The company continued to increase its high
levels of investment in software R&D, investing
£8.8 million in the period, compared to £7.8
million during 2007. As well as supporting
growth in new software sales and enabling the
introduction of new products, this investment
contributed to a 20% increase in maintenance
revenues to £9.7 million.
Commenting on the results, Delcam Chairman,
Peter Miles, said, “The robust results achieved
by the Group over the past financial year
reflect the high-quality software products that
we continue to offer and the benefits of our
diversified business, both in terms of our
geographic reach and the many industries that we
serve.”
“The next two years are going to be difficult
but also an opportunity. The favorable exchange
rate, strong cash position and high levels of
predictable income present Delcam with a
significant opportunity to increase our market
share. During 2009, we plan to maintain our
investment in product development and marketing
to take advantage of the recovery when it comes,
while continuing to exercise tight control over
our day-to-day expenditure.”
A copy of the complete Chairman’s statement
is attached.
Caption: Delcam Chairman Peter Miles
announced record sales for the company in 2008
STATEMENT BY THE CHAIRMAN, PETER
MILES
Introduction
I am pleased to report very robust
results in a year which saw trading
conditions deteriorate significantly,
reflecting the global economic and financial
downturn. These results reflect the high
quality of our software offering and the
diversified spread of our business, both in
terms of our geographic reach and the many
industries that we serve.
Group sales for the financial year to
31 December 2008 recorded a new high. This
increase was achieved partly as a result of
further improvements in our recent
acquisitions, the FeatureCAM, PartMaker and
Crispin families of software, partly through
the introduction of new software programs,
and partly through further organic growth of
longstanding Delcam products. While pre-tax
profit increased by a smaller percentage, in
a difficult year, we consider the increase
to be satisfactory.
Given the tougher economic
environment, it is worth highlighting in our
results, the high levels of recurring
revenues the business generates through
software maintenance income renewals.
While the outlook for the business in
2009 is challenging, we consider that Delcam
is well placed to weather the downturn.
Financial Highlights
Group sales for the year to 31
December 2008 rose by 11% to £32.9 million
from £29.7 million in 2007. As previously
stated, the global slowdown in the latter
months of the year impacted profitability.
Profit before tax was £2.3 million,
including net currency gains of £0.4
million, compared with £2.1 million in 2007,
representing an increase of 5%. Basic
earnings per share were 21.2p from 24.6p
last year. Maintenance revenues increased by
20% to £9.7 million from £8.1m last year and
now represent 29% of Group revenues. Our
maintenance revenues represent high quality,
recurring earnings and provide us with good
earnings visibility looking forward.
We remain convinced that high levels
of investment in ongoing research and
development are essential both to ensure
that our software offerings remain
market-leading within our chosen sectors and
to enable the introduction of additional
products. As our product range grows, this
level of investment becomes even more
important. Over the year, R&D investment
totaled £8.8 million (2007: £7.8 million).
We released improved versions of all of our
main software products during the period, as
well as introducing new products. The value
our customers place in these enhancements is
reflected in the continued growth in income
from maintenance contracts.
The Group remains cash generative with
an increase in net cash from £5.3 million to
£6.4 million.
In 2007, the IAS 19 valuation of the
Delcam Retirement Benefits Scheme, the
Group’s defined benefit pension scheme,
recorded a surplus of £1.7 million. This
surplus was not recognized in the 2007
accounts but the equivalent valuation for
2008, of a deficit of £1.1 million, has been
recognized as a liability at the year end.
The Group’s strong balance sheet gives
it the flexibility, particularly in the
current economic climate, to pursue
opportunities which may arise to acquire
complementary businesses or products.
Dividend
The Board is pleased to propose a
final dividend of 3.9p per ordinary share
(2007 – 4.0p). This makes a total for the
year of 5.25p per share (2007 – 5.25p),
maintaining the dividend at the same overall
level as last year. The final dividend will
be paid on 15 May 2009 to shareholders on
the register as at 14 April 2009. The
ex-dividend date is 8 April 2009.
Review
The Group made good progress over the
year. We further increased the sales of our
core CADCAM products, expanded the
international distribution of the additional
software ranges acquired during 2005 and
2006, and introduced a number of new
products. Our progress in such difficult
times is a strong validation of the
diversification policies which have been
followed by the Group for a number of years,
in particular in reducing our previous
dependence on the automotive industry. We
have successfully entered a number of new
sectors, where we see potential for further
expansion.
The most impressive growth continued
to be among our European subsidiaries in
France, Germany and Italy. Sales in Germany
grew especially strongly, giving our German
subsidiary the highest sales of any of our
international network of sales partners. In
North America, the impact of the poor
economy was felt most severely, although
this was offset to a certain extent by the
strengthening of the US dollar against
sterling. Other areas where we did well
included the emerging economies of China,
India and Latin America.
We continue to extend the
international distribution of the software
products we acquired with our acquisitions
of FeatureCAM and PartMaker and increased
training of both our sales and marketing
staff. Together with our more established
PowerMILL and ArtCAM products, we offer a
broader range of machining software than any
other supplier. This is a key factor in
Delcam continuing to be ranked as the
world’s leading specialist supplier of CAM
software in the rankings published by the
American analyst CIMdata.
Our Crispin range of software for the
footwear industry has been expanded with the
addition of new dedicated programs for the
design and manufacture of orthopedic
footwear. These have been received well by
customers and should help reinforce our
position as the main supplier of CADCAM
software to the industry.
Another relatively new area that
continues to show strong growth is the
dental industry. We have been able to apply
our broad design and manufacturing expertise
to develop products that are becoming
increasingly successful in this application.
We have expanded our Professional
Services Group (PSG) in line with increasing
demand for its consultancy expertise. Our
major customers continue to be aerospace
engine manufacturers and companies that
machine aerostructures. Both of these are
looking for efficiency savings by
introducing new methods of manufacture. It
is also pleasing to see that the Group is
gaining new business in the power generation
sector. We have established a new office in
Singapore to follow up consultancy
opportunities in Asia. The manufacturing
process development work of PSG often leads
to complementary opportunities for our
Tooling Services Division to provide pilot
production capacity to customers within
Delcam’s extensive multiaxis machining
facility. Plans are under way to further
expand this facility with the addition of
another large machine tool during 2009.
Outlook
Our intention is to expand sales in
our newer areas of activity, including
Services and Healthcare, whilst also
remaining the largest specialist supplier of
software for computer controlled machines in
the manufacturing industry. As the largest
supplier, we will inevitably be affected by
the downturn in manufacturing sales and
reduced levels of confidence which are
affecting investment. It remains difficult
to predict the course of the recession but
we are planning for a recovery in
manufacturing to begin during 2010, with
growth resuming in 2011.
The next two years are going to be
difficult but also an opportunity. The
favorable exchange rate, strong cash
position and high levels of predictable
income present Delcam with a significant
opportunity to increase its market share.
During 2009, we plan to maintain our
investment in product development and
marketing, while continuing to exercise
tight control over our day-to-day
expenditure to take advantage of the
recovery when it comes.
We remain confident that our strategy
will deliver business advantage and believe
that Delcam is well placed to see out the
near term challenges.
I would like to thank all our staff
worldwide for their loyalty, hard work and
dedication during the year.
Peter Miles Chairman
27 March 2009
Source: Material used in press releases is often supplied by external
sources and used as is.
