I am pleased to be able to directly share with you Altium’s 2005/06 financial performance highlights – a year which saw us deliver solid sales increases in key markets, a return to profitability, a strengthened balance sheet and a dividend return to shareholders.

The main highlights of our results are:

• 14% increase in revenues to $45.6 million;
• four fold increase in EBITDA to $7.0 million;
• profit after tax of $1.4 million, and
• dividend of 4 cents per share, unfranked.

The key to financial performance for any high gross margin business like ours is driving improved revenues. The main reasons behind this year’s success have been the delivery of our new product – Altium Designer 6 – and a new focus within our sales and marketing operations.

After covering our operating costs which include cost of sales, salaries and wages, marketing, rent and other related items, we have been able to generate EBITDA of $7.0 million. This represents a four fold increase over the $1.7 million EBITDA earned in 2004/05.

In addition to the operating costs outlined above, our profit is impacted by depreciation and amortisation charges. Whilst this affects our bottom line, it does not impact our cash generated from operations. Depreciation and amortisation of property, plant and equipment was $0.9 million.

The Accounting Standards require that we write down the carrying value of our intangible assets, all of which we continue to make significant investment in through our ongoing research and development activity. The extent to which we have written down these intangibles in the past year was $5.0 million.

After these items, and the tax benefit of $0.4 million which included the recognition of tax assets that we had not previously brought to account, our reported profit was $1.4 million compared to a loss of $1.6 million last year.

The company’s cash position was up 77% to $6.4 million at the end of June 2006 and increased by a further 25% to $8.0 million* by the middle of August.

Our revenues come from three main product brands: Altium Designer, TASKING and P-CAD, and from a small consulting team. The revenue growth achieved this year resulted from increasing sales of Altium Designer, while our P-CAD and TASKING revenues were broadly in line with last year.

During the past two years, revenues from our consulting services declined as we concluded a multi-year consulting project and realigned the people in this part of our business towards more strategic software development projects. Consulting revenues now make up less than 3% of our annual revenue.

Over the past twelve months we have been working to further develop our sales organisation with an initial focus on the US, our largest market. The results of this effort are evidenced by our 32% annual sales growth, with growth over each previous period accelerating as the year went on. The US market currently represents 46% of our annual sales.

Strong growth is also evident in China – up 52% for the 2005/06 year – and the broader South East Asian market, which produced overall sales growth of 25%. Europe had growth of 14%, Australia had 5% and there was a fall in Japan and with our consulting business as mentioned previously.

A further indicator of improved strength is evident in our net tangible asset position. Despite the requirement to write down our intangible assets and the resulting impact on reported profits, our underlying net tangible asset position continues to improve in line with our EBITDA. As the accompanying chart shows, net tangible assets have increased from $6.7 million two years ago to over $16.1 million as at 30 June 2006. Also, shareholders should note that the company does not carry any debt.

Given the results achieved this year, the board has had the opportunity to consider its capital management strategies for surplus funds generated. Altium has had a policy of paying dividends to shareholders as a component of the returns that the company provides to them.

This year, with EBITDA of $7.0 million, and without having tax payable due to accumulated tax losses, we are able to pay an unfranked dividend of 4 cents per share. In cash terms, this equates to approx $3.5 million. The remainder of our cash will be retained to help finance ongoing operations and growth opportunities.