Last checked at 26 Aug 2014 07:00
26 August 2014
CONCURRENT TECHNOLOGIES PLC
Interim Results for the six months ended 30 June 2014
Concurrent Technologies Plc (the "Company"), a world leading specialist in the design and manufacture of high-end embedded computer products, for critical applications in the defence, aerospace, transportation, telecommunications, scientific and industrial markets, announces interim results for the six months to 30 June 2014.
Highlights:
· Turnover £5.6m (H1 2013: £5.3m)
· Profit before tax £0.4m (H1 2013: £0.4m)
· Earnings per share for the period 0.56p (H1 2013: 0.66p)
· Interim dividend 0.65p per share (H1 2013: 0.65p)
· Net cash, including cash deposits £4.8m (H1 2013: £5.3m); no borrowings
Operational Highlights:
· Release of four new products
· Increased investment in R&D and creation of engineering facility in the USA
· Investment in new X-ray equipment for manufacturing
Michael Collins, Chairman, commented:
"Our order book is good and our cash position remains strong. With the introduction by the UK Government of the more flexible licensing system, we can now focus on restoring customer confidence in those areas affected. How long it will take to recover from the effects of UK export licensing regulations, and what their full impact might be, remains difficult to assess at this time, but the Board is confident that the resolution of the major export licensing issues, together with the diversity of the Company's product range and customer base, will generate sound results."
Enquiries:
Concurrent Technologies PlcGlen Fawcett, Managing Director |
+44 (0)1206 752 626 |
Newgate Threadneedle (Financial PR)Caroline Forde Robyn McConnachie | +44 (0)207 653 9850 |
Cenkos Securities plc (NOMAD)Neil McDonald Beth McKiernan | +44 (0)131 220 9771+44 (0)131 220 9778 |
CHAIRMAN'S STATEMENT
Financial Summary
Given the backdrop of continuing export licence problems for customers in many markets, I am pleased to report a satisfactory start to 2014. The Group achieved a profit before tax for the six months to 30 June 2014 of £424,338 (H1 2013: £370,528) with associated earnings per share of 0.56 pence (H1 2013: 0.66 pence). Turnover for the period was £5,574,557 (H1 2013: £5,319,772), with a significant increase in sales into telecommunications applications. Our cash balances (including cash deposits) at 30 June 2014 remain healthy at £4,846,837 (H1 2013: £5,331,742) even after paying an increased dividend after the year end, and continued investment in R&D at a slightly increased level compared to the first half of 2013.
Review of Operations
Turnover during the first half of 2014 was in line with expectations although exports have fallen to 54% of turnover (H1 2013: 72%) which was expected due to the application of UK Government export control regulations to our advanced technology products incorporating encryption technology. As a consequence of these export controls, the Board has determined that a further write down in the value of certain designs may be required; the exact amount will be finalised at the year end and incorporated into the results for the full year ending 31 December 2014.
Throughout the second half of 2013 and the first half of 2014, the Company has been working closely with BIS (Department for Business, Innovation and Skills) which has been reviewing the current system of controls. In mid-July 2014, we were notified that BIS had published a generally applicable export licence that substantially decontrols the exporting of encryption products of the type that the Company produces. This licence will considerably simplify the exporting of affected products to key markets outside of the EU and USA.
We have continued to invest in the development of our expanding product ranges and we have released four new products during the first half of this financial year. Two of these are based on the AMC architecture and a further two feature the Intel® Atom™ processor. The latter products are low power computers specifically targeted to offer excellent performance per Watt and are based on the VME and CompactPCI® bus architectures. These single board computers are suitable for applications in our usual markets and support a range of industry standard operating systems.
The Group has implemented its plan to establish an engineering facility in Massachusetts, USA, and US engineers are already augmenting the UK and Indian engineering teams.
We have also invested in new X-ray equipment in our manufacturing facility, which is able to perform 3D scanning and make sectional images. This has substantially improved our ability to see inside ever smaller and more complex components and parts of our products to identify faults and ensure the highest quality of manufacture.
The executive directors exercised their share options 8th April 2014, resulting in an issue of 1.2m shares and an inflow of £300,000 cash.
Future Plans
Our strategy is to continue to expand our range by developing products for the VPX™, VME, AMC and CompactPCI® bus architectures in complex, high technology, low to medium volume and high margin applications. Many versions of these products will be designed for use in harsh environments. The continuing development of new and complementary software packages to provide high-speed data transfer, ease of integration and security will further enhance our product portfolio. We will also continue to recruit in the USA to build up our engineering team there.
Dividend
The Board has declared a first interim dividend that will be maintained at the same level as that for last year, namely, 0.65p per share (H1 2013: 0.65p). The total cost of this dividend will amount to £471,903. The ex-dividend date for the interim dividend is 10 September 2014, the record date is 12 September 2014 and the payment date is 26 September 2014.
Outlook
Our order book is good and our cash position remains strong. With the introduction by the UK Government of the more flexible licensing system, we can now focus on restoring customer confidence in those areas affected. How long it will take to recover from the effects of UK export licensing regulations, and what their full impact might be, remains difficult to assess at this time, but the Board is confident that the resolution of the major export licensing issues, together with the diversity of the Company's product range and customer base, will generate sound results.
Michael Collins
Chairman
22 August 2014
All companies and product names are trademarks of their respective organisations.
CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
unaudited interim results to 30 June 2014
Note | Six months ended 30/06/14 | Six months ended 30/06/13 | Year ended 31/12/13 | |||
£ | £ | £ | ||||
CONTINUING OPERATIONS | ||||||
Revenue | 5,574,557 | 5,319,772 | 11,859,180 | |||
Cost of sales | 2,899,117 | 2,611,202 | 5,857,094 | |||
Gross profit | 2,675,440 | 2,708,570 | 6,002,086 | |||
Net operating expenses | 2,286,611 | 2,369,420 | 5,614,290 | |||
Group operating profit | 388,829 | 339,150 | 387,796 | |||
Finance income | 35,509 | 31,378 | 66,133 | |||
Profit before tax | 424,338 | 370,528 | 453,929 | |||
Tax | 24,923 | (102,822) | (275,688) | |||
Profit for the period | 399,415 | 473,350 | 729,617 | |||
Other Comprehensive Income | ||||||
Exchange differences on translating foreign operations | (29,037) | 127,433 | (124,637) | |||
Tax relating to components of other comprehensive income | - | - | - | |||
Other Comprehensive Income for the period, net of tax | (29,037) | 127,433 | (124,637) | |||
Total Comprehensive Income for the period | 370,378 | 600,783 | 604,980 | |||
Profit for the period attributable to: | ||||||
Equity holders of the parent | 399,415 | 473,350 | 729,617 | |||
Total Comprehensive Income attributable to: | ||||||
Equity holders of the parent | 370,378 | 600,783 | 604,980 | |||
Earnings per share | ||||||
Basic earnings per share | 4 | 0.56p | 0.66p | 1.02p | ||
Diluted earnings per share | 4 | 0.55p | 0.66p | 1.01p |
CONDENSED CONSOLIDATED BALANCE SHEET
unaudited interim results to 30 June 2014
As at | As at | As at | ||||
30/06/14 | 30/06/13 | 31/12/13 | ||||
ASSETS | £ | £ | £ | |||
Non-current assets | ||||||
Property, plant and equipment | 609,986 | 393,125 | 478,131 | |||
Intangible assets | 5,845,981 | 6,262,359 | 5,467,503 | |||
Deferred tax assets | 82,813 | 190,303 | 108,396 | |||
Other financial assets | - | 1,000,000 | - | |||
6,538,780 | 7,845,787 | 6,054,030 | ||||
Current assets | ||||||
Inventories | 2,536,345 | 2,828,830 | 2,550,556 | |||
Trade and other receivables | 2,210,893 | 2,092,746 | 2,874,354 | |||
Current tax assets | 284,726 | 186,933 | 247,240 | |||
Other financial assets | 2,585,066 | 1,000,000 | 2,602,689 | |||
Cash and cash equivalents | 2,261,771 | 3,331,742 | 2,340,859 | |||
9,878,801 | 9,440,251 | 10,615,698 | ||||
Total assets | 16,417,581 | 17,286,038 | 16,669,728 | |||
LIABILITIES | ||||||
Non-current liabilities | ||||||
Deferred tax liabilities | 1,257,824 | 1,315,342 | 1,164,267 | |||
Long term provisions | 10,009 | - | 10,009 | |||
1,267,833 | 1,315,342 | 1,174,276 | ||||
Current liabilities | ||||||
Trade and other payables | 1,708,720 | 1,751,526 | 1,931,110 | |||
Short term provisions | 36,813 | 39,746 | 36,813 | |||
Current tax liabilities | 2,998 | 26,196 | - | |||
1,748,531 | 1,817,468 | 1,967,923 | ||||
Total liabilities | 3,016,364 | 3,132,810 | 3,142,199 | |||
Net assets | 13,401,217 | 14,153,228 | 13,527,529 | |||
EQUITY | ||||||
Capital and reserves | ||||||
Share capital | 739,000 | 727,000 | 727,000 | |||
Share premium account | 3,693,818 | 3,405,817 | 3,405,817 | |||
Capital redemption reserve | 256,976 | 256,976 | 256,976 | |||
Cumulative translation reserve | (103,853) | 177,254 | (74,816) | |||
Profit and loss account | 8,815,276 | 9,586,181 | 9,212,552 | |||
Equity attributable to equity holders of the parent | 13,401,217 | 14,153,228 | 13,527,529 | |||
Total equity | 13,401,217 | 14,153,228 | 13,527,529 |
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
unaudited interim results to 30 June 2014
Six months ended 30/06/14 | Six months ended 30/06/13 |
Year ended 31/12/13 | ||||
£ | £ | £ | ||||
Cash flows from operating activities | ||||||
Profit before tax for the period | 424,338 | 370,528 | 453,929 | |||
Adjustments for: |
| |||||
Finance income | (35,509) | (31,378) | (66,133) | |||
Depreciation | 85,070 | 84,320 | 169,259 | |||
Amortisation | 588,056 | 687,446 | 1,363,530 | |||
Impairment loss | - | - | 842,783 | |||
Loss on disposal of property, plant and equipment | - | - | - | |||
Share-based payment | 2,814 | 5,553 | (94,726) | |||
Exchange differences | 15,635 | 69,188 | (74,551) | |||
(Increase)/decrease in inventories | 14,211 | 138,860 | 417,134 | |||
(Increase)/decrease in trade and other receivables | 663,461 | 1,181,919 | 400,311 | |||
Increase/(decrease) in trade and other payables | (222,390) | 239,771 | 426,431 | |||
Cash generated from operations | 1,535,685 | 2,746,207 | 3,837,967 | |||
Tax received/(paid) | 45,628 | (30,154) | (61,654) | |||
Net cash generated from operating activities | 1,581,313 | 2,716,053 | 3,776,313 | |||
Cash flows from investing activities | ||||||
Interest received | 35,509 | 31,378 | 66,133 | |||
Cash placed on deposit | - | - | (602,689) | |||
Purchases of property, plant and equipment | (217,066) | (40,676) | (225,505) | |||
Purchases of intangible assets | (966,532) | (1,001,051) | (1,726,312) | |||
Net cash used in investing activities | (1,148,088) | (1,010,349) | (2,488,373) | |||
Cash flows from financing activities | ||||||
Equity dividends paid | (785,404) | (750,123) | (1,214,420) | |||
Cash received from share issue | 300,000 | - | - | |||
Purchase of treasury shares | - | - | (16,625) | |||
Net cash used in financing activities | (485,404) | (750,123) | (1,231,045) | |||
Effects of exchange rate changes on cash and cash equivalents | (26,909) | 59,233 | (32,964) | |||
Net increase/(decrease) in cash | (79,088) | 1,014,814 | 23,931 | |||
Cash at beginning of period | 2,340,859 | 2,316,928 | 2,316,928 | |||
Cash at the end of the period | 2,261,771 | 3,331,742 | 2,340,859 | |||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
unaudited interim results to 30 June 2014
Share capital | Share Premium | Capital redemption reserve | Cumulative translation reserve | Profit and loss account | Total equity | |
| £ | £ | £ | £ | £ | £ |
|
|
|
| |||
Balance at 1 January 2013 | 727,000 | 3,405,817 | 256,976 | 49,821 | 9,862,012 | 14,301,626 |
Profit for the period | - | - | - | - | 473,350 | 473,350 |
Exchange differences on translating foreign operations | - | - | - | 127,433 | - | 127,433 |
Total recognised comprehensive income for the period | - | - | - | 127,433 | 473,350 | 600,783 |
Share-based payment | - | - | - | - | 5,553 | 5,553 |
Deferred tax on share based payment | - | - | - | - | (4,611) | (4,611) |
Dividends paid | - | - | - | - | (750,123) | (750,123) |
Sale of treasury shares | - | - | - | - | - | - |
Balance at 30 June 2013 | 727,000 | 3,405,817 | 256,976 | 177,254 | 9,586,181 | 14,153,228 |
Profit for the period | - | - | - | - | 256,267 | 256,267 |
Exchange differences on translating foreign operations | - | - | - | (252,070) | - | (252,070) |
Total recognised comprehensive income for the period | - | - | - | (252,070) | 256,267 | 4,197 |
Share-based payment | - | - | - | - | (100,279) | (100,279) |
Deferred tax on share based payment | - | - | - | - | (48,695) | (48,695) |
Dividends paid | - | - | - | - | (464,297) | (464,297) |
Purchase of treasury shares | - | - | - | - | (16,625) | (16,625) |
Balance at 31 December 2013 | 727,000 | 3,405,817 | 256,976 | (74,816) | 9,212,552 | 13,527,529 |
Profit for the period | - | - | - | - | 399,415 | 399,415 |
Exchange differences on translating foreign operations | - | - | - | (29,037) | - | (29,037) |
Total recognised comprehensive income for the period | - | - | - | (29,037) | 399,415 | 370,378 |
Share-based payment | - | - | - | - | 2,814 | 2,814 |
Deferred tax on share based payment | - | - | - | - | (14,101) | (14,101) |
Dividends paid | - | - | - | - | (785,404) | (785,404) |
Issue of ordinary shares | 12,000 | 288,001 | - | - | - | 300,001 |
Purchase of treasury shares | - | - | - | - | - | - |
Balance at 30 June 2014 | 739,000 | 3,693,818 | 256,976 | (103,853) | 8,815,276 | 13,401,217 |
NOTES TO THE INTERIM REPORT
1. | 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 ("the Company") is the Group's ultimate parent company. It is incorporated and domiciled in Great Britain. Concurrent Technologies Plc 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 26 August 2014.
The information relating to the six months ended 30 June 2014 and 30 June 2013 is unaudited and does not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006. The statutory accounts for the year ended 31 December 2013, prepared under adopted IFRS (International Financial Reporting Standards), have been reported on by the Group's auditors and delivered to the Registrar of Companies. The auditors' report in accordance with Chapter 3 of Part 16 of the Companies Act 2006 in relation to those accounts was unqualified.
| |||||||
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 2014. 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 2013, which have been prepared in accordance with IFRSs.
The accounting policies applied and methods of computation are consistent with those of the annual financial statements for the year ended 31 December 2013, as described in those financial statements. The accounting policies have been consistently applied to all the periods presented.
There are no new IFRSs or IFRIC interpretations that are effective for the first time for the financial period beginning on or after 1 January 2014 that would be expected to have a material impact on the results or financial position of the Group.
| |||||||
2.2 | Taxation
| ||||||
Current tax expense is recognised in these condensed consolidated interim financial statements based on estimated effective tax rates for the full year.
| |||||||
3. | Segmental reporting
| ||||||
The Directors consider that the Group is engaged in a single segment of business, being design, manufacture and supply of high-end embedded computer products, and that therefore the Company has only a single operating segment. The key measure of performance used by the Board to assess the Group's performance is the Group's profit before tax, as calculated under IFRS, and therefore no reconciliation is required between the measure of profit or loss used by the Board and that contained in the condensed consolidated interim financial statements.
| |||||||
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 ended 30/06/14 | Six months ended 30/06/13 | Year ended 31/12/13 | ||||
£ | £ | £ | |||||
Profit attributable to ordinary equity holders | 399,415 | 473,350 | 729,617 | ||||
Six months ended 30/06/14 | Six months ended 30/06/13 | Year ended 31/12/13 | |||||
No | No | No | |||||
Weighted average number of ordinary shares for basic earnings per share | 71,950,766 | 71,440,490 | 71,430,298 | ||||
Adjustment for share options | 22,337 | 653,499 | 593,207 | ||||
Weighted average number of ordinary shares for diluted earnings per share | 71,973,103 | 72,093,989 | 72,023,505 | ||||
5. | Copies of this report will be sent to shareholders and are available at the Company's Registered Office. | ||||||