Delcam PLC
19 March 2008
DLC
DELCAM PLC
('Delcam' or 'the Group')
Preliminary Results
for the year ended 31 December 2007
Delcam is the UK's leading developer and supplier of advanced software solutions
for product development and manufacture. Based in Birmingham, Delcam has more
than 125 local support offices in over 80 countries worldwide. The Group's
specialist software is used by more than 15,000 organisations, ranging from
multi-national corporations to independent designers and toolmakers, across a
wide variety of industries, including aerospace, automotive, electrical
appliances, footwear, ceramics, packaging, toys and sports equipment.
Highlights
• Robust trading performance which reflects:
- organic growth of Delcam software range
- benefits of software ranges acquired in 2006 coming through
• Record sales of £29.7m, an increase of 11% (2006: £26.7m):
- European software sales performed particularly well
- emerging economies - China, India, Russia and South America - achieved
good growth
• Profit before tax of £2.15m (2006: £2.79m):
- weak dollar impacted profit by more than £0.5m
• Basic earnings per share of 24.6p (2006: 38.2p) - dilution effect of Renishaw
plc placing
• Maintenance income (from licence fee renewals) up by 10% to £8.1m (2006: £7.4m)
- represents 27% of Group revenues
• Continued investment in R&D of £7.8m (2006: £7.3m)
- maintains Delcam's market leading position for its software ranges
• Net cash of £5.3m at year end (2006: £(0.7m))
• Final dividend of 4p proposed, making total for the year of 5.25p (2006: 5.0p)
• £6.1m investment by Renishaw plc, leading UK metrology company, completed in
April
- now working together on new software initiatives
• Diversified product range and customer base positions business well for long
term growth
Peter Miles, Chairman, commented,
'I am pleased to report that the business has performed robustly. Results for
the financial year to 31 December 2007 show that sales reached record levels.
With more than half of Delcam's global sales undertaken in the US$, results are
especially creditable given the background of US dollar weakness, which
adversely affected sales and profitability, and our results demonstrate the high
quality of our software offering and the diversified spread of our business
across the many industries in which we operate.
We have had an encouraging start to the current year but we will not be immune
to any global downturn in economic activity. However, by offering our wide range
of products and services across a number of industries, we are in a position to
capitalise on the variety of opportunities available to us. We continue to view
prospects for the business over the long term very positively.'
Enquiries:
Website: www.delcam.com
Delcam plc Hugh Humphreys, Managing Director T: 0121 766 5544
Kulwant Singh, Finance Director
Biddicks Katie Tzouliadis T: 020 7448 1000
Brewin Dolphin Neil Baldwin T: 0113 241 0126
STATEMENT BY THE CHAIRMAN, PETER MILES
Introduction
In my first Annual Report as Chairman, I am pleased to report that the business
has performed robustly. Results for the financial year to 31 December 2007 show
that sales reached record levels. This growth has been achieved partly as a
result of the addition during 2006 of the PartMaker and Crispin families of
software to the Delcam range and partly through increased organic growth of
existing Delcam products.
With more than half of Delcam's global sales undertaken in the US$, results are
especially creditable given the background of US dollar weakness, which
adversely affected sales and profitability. The impact of the weak dollar
reduced Group profit by in excess of £0.5 million. The robustness of our results
demonstrates the high quality of our software offering and the diversified
spread of our business across the many industries in which we operate.
Financial Highlights
The Group has adopted International Financial Reporting Standards (IFRS) for the
year ended 31 December 2007 and, accordingly, comparative figures in respect of
the period ended 31 December 2006 have been restated. Although IFRIC 14 has not
yet been endorsed by the EU, the Group has also adopted the prudent accounting
practices of IFRIC 14 early and not recognised the IAS 19 pension surplus of
£1.7 million for the year ended 31 December 2007.
Group sales for the year to 31 December 2007 rose by 11% to £29.7 million from
£26.7million in 2006. As previously stated, the weak dollar significantly
impacted profitability and profit before tax was £2.15 million compared with
£2.79 million in 2006. Following the issue of new shares as a result of the
investment by Renishaw plc detailed below, basic earnings per share fell to
24.6p from 38.2p last year. Maintenance revenues increased by 10% to £8.1
million and now represent 27% of Group revenues. Our maintenance revenues
represent high quality, recurring earnings and provide us with good earnings
visibility looking forward.
The Group remains highly cash generative with net cash inflow from operating
activities in the year of £2.4 million (2006: £2.4 million). After £1.7 million
spent on capital expenditure, the Group's net cash was £5.3 million (2006: £
(0.7) million). We remain committed to investing in ongoing research and
development which ensures that our software offerings remain market-leading
within our chosen sectors. As our product range has grown so has our R&D
investment. Over the year, R&D investment totalled £7.8 million (2006: £7.3
million) and we released improved versions of all of our main software products
during the period. The value that our customers place in these enhancements is
reflected in the record levels of income from maintenance contracts.
The Group's strong balance sheet gives the Group 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 an increase of the final dividend to 4.0p per
ordinary share (2006: 3.8p). This makes a total for the year of 5.25p per share
(2006: 5.0p), an increase of 5% on last year. The final dividend will be paid on
16 May 2008 to shareholders on the Register as at 4 April 2008 (the ex-dividend
date being 2 April 2008).
Renishaw plc Placing
At an EGM held on 23 April 2007, Delcam shareholders voted to accept an
investment of £6.1m from leading UK metrology company, Renishaw plc. This
investment was effected through a placing of 1,524,052 new Delcam Ordinary
Shares with Renishaw at £4.00 per share. Following the placing, we were pleased
to appoint Renishaw director, Geoff McFarland, as a non-executive director of
Delcam.
Renishaw and Delcam have worked together for many years and share common
metrology interests and customers. Since April, we have been working together on
new software initiatives, including the development of software to support
Renishaw's new inspection probes. We are also jointly looking at software
applications for the dental and medical industries.
Review
The Group made good progress over the year. We continue to grow the sales of our
core CADCAM products and to expand the international distribution of the
additional software ranges acquired during 2005 and 2006.
The most impressive growth has been among our European subsidiaries in France,
Germany and Italy, where sales across the three countries improved by over £1
million. In North America, the management changes we implemented towards the end
of 2006 have resulted in increased sales but this was overshadowed by the impact
of the dollar weakness. Other areas where we did well included the emerging
economies of China, India, Russia and South America.
The addition of the Crispin range for footwear design and manufacture to our
existing software has reinforced our position as the world's leading supplier of
software to the industry. We are further broadening our offering in this area
with the addition of software for orthotic and orthopaedic applications. The
acquisition of PartMaker has given us strength in the supply of systems for the
programming of Swiss-type lathes and mill-turn machines and its addition now
allows us to offer the widest range of industry-leading CAM software from any
supplier.
2007 also saw continued growth in our Professional Services Group to meet the
increasing demand for its consultancy expertise, especially from aerospace
engine manufacturers and from companies that machine aerostructures. In order to
promote further growth in our Professional Services activity and in particular
to develop opportunities in mainland Europe, we have begun similar operations in
France and the Netherlands. The Professional Services Group has worked closely
with our Tooling Services Division on projects where it has developed processes
that have been used for initial production in our in-house manufacturing
facility. To support a number of these projects, we have invested in a new
mill-turn machine. This additional capacity is already committed for the
majority of 2008.
We continue to ensure that our software products remain industry-leading through
significant investment in research and development and believe this policy will
ensure higher sales over the longer term.
Outlook
We have had an encouraging start to the current year but we will not be immune
to any global downturn in economic activity. However, by offering our wide range
of products and services across a number of industries, we are in a position to
capitalise on the variety of opportunities available to us. We continue to view
prospects for the business over the long term very positively.
I would like to thank all our staff worldwide for their loyalty, hard work and
dedication during the year.
Peter Miles
Chairman
19 March 2008
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2007
2007 2006
Note £'000 £'000
Continuing operations
Revenue 3 29,707 26,740
Cost of sales (10,234) (9,535)
-----------------------------
Gross profit 19,473 17,205
Administrative expenses (11,013) (8,937)
Distribution costs (7,006) (5,989)
Other operating income 188 187
-----------------------------
Operating profit 1,642 2,466
Share of results of associates 3 66
Finance income 638 372
Finance costs (135) (112)
-----------------------------
Profit before taxation 2,148 2,792
Taxation (401) (423)
-----------------------------
Profit for the year 1,747 2,369
=============================
Attributable to:
Equity holders of the parent company 1,778 2,328
Equity minority interest (31) 41
-----------------------------
1,747 2,369
=============================
Earnings per share:
from continuing operations
Basic 24.6p 38.2p
Diluted 24.6p 37.2p
=============================
CONSOLIDATED BALANCE SHEET
As at 31 December 2007
2007 2006
£'000 £'000
Non current assets
Goodwill 2,259 2,104
Other intangible assets 1,944 1,643
Property, plant and equipment 7,186 6,154
Interests in subsidiary undertakings - -
Interests in associates 689 774
Other investments 26 26
Deferred tax assets - 379
---------------------------
12,104 11,080
Current assets
Inventories 421 210
Trade and other receivables 7,437 6,763
Cash and cash equivalents 7,717 2,447
---------------------------
15,575 9,420
---------------------------
Total assets 27,679 20,500
===========================
Current liabilities
Trade and other payables (5,279) (3,925)
Borrowings (941) (1,244)
Deferred income (2,324) (2,122)
Current tax liabilities (237) (47)
---------------------------
(8,781) (7,338)
Non current liabilities
Borrowings (1,453) (1,899)
Retirement benefit obligation - (930)
Deferred income (63) (120)
Deferred tax liabilities (583) (1,016)
---------------------------
(2,099) (3,965)
---------------------------
Total liabilities (10,880) (11,303)
---------------------------
Net assets 16,799 9,197
===========================
Equity
Share capital 779 617
Share premium 8,074 1,983
Investment in own shares (297) (144)
Revaluation reserve 1,477 1,495
Capital reserves 9 9
Retaining earnings 6,685 5,134
---------------------------
Equity attributed to equity
holders of the parent 16,727 9,094
Minority interests 72 103
---------------------------
Total equity 16,799 9,197
===========================
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2007
2007 2006
£'000 £'000
Operating activities
Cash flows from operating activities 2,517 2,600
Finance income received 220 90
Finance costs paid (135) (112)
Income taxes paid (265) (159)
-------------------------
Net cash inflow from operating activities 2,337 2,419
Investing activities
Development costs (466) (101)
Acquisition of investments in associate - (34)
Acquisition of investment in
subsidiary undertakings (290) (1,929)
Purchase of property, plant and equipment (1,682) (444)
Proceeds on disposal of property,
plant and equipment - 13
Payments to acquire investment in own shares (200) -
-------------------------
Net cash used in investing activities (2,638) (2,495)
Financing activities
Dividends paid (327) (276)
New bank loans raised - 2,550
Repayments of borrowings (1,610) (891)
Decrease in restricted cash - (83)
Proceeds from issue of share capital 6,253 -
New finance leases advanced 866 -
-------------------------
Net cash from financing activities 5,182 1,300
-------------------------
Increase in cash and cash equivalents 4,881 1,224
-------------------------
Cash and cash equivalents at 1 January 1,904 788
Effect of foreign exchange rate charges 121 (108)
-------------------------
Cash and cash equivalents at 31 December 6,906 1,904
=========================
Analysis of cash and cash equivalents:
Cash and cash equivalents 7,717 2,447
Bank overdraft (811) (543)
-------------------------
Cash and cash equivalents 6,906 1,904
=========================
Reconciliation of operating profit to operating cash flows:
2007 2006
£'000 £'000
Operating profit 1,642 2,466
Depreciation 687 577
Amortisation of intangible assets 165 83
Release of government grants (8) (8)
Share based payments 45 12
Profit on sale of property, plant
and equipment 18 (6)
------------------------
Operating cash flow before working
capital movements 2,549 3,124
Increase in inventories (211) (42)
(Increase)/ decrease in trade and
other receivables (674) (638)
Increase in trade and other
payables 1,449 426
------------------------
Cash generated by operations 3,113 2,870
Additional pension contributions (596) (270)
------------------------
Cash flows from operating
activities 2,517 2,600
------------------------
NOTES
For the year ended 31 December 2007
1. SEGMENTAL ANALYSIS
For management purposes, the Group is currently organised into four geographical
operations and management consider the geographical segments to be its primary
segmental information.
Geographical Segment
2007 2006
Continuing Revenue Profit/(loss) Margin Revenue Profit/(loss) Margin
operations
£'000 £'000 % £'000 £'000 %
Europe 14,789 1,677 11% 13,169 2,639 20%
Americas 7,887 (63) (1%) 7,131 (439) (6%)
Far East 5,708 92 2% 5,197 161 3%
Rest of world 1,323 (64) (5%) 1,243 105 8%
-------- -------------- --------- --------------
29,707 1,642 6% 26,740 2,466 9%
======== =========
Share of associates
results 3 66
Net finance costs 503 260
Taxation (401) (423)
Profit after tax 1,747 2,369
============== ==============
2007 2006
Assets Liabilities Net Assets Liabilities Net
£'000 £'000 £'000 £'000 £'000 £'000
Europe 20,632 (6,291) 14,341 16,707 (7,951) 8,756
Americas 2,595 (2,576) 19 1,940 (1,839) 101
Far East 4,246 (1,955) 2,291 1,601 (1,476) 125
Rest of
world 206 (58) 148 252 (37) 215
----------------------------------------------------------------------------------------
27,679 (10,880) 16,799 20,500 (11,303) 9,197
----------------------------------------------------------------------------------------
2007 2006
Capital Depreciation / Capital Depreciation/
expenditure amortisation expenditure amortisation
£'000 £'000 £'000 £'000
Europe 1,019 721 1,796 554
Americas 40 40 70 34
Far East 531 79 89 59
Rest of the World 92 12 49 13
--------------------------------------------------------------
1,682 852 2,004 660
--------------------------------------------------------------
2. EARNINGS PER ORDINARY SHARE
Basic earnings per Ordinary share is calculated on profit after taxation and
minority interests of £1,778,000 (2006: £2,328,000) and on a weighted average
number of shares of 7,222,428 (2006: 6,096,210) Ordinary shares of 10p each. The
'C' Ordinary shares do not form part of this calculation.
Diluted earnings per share which take into consideration the dilutive effect of
earnings per share if the outstanding share options were exercised, are
calculated on the profit attributable to ordinary shareholders of £1,778,000
(2006: £2,328,000) and on a weighted average number of dilutive shares of
7,222,428 (2006: 6,255,210). The difference in the average number of shares in
issue used in the calculation of basic and diluted earnings per share of nil
(2006: 159,000) is due to the premium element of share options outstanding at
the end of each financial year, based on the average mid market share price for
that year.
3. STATEMENT OF CHANGES IN EQUITY
Share Capital Share premium Investment Capital Revaluation Retained Total
Account account in own reserves Reserve earnings £'000
£'000 £'000 shares £'000 £'000 £'000
£'000
At 1 January
2007 617 1,983 (144) 9 1,495 5,134 9,094
Profit for the
year - - - - - 1,778 1,778
Dividends paid - - - - - (327) (327)
Exchange rate
difference - - - - - (71) (71)
Actuarial
gains and losses - - - - - 1,661 1,661
De-recognition
of pension surplus - - - - - (1,745) (1,745)
Deferred tax - - - - 14 25 39
Transfers - - - - (32) 32 -
Investment in
own shares - - (153) - - 153 -
Share based payments - - - - - 45 45
New share issue 162 6,091 - - - - 6,253
-------------------------------------------------------------------------------------
At 31 December 2007 779 8,074 (297) 9 1,477 6,685 16,727
=====================================================================================
4. This statement is not being posted to shareholders. The Report &
Accounts will be posted to shareholders on 11 April 2008. Copies of this
announcement and further copies of the Report & Accounts will be available from
the Group's Registered Office: Small Heath Business Park, Birmingham, B10 OHJ
and from the Group's website at www.delcam.com.
5. The Annual General Meeting will be held at Delcam PLC, Small Heath
Business Park, Birmingham, on 9 May 2008 at 3pm.
6. The financial information set out above does not comprise the Group's
full statutory accounts within the meaning of Section 240 of the Companies Act
1985. The full statutory accounts for 2007 are yet to be finalised. Consequently
the audit report has not yet been signed. A copy, when approved and signed will
be filed with the Registrar of Companies.
7. The figures for the year to 31 December 2006 have been extracted from
the statutory financial statements for that year, which have been filed with the
Registrar of Companies and carry an unqualified audit report. The Group has
adopted International Financial Reporting Standards (IFRS) for the year ended 31
December 2007 and, accordingly, comparative figures in respect of the period
ended 31 December 2006 have been restated. No statement was required under
Section 237(2) or (3) of the Companies Act 1985.
This information is provided by RNS
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