Delcam mouldmaking software achieves one-year payback
An investment in Delcam software by Dynamic Tool & Design paid for itself in less than a year by boosting the company’s ability to produce complex moulds quickly and accurately.
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- Delcam Plc Preliminary Report 2005
Preliminary Results for the year ended 31 December 2005
2005 |
2004 |
||
Sales |
£24.0m |
£21.5m |
+11.7% |
Pre-tax profit |
£2.3m |
£1.4m |
+71.3% |
Basic earnings per share |
32.3p |
21.6p |
+49.3% |
Final dividend |
3.4p |
3.0p |
+13.3% |
Total dividend for year |
4.5p |
4.0p |
+12.5% |
- Record annual sales of £24.0 million against £21.5 million in 2004
- Dividend increased from 4p to 4.5p for the year with confidence for the future
- Continued high level of investment in R&D of £6.5 million in the year
- Winner of Queen’s Award for Enterprise for third year in succession
- Continued position as world’s leading global supplier of specialist NC software and associated services confirmed by CIMdata
- Released improved versions of all main software products, contributing to record levels of software and maintenance revenue
- Acquisition of the US-based CAM software specialists, Engineering Geometry Systems, to have significant impact on profitability in future years
“The levels of sales for the opening months of 2006 are again promising. We are confident that we can continue to achieve improved results during this year provided the current positive trends for worldwide manufacturing industry are maintained and the US dollar remains stable.”
Tom Kinsey, Chairman
STATEMENT BY THE CHAIRMAN, TOM KINSEY
Financial Highlights
I am very pleased to report that, during 2005, Delcam accelerated the growth in sales that has been seen in recent years. This stronger growth came through a combination of increased sales of our established Power Solution range of software and additional revenue resulting from our acquisition of the US-based software developer Engineering Geometry Systems (now renamed Delcam USA). Total sales for the year to 31 December 2005 were at the record level of £24.0 million, an increase of 11.7% over the £21.5 million achieved during 2004, which was itself a record year.
Profit before tax of £2.3 million, incorporating the effect of the adoption of FRS 17, for the year showed an increase of 71%, from the £1.4 million achieved in 2004. As with the increase in sales, the growth in profits resulted from a combination of increased profitability with our existing products and additional profits from the acquisition . Basic earnings per share were 32.3p compared with 21.6p during last year.
Dividend
The Board proposes to pay a final dividend of 3.4p per ordinary share (2004 – 3.0p), making the dividend for the full year 4.5p per share (2004 – 4.0p). It will be paid on 19 May 2006 to shareholders on the Register as at 28 April 2006.
Review
2005 was a year of improved performance for the company in a fairly stable and growing world economy. Trading in parts of Europe remained difficult as some manufacturing activities transferred out of those countries to Eastern Europe and Asia. However, the rate of transfer seems to be slowing and the aerospace sector is showing increased activity in several countries. In America, the important US market continued to improve, while we also saw further growth in Canada and South America. Asia continued to show good overall performance, particularly in Japan and India, although in Korea, our largest Asian market, poor local conditions contributed to a slowing of sales.
During the year, Delcam continued its policy of increasing its investment in innovative research and development which will continue to give us industry-leading products and, consequently, higher sales. During the year £6.5 million was spent on R & D (2004: £5.8 million). This increased investment enabled us to release improved versions of all of our main software products during the year. Although the level of competition remains high, we believe that we are achieving our objective of offering better functionality and value than other suppliers. As well as helping us to win many new clients, the new versions have contributed to record levels of maintenance revenue from our existing users.
With our international distribution network now represented by more than 150 offices in 60 countries, we are currently focusing on the expansion of our established offices rather than on the appointment of additional resellers in new territories. We did appoint new representatives in Bulgaria and Slovenia, but more significant changes involved further expansion of many of our existing offices, in particular those in China and India.
During 2005, we were very pleased to welcome the staff of Engineering Geometry Systems to Delcam. The company, now renamed Delcam USA, is the developer of the FeatureCAM range of CADCAM software. The software is aimed at production machining and so complements our existing products for the manufacture of complex shapes, such as moulds and dies. This wider range of software has made us better able to meet the needs of a greater number of customers and to provide a complete solution to larger companies operating a broader variety of manufacturing operations. In addition, the acquisition will give Delcam a much stronger presence in the USA, which remains the world’s largest market for CADCAM software. Significant benefits to future sales should come from being able to expand FeatureCAM’s international presence by offering the software through a number of Delcam’s established resellers. While this process started during 2005, it is expected to have a significant impact on profitability in future years.
We were very pleased to win a Queen’s Award for Enterprise for the third year in succession. Our 2005 award was in the International Trade category, following the continuing growth in worldwide sales of our Power Solution software. This recognises the skills and efforts of our development and commercial staff and follows our receipt of Queen’s Awards in the Innovation category in 2003 for the ArtCAM engraving and routing software and in 2004 for the PowerINSPECT inspection software.
We have continued our participation in a number of European Union research projects. We are the leaders of the Custom-Fit project concerned with the economic manufacture of customised products and are also participants in the Hipermoulding project on the production of more efficient moulds and the CEC-made-shoe project on custom-made footwear. These projects provide further input to our research efforts as well as helping to raise Delcam’s profile throughout Europe.
Pension provision
As reported last year, Delcam continues to monitor the pension arrangements for its staff in the light of stock market performance, changes to the regulations on pension schemes, and longer life expectancy. Following the restructuring of the pension scheme in 2004, £1.5 million was paid to the fund during 2005 in addition to the current service, which helped to reduce the FRS17 deficit to £1.7 million.
Outlook
The levels of sales for the opening months of 2006 are again promising. We are confident that we can continue to achieve improved results during this year provided the current positive trends for worldwide manufacturing industry are maintained and the US dollar remains stable.
I would like to thank all our staff worldwide for their hard work and dedication during the year.
T R M KINSEY
Chairman
