Concurrent Technologies PLC Interim Results (7247L)

TIDMCNC

RNS Number : 7247L

Concurrent Technologies PLC

10 September 2019

This announcement contains inside information

10 September 2019

Concurrent Technologies Plc

(the "Company" or the "Group")

Interim Results for the six months ended 30 June 2019

Concurrent Technologies Plc (AIM: CNC), a world leading specialist in the design and manufacture of high-end embedded computer boards for critical applications, announces interim results for the six months to 30 June 2019, reflecting a positive trading period with strong sales, profit before tax and investment.

Financial Highlights

   --    Turnover of GBP9.5m (H1 2018: GBP7.9m) 
   --    Gross profit of GBP4.9m (H1 2018: GBP4.1m) 
   --    Gross margin of 51.7% (H1 2018: 51.7%) 
   --    Group operating profit of GBP1.6m (H1 2018: GBP1.1m) 

-- Profit before tax of GBP2.7m (H1 2018: GBP1.1m) - including other, non-recurring income of GBP1.0m

   --    EPS of 3.31 pence (H1 2018: 1.50 pence) 
   --    Adjusted EPS on continuing activities of 2.21 pence (H1 2018: 1.50 pence)(*) 
   --    Interim dividend increased to 1.05p per share (H1 2018: 0.95p) 
   --    Cash balance (including cash deposits) at 30 June 2019 of GBP10.0m (H1 2018: GBP7.8m) 

(*) Adjusted results are prepared to provide a more comparable indication of the Group's core business performance by removing the impact of certain items including exceptional items (material and non-recurring).

Operational Highlights

-- Sales increased across all sectors, with defence still the largest individual sector, accounting for 58% of Group turnover during the period

   --    Increased order intake resulting in record order book 

-- Global customer base continues to expand with exports generating 90% of Group revenues (H1 2018: 88%)

   --    Investment in R&D during the period increased to GBP1.4m (H1 2018: GBP1.2m) 
   --    Committed to further investment in UK manufacturing facility 
   --    Two additional senior managers appointed to expand skills and experience 

Michael Collins, Chairman of Concurrent Technologies Plc, commented: "The operational performance during the first half of the year has been strong with excellent sales, good cost control and successful recruitment into the senior management team."

"Whilst the turnover of the first half may not reach the same level in the second half, the increased order intake has resulted in a new record order book, the majority of which is expected to ship within the next 12 months. As such, the Board is confident that the Company will deliver a successful performance for the full financial year."

Enquiries:

 
Concurrent Technologies Plc 
 Jane Annear, Managing Director    [phone] 
 
Newgate (Financial PR) 
 Bob Huxford                        [phone] 
 Fiona Norman                       [phone] 
 
Cenkos Securities Plc (NOMAD) 
 Neil McDonald                     [phone] 
 Peter Lynch                       [phone] 
 

About Concurrent Technologies Plc

Concurrent Technologies Plc develops and manufactures high-end embedded computer products for use in a wide range of high performance, long life cycle applications within the telecommunications, defence, security, telemetry, scientific and aerospace markets, including applications within extremely harsh environments. The processor products feature Intel(R) processors, including the latest 9th generation Intel(R) Core(TM) processors, Intel(R) Xeon(R) and Intel(R) Atom(TM) processors. The products are designed to be compliant with industry specifications and support many of today's leading embedded Operating Systems. The products are sold world-wide.

For more information on Concurrent Technologies Plc and its products please visit www.gocct.com.

All trademarks, registered trademarks and trade names used in this announcement are the property of their respective owners.

CHAIRMAN'S STATEMENT

The first half of 2019 has been a sad one for Concurrent, with the unexpected and sudden death of its MD, Glen Fawcett. Glen helped start the Company in the 1980's and worked tirelessly to build it into the vibrant and exciting company it is today. He is, and will be, greatly missed both professionally and personally.

Jane Annear was confirmed as Managing Director in May, having previously held the position of Commercial Director. Jane's appointment provides the Company with continuity and stability and she is already overseeing the introduction of new skills through the recruitment of additional senior personnel to broaden the management team.

Financial Summary

In respect of trading, the first half of 2019 has been extremely positive with strong sales, profit before tax and investment in the first six months of the year.

Revenue for the period was GBP9.5m (H1 2018: GBP7.9m), gross margin remained consistently high at 51.7% (H1 2018: 51.7%) and gross profit was GBP4.9m (H1 2018: GBP4.1m). The unaudited profit before tax (PBT) for the period was GBP2.7m (H1 2018: GBP1.1m), with associated earnings per share (EPS) of 3.31 pence (H1 2018: 1.50 pence). These PBT and EPS figures include non-recurring receipts of GBP1m; adjusting for this, the H1 2019 PBT of the continuing operations is GBP1.7m with an associated EPS of 2.21 pence.

The Group's balance sheet remains strong, with cash balances (including cash deposits) at 30 June 2019 of GBP10.0m (H1 2018: GBP7.8m). These balances have been enhanced by the proceeds of a key man insurance policy. Total equity increased to GBP21.5m (H1 2018: GBP19.1m).

Dividend

The Board has declared a first interim dividend of 1.05p per share (H1 2018: 0.95p) - an increase of 10.5%. The total cost of this dividend will amount to GBP763,544. The ex-dividend date for this interim dividend is 26 September 2019, the record date is 27 September 2019 and the payment date is 11 October 2019.

Review of Operations

The operational performance during the first half of the year has been strong, with excellent sales, good cost control and successful recruitment into the senior management team.

The Group has seen sales increase in all market sectors during 2019, with the defence sector remaining our largest individual market and revenue generator, accounting for 58% of all sales revenues so far in 2019. Our telecommunications revenue has also been buoyant with an increase of over a third from H1 2018. It should be noted that the Group has benefited from some non-recurring sales programmes which have boosted the half-yearly sales revenue.

Several hardware and software product announcements have been made during 2019 and the development of new products and services remains a key focus of the management team. To further drive this expanding pipeline of new products the Group invested GBP1.4m in R&D during the first half of the year (H1 2018: GBP1.2m).

A Chief Technology Officer (CTO) has been recruited with the remit to develop and widen the Group's product range by introducing new technologies, some of which are targeted for applications such as Artificial Intelligence (AI) and Deep Learning. The CTO works closely with our existing engineering teams based in the UK and overseas.

Additionally, a Director of Sales has joined the management team with responsibility for all sales outside of North America. This key appointment brings particular knowledge of software and solution sales within the Defence market sectors, building on our existing expertise of hardware products.

These new additions to the management team bring a wealth of industry experience and will help position the Company to take advantage of the opportunities in the marketplace.

The Company still awaits details of the trade and tariff regime which will apply if the UK leaves the European Union (EU). The Company has long established exporting procedures and systems in place for our sales to Asia and North America, and we expect to apply the same processes for sales into the EU if necessary. Current World Trade Organisation (WTO) rules apply a zero-tariff rating to most of the items we buy and sell and our current assessment has concluded that, while there may be limited logistical disruption following the UK's departure and some negative sentiment directed towards the UK, leaving the EU should have little lasting impact on our trading.

Future Plans

Our engineering teams will continue to develop new hardware designs based on Intel processors in addition to developing complementary products to enhance the overall capabilities and functionality of our current range. Work is also continuing on the development of AI compatible rugged solutions, for which marketing is already underway. In addition, we will continue to increase our support for firmware and software products to facilitate the use of our hardware. This strategy is expected to particularly benefit users of our VPX and MicroTCA ranges which are increasingly sold as system level solutions.

Support for our ranges of VME and CPCI product lines will continue, through long term manufacturing of established products and the development of new boards to provide suitable upgrade paths for both new and existing customers.

As part of the continual improvement to operations and manufacturing, we have ordered a new Automatic Optical Inspection machine with enhanced 3D inspection and Foreign Object Debris (FOD) detection capability and a new high speed component surface mount machine. This additional equipment will complement the upgrade to the main production line which was introduced in 2018. These new machines are expected to be installed before the end of 2019, providing improved capabilities and increased capacity, as well as further future-proofing the Group's manufacturing facilities in the UK.

Outlook

The recruitment of additional senior personnel has enhanced the management team and introduced new skills and experience which will benefit the Group going forward. Whilst the turnover of the first half may not reach the same level in the second half, the increased order intake has resulted in a new record order book, the majority of which is expected to ship within the next 12 months. As such, the Board is confident that the Company will deliver a successful performance for the full financial year.

Michael Collins

Chairman

9 September 2019

All companies and product names are trademarks of their respective organisations.

CONDENSED CONSOLIDATED STATEMENT OF

COMPREHENSIVE INCOME

Unaudited interim results to 30 June 2019

 
                                                        Six months          Six months 
                                                             ended               ended          Year ended 
                                          Note            30/06/19            30/06/18            31/12/18 
                                                               GBP                 GBP                 GBP 
CONTINUING OPERATIONS 
Revenue                                            9,539,922           7,879,517         16,624,151 
Cost of sales                                      4,608,129           3,802,942           7,950,636 
========================================  ====  ==================  ==================  ================== 
Gross profit                                       4,931,793           4,076,575           8,673,515 
Net operating expenses                             3,313,078           3,020,677           5,788,094 
Group operating profit                             1,618,715           1,055,898           2,885,421 
Other Income                               5       1,000,000           -                                 - 
Finance income                                          38,082              37,101              88,326 
========================================  ====  ==================  ==================  ================== 
Profit before tax                                  2,656,797           1,092,999           2,973,747 
Tax                                                   248,898                 3,630               5,886 
========================================  ====  ==================  ==================  ================== 
Profit for the period                              2,407,899           1,089,369           2,967,861 
========================================  ====  ==================  ==================  ================== 
 
Other Comprehensive Income 
Exchange differences on translating 
 foreign operations                                     16,596            244,712               43,903 
Tax relating to components of other                              -                   -                   - 
 comprehensive income 
========================================  ====  ==================  ==================  ================== 
Other Comprehensive Income for 
 the period, net of tax                                 16,596            244,712               43,903 
========================================  ====  ==================  ==================  ================== 
Total Comprehensive Income for 
 the period                                        2,424,495           1,334,081           3,011,764 
========================================  ====  ==================  ==================  ================== 
 
Profit for the period attributable 
 to: 
========================================  ====  ==================  ==================  ================== 
Equity holders of the parent                       2,407,899           1,089,369           2,967,861 
========================================  ====  ==================  ==================  ================== 
 
Total Comprehensive Income attributable 
 to: 
========================================  ====  ==================  ==================  ================== 
Equity holders of the parent                       2,424,495           1,334,081           3,011,764 
========================================  ====  ==================  ==================  ================== 
 
Earnings per share 
Basic earnings per share                   4                 3.31p               1.50p               4.08p 
 
Diluted earnings per share                 4                 3.31p               1.50p               4.08p 
 

CONDENSED CONSOLIDATED BALANCE SHEET

Unaudited interim results to 30 June 2019

 
                                                  As at            As at             As at 
                                               30/06/19         30/06/18          31/12/18 
ASSETS                                              GBP              GBP               GBP 
Non-current assets 
Property, plant and equipment                  672,988         449,860          704,969 
Intangible assets                           8,089,260       7,801,410        7,990,759 
Deferred tax assets                            140,984         178,299          120,385 
                                            8,903,232       8,429,569        8,816,113 
Current assets 
Inventories                                 4,913,969       3,759,675        4,096,576 
Trade and other receivables                 2,907,389       3,445,776        3,352,581 
Current tax assets                             101,621         434,576          316,428 
Other financial assets                         999,315         3,410,970                 - 
Cash and cash equivalents                   9,031,044       4,434,291        7,679,352 
=======================================  ==============  ===============  ================ 
                                          17,953,338      15,485,288       15,444,937 
 
Total assets                              26,856,570      23,914,857       24,261,050 
=======================================  ==============  ===============  ================ 
 
LIABILITIES 
Non-current liabilities 
Deferred tax liabilities                    1,457,296       1,553,918        1,448,012 
Long term provisions                             14,794            3,059            8,183 
=======================================  ==============  ===============  ================ 
                                            1,472,090       1,556,977        1,456,195 
Current liabilities 
Trade and other payables                    3,827,836       3,258,958        2,802,852 
Short term provisions                            15,170          21,410             8,688 
Current tax liabilities                          14,588          25,211                  - 
=======================================  ==============  ===============  ================ 
                                            3,857,594       3,305,579        2,811,540 
 
Total liabilities                           5,329,684       4,862,556        4,267,735 
=======================================  ==============  ===============  ================ 
 
Net assets                                21,526,886      19,052,301       19,993,315 
=======================================  ==============  ===============  ================ 
 
EQUITY 
Capital and reserves 
Share capital                                  739,000         739,000          739,000 
Share premium account                       3,699,105       3,699,105        3,699,105 
Capital redemption reserve                     256,976         256,976          256,976 
Cumulative translation reserve                 365,956         550,169          349,360 
Profit and loss account                   16,465,849      13,807,051       14,948,874 
=======================================  ==============  ===============  ================ 
Equity attributable to equity holders 
 of the parent                            21,526,886      19,052,301       19,993,315 
 
Total equity                              21,526,886      19,052,301       19,993,315 
=======================================  ==============  ===============  ================ 
 

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

Unaudited interim results to 30 June 2019

 
                                               Six months         Six months 
                                                    ended              ended         Year ended 
                                                 30/06/19           30/06/18           31/12/18 
                                                      GBP                GBP                GBP 
Cash flows from operating activities 
Profit before tax for the period                2,656,797          1,092,999          2,973,747 
Adjustments for: 
   Finance income                                (38,082)           (37,101)           (88,326) 
   Depreciation                                   108,085            103,174            219,455 
   Amortisation                                   909,491            756,545          1,542,749 
   Impairment loss                                350,000             63,223            303,030 
   Loss on disposal of property, 
    plant and equipment                                 -                  -            (1,000) 
   Share-based payment                             82,421           (77,595)           (77,595) 
   Exchange differences                            20,619            202,262             56,016 
   (Increase)/decrease in inventories           (817,393)          (536,875)          (873,776) 
   (Increase)/decrease in trade and 
    other receivables                             445,192          (708,092)          (612,246) 
   Increase/(decrease) in trade and 
    other payables                              1,038,077            761,192            466,383 
=======================================  ================  =================  ================= 
Cash generated from operations                  4,755,207          1,619,732          3,908,437 
Tax received/(paid)                              (27,415)            (8,851)          (183,524) 

=======================================  ================  =================  ================= 
Net cash generated from operating 
 activities                                     4,727,792          1,610,881          3,724,913 
=======================================  ================  =================  ================= 
 
Cash flows from investing activities 
Interest received                                  38,082             37,101             88,326 
Cash released from/(placed on) 
 deposit                                        (999,315)          (909,131)          2,502,281 
Purchases of property, plant and 
 equipment                                       (75,403)           (72,930)          (442,280) 
Proceeds from sale of property, 
 plant and equipment                                    -                  -              1,000 
Purchases of intangible assets                (1,357,983)        (1,223,668)        (2,438,917) 
=======================================  ================  =================  ================= 
Net cash used in investing activities     (2,394,619)       (2,168,628)            (289,590) 
=======================================  ================  =================  ================= 
 
Cash flows from financing activities 
Equity dividends paid                        (981.698)         (945,339)        (1,636,163) 
Sale of treasury shares                             4,950                  -                  - 
Net cash used in financing activities        (976,748)         (945,339)        (1,636,163) 
=======================================  ================  =================  ================= 
 
Effects of exchange rate changes 
 on cash and cash equivalents                     (4,733)          10,674            (12,112) 
 
Net increase/(decrease) in cash             1,351,692        (1,458,013)         1,787,048 
Cash at beginning of period                 7,679,352         5,892,304          5,892,304 
=======================================  ================  =================  ================= 
Cash at the end of the period               9,031,044         4,434,291          7,679,352 
=======================================  ================  =================  ================= 
 
 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Unaudited interim results to 30 June 2019

 
                                                          Capital    Cumulative      Profit 
                                    Share      Share   redemption   translation    and loss       Total 
                                  capital    Premium      reserve       reserve     account      equity 
                                      GBP        GBP          GBP           GBP         GBP         GBP 
 
Balance at 1 January 
 2018                             739,000  3,699,105      256,976       305,457  13,715,512  18,716,050 
 
Profit for the period                   -          -            -             -   1,089,369   1,089,369 
Exchange differences 
 on translating foreign 
 operations                             -          -            -       244,712           -     244,712 
===============================  ========  =========  ===========  ============  ==========  ========== 
Total recognised comprehensive 
 income for the period                  -          -            -       244,712   1,089,369   1,334,081 
 
Share-based payment                     -          -            -             -    (77,595)    (77,595) 
Deferred tax on share-based 
 payment                                -          -            -             -      25,104      25,104 
Dividends paid                          -          -            -             -   (945,339)   (945,339) 
Sale of treasury shares                 -          -            -             -           -           - 
Balance at 30 June 2018           739,000  3,699,105      256,976       550,169  13,807,051  19,052,301 
===============================  ========  =========  ===========  ============  ==========  ========== 
 
Profit for the period                   -          -            -             -   1,878,492   1,878,492 
Exchange differences 
 on translating foreign 
 operations                             -          -            -     (200,809)           -   (200,809) 
===============================  ========  =========  ===========  ============  ==========  ========== 
Total recognised comprehensive 
 income for the period                  -          -            -     (200,809)   1,878,492   1,677,683 
 
Share-based payment                     -          -            -             -           -           - 
Deferred tax on share-based 
 payment                                -          -            -             -    (45,845)    (45,845) 
Dividends paid                          -          -            -             -   (690,824)   (690,824) 
Sale of treasury shares                 -          -            -             -           -           - 
Balance at 31 December 
 2018                             739,000  3,699,105      256,976       349,360  14,948,874  19,993,315 
===============================  ========  =========  ===========  ============  ==========  ========== 
 
Profit for the period                   -          -            -             -   2,407,899   2,407,899 
Exchange differences 
 on translating foreign 
 operations                             -          -            -        16,596           -      16,596 
===============================  ========  =========  ===========  ============  ==========  ========== 
Total recognised comprehensive 
 income for the period                  -          -            -        16,596   2,407,899   2,424,495 
 
Share-based payment                     -          -            -             -      82,421      82,421 
Deferred tax on share-based 
 payment                                -          -            -             -       3,403       3,403 
Dividends paid                          -          -            -             -   (981,698)   (981,698) 
Sale of treasury shares                 -          -            -             -       4,950       4,950 
Balance at 30 June 2019           739,000  3,699,105      256,976       365,956  16,465,849  21,526,886 
===============================  ========  =========  ===========  ============  ==========  ========== 
 

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 ("the Company") is the Group's 
      ultimate parent company. It is incorporated and domiciled 
      in Great Britain. Concurrent Technologies Plc 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 (GBP), 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 9 September, 2019. 
 
      The information relating to the six months ended 30 June 2019 
      and 30 June 2018 is unaudited and does not constitute statutory 
      accounts within the meaning of section 434 of the Companies 
      Act 2006. The statutory accounts for the year ended 31 December 
      2018, prepared in accordance with IFRSs (International Financial 
      Reporting Standards) as adopted by the European Union, have 
      been reported on by the Group's auditors and delivered to 
      the Registrar of Companies. The auditors' report was unqualified, 
      did not draw attention to any matters by way of emphasis and 
      did not contain a statement under section 498(2) or (3) of 
      the Companies Act 2006. 
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 2019. 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 2018, which have been prepared 
      in accordance with adopted IFRSs. 
 
      The accounting policies applied and methods of computation 
      are consistent with those of the annual financial statements 
      for the year ended 31 December 2018, as described in those 
      financial statements. The accounting policies have been consistently 
      applied to all the periods presented. 
 
      There are no new IFRSs or IFRIC interpretations that are effective 
      for the first time for the financial period beginning on or 
      after 1 January 2019 that would be expected to have a material 
      impact on the results or financial position of the Group. 
2.2  Going Concern 
     The Directors are satisfied that the Group has sufficient 
      resources to continue in operation for the foreseeable future, 
      a period of not less than 12 months from the date of this 
      report. Accordingly, they continue to adopt the going concern 
      basis in preparing these condensed financial statements. 
2.3  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, namely share options. 
 
        The inputs to the earnings per share calculation are shown 
        below: 
                                             Six months    Six months 
                                                  ended         ended   Year ended 
                                               30/06/19      30/06/18     31/12/18 
                                                    GBP           GBP          GBP 
 
 Profit attributable to ordinary 
  equity holders                              2,407,899     1,089,369    2,967,891 
 ====================================      ============  ============  =========== 
 
                                             Six months    Six months 
                                                  ended         ended   Year ended 
                                               30/06/19      30/06/18     31/12/18 
                                                   N(o)          N(o)         N(o) 
 Weighted average number of 
  ordinary 
  shares for basic earnings 
  per share                                  72,728,490    72,718,490   72,718,490 
 Adjustment for share options                         -         2,457        2,457 
 ====================================      ============  ============  =========== 
 Weighted average number of 
  ordinary shares for diluted 
  earnings per share                         72,728,490    72,720,947   72,720,947 
 ====================================      ============  ============  =========== 
 
5.   Other Income 
 
      Other income relates exclusively to a claim made against a 
      key man insurance policy. The receipt during the period is 
      a non-recurring item and represents full and final settlement 
      of the claim. 
6.   Post reporting date events 
 
      There were no material events subsequent to the end of the 
      interim reporting period that have 
      not been reflected in these condensed interim financial statements. 
 
7.   Shareholder Communication 
 
      A copy of these condensed interim financial statements is 
      available from the Company's Registered Office at 4 Gilberd 
      Court, Newcomen Way, Colchester, Essex, CO4 9WN, UK and from 
      the Company's website at www.gocct.com. 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

END

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September 10, 2019 02:00 ET (06:00 GMT)