Concurrent Technologies Regulatory News (CNC)

6 Mar 2006 07:00

CONCURRENT TECHNOLOGIES PLCPreliminary results for the year ended 31 December 2005Marked Increase in Turnover and ProfitConcurrent 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 2005.Financial Highlights * Continued improvement in market conditions with 2005 turnover up 51% on 2004 * Pre-tax profit up more than 550% at ‚£1,453,087 (2004: ‚£214,580) * Year end net cash ‚£4.0m * Gross margin improvement from 43% to 46% * Final dividend doubled to 0.50p making a total of 0.75p for the year (2004: 0.50p) Operating Highlights * New robotic assembly line installed for increased capacity * New product range launched * Business Development Manager installed in Beijing, China * Focus on defence and communications sectors, particularly USA Michael Collins, Chairman, commented:"The high level of production and despatch activity we experienced towards theend of 2005 has continued into 2006, so the year has started well. The level ofnew customer enquiries remains high and the investment in our new productionline has enabled us to meet the increased demand for our products.As noted above we will continue to invest in staff, and associated equipment,involved with product development, manufacturing, sales and support so as toincrease our product range, customer base and manufacturing capability.Inevitably the cost of such investment precedes the return but it is importantif we are to continue to thrive in the longer term. I look forward to reportingfurther progress over the coming year."6 March 2006Enquiries:Concurrent Technologies Plc 01206 752626 Glen Fawcett, Managing Director Nexus Financial Ltd 020 7451 7050 Nicholas Nelson / Nora de la Quintana Mob: 07921 522 920 CHAIRMAN'S STATEMENTFinancial OverviewMarket conditions are much improved compared with two years ago and our levelof activity has increased markedly in the last year. We achieved a Groupturnover for the year to December 2005 of ‚£10,678,675 (2004: ‚£7,086,044), anincrease of 51%. The consolidated pre-tax profit in the same period was ‚£1,453,087 (2004: ‚£214,580), an increase of 577%. In the second half of 2005 wemade a consolidated pre-tax profit of ‚£950,547 following a pre-tax profit of ‚£502,540 in the first half.Gross margin showed a satisfactory increase to 46% from 43% year on year,helped in part by the product mix which included greater numbers of ruggedisedand extended temperature range boards and in part by a contribution from thestrengthened US dollar. These factors, together with a substantial increase insales, produced the very substantial increase in profit.In arriving at the profits in the 2005 accounts, we have written off ‚£132,361being the balance of the goodwill created on the purchase of OmnibyteCorporation.We ended the year with cash of ‚£3,978,139 and no borrowings.Earnings per share increased to 1.59p (2004: 0.29p).Business SummaryConcurrent 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 ofreliability; applications include military systems, communications, networking,medical imaging, industrial automation and scientific research.The main product range includes single and dual processor computer boards usingIntel‚® and Freescale¢â€ž¢ (formerly Motorola‚®) Central Processing Units (CPUs) forthe CompactPCI‚®, VME and Multibus II architectures. These boards are producedin several grades for use in either standard operating conditions or in morerugged conditions where the environmental stresses are harsher. In addition tohardware design capability, our engineering teams undertake a significantamount of software and firmware development to provide interoperability betweenproducts, generate test software both on-board and for production testpurposes, and also provide support for leading embedded and real-time operatingsystems.The largest markets for our products are now defence and communications.Together these markets in 2005 accounted for just over 80% of our sales byvalue.Review of 2005 OperationsIn 2005 we introduced to the market some exciting new products designed to meetour customers' high-end computing requirements. Many of these new products werebased on the latest single-processor technology from Intel‚®; additionally ahigh performance dual-processor board was developed.We have introduced a new range of 3U CompactPCI‚® computers which are thehalf-height version of our more traditional 6U CompactPCI‚® single boardcomputers. They are particularly suited to the defence, industrial andtransportation markets because their compact dimensions and rugged structuregive them extra resistance to vibration, shock and temperature variations.Our Chicago design facility introduced the VP754/20x VME single board computer,designed around the high speed Freescale¢â€ž¢ PowerPC‚® processor giving real timeresponsiveness, especially for the defence, aerospace and scientific markets.This board features low power usage characteristics and offers support formultiple fast disk drives and high resolution graphics. We have since decidedto de-emphasise our work on Freescale¢â€ž¢ processors at this facility and insteaduse our skills to develop other board products which are targeted at the samemarkets. A few of these new products have already been released.We have also released, in conjunction with our co-development partner ThalesComputers, the VP 315-RC, a ruggedised conduction cooled VME board utilisingthe Intel‚® Pentium‚® M processor complemented by a highly integrated low powerchipset from Intel‚®.We are looking further to expand our sales and marketing capability,particularly in the USA and the Far East. In March 2005 we announced that wehad appointed a Business Development Manager in Beijing in cooperation with theChina Britain Business Council. This appointment is supporting our existingdistribution channels and increasing our profile in China.Our products are becoming increasingly complex and, with improving sales, ourproduction and test facilities came under increased pressure during the year.We responded by installing a new, and much faster, assembly line suitable forbuilding larger production batches. At the heart of this is a high performance"pick-and-place" robotic machine for selecting and mounting electroniccomponents onto printed circuit boards. At the end of the production line weare now increasing our usage of automated optical inspection machines whichelectro-optically examine the quality of the many thousands of miniatureconnections on our boards. These machines have increased both our productioncapacity and quality. During 2005 we made good progress towards the removal oflead in many of our soldering processes, thus making our products moreenvironmentally friendly.Sales and marketing activity continues at a high level. The focus of ourmarketing is now particularly aimed at the defence and communications sectors,and the USA has become our largest market.Future PlansWe believe that world demand for single board computers, particularly thosepowered by Intel‚® CPUs, continues to grow. One recent study forecast that theworld market for CompactPCI‚® boards will grow by 35% between 2004 and 2009 andthat for VME boards will grow by 30% in the same period. We believe we have theright range of products for these and the other niches in the single boardcomputer market which we decided some years ago to pursue. We plan to maintainour focus on specialised customer requirements where the competition is lessfierce than in low tech/high volume applications. We will also continue tofocus on making complex boards suitable for difficult operating environments.In this way we expect to be able to maintain our high gross margins and thusincrease profitability. We are increasingly selected by our target customers asthe supplier of their choice, and are being given the opportunity to quote foran increasing number of opportunities, many of which are also of a larger scalethan in the past.We also believe that our substantial investment in design and developmentcontinues to benefit us as we broaden our range of products. By progressingwith new board designs that leverage advanced CPU technologies, we intend tomake our range of hardware products appeal to a larger part of the increasingmarket. Simultaneously we intend to keep increasing our investment in softwareand firmware engineering so as to make our hardware operate with more softwareproducts and so make our products even more attractive, and simpler to use, forour customers. In many of our new products we will be using low power devicescontaining two processing cores.Our strategy is to support and expand all three of our existing embeddedcomputer technology architectures as well as introducing products for newarchitectures. The Multibus II architecture continues to be accepted by ourcustomers, and we will continue to support it while demand remainssatisfactory. Defence and industrial applications still require VME boards andwe believe these will be important markets for us in the long term. TheCompactPCI‚® architecture, including the newer smaller sized 3U version, withits excellent performance and networking capability, offers the extendedbandwidth particularly necessary for communications applications. The newarchitecture we have decided to support is called Advanced Mezzanine Card("AMC"). We have recently released our first such product, the PR AMC/33x. Thisis an AMC processor module driven by a 2.0 GHz Intel‚® Pentium‚® M processorwhich will be targeted at many applications including those that will be basedon ATCA (Advanced Telecommunications Computing Architecture) and MicroTCA - anew high speed bus system. We will also continue to look to enhance ourcapabilities to produce complete embedded computer systems, and to takeadvantage of opportunities which come from customers who wish to downsizein-house engineering staff and reduce fixed costs by outsourcing.In 2005 we increased our investment in design and development. We intend tocontinue this trend with a further expansion of our engineering staff and ofthe range of products we design, market, build, sell and support.DividendWe have had a very good year and are confident of the continued health of ourbusiness going forward. We have therefore decided to recommend the payment of afinal dividend of 0.50 pence per share (making a total for the year includingthe interim dividend of 0.75 pence per share). The total cost of this finaldividend will amount to ‚£363,500. The ex-dividend date for the final dividendis 3 May 2006, the record date is 5 May 2006 and, subject to the shareholders'approval, payment will be made on 19 May 2006.OutlookThe high level of production and despatch activity we experienced towards theend of 2005 has continued into 2006, so the year has started well. The level ofnew customer enquiries remains high and the investment in our new productionline has enabled us to meet the increased demand for our products.As noted above we will continue to invest in staff, and associated equipment,involved with product development, manufacturing, sales and support so as toincrease our product range, customer base and manufacturing capability.Inevitably the cost of such investment precedes the return but it is importantif we are to continue to thrive in the longer term. I look forward to reportingfurther progress over the coming year.Corporate GovernanceAs 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 principlestherein as are appropriate to a company of our size and nature.Annual General MeetingThe Annual General Meeting this year will be held on 28 April 2006.All companies and product names are trademarks of their respectiveorganisations.Consolidated Profit and Loss Account Year to Year to Note 31 31 December December 2005 2004 ‚£ ‚£ Turnover 10,678,675 7,086,044 Cost of sales 5,781,965 4,052,759 Gross profit 4,896,710 3,033,285 Net operating expenses 3,545,120 2,904,198 Group operating profit 1,351,590 129,087 Interest receivable 101,497 85,493 Profit on ordinary activities before taxation 1,453,087 214,580 Taxation on profit on ordinary activities 294,390 1,177 Profit for the financial year 1,158,697 213,403 Basic earnings per share 3 1.59p 0.29p Diluted earnings per share 3 1.59p 0.29pStatement of Total Recognised Gains and Losses Year to Year to 31 December 31 December 2005 2004 ‚£ ‚£ Profit for the financial year 1,158,697 213,403 Currency translation differences on foreign 128,907 (81,641)currency net investments Total recognised gains relating to the year 1,287,604 131,762 Consolidated Balance Sheet 31 December Restated 31 December 2005 2004 ‚£ ‚£ FIXED ASSETS Goodwill - 120,035 Tangible assets 543,678 474,382 543,678 594,417 CURRENT ASSETS Stocks and work in progress 1,501,554 1,147,782 Debtors 1,832,303 2,190,865 Cash at bank and in hand 3,978,139 2,224,527 7,311,996 5,563,174 CREDITORS: amounts falling due within one year 1,852,977 1,117,178 NET CURRENT ASSETS 5,459,019 4,445,996 TOTAL ASSETS LESS CURRENT LIABILITIES 6,002,697 5,040,413 Provision for liabilities and charges 38,180 - NET ASSETS 5,964,517 5,040,413 CAPITAL AND RESERVES Called up share capital 727,000 727,000 Share premium account 3,405,817 3,405,817 Capital redemption reserve 256,976 256,976 Profit and loss account 1,574,724 650,620 EQUITY SHAREHOLDERS' FUNDS 5,964,517 5,040,413 The Financial Statements were approved by the Board of Directors on 3 March2006 and signed on its behalf by:M Collins G A Fawcett Chairman Managing Director Consolidated Cash Flow Statement 2005 2004 ‚£ ‚£ Net cash inflow/(outflow) from operating 2,125,605 (567,333)activities Returns on investments and servicing of finance: Interest received 101,497 85,493 Taxation 81,458 (20,112) Capital expenditure and financial investment: Payments to acquire tangible fixed assets (288,048) (115,937) Equity dividends paid (363,500) (363,500) Increase/(decrease) in cash 1,657,012 (981,389) NOTES 1. The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2005 or 2004, but is derived from those accounts. Statutory accounts for 2004 have been delivered to the Registrar of Companies and those for 2005 will be delivered following the Company'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 basis consistent with the Consolidated Financial Statements for the year ended 31 December 2004. The restatement of the 2004 Balance Sheet is as a consequence of the adoption of FRS 21 and specifically relates to proposed dividends not being included within the balance sheet as a liability. 3. The calculation of basic earnings per share is based on the weighted average number of Ordinary Shares in issue of 72,700,012 (2004: 72,700,012), and on the profit after tax of ‚£1,158,697 (2004: ‚£213,403). The calculation of diluted earnings per share incorporates 8,503 Ordinary Shares (2004: nil) 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 beavailable from the Company's Registered Office: C/O MSP Secretaries, 90Gloucester Place, London W1U 6EH. ENDCONCURRENT TECHNOLOGIES PLC