Concurrent Technologies Regulatory News (CNC)

7 Mar 2005 07:01

Concurrent Technologies PLC07 March 2005 CONCURRENT TECHNOLOGIES PLC Preliminary results for the year ended 31 December 2004 Marked Growth In Sales Activity Concurrent Technologies Plc, which manufactures high end embedded computerproducts for critical applications in the defence, transportation,communications and industrial markets, announces preliminary results for theyear to 31 December 2004. Financial Highlights • Continued improvement in market conditions with H2 turnover up 38% on H1 • Pre-tax profit maintained on the year at £215k (2003: 280k) • Year end net cash £2.2m • Gross margin improvement from 40% in H1 to 42% in H2 • Final dividend of 0.25p making total 0.50p for the year Operating Highlights • Announced today - opened an office in China • Increased range of products including 5 high margin, wide temperature boards launched • Investment in R&D equipment giving shorter development times, a key competitor differentiator • Sales and marketing activity remains at historical high levels, particularly in Defence and Comms sectors Michael Collins, Chairman, commented: "The recovery in our target markets including the communications and defencesectors is now well established. This is driven in particular by the increasein expenditure in the USA on defence and homeland security projects, and theupturn in design activity within new telecoms and internet security applicationsin the USA and China. As a result we have seen a marked uplift in enquiries andorders for our embedded computer products to meet the growing demand forcomputers which can cope with the relay of large parcels of data and with themonitoring and testing of the quality and functionality of communicationssystems. "Our latest products help to ensure that we are positioned to take advantage ofthis business upturn and our active participation in the Intel(R) CommunicationsAlliance has raised our profile within our industry sector. "This year has started well and the level of new customer enquiries remains highalthough it takes many months for these enquiries to be converted into firmorders. The investment in our new production line will enable us to meetincreased demand for our products and we are optimistic about our prospects forthe year." 7 March 2005 Enquiries:Concurrent Technologies Glen Fawcett, Managing Director 01206 752626 College Hill Nicholas Nelson 020 7457 2020 Corinna Dorward 020 7457 2020 CHAIRMAN'S STATEMENT Business Summary Concurrent Technologies designs, builds and supplies high end embedded computerproducts to the defence, communication, transportation and industrial markets.These computer products are integrated into a variety of applications whichrequire very high levels of processing power and superior levels of reliability;applications include military systems, communications, networking, medicalimaging, industrial automation and scientific research. The main product range includes single and dual processor computer boards usingIntel(R) and FreescaleTM (formerly Motorola(R)) Central Processing Units (CPUs)for the CompactPCI(R), VME and Multibus II architectures. Boards for use instandard operating conditions and ruggedised versions for use in extremeenvironments are produced. In addition to hardware design capability, ourengineering teams undertake a significant amount of software and firmwaredevelopment to provide interoperability between products, generate test softwareboth on-board and for production test purposes, and also provide support forleading embedded and real-time operating systems. The largest single market for our products is now defence, closely followed bycommunications. Together these markets in 2004 accounted for 68% of our sales byvalue. Financial Market conditions continued to improve through 2004, and we achieved a Groupturnover for the year of £7,086,044. The consolidated pre-tax profit of theGroup for the year to 31 December 2004 was £214,580 (2003: £280,283). In thesecond half of 2004 we made a consolidated pre-tax profit of £345,476 followinga loss in the first half of £130,896. The turnover in the second half of 2004was £4.11m compared with £2.98m in the first half, an increase of 38%. We ended the year with cash of £2,224,527 and no borrowings. Review of 2004 Operations and Plans for 2005 Conditions in the specialised part of the single board computer market in whichwe operate, having started to improve in 2003, continued to improve throughout2004. However, the announcement of the end of life of a core component of ourmost popular boards, set us back at the end of 2003 and for the first 6 monthsof 2004. The Group has recovered from this as can be seen from the substantialincrease in turnover and pre-tax profit in the second half of the year. In the early part of 2004 new VME and CompactPCI(R) boards driven by Intel(R)Pentium(R) M processors were released and made available to customers and morerecently we have started to release extended temperature range versions; theseare especially suited to defence applications where boards often have to operatein hostile environments. The new boards included the VP 315-RC which is aruggedised conduction cooled VME single board computer utilising an Intel(R)Pentium(R) M processor and a low power chipset; this product has beenco-developed with Thales Computers under our joint development agreement withthem. This ruggedised product, like many of the Company's other products,provides significant computing power whilst being thermally resourceful and canoperate at temperatures as low as -40oC or as high as 85oC. In September 2004our Chicago design office released the VP 742/20X which has an in-built highspeed FreescaleTM PowerPC(R) processor on a VME architecture giving real timeresponsiveness designed for use in defence, transportation, communications andindustrial applications. Also in September 2004 we announced support for theLynxOS(R) hard real-time operating system designed to facilitate missioncritical tasks in transportation, defence, industrial and medical applications.In October 2004 we released a new CompactPCI(R) board, the PP 332 which uses anIntel(R) 1.8GHz Pentium(R) M processor and is especially aimed at thetelecommunications market. In 2004 we also ported the Linux(R) operating systemto our FreescaleTM PowerPC(R) based products. Gross margins improved to over 42% for the full year having been just over 40%in the first half helped by the continued popularity of our Multibus II boardsand early sales of extended temperature range products. We have controlled costswell without reducing expenditure on R&D. In 2004 we saw a clear upturn in our markets, particularly the defence andcommunications markets of the USA. Most of our products are aimed atapplications for benign environments, but we are injecting increasing effort towin projects in less benign environments as the margins which can be achieved inthese projects are generally higher. We have now extended our product range toinclude several boards which can operate over temperatures ranging from -25degreesC to +70degreesC and often -40degreesC to +85degreesC. As a result of ourjoint development agreement with Thales Computers under which we designed a newnon-ruggedised board for them, they are now producing ruggedised versions of theVP 315 which we include in our own product range. These boards will withstandhigh vibration and high shock levels and operate in a conduction cooledenvironment. I said at the time of publication of our interim results last year that we hadnever seen as much customer interest in our products as we were seeing then.This is still the case. Sales and marketing activity is at a very high level.The focus of our marketing has changed over the last three years. In 2001 thelargest part of our sales was to the medical sector. Since then defence andcommunications projects have become increasingly important to us. We are beinginvited to quote on larger projects than in the past. In the early part of 2004we opened a sales office in Southern California, U.S.A. responding to the factthat the U.S.A. had become our largest market. The significant investment in new Computer Aided Design equipment we made in2003 is now yielding productivity gains. The new equipment has already decreasedthe time taken to design the layout of a board while simultaneously enabling usto increase a board's functionality. Having already reduced the layout timetaken per board we achieved further time reductions during 2004. This is animportant advance as shorter development times reduce our time to market andthis is a key issue that differentiates us from most of our competitors. Future Strategy We have maintained our investment in design and development. We intend tocontinue the expansion of the range of hardware we design and build, and to keepincreasing our investment in software and firmware engineering so as to make ourhardware operate with an ever increasing range of software products. Wherepossible, we will be using low power devices such as Intel(R) Pentium(R) Mprocessors and their successors. Our strategy is to continue to support and expand all three of our existingembedded computer technology architectures. The Multibus II architecture is veryslowly coming towards the end of its life but as long as it continues to bereasonably widely accepted by our customers we will continue to support it. Wesee VME as having strong growth still, particularly for defence and industrialapplications. The CompactPCI(R) architecture was extended a few years ago toinclude 64-bit/66MHz capability which gave this bus architecture more bandwidththan VME or Multibus II and therefore made it particularly suitable forcommunications applications, even though in recent times the performance of VMEhas also been increased. We see this strategy continuing for some time but thereis a new architecture that is gaining market acceptance, AdvancedTelecommunications Computing Architecture (AdvancedTCA(R)), using very highspeed serial inter-connections based on switched fabric methods. Its largerboard size offers higher functionality, better cooling and an improved price/performance ratio and is specifically targeted at telecommunications systembuilders. The ever increasing complexity of our boards and the increased sales activityhas brought with it increased pressure on our production and test facilities. Weare now installing another and much faster, production line suitable forbuilding larger production runs. We have recently placed an order for another"pick and place" robotic machine for selecting and mounting microchip devices oncomputer boards. We estimate that this will increase our throughput capacity atthis point of the production process by a factor of 4. We are also enhancing themethods by which we test our products before shipment. To this end we haverecently purchased an automated optical inspection machine which electronicallyexamines the quality of the connections on our boards and this has alreadyhelped to reduce our testing times. Conscious that we have some excellent opportunities in China, where we have beenoperating through distributors, we are establishing our own office there andemploying a business development manager. We continue to look to enhance our capabilities to produce complete embeddedcomputer systems as well as the component boards which go into them, and to takeadvantage of opportunities which come from customers who wish to downsizein-house engineering staff to reduce fixed costs and who therefore are nowoutsourcing more activities. Dividend We are very confident of the continued health of our business this year and havetherefore decided to recommend the payment of a final dividend of 0.25 pence pershare (making a total for the year including the interim dividend of 0.50 penceper share). The total cost of this final dividend will amount to £181,750. Theex-dividend date for the final dividend is 4 May 2005, the record date is 6 May2005 and, subject to the shareholders' approval, payment will be made on 20 May2005. Outlook The recovery in our target markets including the communications and defencesectors is now well established. This is driven in particular by the increasein expenditure in the USA on defence and homeland security projects, and theupturn in design activity within new telecoms and internet security applicationsin the USA and China. As a result we have seen a marked uplift in enquiries andorders for our embedded computer products to meet the growing demand forcomputers which can cope with the relay of large parcels of data and with themonitoring and testing of the quality and functionality of communicationssystems. Our latest products help to ensure that we are positioned to take advantage ofthis business upturn and our active participation in the Intel(R) CommunicationsAlliance has raised our profile within our industry sector. This year has started well and the level of new customer enquiries remains highalthough it takes many months for these enquiries to be converted into firmorders. The investment in our new production line will enable us to meetincreased demand for our products and we are optimistic about our prospects forthe year. Corporate Governance As an AIM listed company Concurrent Technologies Plc is not obliged to complywith the Combined Code on Corporate Governance. We do however acknowledge theoverall importance of the guidelines and apply as many of the principles thereinas are appropriate to a company of our size and nature. With this in mind weappointed Clive Thomson as an additional non-executive director on 1 June 2004. Annual General Meeting The Annual General Meeting this year will be held on 29th April 2005. Consolidated Profit and Loss Account Year to Year to Note 31 December 31 December 2004 2003 £ £ Turnover 7,086,044 7,303,805 Cost of sales 4,052,759 4,202,524 Gross profit 3,033,285 3,101,281 Net operating expenses 2,879,110 2,885,769 Operating profit before goodwill amortisation 154,175 215,512 Amortisation of goodwill 25,088 28,018 Group operating profit 129,087 187,494 Interest receivable 85,493 92,789 Profit on ordinary activities before taxation 214,580 280,283 Taxation on profit on ordinary activities 1,177 (50,662) Profit for the financial year 213,403 330,945 Dividend 363,500 363,500 Retained loss for the year (150,097) (32,555) Basic and diluted earnings per share 3 0.29p 0.46p Statement of Total Recognised Gains and Losses Year to Year to 31 December 31 December 2004 2003 £ £ Profit for the financial year 213,403 330,945 Currency translation differences on foreign currency net (81,641) (123,590)investments Total recognised gains relating to the year 131,762 207,355 Consolidated Balance Sheet 31 December 31 December 2004 2003 £ £FIXED ASSETSGoodwill 120,035 154,612Tangible assets 474,382 536,708 594,417 691,320CURRENT ASSETSStocks and work in progress 1,147,782 956,240Debtors 2,190,865 1,417,753Cash at bank and in hand 2,224,527 3,263,408 5,563,174 5,637,401 CREDITORS:Amounts falling due within one year 1,298,928 1,205,288 NET CURRENT ASSETS 4,264,246 4,432,113 TOTAL ASSETS LESSCURRENT LIABILITIES 4,858,663 5,123,433 Provision for liabilities and charges - 33,032 NET ASSETS 4,858,663 5,090,401 CAPITAL AND RESERVESCalled up share capital 727,000 727,000Share premium account 3,405,817 3,405,817Capital redemption reserve 256,976 256,976Profit and loss account 468,870 700,608 EQUITY SHAREHOLDERS' FUNDS 4,858,663 5,090,401 The Financial Statements were approved by the Board of Directors on 4 March 2005and signed on its behalf by: M Collins G A FawcettChairman Managing Director Consolidated Cash Flow Statement 2004 2003 £ £ Net cash (outflow)/inflow from operating (567,333) 1,238,346activities Returns on investments and servicing of finance:Interest received 85,493 92,789 Taxation (20,112) (11,332) Capital expenditure and financial investment:Payments to acquire tangible fixed assets (115,937) (176,627) Equity dividends paid (363,500) (436,200) (Decrease)/increase in cash (981,389) 706,976 NOTES 1. The financial information set out above does not constitute thecompany's statutory accounts for the years ended 31 December 2004 or 2003, butis derived from those accounts. Statutory accounts for 2003 have been deliveredto the Registrar of Companies and those for 2004 will be delivered following thecompany's annual general meeting. The auditors have reported on those accounts;their reports were unqualified and did not contain a statement under s237(2) or(3) Companies Act 1985. 2. The consolidated Financial Statements have been prepared on a basisconsistent with the Financial Statements for the year ended 31 December 2003. 3. The calculation of earnings per share is based on the weighted averagenumber of Ordinary Shares in issue of 72,700,012 (2003 - 72,700,012), and on theprofit after tax of £213,403 (2003 - Profit: £330,945). Fully diluted earningsper share is the same as basic earnings per share. Copies of the Annual Report will be sent to Shareholders and will also beavailable from the Company's Registered Office: C/O MSP Secretaries, 22 MeltonStreet, London, NW1 2BW. This information is provided by RNS The company news service from the London Stock Exchange