Delcam, developer of 'computer aided design' software, is looking for potential acquisitions after reporting a 60 per cent full-year profits increase to £1.6 million, writes Elliott Davis.

Last year, Aim-listed Delcam pushed up pre-tax profits from £1 million to £1.6 million on a seven per cent sales gain to £17 million, after spending £3.6 million on research and development. From now on, says finance director Kulwant Singh, 'the only way to grow is through acquisition', even though sales have continued to increase into this year.

Delcam has maintained its growth even though 43 per cent of turnover comes from the fast-slowing US and Far East economies. Nevertheless, Singh argues the company has now 'grown to an optimum size' organically.

Tantalisingly, he claims that five companies - all with 'complementary products' and one 'a major competitor' - have approached Delcam about possible mergers and acquisitions.

Moves to bring institutional backing to the company, meanwhile, began earlier this month when the company replaced its long-standing broker Tilney and corporate adviser Arthur Andersen with the higher profile Williams de Broe. Managing director Hugh Humphreys confirms that 'a research note will be out soon (in April) and we will be looking to talk to people after that'. At present, around 70 per cent of the company is owned by its employees.

Delcam's shares were unmoved at 180p today, valuing the group at £10.8 million.

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