Last checked at 25 Mar 2011 07:00
25 March 2010 Concurrent Technologies Plc Preliminary Results for the year ended 31 December 2010
Concurrent Technologies Plc (the "Company"), a world leading specialist in thedesign and manufacture of high-end embedded computer products, for criticalapplications in the defence, aerospace, transportation, telecommunications,scientific and industrial markets, announces preliminary results for the yearto 31 December 2010.Financial Highlights
* Strong balance sheet, with no loans and net cash, cash equivalents and
other financial instruments of £4.6m (2009: £4.9m) after increased dividend
payments and continuing significant R&D investments
* Total dividend of 1.5p per share for the year; up 7% on last year (2009:
1.4p)
* Profit after tax of £2.0m (2009: £2.5m) on turnover of £12.6m (2009: £
12.9m) * EPS: 2.84p (2009: 3.55p) Operational Highlights * Further diversification of customer base in strengthening market environment * Defence sector remains strong with other markets showing sustainable recovery
* Augmented competitive position and 8 new products launched incorporating
the latest Intel® processors * Lockheed Martin STAR supplier award for the Company's exceptional performance
Outlook
* Continual focus on innovative, high technology, higher margin products * Expansion of design engineering capability in the UK and India * Defence sector remains rich in opportunity
Michael Collins, Chairman, commented:
"Trading conditions in the defence sector remain strong and we continue drivingsome of our products into military equipment aimed at countering the threat ofimprovised explosive devices. We are also pleased to note that the recovery ineconomic conditions within our other markets continues and with a strong orderbook, we expect a significant increase in sales in the first half of thecurrent year compared to the same period last year.
Our pipeline of new products under development remains robust and we look forward to providing further news on these as and when they are launched."
Annual General Meeting
The annual general meeting of Concurrent Technologies Plc will be held at theRamada Hotel, A12/A120 junction, Old Ipswich Road, Colchester, Essex CO7 7QY on20 May 2011 at 4.00 p.m.Enquiries:Concurrent Technologies Plc +44 (0)1206 752 626
Glen Fawcett, Managing Director
NexFin (Financial PR) Nicholas Nelson +44 (0)7921 522920 Cenkos Securities plc (NOMAD) +44 (0)131 220 6939 Ken Fleming +44 (0)131 220 9778 Beth McKiernan CHAIRMAN'S STATEMENT
I am pleased to report on another profitable year and a promising start to thecurrent financial year. Our commitment to R&D has enabled us to improve ourcompetitive position, attract new customers and maintain a good basis forfuture growth. The Company is proud of its track record of profitability andassociated dividend payments.
Financial Summary
The Company achieved a profit before tax for 2010 of £2,323,522 (2009: £2,797,794), a reduction of 17% over the previous year. Earnings per share forthe year were 2.84 pence (2009: 3.55 pence). In the second half of 2010performance was much stronger than in the first half with profit before tax of£1,318,873, an increase of 31% over the first half (H1 2010: £1,004,649). Thisresult was achieved on sales of £12,639,754, a reduction of 2% compared with2009 (2009: £12,854,777). The gross margin for the year was 50.9% compared withan especially high 56.4% in the previous year. As we reported at the half year,the results for 2010 were adversely affected by the delay of a defence relatedorder which we had anticipated would be received for delivery in 2010 and whichis now expected in 2011.We ended the year with cash, cash equivalents and other financial instrumentsof £4.59m (2009: £4.91m) and no borrowings, notwithstanding continuing highlevels of expenditure on research and development and increased dividendpayments.
We continue to broaden our already diverse customer base, most of which comprises large, high quality, international businesses in multiple sectors and in many countries.
Business SummaryThe Company is a leading specialist in the design, manufacture and supply ofinnovative high-end embedded computer products aimed at a wide base of customertypes in the defence, telecommunication, aerospace, transportation, scientificand industrial markets. Our products have a long lifecycle which typicallyprovides the Company with high quality sales over many years.The Company's high performance products are based on Intel® long lifecyclecomponents, and cover a range of central processing unit ("CPU") boards andcomplementary products, which include single and dual processor boards, manyusing dual-core processors, and, more recently, four-core Intel® Coreâ„¢ i7 andsix-core Intel® Xeon® processors. Many of these CPUs are suitable forCompactPCI®, VPX, VME, AMC and XMC/PMC open architecture standards. A commonfeature of our newer products is the low level of electrical power required fortheir very high performance capabilities.Our products deliver extremely high levels of reliability with substantialprocessing power, making them ideal for use in projects ranging fromhigh-performance military communications systems to commercial industrialcontrol units. In particular, we develop ruggedized versions of many productsin our range, for use in harsh and wide temperature environments, making themvery appealing for a variety of demanding applications.In addition to hardware design, our engineering teams undertake a significantamount of software and firmware development to provide interoperability betweenproducts, allowing customers to transition smoothly when new updates or designsare available. In this way we continue to see strong customer loyalty and longterm relationships, as well as new sales following product launches featuringperformance upgrades. We also generate software for both on-board andproduction test purposes, while also providing support for leading operatingsystems.Review of OperationsWe have continued to develop many environmentally superior products that canoperate at extreme temperatures, elevated altitudes and at high shock andvibration levels. With slight variations in operating capacities and format,these products address many different customer needs. Many of the productsreleased by us in 2010 have featured low power consumption, with consequenthigher reliability, which continues to be a critical requirement for end usersof embedded computer products.During the course of the year we announced eight significant new launchesspanning a broad spectrum of product types including switch fabric, VME,CompactPCI® and AMC boards. Among these boards were those which feature thethen latest Intel® Coreâ„¢ i7 processors, as well as our first productsincorporating the very powerful Intel® six-core Xeon® processors (incorporatingadvanced encryption technology) which are particularly suited for use withinthe defence, telecommunications and homeland security market sectors. We havecontinued to respond to the roll-out of new processors by Intel® which webelieve validates the close relationship we have with the world leader insilicon innovation and computer processing technology. We will continue to bean early adopter of the low power, multi-core processor technology from Intel®.The Company's design and engineering team is divided between the UK and Indiabut all manufacturing, and testing takes place in our factory in Colchester,UK. Our sales, marketing and customer support teams operate from the UK andoverseas offices including the USA and China.The first half of 2010 saw the Company being awarded the prestigious LockheedMartin Corporation STAR Supplier Award for the Company's exceptionalperformance as measured by quality, delivery, affordability, management andadministration. This goes some way to demonstrating how the Company is viewedin its marketplace.Future Plans
We recognise that we operate in an ever changing market place and strive tostrengthen our position and seek new opportunities. Our alliance with Intel®will ensure that our position as an early adopter is maintained. This gives usa clear competitive edge and to capitalise fully we will continue with ourprogramme of controlled expansion by increasing our design engineering teams.We believe that we are becoming a key supplier of Intel® based technology tothe defence sector and our products are now found in a wide range of ever moresophisticated high-reliability computer systems. Continual investment in R&D isa necessity to ensure a constant expansion of our range of products, with aparticular focus on the VPX, VME, AMC and CompactPCI® bus architectures.Moreover, we maintain our objective to design more innovative products forcomplex, high technology, low to medium volume and high margin applications,along with producing versions targeted for use in very harsh environments.
The Company will continue to use its authority to buy back its own shares when the Directors consider it appropriate.
Dividend
The Board has declared a second interim dividend of 0.95 pence per share (2009:0.90 pence second interim dividend) which when added to the first interimdividend of 0.55 pence per share will make a total of 1.50 pence per share forthe year (2009: 1.40 pence). This will be an increase of 7.1% over dividendspaid in 2009. The total cost of this second interim dividend will amount to £678,528. The ex-dividend date for the second interim dividend is 23 March 2011,the record date is 25 March 2011 and the payment date is 31 March 2011. TheDirectors do not intend to recommend a final dividend.
Outlook
Trading conditions in the defence sector remain strong and we continue drivingsome of our products into military equipment aimed at countering the threat ofimprovised explosive devices. We are also pleased to note that the recovery ineconomic conditions within our other markets continues and with a strong orderbook, we expect a significant increase in sales in the first half of thecurrent year compared to the same period last year.
Our pipeline of new products under development remains robust and we look forward to providing further news on these as and when they are launched.
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 principlestherein as are appropriate to a company of our size and nature.
Annual General Meeting
The Annual General Meeting this year will be held on 20 May 2011.
Michael CollinsChairman24 March 2011
All companies and product names are trademarks of their respective organisations.
Consolidated Statement of Comprehensive Income
Year to Year to 31 December 31 December 2010 2009 CONTINUING OPERATIONS £ £ Revenue 12,639,754 12,854,777 Cost of sales 6,211,615 5,606,328 Gross profit 6,428,139 7,248,449 Net operating expenses 4,160,061 4,531,272 Group operating profit 2,268,078 2,717,177 Finance income 55,444 80,617 Profit before tax 2,323,522 2,797,794 Tax 293,361 259,488 Profit for the year 2,030,161 2,538,306 Other Comprehensive Income Exchange differences on translating foreign 104,379 (228,640)operations
Tax relating to components of other comprehensive -
-income Other Comprehensive Income for the year, net of 104,379 (228,640)tax Total Comprehensive Income for the year 2,134,540
2,309,666
Profit for the period attributable to:
Equity holders of the parent 2,030,161 2,538,306
Total Comprehensive Income attributable to: Equity holders of the parent 2,134,540 2,309,666 Earnings per share Basic earnings per share 2.84p 3.55p Diluted earnings per share 2.82p 3.53pConsolidated Balance Sheet 31 December 31 December 2010 2009 £ £ ASSETS Non-current assets Property, plant and equipment 562,792 591,989 Intangible assets 4,494,646 3,554,243 Deferred tax assets 202,112 183,722 Other financial assets - 2,000,000 5,259,550 6,329,954 Current assets Inventories 2,489,366 2,056,734 Trade and other receivables 3,136,335 2,344,877 Current tax assets 75,919 311,224 Other financial assets 2,000,000 - Cash and cash equivalents 2,592,871 2,914,657 10,294,491 7,627,492 Total assets 15,554,041 13,957,446 LIABILITIES Non-current liabilities Deferred tax liabilities 1,264,554 1,043,198 Long term provisions 55,569 35,580 1,320,123 1,078,778 Current liabilities Trade and other payables 2,041,748 1,770,066 Short term provisions 58,460 33,066 Current tax liabilities 5,812 33,807 2,106,020 1,836,939 Total liabilities 3,426,143 2,915,717 Net assets 12,127,898 11,041,729 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 230,288 125,909 Profit and loss account 7,507,817 6,526,027 Equity attributable to equity holders of the 12,127,898 11,041,729parent Total equity 12,127,898 11,041,729
Consolidated Cash Flow Statement
Year to Year to 31 December 31 December 2010 2009 £ £
Cash flows from operating activities Profit before tax for the period 2,323,522 2,797,794 Adjustments for: Finance income (55,444) (80,617) Depreciation 214,968 202,165 Amortisation 748,439 486,295 Impairment loss 203,103 149,688 Loss on disposal of property, plant and equipment 1,343 590(PPE) Share-based payment 22,895 22,642 Exchange differences 30,140 (89,917) (Increase) in inventories (432,632) (642,918)
(Increase)/decrease in trade and other receivables (791,458) 1,074,566
Increase/(decrease) in trade and other payables 317,065 (57,060)
Cash generated from operations 2,581,941 3,863,228 Tax received/(paid) 109,758 (471,148) Net cash generated from operating activities 2,691,699
3,392,080
Cash flows from investing activities
Interest received 55,444 80,617
Purchases of property, plant and equipment (PPE) (174,846) (180,717)
Purchases of intangible assets (1,888,628)
(2,243,464)
Net cash used in investing activities (2,008,030)
(2,343,564)
Cash flows from financing activities
Equity dividends paid (1,036,733) (966,166) Purchase of treasury shares (27,376) (33,179) Net cash used in financing activities (1,064,109)
(999,345)
Effects of exchange rate changes on cash and cash 58,654 (128,780)equivalents Net increase/(decrease) in cash (321,786) (79,609) Cash at beginning of period 2,914,657 2,994,266 Cash at the end of the period 2,592,871 2,914,657
Consolidated Statement of Changes in Equity
Capital Cumulative Profit Share Share redemption translation and loss Total capital premium reserve reserve account Equity £ £ £ £ £ £ Balance at 1 727,000 3,405,817 256,976 354,549 4,944,618 9,688,960January 2009 Profit for - - - - 2,538,306 2,538,306the period Exchange - - - (228,640) - (228,640)differences on translating foreign operations Total - - - (228,640) 2,538,306 2,309,666comprehensive income for the period Share-based - - - - 22,642 22,642payment Deferred tax - - - - 19,806 19,806on share based payment Dividends - - - - (966,166) (966,166)paid Purchase of - - - - (33,179) (33,179)treasury shares Balance at 31 727,000 3,405,817 256,976 125,909 6,526,027 11,041,729December 2009 Profit for - - - - 2,030,161 2,030,161the period Exchange - - - 104,379 - 104,379differences on translating foreign operations Total - - - 104,379 2,030,161 2,134,540comprehensive income for the period Share-based - - - - 22,895 22,895payment Deferred tax - - - - (7,157) (7,157)on share based payment Dividends - - - - (1,036,733) (1,036,733)paid Purchase of - - - - (27,376) (27,376)treasury shares Balance at 31 727,000 3,405,817 256,976 230,288 7,507,817 12,127,898December 2010 NOTES1. The financial information set out above does not constitute the Group'sstatutory accounts for the years ended 31 December 2010 or 2009, but is derivedfrom those accounts. Statutory accounts for 2009 have been delivered to theRegistrar of Companies and those for 2010 will be delivered following theAnnual General Meeting. The auditors have reported on those accounts; theirreports were (i) unqualified and (ii) did not contain statements under section498(2) or (3) of the Companies Act 2006 in respect of 2009 or 2010.2. The calculation of basic earnings per share is based on the weightedaverage number of Ordinary Shares in issue during 2010 of 71,498,039 (2009:71,558,889) allowing for an adjustment made as a consequence of the Companyhaving purchased at various times during the year 90,000 (2009: 90,000)Ordinary Shares and on the profit after tax for 2010 of £2,030,161 (2009: £2,538,306). The calculation of diluted earnings per share incorporates 505,238Ordinary Shares (2009: 358,728) in respect of performance related employeeshare options. The profit after tax is the same as for basic earnings pershare.3. The annual general meeting of Concurrent Technologies Plc will be held atthe Ramada Hotel, A12/A120 junction, Old Ipswich Road, Colchester, Essex CO77QY on 20 May 2011 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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