Last checked at 4 Sep 2008 07:00
CONCURRENT TECHNOLOGIES PLC
Interim results for the six months ended 30 June 2008
Concurrent Technologies Plc, ("Concurrent" or the "Company") which manufactures high-end embedded computer products for critical applications in the defence, telecommunications and industrial markets, announces interim results for the six months ended 30 June 2008.
Financial Highlights
* Profit before tax up 45% to ‚£1,213,534 (H1 2007: ‚£835,198) * Sales up 15% ‚£5.48m (‚£4.76m in the first half of 2007) * Gross margins improved to 54%, compared to 47% in 2007 * Cash and cash equivalents of ‚£3.91m, no borrowings * Earnings per share for the period increased by 48% to 1.27p
Operating Highlights
* 6 product launches since the start of the financial year * Continued demand from the defence and telecommunications industries, which have not been affected by economic downturn * Engineering design facility fully operational in Bangalore, India * Focus is now on recruiting suitable talent both in the UK and India to keep up with sales demand
Michael Collins, Chairman, commented:
"The excellent performance seen in the first half is continuing and our healthy order book gives us confidence for the remainder of the year."
"Our sales team is unearthing new leads throughout Europe and more evidently, in the USA. Business growth is predicated upon 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 goes some way to address this issue."
"Regardless of the widely reported economic downturn, I am pleased that the Company has remained insulated from this gloom thus far largely due to our focus on the defence and telecommunications sectors, both of which have proven resilient and where demand for innovation continues to be high."
4 September 2008Enquiries:Concurrent Technologies Plc 01206 752 626 Glen Fawcett, Managing Director Haggie Financial LLP 020 7417 8989 Nicholas Nelson/Kathy Boate Nominated Adviser: 0845 213 1120 Brewin Dolphin Investment Banking Alan Stewart/Neil McDonald CONCURRENT TECHNOLOGIES PLCCHAIRMAN'S STATEMENTFinancial Summary
I am pleased to report a 45% increase in unaudited pre-tax profit for the first half of this year to ‚£1,213,534 with earnings per share rising by 48% to 1.27p. This excellent performance was, in the main, due to continuing strong demand from our defence customers together with an overall improvement in operating margin. Sales in the period were ‚£5.48m compared with ‚£4.76m in the first half of 2007.
Gross margins improved to 54% compared to 47%, resulting from improved sales of our high margin Multibus II products during the period. However, we do not 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 half year with net cash and cash equivalents of ‚£3.91m, a small decrease over the same period in 2007 (‚£4.26m) given our investment, during the period, into our new design subsidiary in Bangalore, India, and the delivery at the end of the period of a significant order.
The Company has used its authority in the first half of 2008 to buy back its own shares and the Directors will continue to do this when they consider it appropriate.
Business Summary
The Company designs, builds and supplies 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. Designed for the CompactPCI‚®, VME, AMC (Advanced Mezzanine Card) and Multibus II open architecture standards, a common feature of Concurrent's products are components that require a low level of electrical power.
Our products deliver very high levels of reliability with substantial processing power, making them ideal for applications in military systems, communications, networking, industrial automation and scientific research. Furthermore we develop rugged versions of many of our products for use in harsh and wide temperature environments.
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, in addition to help driving 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.
Review of Operations
During the first half of 2008 the Company continued to market its products primarily to the defence and telecommunication industries, where innovative products continue to see high demand.
In addition to new processor boards, we have now introduced 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.
This year we have released six 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 widely used in applications within industrial control, transportation and more recently in defence. 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.
Our product development plans are well on their way as the engineering design facility in Bangalore, India is now operational and will aid the design capacity of the Company, as well as provide a base in which to help drive new sales.
Future Plans
We maintain an active policy of exploring value enhancing acquisition opportunities as they arise, but our current emphasis is on internal organic growth where we continue to see ample opportunity to grow the business, while we continue to pursue new sales in our existing market regions.
We strongly believe that continuing to expand our range of products is key to our future success, with a particular focus on the CompactPCI‚® bus architecture, including the newer smaller sized 3U version, together with the VME and AMC architectures. We will continue to design products for complex, high technology, low to medium volume and high margin applications, along with producing versions targeted for use in harsh environments.
Our biggest challenge 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 our plans to build a significant design capability is proceeding on schedule, and we hope to update shareholders as further progress is made.
Dividend
The Board has declared an interim dividend of 0.45 pence per share (2007 interim: 0.40 pence). The total cost of this dividend will amount to ‚£322,286. The ex-dividend date for the interim dividend is 17 September 2008, the record date is 19 September 2008 and the payment date is 3 October 2008.
Outlook
The excellent performance seen in the first half is continuing and our healthy order book gives us confidence for the remainder of the year.
Our sales team is unearthing new leads throughout Europe and more evidently, in the USA. Business growth is predicated upon 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 goes some way to address this issue.
Regardless of the widely reported economic downturn, I am pleased that the Company has remained insulated from this gloom thus far largely due to our focus on the defence and telecommunications sectors, both of which have proven resilient and where demand for innovation continues to be high.
Michael CollinsChairman3 September 2008
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CONCURRENT TECHNOLOGIES PLC
CONDENSED CONSOLIDATED INCOME STATEMENT
Note Six months Six Year months ended ended ended 30/06/08 30/06/07 31/12/07 ‚£ ‚£ ‚£ CONTINUING OPERATIONS Revenue 5,480,801 4,756,967 10,565,278 Cost of sales 2,494,707 2,530,813 5,346,961 Gross profit 2,986,094 2,226,154 5,218,317 Net operating expenses 1,862,057 1,497,937 2,986,864 Group operating profit 1,124,037 728,217 2,231,453 Finance income 89,497 106,981 201,520 Profit before tax 1,213,534 835,198 2,432,973 Tax 302,485 216,443 541,919 Profit for the period 911,049 618,755 1,891,054 Attributable to: Equity holders of the parent 911,049 618,755 1,891,054 Basic earnings per share 4 1.27p 0.86p 2.62p Diluted earnings per share 4 1.26p 0.85p 2.60p
CONCURRENT TECHNOLOGIES PLC
CONDENSED CONSOLIDATED BALANCE SHEET
At 30 June At 30 June At 31 2008 2007 December 2007 ASSETS ‚£ ‚£ ‚£ Non-current assets
Property, plant and equipment 556,168 475,577 468,074
Intangible assets 1,509,543 656,701 1,209,480 Deferred tax assets 82,160 106,020 89,698 2,147,871 1,238,298 1,767,252 Current assets Inventories 1,780,425 1,561,751 1,097,133 Trade and other receivables 3,268,081 1,769,116 2,104,733 Cash and cash equivalents 3,913,747 4,255,556 4,797,233 8,962,253 7,586,423 7,999,099 Total assets 11,110,124 8,824,721 9,766,351 LIABILITIES Non-current liabilities Deferred tax liabilities 435,028 132,257 331,371 Long term provisions 25,421 14,802 26,243 460,449 147,059 357,614 Current liabilities Trade and other payables 2,128,842 1,567,008 1,516,090 Short term provisions 33,312 45,323 34,390 Current tax liabilities 396,900 36,284 103,957 2,559,054 1,648,615 1,654,437 Total liabilities 3,019,503 1,795,674 2,012,051 Net assets 8,090,621 7,029,047 7,754,300 EQUITY Share capital 727,000 727,000 727,000 Share premium account 3,405,817 3,405,817 3,405,817 Capital redemption reserve 256,976 256,976 256,976
Cumulative translation reserve (184,787) (197,656) (182,972)
Profit and loss account 3,885,615 2,836,910 3,547,479 Equity attributable to equity 8,090,621 7,029,047 7,754,300holders of parent Total equity 8,090,621 7,029,047 7,754,300
CONCURRENT TECHNOLOGIES PLC
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Six months Six Year months ended ended ended 30/06/08 30/06/07 31/12/07 ‚£ ‚£ ‚£ Cash flows from operating activities Profit for the period 911,049 618,755 1,891,054 Adjustments for: Finance income (89,497) (106,981) (201,520) Tax 302,485 216,443 541,919 Depreciation 69,547 60,426 123,508 Amortisation 155,617 22,605 64,443 (Profit)/loss on disposal of fixed - (306) -assets Share-based payment 7,275 12,876 15,597 Exchange differences (1,815) (28,398) (16,909)
(Increase)/decrease in inventories (683,292) (282,286) 182,332
Decrease/(increase) in trade and other (1,163,348) 278,338 (57,279) receivables
(Decrease)/increase in trade and other 610,852 (61,897) (112,307) payables
Cash generated from operations 118,873 729,575 2,430,838 Tax (paid)/refunded 95,177 (306,875) (407,426)
Net cash generated from operating 214,050 422,700 2,023,412 activities
Cash flows from investing activities Interest received 89,497 106,981 201,520
Purchases of property, plant and (157,641) (69,056) (124,376) equipment (PPE)
Purchases of intangible assets (9,063) (45,955) (101,005) Proceeds from sale of PPE - 306 -
Payment in respect of development (446,617) (502,427) (1,041,685) costs
Net cash used in investing activities (523,824) (510,151) (1,065,546)
Cash flows from financing activities Equity dividends paid (573,712) (470,015) (758,091) Purchase of treasury shares - - (215,564)
Net cash used in financing activities (573,712) (470,015) (973,655)
Net (decrease)/increase in cash (883,486) (557,466) (15,789)
Cash at beginning of the period 4,797,233 4,813,022 4,813,022
Cash at the end of the period 3,913,747 4,255,556 4,797,233 CONCURRENT TECHNOLOGIES PLCNOTES TO THE INTERIM REPORT1. General information The principal activity of Concurrent Technologies Plc and its subsidiaries ('the Group') is the design, development, manufacture and marketing of single board computers for system integrators and original equipment manufacturers. Concurrent Technologies Plc is the Group's ultimate parent company. It is incorporated and domiciled in Great Britain. Concurrent Technologies Plc's shares are listed on the Alternative Investment Market of the London Stock Exchange. The Group's condensed consolidated interim financial statements are presented in pounds sterling (‚£), which is also the functional currency of the parent company. These condensed consolidated interim financial statements, which are unaudited, have been approved for issue by the Board of Directors on 3 September 2008. The information relating to the six months ended 30 June 2008 and 30 June 2007 is unaudited and does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The statutory accounts for the year ended 31 December 2007, prepared under adopted IFRS, have been reported on by the Group's auditors and delivered to the Registrar of Companies. The auditors' report was unqualified and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985. 2. Summary of significant accounting policies 2.1 Basis of preparation These condensed consolidated interim financial statements are for the six months ended 30 June 2008. They have been prepared in accordance with IAS 34 "Interim Financial Reporting". They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2007, which have been prepared in accordance with IFRSs. Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2007, as described in those financial statements. At the date of authorisation of these financial statements, the following standards and interpretations which have not been applied in these financial statements were in issue but have not yet come into effect: * IAS 1 Presentation of Financial Statements (revised 2007) (effective 1 January 2009) * IAS 27 Consolidated and Separate Financial Statements (Revised 2008) (effective 1 July 2009) * Amendment to IFRS 2 Share-based Payment - Vesting Conditions and Cancellations (effective 1 January 2009) * IFRS 8 Operating Segments (effective 1 January 2009) The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the Group except for additional disclosures. The accounting policies have been consistently applied to all the periods presented. 2.2 Taxation Current tax expense is recognised in these condensed consolidated interim financial statements based on the estimated effective tax rate for the full year. 3. Segmental reporting Based on risks and returns, the Directors consider that the primary reporting format is by business segment. The Directors consider that there is only one business segment being design, manufacture and supply of high-end embedded computer products. The disclosures for the primary segment have already been provided in these financial statements. The historical and anticipated performance of the Group is reported to the Board of Concurrent Technologies Plc as a single entity and thus the directors consider that there are no additional segments required to be disclosed. 4. Earnings per share Basic earnings per share is calculated by dividing the profit attributable to ordinary equity holders for the period by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share is calculated adjusting the weighted average number of ordinary shares outstanding to assume conversion of all contracted dilutive potential ordinary shares. The Company only has one category of dilutive potential ordinary shares, share options. The inputs to the earnings per share calculation are shown below: Six months Six months Year ended ended 30/ ended 06/07 30/06/08 31/12/07 ‚£ ‚£ ‚£ Profit attributable to ordinary 911,049 618,755 1,891,054 equity holders Six months Six months Year ended ended 30/ ended 06/07 30/06/08 31/12/07 No No No Weighted average number of ordinary 71,714,012 72,310,012 72,193,691 shares for basic earnings per share Adjustment for share options 365,684 675,940 623,064 Weighted average number of ordinary 72,079,696 72,985,952 72,816,755 shares for diluted earnings per share 5. Copies of this report will be sent to shareholders and are available at the Company's Registered Office.
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