Last checked at 31 Aug 2010 07:00
CONCURRENT TECHNOLOGIES PLC
Interim Results for the six months ended 30 June 2010
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 2010.
Highlights:
·; Profit before tax £1,004,649 (H1 2009: £1,367,916)
·; Turnover £5,412,725 (H1 2009: £6,520,809)
·; Earnings per share for the period 1.08 pence
·; Gross Margins 54%, in line with 2009 full year results
·; Net cash and cash equivalents £4.6m, no borrowings
·; Interim dividend of 0.55 pence per share (2009 Interim: 0.50 pence) an increase of 10%. Total dividend for the full year to end 2009: 1.40 pence
·; Lockheed Martin Corporation STAR Supplier Award
·; Order book considerably increased in comparison to the same time in 2009
Michael Collins, Chairman, commented:
"After a difficult two years, we believe that an economic recovery in the telecommunications and industrial sectors has begun.
With improving world economic conditions and our growing competitive position, interest continues in our products particularly in relation to the defence sector. Applications for detecting and alleviating the threat posed by improvised explosive devices (IEDs) are of particular interest to us. As reported in July 2010 we had expected a defence related order for delivery this year but this has been deferred into next year with a consequential effect on this year's turnover. Apart from this, our current order book (up substantially on this time last year) and immediate sales prospects give us confidence for the future.
We also have confidence that our ongoing investment in creating new opportunities will produce rewards in future periods. Investment in product development has again increased in 2010 and we expect it to exceed last year's R&D spend by at least 5% as we press for an increase in the diversity of our product range. Three new products will be released during the second half of 2010. In addition design work has already commenced on applying next generation higher performance technology to even more innovative products which will be available in early 2011."
31 August 2010
Enquiries:
Concurrent Technologies Plc +44 (0)1206 752 626 Glen Fawcett, Managing Director
Haggie Financial LLP +44 (0)20 7417 8989 Nicholas Nelson +44 (0)7921 522 920
Cenkos Securities plc (NOMAD) Ken Fleming +44 (0)131 220 6939
Beth McKiernan +44 (0)131 220 9778
THE CHAIRMAN'S STATEMENT
Business Summary
Concurrent Technologies designs, manufactures and supplies innovative 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 and more recently, Intel® Core™ i7 and six-core Intel® Xeon® processors. Designed for CompactPCI®, VPX, VME, AMC, XMC/PMC and Multibus II open architecture standards, a common feature of our products is the low level of electrical power required for their very high performance capabilities.
Our products deliver extremely high levels of reliability with 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 ruggedized 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, the vast majority of which are made in-house, are batch produced to highly detailed specifications.
In addition to hardware design activity, 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 operating systems.
Financial Summary
I am able to report an unaudited pre-tax profit for the first half of this year of £1,004,649 (first half 2009: £1,367,916) with an associated earnings per share of 1.08 pence. Gross margin was 54% (first half 2009: 61%) which is in line with 2009 full year results. Sales in the period were £5,412,725 (first half 2009: £6,520,809).
We ended the half year with our net cash and cash equivalents remaining strong at £4,550,648 (first half 2009: £5,222,057) even after this year's increased investment in R&D and increased dividend paid to shareholders in the first half of 2010.
Review of Operations
We have continued to broaden our already diverse customer base most of which comprises large, high quality companies and organisations across multiple sectors and in many countries. Exports in the first half of 2010 accounted for 84% of revenue. Our customers in the relatively slow changing defence sector were the biggest contributors to our turnover in this period, while demand from commercial customers, which weakened during the recession, has been reasonably stable in the last 6 months.
We have continued to develop many environmentally superior products that can operate at extreme temperatures, elevated altitudes and at high shock and vibration levels. With slight variations in operating capacities and format, these products address many different customer needs. During 2010 we have introduced boards which feature the latest Intel® Core™ i7 processors combined with the Intel® QM57 Express Chipset, as well as our first product incorporating the Intel® six-core Xeon® processors which are particularly suited for use within the defence, telecommunications and homeland security market sectors. All the products released by us this year have featured low power consumption, with consequent higher reliability, which continues to be a critical requirement for end users of embedded computer products.
The first half of 2010 saw the Company being awarded the prestigious Lockheed Martin Corporation STAR Supplier Award for the Company's exceptional performance as measured by quality, delivery, affordability, management and administration.
Future Plans
The key to continued success is to expand our range of products, with a particular focus on the VPX, AMC and CompactPCI® bus architectures. Our business aim will be to design more innovative 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.
Acquisition opportunities are not our top priority but we continue to look for them. There is plenty of scope for internal organic growth where we continue to see many opportunities to extend the business into new market areas without taking unacceptable risk.
We continue the expansion of our design engineering capability both in the UK and India and, therefore, maintain our policy of recruiting design engineers in both countries. The design facility in Bangalore, India will increase its capability in relation to ruggedizing products, enabling the Company to design even more sophisticated and innovative new products which our markets demand.
The Company has not yet used its authority in 2010 to buy back its own shares. This authority will be exercised by the Directors when they consider it appropriate.
Dividend
The Board has declared a first interim dividend of 0.55 pence per share (2009 first interim: 0.50 pence and total dividends for the full year to end 2009: 1.40p), an increase of 10%. The total cost of this dividend will amount to £393,520. The ex-dividend date for the first interim dividend is 8 September 2010, the record date is 10 September 2010 and the payment date is 22 September 2010.
Outlook
After a difficult two years, we believe that an economic recovery in the telecommunications and industrial sectors has begun.
With improving world economic conditions and our growing competitive position, interest continues in our products particularly in relation to the defence sector. Applications for detecting and alleviating the threat posed by improvised explosive devices (IEDs) are of particular interest to us. As reported in July 2010 we had expected a defence related order for delivery this year but this has been deferred into next year with a consequential effect on this year's turnover. Apart from this, our current order book (up substantially on this time last year) and immediate sales prospects give us confidence for the future.
We also have confidence that our ongoing investment in creating new opportunities will produce rewards in future periods. Investment in product development has again increased in 2010 and we expect it to exceed last year's R&D spend by at least 5% as we press for an increase in the diversity of our product range. Three new products will be released during the second half of 2010. In addition design work has already commenced on applying next generation higher performance technology to even more innovative products which will be available in early 2011.
Michael Collins
Chairman
31 August 2010
All companies and product names are trademarks of their respective organisations.
CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
|
| Six months |
| Six months |
| Year |
|
| ended |
| ended |
| ended |
|
| 30/06/10 |
| 30/06/09 |
| 31/12/09 |
| CONTINUING OPERATIONS | £ |
| £ |
| £ |
| Revenue | 5,412,725 |
| 6,520,809 |
| 12,854,777 |
| Cost of sales | 2,504,806 |
| 2,558,796 |
| 5,606,328 |
| Gross profit | 2,907,919 |
| 3,962,013 |
| 7,248,449 |
| Net operating expenses | 1,931,076 |
| 2,638,741 |
| 4,531,272 |
| Group operating profit | 976,843 |
| 1,323,272 |
| 2,717,177 |
| Finance income | 27,806 |
| 44,644 |
| 80,617 |
| Profit before tax | 1,004,649 |
| 1,367,916 |
| 2,797,794 |
| Tax | 230,527 |
| 266,226 |
| 259,488 |
| Profit for the year | 774,122 |
| 1,101,690 |
| 2,538,306 |
|
|
|
|
|
|
|
| Other Comprehensive Income |
|
|
|
|
|
| Exchange differences on translating foreign operations | 185,438 |
| (264,211) |
| (228,640) |
| Tax relating to components of other comprehensive income | - |
| - |
| - |
| Other Comprehensive Income for the year, net of tax | 185,438 |
| (264,211) |
| (228,640) |
| Total Comprehensive Income for the year | 959,560 |
| 837,479 |
| 2,309,666 |
|
|
|
|
|
|
|
| Profit for the period attributable to: |
|
|
|
|
|
| Equity holders of the parent | 774,122 |
| 1,101,690 |
| 2,538,306 |
|
|
|
|
|
|
|
| Total Comprehensive Income attributable to: |
|
|
|
|
|
| Equity holders of the parent | 959,560 |
| 837,479 |
| 2,309,666 |
|
|
|
|
|
|
|
| Earnings per share |
|
|
|
|
|
| Basic earnings per share | 1.08p |
| 1.54p |
| 3.55p |
|
|
|
|
|
|
|
| Diluted earnings per share | 1.07p |
| 1.53p |
| 3.53p |
CONDENSED CONSOLIDATED BALANCE SHEET
|
| As at |
| As at |
| As at |
|
| 30/06/10 |
| 30/06/09 |
| 31/12/09 |
| ASSETS | £ |
| £ |
| £ |
| Non-current assets |
|
|
|
|
|
| Property, plant and equipment | 579,968 |
| 592,059 |
| 591,989 |
| Intangible assets | 4,177,654 |
| 2,522,667 |
| 3,554,243 |
| Deferred tax assets | 219,305 |
| 107,174 |
| 183,722 |
|
| 4,976,927 |
| 3,221,900 |
| 4,329,954 |
| Current assets |
|
|
|
|
|
| Inventories | 2,298,186 |
| 2,127,873 |
| 2,056,734 |
| Trade and other receivables | 2,316,927 |
| 2,552,379 |
| 2,344,877 |
| Current tax assets | 233,431 |
| - |
| 311,224 |
| Cash and cash equivalents | 4,550,648 |
| 5,222,057 |
| 4,914,658 |
|
| 9,399,192 |
| 9,902,309 |
| 9,627,493 |
|
|
|
|
|
|
|
| Total assets | 14,376,119 |
| 13,124,209 |
| 13,957,447 |
|
|
|
|
|
|
|
| LIABILITIES |
|
|
|
|
|
| Non-current liabilities |
|
|
|
|
|
| Deferred tax liabilities | 1,219,564 |
| 797,734 |
| 1,043,198 |
| Long term provisions | 48,159 |
| 35,564 |
| 35,580 |
|
| 1,267,723 |
| 833,298 |
| 1,078,778 |
| Current liabilities |
|
|
|
|
|
| Trade and other payables | 1,630,059 |
| 2,005,713 |
| 1,770,066 |
| Short term provisions | 44,754 |
| 31,081 |
| 33,066 |
| Current tax liabilities | 51,914 |
| 373,124 |
| 33,807 |
|
| 1,726,727 |
| 2,409,918 |
| 1,836,939 |
|
|
|
|
|
|
|
| Total liabilities | 2,994,450 |
| 3,243,216 |
| 2,915,717 |
|
|
|
|
|
|
|
| Net assets | 11,381,669 |
| 9,880,993 |
| 11,041,730 |
|
|
|
|
|
|
|
| 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 reserve | 256,976 |
| 256,976 |
| 256,976 |
| Cumulative translation reserve | 311,347 |
| 90,338 |
| 125,909 |
| Profit and loss account | 6,680,529 |
| 5,400,862 |
| 6,526,027 |
| Equity attributable to equity holders of the parent | 11,381,669 |
| 9,880,993 |
| 11,041,729 |
|
|
|
|
|
|
|
| Total equity | 11,381,669 |
| 9,880,993 |
| 11,041,729 |
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
|
| Six months |
| Six months |
| Year |
|
| ended |
| ended |
| ended |
|
| 30/06/10 |
| 30/06/09 |
| 31/12/09 |
|
| £ |
| £ |
| £ |
| Cash flows from operating activities |
|
|
|
|
|
| Profit before tax for the period | 1,004,649 |
| 1,367,916 |
| 2,797,794 |
| Adjustments for: |
|
|
|
|
|
| Finance income | (27,806) |
| (44,644) |
| (80,617) |
| Depreciation | 105,679 |
| 106,358 |
| 202,165 |
| Amortisation | 366,930 |
| 199,718 |
| 486,295 |
| Impairment loss | 54,066 |
| 120,571 |
| 149,688 |
| Loss on disposal of property, plant and equipment (PPE) | - |
| - |
| 590 |
| Share-based payment | 11,016 |
| 11,291 |
| 22,642 |
| Exchange differences | 46,869 |
| (136,351) |
| (89,917) |
| (Increase) in inventories | (241,452) |
| (714,057) |
| (642,918) |
| (Increase)/decrease in trade and other receivables | 27,950 |
| 867,064 |
| 1,074,566 |
| Increase/(decrease) in trade and other payables | (115,740) |
| 176,586 |
| (57,060) |
| Cash generated from operations | 1,232,162 |
| 1,954,452 |
| 3,863,228 |
| Tax (paid)/received | 19,011 |
| (61,990) |
| (471,148) |
| Net cash generated from operating activities | 1,251,173 |
| 1,892,462 |
| 3,392,080 |
|
|
|
|
|
|
|
| Cash flows from investing activities |
|
|
|
|
|
| Interest received | 27,806 |
| 44,644 |
| 80,617 |
| Purchases of property, plant and equipment (PPE) | (80,557) |
| (91,259) |
| (180,717) |
| Purchases of intangible assets | (1,040,692) |
| (899,044) |
| (2,243,464) |
| Net cash used in investing activities | (1,093,444) |
| (945,659) |
| (2,343,564) |
|
|
|
|
|
|
|
| Cash flows from financing activities |
|
|
|
|
|
| Equity dividends paid | (643,491) |
| (608,422) |
| (966,166) |
| Purchase of treasury shares | - |
| (6,791) |
| (33,179) |
| Net cash used in financing activities | (643,491) |
| (615,213) |
| (999,345) |
|
|
|
|
|
|
|
| Effects of exchange rate changes on cash and cash equivalents | 121,753 |
| (103,799) |
| (128,780) |
|
|
|
|
|
|
|
| Net increase/(decrease) in cash | (364,009) |
| 227,791 |
| (79,608) |
| Cash at beginning of period | 4,914,658 |
| 4,994,266 |
| 4,994,266 |
| Cash at the end of the period | 4,550,648 |
| 5,222,057 |
| 4,914,658 |
CONDENSED 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 January 2009 | 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 comprehensive income for the period | - |
| - |
| - |
| (264,211) |
| 1,101,690 |
| 837,479 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Share-based payment | - |
| - |
| - |
| - |
| 11,291 |
| 11,291 |
| Deferred tax on share based payment | - |
| - |
| - |
| - |
| (41,524) |
| (41,524) |
| Dividends paid | - |
| - |
| - |
| - |
| (608,422) |
| (608,422) |
| Purchase of 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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Profit for the period | - |
| - |
| - |
| - |
| 1,436,616 |
| 1,436,616 |
| Exchange differences on translating foreign operations | - |
| - |
| - |
| 35,571 |
| - |
| 35,571 |
| Total recognised comprehensive income for the period | - |
| - |
| - |
| 35,571 |
| 1,436,616 |
| 1,472,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Share-based payment | - |
| - |
| - |
| - |
| 11,351 |
| 11,351 |
| Deferred tax on share based payment | - |
| - |
| - |
| - |
| 61,330 |
| 61,330 |
| Dividends paid | - |
| - |
| - |
| - |
| (357,744) |
| (357,744) |
| Purchase of treasury shares | - |
| - |
| - |
| - |
| (26,388) |
| (26,388) |
| Balance at 31 December 2009 | 727,000 |
| 3,405,817 |
| 256,976 |
| 125,909 |
| 6,526,027 |
| 11,041,729 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Profit for the period | - |
| - |
| - |
| - |
| 774,122 |
| 774,122 |
| Exchange differences on translating foreign operations | - |
| - |
| - |
| 185,438 |
| - |
| 185,438 |
| Total recognised comprehensive income for the period | - |
| - |
| - |
| 185,438 |
| 774,122 |
| 959,560 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Share-based payment | - |
| - |
| - |
| - |
| 11,016 |
| 11,016 |
| Deferred tax on share based payment | - |
| - |
| - |
| - |
| 12,855 |
| 12,855 |
| Dividends paid | - |
| - |
| - |
| - |
| (643,491) |
| (643,491) |
| Purchase of treasury shares | - |
| - |
| - |
| - |
| - |
| - |
| Balance at 30 June 2010 | 727,000 |
| 3,405,817 |
| 256,976 |
| 311,347 |
| 6,680,529 |
| 11,381,669 |
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 31 August 2010.
The information relating to the six months ended 30 June 2010 and 30 June 2009 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 2009, 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 2010. 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 2009, 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 2009, as described in those financial statements. 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
| ||
|
| 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 30/06/10 £ |
| Six months ended 30/06/09 £ |
| Year ended 31/12/09 £ |
|
| Profit attributable to ordinary equity holders | 774,122 |
| 1,101,690 |
| 2,538,306 |
|
|
|
|
|
|
|
|
|
|
| Six months ended 30/06/10 No |
| Six months ended 30/06/09 No |
| Year ended 31/12/09 No |
|
| Weighted average number of ordinary shares for basic earnings per share | 71,499,012 |
| 71,580,393 |
| 71,558,889 |
|
| Adjustment for share options | 565,440 |
| 276,286 |
| 358,728 |
|
| Weighted average number of ordinary shares for diluted earnings per share | 72,064,452 |
| 71,856,679 |
| 71,917,617 |
|
|
| |||||
| 5. | Copies of this report will be sent to shareholders and are available at the Company's Registered Office. | |||||