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Delcam PLC LSE: DLC |
Aug 28, 2008 02:00 ET
Half-yearly report
TIDM: DLC
28 August 2008
DELCAM PLC
("Delcam" or "the Company")
Half Year Report
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."
Enquiries:
Website: www.delcam.com
Delcam plc Hugh Humphreys, Managing Director T: 0121 683 1000
Kulwant Singh, Finance Director
Biddicks Katie Tzouliadis T: 020 7448 1000
Brewin Dolphin Neil Baldwin T: 0845 270 8612
Chairman's Statement
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.
Financial Highlights
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.
Dividend
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.
Board changes
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.
Review
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.
Outlook
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.
Peter Miles
Chairman
28 August 2008
CONSOLIDATED INCOME STATEMENT
Six months Six months Year to
to 30/06/08 to 30/06/07 31/12/07
Notes £'000 £'000 £'000
-------------------------------------------
CONTINUING OPERATIONS
Revenue 1 16,902 14,504 29,707
Cost of sales (5,437) (4,425) (10,234)
-------------------------------------------
Gross profit 11,465 10,079 19,473
-------------------------------------------
Other operating expenses (10,148) (8,858) (17,831)
-------------------------------------------
Operating profit 1,317 1,221 1,642
-------------------------------------------
Share of associates' operating (loss)/profit (56) (34) 3
Net finance income 159 71 503
-------------------------------------------
Profit before tax 1,420 1,258 2,148
-------------------------------------------
Tax 5 (281) (204) (401)
-------------------------------------------
Profit for the period from continuing operations 1,139 1,054 1,747
-------------------------------------------
Attributable to
Equity holders of the parent company 1,148 1,073 1,778
Equity minority interests (9) (19) (31)
-------------------------------------------
1,139 1,054 1,747
-------------------------------------------
Earnings per share
From continuing operations
Basic 2 14.9p 16.1p 24.6p
Diluted 2 14.5p 15.9p 24.6p
CONSOLIDATED BALANCE SHEET
As at As at As at
30/06/08 30/06/07 31/12/07
Notes £'000 £'000 £'000
---------------------------------------
Non-current assets
Goodwill 2,261 2,124 2,259
Other intangible assets 2,056 1,819 1,944
Property, plant & equipment 7,027 6,437 7,186
Investment in associates 628 759 689
Other investments 26 26 26
Deferred tax asset 0 175 0
---------------------------------------
11,998 11,340 12,104
---------------------------------------
Current assets
Inventories 206 222 421
Trade and other receivables 8,674 7,538 7,437
Cash and cash equivalents 3 8,130 7,135 7,717
---------------------------------------
17,010 14,895 15,575
---------------------------------------
Total assets 29,008 26,235 27,679
---------------------------------------
Current liabilities
Trade and other payables (5,646) (4,646) (5,279)
Current tax liabilities (270) (132) (237)
Borrowings (1,525) (334) (941)
Deferred income (2,570) (2,021) (2,324)
---------------------------------------
(10,011) (7,133) (8,781)
---------------------------------------
Net current assets 6,999 7,762 6,794
---------------------------------------
Non-current liabilities
Retirement benefit obligation 0 (486) 0
Deferred tax liabilities (583) (1,008) (583)
Borrowings (833) (874) (1,453)
Deferred income (61) 0 (63)
---------------------------------------
(1,477) (2,368) (2,099)
---------------------------------------
Total liabilities (11,488) (9,501) (10,880)
---------------------------------------
Net assets 17,520 16,734 16,799
---------------------------------------
Equity
Called-up share capital 779 779 779
Share premium 8,078 8,074 8,074
Investment in own shares (499) (131) (297)
Revaluation reserve 1,461 1,479 1,477
Capital reserve 9 9 9
Retained earnings 7,630 6,472 6,685
---------------------------------------
Equity attributable to equity holders of parent 17,458 16,682 16,727
---------------------------------------
Minority interests 62 52 72
---------------------------------------
Total equity 17,520 16,734 16,799
---------------------------------------
CONSOLIDATED CASH FLOW STATEMENT
Six months Six months Year
to 30/06/08 to 30/06/07 to 31/12/07
£'000 £'000 £'000
-------------------------------------------
Operating profit from continuing operations 1,317 1,221 1,642
Adjustments for:
Depreciation and amortisation 502 389 852
Release of government grants 0 (4) (8)
Profit on sale of tangible fixed assets 0 0 18
Share based payments 43 0 45
-------------------------------------------
Operating cash inflow before working capital movements 1,862 1,606 2,549
-------------------------------------------
Movement in working capital (628) (30) 564
-------------------------------------------
Cash generated by operations 1,234 1,576 3,113
-------------------------------------------
Additional pension payment (50) (148) (596)
Net interest received/(paid) 159 (7) 85
-------------------------------------------
Cash inflow from operating activities 1,343 1,421 2,602
-------------------------------------------
Investing activities
Purchases of fixed assets & investments (218) (606) (1,682)
Expenditure on product development (260) (258) (466)
Deferred consideration payments (302) (20) (290)
Payments to acquire investment in own shares (299) 0 (200)
-------------------------------------------
Net cash used in investing activities (1,079) (884) (2,638)
-------------------------------------------
Financing activities
Dividends paid (309) (230) (327)
Taxation paid (223) (77) (265)
Proceeds from new share capital 0 6,253 6,253
Repayment of borrowings (301) (1,934) (1,610)
New finance leases advanced 0 0 866
Restricted cash movement 693 685 0
-------------------------------------------
Net cash (used)/from financing activities (140) 4,697 4,917
-------------------------------------------
Increase in cash and cash equivalents 124 5,234 4,881
-------------------------------------------
Cash and cash equivalents at 1 January 6,906 1,904 1,904
Effect of foreign exchange rate charges 83 (3) 121
-------------------------------------------
Cash and cash equivalents at end of the period 7,113 7,135 6,906
-------------------------------------------
Analysis of Cash and Cash equivalents:
Cash and cash equivalents 8,130 7,135 7,717
Bank Overdraft (1,017) 0 (811)
-------------------------------------------
7,113 7,135 6,906
-------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Segment information
Business Segment
Revenue Six months Six months Year
to 30/06/08 to 30/06/07 to 31/12/07
£'000 £'000 £'000
---------------------------------------------
Software 8,792 7,596 15,932
Maintenance 5,137 4,400 8,051
Services 2,363 1,322 4,055
Other 610 1,186 1,669
---------------------------------------------
Continuing operations 16,902 14,504 29,707
---------------------------------------------
Geographical segments
Revenue Six months Six months Year
to 30/06/08 to 30/06/07 to 31/12/07
£'000 £'000 £'000
---------------------------------------------
Europe 9,765 8,322 14,789
Americas 3,575 3,266 7,887
Far East 3,089 2,045 5,708
Rest of World 473 871 1,323
---------------------------------------------
Continuing operations 16,902 14,504 29,707
---------------------------------------------
2. Earnings per share
Six months Six months Year
to 30/06/08 to 30/06/07 to 31/12/07
Earnings - continuing £'000 £'000 £'000
----------------------------------------------
Profit attributable to equity holders of the parent 1,148 1,073 1,778
----------------------------------------------
Weighted average number of shares '000 '000 '000
----------------------------------------------
For basic earnings per share 7,715 6,685 7,222
Scheme options 200 65 0
For diluted earnings per share 7,915 6,750 7,222
----------------------------------------------
Earnings per share
Continuing - basic 14.9p 16.1p 24.6p
- diluted 14.5p 15.9p 24.6p
3. Restricted cash
At 30 June 2008, included within cash at bank and in hand and trade and other payables is
£1,399,000 (30 June 2007: £1,391,000) that relates to monies received by the company for a grant
in respect of a European project. This cash is restricted as the company has been nominated to
administer the funds, which are to be distributed to several other independent partners. Therefore
this cash is not considered as part of the net owned funds of the company at 30 June 2008.
4. The financial information set out above does not constitute statutory accounts within the
meaning of section 40 of the Companies Act 1985. The figures in this statement have been prepared
under the accounting standards that the Directors expect to be applicable for the financial year
ending 31 December 2008. The statutory accounts for the year ended 31 December 2007, which have
been delivered to the Registrar of Companies, carry an unqualified report by the auditors and do
not contain a statement under Section 237 (2) or section 237 (3) of the Companies Act 1985.
5. The taxation charge is based on the estimated effective rate of tax for the full year.
6. Copies of this statement are being sent to shareholders. Further copies are available from the
Company Secretary at the Registered Office of the Company, Small Heath Business Park, Birmingham,
B10 0HJ. A copy of the interim report is also available on the www.delcam.com website.
For more information, please contact
Delcam PLC