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Delcam Plc Preliminary Report
2002
Preliminary
Results for the year ended 31 December 2002
| 2002 | 2001 | ||
Sales |
£18.9m £1.07m 14.0p 2.55p 3.50p |
£18.2 £0.85m 9.9 p 2.40p 3.35p |
+4% +25% +41% +4% |
Chairman’s Statement
Financial Highlights
I am very pleased to report that Delcam’s sales continued to grow during 2002, reaching £18.9 million compared with £18.2 million during 2001, an increase of 4%. Profit before tax for the year also increased, rising from £0.85 million in 2001 to £1.07 million during 2002, an improvement of 25%. These results are especially pleasing given the very difficult economic conditions in many of the markets in which we operate. They have been achieved even after the company continued its high levels of investment in R & D, marketing and people. As declared in my previous statements, the Company believes that these investments are essential to continue the company’s sales and profit growth. Basic earnings per share were 14.0p compared with 9.9p last year.Dividend
The Board proposes to pay a final dividend of 2.55p per ordinary share (2001 – 2.4p), making the dividend for the full year 3.5p per share (2001 – 3.35p per share). It will be paid on 9 May 2003 to shareholders on the Register as at 4 April 2003. The shares are expected to be quoted ex dividend on 2 April 2003.
Review
During 2002, Delcam continued its progress as the leading international supplier of complete, automated CADCAM systems for the design, manufacture and inspection of complex shapes. This progress has been maintained despite the poor economic conditions and uncertain political climate in many of our key markets. These factors have restricted sales in many territories throughout the year, with a lack of long-term confidence limiting investment by both our existing and our potential customers. To continue to grow sales in this environment is a strong testament to the quality of our products and services, the effectiveness of our marketing, and the skills and expertise of our sales network. During the year we acquired 1,500 new customers who will generate increased maintenance revenues in future years.Total spending on R & D over the year increased by over £450,000, allowing regular releases of new and improved software programs throughout the year. This continued high level of investment does affect our short-term profitability but we believe it is essential for the achievement of our longer-term sales and profit goals. During 2003, we will place additional emphasis on research into inspection software and e-commerce systems. The results of these investments are expected to be seen in 2004. While the majority of the investment in R&D will continue to be funded by the company, we will continue our involvement with British and European collaborative research projects whenever appropriate.
Traditionally, Delcam has relied on copyright to protect our innovative intellectual property but we have started to apply for patents in response to the unwelcome trend, particularly in the USA, to seek patents for any innovative processes. This is clearly an increased expense but one we now feel we must selectively embrace to ensure that we enjoy the benefits of our developments.
The latter part of the year saw the formation of a new Custom Software Consultancy Group, based at the company’s Birmingham headquarters. The Group will undertake bespoke software projects in a range of manufacturing sectors, including the อากาศยาน, automotive, medical and toolmaking industries, and provide dedicated solutions for specific manufacturing processes built around our existing range of software.
Our Sales Partner network continued to strengthen and grow, with new Partners
appointed in several territories, and new staff recruited and additional offices
opened by our existing Partners. We continued to develop stronger relationships
with suppliers of related equipment, particularly machine tools and inspection
devices, and were pleased to be appointed Toshiba Machines preferred CAM partner
at the end of the year.
Products
The continued high level of investment in product development has produced significant advances in our two key products – the PowerSHAPE design software and the PowerMILL machining system. The launch of the world’s first Total Modelling design solution should enable us to develop additional sales among product designers, while continued progress with our automated methods for electrode and injection mould design in PowerSHAPE will help consolidate our position as the leading specialist supplier of CADCAM systems to the international toolmaking industry. Developments in PowerMILL have focussed on the increasingly popular five-axis machining options, as well as extending our leadership in the area of high-efficiency three-axis machining. Both our reverse engineering system CopyCAD and our ArtCAM software for engraving and routing have seen their capabilities extended, both as independent products and as part of the Total Modelling concept. PowerINSPECT has become established as one of the leading hardware-independent inspection software solutions, with a further broadening of the equipment with which it can be used planned for 2003. Our PS-Exchange online data translation service continues to attract new users and to promote increased sales of the full licences of the software. The first sales of our new PS-Team product for project and team management have been recorded. This collaboration software will allow us to gain business outside our traditional CADCAM markets.
European Subsidiaries
The performance of the European subsidiaries was generally disappointing with only Italy and Germany showing a growth in sales compared to 2001. The UK toolmaking industry was particularly badly affected by the slow down in manufacturing in the country, although the impact of these problems was limited by diversification into other areas of manufacturing, particularly the อากาศยาน industry.
Rest of Europe
Sales in the other European territories were similar to the previous years, with gains in some countries balanced by reduced sales in others. The one significant exception was in Poland, where the establishment of a new branch office and reseller network saw sales increase dramatically.
The Americas
Further expansion of our Sales Partner network in North America allowed us to increase our sales in the world’s largest market for CADCAM software by over 15% despite the difficult economic conditions in the region. As with 2001, this must be considered to be a very satisfactory performance, as we believe that many of our competitors have seen a decline in their sales.
South America continued to be adversely affected by the economic problems in
the region, although there were some signs of improvement towards the end of
the year. Software sales in Mexico increased over last year but this was more
than offset by declines in sales in Brazil and Argentina.
The Far East
Software sales in most Asian territories showed good growth. Our subsidiaries in Japan, India, China and Malaysia all continued their progress, while our joint ventures in Korea, Hong Kong and Taiwan, and our reseller in Thailand increased their sales significantly.
Prospects
0ur increased investments in product development, marketing and the expansion of our sales channel, mean that we start 2003 in a strong competitive position. However with the year starting slowly, the uncertain political and economic climate makes it difficult to forecast with any certainty. While I remain optimistic about our prospects in the long term, it is clear that increased confidence is needed amongst our customers before we can achieve our full potential.
As ever, I would like to thank the staff for their hard work and contribution during the year.
T R M KINSEY
Chairman
19 March 2003