Final Results
CONCURRENT TECHNOLOGIES PLC
Preliminary results for the year ended 31 December 2008
Concurrent Technologies Plc, ("Concurrent" or the "Company") which manufactures
high-end embedded computer products for critical applications in the defence,
transportation, communications and industrial markets, announces preliminary
results for the year to 31 December 2008.
Financial Highlights
* Profit before tax of £2,951,603 an increase of 21% (2007: £2,432,973)
* Turnover of £12,619,631 an increase of 19% (2007: £10,565,278)
* both turnover and profits stronger in second half of year
* Gross margins for the year strengthened to 53.0% up from 49.4% last year
* Strong balance sheet: cash of £4.99m with no borrowings
* EPS increased to 3.26 pence (2007: 2.62p)
* Total dividend of 1.30 pence per share for the year
Operational Highlights
* Released 9 new products during the year
* Increased requirement for Concurrent's 3U-sized boards - more attractive to
critical military applications
* Particularly strong demand from defence sector
* Continued demand from telecommunications and industrial sector despite
economic conditions
* Product design and development key to further expansion - engineering
centre in Bangalore fully operational and Concurrent continuing to recruit
there and in the UK
* Post period end: release of most sophisticated product to date, based on
the latest Intel® quad-core processor technology
Michael Collins, Chairman, commented:
"Trading in the first quarter of 2009 has proceeded in line with our
expectations. Clearly the declining world economic activity is having an effect
on companies in the telecommunications and industrial sectors, but we are still
experiencing reasonable order intake from these sectors."
"In the defence field, activity has never been higher for us. Moreover, US
Government plans to cut back on some defence projects are unlikely to impact us
as the projects which appear to be under most threat, such as the F-22 fighter,
are not those where we have a major interest. Very strong interest continues in
our products for projects for electronic, aerial and battlefield surveillance.
Sales growth occurring this year is likely to be more modest than in 2008, but
at this stage we expect our financial performance to be satisfactory. Our
existing order book and immediate sales prospects give us confidence for the
remainder of this year, and, so far as the future beyond that is concerned, we
believe there is an abundance of opportunity, particularly in the defence
market in the USA."
"We have announced some important new product launches during the past 12
months and expect that the continuing 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 sales opportunities as they arise."
27 April 2009
Enquiries:
Concurrent Technologies Plc 01206 752 626
Glen Fawcett, Managing Director
Haggie Financial LLP 020 7417 8989
Nicholas Nelson/Kathy Boate
Nominated Adviser
Brewin Dolphin Investment Banking 0845 213 4726
Neil Baldwin
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. 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, quad-core processors.
Designed for the 3U and 6U CompactPCI®, VME, AMC (Advanced Mezzanine Card) and
Multibus II open architecture standards, a common feature of our products is
the low level of electrical power required for their high performance
capabilities.
Our products deliver very 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 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 highly detailed specifications, and the vast majority of these are
made in-house.
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
We are pleased to report a profit before tax for 2008 of £2,951,603 (2007: £
2,432,973), an increase of 21% over the previous year. Earnings per share for
the period increased to 3.26p (2007: 2.62p). In the second half of the year,
profit before tax was £1,738,069 an increase of 43% over the first half of 2008
(H1 2008: £1,213,534). This result was achieved on sales of £12,619,631, an
increase of 19% compared with 2007 (2007: £10,565,278). Sales in the second
half of 2008 also improved, with turnover of £7,138,830 compared with £
5,480,801 in the first half.
Gross margins for the year strengthened again to 53.0% up from 49.4% last year,
resulting partly from a strong US dollar and partly from increased sales of our
high margin Multibus II products during the period. We do not, however, 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 year with cash and cash equivalents of £4.99m (2007: £4.80m) and
no borrowings. It is encouraging that this increased cash balance was during a
period of continuing increases in product development expenditure to £2,031,970
up from £1,522,073 in 2007.
We continue to have a good diversity of customers, encompassing large blue chip
companies across multiple sectors, with the stable defence market being the
biggest contributor to our turnover.
Review of Operations
During 2008 the Company continued to market its products primarily to the
defence and telecommunication industries, where innovative products continue to
have a high level of demand. In addition to the launch of new processor boards,
we continued to introduce 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. With slight variations in operating capacities and
format, these products address many different customer needs.
In 2008 we released 9 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 particularly attractive to defence applications. This is due
to our ability to put a large amount of functionality on a very small board
which can be ruggedised and specified for use in harsh environments. Included
among the 3U boards released recently is one using the latest Intel® very low
power Atomâ„¢ processor. This type of board in commercial form is widely used in
applications within industrial control. 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.
Post the financial year end, 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.
All of the products released in 2008 enable the Company to offer boards which
provide enhanced processing capabilities without a significant increase in
power consumption - an important attribute for the end users. Low power
consumption also leads to higher reliability, which is a characteristic
demanded by most users of embedded computer products. The boards offer high
performance solutions that continue to attract new customers while encouraging
upgrades from current clients keen to take advantage of the improved
functionalities.
Future Plans
Although we maintain an active policy of exploring value enhancing acquisition
opportunities as they arise, this is not our top priority at the moment. Our
current emphasis is on internal organic 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 the CompactPCI® bus
architecture, including the newer smaller sized 3U version, together with the
VME and AMC architectures. Our business aim will be 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.
Even though, like most other businesses, maintaining and growing sales in a
contracting world economy is a challenge, an even bigger challenge for us 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 we have now built a significant design capability.
Our operation in Bangalore, India gives us direct access to a large pool of
talent, which will supplement our engineering operations in the UK. The design
facility in Bangalore is now fully operational (16 employees at the end of
2008) and has already produced several key designs.
The Company has used its authority in 2008 to buy back its own shares and the
Directors will continue to do this when they consider it appropriate.
Dividend
The Board will recommend a final dividend of 0.85 pence per share (2007: 0.80
pence) which when added to the interim dividend of 0.45 pence per share will
make a total of 1.30 pence per share for the year (2007: 1.20 pence). The total
cost of this final dividend will amount to £608,422. The ex-dividend date for
the final dividend is 27 May 2009, the record date is 29 May 2009 and the
payment date is 15 June 2009.
Outlook
Trading in the first quarter of 2009 has proceeded in line with our
expectations. Clearly the declining world economic activity is having an effect
on companies in the telecommunications and industrial sectors, but we are still
experiencing reasonable order intake from these sectors.
In the defence field, activity has never been higher for us. Moreover, US
Government plans to cut back on some defence projects are unlikely to impact us
as the projects which appear to be under most threat, such as the F-22 fighter,
are not those where we have a major interest. Very strong interest continues in
our products for projects for electronic, aerial and battlefield surveillance.
Sales growth occurring this year is likely to be more modest than in 2008, but
at this stage we expect our financial performance to be satisfactory. Our
existing order book and immediate sales prospects give us confidence for the
remainder of this year, and, so far as the future beyond that is concerned, we
believe there is an abundance of opportunity, particularly in the defence
market in the USA.
Business growth is determined by 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 has successfully addressed this issue. Investment in
engineering development was increased by 58% in 2008 over 2007, and we are
investing even more in 2009. We see this as a very good time to invest in our
core business in order to ensure a substantial increase in the product range we
will be offering when economic conditions improve.
We have announced some important new product launches during the past 12 months
and expect that the continuing 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 sales opportunities as they arise.
Corporate Governance
As an AIM listed company Concurrent Technologies Plc is not obliged to comply
with the Combined Code on Corporate Governance. We do however acknowledge the
overall importance of the guidelines and apply as many of the principles
therein as are appropriate to a company of our size and nature.
Annual General Meeting
The Annual General Meeting this year will be held on 8 June 2009.
Michael Collins
Chairman
24 April 2009
All companies and product names are trademarks of their respective
organisation.
CONCURRENT TECHNOLOGIES PLC
Consolidated Income Statement
Year to Year to
31 December 31 December
2008 2007
CONTINUING OPERATIONS £ £
Revenue 12,619,631 10,565,278
Cost of sales 5,933,965 5,346,961
Gross profit 6,685,666 5,218,317
Net operating expenses 3,917,427 2,986,864
Group operating profit 2,768,239 2,231,453
Finance income 183,364 201,520
Profit before tax 2,951,603 2,432,973
Tax 616,531 541,919
Profit for the period 2,335,072 1,891,054
Attributable to:
Equity holders of the parent 2,335,072 1,891,054
Basic earnings per share 3.26p 2.62p
Diluted earnings per share 3.24p 2.60p
CONCURRENT TECHNOLOGIES PLC
Consolidated Balance Sheet
31 December 31 December
2008 2007
£ £
ASSETS
Non-current assets
Property, plant and equipment 621,798 468,074
Intangible assets 1,948,934 1,209,480
Deferred tax assets 114,585 89,698
2,685,317 1,767,252
Current assets
Inventories 1,413,816 1,097,133
Trade and other receivables 3,419,443 2,104,733
Cash and cash equivalents 4,994,266 4,797,233
9,827,525 7,999,099
Total assets 12,512,842 9,766,351
LIABILITIES
Non-current liabilities
Deferred tax liabilities 579,930 331,371
Long term provisions 35,767 26,243
615,697 357,614
Current liabilities
Trade and other payables 1,831,013 1,516,090
Short term provisions 28,992 34,390
Current tax liabilities 348,180 103,957
2,208,185 1,654,437
Total liabilities 2,823,882 2,012,051
Net assets 9,688,960 7,754,300
EQUITY
Capital and reserves
Share capital 727,000 727,000
Share premium account 3,405,817 3,405,817
Capital redemption reserve 256,976 256,976
Cumulative translation reserve 354,549 (182,972)
Profit and loss account 4,944,618 3,547,479
Equity attributable to equity 9,688,960 7,754,300
holders of the parent
Total equity 9,688,960 7,754,300
CONCURRENT TECHNOLOGIES PLC
Consolidated Cash Flow Statement
Year to Year to
31 December 31 December
2008 2007
£ £
Cash flows from operating activities
Profit before tax for the period 2,951,603 2,432,973
Adjustments for:
Finance income (183,364) (201,520)
Depreciation 163,905 123,508
Amortisation 213,449 64,443
Impairment loss 331,481 -
Share-based payments 18,085 15,597
Exchange differences 187,268 (36,129)
(Increase) / decrease in inventories (316,683) 182,332
(Increase) in trade and other (1,314,710) (57,279)
receivables
Increase/(decrease) in trade and other 319,049 (112,307)
payables
Cash generated from operations 2,370,083 2,411,618
Tax paid (166,642) (407,426)
Net cash generated from operating 2,203,411 2,004,192
activities
Cash flows from investing activities
Interest received 183,364 201,520
Purchases of property, plant and (312,460) (124,376)
equipment (PPE)
Purchases of intangible assets (1,278,828) (1,142,690)
Net cash used in investing activities (1,407,924) (1,065,546)
Cash flows from financing activities
Equity dividends paid (896,178) (758,091)
Purchase of treasury shares (41,834) (215,564)
Net cash used in financing activities (938,012) (973,655)
Effects of exchange rate changes on 339,528 19,220
cash and cash equivalents
Net increase/(decrease) in cash 197,003 (15,789)
Cash at beginning of period 4,797,233 4,813,022
Cash at the end of the period 4,994,266 4,797,233
NOTES
1. The financial information set out above does not constitute the Group's
statutory accounts for the years ended 31 December 2008 or 2007, but is
derived from those accounts. Statutory accounts for 2007 have been
delivered to the Registrar of Companies and those for 2008 will be
delivered following the Annual General Meeting. The auditors have reported
on those accounts; their reports were unmodified and did not contain a
statement under s 237(2) or (3) Companies Act 1985.
2. The calculation of basic earnings per share is based on the weighted
average number of Ordinary Shares in issue during 2008 of 71,666,307 (2007:
72,193,691) allowing for an adjustment made as a consequence of the Company
having purchased at various times during the year 165,000 (2007: 596,000)
Ordinary Shares and on the profit after tax for 2008 of £2,335,072 (2007: £
1,891,054). The calculation of diluted earnings per share incorporates
317,883 Ordinary Shares (2007: 623,064) in respect of performance related
employee share options. The profit after tax is the same as for basic
earnings per share.
Copies of the Annual Report will be sent to Shareholders and will also be
available from the Company's Registered Office: 4, Gilberd Court, Newcomen Way,
Colchester, Essex CO4 9WN. The Annual Report will also be available on the
Company's website : www.cct.co.uk
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