Last checked at 15 Apr 2010 07:00
15 April 2010
Concurrent Technologies Plc Preliminary results for the year ended 31 December 2009
Concurrent Technologies Plc, ("Concurrent", "Company" or "Group") 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 2009.
Financial Highlights
* Profit after tax of £2.5m, an increase of 8.7% (2008: £2.3m) * Turnover of £12.9m, an increase of 2% (2008: £12.6m) during a period of recession * Gross margins for the year strengthened to 56.4% up from 53.0% last year * Increased product development, total spend up 60% from £2.03m to £3.25m * Strong balance sheet, with no loans and Net Cash of £4.91m (2008: £4.99m) after increased dividend payments and record R & D investments * EPS increased to 3.55 pence (2008: 3.26 pence) * Total dividend of 1.40 pence per share for the year, up 8% on last year (2008: 1.30 pence)
Operational Highlights
* Strengthening market environment * + Defence sector remains strong + Telecoms and industrials showing sustainable recovery * Augmented competitive position * + 10 new products launched + Continual product innovation; diversifying customer base * Industry Award winner * + Lockheed Martin STAR supplier award for Concurrent's exceptional performance.
The Future
* Continual investment in new product innovation * Expansion of design engineering capability in the UK and India * Defence sector remains rich in opportunity
Michael Collins, Chairman, commented:
"Trading in the first quarter of 2010 has proceeded in line with our expectations."
"Reduced world economic activity has had a negative effect on companies in the telecommunications and industrial sectors, however we are seeing signs of recovery which we believe will be sustained in these sectors."
"Moreover, we have seen no contraction in that part of the defence market in which we operate and in this regard, our future looks positive. We see very strong interest in our products for projects involving the detection and detonation of improvised explosive devices (IEDs) and for electronic, aerial and battlefield surveillance. Sales growth this year is likely to be modest, although at this stage we expect our financial performance to continue to remain satisfactory. Beyond 2010, we are confident that the investment we have made in creating new opportunities, particularly in defence applications, will produce rewards in future periods."
"Investment in product development was increased by 60% in 2009 over 2008 as we took the view that the improving economic climate warranted an enhanced focus on our core business and a substantial increase in the diversity of our product range."
Enquiries: Concurrent Technologies Plc 01206 752 626 Glen Fawcett, Managing Director Haggie Financial LLP 020 7417 8989
Nicholas Nelson / Henrietta Breakwell
Nominated AdviserBrewin Dolphin Investment Banking 0845 213 4726Neil Baldwin/Neil McDonald CHAIRMAN'S STATEMENTBusiness Summary
We design, manufacture 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, Intel® Coreâ„¢ i7 and quad-core Intel® Xeon® processors. Designed for the 3U and 6U CompactPCI®, VPX, VME, AMC 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 ruggedized 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, the vast majority of which are made in-house, are batch produced to highly detailed specifications.
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
I am pleased to report a profit before tax for 2009 of £2,797,794 (2008: £ 2,951,603) a reduction of 5% over the previous year following a provision of £ 279,000 against a doubtful receivable. The Directors view this as a one-off incident and unlikely to be repeated in future periods. Profit after tax for 2009 was £2,538,306 (2008: £2,335,072), an increase of 8.7%. Increased investment in product design has resulted in a reduced tax charge arising from higher Research and Development Tax Credits. Earnings per share for the year increased to 3.55p (2008: 3.26p).
In the second half of the year, profit before tax was £1,429,878, an increase of 5% over the first half of 2009 (H1 2009: £1,367,916). This result was achieved on sales of £12,854,777, an increase of 2% compared with 2008 (2008: £ 12,619,631).
Gross margins for the year strengthened again to 56.4% up from 53.0% last year, a result influenced by the strong US dollar. Although expenditure on product development increased by 60% in the year from £2,031,970 in 2008 to £3,250,465 we ended the year with cash and cash equivalents of £4,914,657 (2008: £ 4,994,266) and no borrowings.
We continue to broaden our already diverse customer base most of which comprises large, high quality companies and organisations across multiple sectors and in many countries. Furthermore, in common with last year, our defence customers were the biggest contributors to our turnover. Exports accounted for 87% of revenue.
Review of Operations
During the year the Company continued to market its products into high performance applications which require long term supply and where we see high levels of demand for innovative products. In addition to the launch of new processor boards, we continued to develop many environmentally superior products that can operate at extreme temperatures, elevated altitudes and at high shock and vibration levels. With slight variations in operating capacities and format, these products address many different customer needs.
In 2009, we launched 10 new products, including boards designed according to the 6U and 3U CompactPCI® standards and products featuring the quad-core InteI® Xeon® processors which are particularly suited for use within the defence, telecommunications and homeland security market sectors. During this period we also began design work on the latest Intel® Coreâ„¢ i7 products featuring many attributes which are desired by our customers.
We continue to develop products using low and ultra-low power processors enabling us to supply products which feature large amounts of functionality on small boards which can then be ruggedized and made to operate in harsh environments. In addition, we continued to extend our family of single slot VME single board computers as well as our range of XMC and AMC products. Low power consumption, with consequent higher reliability, continues to be a critical requirement for end users of embedded computer products.
One of the highlights since my Chairman's Statement in April 2009 has been the progress we have made on the development of VPX products and more specifically our involvement in the industry-wide effort to establish the OpenVPXâ„¢ specification. As a result of its pioneering development work, the Company was at the forefront of releasing OpenVPXâ„¢ products targeted at the defence and transportation markets in late 2009.
Another significant highlight for Concurrent Technologies was the award by Lockheed Martin Corporation in February 2010 of their prestigious STAR Supplier Award for the Company's exceptional performance as measured by quality, delivery, affordability, management and administration.
Future Plans
The key to continued success is to expand our range of products, with a particular focus on the VPX and CompactPCI® bus 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. We continue to look for acquisition opportunities but this is not our top priority; indeed there is plenty of scope for internal organic growth where we continue to see many opportunities to grow the business into new market areas without taking unacceptable risk.
We continue to press for the expansion of our design engineering capability both in the UK and India and, therefore, maintain our policy of recruiting design engineers in both countries. The design facility in Bangalore, India is now fully operational (20 employees at the end of 2009, up from 16 at the end of 2008) and producing key designs.
The Company has used its authority in 2009 to buy back its own shares and the Directors will continue to do this when they consider it appropriate.
Dividend
In March 2010 the Board declared a second interim dividend of 0.90 pence per share (2008: 0.85 pence final dividend) which was paid to shareholders on 1st April 2010. The total cost of this second interim dividend amounted to £ 643,491. This second dividend, when added to the first interim dividend of 0.50 pence per share paid in September 2009, makes a total dividend for the year of 1.40 pence per share (2008: 1.30 pence). This is an increase of 7.7% over the dividends paid in for 2008.
The Directors do not intend to recommend a final dividend given the payment of the interim dividends as mentioned above.
Outlook
Trading in the first quarter of 2010 has proceeded in line with our expectations.
Reduced world economic activity has had a negative effect on companies in the telecommunications and industrial sectors, however we are seeing signs of recovery which we believe will be sustained in these sectors.
Moreover, we have seen no contraction in that part of the defence market in which we operate and in this regard, our future looks positive. We see very strong interest in our products for projects involving the detection and detonation of improvised explosive devices (IEDs) and for electronic, aerial and battlefield surveillance. Sales growth this year is likely to be modest, although at this stage we expect our financial performance to continue to remain satisfactory. Beyond 2010, we are confident that the investment we have made in creating new opportunities, particularly in defence applications, will produce rewards in future periods.
Investment in product development was increased by 60% in 2009 over 2008 as we took the view that the improving economic climate warranted an enhanced focus on our core business and a substantial increase in the diversity of our product range.
Corporate Governance
As an AIM quoted 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 21st May 2010.
Michael CollinsChairman14 April 2010
All companies and product names are trademarks of their respective organisation.
Consolidated Statement of Comprehensive Income
Year to Year to 31 December 31 December 2009 2008 CONTINUING OPERATIONS £ £ Revenue 12,854,777 12,619,631 Cost of sales 5,606,328 5,933,965 Gross profit 7,248,449 6,685,666 Net operating expenses 4,531,272 3,917,427 Group operating profit 2,717,177 2,768,239 Finance income 80,617 183,364 Profit before tax 2,797,794 2,951,603 Tax 259,488 616,531 Profit for the year 2,538,306 2,335,072 Other Comprehensive Income Exchange differences on translating (228,640) 537,521 foreign operations Other Comprehensive Income for the (228,640) 537,521 year, net of tax Total Comprehensive Income for the 2,309,666 2,872,593 year Profit for the period attributable to: Equity holders of the parent 2,538,306 2,335,072 Total Comprehensive Income attributable to: Equity holders of the parent 2,309,666 2,872,593 Earnings per share Basic earnings per share 3.55p 3.26p Diluted earnings per share 3.53p 3.24p Consolidated Balance Sheet 31 December 31 December 2009 2008 £ £ ASSETS Non-current assets Property, plant and equipment 591,989 621,798 Intangible assets 3,554,243 1,948,934 Deferred tax assets 183,722 114,585 4,329,954 2,685,317 Current assets Inventories 2,056,734 1,413,816 Trade and other receivables 2,344,877 3,419,443 Current tax assets 311,224 - Cash and cash equivalents 4,914,657 4,994,266 9,627,492 9,827,525 Total assets 13,957,446 12,512,842 LIABILITIES Non-current liabilities Deferred tax liabilities 1,043,198 579,930 Long term provisions 35,580 35,767 1,078,778 615,697 Current liabilities Trade and other payables 1,770,066 1,831,013 Short term provisions 33,066 28,992 Current tax liabilities 33,807 348,180 1,836,939 2,208,185 Total liabilities 2,915,717 2,823,882 Net assets 11,041,729 9,688,960 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 125,909 354,549 Profit and loss account 6,526,027 4,944,618 Equity attributable to equity holders 11,041,729 9,688,960 of the parent Total equity 11,041,729 9,688,960
Consolidated Cash Flow Statement
Year to Year to 31 December 31 December 2009 2008 £ £ Cash flows from operating activities Profit before tax for the period 2,797,794 2,951,603 Adjustments for: Finance income (80,617) (183,364) Depreciation 202,165 163,905 Amortisation 486,295 213,449 Impairment loss 149,688 331,481 Loss on disposal of property, plant 590 - and equipment (PPE) Share-based payment 22,642 18,085 Exchange differences (89,917) 187,268 (Increase) in inventories (642,918) (316,683) (Increase)/decrease in trade and other 1,074,566 (1,314,710) receivables Increase/(decrease) in trade and other (57,060) 319,049 payables Cash generated from operations 3,863,228 2,370,083 Tax paid (471,148) (166,642) Net cash generated from operating 3,392,080 2,203,441 activities Cash flows from investing activities Interest received 80,617 183,364 Purchases of property, plant and (180,717) (312,460) equipment (PPE) Purchases of intangible assets (2,243,464) (1,278,828)
Net cash used in investing activities (2,343,564) (1,407,924)
Cash flows from financing activities Equity dividends paid (966,166) (896,178) Purchase of treasury shares (33,179) (41,834) Net cash used in financing activities (999,345) (938,012) Effects of exchange rate changes on (128,780) 339,528 cash and cash equivalents Net increase/(decrease) in cash (79,609) 197,033 Cash at beginning of period 4,994,266 4,797,233 Cash at the end of the period 4,914,657 4,994,266NOTES
1. The financial information set out above does not constitute the Group's statutory accounts for the years ended 31 December 2009 or 2008, but is derived from those accounts. Statutory accounts for 2008 have been delivered to the Registrar of Companies and those for 2009 will be delivered following the Annual General Meeting. The auditors have reported on those accounts; their reports were (i) unqualified and (ii) did not contain statements under section 237(2) or (3) of the Companies Act 1985 in respect of 2008, or under section 498(2) or (3) of the Companies Act 2006 in respect of 2009.
2. The calculation of basic earnings per share is based on the weighted average number of Ordinary Shares in issue during 2009 of 71,558,889 (2008: 71,666,198) allowing for an adjustment made as a consequence of the Company having purchased at various times during the year 90,000 (2008: 165,000) Ordinary Shares and on the profit after tax for 2009 of £2,538,306 (2008 £ 2,335,072). The calculation of diluted earnings per share incorporates 358,728 Ordinary Shares (2008: 319,416) in respect of performance related employee share options. The profit after tax is the same as for basic earnings per share.
3. The annual general meeting of Concurrent Technologies Plc will be held at the Ramada Hotel, A12/A120 junction, Old Ipswich Road, Colchester, Essex CO7 7QY on 21 May 2010 at 4.00 p.m.
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, UK, and on the Company's website: www.cct.co.uk.
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