- You are here:
- Home
- »
- About Delcam
- »
- Investor Relations
- »
- Delcam plc Preliminary Report 2003
Delcam Plc Preliminary Report 2003
Preliminary results for the year ended 31 December 2003
Delcam Sales Top £20m
| 2003 | 2002 | ||
Sales |
£20.5m £1.35m 20.5p 2.80p 3.75p |
£18.9 £1.07m 14.0 p 2.55p 3.50p |
+8% +26% +46% +7% |
- Record sales of £20.5m.
- The results show the effects of strong trading in the second half with the customer base now over 9,000. Record sales were achieved partly through an expansion of our distribution network, primarily in the emerging economies of China and India, but also in many of our established markets, including the United States, Germany, Korea and Japan.
- Generated £1.3 million in cash during the year.
- Broader of range of products and supporting services.
- Further increased continued investment in R & D, representing 25% of turnover.
- Queen’s Award for Enterprise in the Innovation category awarded in the year.
“The growth is a strong testament, to the excellence of our products, to the quality of our resellers around the world and the efforts of our employees. As a global business, it is easy to see how events across the world have affected our performance in certain regions. During 2003, we have again demonstrated that we can continue to achieve good results despite these challenges.”
Chairman's Statement
Financial Highlights
I am very pleased to report that the growth in sales for the second half of 2003 has accelerated from that achieved in the first half of the year. Sales for the year to 31 December 2003 were at the record level of £20.5 million compared with £18.9 million during 2002, an increase of 8.5%. These record sales were achieved partly through an expansion of our distribution network, primarily in the emerging economies of China and India, but also in many of our established markets, including the United States, Germany, Korea and Japan. We have also been successful in broadening the range of applications of our software. Our recent technical developments have made our software more attractive to companies in product design applications such as footwear, packaging and electrical/ telecommunications appliances, and also for production machining of high-value components for the aerospace, motor sports and medical industries.
Profit before tax of £1.35 million showed an increase of 26% over last year. As previously reported, the company philosophy continues to be to increase its investment in product development and in sales and marketing. We firmly believe that this increased investment, while affecting short-term profitability, is essential to the continued long-term growth of the company. Basic earnings per share were 20.5p compared with 14.0p in the equivalent period last year.
The Company generated £1.3 million in cash during the year, resulting in it being free of debt at the year end.
The Directors are currently undertaking a review of the Company’s pension fund and its level of benefits and the fund liabilities following the preliminary results of the valuation that was undertaken as at 31 December 2003 which is yet to be finalised. The Board recognise the need to provide staff pension benefits whilst managing the risks and cost to the Company.
Dividend
The Board proposes to pay a final dividend of 2.80p per ordinary share (2002 – 2.55p), making the dividend for the full year 3.75p per share (2002 – 3.50p) an increase of 7.1%. It will be paid on 13 May 2004 to shareholders on the Register as at 16 April 2004. The shares are expected to be quoted ex dividend on 14 April 2004.
Review
During 2003, we planned to continue our growth through three key strategies. Firstly, we promoted our capabilities as a supplier of product development solutions, rather than just as a CADCAM supplier, through the broadening of our range of products and supporting services. The establishment in 2002 of our consultancy group, which won a number of valuable contracts during the year, continues to be an important element of this broader portfolio. Secondly, we increased the proportion of our business coming from outside the mould and die area, both in other types of toolmaking and in other industries. The results of this wider focus have already been seen, with new customers being gained from companies undertaking production machining and inspection of complex aerospace engine components and airframe structures, and from product design organisations. Thirdly, we will continue to increase our sales to larger organisations as well as to smaller and medium-sized companies.
These clear objectives helped us to succeed despite the poor economic conditions for manufacturing companies that have continued in a number of the territories in which we operate. In addition, a number of external factors disrupted our business, in particular the SARS outbreak in Asia, the conflict in Iraq and the fall in value of the US dollar. This difficult trading environment makes the continued growth in our sales even more impressive. The growth is a strong testament, to the excellence of our products, to the quality of our resellers around the world and the efforts of our employees. After two years in which our second half sales were lower than those for the first half, Delcam returned to its more usual trading pattern in 2003 by achieving higher sales in the second half of the year.
We were very pleased to win a Queen’s Award for Enterprise in the Innovation category. Whilst this was awarded specifically in recognition of the continuing innovation in our ArtCAM software, it has provided a boost for all our development staff. We were also pleased to see several of our customers winning awards for excellence in High-Speed Machining and Toolmaking.
At the start of 2003, Delcam reorganised its international sales activity into three divisions; Europe, the Americas, and Far East. This new structure was introduced to give improved management of our increasing number of resellers, better coordination of our sales to larger companies that tend to operate in many countries, and closer relationships with suppliers of machine tools and other related equipment that tend to be organised along similar geographic lines.
Europe
Sales of software and maintenance in the region grew by just over 10%, which must be considered a good result given the economic difficulties in the region. The UK subsidiary maintained its revenues despite the contracting manufacturing base in the country. Our Italian subsidiary had a difficult year but this was more than offset by excellent results from Germany, France and Austria.
The Americas
The improved conditions for manufacturing towards the end of the year contributed
to an 8% increase in sales in North America, despite the weakening of the US
dollar against sterling. An even better performance was seen in South America
during the second half of the year, with greatly improved political and economic
stability in the region leading to a 10% increase in sales over the year.
The Far East
Strong growth was seen in most parts of the region. Sales increased by more than one third in China and Taiwan, and in the ASEAN group of nations. The more established markets of Korea and Japan continued their growth but, as might be expected, at a lower rate than our newer markets.
Outlook
As a global business, it is easy to see how events across the world have affected our performance in certain regions. During 2003, we have again demonstrated that we can continue to achieve good results despite these challenges. The lower value of the US dollar against sterling is expected to adversely affect our growth, as it counteracts some of the expected increase in our sales volumes. Trading in the early part of 2004 gives good reason for optimism, especially if we maintain our traditional pattern of higher sales in the second half of the year.
T R M KINSEY
Chairman
29 March 2004
