1999 Annual Report - Altium

Japan
Protel Sales & Support Offices
Australasia
With the addition of the MicroCode business
in September, Protel was able to restructure
its North American operations in to two
main centres, an R&D centre located in
Orem and a new Sales and Support Centre
located in Provo, both in Utah. The
operations of the California based Sales and
Support centre was merged with the Provo
centre to create one main centre supporting
all of North America. The location in Utah
enables the company to better support East
Coast time zones and reduces the costs of
operating the business from the high cost
Silicon Valley area. Abnormal costs
associated with closure of Protel's
Californian office have been identified in the
financial report.
Investments for Future Performance
During the year the company undertook a
number of strategic technology acquisitions
to compliment its in-house developed
intellectual property. Total value of
intellectual property acquired was approx
$7m with an additional $750,000 invested
in integration of this technology.
Consideration for these acquisitions
included cash, deferred settlement and
convertible debt. Further details can be
found in note 16 to the accounts.
In addition to the above technology
investments, the company expanded
operations in Utah to support growth of sales
in the North American market and to expand
research and development (R&D) capability.
Marketing activities are focused on building
brand awareness through increased
advertising expenditure and direct mail
campaigns. During the period the company
conducted 8 direct mail campaigns
compared to 3 in the previous corresponding
period. These campaigns tailor specific
offers to customers' dependant upon their
current model of Protel software tool or
previous upgrading activity.
North America
Review of Financial Condition
Capital Structure
During the year the company raised funds
through an issue of redeemable preference
shares. This funding was raised to assist
in financing technology purchases. The
preference shares converted to ordinary
shares on allotment of the company's shares
on its listing on the Australian Stock
Exchange (ASX) subsequent to year end.
Additional consideration for technology
acquisitions was made through the issue of
two convertible notes. Details in relation to
the conversion of these notes can be found
in note 16 to the financial statements.
Subsequent to balance date, the company
issued a prospectus for the sale of new
Ordinary Shares, Vendor Shares and a
proposed listing on the ASX. Details of this
offer are contained in note 29 to the
financial statements.
Treasury Policy
The company has not used hedging tools to
manage its foreign exchange exposure. To
date, the directors consider that natural
hedges have provided adequate coverage of
exchange risk.
Cash flows from Operations
The cash position of the company continues
to improve as a result of operational
activities. Surplus funds have been invested
in technology acquisitions and further
expansion of the operations. The cash
position will continue to strengthen as future
acquisitions are funded through funds raised
from the company listing.
Corporate Governance
Corporate governance information is
included on page 12 of the annual report.
Statement of Compliance
The above report is based on the guidelines
in The Group of 100 Incorporated
publication: Guide to Review of
Operations and Financial Condition.
$ million
... the company
expanded operations
in Utah to support
growth of sales in
the North American
market and to
expand research
and development
(R&D) capability.
25
20
15
10
5
North
America
41%
ANNUAL REPORT
1997 1998 1999
Asia
5%
Other 1%
Revenue Revenue
Australia
9%
Europe 27%
Sales by Region
Japan
17%
7