Delcam Plc Interim Report 2000
Interim Results for the six months to 30 June 2000

• Record half-year sales of £8,302,280 against £7,677,884 in 1999
• Pre-tax interim profits of £611,162 against £509,549, up 20%.
• Interim dividend of 0.85p per share, up 21%
• Delcam’s sales in the U.S.A., world’s largest CAD/CAM market, up 30% in the first half
• Continued recovery in the Far East
• Two major product launches scheduled for the second half
• Continued high level of investment in product development

As I reported at our last AGM, trading in 2000 has continued the improvement seen last year. Sales for the six-month period to 30 June 2000 were £8,302,280 compared with £7,677,884 in the corresponding period last year. Profit before tax of £611,162 reflects a continued improvement from the first-half profit in 1999 of £509,549. Earnings per share were 8.1p compared with earnings per share of 7.0p in the corresponding period last year. A net cash flow of £1,028,527 was generated from operating activities.

In view of our improved performance and reflecting the directors’ confidence in future trading, the interim dividend has been increased. A net interim dividend of 0.85p per share (0.7p per share in 1999) will be paid on 22 September 2000 to shareholders on the Register as at 15 September 2000. The shares are expected to be quoted ex dividend on 11 September 2000.

Delcam supplies leading software for the design, manufacture and inspection of complex shapes. Typical applications include อากาศยาน and automotive components, housings for mobile phones and other electrical appliances, sports equipment and footwear. This area of the CADCAM industry is growing rapidly as a result of the desire for more complex designs in many consumer products and because of the increasing rate of styling modifications to meet changing fashions.

A recent review by the US consulting and market research firm CIMdata has confirmed our position as the leading supplier of NC software and services to the toolmaking industry both in North America and in Europe.

The first half of the year has seen the introduction of new programs for footwear design and a new entry-level machining package sold via the Internet. We have also introduced an Internet-based data translation service. Work is now under way on major releases of our two key products — the design software PowerSHAPE and our machining software PowerMILL. These are both due for release during the autumn. The rights to the mould design package developed by Tecnocad have been acquired and an improved version of this software will also be available later this year.

Extensive media coverage has been gained from the selection of Delcam software for the production of the Maitreya Buddha in Bodh Gaya, India. This high-profile project will produce the largest statue in the world. The work has now started in Birmingham and will be continued in our recently opened Indian operation.

This year, a distribution and development agreement has been signed with the leading metrology company, Renishaw plc, that will allow the supply of our reverse engineering technology to many of its customers. The arrangements for measuring arm manufacturers to supply our inspection software PowerINSPECT with their products are working successfully and are expected to be extended later this year.

Lower levels of confidence and investment seen throughout UK manufacturing industry has had an impact on software sales following the record results achieved in the first half of 1999. Some improvement is expected in the second half of the year. Sales of services have continued to grow, with the results from the Tooling Services Division showing substantial improvement.

We have seen continued strong growth in Italy with sales up by 20%, together with considerable improvements in Spain and Scandinavia.

We are developing plans for the expansion of our distribution network in Germany. This will allow us to take advantage of the launch of our new product upgrades later in the year.

Within Eastern Europe, the slow recovery in Russia has resulted in a significant increase in sales in the region. A new reseller has been appointed in Poland that should lead to increased business from that country.

In North America, the world’s largest market for CADCAM software, we have continued the strong growth seen during 1999 with sales increasing by 30% compared with the first half of last year. Additional staff have been recruited for the North American office and further experienced resellers have been appointed.

In South America, the easing of the economic problems in Brazil has led to a doubling of sales compared with the disappointing first half results in 1999.

Japan, China, Hong Kong, Thailand and Malaysia have all seen improved results as the recovery continues in these countries and in Korea sales were up by 29%. We have opened an office in India to support the reseller in the country and to expand our distribution network.

We have made good progress so far this year, both technically and commercially. The major software releases, and continuing investment in our sales channels, planned for the second half of the year should ensure that this progress will be maintained both for the remainder of this year and into 2001.

T R M KINSEY
Chairman
30 August 2000