Delcam

Despite downturn dampening spend amid its manufacturing client base, global 'CADCAM’ software supplier Delcam performed strongly in 2009 whilst investing for growth.

Birmingham-based Delcam, whose technology is used for product manufacture by clients spanning industries as diverse as aerospace, automotive and sports equipment, suffered a slight 3% sales decline to £31.8m for the year to December, with pre-tax profits dropping to £1.1m (2008: £2.3m), pegged back, among other factors, by significant research and development (R&D) spend.

However, this was still the second highest sales figure in Delcam’s history, supporting management’s decision to continue investing in R&D and marketing throughout the recession and reflecting growth in newer sectors (medical, dental, footwear) and emerging territories including China and India.

In a further highlight, high-visibility recurring income (from software maintenance and support) grew 10% to £10.7m, to represent 34% of sales and Delcam looks strongly positioned to capture market share, having introduced new software products and released new, improved versions of all its products last year.

Primed to capitalise on economic upswing, having finished the year with a robust balance sheet awash with £5.7m (2008: £6.4m) of net cash, underpinning a maintained total dividend of 5.25p, Delcam is forecast to deliver earnings of 17.8p (2009; 12.7p) and a 5.5p dividend for 2010.

Trading on a forward p/e of 12.5 – relatively undemanding, given the group’s market leading position – and offering a 2.5% yield, the shares, originally backed by Growth Company Investor at 417.5p in 2007, are not to be sold at these depleted levels. If you still have faith in the fundamentals, then sit tight.