Interim Results

RNS Number:6589T
Cadcentre Group PLC
7 November 2000


FOR IMMEDIATE RELEASE
                     7 November 2000


                             CADCENTRE GROUP PLC



       PROFITS INCREASE 28% TO #2.6M FOR SIX MONTHS ENDED 30 SEPT 2000


CADCENTRE Group plc ("Cadcentre"), the Cambridge headquartered leader in the
international market for engineering data and design IT systems, has announced
its unaudited interim results for the six months ended 30 September 2000.


Key points :



-    These results maintain Cadcentre's unbroken record of profit growth.



-    Already one of the world leaders in the supply of 3D engineering design
software, Cadcentre is successfully moving into the supply of enabling
software for web-based e-procurement for the process and power plant industry.



-    Turnover for the first half year rose 18% to #12.9m (1999 : #10.9m).



-    Operating margins improved to 17.8% (1999 : 16.9%).



-    Profit before tax and amortisation of intangible assets arising from
acquisitions increased by 28% to #2.6m (1999 : #2.0m).



-    Profit before tax under FRS3 and other UK Accounting Standards increased
23% to #2.3m (1999 : #1.9m).



-    Earnings per share were up by 20% to 9.60p (1999 : 8.00p).



-    An interim dividend of 1.80p will be paid (1999 : 1.80p).



-    Net cash at 30 September 2000 was #2.7m (1999 : #3.5m) after an outlay of
some #2.3m on acquisitions over the last twelve months.



-    Major services contract received from Halliburton Company during the
first half.



-    Successful move into the supply of web e-procurement software with the
winning of a major order after the end of the first half from Industria for an
initial $1m.



-    On outlook, Chairman, Richard King stated :



      "Cadcentre's new vision has been well received within the marketplace
and progress in its implementation is being achieved whilst maintaining our
unbroken record of profit growth.  In particular, the ability to provide
web-enabled engineering data management systems is creating a new stimulus for
Cadcentre's growth.



      "We are confident that good progress will be maintained through the
remainder of this year."


Richard Longdon, Chief Executive; or 
John Dersley, Finance Director          on 020-7466 5000 (today)
                                        and on 01223-556655 (thereafter)

Steve Liebmann or Nicky Cronk 
at Buchanan Communications              on 020-7466 5000



CHAIRMAN'S STATEMENT



Introduction



Excellent progress continues to be made in implementing Cadcentre's strategy.
A key aspect of this is the broadening of our software and services portfolio
to increase the quality and depth of relationships with clients who mainly
comprise blue chip owners, operators, builders and designers of major capital
plant used in the process and power industries.



In addition to reporting a further set of record results, we were recently
pleased to announce a $1 million collaboration in which Cadcentre's software
will power a substantial World Wide Web based e-procurement development within
the process plant industry.



Results, Finance and Dividend



During the six months ended 30 September 2000 turnover increased by 18% to #
12.9 million (1999: #10.9 million).  Even though Cadcentre is in the process
of changing its business model, operating margins improved to 17.8% (1999:
16.9%) and profit before tax increased by 23% to #2.3 million (1999: #1.9
million).  Earnings per share were up by 20% to 9.60p (1999: 8.00p).



Net cash at 30 September 2000 was #2.7 million (1999: #3.5 million) after an
outlay of some #2.3 million on acquisitions over the last twelve months.



With the success of Cadcentre's strategy to increase its business, the Board
has concluded that it should maximise the direction of its resources towards
funding that growth.  Accordingly, it has decided to pay an unchanged interim
dividend of 1.80p per share (1999: 1.80p) on 26 January 2001 to shareholders
on the register at the close of business on 3 January 2001. Further, the Board
has decided that, subject to satisfactory performance, it will recommend an
unchanged final dividend of 3.60p to make a total of 5.40p for the year.



Operations



The company has been revitalised by implementing its plan to offer a broader
range of engineering IT systems and services. The company is now 18 months
into its programme of acquisitions and developments and over the last six
months the first sales of the new products have started to feed through. The
acquisition of Open Plant in September when coupled with other acquisitions
and developments gives the company an unrivalled product range. The
restructuring and increase of the sales and support teams around the world is
ongoing. Revenue in North America has risen 22% and in Asia Pacific revenue
has grown by 86%. The growth in both North America and Asia Pacific contrasts
with the sales in Europe, Middle East and Africa, which, including the UK,
remained the same as the previous year - partly reflecting changes in
currencies. Overall, there was a welcome net benefit for Cadcentre as these
strong sales in Japanese Yen and the US Dollar outweighed the negative effect
of the strength of Sterling against the Euro.



In all the company signed over 50 new customers, a 21% increase on the
previous period.



Sales in Europe, Middle East and Africa include the first customer in that
region for the VANTAGE and FOCUS products while efforts in the USA have been
concentrated on building resources to service existing VANTAGE business with
Merck and DuPont. The Asia Pacific market has enthusiastically embraced the
new products, with three trial licences in Korea for VANTAGE and FOCUS.  In
Japan a large customer has signed a $1 million contract of which only the
licence element for standard product has been booked in the first half of the
year. The consultancy and maintenance revenues will contribute to the result
for the second half year.





Cadcentre's 3D design software, PDMS and the other established products have
continued to make progress against the competition with notable sales in the
USA, Taiwan and Mexico. PDMS remains a crucial part of the new strategy, its
capabilities proven on some of the largest and most demanding plant
construction projects in the world. The cumulative value of these projects now
exceeds $400 billion.



In October 2000 Cadcentre hosted for the first time (as these are normally
hosted by a customer) a world-wide user meeting in the USA. This was a truly
global event attracting 200 people from 23 countries and represented a forum
to showcase new products and services. Customers and prospects were given the
chance to see the new product portfolio and give feedback on Cadcentre
strategy.



Business Environment



The changes in working practices taking place within Cadcentre's customer
industries have become the most important influence on the development of the
business.  There are two major trends - both of which are expected to be of
benefit to Cadcentre.



The first is the increasing use of the World Wide Web as a delivery mechanism
and as a potential trading platform.  Many of Cadcentre's products have been
web-enabled for some time; this, together with recent product acquisitions, is
now resulting in significant revenue generation - evidenced by our venture
with Industria Solutions referred to below - and an expansion in the company's
potential marketplace beyond its original core of engineering design software.
The company is preparing to meet an emerging need for hosted applications or
Applications Service Provision (ASP). Remaining products are being made web
compliant and a new web based licence management system will be available this
year. During the first half year studies have been carried out on the ASP
market and the company is working with partners in order to make its products
available via a third party ASP or semi public portal once the technology is
proven.



The second trend is the increasing interest within large engineering and plant
owning companies to outsource all or part of their engineering IT activity to
specialists.  During the period under review, Halliburton Company signed a
services contract for in excess of $1 million - Cadcentre's second major
services contract.



Strategy



Cadcentre's new product and service strategy represents a redefining of the
company, to recognise that our future is in both our established design
software and engineering management software.  Engineering, procurement and
construction are all important to the overall delivery of plant creation
solutions and customers are being increasingly driven by the need for much
shorter cycle times and zero tolerance for errors. Our reputation as a
provider of robust, technologically stable solutions lends credibility to our
broadened mission.



Cadcentre's vision is to extend its technology beyond data creation to provide
management and leveraging of engineering data throughout an asset's lifecycle.
  Our ambition, is to allow Cadcentre to become closely involved with its
customers' enterprise IT infrastructure, integrating its software with
clients' back-office systems  (such as SAP and Oracle) to improve the
efficiency and competitiveness of their critical business processes.



Of course, this strategy is not without challenges. Making the most of new
opportunities in engineering data management and project/materials management,
in concert with users' enterprise IT requirements, will require time, the
development or acquisition of further software products and further increases
in our consulting and services offering.  As such we intend to continue to
expand our service offerings in order to build name recognition in the
marketplace as more than just a 3D supplier and to establish the company as a
consultative solutions provider.


Focus and Vantage



The acquisitions of the VANTAGE and FOCUS products added engineering data
management, materials procurement and project control system software to
Cadcentre's existing design software portfolio.  We are now able to offer our
customers their choice of individual systems or a fully integrated lifecycle
engineering IT suite unrivalled within the industry, together with practical
consultancy and implementation services. This represents the opportunity for
customers to make substantial administrative, construction and purchasing
economies previously only partially available through the use of in-house
products with all their attendant costs and problems.  VANTAGE and FOCUS were
developed and proven by existing Cadcentre customers and consequently the new
products integrated well with our design systems. VANTAGE has been rounded out
by the recent addition of Open Plant, enabling compliance with emerging
industry standards and proficient  interfacing to third party products.



In acquiring this software we took over development and support resource in
the UK amounting to some 30 people. We have subsequently recruited senior
industry specialists in this field and added consultancy expertise in all of
our global business units.



Part of the acquisition plan was to build a portfolio that enables the company
to be a content provider to some of the e-business sites for plant creation
and procurement. Cadcentre's domain experience in this area is unrivalled and
is of great value in this emerging market.



We are actively recruiting further sales consultants and reshaping our
existing sales force towards selling to global clients on a consultancy basis
rather than being driven by the sale of individual products.



E-Business Initiatives



The ability to offer comprehensive industry-specific procurement and project
management software has enabled Cadcentre to secure a major contract within
the e-commerce arena as the supplier of key enabling software for project,
materials and information management.



The business-to-business e-commerce venture with Industria Solutions of
California, signed and announced in October 2000, is potentially very
exciting. Industria has selected Cadcentre's FOCUS as key enabling software
for project and materials management. Industria has agreed an initial licence
fee of $1 million covering most of the FOCUS product suite and further
substantial licence fees are expected to be paid over the next two or three
year period, dependent on the number of companies which agree to use the
integrated software solution.



Industria is a private corporation owned by DuPont, IBM, CMGi and Ventro
Corporation. Major builders and owners of process plant will use its web-based
marketplace to streamline project management and the procurement of
engineering components and equipment.  This is a specialist requirement of the
process industry that cannot be met by simpler component-based e-procurement
systems. Industria has 80 people working on providing plant owners,
engineering contractors and fabricators with the ability to conduct
request-for-quotes on equipment, collaborate on fabrication and manage related
project, materials and engineering information on a global basis via the
Internet.  Multiple users will be able to view models, drawings and documents
simultaneously from anywhere in the world using a standard web browser.



This is a new business area for Cadcentre which underlines the unique
advantages of FOCUS as a tool for managing the complex procurement process for
large-scale industrial plants such as chemical refineries, oil production
platforms or power stations.



None of the Industria revenue impacted the results for the first half, but the
second half revenues will benefit by the $1 million initial fee. In the next
few years it may also prove financially very rewarding from our share of
transaction revenue.


The company has spent considerable time in discussions with substantial
business-to-business (B2B) companies who find our strategic proposition
compelling and unique in this industry.  We are structuring such discussions
with the aim of securing licence fees up front for the supply of software
together with the prospect of sharing in the revenue generated by the B2B
marketplace if successful.



Outlook



The company's new vision has been well received within the marketplace and
progress in its implementation is being achieved whilst maintaining the
company's unbroken record of profit growth. In particular, the ability to
provide web-enabled engineering data management systems is creating a
significant new stimulus for Cadcentre's growth.



The Board is confident that good progress will be maintained through the
remainder of this year - subject to the normal caveat in relation to the
timing of substantial software licence sales. In the longer term, the company
is well placed to benefit considerably from the initiatives of the last two
years.





Richard King
Chairman                                                  7 November 2000


Consolidated Profit and Loss Account
for the six months ended
30 September 2000


                           6 months ended 30 September     Year ended 31 March

                                2000              1999                 2000
                           (unaudited)         (unaudited)        (audited)
                             #'000               #'000                #'000

Turnover                   12,936              10,929             23,889
Cost of sales              (5,233)             (4,640)            (7,882)
Gross profit               7,703               6,289              16,007
Other operating expenses   (5,405)             (4,446)            (11,768)
(net)
Operating profit           2,298               1,843              4,239
Finance income (net)       37                  57                 99
Profit on ordinary         2,335               1,900              4,338
activities before taxation
Tax on profit on ordinary  (724)               (570)              (1,388)
activities
Profit on ordinary         1,611               1,330              2,950
activities after taxation
Dividends paid and         (303)               (298)              (902)
proposed
Profit retained for the    1,308               1,032              2,048
period
Basic earnings per share
                               9.60p           8.00p                17.72p
Diluted earnings per share
                               9.35p           7.94p                17.40p
Dividend per equity share
                               1.80p           1.80p                  5.40p


Consolidated statement of total recognised gains and losses for the six months
ended 30 September 2000

                             6 months ended 30 September    Year ended 31 March

                                 2000              1999               2000
                             (unaudited)       (unaudited)       (audited)
                                #'000             #'000              #'000

Profit for the period        1,611             1,330             2,950
Translation gain (loss)      127               (33)              60
arising on consolidation
                             1,738             1,297             3,010




Consolidated Balance Sheet
as at 30 September 2000

                                   At 30 September               At 31 March

                           2000                1999                 2000
                     (unaudited)         (unaudited)              (audited)
                          #'000               #'000                 #'000

Fixed assets
Software rights           2,903               1,686               3,063
Goodwill                  2,247               2,538               2,381
Tangible assets           3,563               3,151               3,409
                          8,713               7,375               8,853
Current assets
Debtors                   9,679               6,657               7,956
Cash                      2,663               3,484               4,214
                          12,342              10,141              12,170
Creditors
Amounts falling due       (8,396)             (7,728)             (9,946)
within one year
Net current assets        3,946               2,413               2,224
Total assets less current 12,659              9,788               11,077
liabilities

Provisions for            (191)               (66)                (191)
liabilities and charges
Net assets                12,468              9,722               10,886
Capital and reserves
Called-up share capital   1,684               1,662               1,673
Share premium account     7,013               6,833               6,877
Profit and loss account   3,771               1,227               2,336
                          12,468              9,722               10,886



Consolidated Cash Flow
for the six months ended
30 September 2000


                            6 months ended 30 September     Year ended 31 March

                                2000               1999             2000
                          (unaudited)        (unaudited)        (audited)
                               #'000              #'000            #'000

Net cash inflow from         462                2,651              6,388
operating activities
Returns on investments and   37                 57                 99
servicing of finance
Taxation                     (1,016)            (581)              (1,090)
Capital expenditure and      (653)              (2,401)            (4,609)
financial investment
Acquisitions                 -                  (19)               2
Equity dividends paid        (590)              (532)              (832)
Cash outflow before          (1,760)            (825)              (42)
financing
Financing                    140                (17)               34
Decrease in cash in the      (1,620)            (842)              (8)
period



Notes for the six months ended
30 September 2000




1 Analysis of turnover by destination      


                           6 months ended 30        Year ended 31 March
                               September         



                       2000                 1999                   2000

                       #'000                #'000                #'000

United Kingdom         2,037                1,431                4,292
Europe, Middle East    3,901                4,601                8,874
and Africa
Americas               3,998                3,068                6,608
Far East               3,000                1,829                4,115
                       12,936               10,929               23,889



2                Interim ordinary dividend

The proposed interim dividend of 1.80p per ordinary share will be payable on
26 January 2001 to shareholders on the register on 3 January 2001.




3     Earnings per ordinary share     


                                6 months ended 30           Year ended 31
                                    September                      March


                             2000               1999                2000

Profit on ordinary        #1,611,000         #1,330,000         #2,950,000
activities after tax
Ordinary shares of 10p    16,784,862         16,622,000         16,651,512
each in issue
Diluted ordinary shares   17,230,245         16,760,414         16,952,776
of 10p each



Numbers of shares in the table above represent the weighted average numbers of
shares during the periods shown.





4          Comparative figures

             The comparative figures for the financial year ended 31 March
2000 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.



INDEPENDENT REVIEW REPORT TO CADCENTRE GROUP PLC



Introduction

We have been instructed by the company to review the financial information set
out on pages 6 to 9 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
directors are responsible for preparing the interim report in accordance with
the Listing Rules of the Financial Services Authority and applicable United
Kingdom accounting standards.  The Listing Rules 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 in the United Kingdom by the Auditing Practices Board and with our
profession's ethical guidance. A review consists principally of making
enquiries of group 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 30 September 2000.


Arthur Andersen

Chartered Accountants

Betjeman House

104 Hills Road

Cambridge

CB2 1LH


7 November 2000