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News Release from: Vero International Group
Edited by the Manufacturingtalk Editorial
Team on 10 April 2007
2006 results for CAD/CAM software
supplier
VI Group, international suppliers of CAD/CAM software, has announced preliminary results for the year to 31 December 2006, another year of revenue growth and increased earnings.
VI Group, international suppliers of CAD/CAM software, has announced preliminary results for the year to 31 December 2006, another year of revenue growth and increased earnings Financial and business highlights: * EBITDA (earnings before interest, tax, depreciation and amortization) increased by 32% to GBP1.3m (2005: GBP1.0m) * Revenue increased 8% to GBP11 million (2005: GBP10.2m) * Profit before tax rose 57% to GBP0.9 million (2005: GBP0.6m) * Basic and fully diluted earnings per share of 1.51p (2005: 0.99p), an increase of 52% * Successful completion of two acquisitions, including VI's largest to date * Expanded sales and support operations in Japan, China, North America, France and the UK * Increased investment in product development, giving greater capacity to develop new products and improving the core software Stephen Palframan, Chairman, commented: "In another busy year the Company has further increased revenues and earnings per share while following its strategy of expanding the product line
This article was originally published on Manufacturingtalk on 18 Nov 2005 at 8.00am (UK)
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These products will gradually be made available to the distribution network during 2007 and should provide further impetus for growth.
Although 2006 was active in terms of acquisitions it is unlikely to mark the end of our interest in expanding yet further the distribution channels as opportunities become available.
Therefore, the Group can look forward to an exciting year of expansion in a range of new sectors and to the consolidation of current gains." "I am pleased to present VI Group's financial results for the year ended 31st December 2006.
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VI has delivered further improvements in revenues and profitability and the Group's growth strategy has continued, making two significant acquisitions during the year.
Group turnover increased by eight percent to GBP11 million (2005: GBP10.2m), a result of organic growth and the effect of acquisitions made during the year.
We are pleased that the growth was achieved against a background of lower exchange rates for both the US Dollar and the Japanese Yen.
A significant proportion of sales is denominated in these currencies, therefore the changes to these exchange rates impacted on our reported revenues.
In constant currency terms sales growth would have been 11%.
EBITDA (earnings before interest, tax, depreciation and amortization) increased by 32% to GBP1.3 million (2005: GBP1.0m) and profit before tax rose 57% to GBP0.9 million (2005: GBP0.6m).
Earnings per share increased by 52% to 1.51p (2005: 0.99p).
The two acquisitions announced during 2006 have provided us with new product ranges that complement our existing products and additional sales outlets, notably in Japan and Italy.
We are delighted that both acquisitions have already contributed positively to this year's sales and profit figures.
The acquisition of an Italian company Plastics and Computer International Srl was announced in June.
The company develops and licenses software for the analysis and simulation of the flow of plastic materials within injection moulds.
This sophisticated software allows its users to model accurately how different materials will perform inside the moulds and dies.
It represents a new approach in the design process by allowing design or material problems to be fully investigated before manufacture, providing significant time and cost savings for the customer.
As plastic injection molding is already a significant sales sector for our current product lines this will facilitate the provision of both products and consulting services to the existing customer base.
Camtek , a UK based software developer, was acquired more recently in November 2006, and is VI's largest acquisition to date.
The purchase further extends our sales to other companies embedding VI software within their own products and gives us entry into the production sector.
Camtek is located conveniently close to the Group's current head office and provides further opportunity to integrate a substantial number of experienced developers within the VI teams.
Results from Asia were again strong with particularly good growth in Japan resulting from a recovery in the manufacturing sector and from Japanese companies being among the first of our customer base to benefit from the technological advantages of new VI products.
Elsewhere sales in North America grew well.
The SMIRTware acquisition from 2005 produced a number of new products that were readily adopted by Ford and Daimler Chrysler as part of their respective efficiency drives.
In Europe sales in the UK, France and Germany grew strongly for both the new customer and existing user profiles.
Italy remains our largest European market but suffered from the prevailing economic conditions in 2006.
We believe that Eastern Europe remains a potential growth market but lacks much of the infrastructure necessary for its dynamic development.
Staff numbers have also grown during the year and our largely stable workforce has been behind much of the success in producing, improving, selling and supporting the broader range of products.
Their enthusiasm and loyalty remain cornerstones of our ability to compete around the world with far larger companies.
These results are the first to be produced using International Financial Reporting Standards, a year ahead of the mandatory requirement for AIM listed companies." In another busy year the Company has further increased revenues and earnings per share while following its strategy of expanding the product line.
These new products will gradually be made available to the distribution network during 2007 and should provide further impetus for growth.
Although 2006 was active in terms of acquisitions it is unlikely to mark the end of our interest in expanding yet further the distribution channels as opportunities become available.
Therefore, the Group can look forward to an exciting year of expansion in a range of new sectors and to the consolidation of current gains.
The directors set out in this section their analysis of business.
We do so voluntarily and do not seek to comply in full with the Accounting Standard Board's Statement "Operating and Financial Review" issued in January 2003.
These are the Group's first annual consolidated financial statements which have been prepared using IFRS as adopted by the European Union and all comparatives have been restated accordingly.
In recent years the Group has focused on improving bottom line profitability and cash generation.
This year we have been able to capitalize on this and have made two further acquisitions.
We have now made a total of eight acquisitions since floating on AIM and are pleased to report another year of improvement with a 57% rise in pre tax profits to GBP942,000.
The Group reports its 18th consecutive year of increasing revenue with an eight percent increase to GBP11.0 million from GBP10.2m in 2005.
The Group introduced new software products during the year intended for the footwear, large stamping dies, plastic injection, laser cutting, wire erosion, reverse engineering, automotive and electronic sectors during 2006.
All of the products are highly specific for each application and accordingly provide significant design and production advantages for each individual sector.
Sales and support operations in Japan, China, North America, France and the UK were all expanded in 2006 following the Company's growth in each of these markets.
Increased development resources also reflected the Group strategy to expand the product range and further enhance the principal software products.
Software maintenance revenues have continued to climb reflecting the quality of customer support as well as the eagerness of customers to maintain their productivity at the highest levels.
New sales to existing customers accounted for 63% of revenues as they expanded the VI solutions within their own organisations.
Continuing investment in our in house development and the higher profitability in some of the newer products led to further gains in our gross margin from GBP9.2 million or 90% of sales in 2005 to GBP10.2 million or 92% of sales in 2006.
The acquisition of Plastics and Computer was completed at the start of September 2006 following an initial commercial collaboration over the previous year.
The plastic flow analysis software provided by the company over its long history has now been integrated within the VISI-Series range of products and is being commercialized in all countries under the brand name 'VISI-Flow'.
In November, the Company bought Camtek ., based in Malvern, for GBP2.8 million.
The initial results have been encouraging with a contribution of GBP0.3 million to revenues and nearly GBP0.1 million to the Group operating profit for the two month period since it was acquired.
Cutting edge products providing the leading solutions for controlling wire erosion and multi axis laser cutting machines are being rolled out throughout the group.
The integration of Camtek products and staff has proceeded smoothly with benefits in both product breadth and distribution being utilised as early as possible.
A number of new dealers and OEM customers were started in 2006 and in particular in North America where the Group is growing in influence.
VI Group will concentrate on integrating and selling the newly acquired products through its own distribution network in 2007 and maximizing the genuine cross selling opportunities that exist.
We remain focused on cost control.
Both selling and general and administration expenses grew at a lower rate than turnover (seven percent and five percent respectively).
This was despite the additional costs associated with the two acquisitions this year and a full year of costs from SMIRTware which was acquired in August 2005.
We have made additional investment in our product development activities and the acquisitions made during the year have provided the Group with a greater capacity to develop new products while improving the core software offering.
The rate of delivery of new productivity gains to new and existing customers is increasingly being recognised as the key target for the Company's software development effort.
Product development expenditure of GBP603,000 has been capitalized this year (2005: GBP333,000) as required by International Financial Reporting Standards.
This reflects investment in development which will be included in future releases of our products.
Further investment planned for 2007 includes specific developments for our growing number of larger customers in the electronics and automotive industries.
The Company made earnings before interest, tax, depreciation and amortization (EBITDA) of GBP1.3 million, an increase of 32% on the previous year (2005: GBP1.0m).
It also recorded a pre-tax profit of GBP942,000 (2005: GBP601,000).
The Company incurred a tax charge of GBP380,000 and a post tax profit of GBP562,000 (2005: GBP370,000).
Basic and fully diluted earnings per share were 1.51p (2005: 0.99p) an increase of 52%.
Cash inflow from operations was GBP0.8 million compared to an inflow of GBP0.7 million in 2005.
Cash balances at the year end were GBP1.0 million (2005: GBP1.1m), with GBP0.6 million of short-term borrowings (2005: GBP0.4m), giving a net funds figure of GBP0.4 million (2005: GBP0.7m).
Net debt increased to GBP2.3 million from GBP0.1 million largely because of the financing of the Camtek acquisition.
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