Sydney, Australia, August 29, 2002 — Citect Corp. Ltd., a provider of industrial automation and information management solutions, reported an excellent result for the half year to 30 June 2002, exceeding prior guidance.
Group revenues of $30.0 million in the period were 25% higher than the prior comparable period (pcp). Earnings before tax (EBIT) increased by 49% to $6.2 million, while net profit after tax was $4.3 million, a 30% increase.
“We performed well during the half, achieving solid revenue and profit growth in all geographies and all business segments by successfully executing the company’s “Growth by Design” strategy”, said Wayne Morris, Managing Director and CEO of Citect. “We grew software license revenue, significantly improved our professional services net margins, and exercised excellent expense control while continuing to invest heavily in new technology development.”
Craig Resnick, Director of Research for ARC Advisory Group, Dedham MA, USA, stated “Although the industrial automation market continues to be turbulent globally, Citect’s “Growth by Design” strategy demonstrates that it is still possible for industrial automation solution suppliers to weather the storm and continue to grow profitably in spite of these conditions.
Citect has succeeded by offering manufacturers a portfolio of solutions that provide them with a lower total cost of ownership, an increased return on assets, a fast return on investment, and methods to measure and document those metrics.”
Geographic Performance Australia/Pacific/Africa
The revenues for this geography grew by 31% to $13.7 million, and the result before tax was $5.8 million, an increase of 28% over the first half of 2001. The result includes the newly acquired South African operations. This acquisition was effective 1 January 2002 and major projects with the De Beers Group and Kumba Resources have contributed to the South African operations meeting the disclosed expectation of adding greater than 10 % in revenues and profits from 2001.
In Australia, the change in field organisation to a solution orientation including software and professional services has seen software license revenues increase. Americas America’s revenue grew by 29% to $6.6 million, a very good result given the unsettled market conditions in the wake of the 11th September events. In these conditions Americas achieved a result before tax of $1.5 million, an increase of 223%.
Citect was awarded the second phase of the natural gas pipeline project from PG&E Gas Transmission Northwest Corporation and was also the software chosen for an Xcel Energy pipeline project in North America. This further validates the focus Citect is placing on pipelines as a strategic industry.
Revenue in Europe grew to $5.1 million, a 5% increase over the prior period. Profit before tax grew by 3% to $3.9 million.
In very competitive conditions, Europe continued to win contracts in strategic industries such as water and facilities management and also gained further penetration in the OEM market. The acquisition of the previous Citect distributor in Germany was completed on 1st July and this will facilitate a more focused growth program in Europe’s largest market through better System integrator, reseller and OEM channels.
Asian revenues continued to grow strongly by 94% to reach $4.5 million. Profit before tax for the geography grew by 33% to be $1.0 million. Major project wins in China and encouraging growth in Korea and parts of South East Asia supported this result.
As announced previously, Citect has entered into a Joint Venture with Chongqing Yuanda in Western China providing further growth opportunities as China seeks to further open up and develop the western region of the country. Divisional Performance Software Software license revenues grew by 21% to $15.6 million. Citect HMI and SCADA software achieved 20% growth. Plant2Business revenues continued to build posting 89% growth over the first half of 2001.
Services revenues increased 35% to $14.4 million. While Professional Services revenues increased by 39%, with South Africa contributing some of this growth, an encouraging sign was the improvement in margins due to better quality management, audit and training programs.
Software maintenance support increased by 17%. Support programs are being revised worldwide to improve this growth rate. Training revenues decreased by 7%, and increased regional focus and marketing programs will seek to increase this revenue stream.
The technology division continues to focus on delivering the horizontal products and developing the next generation capabilities to be delivered as part of Plant2Business and Citect. Citect 5.41, CitectHMI and Plant2Business 2.1 have all been delivered this half-year. We have also initiated an aggressive program to improve the quality of our products and after sales support.
During the first half, the technology division ramped development on the Metamorphic technologies, due for initial release with Plant2Business 3.0 in late third quarter 2002. Components of the new technology have already been utilized within CitectSCADA Facilities and the Downtime Monitoring solution developed by the Applications Engineering division.
Applications Engineering division
The establishment of the Applications Engineering group has enabled (a) more efficient development of application products/solutions, reducing significantly our time to market and (b) allowed the technology division to focus on the core technology development that underpins all products.
During the half, this group delivered the Downtime Monitoring solution developed with a key customer and also developed a key vertical industry product, CitectSCADA Facilities that was demonstrated at Hanover in April and released in July. Dividend With the Company’s sights set on a clear growth strategy, rewards are expected to be delivered to shareholders primarily in the form of capital growth. The company is also announcing the resumption of dividend payments with an interim dividend of 2.5 cents per share fully franked, payable in September.
The outlook for full year 2002 remains strong with our operations continuing to progress. Whilst the third quarter is a traditionally slow quarter particularly in the Northern Hemisphere, we are still looking for a solid second half performance.
Although the market remains highly competitive and relatively nervous, particularly in North America, Citect is raising its full year guidance. Revenues for the full year are now expected to grow by more than 20% and profit growth is expect to be more than 30%.
Citect is a worldwide provider of industrial automation and information management. Its Citect and Plant2Business software are complemented by professional services, customer support and training.
These solutions are enhanced by strong partner programs and are sold in numerous industries, including water and waste water, facilities monitoring, gas pipelines, mining, dairy, food processing, pharmaceutical, and power distribution. Citect is headquartered in Sydney Australia, has offices in Australia, USA, Europe, China and Africa, and its products are distributed in more than 40 countries worldwide.