Last checked at 19 Sep 2007 07:00
CONCURRENT TECHNOLOGIES PLC
Interim results for the six months ended 30 June 2007
Concurrent Technologies Plc, 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 2007.
Financial Highlights
* Profit before tax, after capitalisation of certain development costs for the current period, declined 11% to ‚£835,198 (H1 2006: ‚£939,619). Second half bias anticipated * Increased interim dividend to 0.40p per share (H1 2006: 0.35p) * Gross margins strengthened to 47% (H1 2006: 45%) * Cash of ‚£4.3m and no borrowings
Operating Highlights
* Customers successfully transitioned to new RoHS compliant products * Ranked in the top 5% of embedded board vendors by an independent global market analysis report * Many new products successfully launched during the period * Expansion into India: - Increasing customer enquiries - Planned establishment of a new design centre in Bangalore in India
Michael Collins, Chairman, commented:
"The number of sales opportunities, especially in the USA, continues to increase. In addition, in recent months the number of sales requests emanating from India has much increased and so in the coming months, sales channels will be established in the sub-continent to address the defence and telecommunications markets in particular."
"We have announced some important new product launches this year already and we expect that the release of even more new products based on the latest multi-core Intel‚® processors should ensure that we are in an excellent position to take advantage of these sales opportunities."
19 September 2007EnquiriesConcurrent Technologies Plc 01206 752 626 Glen Fawcett, Managing Director Nexus Financial Ltd 020 7451 7050 Nicholas Nelson / Kathy Boate Nominated Adviser Brewin Dolphin Investment Banking 0141 221 7733 Alan Stewart / Ken Fleming CONCURRENT TECHNOLOGIES PLCCHAIRMAN'S STATEMENTFinancial Summary
As I reported in March 2007, the introduction of the RoHS environmental regulations had a significant impact on us in 2006 in particular. One consequence was that some customers advanced product purchases into 2006 as they made "last time buy" purchases of products containing leaded components which would in the normal course of events have been purchased in 2007. Consequently, whilst turnover and profits for the second half of 2006 were boosted by this unusual event the results for the first half of 2007 were depleted for the same reasons. In addition, many customers who were making the change to unleaded products decided that they should also transition towards our new dual-core processor based products and this transition is continuing. Profit before tax, calculated after capitalisation of certain development costs for the current period, declined 11% to ‚£835,198 (H1 2006: ‚£939,619) but we anticipate a second half bias for the full year.
Despite the continued weakness of the US dollar gross margins during the period strengthened to 47% from 45% in the same period last year.
We ended this half year with cash of ‚£4.26m and no borrowings, while our earnings per share for the period was 0.86p (H1 2006: 0.98p). Market conditions continue to be good.
In preparing the figures for the first half of 2007 we have made the transition from UK GAAP to International Financial Reporting Standards ("IFRS"). There are many changes in the way we report our results, in particular relating to the treatment of development costs, some of which for the first time for many years have been capitalised and now appear as intangible assets in the balance sheet.
Business Summary
Concurrent Technologies designs, builds and supplies high-end embedded computer products to the defence, telecommunication and industrial markets. Our range of products includes central processing unit ("CPU") boards, computer inter-connections and computer systems. These computer products are integrated into a variety of applications which require very high levels of processing power and superior levels of reliability; applications include military systems, communications, networking, medical imaging, industrial automation and scientific research.
The Group's product range, which is mainly based on long life-cycle components produced by Intel‚®, includes single and dual processor computer boards using single and dual-core processors. Designed for the CompactPCI‚®, VME, AMC (Advanced Mezzanine Card) and Multibus II open architecture standards, the majority of the designs are for use in standard operating conditions with some extended temperature range versions for use in more extreme environments.
In addition to hardware design capability, our engineering teams undertake a significant amount of software and firmware development to provide interoperability between products, generate test software both on-board and for production test purposes, and also provide support for leading embedded and real-time operating systems.
Review of Operations
During the first half of this year the Company focussed on the introduction of new products, and in particular in transitioning existing and new customers to our latest ranges of RoHS compliant dual-core products. These products are being marketed world-wide and targeted primarily at defence and telecommunication industries.
These new products include significant technological developments resulting in this period being one of the most productive in our history. In addition to our new processor boards, we have now developed technology using multi-channel switches operating at gigabit data rates that can be used in high-speed switched fabric VME systems.
Many new products which support the Intel‚® Core¢â€ž¢2 Duo range of processors have now been released. These processors enable the Company to offer products which provide enhanced processing capabilities without a significant increase in power consumption - an important attribute for the end users. The low power consumption also leads to higher reliability and is a characteristic much in demand by users of embedded computer products.
The Company has also produced a further product that features two Dual-Core Intel‚® Xeon‚® processors on a single CompactPCI‚® board. The board is ideal for intensive processing applications where the four processor cores can access up to 8 Gbytes of onboard memory.
Many advances are being made in the development of products with enhanced environmental capabilities, and important product announcements are expected later this year.
The Company's image within its markets was further enhanced during the first half by an independent global market analysis research report which placed the Company within the top 5% of embedded board vendors. This was particularly encouraging.
Where appropriate we have successfully transitioned customers to our new dual-core product ranges, and these customers are now in their test and development stages using this new technology. In addition, we have identified many new customers and our products have been designed into a number of new development programmes, particularly within the defence market. Most of these programmes have yet to go to the production stage, but we are confident that many of these will generate business for several years.
Future Plans
It is key to the future success of the business that we continue to expand our range of products targeted primarily at 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, and in an increasing number of cases these products are targeted for use in harsh environments.
We will, therefore, continue increasing our substantial investment in design and development. As part of this aim we have plans to establish a new design studio in Bangalore, India which enjoys a concentration of high technology design skills suited to our needs. Shareholders should expect us to be moving quickly to make India another product development centre, although we currently have no plans to manufacture there.
The Company has the authority to buy back its own shares and the Directors, as in past periods, will consider re-purchases if good opportunities arise at suitable times.
As I said in March 2007, with the Group's strong financial base and market positioning, we maintain a proactive policy of exploring value enhancing acquisition opportunities as they arise.
Dividend
The Board is declaring an interim dividend of 0.40p per share (2006 0.35p). The total cost of this interim dividend will amount to ‚£289k. The ex-dividend date for the interim dividend is 3 October 2007, the record date is 5 October 2007 and the payment date is 2 November 2007.
Outlook
The second half of 2007 has started well although due to their own market conditions, a few customers have experienced delays during 2007. These delays coupled with customers migrating to our dual-core processing products means that we do not anticipate that the year as a whole will surpass last year's excellent performance.
The number of sales opportunities, especially in the USA, continues to increase. In addition, in recent months the number of sales requests emanating from India has much increased and so in the coming months, sales channels will be established in the sub-continent to address the defence and telecommunications markets in particular.
We have announced some important new product launches this year already and we expect that the release of even more new products based on the latest multi-core Intel‚® processors should ensure that we are in an excellent position to take advantage of these sales opportunities.
Michael CollinsChairman18 September 2007
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CONCURRENT TECHNOLOGIES PLC
CONDENSED CONSOLIDATED INCOME STATEMENT Six months Six months Year ended ended ended 30/06/07 30/06/06 31/12/06 ‚£ ‚£ ‚£ CONTINUING OPERATIONS Sales revenue 4,756,967 5,829,566 12,507,280 Cost of sales 2,530,813 3,217,770 6,683,124 Gross profit 2,226,154 2,611,796 5,824,156 Net operating expenses 1,497,937 1,759,143 3,716,999 Group operating profit 728,217 852,653 2,107,157 Finance income 106,981 86,966 187,501 Profit before tax 835,198 939,619 2,294,658 Tax 216,443 228,453 539,515 Profit for the period 618,755 711,166 1,755,143 Attributable to: Equity holders of the parent 618,755 711,166 1,755,143 Basic earnings per 0.86p 0.98p 2.42p share Diluted earnings per 0.85p 0.98p 2.41p share CONCURRENT TECHNOLOGIES PLC CONDENSED CONSOLIDATED BALANCE SHEET At 30 June At 30 June At 31 2007 2006 December 2006 ASSETS ‚£ ‚£ ‚£ Non-current assets Property, plant and 475,577 465,523 467,244 equipment Intangible assets 656,701 133,038 131,289 Deferred tax assets 106,020 102,866 119,706 1,238,298 701,427 718,239 Current assets Inventories 1,561,751 1,390,274 1,279,465 Trade and other 1,769,116 1,823,053 2,047,454 receivables Cash and cash 4,255,556 4,296,070 4,813,022 equivalents 7,586,423 7,509,397 8,139,941 Total assets 8,824,721 8,210,824 8,858,180 LIABILITIES Non-current liabilities Deferred tax liabilities 132,257 37,113 - Other provisions 14,802 - 16,445 147,059 37,113 16,445 Current liabilities Trade and other payables 1,567,008 1,525,386 1,628,905 Provisions 45,323 - 43,680 Current tax liabilities 36,284 404,109 299,029 1,648,615 1,929,495 1,971,614 Total liabilities 1,795,674 1,966,608 1,988,059 Net assets 7,029,047 6,244,216 6,870,121 EQUITY Capital and reserves Share capital 727,000 727,000 727,000 Share premium account 3,405,817 3,405,817 3,405,817 Capital redemption 256,976 256,976 256,976 reserve Cumulative translation (197,656) (90,776) (165,969) adjustment Profit and loss account 2,836,910 1,945,199 2,646,297 Equity attributable to 7,029,047 6,244,216 6,870,121 equity holders of parent Total equity 7,029,047 6,244,216 6,870,121 CONCURRENT TECHNOLOGIES PLC CONDENSED CONSOLIDATED CASH FLOW STATEMENT Six months Six months Year ended ended ended 30/06/07 30/06/06 31/12/06 ‚£ ‚£ ‚£ Cash flows from operating activities Profit for the period 618,755 711,166 1,755,143 Adjustments for: Finance income (106,981) (86,966) (187,501) Tax 216,443 228,453 539,515 Depreciation 60,426 71,537 143,546 Amortisation 22,605 15,697 33,302 (Profit)/loss on disposal of (306) - 1,331 fixed assets Capitalisation of development (502,427) - - costs Share-based payment 12,876 16,041 29,311 (Increase)/decrease in stock (282,286) 111,280 222,089 Decrease/(increase) in trade and 278,338 (129,762) (354,163) other receivables (Decrease)/increase in trade and (61,897) (116,151) 48,803 other payables Cash generated from operations 255,546 821,295 2,231,376 Tax (paid)/received (306,875) 2,395 (429,903) Net cash (used in)/generated (51,329) 823,690 1,801,473 from operating activities Cash flows from investing activities Interest received 106,981 86,966 187,501 Purchases of property, plant and (69,056) (105,202) (180,334) equipment (PPE) Purchases of intangible assets (45,955) (38,014) (55,341) Proceeds from sale of PPE 306 - 587 Net cash used in investing (7,724) (56,250) (47,587) activities Cash flows from financing activities Equity dividends paid (470,015) (363,500) (617,950) Purchase of treasury shares - - (140,743) Net cash used in financing (470,015) (363,500) (758,693) activities Net (decrease)/increase in cash (529,068) 403,940 995,193 Cash at beginning of period 4,813,022 3,978,139 3,978,139 Effect of foreign exchange rate (28,398) (86,009) (160,310) changes Cash at the end of the period 4,255,556 4,296,070 4,813,022 CONCURRENT TECHNOLOGIES PLCNOTES TO THE INTERIM REPORT
1. These condensed consolidated interim financial statements, which are
unaudited, have been approved for issue by the Board of Directors on 18
September 2007.
2. The condensed financial information set out in this interim report does not
constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The Group's statutory financial statements for the year ended 31 December 2006, prepared under UK GAAP (United Kingdom Generally Accepted Accounting Practice), have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under Section 237(2) of the Companies Act 1985.
3. These condensed consolidated interim financial statements are for the six
months ended 30 June 2007. They have been prepared in accordance with IAS 34 "Interim Financial Reporting" and the requirements of IFRS 1 "First-time Adoption of International Financial Reporting Standards" relevant to interim reports, because they are part of the period covered by the Group's first IFRS financial statements for the year ended 31 December 2007. 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 2006.
4. Current tax expense is recognised in these condensed consolidated interim
financial statements based on the estimated effective tax rate for the full
year.
5. The calculation of basic earnings per share for the six months ended 30
June 2007 is based on the weighted average number of Ordinary Shares outstanding during the period of 72,310,012. Comparative basic earnings per share for the periods shown are based on the weighted average number of Ordinary Shares outstanding of 72,700,012 in respect of the six months ended 30 June 2006 and 72,657,889 in respect of the year ended 31 December 2006. The calculation of diluted earnings per share incorporates the following number of Ordinary Shares in respect of performance related employee share options: six months ended 30 June 2007 - 675,940, six months ended 30 June 2006 - 69,377, year ended 31 December 2006 - 250,083.
6. Copies of this report will be sent to shareholders and are available at the
Company's Registered Office.
CONCURRENT TECHNOLOGIES PLC