Last checked at 27 Apr 2009 07:00
CONCURRENT TECHNOLOGIES PLC
Preliminary results for the year ended 31 December 2008
Concurrent Technologies Plc, ("Concurrent" or the "Company") which manufactures high-end embedded computer products for critical applications in the defence, transportation, communications and industrial markets, announces preliminary results for the year to 31 December 2008.
Financial Highlights
* Profit before tax of £2,951,603 an increase of 21% (2007: £2,432,973) * Turnover of £12,619,631 an increase of 19% (2007: £10,565,278) * both turnover and profits stronger in second half of year * Gross margins for the year strengthened to 53.0% up from 49.4% last year * Strong balance sheet: cash of £4.99m with no borrowings * EPS increased to 3.26 pence (2007: 2.62p) * Total dividend of 1.30 pence per share for the year
Operational Highlights
* Released 9 new products during the year * Increased requirement for Concurrent's 3U-sized boards - more attractive to critical military applications * Particularly strong demand from defence sector * Continued demand from telecommunications and industrial sector despite economic conditions * Product design and development key to further expansion - engineering centre in Bangalore fully operational and Concurrent continuing to recruit there and in the UK * Post period end: release of most sophisticated product to date, based on the latest Intel® quad-core processor technology
Michael Collins, Chairman, commented:
"Trading in the first quarter of 2009 has proceeded in line with our expectations. Clearly the declining world economic activity is having an effect on companies in the telecommunications and industrial sectors, but we are still experiencing reasonable order intake from these sectors."
"In the defence field, activity has never been higher for us. Moreover, US Government plans to cut back on some defence projects are unlikely to impact us as the projects which appear to be under most threat, such as the F-22 fighter, are not those where we have a major interest. Very strong interest continues in our products for projects for electronic, aerial and battlefield surveillance. Sales growth occurring this year is likely to be more modest than in 2008, but at this stage we expect our financial performance to be satisfactory. Our existing order book and immediate sales prospects give us confidence for the remainder of this year, and, so far as the future beyond that is concerned, we believe there is an abundance of opportunity, particularly in the defence market in the USA."
"We have announced some important new product launches during the past 12 months and expect that the continuing release of even more new products based on the latest multi-core Intel® processors should ensure that we are in an excellent position to take advantage of sales opportunities as they arise."
27 April 2009Enquiries:Concurrent Technologies Plc 01206 752 626 Glen Fawcett, Managing Director Haggie Financial LLP 020 7417 8989 Nicholas Nelson/Kathy Boate Nominated Adviser Brewin Dolphin Investment Banking 0845 213 4726 Neil Baldwin CONCURRENT TECHNOLOGIES PLCCHAIRMAN'S STATEMENTBusiness Summary
We design, build and supply high-end embedded computer products for the defence, telecommunication, aerospace, transportation, scientific and industrial markets. These high performance products are based on Intel® long life cycle components, and cover a range of central processing unit ("CPU") boards and computer systems, which include single and dual processor boards, many using dual-core processors and more recently, quad-core processors. Designed for the 3U and 6U CompactPCI®, VME, AMC (Advanced Mezzanine Card) and Multibus II open architecture standards, a common feature of our products is the low level of electrical power required for their high performance capabilities.
Our products deliver very high levels of reliability with substantial processing power, making them ideal for use in projects ranging from high-performance military communications systems to commercial industrial control units. Furthermore we develop rugged versions of many of our products for use in harsh and wide temperature environments, making them very appealing for a variety of demanding applications. These long life-cycle boards are batch produced to highly detailed specifications, and the vast majority of these are made in-house.
In addition to hardware design capability, our engineering teams undertake a significant amount of software and firmware development to provide interoperability between products, allowing customers to transition smoothly when new updates or designs are available. In this way we continue to see strong customer loyalty and long term relationships, as well as new sales following product launches featuring performance upgrades. We also generate software for both on-board and production test purposes, while also providing support for leading embedded and real-time operating systems.
Financial Summary
We are pleased to report a profit before tax for 2008 of £2,951,603 (2007: £ 2,432,973), an increase of 21% over the previous year. Earnings per share for the period increased to 3.26p (2007: 2.62p). In the second half of the year, profit before tax was £1,738,069 an increase of 43% over the first half of 2008 (H1 2008: £1,213,534). This result was achieved on sales of £12,619,631, an increase of 19% compared with 2007 (2007: £10,565,278). Sales in the second half of 2008 also improved, with turnover of £7,138,830 compared with £ 5,480,801 in the first half.
Gross margins for the year strengthened again to 53.0% up from 49.4% last year, resulting partly from a strong US dollar and partly from increased sales of our high margin Multibus II products during the period. We do not, however, expect a continuation of this high level of Multibus II sales in the future as this technology has been superseded by newer and superior bus architectures, which we continue to focus on.
We ended the year with cash and cash equivalents of £4.99m (2007: £4.80m) and no borrowings. It is encouraging that this increased cash balance was during a period of continuing increases in product development expenditure to £2,031,970 up from £1,522,073 in 2007.
We continue to have a good diversity of customers, encompassing large blue chip companies across multiple sectors, with the stable defence market being the biggest contributor to our turnover.
Review of Operations
During 2008 the Company continued to market its products primarily to the defence and telecommunication industries, where innovative products continue to have a high level of demand. In addition to the launch of new processor boards, we continued to introduce boards which use multi-channel switches operating at gigabit data transfer rates that can be used in high-speed switched fabric VME and CompactPCI® systems. With slight variations in operating capacities and format, these products address many different customer needs.
In 2008 we released 9 new products, including more boards designed according to the 3U CompactPCI® standard, which is experiencing increased demand. 3U CompactPCI® products are smaller than our traditional 6U CompactPCI® products and are becoming particularly attractive to defence applications. This is due to our ability to put a large amount of functionality on a very small board which can be ruggedised and specified for use in harsh environments. Included among the 3U boards released recently is one using the latest Intel® very low power Atomâ„¢ processor. This type of board in commercial form is widely used in applications within industrial control. In addition, we continued to extend our family of single slot VME single board computers as well as introducing more high performance 6U CompactPCI® boards.
Post the financial year end, in April 2009 we released our most sophisticated product to date, which is based on the latest Intel quad-core processor technology. This quad-core product with its substantial processing capability is well suited for use within the telecommunications, defence and homeland security market sectors.
All of the products released in 2008 enable the Company to offer boards which provide enhanced processing capabilities without a significant increase in power consumption - an important attribute for the end users. Low power consumption also leads to higher reliability, which is a characteristic demanded by most users of embedded computer products. The boards offer high performance solutions that continue to attract new customers while encouraging upgrades from current clients keen to take advantage of the improved functionalities.
Future Plans
Although we maintain an active policy of exploring value enhancing acquisition opportunities as they arise, this is not our top priority at the moment. Our current emphasis is on internal organic growth where we continue to see many opportunities to grow the business into new market areas without taking unacceptable risk. At the same time we will continue to pursue new sales in our existing markets.
We strongly believe that the key to our future success is continuing to expand our range of products, with a particular focus on the CompactPCI® bus architecture, including the newer smaller sized 3U version, together with the VME and AMC architectures. Our business aim will be to design more products for complex, high technology, low to medium volume and high margin applications, along with producing versions targeted for use in harsh environments, including military applications.
Even though, like most other businesses, maintaining and growing sales in a contracting world economy is a challenge, an even bigger challenge for us is to expand our engineering resources to keep up with sales demand. Our priority continues to be the swift expansion of our engineering capability both here and abroad. Thus we continue with our policy of recruiting design engineers in the UK and also in India where we have now built a significant design capability. Our operation in Bangalore, India gives us direct access to a large pool of talent, which will supplement our engineering operations in the UK. The design facility in Bangalore is now fully operational (16 employees at the end of 2008) and has already produced several key designs.
The Company has used its authority in 2008 to buy back its own shares and the Directors will continue to do this when they consider it appropriate.
Dividend
The Board will recommend a final dividend of 0.85 pence per share (2007: 0.80 pence) which when added to the interim dividend of 0.45 pence per share will make a total of 1.30 pence per share for the year (2007: 1.20 pence). The total cost of this final dividend will amount to £608,422. The ex-dividend date for the final dividend is 27 May 2009, the record date is 29 May 2009 and the payment date is 15 June 2009.
Outlook
Trading in the first quarter of 2009 has proceeded in line with our expectations. Clearly the declining world economic activity is having an effect on companies in the telecommunications and industrial sectors, but we are still experiencing reasonable order intake from these sectors.
In the defence field, activity has never been higher for us. Moreover, US Government plans to cut back on some defence projects are unlikely to impact us as the projects which appear to be under most threat, such as the F-22 fighter, are not those where we have a major interest. Very strong interest continues in our products for projects for electronic, aerial and battlefield surveillance. Sales growth occurring this year is likely to be more modest than in 2008, but at this stage we expect our financial performance to be satisfactory. Our existing order book and immediate sales prospects give us confidence for the remainder of this year, and, so far as the future beyond that is concerned, we believe there is an abundance of opportunity, particularly in the defence market in the USA.
Business growth is determined by our ability to convert this abundance of opportunity into revenue, which in turn depends upon our ability to grow our engineering team quickly enough to satisfy customer demand. Our facility in Bangalore, India has successfully addressed this issue. Investment in engineering development was increased by 58% in 2008 over 2007, and we are investing even more in 2009. We see this as a very good time to invest in our core business in order to ensure a substantial increase in the product range we will be offering when economic conditions improve.
We have announced some important new product launches during the past 12 months and expect that the continuing release of even more new products based on the latest multi-core Intel® processors should ensure that we are in an excellent position to take advantage of sales opportunities as they arise.
Corporate Governance
As an AIM listed company Concurrent Technologies Plc is not obliged to comply with the Combined Code on Corporate Governance. We do however acknowledge the overall importance of the guidelines and apply as many of the principles therein as are appropriate to a company of our size and nature.
Annual General Meeting
The Annual General Meeting this year will be held on 8 June 2009.
Michael CollinsChairman24 April 2009
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CONCURRENT TECHNOLOGIES PLC
Consolidated Income Statement
Year to Year to 31 December 31 December 2008 2007 CONTINUING OPERATIONS £ £ Revenue 12,619,631 10,565,278 Cost of sales 5,933,965 5,346,961 Gross profit 6,685,666 5,218,317 Net operating expenses 3,917,427 2,986,864 Group operating profit 2,768,239 2,231,453 Finance income 183,364 201,520 Profit before tax 2,951,603 2,432,973 Tax 616,531 541,919 Profit for the period 2,335,072 1,891,054 Attributable to: Equity holders of the parent 2,335,072 1,891,054 Basic earnings per share 3.26p 2.62p Diluted earnings per share 3.24p 2.60pCONCURRENT TECHNOLOGIES PLCConsolidated Balance Sheet 31 December 31 December 2008 2007 £ £ ASSETS Non-current assets Property, plant and equipment 621,798 468,074 Intangible assets 1,948,934 1,209,480 Deferred tax assets 114,585 89,698 2,685,317 1,767,252 Current assets Inventories 1,413,816 1,097,133 Trade and other receivables 3,419,443 2,104,733 Cash and cash equivalents 4,994,266 4,797,233 9,827,525 7,999,099 Total assets 12,512,842 9,766,351 LIABILITIES Non-current liabilities Deferred tax liabilities 579,930 331,371 Long term provisions 35,767 26,243 615,697 357,614 Current liabilities Trade and other payables 1,831,013 1,516,090 Short term provisions 28,992 34,390 Current tax liabilities 348,180 103,957 2,208,185 1,654,437 Total liabilities 2,823,882 2,012,051 Net assets 9,688,960 7,754,300 EQUITY Capital and reserves Share capital 727,000 727,000 Share premium account 3,405,817 3,405,817 Capital redemption reserve 256,976 256,976 Cumulative translation reserve 354,549 (182,972) Profit and loss account 4,944,618 3,547,479 Equity attributable to equity 9,688,960 7,754,300holders of the parent Total equity 9,688,960 7,754,300CONCURRENT TECHNOLOGIES PLCConsolidated Cash Flow Statement Year to Year to 31 December 31 December 2008 2007 £ £ Cash flows from operating activities Profit before tax for the period 2,951,603 2,432,973 Adjustments for: Finance income (183,364) (201,520) Depreciation 163,905 123,508 Amortisation 213,449 64,443 Impairment loss 331,481 - Share-based payments 18,085 15,597 Exchange differences 187,268 (36,129)
(Increase) / decrease in inventories (316,683) 182,332
(Increase) in trade and other (1,314,710) (57,279)receivables
Increase/(decrease) in trade and other 319,049 (112,307) payables
Cash generated from operations 2,370,083 2,411,618 Tax paid (166,642) (407,426) Net cash generated from operating 2,203,411 2,004,192activities Cash flows from investing activities Interest received 183,364 201,520 Purchases of property, plant and (312,460) (124,376)equipment (PPE) Purchases of intangible assets (1,278,828) (1,142,690)
Net cash used in investing activities (1,407,924) (1,065,546)
Cash flows from financing activities Equity dividends paid (896,178) (758,091) Purchase of treasury shares (41,834) (215,564)
Net cash used in financing activities (938,012) (973,655)
Effects of exchange rate changes on 339,528 19,220cash and cash equivalents Net increase/(decrease) in cash 197,003 (15,789) Cash at beginning of period 4,797,233 4,813,022 Cash at the end of the period 4,994,266 4,797,233
NOTES
1. The financial information set out above does not constitute the Group's
statutory accounts for the years ended 31 December 2008 or 2007, but is derived from those accounts. Statutory accounts for 2007 have been delivered to the Registrar of Companies and those for 2008 will be delivered following the Annual General Meeting. The auditors have reported on those accounts; their reports were unmodified and did not contain a statement under s 237(2) or (3) Companies Act 1985.
2. The calculation of basic earnings per share is based on the weighted
average number of Ordinary Shares in issue during 2008 of 71,666,307 (2007: 72,193,691) allowing for an adjustment made as a consequence of the Company having purchased at various times during the year 165,000 (2007: 596,000) Ordinary Shares and on the profit after tax for 2008 of £2,335,072 (2007: £ 1,891,054). The calculation of diluted earnings per share incorporates 317,883 Ordinary Shares (2007: 623,064) in respect of performance related employee share options. The profit after tax is the same as for basic earnings per share.
Copies of the Annual Report will be sent to Shareholders and will also be available from the Company's Registered Office: 4, Gilberd Court, Newcomen Way, Colchester, Essex CO4 9WN. The Annual Report will also be available on the Company's website : www.cct.co.uk
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