Last checked at 3 Sep 2009 07:00
CONCURRENT TECHNOLOGIES PLC
Interim results for the six months ended 30 June 2009
Concurrent Technologies Plc, (the "Company") which manufactures high-end embedded computer products for critical applications in the defence, telecommunication, aerospace, transportation, scientific and industrial markets, announces interim results for the six months ended 30 June 2009.
Highlights
Profit before tax up 13% to £1,367,916 (H1 2008: £1,213,534) on Sales up 19% at £6,520,809 (H1 2008: £5,480,801)
Earnings per share for the period increased to 1.54p
Gross margins improved to 61%, compared to 54% in H1 2008
Net cash and cash equivalents of £5.22m, no borrowings
Interim Dividend of 0.50p - up 11%
Multiple new product launches including the Company's most sophisticated to date
Michael Collins, Chairman, commented:
"We continue to expect our 2009 overall financial performance to be satisfactory, notwithstanding our substantially increasing investment in new product development, and view the subdued operating environment as being a short term factor."
"Indeed, the future beyond this year looks positive in the part of the defence market in which we operate. We continue, for example, to see very strong interest in our products for projects involving electronic, aerial and battlefield surveillance."
03 September 2009
Enquiries:
| Concurrent Technologies PlcGlen Fawcett, Managing Director | 01206 752 626 |
| Haggie Financial LLPNicholas Nelson/Kathy Boate | 020 7417 8989 |
| Nominated Adviser: Brewin Dolphin Investment BankingNeil Baldwin | 0845 213 4726 |
CONCURRENT TECHNOLOGIES PLC
CHAIRMAN'S STATEMENT
Business Summary
We design, build and supply high-end embedded computer products for the defence, telecommunication, aerospace, transportation, scientific and industrial markets and have been successful in this for over twenty years. These products include a wide range of high performance central processing unit ("CPU") boards, including many which feature dual-core and now quad-core processors. We also produce a number of other boards designed for applications where low power consumption is more important, but a common element of all our products is their relatively low electrical power requirement for the performance achieved. All these boards are designed to comply with open architecture interconnection standards.
In addition to their efficiency of operation, our products deliver very high levels of reliability without compromise to the 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 rugged 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 are batch produced to detailed specifications, and the vast majority of them are assembled in our UK factory.
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 13% increase in unaudited pre-tax profit for the first half of this year to £1,367,916 (first half 2008: £1,213,534) with earnings per share rising to 1.54 pence. Our defence business continues to contribute strongly to our performance while demand from commercial customers has been weaker during this recession. In addition, profitability has been boosted by a further increase in gross margin to 61% compared to 54% in the first half of 2008. Sales in the period were £6,520,809 (first half 2008: £5,480,801).
We ended the half year with net cash and cash equivalents of £5,222,057, up from £4,994,266 at the end of 2008.
The Company has used its authority in the first half of 2009 to buy back its own shares and the Directors will continue to do this when they consider it appropriate.
Review of Operations
During the first half of 2009 the Company continued to market its products primarily to the defence and telecommunication industries, where innovative products continue to see high demand. We now have a strong emphasis on designing boards which use processors with low power consumption which is critical in many applications. Lower power usage also leads to higher reliability, which is a characteristic demanded by most users of embedded computer products.
In addition to the launch of new processor boards, we continue to introduce boards which use multi-channel switches operating at gigabit data transfer rates that can be used in high-speed switched fabric bus interconnect systems. With slight variations in operating capabilities and format, these products address many different customer needs.
In April 2009 we released our most sophisticated product to date, which is based on the latest Intel® quad-core processor technology. This quad-core product with its substantial processing capability is well suited for use within the telecommunications, defence and homeland security market sectors.
Future Plans
Although we maintain an active policy of exploring value enhancing acquisition opportunities as they arise, we are currently concentrating on internal growth where we continue to see many opportunities to grow the business into new market areas without taking unacceptable risk. At the same time we will continue to pursue new sales in our existing markets.
We strongly believe that the key to our future success is continuing to expand our range of products, with a particular focus on existing bus architectures, including the smaller sized 3U versions, and rapidly applying the latest technologies from Intel®. Our business aim is 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.
As our priority continues to be the swift expansion of our engineering capability both here and abroad, we continue with our policy of recruiting design engineers in the UK and also in India where we now have a significant design capability.
Dividend
The Board has declared an interim dividend of 0.50 pence per share (2008 interim: 0.45 pence and dividends for the full year to end 2008: 1.30p), an increase of 11%. The total cost of this dividend will amount to £357,745. The ex-dividend date for the interim dividend is 9 September 2009, the record date is 11 September 2009 and the payment date is 25 September 2009.
Outlook
As we anticipated when reporting on our 2008 performance, declining world economic activity has had a negative effect on our customers in the telecommunications and industrial sectors. The impact of this has been much less in the defence sector.
At this stage we continue to expect our 2009 overall financial performance to be satisfactory, notwithstanding our substantially increasing investment in new product development, and view the subdued operating environment as being a short term factor. Indeed the future beyond this year looks positive in the part of the defence market in which we operate. We continue, for example to see very strong interest in our products for projects involving electronic, aerial and battlefield surveillance.
Our sales team has been opening up new opportunities throughout Europe and the USA. With this in mind, investment in engineering development has further increased in the first half of 2009 (up by 47% compared with the first half of 2008). Such investment increased by 34% in 2008 over 2007. Our objective with this investment is to continue to release more new products based on the latest multi-core Intel® processors and their very low-power Atom™ range, which should ensure that when economic conditions improve we will be in an excellent position to take advantage of sales opportunities as they arise.
Michael Collins
Chairman
03 September 2009
All companies and product names are trademarks of their respective organisation.
CONDENSED CONSOLIDATED INCOME STATEMENT
| Note | Six months ended 30/06/09 | Six months ended 30/06/08 | Year ended 31/12/08 | ||||
| £ | £ | £ | |||||
| CONTINUING OPERATIONS | |||||||
| Revenue | 6,520,809 | 5,480,801 | 12,619,631 | ||||
| Cost of sales | 2,558,796 | 2,494,707 | 5,933,965 | ||||
| Gross profit | 3,962,013 | 2,986,094 | 6,685,666 | ||||
| Net operating expenses | 2,638,741 | 1,862,057 | 3,917,427 | ||||
| Group operating profit | 1,323,272 | 1,124,037 | 2,768,239 | ||||
| Finance income | 44,644 | 89,497 | 183,364 | ||||
| Profit before tax | 1,367,916 | 1,213,534 | 2,951,603 | ||||
| Tax | 266,226 | 302,485 | 616,531 | ||||
| Profit for the period | 1,101,690 | 911,049 | 2,335,072 | ||||
| Attributable to: | |||||||
| Equity holders of the parent | 1,101,690 | 911,049 | 2,335,072 | ||||
| Basic earnings per share | 4 | 1.54p | 1.27p | 3.26p | |||
| Diluted earnings per share | 4 | 1.53p | 1.26p | 3.24p | |||
CONDENSED CONSOLIDATED BALANCE SHEET
| At 30 June 2009 | At 30 June 2008 | At 31 December 2008 | |||||
| ASSETS | £ | £ | £ | ||||
| Non-current assets | |||||||
| Property, plant and equipment | 592,059 | 556,168 | 621,798 | ||||
| Intangible assets | 2,522,667 | 1,509,543 | 1,948,934 | ||||
| Deferred tax assets | 107,174 | 82,160 | 114,585 | ||||
| 3,221,900 | 2,147,871 | 2,685,317 | |||||
| Current assets | |||||||
| Inventories | 2,127,873 | 1,780,425 | 1,413,816 | ||||
| Trade and other receivables | 2,552,379 | 3,268,081 | 3,419,443 | ||||
| Cash and cash equivalents | 5,222,057 | 3,913,747 | 4,994,266 | ||||
| 9,902,309 | 8,962,253 | 9,827,525 | |||||
| Total assets | 13,124,209 | 11,110,124 | 12,512,842 | ||||
| LIABILITIES | |||||||
| Non-current liabilities | |||||||
| Deferred tax liabilities | 797,734 | 435,028 | 579,930 | ||||
| Long term provisions | 35,564 | 25,421 | 35,767 | ||||
| 833,298 | 460,449 | 615,697 | |||||
| Current liabilities | |||||||
| Trade and other payables | 2,005,713 | 2,128,842 | 1,831,013 | ||||
| Short term provisions | 31,081 | 33,312 | 28,992 | ||||
| Current tax liabilities | 373,124 | 396,900 | 348,180 | ||||
| 2,409,918 | 2,559,054 | 2,208,185 | |||||
| Total liabilities | 3,243,216 | 3,019,503 | 2,823,882 | ||||
| Net assets | 9,880,993 | 8,090,621 | 9,688,960 | ||||
| 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 | 90,338 | (184,787) | 354,549 | ||||
| Profit and Loss | 5,400,862 | 3,885,615 | 4,944,618 | ||||
| Equity attributable to equity holders of parent | 9,880,993 | 8,090,621 | 9,688,960 | ||||
| Total equity | 9,880,993 | 8,090,621 | 9,688,960 | ||||
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
| Six months ended 30/06/09 | Six months ended 30/06/08 | Year ended 31/12/08 | |||
| £ | £ | £ | |||
| Cash flows from operating activities | |||||
| Profit before tax for the period | 1,367,916 | 1,213,534 | 2,951,603 | ||
| Adjustments for: | |||||
| Finance income | (44,644) | (89,497) | (183,364) | ||
| Depreciation | 106,358 | 69,547 | 163,905 | ||
| Amortisation | 199,718 | 155,617 | 213,449 | ||
| Impairment loss | 120,571 | - | 331,481 | ||
| Share-based payment | 11,291 | 7,275 | 18,085 | ||
| Exchange differences | (136,351) | (13,219) | 187,268 | ||
| (Increase)/decrease in inventories | (714,057) | (683,292) | (316,683) | ||
| Decrease/(increase) in trade and other receivables | 867,064 | (1,163,348) | (1,314,710) | ||
| Increase/(decrease) in trade and other liabilities | 176,586 | 610,852 | 319,049 | ||
| Cash generated from operations | 1,954,452 | 107,469 | 2,370,083 | ||
| Tax (paid)/refunded | (61,990) | 95,177 | (166,642) | ||
| Net cash generated from operating activities | 1,892,462 | 202,646 | 2,203,441 | ||
| Cash flows from investing activities | |||||
| Interest received | 44,644 | 89,497 | 183,364 | ||
| Purchases of property, plant and equipment (PPE) | (91,259) | (157,641) | (312,460) | ||
| Purchases of intangible assets | (899,044) | (455,680) | (1,278,828) | ||
| Net cash used in investing activities | (945,659) | (523,824) | (1,407,924) | ||
| Cash flows from financing activities | |||||
| Equity dividends paid | (608,422) | (573,712) | (896,178) | ||
| Purchase of treasury shares | (6,791) | - | (41,834) | ||
| Net cash used in financing activities | (615,213) | (573,712) | (938,012) | ||
| Effects of exchange rate changes on cash and cash equivalents | (103,799) | 11,404 | 339,528 | ||
| Net (decrease)/increase in cash | 227,791 | (883,486) | 197,033 | ||
| Cash at beginning of the period | 4,994,266 | 4,797,233 | 4,797,233 | ||
| Cash at the end of the period | 5,222,057 | 3,913,747 | 4,994,266 | ||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| Share capital | Share premium | Capital redemption reserve | Cumulative translation reserve | Profit and loss account | Total equity | |||||||||||
| £ | £ | £ | £ | £ | £ | |||||||||||
| Balance at 1 January 2008 | 727,000 | 3,405,817 | 256,976 | (182,972) | 3,547,479 | 7,754,300 | ||||||||||
| Profit for the period | - | - | - | - | 911,049 | 911,049 | ||||||||||
| Exchange differences on translating foreign operations | - | - | - | (1,815) | - | (1,815) | ||||||||||
| Total recognised income and expense for the period | - | - | - | (1,815) | 911,049 | 909,234 | ||||||||||
| Share based payment | - | - | - | - | 7,275 | 7,275 | ||||||||||
| Deferred tax on share based payments | - | - | - | - | (6,476) | (6,476) | ||||||||||
| Dividends paid | - | - | - | - | (573,712) | (573,712) | ||||||||||
| Balance at 30 June 2008 | 727,000 | 3,405,817 | 256,976 | (184,787) | 3,885,615 | 8,090,621 | ||||||||||
| Profit for the period | - | - | - | - | 1,424,023 | 1,424,023 | ||||||||||
| Exchange differences on translating foreign operations | - | - | - | 539,336 | - | 539,336 | ||||||||||
| Total recognised income and expense for the period | - | - | - | 539,336 | 1,424,023 | 1,963,359 | ||||||||||
| Share based payment | - | - | - | - | 10,810 | 10,810 | ||||||||||
| Deferred tax on share based payments | - | - | - | - | (11,530) | (11,530) | ||||||||||
| Dividends paid | - | - | - | - | (322,466) | (322,466) | ||||||||||
| Treasury shares | - | - | - | - - | (41,834) | (41,834) | ||||||||||
| Balance at 31 December 2008 | 727,000 | 3,405,817 | 256,976 | 354,549 | 4,944,618 | 9,688,960 | ||||||||||
| Profit for the period | - | - | - | - | 1,101,690 | 1,101,690 | ||||||||||
| Exchange differences on translating foreign operations | - | - | - | (264,211) | - | (264,211) | ||||||||||
| Total recognised income and expense for the period | - | - | - | (264,211) | 1,101,690 | 837,479 | ||||||||||
| Share based payment | - | - | - | - | 11,291 | 11,291 | ||||||||||
| Deferred tax on share based payments | - | - | - | - | (41,524) | (41,524) | ||||||||||
| Dividends paid | - | - | - | - | (608,422) | (608,422) | ||||||||||
| Treasury shares | (6,791) | (6,791) | ||||||||||||||
| Balance at 30 June 2009 | 727,000 | 3,405,817 | 256,976 | 90,338 | 5,400,862 | 9,880,993 | ||||||||||
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 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 2009. The information relating to the six months ended 30 June 2009 and 30 June 2008 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 2008, 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 under section 235 of the Companies Act 1985 in relation to those accounts was unqualified and did not contain a statement under section 237(2) or section 237(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 2009. 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 2008, 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 2008, as described in those financial statements: IFRS 2 Share-based Payment - Vesting Conditions and Cancellations The Standard has been amended to clarify the definition of vesting conditions and to prescribe the accounting treatment of an award that is effectively cancelled because a non-vesting condition is not satisfied. The adoption of this amendment did not have any impact on the financial position or performance of the Group. IFRS 8 Operating SegmentsThis standard requires disclosure of information about the Group's operating segments and replaces the requirement to determine primary (business) and secondary (geographical) reporting segments of the Group. Adoption of this new standard did not have any effect on the financial position or performance of the Group. The Group determined that it only has one operating segment under the new standard. An additional description of the operating segment under IFRS 8 is shown in Note 3. At the date of authorisation of these condensed consolidated interim 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 27 Consolidated and Separate Financial Statements (Revised 2008) (effective 1 July 2009) The Directors anticipate that the adoption of this Standard and Interpretation 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 estimated effective tax rates for the full year. | |||
| 3. | Segmental reporting | ||
| During the period, the Group has adopted IFRS 8, which replaced IAS 14 Segment Reporting. A key difference between IAS 14 and IFRS 8 is that the latter requires segment information to be presented on the same basis as that provided for internal reporting purposes to the Group's chief operating decision-maker. The Board has considered the requirements of IFRS 8 "Operating Segments". The Board is of the view 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 Board of Directors, as a whole, has been identified as constituting the chief operating decision maker of the Group. The key measure of performance used by the Board to assess the Group's performance is the Groups' 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 30/06/09 £ | Six months ended 30/06/08 £ | Year ended 31/12/08 £ | |||||
| Profit attributable to ordinary equity holders | 1,101,690 | 911,049 | 2,335,072 | ||||
| Six months ended 30/06/09 No | Six months ended 30/06/08 No | Year ended 31/12/08 No | |||||
| Weighted average number of ordinary shares for basic earnings per share | 71,580,393 | 71,714,012 | 71,666,198 | ||||
| Adjustment for share options | 276,286 | 365,684 | 319,416 | ||||
| Weighted average number of ordinary shares for diluted earnings per share | 71,856,679 | 72,079,696 | 71,985,614 | ||||
| 5. | Copies of this report will be sent to shareholders and are available at the Company's Registered Office. | ||||||