25 March 2014
Concurrent Technologies Plc
Preliminary Results for the year ended 31 December 2013
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 preliminary results for the year to 31 December 2013.
Financial Highlights
· Turnover £11.9m (2012: £12.8m)
· EBITDA £1.9m (2012: £3.5m)
· Profit before Tax £0.5m (2012: £2.0m)
· Cash in business plus deposits increased to £4.9m (2012: £4.3m)
· EPS 1.02 pence (2012: 2.75 pence)
· Dividend increased by 2.94% to 1.75 pence per share for the year (2012: 1.70 pence)
Operational Highlights
· 7 new high performance processor boards released, featuring the latest technology including 4th generation Intel® Core™ processors and new Intel® Atom™ processors.
· Additional development of software and middleware to provide high technology intercommunication and security.
· Improvement in sales to defence customers despite setbacks due to export licencing requirements.
· Further significant growth in sales of product using AMC architecture in telecoms.
· Continued improvement in VPX™ architecture product sales mainly for defence applications.
Michael Collins, Chairman, commented:
"Against a challenging export environment, we have delivered another year of profitability. Our objective remains to design more innovative products for complex, high technology, low to medium volume and high margin applications, including versions for use in harsh environments. We also aim to further enhance the capabilities of these products with new and complementary software packages to provide high-speed data transfer, ease of integration and security. We will continue to be an early adopter of the latest technology from Intel and maintain our investment in R&D to ensure an expansion of our range of advanced technology products. To augment our R&D capabilities and to complement our UK and Indian design centres, we intend to establish an R&D facility in Massachusetts, USA."
"We know that our diverse product range and the continuing investment in applying new technology to our product ranges enhances the Group's position in a variety of different markets. The probable improvement in the situation regarding export licence restrictions is also expected to improve the Group's prospects during 2014."
Annual General Meeting
The annual general meeting of Concurrent Technologies Plc will be held at the Company's offices at 4 Gilberd Court, Newcomen Way, Colchester, Essex, CO4 9WN, on 27 May 2014 at 2:30pm.
Enquiries:
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Concurrent Technologies Plc |
+44 (0)1206 752 626 |
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Newgate Threadneedle (Financial PR) Robyn McConnachie |
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Cenkos Securities plc (NOMAD) Beth McKiernan |
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Extracts from the Strategic Report
Review of Operations
As announced prior to the last Interim Results, one of the main challenges during this year has been the problem of the licencing of advanced technology exports to emerging markets where we were expecting sales growth. These exporting issues have been raised with the Secretary of State for Business, Innovation and Skills (BIS). The Company continues to work with BIS officials who are reviewing the current system of control to determine whether the affected products may be moved to a more flexible export licensing system such as that which exists in the USA.
These export licencing issues have had a negative impact on the results for the year and may continue to adversely affect trading relationships with some of our customers. However, although the report on the review by BIS was delayed, due to critical world events, we have made good progress and the Board is optimistic that the more flexible licensing system that we need from BIS will be introduced by the end of June 2014.
The results for this year include a write down of our R&D design assets by £842,783 (original estimate £1.3m), substantially due to the effects on possible future orders caused by UK export licencing.
The Group EBITDA (measured as Operating Profit plus Depreciation and Amortisation) for 2013 was £1,920,585 (2012: £3,479,094). The reduction was due to the lower level of sales, less capitalisation and increased impairments of R&D, compared to 2012, due to the export issues noted above. The Group achieved a profit before tax for 2013 of £453,929 (2012: £2,001,404), which includes the increased amortisation of capitalised R&D, a result which is slightly ahead of consensus forecasts. Earnings per share for the year were 1.02 pence (2012: 2.75 pence). Group revenue for the year was £11,859,180 (2012: £12,794,380). The gross margin for the year was 50.6% compared with 51.7% for 2012.
Our balance sheet remains strong due to underlying profitability and robust financial controls within the business, and our cash balances have been maintained despite the reduction in reported profit. We have also continued our investment in R&D and have increased our dividend compared to the previous year. We had cash balances of £2.3m (2012: £2.3m) plus short to medium term cash deposits of £2.6m (2012: £2.0m) at the year end, with no borrowings.
Operational Highlights
A critical element of our strategy is to maintain our investment in R&D to ensure a constant expansion of our product range in order to create new opportunities, protect our competitive position and provide our existing customers with viable technical upgrade paths. The investment in R&D was maintained throughout 2013.
A total of 7 new high performance embedded computers were released during the year, featuring the latest technology including 4th generation Intel® Core™ processors and new low power Intel® Atom™ processors. We have concentrated on providing more AMC and VPX™ architecture products, these usually being the architectures of choice for new projects and therefore offering greater potential for growth. Combined with a Serial RapidIO® interface, the AMC architecture products are particularly well suited for MicroTCA™ and AdvancedTCA® based telecommunications applications such as IPTV, digital media servers, media gateways, broadband, and Long Term Evolution (LTE) or LTE-Advanced, wireless base stations. They are also being utilised in test systems for wireline and wireless networks, where a large number of computing nodes are required to intercommunicate at very fast data transfer rates. Sales of our AMC boards have significantly increased during 2013. Our VPX™ architecture boards are mainly used in defence and surveillance related applications, including unmanned vehicles, and these have also shown continuing growth in sales during 2013.
To enhance the functionality of our hardware products, we have continued the development of key software projects. These include our Fabric Interconnect Networking Software for inter-board communications, and our Board Level Security Package, designed to assist customers to deliver secure solutions for applications where protecting critical technologies and data is essential.
The Group's customer base is well diversified comprising many large, high quality, international businesses, which use our products in many different applications. Sales for defence applications increased slightly during 2013 from the previous year and may have been even better if we had not been affected by the difficulties with export licencing. There were also increased sales for industrial applications, and also for scientific applications like physics research.
Future Plans
Against a challenging export environment, we have delivered another year of profitability. Our objective remains to design more innovative products for complex, high technology, low to medium volume and high margin applications, including versions for use in harsh environments. We also aim to further enhance the capabilities of these products with new and complementary software packages to provide high-speed data transfer, ease of integration and security. We will continue to be an early adopter of the latest technology from Intel and maintain our investment in R&D to ensure an expansion of our range of advanced technology products. To augment our R&D capabilities and to complement our UK and Indian design centres, we intend to establish an R&D facility in Massachusetts, USA.
We know that our diverse product range and the continuing investment in applying new technology to our product ranges enhances the Group's position in a variety of different markets. The probable improvement in the situation regarding export licence restrictions is also expected to improve the Group's prospects during 2014.
Dividend
The Board has declared a second interim dividend of 1.10 pence per share (2012: 1.05 pence second interim dividend) which when added to the first interim dividend of 0.65 pence per share will make a total of 1.75 pence per share for the year (2012: 1.70 pence). This is an increase of 2.94% on dividends paid for 2012. The total cost of this second interim dividend will amount to £785,405. The Directors do not intend to recommend a final dividend.
Annual General Meeting
The annual general meeting of Concurrent Technologies Plc will be held at the Company's offices at 4 Gilberd Court, Newcomen Way, Colchester, Essex, CO4 9WN, on 27 May 2014 at 2:30pm.
All companies and product names are trademarks of their respective organisations.
Consolidated Statement of Comprehensive Income
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Year to |
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Year to |
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31 December |
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31 December |
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2013 |
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2012 |
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CONTINUING OPERATIONS |
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£ |
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£ |
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Revenue |
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11,859,180 |
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12,794,380 |
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Cost of sales |
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5,857,094 |
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6,183,357 |
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Gross profit |
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6,002,086 |
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6,611,023 |
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Operating expenses |
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5,614,290 |
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4,666,346 |
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Group operating profit |
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387,796 |
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1,944,677 |
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Finance income |
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66,133 |
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56,727 |
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Profit before tax |
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453,929 |
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2,001,404 |
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Tax |
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(275,688) |
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34,749 |
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Profit for the year |
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729,617 |
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1,966,655 |
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Other Comprehensive Income |
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|
|
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Items that will be reclassified subsequently to profit or loss: |
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|
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Exchange differences on translating foreign operations |
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(124,637) |
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(131,051) |
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Tax relating to components of other comprehensive income |
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- |
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- |
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Other Comprehensive Income for the year, net of tax |
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(124,637) |
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(131,051) |
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Total Comprehensive Income for the year |
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604,980 |
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1,835,604 |
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Profit for the period attributable to: |
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Equity holders of the parent |
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729,617 |
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1,966,655 |
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Total Comprehensive Income attributable to: |
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Equity holders of the parent |
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604,980 |
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1,835,604 |
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Earnings per share |
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Basic earnings per share |
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1.02p |
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2.75p |
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Diluted earnings per share |
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1.01p |
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2.73p |
Consolidated Balance Sheet
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As at |
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As at |
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31 December |
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31 December |
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2013 |
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2012 |
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£ |
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£ |
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ASSETS |
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Non-current assets |
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Property, plant and equipment |
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478,131 |
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437,851 |
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Intangible assets |
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5,467,503 |
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5,948,660 |
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Deferred tax assets |
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108,396 |
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188,323 |
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Other financial assets |
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- |
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1,000,000 |
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6,054,030 |
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7,574,834 |
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Current assets |
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Inventories |
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2,550,556 |
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2,967,690 |
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Trade and other receivables |
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2,874,354 |
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3,274,665 |
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Current tax assets |
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247,240 |
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123,696 |
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Other financial assets |
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2,602,689 |
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1,000,000 |
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Cash and cash equivalents |
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2,340,859 |
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2,316,928 |
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10,615,698 |
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9,682,979 |
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Total assets |
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16,669,728 |
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17,257,813 |
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LIABILITIES |
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Non-current liabilities |
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Deferred tax liabilities |
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1,164,267 |
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1,404,686 |
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Long term provisions |
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10,009 |
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- |
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1,174,276 |
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1,404,686 |
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Current liabilities |
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Trade and other payables |
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1,931,110 |
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1,511,755 |
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Short term provisions |
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36,813 |
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39,746 |
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1,967,923 |
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1,551,501 |
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Total liabilities |
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3,142,199 |
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2,956,187 |
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Net assets |
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13,527,529 |
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14,301,626 |
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EQUITY |
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Capital and reserves |
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Share capital |
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727,000 |
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727,000 |
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Share premium account |
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3,405,817 |
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3,405,817 |
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Capital redemption reserve |
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256,976 |
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256,976 |
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Cumulative translation reserve |
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(74,816) |
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49,821 |
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Profit and loss account |
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9,212,552 |
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9,862,012 |
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Equity attributable to equity holders of the parent |
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13,527,529 |
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14,301,626 |
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Total equity |
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13,527,529 |
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14,301,626 |
Consolidated Cash Flow Statement
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Year to |
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Year to |
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|
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31 December |
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31 December |
|
|
|
2013 |
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2012 |
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|
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£ |
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£ |
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Cash flows from operating activities |
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|
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Profit before tax for the period |
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453,929 |
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2,001,404 |
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Adjustments for: |
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Finance income |
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(66,133) |
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(56,727) |
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Depreciation |
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169,259 |
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206,286 |
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Amortisation |
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1,363,530 |
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1,328,131 |
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Impairment loss |
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842,783 |
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236,733 |
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Loss on disposal of property, plant and equipment (PPE) |
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- |
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5,714 |
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Share-based payment |
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(94,726) |
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11,941 |
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Exchange differences |
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(74,551) |
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(45,511) |
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(Increase) in inventories |
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417,134 |
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(341,030) |
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(Increase)/decrease in trade and other receivables |
|
400,311 |
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(884,288) |
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Increase/(decrease) in trade and other payables |
|
426,431 |
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(230,060) |
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Cash generated from operations |
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3,837,967 |
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2,232,593 |
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Tax (paid)/received |
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(61,654) |
|
19,622 |
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Net cash generated from operating activities |
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3,776,313 |
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2,252,215 |
|
|
|
|
|
|
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Cash flows from investing activities |
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|
|
|
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Interest received |
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66,133 |
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56,727 |
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Cash placed on Deposit |
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(602,689) |
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- |
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Purchases of property, plant and equipment (PPE) |
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(225,505) |
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(181,263) |
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Capitalisation of development costs and purchases of intangible assets |
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(1,726,312) |
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(2,136,090) |
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Net cash used in investing activities |
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(2,488,373) |
|
(2,260,626) |
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|
|
|
|
|
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Cash flows from financing activities |
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|
|
|
|
Equity dividends paid |
|
(1,214,420) |
|
(1,179,051) |
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Purchase of treasury shares |
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(16,625) |
|
(17,038) |
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Net cash used in financing activities |
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(1,231,045) |
|
(1,196,089) |
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|
|
|
|
|
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Effects of exchange rate changes on cash and cash equivalents |
|
(32,964) |
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(72,703) |
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|
|
|
|
|
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Net increase/(decrease) in cash |
|
23,931 |
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(1,277,203) |
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Cash at beginning of period |
|
2,316,928 |
|
3,594,131 |
|
Cash at the end of the period |
|
2,340,859 |
|
2,316,928 |
|
|
|
|
|
|
Consolidated Statement of Changes in Equity
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|
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Capital |
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Cumulative |
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Profit |
|
|
|
|
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Share |
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Share |
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redemption |
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translation |
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and loss |
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Total |
|
|
|
capital |
|
premium |
|
reserve |
|
reserve |
|
account |
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Equity |
|
|
|
£ |
|
£ |
|
£ |
|
£ |
|
£ |
|
£ |
|
Balance at 1 January 2012 |
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727,000 |
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3,405,817 |
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256,976 |
|
180,872 |
|
9,052,951 |
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13,623,616 |
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|
|
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|
|
|
|
|
|
|
|
|
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|
Profit for the period |
|
- |
|
- |
|
- |
|
- |
|
1,966,655 |
|
1,966,655 |
|
Exchange differences on translating foreign operations |
|
- |
|
- |
|
- |
|
(131,051) |
|
- |
|
(131,051) |
|
Total comprehensive income for the period |
|
- |
|
- |
|
- |
|
(131,051) |
|
1,966,655 |
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1,835,604 |
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Transactions with owners: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based payment |
|
- |
|
- |
|
- |
|
- |
|
11,941 |
|
11,941 |
|
Deferred tax on share based payment |
|
- |
|
- |
|
- |
|
- |
|
26,554 |
|
26,554 |
|
Dividends paid |
|
- |
|
- |
|
- |
|
- |
|
(1,179,051) |
|
(1,179,051) |
|
Purchase of treasury shares |
|
- |
|
- |
|
- |
|
- |
|
(17,038) |
|
(17,038) |
|
Balance at 31 December 2012 |
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727,000 |
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3,405,817 |
|
256,976 |
|
49,821 |
|
9,862,012 |
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14,301,626 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period |
|
- |
|
- |
|
- |
|
- |
|
729,617 |
|
729,617 |
|
Exchange differences on translating foreign operations |
|
- |
|
- |
|
- |
|
(124,637) |
|
- |
|
(124,637) |
|
Total comprehensive income for the period |
|
- |
|
- |
|
- |
|
(124,637) |
|
729,617 |
|
604,980 |
|
Transactions with owners: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based payment |
|
- |
|
- |
|
- |
|
- |
|
(94,726) |
|
(94,726) |
|
Deferred tax on share based payment |
|
- |
|
- |
|
- |
|
- |
|
(53,306) |
|
(53,306) |
|
Dividends paid |
|
- |
|
- |
|
- |
|
- |
|
(1,214,420) |
|
(1,214,420) |
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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NOTES
1. The financial information set out above does not constitute the Group's statutory accounts for the years ended 31 December 2013 or 2012, but is derived from those accounts. Statutory accounts for 2012 have been delivered to the Registrar of Companies and those for 2013 will be delivered following the Annual General Meeting. The auditors have reported on those accounts; their reports were (i) unqualified and (ii) did not contain statements under section 498(2) or (3) of the Companies Act 2006 in respect of 2012 or 2013.
2. The calculation of basic earnings per share is based on the weighted average number of Ordinary Shares in issue during 2013 of 71,430,298 (2012: 71,451,883) allowing for an adjustment made as a consequence of the Company having purchased at various times during the year 40,000 (2012: 45,000) Ordinary Shares and on the profit after tax for 2013 of £729,617 (2012: £1,966,655). The calculation of diluted earnings per share incorporates 593,207 Ordinary Shares (2012: 534,454) in respect of performance related employee share options. The profit after tax is the same as for basic earnings per share.
3. The annual general meeting of Concurrent Technologies Plc will be held at the Company's offices at 4 Gilberd Court, Newcomen Way, Colchester, Essex, CO4 9WN, on 27 May 2014 at 2:30pm.
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, UK, and on the Company's website: www.cct.co.uk.