Profit before tax of £735,000 represents an improvement of 20% on the first half of 2000. Basic earnings per share were 8.9p compared with 8.1p in the equivalent period last year.

Dividend

In view of the improved performance, the Board proposes to pay an interim dividend of 0.95p per ordinary share (2000 - 0.85p). It will be paid on 14 September 2001 to shareholders on the Register as at 31 August 2001. The shares are expected to be quoted ex dividend on 29 August 2001.

Review

Products

Delcam has continued its progress as the leading international supplier of complete, automated CADCAM systems for the design, manufacture and inspection of complex shapes, despite the current challenging trading conditions. In many of the countries in which we operate, we have continued to expand our customer base outside our traditional toolmaking market, winning new customers such as Lotus, Nike and Dunlop.

A recent survey by US analysts CIMdata confirmed Delcam's position as the world's leading specialist supplier of NC Software and Services. The CIMdata Vice-President remarked "CIMdata views Delcam as a clear leader among worldwide Computer Aided Manufacturing (CAM) vendors. CIMdata is favorably impressed by the financial, marketing, and technical progress made by Delcam since a similar assessment was conducted 2 years ago. The revenue growth achieved is particularly striking given the worldwide market conditions. Delcam continues to command respect from users and competitive vendors alike." It also showed us to be one of the fastest growing suppliers in this area during 2000 and predicted a further increase in Delcam's market share during this year.

Total spending on R & D in the first 6 months increased to £2.0 million allowing us to release new versions of our software. Work is under way on major upgrades of our two key products - the design software PowerSHAPE and our machining software PowerMILL. The new release of PowerSHAPE will further strengthen our ability to compete in the concept design area, as well as in our traditional design for manufacture field. The forthcoming version of PowerMILL will reinforce Delcam's leading position in the more demanding machining operations, such as high-speed machining and five-axis machining, as well as improving competitiveness in the mainstream business in three-axis machining. Sales of the improved PowerINSPECT product increased over 250% compared with the same period last year.

The second half of the year will see the launch of PS-Team, a new web-based task management system that can improve communication and collaboration both within a single company and along the supply chain.

United Kingdom

Successful application of various diversification strategies has seen sales of software increase despite the slowdown in the UK mouldmaking industry. In contrast, sales of hardware and technical support have slowed although training revenue has increased.

Europe

A reorganisation of the management of our European subsidiaries was undertaken earlier in the year. This is already producing significant improvements, with strong sales growth in France, Germany and Italy. Recruitment is continuing in both France and Germany, to staff additional offices planned in both countries during the second half of the year.

The continuing recovery in Eastern Europe has generated a further significant increase in sales, with better results in the Czech Republic, Hungary, Romania and Russia.

The Americas

In North America, the world's largest market for CADCAM software, the appointment of further experienced resellers in the second half of last year has led to some growth despite the economic slowdown. A number of additional staff have now been recruited for the North American office to support the expanding reseller network and the growing customer base.
South America has been affected by the economic problems in the USA and while there are some recent signs of improvement, it seems unlikely that this year's sales in the region will match last year's performance.

The Far East

Sales to date in both Japan and Korea, the two largest markets in this region, are only slightly changed from the first half of 2000. Sales in Taiwan are down on the same period last year, although this is more than compensated for by strong growth in China and Hong Kong. A subsidiary has been established in India, with a head office in Pune and regional offices in Delhi and Bangalore. Initial sales have been excellent and further expansion of the activity will take place in the second half.

Prospects

Delcam's good progress, both technically and commercially, has continued during the first half of 2001. In spite of the slowdown in our principal markets in the UK and USA, the Board currently expects further improvement during the second half as Europe and the Far East continue to achieve good sales growth. The Group's strong financial position continues to enable Delcam to invest strongly in research and development which will lead to major releases in the next six months. These new releases, together with a number of new products and continuing investment in our sales channels, will ensure that our already strong competitive position will be further enhanced.

T R M KINSEY
Chairman
21 August 2001

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