Engineering design software supplier Delcam made a strong recovery in the first half of 2010.
Delcam reported a 12% increase in revenues to £18.1m in the six months to June 2010, and a jump in profit from £310,000 to £1.1m. That improvement was after around £400,000 of provisions and dismissal costs. Recurring revenues account for more than one-third of total revenues. The interim dividend was unchanged at 1.35p a share.
The recovery is across the board with no particular geographical area or sector standing out. The market declined in 2009 but it is expected to grow by 9% this year. It appears that Delcam will be able to grow faster than the market.
The business is cash generative and there was net cash of £7.45m. The figure is flat over a 12 month period but the corresponding cash figure was swelled by cash that was being passed onto other companies and was therefore not really the company’s cash.
House broker WH Ireland has increase its revenue forecast for 2010 but maintained its profit forecast at £1.9m.
Scientific instruments supplier Renishaw retains a 19.8% stake in Delcam following its £6.1m capital injection in April 2007. However, the hoped-for benefits of the tie up have not really come through.
At 292.5p a share, Delcam is valued at £22.6m. The shares are trading on less than 15 times prospective earnings for 2010.
Delcam continues to look for acquisitions, whether it is to add to the geographic spread of the business or to add new technology or sectors.
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