Final Results

CONCURRENT TECHNOLOGIES PLC Preliminary results for the year ended 31 December 2006 Continued Strong Growth 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 2006. Financial Highlights * Continued strong growth: * Turnover up 17% to £12.5m (2005: £10.7m) * Pre-tax profit up 61% to £2.3m (2005: £1.4m) * Year end net cash £4.8m * Gross margins remain strong at 47% * Final dividend increase by 30% to 0.65p making a total of 1.00p for the year (2005: 0.75p) Operating Highlights * Increased investment in design, development and manufacturing * Nine new product launches announced during the year * Installation of new automated optical inspection machinery * Sales and marketing infrastructure expanded in USA and China * Resulting widening of awareness and interest in Concurrent * Total compliance achieved with new European regulations on hazardous substances Michael Collins, Chairman, commented: "The introduction of the RoHS environmental regulations resulted in some customers advancing their product purchases into 2006 and in addition, much of our engineering effort had to be diverted to achieve the technology change required to comply with the regulations. This delayed the introduction of certain new products for 2007 but we are delighted that four notable new product launches have already been announced this year, with more in the pipeline." "Our investment in compliance with environmental regulations, product development and engineering capability will lend a distinct second half bias to profits for 2007." "Sales activity and new customer enquiries remain high and the recent release of new products based on the latest multi-core Intel® processors will, we believe, ensure that our position in the single board computer industry is enhanced. We continue to be confident that the Company will make further progress in 2007." 19 March 2007 Enquiries: Concurrent Technologies Plc 01206 752626 Glen Fawcett, Managing Director Nexus Financial Ltd 020 7451 7050 Nicholas Nelson/Kathy Boate Mob: 07921 522 920 Bell Lawrie 0141 221 7733 Alan Stewart CHAIRMAN'S STATEMENT Financial Summary Market conditions continue to be good and our level of activity increased markedly last year with excellent turnover and profit growth as set out below: 12 months to Year-on-year Restated 31 Dec 2006 change 12 months to 31 Dec 2005 Turnover £12,507k +17% £10,679k Profit before tax £2,295k +61% £1,426k In the second half of 2006 we made a consolidated pre-tax profit of £1.36m following a pre-tax profit of £0.94m in the first half. Despite the weakening of the US dollar gross margins continued to be strong at 47% (2005: 46%). In arriving at the 2006 profits there were no unusual items comparable with the goodwill write off in 2005, although profits were boosted by some "last time buy" sales of boards containing leaded components. We ended the year with cash of £4.8m and no borrowings while our earnings per share increased by 55% to 2.42p (restated 2005: 1.56p). Business Summary Concurrent Technologies designs, builds and supplies high-end embedded computer products to the defence, communication, transportation and industrial markets. Our range of products includes central processing unit ("CPU") boards, computer inter-connections and computer systems. These computer products are integrated into a variety of applications which require very high levels of processing power and superior levels of reliability; applications include military systems, communications, networking, medical imaging, industrial automation and scientific research. The Group's product range, which is mainly based on long life-cycle components produced by Intel®, includes single and dual processor computer boards using single and dual core processors. Designed for the CompactPCI®, VME, AMC (Advanced Mezzanine Card) and Multibus II open architecture standards, the majority of the designs are for use in standard operating conditions with some extended temperature range versions for use in more extreme environments. In addition to hardware design capability, our engineering teams undertake a significant amount of software and firmware development to provide interoperability between products, generate test software both on-board and for production test purposes, and also provide support for leading embedded and real-time operating systems. The majority of the products we design and manufacture use surface mount technology and ball grid array devices mounted on 12 to 14 layer printed circuit boards and the majority of our boards have about 10,000 interconnections and 9,300 vias. The complexity increases each year. The largest markets for our products have, as in recent years, been in the communications and defence sectors. Together these markets in 2006 accounted for 83% of our sales by value. We achieve our sales through a combination of a direct sales force, manufacturers' representatives and distributors. Review of 2006 Operations During 2006 we continued to increase our investment in design and development which amounted to £1,334,749 (2005: £1,175,480). We developed and introduced a range of innovative new products designed to meet our customers' high-end computing requirements. Many of these new products were based on the latest dual core processor technology from Intel®. In 2006 the process of expanding our sales capability continued, especially in the USA and China. An augmented marketing effort resulted in sales growth and an increased customer and market awareness. The focus of our marketing during the period was particularly aimed at defence and communications with the USA as the dominant market. With our presence firmly established we plan to capitalise fully through an increased flow of new products driven by a growing headcount of design engineers. In this regard we are actively recruiting. The Company is now meeting new regulations which require our board products to be compliant with a European Union based environmental standard (known as "RoHS" or "Restriction of the use of certain Hazardous Substances") which results in dramatically reduced amounts of lead used in our products. This process has been time consuming and has absorbed significant amounts of engineering resource. We are now through this phase and are pleased with the resulting "environmentally friendly" product range. A number of significant product launches occurred during 2006, the most important being the VX 405/04x family of single board computers and the CompactPCI® PP 412/03x computer. These new computer boards feature Intel® dual core processors which combine high performance with low power consumption. We are targeting these products at existing customers who wish to upgrade as well as to new customers and those being drawn to us from our competitors. Applications will be within the telecommunications, defence, security, telemetry, industrial control, scientific and aerospace markets. Extended temperature versions of these boards will in due course be available for use in harsher environments. We have also introduced our next generation Advanced Mezzanine Card, the AM100/ 20x. This product uses the server-class dual core Intel® Xeon® CPU together with the Intel® 3100 chipset, which is the first integrated Intel® chipset to be optimised for embedded, communications and storage applications. During 2006 we introduced a second automated optical inspection machine which electro-optically examines the quality of the many thousands of miniature connections and components on our boards. This machine, together with our "pick-and-place" robotic machine which selects and mounts electronic components onto printed circuit boards, has helped further increase efficiencies in the manufacturing area of our business. Future Plans We will continue to expand our range of products targeted primarily at the CompactPCI® bus architecture, including the newer smaller sized 3U version, and the VME architecture where market indications are that we will see good growth in the short and medium terms. We are also now supporting a new architecture called AMC which is directed to many applications including those that will be based on ATCA® (Advanced Telecommunications Computing Architecture) and MicroTCA™ - a new high speed serial bus system. We will continue to target our products at complex, high-technology, low to medium volume and high margin applications while working closely with our customers to meet their specialised requirements. Our range of products suitable for harsh operating environments will continue to be expanded. Many of our new products will use low power devices containing two or more processing cores within a single device. We anticipate the arrival of processors with more than two cores and are expanding our capability to design hardware and develop the related software and firmware. We also believe that our substantial investment in design and development continues to benefit us as we broaden our range of products. We are therefore continually evaluating our design and development capabilities and how best to exploit locally available engineering talent to meet our growing needs. In addition to our UK and USA sites, other countries which have a high concentration of high technology design skills are being actively considered as potential new locations for product design. We will also continue to look to enhance our capabilities to produce complete embedded computer systems, and to take advantage of opportunities which come from customers who wish to downsize in-house engineering staff and reduce fixed costs by outsourcing. During 2006 we expanded our North America sales and marketing capability by appointing a VP of Sales and Marketing, to oversee all aspects of our sales, marketing and customer support in North America. This appointment should be of great benefit to the Group in the future. We believe that world demand for single board computers, particularly those powered by Intel® CPUs, continues to expand and our aim is to have the right range of products for our niches in the single board computer market. The Company has taken the authority in previous General Meetings to buy in shares and in light of our substantial cash reserves and the continuing growth of the business, the Directors have been utilising this facility in recent months and intend to buy in further shares in the coming months as opportunities arise. With the Group's strong financial base and market positioning, we maintain a proactive policy of exploring value enhancing acquisition opportunities as they arise. Dividend The Directors are recommending the payment of a final dividend of 0.65 pence per share (making a total for the year including the interim dividend of 1.00 pence per share). The total cost of this final dividend will amount to £470,015. The ex-dividend date for the final dividend is 2 May 2007, the record date is 4 May 2007 and subject to the shareholders' approval, payment will be made on 18 May 2007. Outlook The introduction of the RoHS environmental regulations resulted in some customers advancing their product purchases into 2006 and in addition, much of our engineering effort had to be diverted to achieve the technology change required to comply with the regulations. This delayed the introduction of certain new products for 2007 but we are delighted that four notable new product launches have already been announced this year, with more in the pipeline. Our investment in compliance with environmental regulations, product development and engineering capability will lend a distinct second half bias to profits for 2007. Sales activity and new customer enquiries remain high and the recent release of new products based on the latest multi-core Intel® processors will, we believe, ensure that our position in the single board computer industry is enhanced. We continue to be confident that the Company will make further progress in 2007. 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 20 April 2007. Michael Collins Chairman 16 March 2007 All companies and product names are trademarks of their respective organisations. Consolidated Profit and Loss Account Restated Year to year to Note 31 31 December December 2006 2005 £ £ Turnover 12,507,280 10,678,675 Cost of sales 6,683,124 5,781,965 Gross profit 5,824,156 4,896,710 Net operating expenses 3,716,999 3,571,763 Group operating profit 2,107,157 1,324,947 Interest receivable 187,501 101,497 Profit on ordinary activities before taxation 2,294,658 1,426,444 Taxation on profit on ordinary activities 533,449 294,390 Profit for the financial year 1,761,209 1,132,054 Basic earnings per share 3 2.42p 1.56p Diluted earnings per share 3 2.42p 1.56p Statement of Total Recognised Gains and Losses Note Restated Year to year to 31 31 December December 2006 2005 £ £ Profit for the financial year 1,761,209 1,132,054 Currency translation differences on foreign (165,969) 128,907 currency net investments Total recognised gains and losses relating to 1,595,240 1,260,961 the year Prior year adjustment 2 (44,786) Total gains and losses recognised since last 1,550,454 annual report Consolidated Balance Sheet 31 December 31 December 2006 2005 £ £ FIXED ASSETS Tangible assets 598,533 543,678 CURRENT ASSETS Stocks and work in progress 1,279,465 1,501,554 Debtors 2,166,230 1,832,303 Cash at bank and in hand 4,813,022 3,978,139 8,258,717 7,311,996 CREDITORS: Amounts falling due within one year 1,927,934 1,852,977 NET CURRENT ASSETS 6,330,783 5,459,019 TOTAL ASSETS LESS CURRENT LIABILITIES 6,929,316 6,002,697 Provision for liabilities and charges 98,941 38,180 NET ASSETS 6,830,375 5,964,517 CAPITAL AND RESERVES Called up share capital 727,000 727,000 Share premium account 3,405,817 3,405,817 Capital redemption reserve 256,976 256,976 Profit and loss account 2,440,582 1,574,724 EQUITY SHAREHOLDERS' FUNDS 6,830,375 5,964,517 The Financial Statements were approved and authorised for issue by the Board of Directors on 16 March 2007 and signed on its behalf by: M Collins G A Fawcett Chairman Managing Director Consolidated Cash Flow Statement Year to Year to 31 December 31 December 2006 2005 £ £ Net cash inflow from operating activities 2,231,376 2,125,605 Returns on investments and servicing of finance: Interest received 187,501 101,497 Taxation (429,903) 81,458 Capital expenditure and financial investment: Payments to acquire tangible fixed assets (235,675) (288,048) Receipts from sale of tangible fixed assets 587 - (235,088) (288,048) Equity dividends paid (617,950) (363,500) Financing: Purchase of Treasury Shares (140,743) - Increase in cash 995,193 1,657,012 NOTES 1. The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2006 or 2005, but is derived from those accounts. Statutory accounts for 2005 have been delivered to the Registrar of Companies and those for 2006 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain a statement under s237(2) or (3) Companies Act 1985. 2. The consolidated results for the year ended 31 December 2005 have been restated following the adoption of FRS 20 (Share-based payment) for the period commencing 1 January 2006. The effect of this restatement has been to reduce reported profit by £26,643 in the year ended 31 December 2005 and to reduce reported profit by £18,143 in the period prior to 31 December 2005. In all other respects the Consolidated Financial Statements for the year ended 31 December 2006 have been prepared on a basis consistent with the Consolidated Financial Statements for the year ended 31 December 2005. 3. The calculation of basic earnings per share is based on the weighted average number of Ordinary Shares in issue during 2006 of 72,657,889 (2005: 72,700,012) allowing for an adjustment made as a consequence of the Company having purchased at various times during the year 390,000 Ordinary Shares and on the profit after tax for 2006 of £1,761,209 (restated 2005: £ 1,132,054). The calculation of diluted earnings per share incorporates 259,089 Ordinary Shares (restated 2005: 4,022) 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.

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