RNS Number:4783A
Cadcentre Group PLC
9 November 1999
CADCENTRE GROUP PLC
PROFITS INCREASE BY NEARLY 40% FOR HALF YEAR TO 30 SEPT 1999
CADCENTRE Group plc ("Cadcentre"), the Cambridge headquartered
leader in the international market for computer systems which
aid the design of process and power plants, has announced its
unaudited results for the six months ended 30 September 1999.
Key points
* Unbroken record of growth maintained with 39% increase in
pre-tax profits to #1.9m (1998 : #1.4m).
* Turnover rose by 24% to #10.9m (1998 : #8.8m) with a broadly
even balance in growth between organic and acquisition.
* Operating margins improved to 16.9% (1998 : 14.4%).
* Earnings per share were up 59% to 8.00p (1998 : 5.03p).
* Interim dividend is being lifted to 1.8p (1998 : 1.6p) - an
increase of 13%.
* Cash flow remained strong with net cash of #3.5m (1998 :
#4.7m) after an outlay of some #4m on acquisitions over the
past twelve months.
* Strong growth in revenues was achieved in Far East markets
and, after last year's cornerstone contract win from BASF,
there was strong follow through with sales into the chemical
engineering industry in Germany.
* At the start of the current financial year, Cadcentre
acquired the rights to the 3D design software customer base
of AEA Technology ("AEAT") for a consideration of up to
$4.5m.
* In September, Cadcentre acquired from Kvaerner the rights to
additional software products for #1.7m.
* On outlook, Chairman, Richard King stated :
"We are confident of achieving a successful outcome
for the financial year ending March 2000, although for
this year, there may be a more even balance between the
first and second half years than has historically been the case.
"Looking forward over the next few years, the combination of
new product and service sales opportunities within an
expanding customer base is expected to result in substantial
growth in revenues."
Richard Longdon, Chief Executive; or John Dersley, Finance Director
on 0171-466 5000 (today)
and on 01223-556655 (thereafter)
Steve Liebmann or Richard Darby at Buchanan Communications
on 0171-466 5000
CADCENTRE GROUP PLC
RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 1999
Results and dividend
Cadcentre is pleased to announce record profits from a
resumption of strong turnover growth, which is balanced evenly
between organic growth and that achieved through acquisition.
During the six months ended 30 September 1999, turnover
increased by 24% to #10.93 million (1998: #8.80 million) and
profit before tax increased by 39% to #1.90m (1998: #1.37m).
Earnings per share were up 59% at 8.00p for the six months
(1998: 5.03p), and an interim dividend of 1.80p per share
(1998: 1.60p) will be paid on 28 January 2000 to shareholders
on the register at the close of business on 6 January 2000.
Operations
The main thrust in recent months has been the implementation
of the company's strategy to consolidate our existing position
and expand our sphere of operations. This involves building on
our reputation, skills and customer base in the design of
process plant to become a supplier of a broader range of
engineering IT systems and services, covering total project
execution and operations within our chosen industries.
Consolidation
This started in November 1998 with the acquisition of the
Cadcentre business of our Japanese distributor, but had very
little effect until this financial year. Our new company in
Japan, aided by a satellite office in Korea, now directly
handles sales and support in those countries. The elimination
of the distributor's commission means we now retain all of the
revenue generated from our customers, but more importantly, we
have more control over the selling effort. Coinciding with the
re-awakening of the Asian market, the appreciation of the yen
and our taking on responsibility for the PASCE customer base
(see below), this has meant that the area has enjoyed great
success in the first half of this year. Total revenue from the
Far East more than doubled compared to the similar period last
year.
Consolidation continued in the final days of March 1999 with
the acquisition of the PASCE 3D design software customer base
of AEA Technology. This opened up over 70 active customers to
reinforce our position in plant design and means that
Cadcentre now has the world's largest installed customer base
in high-end 3D plant design systems. The first of those
customers have now taken advantage of favourable terms to
transfer their usage to Cadcentre's PDMS product. Completion
of a PASCE/PDMS translator tool is set for mid-December and
Cadcentre will be offering a comprehensive migration service.
Expansion
On 13 September 1999 the Company acquired SCOPE, an integrated
suite of project management software systems. Now renamed
FOCUS, version 8.1 will be shipped in November 1999. Just as
Cadcentre's PDMS is used in the design office to achieve
consistent, buildable designs, eliminating re-work caused by
design errors, so FOCUS extends this efficiency drive to the
entire fabrication and construction cycle. FOCUS provides
precise details of project activity to support the sourcing,
planning and control of materials, contractors, equipment and
costs. The main competition for FOCUS is our customers' in-
house systems, which are expensive to maintain and generally
less comprehensive, less integrated and less effective than
FOCUS.
Revenue growth
As mentioned, the new offices in the Far East have enjoyed a
good start with the Yokohama office in Japan being warmly
welcomed by our users. Although some of the increased revenue
in this region was purchased, much of the business in the last
six months has been generated from new customers: five in
Japan, one in the Philippines, two in Korea and two in China.
Following the major sale to BASF last year, our German
operation continued its drive into the chemical industry,
adding six of its eight new customers from within that
industry and growing its total sales by a further 38% over the
previous year. Revenue growth in the USA totalled 18% largely
as a result of the PASCE acquisition. France gained little
benefit from the acquired businesses, but grew its net sales
by 13%. The International Division, which covers the rest of
Europe including the UK and east as far as India, grew revenue
by 14%. This includes revenue from PASCE customers, support
revenue from the first few days of FOCUS and the consolidation
of the Norwegian subsidiary (previously a minority interest).
Finance
Strong cash generation has resulted in net cash balances at
the end of six months of #3.48 million (1998: #4.66 million)
after utilisation of approximately #4 million on acquisitions
in the last twelve months.
Outlook
It is best to look towards the future in two parts. First,
the short term. There is some immediate uncertainty over our
customers' investment intentions before the full impact of the
millennium issues can be assessed, especially within the US
market. On a sectoral view, a majority of our new customers
in the first half year were linked to the chemical industry
(19) while the recovery in the price of oil has yet to feed
through into sales to the oil and gas sector (8 new
customers). The energy sector was also stable (8 new
customers).
Overall, the Board is confident of achieving a successful
outcome for the financial year ending March 2000, although for
this year, there may be a more even balance between the first
and second half years than has historically been the case.
Looking forward over the next few years, the combination of
new product and service sales opportunities within an
expanding customer base is expected to result in substantial
growth in revenues.
Richard King
Chairman
CONSOLIDATED PROFIT AND LOSS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 1999
6 months ended Year ended
30 September 31 March
1999 1998 1999
(unaudited)(unaudited) (audited)
#'000 #'000 #'000
Turnover 10,929 8,798 17,861
Cost of sales (4,640) (3,883) (6,575)
Gross profit 6,289 4,915 11,286
Other operating expenses (net) (4,446) (3,644) (8,448)
Operating profit 1,843 1,271 2,838
Interest receivable 61 96 171
Interest payable and similar
charges (4) - (8)
Profit on ordinary
activities before taxation 1,900 1,367 3,001
Tax on profit on ordinary
activities (570) (531) (1,105)
Profit on ordinary
activities after taxation 1,330 836 1,896
Dividends paid and proposed (298) (265) (797)
Profit retained for the
period 1,032 571 1,099
Basic earnings per share 8.00p 5.03p 11.41p
Diluted earnings per share 7.94p 4.92p 11.21p
Dividend per equity share 1.80p 1.60p 4.80p
Consolidated statement of total recognised gains and losses
for the six months ended 30 September 1999
6 months Year
ended ended 31
30 September March
1999 1998 1999
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Profit for the period 1,330 836 1,896
Translation (loss) gain (33) (10) 10
arising on consolidation
1,297 826 1,906
CONSOLIDATED BALANCE SHEET
AS AT 30 SEPTEMBER 1999
At 30 At 31
September March
1999 1998 1999
(unaudited)(unaudited) (audited)
#'000 #'000 #'000
Fixed assets
Software rights 1,686 - -
Goodwill 2,538 - 2,648
Tangible assets 3,151 2,670 2,927
Investments - 6 6
7,375 2,676 5,581
Current assets
Debtors 6,657 6,953 6,863
Cash 3,484 4,661 4,307
10,141 11,614 11,170
Creditors
Amounts falling due within
one year (7,728) (6,097) (8,021)
Net current assets 2,413 5,517 3,149
Total assets less current
liabilities 9,788 8,193 8,730
Creditors
Amounts falling due after
more than one year - (18) (7)
Provisions for liabilities
and charges (66) - -
Net assets 9,722 8,175 8,723
Capital and reserves
Called-up share capital 1,662 1,662 1,662
Share premium account 6,833 6,833 6,833
Profit and (loss) account 1,227 (320) 228
9,722 8,175 8,723
CONSOLIDATED CASH FLOW
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 1999
6 months ended Year ended
30 September 31 March
1999 1998 1999
(unaudited)(unaudited) (audited)
#'000 #'000 #'000
Net cash inflow from
operating activities 2,651 1,793 3,588
Returns on investments and
servicing of finance 57 (95) 163
Taxation (581) (679) (1,072)
Capital expenditure and
financial investment (2,401) (408) (1,345)
Acquisitions (19) - (929)
Equity dividends paid (532) (398) (665)
Cash (outflow)/inflow before
management of liquid
resources and financing (825) 213 (260)
Management of liquid resources - 150 1,400
Financing (17) (100) (126)
(Decrease)/increase in cash
in the period (842) 263 1,014
Notes
1 Analysis of turnover by destination
6 months ended Year ended
30 September 31 March
1999 1998 1999
#'000 #'000 #'000
United Kingdom 1,431 1,774 3,218
Europe, Middle East and
Africa 4,601 3,700 7,861
Americas 3,068 2,472 5,028
Far East 1,829 852 1,754
10,929 8,798 17,861
2 Interim ordinary dividend
The proposed interim dividend of 1.8p per ordinary share
will be payable on 28 January 2000 to shareholders on the
register on 6 January 2000.
3 Earnings per ordinary share
30 September 31 March
1999 1998 1999
Profit on ordinary
activities after tax #1,330,000 #836,000 #1,896,000
Ordinary shares of 10p
each in issue 16,622,000 16,622,000 16,622,000
Diluted ordinary shares
of 10p each 16,760,414 16,993,839 16,920,350
4 Comparative figures
The comparative figures for the financial year ended 31
March 1999 do not constitute statutory accounts for that
financial year. These figures have been extracted from the
audited accounts for that year, which have been delivered
to the Registrar of Companies. The report of the auditors
was unqualified and did not contain a statement under
section 237(2) or (3) of the Companies Act 1985.
5 Year 2000 Compliance
Year 2000 compliance continued to be high on the agenda of
Cadcentre and its customers throughout the year. Year 2000
compliant versions of all Cadcentre's major software
products (including PDMS, PEGS, Design Manager, REVIEW
Reality and HyperPlant) were prepared and made available to
customers before the end of 1998, on both the Windows NT
and UNIX platforms.
Within Cadcentre itself, the IT department has
responsibility for ensuring that all internal software and
hardware systems are Year 2000 compliant, and they have
been in liaison with all Cadcentre's major suppliers. Any
critical systems that have been identified as non-compliant
have been replaced by Year 2000 compliant systems. The
resultant costs of ensuring compliance have been met from
within existing IT budgets and hence no material additional
expense has been incurred, or is expected to be incurred,
in connection with the group's Year 2000 compliance plan.
It is Cadcentre's stated policy that our internal systems
and Year 2000 compliant releases of all our products shall
perform in compliance to the BSI definition DISC DP2000-1
'A definition of Year 2000 Conformity Requirements'.
INDEPENDENT REVIEW REPORT TO CADCENTRE GROUP PLC
Introduction
We have been instructed by the company to review the financial
information set out above and we have read the other
information contained in the interim report and considered
whether it contains any apparent misstatements or material
inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information
contained therein, is the responsibility of, and has been
approved by, the directors. The Listing Rules of the London
Stock Exchange require that the accounting policies and
presentation applied to the interim figures should be
consistent with those applied in preparing the preceding
annual accounts except where any changes, and the reasons for
them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained
in Bulletin 1999/4 issued by the Auditing Practices Board. A
review consists principally of making enquiries of Cadcentre
management and applying analytical procedures to the financial
information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A
review excludes audit procedures such as tests of controls and
verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in
accordance with Auditing Standards and therefore provides a
lower level of assurance than an audit. Accordingly we do not
express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material
modifications that should be made to the financial information
as presented for the six months ended 30th September 1999.
Arthur Andersen 9th November 1999
Chartered Accountants
Betjeman House
104 Hills Road
Cambridge
CB2 1LH
END
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