The significant initiatives taken over the past year have accelerated Cadcentre’s rate of growth, opened up new market opportunities and built momentum. While doing so, Cadcentre has retained its rate of profitability and cash generation. It is well equipped with the strategy, skills, products and reputation to benefit from its widened market and looks forward with confidence to achieving further improvements in financial results this year.
Over the past year, Cadcentre has taken a number of important initiatives which are accelerating its rate of revenue growth whilst maintaining a high rate of profitability. This has produced excellent results which are ahead of original market expectations and continue the unbroken record of growth in profits.
In the year to 31 March 2000, overall turnover increased by 34% to £23.9 million (1999 : £17.9 million); underlying revenue growth was 19% excluding acquisitions at the end of the previous year and during 1999-2000. Operating margins improved to 17.7% (1999 : 15.9%). Profit before tax and amortisation of intangible assets arising from acquisitions increased by 57% to £4.7 million (1999 : £3.0 million). Profit before tax reported under FRS3 and other UK Accounting Standards increased 45% to £4.3 million (1999 : £3.0 million) and earnings per share were 55% higher at 17.72p (1999 : 11.41p).
Cadcentre’s balance sheet remains strong with net cash balances at the year-end of £4.2 million (1999: £4.3 million) after providing for cash acquisitions of £3.2 million.
A final dividend of 3.6p per share is proposed (1999 : 3.2p), making a total for the year of 5.4p (1999 : 4.8p), an increase of 13%. The final dividend will be paid on 4 August 2000 to shareholders on the register at the close of business on 7 July 2000.
STRATEGY
Cadcentre has grown successfully as a world-leading developer and vendor of high value software products used for the design and engineering of major capital plant for the process and power industries. Cadcentre is now making good progress in implementing a strategy of extending its portfolio of products and services to gain a greater penetration of the engineering design activities within its ‘blue chip’ client base. This is being combined with a greater control of global sales, marketing and customer support activities. Cadcentre will stay within its area of expertise but add further activities by extending into the creation and maintenance of plant assets within its target sectors. This strategy is being achieved by organic growth and selected acquisitions.
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The effect of this strategy is to strengthen the long-term relationships between Cadcentre and its clients, developing longer-term visible revenue streams which, in time, will lessen the influence of individual software licence sales on short-term results.
DELIVERY
In order to improve Cadcentre’s ability to market to and support its customers globally, additional offices were opened during the year in Korea and Malaysia. In Japan, Cadcentre took direct control of its representation four months before the start of the year under review. As a result of these actions, revenue from the Asia Pacific region increased by 135%.
Selected acquisitions have been used to increase Cadcentre’s customer base and to broaden its product portfolio. At the end of the previous financial year, the PASCE 3D design software and customer base was acquired from a subsidiary of AEA Technology plc. These PASCE customers have contributed to revenue and profit in the year under review and satisfactory progress is being made in converting these customers to Cadcentre’s PDMS mainstream 3D design system. Two software products were acquired during the year : in September, the FOCUS project management suite and in December, the VANTAGE plant data management system for large engineering projects.
These changes have contributed to Cadcentre’s ability to move into strategic services related to the engineering activities within major process plant builders and operators, building on long-term relationships with these departments. With VANTAGE and FOCUS, both developed by PDMS customers to work in conjunction with PDMS, Cadcentre now owns a unique, comprehensive portfolio of integrated applications for process plant engineering which it can deliver globally. In December, Cadcentre secured a service contract with a large US pharmaceutical company; since the year-end, a major services contract has been awarded to Cadcentre by Halliburton Company.
EXPANSION
Tony Christian, appointed in 1998, has spearheaded the company’s move into value added services with a number of customers making use of our professional services to strengthen the value they derive from our software products. The first major long-term contract for professional services has been agreed with Halliburton. Under the contract Cadcentre will provide a wide range of services to further develop Halliburton’s world leading computer aided engineering solutions as used on engineering projects world-wide.
Following the acquisition of the Cadcentre sales and support activities in Japan in November 1998, we have reorganised our East Asia operations to cover the whole Asia Pacific region. The last year has been very successful for our products and services in Japan and Korea, with expansion opportunities evident in most part of the Asia Pacific region. The company has located its new Asia Pacific Division headquarters in Malaysia and operates six sales and support offices throughout the region.
Cadcentre’s integrated global sales organisation is now in a position to meet the needs of its clients, regardless of where their business operations are located.
