One thing that never ceases to amaze me is how quickly the electronic product development industry moves. Take a look around the shelves in any consumer electronics store and you'll see products that we were probably only dreaming about a few short years ago.
Perhaps more impressive than the products themselves is how electronics designers cope with the constant increase in complexity necessary to create ever more intelligent devices. It's clear that they must always be on the lookout for better and smarter ways of doing design, and new technologies that will allow faster and more efficient development of products.
It's also clear that they rely on design software companies to supply them with design systems that keep pace with the changes in the industry and support new design technologies and methodologies as they emerge. One of Altium's strengths over the years has been its commitment to making the most advanced design technology available to the mainstream of electronics designers and developers in order to allow them to stay competitive in a rapidly evolving environment.
Shifting the focus
Over the last five years Altium has undertaken an intensive R&D effort to put it at the forefront of design technology and address the needs of what is now emerging as the 'next big thing' in electronic product development – the use of high-capacity programmable devices as a platform on which to build complete electronic systems.
This last financial year has seen us deliver and package into a single product brand the technology specifically aimed at this emerging market. Altium Designer, released in May 2005, represents a major leap forward in addressing the use of programmable devices in electronics design and lets the
mainstream of designers create more intelligent digital systems in a much shorter time frame than
previously possible. In technology terms, we are leading the industry in this area. The challenge going
forward is to capitalise on this strong competitive position.
With the release of Altium Designer the Company has entered a new phase in its ongoing growth strategy and shifted its focus towards translating the investment it has made in technology and R&D over the last few years into solid financial returns.
Financial results
This shift in focus has seen a significant increase in the intensity of marketing and PR efforts around the release of Altium Designer. As a result, the second half of the 2004/2005 financial year showed a
strengthening of the Company's financial performance with a profit after tax of AU$0.4 million. This was offset, however, by a slow first half, resulting in a full year total revenue of AU$40 million and a reported loss of AU$1.1 million overall. Cash flow over the full financial year was positive.
Sales booked for the full year showed an increase of 4% over the previous financial year in local currency terms but were down 1% on the previous year in Australian dollars.
While the full year result fell short of the Board's expectations, strengthening sales in the latter half of the financial year and the successful launch of the Altium Designer system, point to continuing
improvements in the Company's results moving into the future.
We expect the positive trend seen in the latter half of the financial year to continue as the Company ramps up further marketing initiatives behind Altium Designer. The Company has rolled out a new and more focused strategic selling methodology across its global sales organization. This is expected to increase the sales activity and performance, leading to a higher degree of successful closure on all generated sales opportunities moving forward.
Changes to the Board of Directors and CEO position
This last year has seen several changes to the makeup of Altium's Board of Directors. These changes have been designed to enhance the Board's independence and ability to oversee the performance of the Company.
Dave Warren relinquished his Executive role in the Company to take up a Non-Executive Director position, and Darren Charles stepped down from his position on the Board, but remains in his position as Chief Financial Officer for the Company.
Bruce Edwards and Stephen Duvall have both left the Board, and I would like to take this opportunity to thank them for their valuable contributions. I believe that these structural changes to the Board, which see a higher proportion of Non-Executive Directors, will allow it to be more responsive to the needs of the Company.
Over the last few years Nick Martin and Kayvan Oboudiyat have acted in the role of Joint CEOs. This structure has allowed Nick to directly manage the intense development effort that has culminated in
our revolutionary Altium Designer system, while sharing overall management of the Company with Kayvan.
With the shift in focus towards capitalising on the significant opportunities presented by the unique technology position we have developed, Nick Martin has taken on the position of sole CEO. Kayvan Oboudiyat has moved to the position of Executive Vice Chairman, concentrating his energy on developing business opportunities, particularly the vast potential for Altium within Asian markets. In July of this year, the Company completed the process of registering Altium Information Technology (Shanghai) Co Ltd, allowing the company for the first time to sell directly into the fast-growing Chinese market.
Focusing on the future
The changes made at the Board and Executive levels this last year have been part of a wider global push to align the entire Company behind its newly-developed technology, and to sell its vision of the future of electronics product development to as many engineers, designers and developers as possible. The early signs are that the Company's message is being well received with both customers and the wider electronics industry. The release of Altium Designer has coincided with an upswell of interest globally in the potential of 'soft' system design – the precise market the technology is designed to address.
While much hard work has already been done, it is recognised that there is still a lot more to do to turn the Company's strong technology base into an equally strong market position. I am confident that the
measures taken over the last year to streamline the structure of both the Company and Board will lead to improvements in financial performance in the short term. In the longer term, the Company is now perfectly poised to fully-capitalise on the opportunities that will present themselves over the next few years as mainstream electronics designers begin to move their systems onto programmable devices in increasing numbers.
On behalf of the Board I would like to thank our shareholders for their continued loyalty. Our thanks also go to all of our Altium employees worldwide, whose continued hard work and dedication have sustained our position as a global leader in innovative mainstream solutions for electronic design.
Both the Board and I look towards the future with heightened optimism.
Carl J Rooke,
Chairman
